10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 29, 2007

Commission file number 0-14800

X-RITE, INCORPORATED

(Name of registrant as specified in charter)

Michigan	38-1737300
(State of Incorporation)	(I.R.S. Employer Identification No.)

4300 44th Street S.E., Grand Rapids, Michigan 49512

(Address of principal executive offices)

616-803-2100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: (none)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.10 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section15 (d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  x    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    Yes  ¨    No  x

On March 3, 2008, the number of outstanding shares of the registrant’s common stock, par value $.10 per share, was 29,049,119.

The aggregate market value of the common stock held by non-affiliates of the registrant (i.e., excluding shares held by executive officers, directors and control persons as defined in Rule 405, 17 CFR 230.405) as of the last business day of the second quarter of the Company’s fiscal year was $424,033,023 computed at the closing price on that date.

Portions of the Company’s Proxy Statement for the 2008 Annual Meeting of Shareholders are incorporated by reference into Part III. Exhibit Index is located at Page 79.

FORM 10-K

X-Rite, Incorporated

For The Year-Ended December 29, 2007

Table of Contents

Part	Topic	Page
Part I
Item 1	Business	1
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	12
Item 2	Properties	13
Item 3	Legal Proceedings	14
Item 4	Submission of Matters to a Vote of Security Holders	14
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6	Selected Financial Data	17
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	38
Item 8	Financial Statements and Supplementary Data	39
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	81
Item 9A	Controls and Procedures	81
Item 9B	Other Information	81
Part III
Item 10	Directors, Executive Officers, and Corporate Governance	82
Item 11	Executive Compensation	82
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	82
Item 13	Certain Relationships and Related Transactions, and Director Independence	82
Item 14	Principal Accountant Fees and Services	82
Part IV
Item 15	Exhibits, Financial Statement Schedules	83
	Signatures	84
	Exhibit Index	86

X-Rite’s internet website is www.xrite.com. X-Rite’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after we electronically file with or furnish them to the Securities and Exchange Commission.

PART I

ITEM 1. BUSINESS

X-Rite, Incorporated (also referred to as “X-Rite,” “the Company,” “our,” “we,” or “us”) is a technology company that develops a full range of color management systems and solutions. The Company’s technologies assist manufacturers, retailers, and distributors in achieving precise color appearance throughout their global supply chain. X-Rite products also assist printing companies, graphic designers, and professional photographers in achieving precise color reproduction of images across a wide range of devices and from the first to the last print. The Company’s products also provide retailers color harmony solutions at point of purchase. The key markets served include Imaging and Media, Industrial, and Retail. A more detailed discussion of X-Rite products and markets appears below.

Products are sold worldwide through the Company’s own sales personnel and through independent sales representatives and dealers. The Company is headquartered in Grand Rapids, Michigan and has other domestic operations in New Jersey and Massachusetts. In addition, the Company has locations in Switzerland, Germany, England, France, Italy, Spain, the Czech Republic, Russia, China, Japan and India. Manufacturing facilities are located in the United States, Switzerland, Germany, and Italy.

X-Rite was organized in 1958 as a Michigan corporation and completed its initial public offering of common stock in April of 1986. We have grown through internal expansion and acquisitions, investing heavily over the past three years in our core color businesses.

• Pantone, Inc. Acquisition

We completed the acquisition of Pantone, Inc. (Pantone) on October 24, 2007 for $176.1 million. Pantone is a leader in color inspiration, communication and specification standards in the creative design industries. Its flagship product, the PANTONE^® MATCHING SYSTEM^®, is a key color standard in the graphic arts, printing, publishing and advertising industries. Pantone also provides color standards and design tools for the fashion, home furnishings, architecture, paint, interior and industrial design industries.

• Amazys Holding AG Acquisition

We completed the acquisition of Amazys Holding AG (Amazys) on July 5, 2006 for $306.7 million. Amazys is a color management solutions company, based in Switzerland that develops markets, and supports hardware, software, and services to measure and communicate color for the imaging and media, photography, digital imaging, paints, plastics, apparel, textiles, and automotive industries.

• Product Innovation

In 2007, we introduced seven new products and three major product upgrades. We also devoted substantial resources to research and development, streamlining the development process, and achieving functional design excellence. In 2007, we spent approximately fourteen percent of our revenues on engineering, research, and development. Our focus continues to center on color management solutions that incorporate software, hardware, standards, and services.

• International Operations

With offices in thirteen countries outside the U.S. and service centers across Europe, Asia, and the Americas, X-Rite continues to improve its ability to conduct business with customers around the world. In 2007, international sales represented 65.7 percent of total revenue. The Company began to accelerate its global presence in 1993 with the establishment of two foreign sales and service subsidiaries: X-Rite GmbH, Cologne, Germany and X-Rite Asia Pacific Limited, Hong Kong. In 1994, we established a U.K. subsidiary, X-Rite, Ltd., which acquired the outstanding stock of an X-Rite dealer located near Manchester, England. In 1998, a French subsidiary, X-Rite Méditerranée SARL, was established by

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acquiring a branch of an X-Rite dealer located near Paris. In 2002, we opened X-Rite, (Shanghai) International Trading Co. Ltd., a sales and service center incorporated in The Peoples Republic of China. This subsidiary coordinates activity with previously opened representative offices in Beijing, Tianjin and Guangzhou strengthening our ability to serve China’s growing markets. In 2003, we affirmed our commitment to Japan and the many multi-national companies that reside there by expanding our sales office and creating a new company, X-Rite, K.K. In 2006, we expanded our global presence even further through the acquisition of Amazys Holding AG, a color solutions company based in Switzerland. As a result of the Amazys acquisition the Company established its European headquarters in Regensdorf, Switzerland. As a result of the 2007 acquisition of Pantone the Company increased our global presence through the addition of a sales office in Mumbai, India.

MAJOR MARKETS

X-Rite operates in two reportable business segments: (1) Color Measurement and (2) Color Standards. The Color Measurement segment represented 96.4 percent of X-Rite’s total net sales in 2007. The Color Measurement segment provides end-to-end solutions that combine hardware, software, and services to customers. The Color Standards segment represented 3.6 percent of X-Rite’s total net sales in 2007. The Color Standards segment develops and markets products for the accurate communication and reproduction of color. Both reportable segments service the following major markets.

Further information relating to segments is provided in Note 2 to the Consolidated Financial Statements included in Item 8 of this report.

Imaging and Media

The Imaging and Media market consists of two major markets: Digital Imaging and Printing.

X-Rite’s Digital Imaging markets consist of solutions for graphic designers, photo processing, photography, graphic design, pre-press service bureaus, and a myriad of calibration tools for image setters, raster image processors, and other digital applications. Our product solutions work to create value at key stages of the workflow by reducing waste, increasing productivity and enhancing quality.

The primary Printing markets that we serve are in digital and traditional printing. X-Rite’s color-calibrated instruments, digital palettes, and output measurement devices support color communication for the entire printing and preprinting process reducing set up time and eliminating costly mistakes. Our handheld products are straightforward, self-contained solutions that keep color on-target in the pre-press process, ink lab and pressroom. X-Rite’s automated scanning systems support the need for faster and more frequent color data collection.

Industrial

Our Industrial market is concentrated in the quality and process control markets. We design, develop, and manufacture precision instrumentation, software, and systems for global manufacturers, fulfilling a need to measure color for formulation, quality, and process control for paint, plastics, and textiles. Accurate color reproduction and global supply chain management offer businesses a competitive advantage, and are important factors when products are assembled from parts made around the world. X-Rite industrial product solutions are designed to reduce waste, increase production uptime, improve process management, and enable global color communication.

Color Support Services

Our Color Support Services market provides customers access to color professional specialists, training, and technical support worldwide through color seminars, classroom workshops, on-site consulting, and interactive media development. Our Color Services business provides both major manufacturers and end users with

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comprehensive solutions for their color and workflow problems. Color Support Service additionally operates and manages the Company’s service repair operation with facilities around the world and specializing in repairing all X-Rite equipment. The products repaired by the service department include products currently covered by our warranty program as well as those products which are out of warranties.

Retail

X-Rite’s Retail market serves two major markets: paint matching and home décor. The paint matching market is conducted under the name of Match Rite. X-Rite is a leading supplier of retail paint matching systems for home centers, mass merchants, hardware stores and paint retailers in North America, and it has established a strong presence in Europe and other regions of the world. X-Rite’s Retail customers rely on its strength in color measurement instrumentation, database creation and management, custom software development, and large scale account servicing. These solution-based products reduce paint inventory for the retailer and provide a user-friendly environment promoting sophisticated shade matching capabilities for the consumer. We are leveraging our retail-based expertise to broaden this market and develop other shade matching applications for our retail customer base and other facets of the home décor industry.

Other

Medical and Dental—X-Rite serves the medical x-ray market’s imaging needs and provides instrumentation designed for use in controlling variables in the processing of x-ray film. Additionally, we manufacture restorative tooth shade matching instruments and complementary software packages that are designed for use in cosmetic dental practices. Our ShadeVision^® System is a significant technological advance that improves patient care by replacing the subjective selection of tooth color with an accurate measurement. This product line is sold and marketed exclusively through our partner, Sullivan-Schein Dental, part of the Henry Schein Company.

Light Measurement—X-Rite develops and manufactures color and light measurement instrumentation and software. The light measurement product line precisely measures the light output of the most sophisticated high-intensity discharge (HID) lamps produced today. In addition, they have a line of laboratory products, including integrating sphere systems for light measurement. The Light product line also specializes in color viewing systems designed to increase productivity and reduce costs, while providing accurate simulation of natural daylight.

PRODUCTS

X-Rite’s color measurement and management solutions are comprised of hardware, software, and services. Here is a brief overview of the primary components that make up our product lines.

Instrumentation

• Colorimeters measure light much like the human eye using red, green and blue receptors and are utilized to measure printed colors on packages, labels, textiles and other materials where a product’s appearance is critical for buyer acceptance.

• Spectrophotometers are related to colorimeters; however, they measure light at many points over the entire visible spectrum. Spectrophotometers are used in color formulation for materials such as plastics, paints, inks, ceramics and metals. The Company’s multi-angle spectrophotometer, which is used to measure the color of metallic finishes, is useful for controlling the color consistency of automotive paints and other metallic and pearlescent coatings. In addition, the Company produces a spherical spectrophotometer, which measures the color of textured surfaces and is used in the textile, paint, and plastics industries.

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• Densitometers are instruments that measure optical or photographic density, compare such measurement to a reference standard, and signal the result to the operator of the instrument. Some models are designed for use in controlling variables in the processing of x-ray film in medical and non-destructive testing applications. Other models are designed to be used to control process variables in the production of photo-transparencies, such as photographic film and microfilm, or measure the amount of light that is reflected from a surface, such as ink on paper.

• Spectrodensitometers combine the function of a densitometer with the functions of a colorimeter and a spectrophotometer to provide measurements for monitoring color reproduction used for controlling the color of printed inks in graphic arts applications.

• Sensitometers are used to expose various types of photographic film in a very precise manner for comparison to a reference standard. The exposed film is processed and then “read” with a densitometer to determine the extent of variation from the standard.

Software and Databases

The Company provides software and databases that interface with its color measurement instruments and other process equipment. These software packages allow the user to collect and store color measurement data, compare that data to established standards and databases, communicate color results and formulate colors from a database.

Color Standards

The Color Standards segment includes the operations of the Pantone, Inc. business unit. Pantone, Inc. is a leading developer and marketer of products for the accurate communication and reproduction of color, servicing worldwide customers in a variety of industries including imaging and media, textiles, digital technology, plastics, and paint.

OTHER INFORMATION

Manufacturing, Sourcing and Service

We manufacture the majority of our products at our manufacturing facilities in Grand Rapids, Michigan and Regensdorf, Switzerland. We generally have multiple sources for raw materials, supplies and components. Product repair and service is provided at eleven locations throughout the world.

Competition

The Color Measurement and Color Standards businesses are competitive and subject to technological change, evolving customer requirements, and changing business models. We face strong competition in many areas of our current business activities. The rapid pace of technological change creates new opportunities for both our existing competitors as well as start-ups. Moreover, the rise of new industry alliances and new mergers and acquisitions can dramatically change our competitive landscape and can result in competitors with significant resources in research and development, marketing and sales. Customer requirements change quickly as a result from new and more cost efficient technologies. We face direct competition from approximately three firms which are producing competing products in the Imaging and Media category, approximately six manufacturers of competing products in the retail and industrial markets, and approximately five distributors in the Color Standards industry; some of whom have significant resources and sales. The primary basis of competition for all the Company’s products is technology and IP, design, service, and price. Our competitive position may be adversely affected in the future by one or more of the factors described in this section.

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Employees

As of December 29, 2007, the Company employed 1,018 people on a full time basis, of which 650 were in the United States. We believe generally we have good relationships with our employees.

Patents

As of December 29, 2007, X-Rite owned 154 patents and had 197 patent applications on file. While the Company follows a policy of obtaining patent protection for its products where appropriate, it does not believe that the loss of any existing patent, or failure to obtain any new patents, would have a material adverse impact on its current operations. We expect to protect our products and technology by asserting our intellectual property rights where appropriate and prudent.

Distribution Networks

X-Rite’s products are sold by its own sales personnel and through independent manufacturer’s representatives. Certain products not sold directly to end-users are distributed through a network of independent dealers throughout Europe, Asia Pacific and the Americas.

Seasonality

The Company’s business is generally not subject to seasonal variations that significantly impact sales, production, or net income.

Working Capital Practices

The Company does not believe that it, or the industry in general, has any special practices or special conditions affecting working capital items that are significant for an understanding of the Company’s business.

Significant Customers

In 2007 the Color Measurement segment had one significant customer which accounted for $28.3 million or 11.4 percent, of total net sales in 2007. No single customer accounted for more than 10 percent of total net sales in 2006 or 2005.

Backlog

The Company’s backlog of scheduled but unshipped orders was $27.7 million as of January 26, 2008, and $16.8 million as of January 27, 2007. This backlog is expected to be filled during the current fiscal year.

Research, Development and Engineering

During 2007, 2006, and 2005 the Company expensed $34.7, $25.3, and $15.0 million, respectively, on research, development, and engineering.

In addition to the research, development, and engineering costs reported as operating expenses, certain costs to develop new software products were capitalized in each of the last three years. Software development costs capitalized totaled $3.7, $3.0, and $3.8 million in 2007, 2006, and 2005, respectively. The related amortization expense was included in cost of sales (see Note 1 to the Consolidated Financial Statements).

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ITEM 1A. RISK FACTORS

There are many risk factors that may adversely affect the Company’s operating results including the following:

Our future results could be harmed by economic, political, geographic, regulatory and other specific risks associated with international operations.

The acquisitions of Amazys in July of 2006 and Pantone in October 2007 significantly expanded our international operations. During fiscal 2007, we derived approximately 65.7 percent of our total revenues from sales of our products outside of the United States, compared with 60.7 percent during fiscal 2006 and 48.4 percent during fiscal 2005. We intend to continue to pursue growth opportunities in sales internationally, which could expose us to greater risks associated with international sales and operations. There can be no assurance that we will maintain or expand our international sales. If the revenues generated from international activities, especially in emerging markets, are inadequate to offset the expense of maintaining such international operations, our business, financial condition and results of operations could be materially and adversely affected. The increasingly international reach of our businesses could also subject us and our results of operations to unexpected, uncontrollable and rapidly changing economic and political conditions. Specifically, international sales and operations are subject to inherent risks, including:

• lack of experience in a particular geographic market;

• tariffs and other barriers, including import and export requirements and taxes on subsidiary operations;

• different and changing regulatory requirements in various countries and regions;

• fluctuating exchange rates and currency controls;

• difficulties in staffing and managing foreign sales and support operations;

• longer accounts receivable payment cycles;

• potentially adverse tax consequences, including repatriation of earnings;

• diminished protection of intellectual property in some countries outside the U.S.;

• development and support of localized and translated products;

• lack of acceptance of localized products or X-Rite in foreign countries;

• differing local product preferences and product requirements;

• labor force instability, including possible shortages of skilled personnel required for local operations; and

• political and/or economic instability, such as perceived or actual public health (e.g. SARS) or terrorist risks which impact a geographic region and business operations therein.

As we expand our international operations, we may encounter new risks. For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local distributors and trading companies. If we are not successful in developing these relationships, we may not be able to grow sales in these geographic regions.

If we fail to attract, hire and retain qualified personnel, we may not be able to design, develop, market or sell our products or successfully manage our business.

Our ability to attract new customers, retain existing customers and pursue our strategic objectives depends on the continued services of our current management, sales, product development and technical personnel and our ability to identify, attract, train and retain similar personnel. Competition for top management personnel is intense and we may not be able to recruit and retain the personnel we need if we are unable to offer competitive

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compensation and benefits. The loss of any one of our management personnel, or our inability to identify, attract, train, retain and integrate additional qualified management personnel, could make it difficult for us to manage our business successfully and pursue our strategic objectives. We do not carry key person life insurance on any of our employees. Similarly, competition for skilled sales, product development and technical personnel is intense and we may not be able to recruit and retain the personnel we need. The loss of the services of key sales, product development and technical personnel, or our inability to hire new personnel with the requisite skills, could restrict our ability to develop new products or enhance existing products in a timely manner, sell products to our customers or manage our business effectively.

Our indebtedness following our offer will be higher than our existing indebtedness.

On October 24, 2007, the Company entered into new secured senior credit facilities which provide for aggregate principal borrowings of up to $415 million and replace the Company’s previous credit facilities established with the Amazys acquisition. The new credit facilities consist of a $310 million first lien loan, which is comprised of a $270 million five-year term loan and a $40 million five-year revolving line of credit, and a $105 million six-year term second lien loan. Obligations under these credit facilities are secured by essentially all of the tangible and intangible assets of the Company. Both facilities provide variable indices from which the Company may select for interest calculations. Interest payments on LIBOR based loans are payable on the last day of each interest period, not to exceed three months. A small portion of the credit facilities are tied to the prime rate and require interest payments on a scheduled quarterly basis. We have entered into certain interest rate swaps to, in effect; convert the interest rates of the floating-rates based on LIBOR into a fixed interest rate. Higher interest rates would accordingly result in increased interest expense. While we presently mitigate the risk of higher interest rates through interest rate swaps, there can be no assurance that we will maintain a matched portfolio in the future

After the completion of the offer we will have a substantial amount of debt which will require significant interest and principal payments. Our level of debt and the limitations imposed on us by our credit agreements could adversely affect our operating flexibility and put us at a competitive disadvantage. Our substantial debt level may adversely affect our future performance, because, among other things:

• we may be placed at a competitive disadvantage relative to our competitors, some of which have lower debt service obligations and greater financial resources than we do;

• our ability to complete future acquisitions may be limited;

• we will have to use a portion of our cash flow for debt service rather than for investment in research and development and capital expenditures

• we may not be able to obtain further debt financing and/or we may have to pay more for such additional financing as we are able to obtain;

• we may not be able to take advantage of business opportunities; and

• we will be more vulnerable to adverse economic conditions.

The senior credit facilities contain certain covenants applicable to us and our subsidiaries that may adversely affect our ability to incur certain liens or engage in certain types of transactions

Our ability to make scheduled payments of principal of, to pay interest on, or to refinance our indebtedness will depend upon our future operating performance, which may be affected by factors beyond our control. In addition, there can be no assurance that future borrowings or equity financing will be available to us on favorable terms or at all for the payment or refinancing of our indebtedness. If we are unable to service our indebtedness, our business, financial condition and results of operations would be materially adversely affected.

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Moreover, if one or more rating agencies downgrades our credit rating, we may have difficulty obtaining additional financing and/or our cost of obtaining additional financing or refinancing existing debt may be increased significantly.

Uncertainties exist in integrating the business operations of X-Rite and Pantone.

We intend, to the extent reasonably practicable, to integrate our operations with those of Pantone. Our goal in integrating these operations is to increase earnings and achieve cost savings by taking advantage of the anticipated synergies of consolidation and enhanced growth opportunities. Actual costs to complete the synergies may exceed the our preliminary estimates. There can be no assurance that we will not encounter difficulties integrating our operations with Pantone’s operations, resulting in a delay or the failure to achieve the anticipated synergies and, therefore, the expected increases in earnings and cost savings. The potential difficulties of combining the operations of the companies may include, among other things:

• possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between X-Rite and Pantone;

• coordinating and consolidating ongoing and future research and development efforts;

• consolidating sales and marketing operations;

• retaining existing customers and attracting new customers;

• retaining strategic partners and attracting new strategic partners;

• retaining key employees;

• retaining and integrating distributors and key sales representatives;

• consolidating corporate and administrative infrastructures, including consolidating and integrating computer information and financial systems;

• aligning and managing the technologies and products of the two companies;

• identifying and eliminating redundant and underperforming operations and assets;

• using capital assets efficiently to develop the business of the combined company;

• minimizing the diversion of management’s attention from ongoing business concerns;

• coordinating geographically separate organizations;

• possible tax costs or inefficiencies associated with integrating the operations of the combined company;

• possible modification of operating control standards in order to comply with the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder; and

• retaining and attracting new engineers and research and development personnel to support new products and new technology development.

For these reasons, we may fail to complete successfully the anticipated integration of X-Rite and Pantone, or to realize any of the anticipated benefits of the integration of the two companies. Actual cost savings and synergies may be lower than we currently expect and may take a longer time to achieve than we currently anticipate.

We are subject to risks arising from currency exchange rate fluctuations, which could increase our costs and may cause our profitability to decline.

In fiscal 2007, we derived approximately $163.4 million, or 65.7 percent of our total revenues, from sales of our products outside of the United States. Measured in local currency, a substantial portion of our business’

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foreign generated revenues were generated in Swiss Francs, Euros and British Pound Sterling. The United States dollar value of our foreign-generated revenues varies with currency exchange rate fluctuations. Significant increases in the value of the United States dollar relative to other currencies could have a material adverse effect on our results of operations. We address currency risk management through regular operating and financing activities. We currently have no hedging or similar foreign currency contracts to mitigate the risk of exchange rate fluctuations. Fluctuations in the value of foreign currencies could adversely impact the profitability of our foreign operations.

If we are unable to protect our intellectual property rights, our business and prospects may be harmed.

We have made significant expenditures to develop and acquire technology and intellectual property rights. We actively patent and trademark these properties when deemed appropriate and will vigorously defend them against infringement. Our failure to protect our intellectual property could seriously harm our business and prospects because developing new products and technologies is critical to our success. We will incur substantial costs in obtaining patents and, if necessary, defending our intellectual propriety rights. We do not know whether we will obtain the patent protection we seek, or that the protection we do obtain will be found valid and enforceable if challenged. Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, trade secrets, copyrights, confidentiality and nondisclosure agreements and other measures may not be adequate to protect our proprietary rights. Patent filings by third parties could render our intellectual property less valuable. Disputes may arise as to ownership of our intellectual property or as to whether products designed by our competitors infringe our intellectual property rights. Employees, consultants and others who participate in developing our products may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies for the breach. In addition, intellectual property rights may be unavailable or limited in some foreign countries, which could make it easier for competitors to capture market position. Competitors may also capture market share from us by designing products that mirror the capabilities of our products or technology without infringing on our intellectual property rights. In addition, as sales of our products continue to grow internationally, our exposure to intellectual property infringements in countries where intellectual property rights protections are less stringent will increase. If we do not obtain sufficient international protection for our intellectual property, our competitiveness in international markets could be impaired, which would limit our growth and future revenue.

We may be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from selling our products.

A successful claim of patent or other intellectual property infringement against us could adversely affect our growth and profitability, in some cases materially. We cannot assure you that others will not claim that our proprietary or licensed products are infringing on their intellectual property rights or that we do not in fact infringe on those intellectual property rights. From time to time, we receive notices from third parties of potential infringement and receive claims of potential infringement. We may be unaware of intellectual property rights of others that may cover some of our technology. If someone claims that our products infringed on their intellectual property rights, any resulting litigation could be costly and time consuming and would divert the attention of management and key personnel from other business issues. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement also might require us to enter into costly royalty or license agreements or to modify our products. We also may be subject to significant damages or an injunction preventing us from manufacturing, selling or using some of our products in the event of a successful claim of patent or other intellectual property infringement. Any of these adverse consequences could have a material adverse effect on our business, financial condition and results of operations.

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We may not have financing for future technology and capital requirements, which may prevent us from addressing gaps in our product offerings, improving our technology or increasing our manufacturing capacity.

If we cannot incur additional debt or issue equity or are limited with respect to incurring additional debt or issuing equity, we may be unable to address gaps in our product offerings, improve our technology or increase our manufacturing capacity, particularly through strategic acquisitions or investments. Although historically our cash flow from operations has been sufficient to satisfy working capital, capital expenditures and research and development requirements, in the future we may need to incur additional debt or issue equity in order to fund these requirements as well as to make acquisitions and other investments. We cannot assure you that debt or equity financing will be available to us on acceptable terms or at all. If we raise funds through the issuance of debt or equity, any debt securities or preferred stock issued will have rights and preferences and privileges senior to those of holders of our common stock in the event of a liquidation. The terms of the debt securities may impose restrictions on our operations. If we raised funds through the issuance of equity, this issuance would dilute your ownership of us.

Our ability to make payments on and to refinance our indebtedness and to fund working capital, capital expenditures and strategic acquisitions and investments, will depend on our ability to generate cash in the future. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

The markets for our products and services are highly competitive. If we are unable to compete effectively with existing or new competitors, our business could be negatively impacted.

The businesses in which we compete are very competitive and subject to technological change, evolving standards, frequent product enhancements and introductions and changing customer requirements. Many of our current and potential competitors have (1) longer operating histories, (2) significantly greater financial, technical and marketing resources, (3) greater name recognition, and/or (4) a larger installed customer base than X-Rite. A number of companies offer products and services that are similar to those offered by us and that target the same markets. In addition, any of these competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements, and to devote greater resources to the development, promotion and sale of their products than us. Our competitors may develop products and services that compete with those offered by us or may acquire companies, businesses and product lines that compete with us. It also is possible that competitors may create alliances and rapidly acquire significant market share, including in new and emerging markets. If we are not able to differentiate our products and services in the market then competitive pressures may potentially impact our sales volumes, pricing structure, gross margin, operating expenses an operating income.

Accordingly, there can be no assurance that current or potential competitors of X-Rite will not develop or acquire products or services comparable or superior to those that we develop, combine or merge to form significant competitors, or adapt more quickly than us to new technologies, evolving industry trends and changing customer requirements. Competition could cause price reductions, reduced margins or loss of market share for our products and services, any of which could materially and adversely affect our business, operating results and financial condition. There can be no assurance that we will be able to compete successfully against current and future competitors of X-Rite or that the competitive pressures that the company may face will not materially adversely affect our business, operating results, cash flows and financial condition.

We may be affected by environmental laws and regulations.

We are subject to a variety of laws, rules and regulations relating to discharges of substances in the air, water and land, the handling, storage and disposal of wastes and the cleanup of properties necessitated by pollutants. Any of those regulations could require us to acquire expensive equipment or to incur substantial other

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expenses to comply with them. If we incur substantial additional expenses, product costs could significantly increase. Also, if we fail to comply with present or future environmental laws, rules and regulations, such failure could result in fines, suspension of production or cessation of operations.

We are vertically integrated and, therefore, must manage costs efficiently.

A significant portion of our manufacturing processes are vertically integrated. Therefore, it is critical to efficiently manage the cost structure for capital expenditures, materials and overhead, as well as operating expenses such as wages and benefits.

Our reliance on outsourced manufacturing presents risks to our fulfillment process.

We rely on a number of strategic supply chain partners that produce key components or sub-assemblies that support our final assembly, calibration, and test process. Some of these suppliers are single sourced and therefore present risks to our fulfillment process.

We depend on new product development to compete effectively.

We have made large investments in new products and services. There are no assurances as to when future revenues from these products will be received, or that the ultimate profit margins received will be adequate to justify the investment.

Continual development of new products and technologies as well as enhancements to existing products is a core component of our long-term growth plans. Our future business, financial condition and results of operations will depend to a significant extent on our ability to develop new products that address these market opportunities. As a result, we believe that significant expenditures for research and development will continue to be required in the future. Product development requires a time-consuming and costly research and development process. Unexpected delays in this process may significantly affect the timing of future revenues and increase costs. We must anticipate the features and functionality that customers will demand, incorporate those features and functionality into products, price our products competitively and introduce new products to the market on a timely basis. We cannot assure you that the products we expect to introduce will incorporate the features and functionality demanded by our customers, will be successfully developed, or will be introduced within the appropriate window of market demand. If there are delays in production of current or new products, our potential future business, financial condition, and results of operations could be adversely affected. In addition, the time required for competitors to develop and introduce competing products may be shorter, their manufacturing yields may be better, and their production costs may be lower than those experienced by us.

Any general economic slowdown could adversely affect our revenues and profitability.

Many of our products are used for quality control purposes within a larger manufacturing or production process. As such, our sales in some instances are linked to capital goods spending. Should there be a prolonged slowdown in capital goods spending or changes in global economic conditions, our revenues and profitability could be noticeably impacted.

We may face potential tax liabilities.

We are subject to taxation in many jurisdictions in the United States, Europe, Asia and elsewhere. In the ordinary course of business, there are transactions and calculations where the ultimate tax liability cannot be determined with certainty at the time the transaction is entered into. Preparation of our income tax provision requires the use of judgments as to how these transactions will ultimately be taxed. We believe our tax accruals are accurate though the ultimate determination of these issues may be different from that which is reflected in our historical provision and accruals. Should these determinations be different from what is previously recorded and additional tax is assessed, those assessments would be recorded in the period in which they occur.

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The Company’s reliance on a primary manufacturing center may affect timely product production and profitability.

Manufacturing and service of much of our core color products are performed at our headquarters facility in Grand Rapids, Michigan, and in our European headquarters facility in Regensdorf, Switzerland. Should a catastrophic event occur at either of these facilities, our ability to manufacture products, complete existing orders, and provide other services would be severely impacted for an undetermined period of time. We have purchased business interruption insurance to cover the costs of certain catastrophic events . Our inability to conduct normal business operations for a period of time may have an adverse impact on long-term operating results.

ITEM 1B. UNRESOLVED STAFF COMMENTS—None

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ITEM 2. PROPERTIES

The Company and its subsidiaries own or lease properties throughout the world. Listed below are the principal properties owned or leased as of March 1, 2008:

Location	Principal Uses	Owned/Leased
Grand Rapids, MI	Company headquarters, manufacturing, RD&E, sales, customer service, warehouse and administration	Owned
Grandville, MI	Previous headquarters, currently for sale	Owned
Tewksbury, MA	RD&E, sales, customer service, and administration	Leased
Greensboro, NC	Sales, customer service	Leased
Regensdorf, Switzerland	Manufacturing, RD&E, sales, customer service, warehouse and administration	Leased
Carlstadt, NJ	Manufacturing, RD&E, sales, customer service, warehouse and administration	Leased
Mumbai, India	Sales and customer service	Leased
Poynton, England	Sales, customer service, and administration.	Leased
Berlin, Germany	Manufacturing, RD&E, sales, customer service, warehouse, and administration	Leased
Neu-Isenburg, Germany	Sales, customer service	Leased
Martinsried, Germany	Manufacturing, RD&E, sales, customer service, training	Leased
Massy, France	Sales, customer service, and administration	Leased
Prato, Italy	Sales and customer service	Leased
Brixen-Bressanone, Italy	Manufacturing, RD&E sales, customer service	Owned
Vyskov, Czech Republic	Sales	Leased
Moscow, Russia	Sales	Leased
Quarry Bay, Hong Kong	Sales, customer service, and administration	Leased
Tokyo, Japan	Sales, customer service, and administration	Leased
Shanghai, China	Sales, customer service, and administration (3 sites)	Leased
Beijing , China	Sales and customer service	Leased
Guangzhou, China	Sales and customer service	Leased

As of March 1, 2008, X-Rite and its subsidiaries collectively own approximately 699,000 square feet of space and lease approximately 272,000 square feet. Included in these figures are 311,000 square feet owned and approximately 41,000 square feet leased related to facilities that have been closed or that are in the process of being closed as of March 1, 2008 as part of the Company’s restructuring plans. The Company is currently in the process of selling, subleasing, or negotiating lease break-fees for all of the closed facilities.

On February 14, 2006, the Company purchased a new corporate headquarters and manufacturing facility in Grand Rapids, Michigan for $13.4 million. The new facility is approximately 375,000 square feet and is located ten miles from the Company’s former headquarters. In December 2007, the Company entered into a definitive purchase agreement to sell the Company’s former headquarters, located in Grandville, Michigan, for $13.1 million plus reimbursement of certain property tax assessment payments made prior to closing of the transaction. The purchase agreement provides for a 120 day due diligence period for the buyer to evaluate the property. The

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buyer has deposited an initial earnest money deposit of $125,000 with an escrow agent to be applied as a credit to the purchase price at closing. Final closing on the sale will be based on completion of the Buyer’s inspection and due diligence process as well as the granting of governmental approvals related to the future planned usage of the property.

Management considers all the Company’s properties and equipment to be suitable and adequate for its current and reasonably anticipated development, production, distribution, and selling requirements.

ITEM 3. LEGAL PROCEEDINGS

The Company is periodically involved in legal proceedings, legal actions, and claims arising in the normal course of business, including proceedings related to product, labor, and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable. The Company records amounts for losses that are deemed probable and subject to reasonable estimate. The Company does not believe that the ultimate resolution of any of these matters will have a material adverse effect on our financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 29, 2007.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table lists the names, ages, and positions of all of the Company’s executive officers as of March 3, 2008.

Name	Age	Position	Position Held Since
Thomas J. Vacchiano Jr.	55	President, Chief Executive Officer	2006	(1)
Lynn J. Lyall	54	Executive Vice President, Chief Financial Officer	2008	(2)
Francis Lamy	49	Executive Vice President, Chief Technology Officer	2006	(3)

(1) Mr. Vacchiano joined X-Rite as its President in July 2006 as part of the Amazys acquisition, and was appointed CEO upon the retirement of Michael C. Ferrara from that position in October 2006. Prior to joining X-Rite, Mr. Vacchiano served as President and Chief Executive Officer of Amazys, a color technology company headquartered in Switzerland, which was acquired by X-Rite on July 2006. He held that position for five years.

(2) Mr. Lyall joined X-Rite on March 3, 2008 as Executive Vice President and Chief Financial Officer. Prior to joining X-Rite, Mr. Lyall served as Chief Financial Officer of Alticor, Inc., a $7 billion global consumer products business from 1999 to 2007. Prior to Alticor, he held the position of Chief Financial Officer at Blockbuster Entertainment Group from 1997 to 1999.

(3) Mr. Lamy joined X-Rite as part of the Amazys acquisition in July 2006. Prior to joining X-Rite, Mr. Lamy served as the Executive Vice President and Chief Technology Officer for GretagMacbeth AG, the primary subsidiary of Amazys. He held that position for more than five years.

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PART II

ITEM  5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER  MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is quoted in the NASDAQ—National Market System under the symbol “XRIT”. As of March 1, 2008, there were approximately 906 shareholders of record. Ranges of high and low sales prices reported by The NASDAQ National Market System for the past two fiscal years appear in the following table.

	High		Low		Dividends Per Share
Year Ended December 29, 2007:
Fourth Quarter	$	16.22	$	11.05	$	.000
Third Quarter		16.42		12.70		.000
Second Quarter		15.49		12.32		.000
First Quarter		13.36		10.90		.000
Year Ended December 30, 2006:
Fourth Quarter	$	12.55	$	10.26	$	.025
Third Quarter		11.59		7.50		.025
Second Quarter		13.53		10.50		.025
First Quarter		13.32		10.00		.025

On January 8, 2007, the Company announced the Board of Directors decision to suspend payment of its quarterly dividend of $.025 per share effective immediately. This decision was made to speed in the repayment of borrowings related to the Amazys acquisition and help fund future product development initiatives. Although the Board does not anticipate reinstating the dividend payment in the foreseeable future, it will continue to reevaluate the policy on an on-going basis.

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Shareholder Return Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Company’s common stock with that of the cumulative total return of the NASDAQ Stock Index (US & foreign) and NASDAQ Non-Financial Index for the five-year period ended December 29, 2007. The graph assumes an investment of $100 on December 31, 2002 in the company’s common stock, the NASDAQ Stock Index (US & foreign) and the NASDAQ Non-Financial Index, with dividends re-invested.

	2002		2003		2004		2005		2006		2007
X-Rite, Inc.	$	100	$	162	$	229	$	143	$	176	$	166
NASDAQ US & foreign	$	100	$	151	$	164	$	168	$	185	$	205
NASDAQ Non-Financial	$	100	$	153	$	165	$	169	$	185	$	210

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ITEM 6. SELECTED FINANCIAL DATA

Selected financial data for the five most recently completed fiscal years is summarized below. Such data should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto and information included elsewhere in this Annual Report on Form 10K.

	2007			2006			2005		2004		2003
	(in thousands, except per share data)
Net sales from continuing operations	$	248,710		$	167,641		$	119,626	$	116,159	$	106,468
Operating income (loss)		16,643			(25,660	)		14,230		14,572		8,332
Income (loss) from continuing operations		(20,822	)		(27,144	)		9,406		12,122		5,494
Earnings (loss) per share from continuing operations:
Basic(1)		(.72	)		(1.09	)		.44		.58		.27
Diluted(1)		(.72	)		(1.09	)		.44		.57		.27
Dividends per share		.00			.10			.10		.10		.10
Total assets	$	654,824		$	462,259		$	147,635	$	134,293	$	119,683
Long-term debt, less current portion		378,300			190,200			—		—		—

(1) In 2007, the Company issued 363,162 shares of common stock in connection with option exercises and purchases under the Employee Stock Purchase Plan. In addition, 343,041 shares were granted under the Company’s Restricted Stock Plan including 141,144 shares issued in connection with the Pantone acquisition. In 2006, the Company issued 96,450 shares of common stock in connection with option exercises and purchases under the Employee Stock Purchase Plan, 137,210 shares were granted under the Company’s Restricted Stock Plan and 7,221,458 shares were issued in connection with the Amazys acquisition. During 2005, 283,827 shares of common stock were issued in connection with employee stock option and purchase plans.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS:

This discussion and analysis of financial condition and results of operations, as well as other sections of the Company’s Form 10-K, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the industries it serves, the economy, and about the Company itself. Words such as “anticipates,” “believes,” “estimates,” “expects,” “likely,” “plans,” “projects,” “should,” variations of such words and similar expressions are intended to identify such forward looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence including those listed in Item 1A – Risk Factors. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Furthermore, X-Rite, Incorporated undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements include, but are not limited to, statements concerning liquidity, capital resources needs, tax rates, dividends, and potential new markets.

The following management’s discussion and analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of X-Rite, Incorporated (also referred to as “X-Rite,” or “the Company”). For purposes of this discussion, amounts from the accompanying consolidated financial statements and related notes have been rounded to millions of dollars, except where separately disclosed, for convenience of the reader. These rounded amounts are the basis for calculations of comparative changes and percentages used in this discussion. This discussion should be read in conjunction with the accompanying consolidated financial statements, which include additional information about the Company’s significant accounting policies, practices and transactions that underlie its financial results.

OVERVIEW OF THE COMPANY

X-Rite, Incorporated is a technology company that develops a full range of color management systems. The Company’s technologies assist manufacturers, retailers, and distributors in achieving precise color appearance throughout their global supply chain. X-Rite products also assist printing companies, graphic designers, and professional photographers in achieving precise color reproduction of images across a wide range of devices and from the first to the last print. The Company’s products also provide retailers color harmony solutions at point of purchase. The key markets served include Imaging and Media, Industrial, and Retail.

X-Rite generates revenue by selling products and services through a direct sales force as well as select distributors. The Company has sales and service facilities located in the United States, Europe, Asia, and Latin America.

Overview of 2007

Our results in 2007 were impacted significantly by the integration of the acquisition of our largest competitor, Amazys Holding AG. Additionally, we acquired the leading color communications and standards company, Pantone, Inc. These two acquisitions position X-Rite as a leader in the marketplace for color solutions. Significant events in 2007 include:

• In October 2007, we announced the acquisition of Pantone for approximately $175 million in cash. The strategic rationale for the acquisition includes the following:

• Creates the market leader in the color management industry

• Acquisition of an important color brand and customer and partner base

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• Economies of scale are expected to result in annual operational cost savings estimated at $6 million by the end of year two

• Extends our market opportunities in the design area and with new addressable markets

• Augments our existing talent pool in marketing and brand building skills

• We achieved a record annual revenue level of $248.7 million, a 48 percent increase over 2006 levels, as a result of our acquisitions of Amazys and Pantone.

• We completed the sale of our Labsphere business at a favorable price in February 2007.

• We launched seven new products including the innovative Vericolor Spectro non-contact soliution, Hubble home entertainment system, Personal Color Trainer, InpressControl CD74, and Personal Designer

During 2007 we continued to execute our comprehensive plan to integrate the Amazys acquisition which resulted in approximately $15 million of incremental achieved synergies. Since the transaction closed on July 5, 2006 we have achieved $21.1 million of cost synergies including the following:

• Closure of 15 facilities worldwide including the Amazys US headquarters and manufacturing operations

• Implementation of product line integration plans

• Consolidation of key financial and back office operations including the conversion of substantially all IT systems to a common platform

• Reduction of headcount by approximately 20 percent

As we look forward, our 2008 focus is on several key priorities—completing the final elements of the integration of Amazys, achieving our planned integration cost synergies for Pantone, growing and expanding our revenues and investing in product and technology innovation. Further, we believe the demand for innovative, cost effective color technology and solutions will continue to grow as our solutions become easier to use and our customers view color as an integral differentiator in their products and services. We are focused on developing the innovative products and solutions that our customers demand and executing our business strategies.

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RESULTS OF OPERATIONS

The following table summarizes the results of the Company’s operations for the 2007, 2006 and 2005 fiscal years and includes amounts expressed as a percentage of net sales (in millions):

	2007					2006					2005
Net Sales	$	248.7		100.0	%	$	167.6		100.0	%	$	119.6		100.0	%
Cost of sales:
Products sold		99.7		40.1			65.5		39.1			39.3		32.9
Restructuring charges		0.2		0.1			6.1		3.6			—		—
Inventory valuation adjustment		2.6		1.0			4.9		2.9			—		—
Gross profit		146.2		58.8			91.1		54.4			80.3		67.1
Operating expenses		129.6		52.1			116.8		69.7			66.1		55.2
Operating income (loss)		16.6		6.7			(25.7	)	(15.3	)		14.2		11.9
Interest expense		(22.1	)	(8.8	)		(8.8	)	(5.3	)		—		—
Gain on derivative financial instruments		—		—			2.1		1.3			—		—
Write-off of deferred financing costs		(5.5	)	(2.2	)		—		—			—		—
Gain (loss) sale of investments		0.8		0.3			—		—			(0.6	)	(0.5	)
Other income (expense)		(1.0	)	(0.5	)		0.3		0.1			(0.7	)	(0.6	)
Income (loss) before income taxes		(11.2	)	(4.5	)		(32.1	)	(19.2	)		12.9		10.8
Income taxes (benefit)		9.6		3.9			(5.0	)	(3.0	)		3.5		2.9
Income (loss) from continuing operations		(20.8	)	(8.4	)		(27.1	)	(16.2	)		9.4		7.9
Discontinued operations:
Income from operations		—		—			1.7		1.0			1.7		1.4
Net gain on sale		8.2		3.3			—		—			—		—
Net income (loss)	$	(12.6	)	(5.1	)%	$	(25.4	)	(15.2	)%	$	11.1		9.3	%

On October 24, 2007, the Company acquired Pantone, Inc., a worldwide market leader in color communication and specification standards in the creative design industries. Anticipated strategic, operational and financial benefits of the acquisition include a deepening of X-Rite’s range of offerings by adding color standards to its leadership position in hardware, software, and services solutions.

On July 5, 2006, the Company acquired Amazys Holding, AG, a primary competitor in key markets. The Company has a comprehensive plan to integrate the operations of the two Companies which includes:

• Consolidation of product lines

• Consolidation of global sales and marketing functions

• Elimination of duplication in engineering and general and administrative functions

As a result of executing this comprehensive integration plan, various Amazys operations have been integrated into the operations of X-Rite as of December 29, 2007 and included in the sales attributable to X-Rite for the 2007 periods presented. As Amazys’ financial information is not included in the consolidated results for the first six months of 2006 or for the 2005 fiscal year (i.e., prior to the date of acquisition), comparability on a period to period basis is limited.

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A key component of the integration plan for the Amazys acquisition involves consolidating the two companies’ product lines. This process includes elimination of certain overlapping products from each Company over the next one to two years. As such, the relative sales of products from each company may shift.

	2007				2006				2005
	(in millions)
Net Sales
Imaging and Media	$	124.2	50.0	%	$	78.9	47.1	%	$	47.8	40.0	%
Industrial		48.0	19.3			36.0	21.5			27.0	22.6
Color Support Services		28.3	11.4			21.8	13.0			12.8	10.7
Retail		22.2	8.9			20.7	12.3			24.6	20.5
Other		17.0	6.8			10.2	6.1			7.4	6.2
Total Color Measurement Segment		239.7	96.4			167.6	100.0			119.6	100.0
Color Standards Segment		9.0	3.6			—	—			—	—
Total Net Sales	$	248.7	100.0	%	$	167.6	100.0	%	$	119.6	100.0	%

As a result of the Pantone acquisition, the Company has two reportable segments, Color Measurement and Color Standards. The Color Measurement segment is engaged in X-Rite’s traditional hardware and software technology business that develops a full range of color management systems. The Company’s technologies assist manufacturers, retailers, and distributors in achieving precise color appearance throughout their global supply chain. The Color Standards segment includes the operations of the Pantone, Inc. business unit. Pantone, Inc. is a leading developer and marketer of products for the accurate communication and reproduction of color, servicing worldwide customers in a variety of industries including imaging and media, textiles, digital technology, plastics, and paint.

Net sales for 2007 increased $81.1 million, or 48.4 percent, over 2006. The Amazys acquisition and changes in product mix and selling price in the Color Measurement segment, as discussed below, increased revenue by $72.1 million. The addition of the Color Standards segment, as of October 24, 2007, contributed $9.0 million in revenue to the Company’s increased sales. The impact of translating foreign denominated revenue to U.S. dollars improved revenue by $6.7 million in 2007. Both domestic and international revenue increased, with international revenue accounting for 65.7 percent of net sales in 2007 compared to 60.7 percent in 2006.

Color Measurement Segment

The Imaging and Media product lines provide solutions for commercial and package printing applications, digital printing and photo processing, photographic, graphic design and pre-press service bureaus in the imaging industries. The Imaging and Media business unit reported an increase in revenue of $45.3 million, or 57.4 percent, as compared to 2006. The increase in the Imaging and Media business unit was assisted by incremental European sales of $28.9 million, or 91.6 percent, compared to 2006. The growth in the Imaging and Media business unit was primarily through the acquisition of Amazys in mid 2006. As a result of the acquisition, the Company had year over year incremental sales to its largest customer of $17.1 million compared to 2006. In 2007, the company introduced several new products which contributed to increased sales and had full year sales for products that were launched in the second half of 2006.

In 2006, the Imaging and Media products group recorded an increase in net sales of $31.1 million, or 65.1 percent, compared with 2005. The increase consisted of $33.3 million of Amazys product sales since the acquisition, a $0.7 million increase in X-Rite Media sales, and a decrease in X-Rite Imaging sales of $2.9 million. On a combined basis the Company noted strengths in its major accounts and OEM channels which were fueled by strong demand for online, embedded, and bundled product solutions. These gains were offset by weakness in our other sales channels. The increase in Media sales for the traditional X-Rite product lines compared with 2005 was primarily the result of the successful launch of the Intellitrax product in late 2005. The decrease in sales of X-Rite Imaging products was primarily attributable to market uncertainty surrounding the Company’s product rationalization activities.

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The Industrial group provides color measurement solutions for the automotive quality control, process control and global supply chain markets. The Company’s products are an integral part of the manufacturing process for automotive interiors and exteriors, as well as textiles, plastics, and dyes. The Industrial business unit’s net sales increased by $12.0 million, or 33.3 percent compared to the prior year. European sales accounted for 43.0 percent, or $5.2 million, of the total sales increase for the industrial business unit. The year over year increase was primarily due to the Amazys acquisition and increased software sales in the industrial business unit.

Industrial sales in 2006, increased $9.0 million, or 33.3 percent, compared with 2005. Sales of Amazys products post acquisition contributed $13.3 million to 2006 net sales. Sales of the traditional X-Rite product lines increased $0.7 million or 2.2 percent in 2006, compared with 2005, primarily due to strong sales in the portables lines used in the plastics industry. Overall, sales for both Companies were negatively impacted by softening in the auto refinishing market, a slow down in supply chain business in the Americas and Asia due to project timing and competitive actions, as well as uncertainties in the market place over the product rationalization process that was on-going in the latter half of 2006.

The Color Support Services business provides professional color training and support worldwide through seminar training, classroom workshops, on-site consulting, technical support and interactive media development. The Color Support Service division group also manages the Company’s service repair departments. The products repaired by the service department include the Company’s products currently covered by our warranty program as well as those products which have expired warranties. The Color Support Services business unit was formed in 2007 as a result of the Amazys acquisition. The Color Support Services group recorded an increase in sales of $6.5 million or 29.8 percent compared to 2006. The increase in the Color Support Services business unit was primarily due to the Amazys acquisition. Increased sales of $5.9 million in Europe accounted for 91.0 percent of the Color Support Services increase from 2006.

The Retail business unit experienced a sales increase of $1.5 million, or 7.2 percent, for 2007 compared with 2006. This increase in sales was a result of an increase in European sales $2.1 million offset partially by decrease sales in North America of $0.8 million. The increase in Europe sales was a result of an expanded presence with key customers and the continued development of strong regional dealer partners. These factors, combined with a stronger resource commitment to the region, have enabled the growth.

For 2006, the Retail sales group had net sales of $20.7 million, a decrease of $3.9 million, or 15.9 percent, compared with 2005. The decline was attributable to softness in the North America market, which declined $5.7 million over 2005. This decline was partially off-set by growth in European sales, which increased $1.8 million over 2005. North American sales in 2006 were also negatively impacted by a lack of growth in the market size and the delayed launch of the Matchstik 1.1 handheld instrument. Several large rollout orders totaling $4.0 million in late 2005 also negatively impacted the 2006 to 2005 comparison.

The Company’s product lines denoted as Other consist of three primary categories, Medical, Dental and Light. The Medical product line provides instrumentation designed for use in controlling variables in the processing of x-ray film. The Dental product line provides matching technology to the cosmetic dental industry thorough X-Rite’s ShadeVision systems. The Light product line specializes in color viewing systems designed to increase productivity and reduce costs, while providing accurate simulation of natural daylight. Other product sales represented $17.0, $10.2, and $7.4 million for the 2007, 2006, and 2005 years, respectively. Other product sales have ranged from 6.8 percent of sales to 6.1 percent of sales in the three years.

Color Standards Segment

The Color Standards segment includes the operations of the Pantone, Inc. business unit. Pantone, Inc. is a leading developer and marketer of products for the accurate communication and reproduction of color, servicing worldwide customers in a variety of industries including imaging and media, textiles, digital technology, plastics, and paint. For 2007, the results presented in the color standards segment reflect the operations of Pantone since the October 24, 2007 acquisition date. For 2007, the color standards segment recorded $9.0 million in net sales.

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Cost of Sales and Gross Profit

X-Rite’s cost of sales consists primarily of materials, labor, and manufacturing overhead associated with manufacturing its products. Primary manufacturing activities are conducted at facilities in Michigan and Switzerland, with smaller operations located in Italy and Germany. Software development is also conducted at these facilities, as well as at additional facilities in Massachusetts and Germany. The Company’s gross profit historically has fluctuated within a narrow range. Principal drivers of gross profit include production volumes, product mix, labor, facilities and materials costs.

Gross profit for 2007 was $146.2 million, or 58.8 percent of sales, compared with $91.1 million, or 54.4 percent of sales, in 2006. Included in cost of sales in 2007 was $0.2 million in restructuring expenses representing charges for the write-down of inventory and capitalized software directly related to X-Rite product lines that were discontinued as a result of the Amazys acquisition. In addition, the Company recorded $2.6 million, or 1.0 percent of margin, in purchase accounting inventory adjustments as a result of the Pantone acquisition purchase price allocation. This allocation process required the Company to value the Pantone acquired inventory at estimated fair value less a normal profit margin as of the date of the acquisition and subsequently recognize this amount in operations as the related inventory was sold. The fair value valuation resulted in an increase to inventory of $15.4 million. The Company’s gross margin related to continuing operations was $149.0 million, or 59.9 percent of sales compared to $102.1 million, or 60.9 percent, in 2006. The decrease in margin was primarily due to the full year of Amazys production, whose gross margins have historically run 4 to 8 percent lower than X-Rite’s. Other factors contributing to the 2007 gross margin include manufacturing and material variances, and efficiencies generated from the movement of production from subsidiaries to the Michigan location.

Gross profit for 2006, was $91.1 million, or 54.4 percent of sales, compared with $80.3 million, or 67.1 percent of sales, in 2005. Included in cost of sales in 2006, was $6.1 million in restructuring expenses representing charges for the write-down of inventory, tooling, capitalized software and other intangible assets directly related to X-Rite product lines that were discontinued as a result of the Amazys acquisition. In addition, the Company recorded $4.9 million in purchase accounting inventory adjustments as a result of the Amazys acquisition purchase price allocation. The Company’s gross margin would have been $102.1 million, or 60.9 percent, for 2006. The year over year decline in margins from 2005 was primarily attributable to the inclusion of Amazys for the second half of 2006. Other factors contributing to the decline in margins compared with 2005 include unfavorable manufacturing variances and increases in inventory scrap and obsolescence reserves including reserves for non-Rohs-Wees compliant components that are no longer used in production.

Operating Expenses

The following table compares operating expense components as a percentage of net sales (in millions):

	2007				2006				2005
Selling and marketing	$	60.6	24.4	%	$	43.4	25.9	%	$	34.9		29.2	%
Research, development and engineering		34.7	14.0			25.3	15.1			15.0		12.5
General and administrative		28.2	11.3			23.7	14.1			17.4		14.5
Acquired in-process research and development		—	—			11.1	6.6			—		—
Restructuring		2.8	1.1			10.0	6.0			—		—
Integration		3.3	1.3			3.3	2.0			—		—
Founders insurance gain		—	—			—	—			(1.2	)	(1.0	)
Total	$	129.6	52.1	%	$	116.8	69.7	%	$	66.1		55.2	%

The effect of foreign exchange rates on operating expenses accounted for $3.8 million of additional operating expenses in 2007, $0.2 million in 2006, and was nominal in 2005.

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Selling and Marketing Expenses

Selling and marketing expenses consist primarily of wages, commissions, facility costs, travel, advertising, trade shows, media and product promotion costs. Selling and marketing expenses for 2007 were $60.6 million, an increase of $17.2 million, or 39.6 percent, compared with 2006. The increase was primarily a result of the full year selling expenses related to the Amazys acquisition. Included in the 2007 selling and marketing expenses are the costs associated with Pantone’s selling and marketing group of $1.9 million since the acquisition date. In addition selling and marketing expenses also include $1.8 million of acquisition related amortization expenses. As a percentage of sales, 2007 expenses were 24.4 percent compared to 25.9 and 29.2 percent for 2006 and 2005, respectively.

Selling and marketing expenses for 2006 were $43.4 million, an increase of $8.5 million, or 24.4 percent compared with 2005. The increase was primarily a result of the costs associated with the Amazys selling and marketing group which has incurred $8.9 million in 2006 since the acquisition date. In addition selling and marketing expenses also include $1.3 million of acquisition related amortization expenses. Excluding the increases due to Amazys related costs the X-Rite selling and marketing spending decreased $1.6 million compared to the prior year, or 4.4 percent.

Research, Development and Engineering Expenses

Research, development and engineering (RD&E) expenses include compensation, facility costs, consulting fees, and travel for the Company’s engineering staff. These costs are incurred primarily in the United States and Switzerland for both new product development and the support and refinement of existing product lines. RD&E expenses in 2007 increased $9.4 million, or 37.2 percent. Of this increase $3.5 million was attributable to acquisition related intangible amortization incurred from the July 2006 acquisition of Amazys and the October 2007 acquisition of Pantone. Also contributing to the increase over 2006 was the full year costs of the Amazys acquisition RD&E expenses. RD&E expenses as a percentage of sales were 14.0, 15.1 and 12.5 percent for 2007, 2006 and 2005, respectively. The Company intends to make investments in RD&E in the range of 12 to 14 percent of net sales for the foreseeable future.

RD&E expenses in 2006 increased $10.3 million, or 68.7 percent. Of this increase, $5.7 million was attributable to Amazys RD&E costs and $3.4 million was attributable to acquisition related intangible amortization, both incurred after the acquisition in July 2006. Excluding the Amazys related expenses, RD&E expenses for X-Rite increased $1.1 million, or 6.7 percent, over 2005 levels. Also contributing to the increase over 2005, an increase in non-capitalized software costs, increased costs of Rohs-Wees compliance, and expensing of share-based compensation as required by the adoption of SFAS 123 (R) in 2006. These costs were not expensed prior to this adoption (see Note 9 to the Consolidated Financial Statements for further discussion of share-based compensation).

In addition to the RD&E costs reported as operating expenses, certain costs to develop new software products were capitalized in each of the last three years. Software development costs capitalized totaled $3.7, $3.0, and $3.8 million in 2007, 2006, and 2005, respectively. The related amortization expense was included in cost of sales (see Note 1 to the Consolidated Financial Statements).

General and Administrative Expenses

General and administrative (G&A) expenses include compensation, facility costs, and travel for the Company’s executive, finance, human resources and administrative functions, as well as legal and consulting costs. G&A expenses in 2007 increased $4.5 million, or 19.0 percent, over 2006. This increase is primarily attributable to a full year of expenses related to the Amazys G&A expenses. In addition, 2007 G&A expenses included $1.7 million of incremental expense related to amortization of intangible assets recorded as part of the Pantone and Amazys purchase price allocations. G&A expenses also included the results of Pantone of $0.9 million for the two months ended December 29, 2007.

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G&A expenses in 2006 increased $6.3 million, or 36.2 percent, over 2005. This increase includes $4.2 million attributable to Amazys G&A expenses incurred since the acquisition. In addition, 2006 G&A expenses also included $0.6 million of expense related to amortization of intangible assets recorded as part of the Amazys purchase price allocation and an incremental charge of $1.3 million for share-based compensation which was not required to be expensed in 2005.

Acquired In-Process Research and Development

In 2006, the Company allocated $11.1 million to acquired in-process research and development (IPR&D) as part of the intangibles valuation process in connection with the Amazys acquisition. This value was calculated utilizing the income approach by determining cash flow projections related to IPR&D projects at the date of the acquisition. The full value of the acquired IPR&D intangible assets was written off at the date of acquisition in accordance with U.S. generally accepted accounting principles as technological feasibility had not been established and no future alternative uses existed. This write-off was included in a separate line on the Company’s Consolidated Statement of Operations. See Note 3 to the Consolidated Financial Statements for further discussion of the Amazys acquisition.

Restructuring

During 2006 and 2007, the Company executed restructuring actions relating to the integration of Amazys. The Company’s plan to integrate the two businesses includes closure of duplicate facilities, elimination of redundant jobs, and consolidation of product lines. The restructuring plan includes estimated workforce reductions of approximately 81 employees, all of which have been completed as of December 29, 2007, facility closures of approximately 14,348 square feet, various asset write-downs, and other restructuring charges related to consulting and legal fees. Total restructuring charges related to this plan in 2007 and 2006 are $19.2 million, comprised of $6.4 million in cost of sales related charges ($6.2 in 2006 and $0.2 million in 2007) and $12.8 million of operating expenses ($10.0 million in 2006 and $2.8 million in 2007). To date the Company has incurred all of these costs as of December 29, 2007, consisting of $10.9 million related to severance, $7.4 million related to asset write-downs, $0.7 million related to consulting and legal fees, and $0.2 million in facility closure costs. Asset write-downs include inventory, tooling, capitalized software, and other intangible asset write-downs directly related to discontinued product lines.

Costs associated with Amazys workforce reductions, facility closures, and other related items were included in the related purchase accounting. See Note 4 to the Consolidated Financial Statements for further discussion of purchase accounting.

As of December 29, 2007, the Company continues to evaluate restructuring activities, if any, associated with the Pantone acquisition.

Integration

Costs incurred related to the integration of the Company’s acquisitions that do not qualify as restructuring under the provisions of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, have been included in a separate line on the Company’s Consolidated Statements of Operations titled “Integration”. These costs include costs related to personnel working fulltime on integration work, integration related travel, and outside consultants’ work on strategic planning and culture and synergy assessments. All costs included in this caption were solely related to the Company’s integration efforts and do not include normal business operating costs. Integration costs associated with the Amazys acquisition were $3.3 million and $3.3 million for the fiscal years ended 2007 and 2006, respectively. Integration costs associated with the Pantone acquisition were $0.1 million for the fiscal year ended 2007.

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Founders Insurance

Included in 2005 operating expenses was a $1.2 million gain related to the sale of life insurance policies originally purchased to fund the Founders’ Share Redemption Program. Consistent with the treatment of expenses related to these life insurance policies, the gain has been included as a component of operating income. See Note 12 to the Consolidated Financial Statements and Founders’ Shares Redemption Program below for further discussion of the Founders’ Share Redemption Agreements and related life insurance policies.

Other Income (Expense)

Interest Expense

Interest expense was $22.1 million in 2007. In 2006, the Company had interest expense of $8.8 million. Interest expense in 2007 was related to the Company’s new debt facility obtained in connection with the October 2007 acquisition of Pantone and a full years interest expense related to the 2006 acquisition of Amazys. Interest expense in 2006 was primarily related to the debt incurred and amortization of associated financing costs in order to finance the acquisition of Amazys that occurred during July of 2006. The Company did not incur interest expense in 2005 since it did not have any amounts outstanding under its credit facility. See Note 7 to the Consolidated Financial Statements for further discussion of the Company’s short and long-term indebtedness.

Write-off of Deferred Financing Costs

In connection with the Pantone acquisition, the Company entered into new secured senior credit facilities which provide for aggregate principal borrowings of up to $415 million in 2007 and replace the Company’s previous credit facilities entered into as a result of the Amazys acquisition. As the Company’s prior credit facilities were extinguished, the Company wrote off the remaining value of the deferred financing costs associated with the original credit facility. The net write-off related to the Company’s prior credit facility was $5.5 million in 2007.

Gain on Derivative Financial Instruments

In 2006, the Company utilized foreign currency forward exchange contracts to manage the variability associated with the cash requirements associated with the acquisition of Amazys. These contracts had a notional value of CHF 260.1 million ($210.3 million) and were not designated as hedges as they did not meet the criteria specified by SFAS 133. The contracts expired on July 5, 2006, the date of the acquisition, in a net gain position of $2.1 million, which was recorded as a component of other income.

Gain on sale of investment

In prior years, the Company had made $12.2 million of investments through its strategic venture capital group, XR Ventures, LLC (XRV). Each investment represents less than twenty percent of the respective portfolio companies. The investments have been recorded at cost since the Company does not exercise significant influence over the operating and financial policies of each portfolio company.

All venture capital investments are fully impaired. Although XRV continues to hold positions in several portfolio companies, no future investments will be made except where necessary to protect an existing position.

During the second quarter of 2007, an investment held by the Company’s former venture capital firm, XR Ventures (“XRV”), which had previously been written off, was sold. Proceeds from the transaction for the XRV interest in this investment were received in the form of restricted stock of a publicly traded company which was valued at $0.8 million at the date of sale. The restriction on the stock will lift in the second quarter of 2008. The Company could also receive additional shares in this transaction upon finalization of certain acquisition contingencies. The value of these additional shares, if any, is not expected to be significant.

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In the first two quarters of 2005, XRV provided working capital advances totaling $0.3 million to two companies in which it had previously invested. This new funding was made in coordination with the investees previous third-party investors and was made to protect the Company’s ownership position in the investees. Due to uncertainty over the timing and proceeds from the expected sale of the investees, these investments were deemed impaired, and the appropriate charge was taken. The Company did not make any investments during 2006.

Other, net

Other income consists of foreign currency, investment income and investment impairments. The Company’s investment portfolio was liquidated in June 2006 to provide funding for the Amazys acquisition. Historically, investment income was derived primarily from tax-free variable rate demand notes and corporate securities.

Income Taxes

In 2007, the Company recorded a tax expense of $9.6 million against a pre-tax loss from continuing operations of $11.3 million. The Company’s effective tax rate was negatively impacted by the recording of valuation allowances of $13.4 million against many of its current deferred income tax assets, research and experimentation credit carry-forwards and net operating loss carry-forwards for which it is currently not more likely than not that a future benefit will be realized under the current accounting standards. The net operating loss carry-forwards are on operations in the United States which expire in twenty years and also on operations outside of the United States which do not have expiration dates. Valuation allowances on deferred income tax assets related to the Amazys and Pantone acquisitions were recorded as an offset to Goodwill.

Effective December 31, 2006, (fiscal year 2007), the Company adopted the provisions of FIN 48. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 and prescribes a threshold of more likely than not to be sustained upon examination. The adjustment to retained earnings upon adoption of FIN 48 on December 31, 2007 was $0.2 million.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits from December 31, 2006 to December 29, 2007 (in thousands):

Balance as of December 31, 2006	$	4,331
Increases related to prior year tax positions		636
Decreases related to prior year tax positions		(532	)
Increases related to current year tax positions		88
Decreases related to settlements with taxing authorities		(49	)
Decreases related to the lapsing of the statute of limitations		(456	)
Balance as of December 29, 2007	$	4,018

The Company’s FIN 48 liabilities are recorded as a component of accrued income taxes in the accompanying consolidated financial statements.

The Company is currently in negotiations or has settled several tax matters in 2008 with a value of $4.1 million, but does not anticipate other significant changes to its FIN 48 liabilities during the next twelve months.

Unrecognized tax benefits including interest and penalties, that, if recognized would favorably affect the Company’s effective tax rate in the future were $5.8 and $5.1 million as of December 29, 2007 and December 30, 2006, respectively.

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It is the Company’s policy to include interest and penalties related to gross unrecognized tax benefits in its provision for income taxes, as of December 29, 2007, the Company had accrued $1.8 million for payment of interest and penalties.

The Company and its subsidiaries are periodically examined by various taxing authorities. The Company files federal state and local tax returns in the United States as well as several foreign countries. Its primary income tax jurisdictions are the United States and Switzerland. The Internal Revenue Service has examined the Company’s federal tax returns through 2001. The tax years 2002 -2007 remain subject to examination by the Internal Revenue Service for federal income tax purposes, and the years 2004-2007 remain subject to examination by the appropriate governmental agencies for Swiss tax purposes.

In 2006, the Company recorded an income tax benefit of $5.0 million against a pre-tax loss of $32.2 million, for an effective tax rate of 15.7 percent. The 2006 effective tax rate was favorably impacted by benefits associated with the X-Rite international operations and research and development credits that were offset by nondeductible in-process research and development costs and a change in the valuation allowance associated with the recognition of deferred income tax assets. Amazys operations since the acquisition date incurred $2.6 million of domestic and foreign income taxes in 2006.

The Company is currently in the process of evaluating potential tax structures related to the Amazys and Pantone acquisitions that may allow for some or all of the purchase accounting adjustments to receive more favorable tax treatment.

In 2005, the Company recorded income tax expense of $3.5 million against pre-tax income of $12.9 million, which equated to an effective tax rate of 27.3 percent. The 2005 provision calculation was impacted favorably by certain international tax benefits, research and development credits, and tax benefits associated with the sale of the Founders’ life insurance policies.

Net Income

As a result of the revenue, gross margin, and expense changes discussed above, the Company recorded income (loss) from continuing operations of $(20.8), $(27.1), and $9.4 million for 2007, 2006, and 2005, respectively. On a per share basis, fully diluted earnings (loss) per share were $(0.72), $(1.09) and $0.44 for 2007, 2006 and 2005, respectively.

On February 7, 2007, the Company completed the sale of its Labsphere subsidiary to Halma Holdings plc (“Halma”). Labsphere, which is based in North Sutton, New Hampshire, provides integrated spheres and systems as well as reflectance materials to the light measurement markets. This divestiture was part of the Company’s ongoing strategy to focus resources on its core color-related businesses. Under the terms of the agreement, Halma acquired all of the outstanding Labsphere stock for $14.3 million in cash. Proceeds from the sale were used to reduce the principal balance of the Company’s first lien credit facility.

The Company recorded a net gain on the sale of $8.2 million for the year ended December 29, 2007, which is presented as a gain on sale of discontinued operations in the accompanying Condensed Consolidated Statement of Operations. The results of operations for the Labsphere subsidiary through the date of sale were reported within discontinued operations in the accompanying Condensed Consolidated Statements of Operations. In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company has also reclassified the prior year statement of operations to present the results of Labsphere within discontinued operations. Interest expense was not allocated to Labsphere, therefore, all of the Company’s interest expense is included within continuing operations.

As a result of the sale of Labsphere the Company recorded net income from discontinued operations of $8.2, $1.7, and $1.7 million for 2007, 2006, and 2005, respectively. On a per share basis, fully diluted earnings per share from discontinued operations were $0.28, $0.06 and $0.08 for 2007, 2006 and 2005, respectively.

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The Company recorded net income (loss) of $(12.6), $(25.4) and $11.1 million for 2007, 2006 and 2005, respectively. On a per share basis, fully diluted earnings (loss) per share were $(0.44), $(1.03) and $0.52 for 2007, 2006 and 2005, respectively.

The average number of common shares outstanding for purposes of calculating basic shares outstanding was higher in 2007 and 2006 than in 2005, due to the issuance of 7.2 million shares in the third quarter of 2006 as part of the consideration paid to acquire Amazys. In addition, the average number of common shares outstanding was slightly higher each year in 2007, 2006, and 2005 due to shares being issued in connection with the Company’s employee stock purchase program, stock option plan and share grant activity, and shares issued in connection with prior acquisitions.

FINANCIAL CONDITION AND LIQUIDITY

Liquidity and Capital Resources

As highlighted in the Consolidated Statements of Cash Flows, the Company’s liquidity and available capital resources are impacted by four key components: (i) cash and cash equivalents, and short-term investments, (ii) operating activities, (iii) investing activities and (iv) financing activities. These components are summarized below (in millions):

	2007			2006			2005
Net cash flow provided by (used for):
Operating activities	$	8.8		$	20.5		$	8.9
Investing activities		(168.6	)		(210.2	)		(12.2	)
Financing activities		166.4			195.8			(0.4	)
Effect of exchange rate changes on cash and cash equivalents		0.8			0.3			0.5
Net increase (decrease) in cash and cash equivalents		7.4			6.4			(3.2	)
Cash and cash equivalents, beginning of period		12.9			6.5			9.7
Cash and cash equivalents, end of period	$	20.3		$	12.9		$	6.5

Cash, Cash Equivalents and Short-Term Investments

At December 29, 2007, the Company had cash and cash equivalents of $20.3 million and no short-term investments. At December 30, 2006, the Company had cash and cash equivalents of $12.9 million and no short-term investments. As of December 29, 2007, approximately $12.4 million of cash and cash equivalents were held by subsidiaries outside of the United States.

Operating Activities

Net cash provided by operating activities was $8.8, $20.5 and $8.9 million for 2007, 2006 and 2005, respectively. In 2007, cash used for operating activities consisted of a net loss of $12.6 million and net cash used for operating assets and liabilities of $12.7 million offset by non-cash items of $34.0 million. Significant uses of cash in 2007 included decreases in other current and non-current liabilities of $15.1 million and increases in inventories of inventories of $7.8 million, respectively, partially offset by increases in accounts receivable.

In 2006, cash provided by operating activities consisted of a net loss of $25.5 million, offset by non-cash items of $36.5 million and net cash provided by operating assets and liabilities of $9.5 million. Significant sources of cash in 2006 included decreases in accounts receivable of $10.0 million and decreases in other current and non current assets of $9.4 million, partially offset by decreases in other current and non current liabilities, income taxes, and accounts payable.

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In 2005, net cash from operating activities consisted of net income of $11.1 million plus non-cash items of $8.1 million and reduced by net cash used for operating assets and liabilities of $10.3 million. The adjustment for non-cash items included $6.2 million in depreciation and amortization charges and $1.4 million in deferred tax benefits, partially offset by a $1.2 million gain on sale of life insurance policies related to the Founders’ Share Redemption Program, as discussed more fully in Note 12 to the Consolidated Financial Statements and below in Founders’ Share Redemption program. The use of operating funds was primarily driven by increased sales volume in the fourth quarter of 2005, compared with 2004. Increases were recorded in accounts receivable, inventories, prepaid expenses and other current assets of $6.9, $3.4, and $2.2 million, respectively. These cash uses were partially offset by cash provided by increases in accounts payable and income taxes payable of $1.3 and $1.0 million, respectively.

Investing Activities

The most significant components of the Company’s investment activities are (i) strategic acquisitions, (ii) capital expenditures, (iii) proceeds from sales of subsidiaries, and (iv) proceeds from sales of property and equipment. Net cash used for investing activities during 2007, 2006 and 2005 was $168.6, $210.2 and $12.2 million, respectively.

The significant increase in cash used for investing activities in 2007 was primarily attributable to the acquisition of Pantone, which required $176.1 million, net of cash received (see Acquisition of Pantone below), and capital expenditures of $7.6 million. Sources of cash to meet these needs came from the sale of the company’s Labsphere subsidiary and short and long term borrowings (see Financing Activities below).

The significant increase in cash used for investing activities in 2006 was primarily attributable to the acquisition of Amazys, which required $195.2 million, net of cash received (see Acquisition of Amazys Holding AG below), and capital expenditures of $28.9 million, which include the purchase and renovation of the Company’s new corporate headquarters and manufacturing facility. Sources of cash to meet these needs came from short and long term borrowings, operating cash flows, liquidation of the short-term investment portfolio, and cash acquired as part of the Amazys transaction.

Significant cash used for investing activities in 2005, included net purchases of short term investments of $8.6 million, capital expenditures of $4.7 million, increases in other assets of $3.9 million and the final of two payments for the purchase of Monaco Systems, Inc. of $0.8 million. Offsetting cash used in investing activities were proceeds of $6.5 million from the sale of three life insurance policies originally purchased to fund the Founders’ Shares Redemption Program, described more fully in Note 12 to the Consolidated Financial Statements and below in Founders’ Shares Redemption Program. Additional funding for investing activities was generated by operating cash flows and periodic sales of short-term investments.

Under provisions of the life insurance policies originally purchased to fund the Founders’ Shares Redemption Program, the Company is allowed to determine the timing and amount of premium payments. The Company did not make any premium payments for the 2007, 2006 or 2005 policy years. The Company does not expect this to materially impact the cash surrender values in the short-term, or payment of benefits under the policies. The Company continues to review its options with regards to the future of the remaining policies.

Capital expenditures were $7.6 million in 2007, compared with $28.9 million in 2006 and $4.7 million in 2005. The large amount of capital expenditures in 2006 was due to $24.3 million related to the purchase and renovation of the Company’s new corporate headquarters and manufacturing facility in Grand Rapids, Michigan.

Financing Activities

In the first quarter of 2006, the Company incurred short-term borrowings of $13.5 million under its former revolving line of credit in connection with the acquisition of its new corporate headquarters and manufacturing

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facility in Grand Rapids, Michigan. This loan was converted to a mortgage loan in June 2006, secured by the Company’s former headquarters and manufacturing facility in Grandville, Michigan. The mortgage was renewed and extended in October of 2007, during which time the Company made a principal payment of $4.8 million.

Prior to July 1, 2006, the Company maintained a revolving line of credit agreement with a bank, which provided for maximum borrowings of $25 million with variable interest at LIBOR plus 75 to 100 basis points as defined in the agreement. Borrowings under this facility were unsecured and no compensating balances were required under the agreement. This agreement was terminated and replaced by a new revolving line of credit in conjunction with the Amazys acquisition.

In connection with the July 5, 2006 Amazys acquisition, the Company entered into secured senior credit facilities which provided for aggregate principal borrowings of up to $220 million and replaced the Company’s previous line-of-credit. The credit facilities consisted of a $160 million first lien loan, which was comprised of a $60 million seven-year term loan and a $40 million five-year revolving line of credit, and a $60 million six-year term second lien loan. Obligations under these credit facilities were secured by essentially all of the tangible and intangible assets of the Company. Both facilities provided variable interest rate options from which the Company selected for interest calculations. Subsequent to the end of the third quarter in 2007, the Company elected to change the indices to the Prime Rate plus 125 and 400 basis points for the first and second lien facilities, respectively, in anticipation of re-financing activity associated with the acquisition of Pantone, Inc., which was completed on October 24, 2007. See Note 3 for further discussion of the Pantone acquisition.

In connection with the October 24, 2007 Pantone acquisition, the Company entered into new secured senior credit facilities which provide for aggregate principal borrowings of up to $415 million and replace the Company’s previous credit facilities established with the Amazys acquisition. The new credit facilities consist of a $310 million first lien loan, which is comprised of a $270 million five-year term loan and a $40 million five-year revolving line of credit, and a $105 million six-year term second lien loan. Obligations under these credit facilities are secured by essentially all of the tangible and intangible assets of the Company. Both facilities provide variable indices from which the Company may select for interest calculations. As of December 29, 2007, the Company has selected the three month LIBOR plus 350 and 750 basis points for most of the first and second lien facilities, respectively, as its primary interest rate index. Interest payments on LIBOR based loans are payable on the last day of each interest period, not to exceed three months. A small portion of the credit facilities are tied to the prime rate and require interest payments on a scheduled quarterly basis.

As of December 29, 2007, the Company had $6.0 million drawn against the revolving line of credit. Further draws on the $40 million revolving line of credit will be restricted to a total outstanding balance of $31.3 million until such time that the mortgage loan on the Company’s Grandville, Michigan facility is repaid in full. The unused portion of the revolving credit facility is subject to a fee of 0.5% per annum.

The Company recorded deferred financing costs in connection with the secured senior credit facilities discussed above. These costs are currently being amortized over the lives of the related facilities. The remaining unamortized balance as of December 29, 2007 was $15.8 million.

The Company utilizes interest rate swap agreements designated as cash flow hedges of the outstanding variable rate borrowings of the Company. These agreements result in the Company paying or receiving the difference between three month LIBOR and fixed interest rates at specified intervals, calculated based on the notional amounts. The interest rate differential to be paid or received is accrued as interest rates change and is recorded as interest income or expense. The effective portion of the derivative’s gain or loss is initially recorded as a component of other comprehensive income, net of taxes, and subsequently reclassified into earnings when the hedged interest expense affects earnings. The ineffective portion of the gain or loss, if any, is recognized in current period earnings in general and administrative expenses.

As of December 29, 2007, the combined notional amount of outstanding swap agreements was $336.1 million. Certain of these swap agreements have notional amounts that fluctuate over their lives. The fair value of

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outstanding interest rate swaps at December 29, 2007 was a liability of $4.9 million which was recorded in both current and long-term other accrued liabilities, depending on the expiration date of the underlying instrument.

In 2007, the Company issued 363,162 shares of common stock in connection with option exercises and purchases under the Employee Stock Purchase Plan, which generated $3.4 million of cash. In addition, 343,041 shares were granted under the Company’s Omnibus Stock Plan. In 2006, the Company issued 96,450 shares of common stock in connection with option exercises and purchases under the Employee Stock Purchase Plan, which generated $0.9 million of cash. In addition, 137,210 shares were granted under the Company’s Restricted Stock Plan and 7,221,458 shares were issued in connection with the Amazys acquisition. During 2005, 283,827 shares of common stock were issued in connection with employee stock option and purchase plans, which generated $1.7 million of cash.

On January 8, 2007, the Company announced the Board of Directors decision to suspend payment of its quarterly dividend of $.025 per share effective immediately. The Company paid annual dividends at a rate of $.10 per share in 2006, and 2005 requiring the use of $2.5, and $1.1 million of cash, respectively. This decision was made to suspend the payment of its quarterly dividend to speed in the repayment of borrowings related to the Amazys acquisition and help fund future product development initiatives. Although the Board does not anticipate reinstating the dividend payment it will continue to reevaluate the policy on an on-going basis.

The Company believes its current liquidity, future cash flows, and secured indebtedness should provide the necessary financial resources to meet its expected operating requirements for the foreseeable future. These requirements include the payment of principal and interest on indebtedness, funding of operations, life insurance premiums, and capital expenditures. The company intends to enter into discussions to amend certain terms in its credit arrangements to allow for greater operating flexibility. Should additional funding be required, supplemental borrowing arrangements are the most probable alternative for meeting capital resource and liquidity needs.

Acquisition of Pantone

On October 24, 2007, the Company completed it’s acquisition of Pantone, Inc. (“Pantone”), for a purchase price of $174.4 million. Pantone is the worldwide market leader in color communication and specification standards in the creative design industries. The Company also provides color standards and design tools for the fashion, home furnishings, architecture, paint, interior, and industrial design industries. The Company believes that the grouping of X-Rite and Pantone’s technology platforms and standards and the expanded customer base that the acquisition brings should help drive innovation and growth and further diversify the Company’s business.

The following table summarizes the aggregate consideration paid for the acquisition (in thousands):

Cash consideration paid for Pantone	$	174,379
Transaction costs		1,738
Total acquisition consideration	$	176,117

The transaction was funded exclusively with cash, financed through new borrowings. Total cash acquired with the Pantone purchase was $0.7 million.

Assets acquired and liabilities assumed in the acquisition were recorded on the Company’s Consolidated Balance Sheets based on their estimated fair values as of the date of the acquisition. The results of operations of Pantone have been included in the Company’s Consolidated Statements of Operations since the date of the acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill. Pantone is included in the Company’s Color Standards segment; therefore all of the Goodwill recorded in the Pantone acquisition has been allocated to that segment. The

32

purchase price allocation is preliminary and a final determination of required purchase accounting adjustments will be made upon finalization of asset valuations and tax structuring decisions, as well as the completion of the integration process. Revisions to the fair values, which may be significant, will be recorded by the Company as further adjustments to the purchase price allocation.

Acquisition of Amazys Holding AG

On July 5, 2006, the Company consummated its exchange offer (the “Offer”) for all publicly held registered shares of Amazys Holding AG (“Amazys”), a listed company incorporated in Switzerland. Amazys is a color management solutions company that develops, markets, and supports hardware, software and services to measure and communicate color for the imaging and media, photography, digital imaging, paints, plastics, apparel, textiles, and automotive industries. The Company believes the combining of X-Rite and Amazys will result in significant benefits to the Company including creating a global market leader in the color industry, accelerating technological innovation, and building the strongest talent pool in the industry.

In the Offer, the Company acquired an aggregate of 3,422,492 Amazys shares, representing approximately 99.7% of the shares outstanding on a fully diluted basis. On January 31, 2007, the Company completed the compulsory acquisition process under Swiss law whereby, each Amazys share that remained outstanding was cancelled and converted into the right to receive the Offer consideration. Pursuant to the terms of the Offer, the Company paid 2.11 shares of its common stock and 77 Swiss Francs (CHF) in cash for each tendered Amazys share. Cash consideration for this portion of the acquisition was $0.6 million including transaction costs, and the fair value of common stock issued was $0.2 million.

The following table summarizes the aggregate consideration paid for the acquisition, with a reconciliation to the total net assets acquired, (in thousands):

Cash consideration for Amazys common shares tendered	$	215,787
Transaction costs		9,497
Total cash consideration		225,284
Fair value of X-Rite stock (7,240,478 shares)		81,383
Total acquisition consideration	$	306,667

The cash consideration exchanged for Amazys shares consisted of existing cash, the issuance of new debt totaling $205.0 million and cash of $2.1 million derived from the settlement of a derivative financial instrument associated with the transaction. Total cash acquired with the Amazys purchase was $29.2 million; of which $17.5 was used to pay down long-term debt incurred for the acquisition. The fair value of shares issued was determined based upon closing market price on the date of the acquisition.

Founders’ Shares Redemption Program

During 1998, the Company entered into agreements with its founding shareholders for the future repurchase of 4.5 million shares of the Company’s outstanding stock. The agreements were terminated in November 2004. At that time, 3.4 million shares remained subject to repurchase. Prior to their termination, the agreements required stock repurchases following the later of the death of each founder or his spouse. The cost of the repurchase agreements was to be funded by $160.0 million of proceeds from life insurance policies the Company purchased on the lives of certain of these individuals.

In June 2005, the Company entered into agreements with two life settlement providers for the sale of three life insurance policies owned by the Company with a total face value of $30.0 million. The Company received

33

proceeds of $6.5 million, net of closing costs, from the sale of these policies. The Company recorded a gain of $1.2 million in the second quarter of 2005 in connection with the sale of these policies, which was included as a component of Operating Income. At December 29, 2007, the Company’s remaining life insurance portfolio consists of eleven policies with a face value of $130.0 million.

Under provisions of the life insurance policies originally purchased to fund the agreements, the Company is allowed to determine the timing and amount of premium payments. Premiums on the remaining policies total $3.5 million per year. The Company elected not to make premium payments for the 2007, 2006, and 2005 policy years. This election has not materially impacted the cash surrender values during those periods, nor is it expected to affect payment of future benefits under the policies. The Company continues to review its options with regard to the future of the remaining policies.

Corporate Headquarters

On February 14, 2006, the Company completed the purchase of its new corporate headquarters and manufacturing facility in Grand Rapids, Michigan, for $13.4 million. Funds for the purchase were drawn from the Company’s revolving line of credit which was subsequently refinanced with a mortgage loan on the Company’s prior corporate headquarters in Grandville. This facility is approximately 375,000 square feet and is located ten miles from the Company’s prior headquarters. State and local governments have provided an incentive package of approximately $21.0 million in connection with the purchase. Full realization of the incentive package will occur over a number of years and is dependent upon the Company meeting certain job creation and growth goals. The Company relocated its headquarters to the facility in Grand Rapids during the first quarter of 2007.

In December 2007, the Company entered into a definitive purchase agreement to sell the Grandville property for $13.1 million plus reimbursement of certain property tax assessment payments made prior to closing of the transaction. The purchase agreement provides for a 120 day due diligence period for the buyer to evaluate the property. The buyer has deposited an initial earnest money deposit of $125,000 with an escrow agent to be applied as a credit to the purchase price at closing. Final closing on the sale will be based on completion of the Buyer’s inspection and due diligence process as well as the granting of governmental approvals related to the future planned usage of the property.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company strives to report its financial results in a clear and understandable manner. It follows accounting principles generally accepted in the United States in preparing its consolidated financial statements, which requires management to make certain estimates and apply judgments that affect its financial position and results of operations. There have been no material changes in the Company’s policies or estimates since December 30, 2006.

The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In some instances, there may be alternative policies or estimation techniques that could be used. Management maintains a thorough process to review the application of accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information.

The policies and estimates discussed below include the financial statement elements that are either the most judgmental or involve the selection or application of alternative accounting policies and are material to the financial statements. Management has discussed the development and selection of these accounting policies with the Audit Committee of the Board of Directors.

34

Accounts Receivable Allowances

Accounts receivable allowances are based on known customer exposures, historic credit experience, and the specific identification of potentially uncollectible accounts. In addition to known or judgmental components, a policy that consistently applies reserve rates based on the age of outstanding accounts receivable is followed. Actual collections may differ, requiring adjustments to the reserves.

Inventory Reserves

Inventories are valued at the lower of cost or market. In assessing the ultimate realization of inventories, judgments are made as to future demand requirements and compared with current inventory levels. Reserves are established for excess and obsolete inventory, based on material movement, market conditions, and technological advancements.

Self-Insurance Reserves

The Company is self insured up to certain limits for costs associated with benefits paid under employee health care programs. The measurement of these costs requires the consideration of historic loss experience and judgments about the present and expected levels of costs per claim. These costs are accounted for by developing estimates of the undiscounted liability for claims incurred, including those claims incurred but not reported. This method provides estimates of future ultimate claim costs based on claims incurred as of the balance sheet date.

Long-Lived Assets

Evaluations are periodically made of long-lived assets for indicators of impairment when events or circumstances indicate that this risk may be present. Judgments regarding the existence of impairment are based on several factors including but not limited to, market conditions, operational performance, technological advancements and estimated future cash flows. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded to adjust the asset to its fair value.

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with SFAS No.142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires companies to review goodwill and intangible assets with indefinite useful lives for impairment annually, or more frequently if indicators of impairment occur. Impairment indicators could include a significant adverse change in the business climate, operating performance indicators, or the decision to sell or dispose of a reporting unit. The Company is required to test the carrying value of goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment). A discounted cash flow method is used to establish the fair value of reporting units. This model requires the use of estimates about the future cash flows of each reporting unit to determine estimated fair values. An impairment charge is recognized for any amount by which the carrying amount of a reporting unit’s goodwill exceeds its fair value. Changes in forecasted operations and changes in discount rates can materially affect these estimates. Once an impairment of goodwill has been recorded it cannot be reversed.

SFAS 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Derivative Financial Instruments

The Company uses derivative financial instruments to manage exposures to movements in interest rates and foreign exchange rates. Derivatives are not used for speculative or trading purposes.

35

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as amended. As a result the Company recognizes derivative financial instruments in its consolidated financial statements at fair value regardless of the purpose or intent for holding the instruments. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective hedges, are recorded in other comprehensive income. Changes in fair values of derivatives not qualifying as hedges are reported in income.

Deferred Income Tax Valuation Allowance

The Company periodically evaluates its deferred income tax assets to assess the probability of their being ultimately realized. Upon determination that a deferred income tax asset may not be realized, a valuation allowance is established for the potential unrealizable amount. This evaluation process requires a review of the underlying transaction to determine that the conditions that led to the creation of the asset still exist and that the related tax benefit will be realized.

Software Development Costs

Development costs incurred for research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility is achieved. After technological feasibility is achieved, any additional development costs are capitalized until the product is available for general release to customers and then amortized using the straight-line method over a three-year period.

Revenue Recognition

Revenue is recognized when earned in accordance with applicable accounting standards. Revenue from sales of products and services is recognized when a purchase order has been received, the product has been shipped or the service has been performed, the sales price is fixed and determinable, and collection of any resulting receivable is probable.

For transactions involving the sale of software which is not incidental to the product, revenue is recognized in accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) No. 97-2, Software Revenue Recognition, as amended by SOP No. 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions (SOP 98-9). We recognize revenue when there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collection is probable. In instances where an arrangement contains multiple elements, revenue is deferred related to the undelivered elements to the extent that vendor-specific objective evidence of fair value (VSOE) exists for such elements. VSOE is the price charged when the element is sold separately. Revenue for the separate elements is only recognized where the functionality of the undelivered element is not essential to the delivered element.

36

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

The Company has no significant off balance sheet transactions other than operating leases for equipment, real estate, and vehicles. It also is not the Company’s policy to issue guarantees to third parties. The following table sets forth information about the Company’s long-term contractual obligations outstanding at December 29, 2007. It brings together data for easy reference from the consolidated balance sheet and from individual notes to the consolidated financial statements.

	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
	(in thousands)
Payments Due by Period
Long-term debt	$	381,000	$	2,700	$	5,400	$	267,900	$	105,000
Interest on long-term debt		252,100		37,000		72,600		71,700		70,800
Short-term borrowings		8,680		8,680		—		—		—
Operating leases		11,864		3,457		4,979		3,262		166
Total contractual obligations	$	653,644	$	51,837	$	82,979	$	342,862	$	175,966

The Company is currently in negotiations or has settled several tax matters in 2008 with a value of $4.1 million, but does not anticipate other significant changes to its FIN 48 liabilities during the next twelve months. At this time the Company is unable to make a reasonable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes. The Company expects to contribute $1.5 million to its pension plan in 2008. Funding amounts are calculated on an annual basis and no required or planned funding beyond one year has been determined. Additionally, the Company is unable to make a reliable estimate of the timing of payments related to purchase obligations for inventory and fixed assets.

OTHER MATTERS

In November of 2001, the Company’s Board of Directors adopted a Shareholder Protection Rights Plan (the “Plan”), which became effective in the first quarter of 2002. The Plan is designed to protect shareholders against unsolicited attempts to acquire control of the Company in a manner that does not offer a fair price to all shareholders.

Under the Plan, one purchase right automatically trades with each share of the Company’s common stock. Each Right entitles a shareholder to purchase 1/100 of a share of junior participating preferred stock at a price of $30.00, if any person or group attempts certain hostile takeover tactics toward the Company. Under certain hostile circumstances, each Right may entitle the holder to purchase the Company’s common stock at one-half its market value or to purchase the securities of any acquiring entity at one-half their market value. Rights are subject to redemption by the Company at $.005 per Right and, unless earlier redeemed, will expire in the first quarter 2012. Rights beneficially owned by holders of 15 percent or more of the Company’s common stock, or their transferees and affiliates, automatically become void.

37

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to a variety of risks including foreign currency exchange fluctuations, and market volatility in its derivative and insurance portfolios. In the normal course of business, the Company employs established procedures to evaluate its risks and take corrective actions when necessary to manage these exposures.

The Company utilizes interest rate swap contracts to manage the potential variability in interest rates associated with debt incurred in connection with the acquisitions of Pantone and Amazys. As of December 29, 2007, the combined notional amount of outstanding swap agreements was $336.1 million. Certain of these swap agreements have notional amounts that fluctuate over their lives. The fair value of outstanding interest rate swaps at December 29, 2007 was a liability of $4.9 million which was recorded in both current and long-term other accrued liabilities, depending on the expiration date of the underlying instrument. During 2007, the Company reclassified a $0.3 million benefit related to net interest settlements from other comprehensive income to interest expense. The Company does not trade in financial instruments for speculative purposes.

Foreign currency exchange risks arise from transactions denominated in a currency other than the entity’s functional currency and from foreign denominated transactions translated into U.S. dollars. The Company’s largest exposures are to the Euro and Swiss Franc. As these currencies fluctuate relative to the dollar, it may cause profitability to increase or decrease accordingly.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following report, financial statements, and notes are included with this report:

Management’s Report on Internal Control over Financial Reporting	40
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	41
Report of Independent Registered Public Accounting Firm on Financial Statements	42
Consolidated Balance Sheets	43
Consolidated Statements of Operations	45
Consolidated Statements of Shareholders’ Investment	46
Consolidated Statements of Cash Flows	47
Notes to Consolidated Financial Statements	48

39

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 29, 2007 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation and those criteria, our management concluded that our internal control over financial reporting was effective as of December 29, 2007.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting, as stated in their report which appears on page 41.

40

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

The Board of Directors and Shareholders of X-Rite, Incorporated

We have audited X-Rite, Incorporated and subsidiaries’ internal control over financial reporting as of December 29, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). X-Rite, Incorporated’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, X-Rite, Incorporated and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 29, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of X-Rite, Incorporated and subsidiaries as of December 29, 2007 and December 30, 2006, and the related consolidated statements of operations, shareholders’ investment, and cash flows for each of the three years in the period ended December 29, 2007, and our report dated March 7, 2008 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Grand Rapids, Michigan

March 7, 2008

41

Report of Independent Registered Public Accounting Firm on Financial Statements

The Board of Directors and Shareholders of X-Rite, Incorporated

We have audited the accompanying consolidated balance sheets of X-Rite, Incorporated and subsidiaries as of December 29, 2007 and December 30, 2006, and the related consolidated statements of operations, shareholders’ investment, and cash flows for each of the three years in the period ended December 29, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of X-Rite, Incorporated and subsidiaries at December 29, 2007 and December 30, 2006, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 29, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 11 to the consolidated financial statements, in 2007 X-Rite, Incorporated changed its method of accounting for uncertain tax positions in connection with the required adoption of FASB Interpretation No. 48. In 2006, X-Rite, Incorporated also changed its methods of accounting for share-based payments and retirement plans in connection with the required adoption of Statement of Financial Accounting Standards Nos. 123(R) and 158.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), X-Rite, Incorporated and subsidiaries’ internal control over financial reporting as of December 29, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 7, 2008 expressed an unqualified opinion thereon.

/s/    Ernst & Young LLP

Grand Rapids, Michigan

March 7, 2008

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X-RITE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 29, 2007			December 30, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	20,300		$	12,876
Accounts receivable, less allowance of $2,328 in 2007 and $1,584 in 2006		47,050			40,226
Inventories		61,839			30,165
Deferred income taxes		2,571			4,749
Assets held for sale		7,614			12,081
Prepaid expenses and other current assets		6,318			5,378
		145,692			105,475
Property, plant and equipment:
Land		2,796			120
Buildings and improvements		25,723			8,333
Machinery and equipment		27,250			28,869
Furniture and office equipment		22,596			18,282
Construction in progress		1,614			26,188
		79,979			81,792
Less accumulated depreciation		(32,619	)		(33,232	)
		47,360			48,560
Other assets:
Goodwill		288,208			203,101
Other intangibles, net		123,314			64,143
Cash surrender values (Founders policies)		21,168			21,377
Capitalized software, net of accumulated amortization of $6,121 in 2007 and $3,075 in 2006		7,805			8,548
Deferred financing costs, net of accumulated amortization of $527 in 2007 and $624 in 2006		15,786			6,882
Deferred income taxes		2,428			—
Other non-current assets		3,063			4,173
		461,772			308,224
		$654,824		$	462,259

The accompanying notes are an integral part of these statements.

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X-RITE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS—Continued

(In thousands, except share and per share data)

	December 29, 2007		December 30, 2006
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
Current liabilities:
Short-term borrowings	$	8,680	$	13,500
Current portion of long-term debt		2,700		1,200
Accounts payable		17,724		10,574
Accrued liabilities:
Payroll and employee benefits		19,153		18,915
Income taxes		5,928		4,759
Deferred income taxes		6,090		—
Derivative financial instruments		81		12
Interest		1,368		1,283
Other		10,740		12,822
		72,464		63,065
Long-term liabilities:
Long-term debt, less current portion		378,300		190,200
Restructuring		2,232		3,729
Long-term compensation and benefits		1,541		1,410
Derivative financial instruments		4,862		520
Deferred income taxes		8,839		16,841
Accrued income taxes		1,713		—
Other		569		884
		470,520		213,584
Shareholders’ investment:
Preferred stock, $.10 par value, 5,000,000 shares authorized; none issued		—		—
Common stock, $.10 par value, 50,000,000 shares authorized; 29,026,073 shares issued and outstanding in 2007 and 28,568,630 shares issued and outstanding in 2006		2,903		2,857
Additional paid-in capital		109,439		100,665
Retained earnings		66,314		79,119
Accumulated other comprehensive income		5,648		2,969
		184,304		185,610
	$	654,824	$	462,259

The accompanying notes are an integral part of these statements.

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X-RITE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	For the Year Ended
	December 29, 2007			December 30, 2006			December 31, 2005
Net sales	$	248,710		$	167,641		$	119,626
Cost of sales:
Products sold		99,665			65,506			39,288
Restructuring charges		245			6,159			—
Inventory valuation adjustment		2,563			4,854			—
		102,473			76,519			39,288
Gross profit		146,237			91,122			80,338
Operating expenses (income):
Selling and marketing		60,558			43,423			34,866
Research, development and engineering		34,672			25,280			14,994
General and administrative		28,230			23,678			17,402
Acquired in-process research and development		—			11,107			—
Restructuring		2,839			9,986			—
Integration		3,295			3,308			—
Founders insurance gain		—			—			(1,154	)
		129,594			116,782			66,108
Operating income (loss)		16,643			(25,660	)		14,230
Interest expense		(22,089	)		(8,758	)		—
Gain on derivative financial instruments		—			2,083			—
Write-off of deferred financing costs		(5,515	)		—			—
Gain (loss) on sale of investments		837			(2	)		(540	)
Write-down of other investments		—			—			(332	)
Other, net		(1,134	)		145			(422	)
Income (loss) before income taxes		(11,258	)		(32,192	)		12,936
Income taxes (benefit)		9,564			(5,048	)		3,530
Income (loss) from continuing operations		(20,822	)		(27,144	)		9,406
Discontinued operations:
Income from operations		17			1,653			1,646
Net gain on sale		8,226			—			—
		8,243			1,653			1,646
Net income (loss)	$	(12,579	)	$	(25,491	)	$	11,052
Basic and diluted income (loss) per share:
Income (loss) from continuing operations	$	(.72	)	$	(1.09	)	$	.44
Discontinued operations:
Income from operations		—			.06			.08
Net gain on sale		.28			—			—
Net income (loss)	$	(.44	)	$	(1.03	)	$	.52

The accompanying notes are an integral part of these statements.

45

X-RITE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ INVESTMENT

(In thousands, except share and per share data)

	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Stock Conversion Program			Total Shareholders’ Investment
BALANCES, JANUARY 1, 2005	$	2,095	$	13,792		$	98,177		$	2,810		$	(410	)	$	116,464
Net income		—		—			11,052			—			—			11,052
Translation adjustment		—		—			—			(1,396	)		—			(1,396	)
Unrealized gain on short-term investments (net of tax of $165)		—		—			—			307			—			307
Total comprehensive income																9,963
Cash dividends declared of $.10 per share		—		—			(2,124	)		—			—			(2,124	)
Issuance / release of shares under employee benefit plans, including tax benefits (186,182 shares)		19		1,832			—			—			—			1,851
Issuance of shares pursuant to a business acquisition (62,819 shares)		6		933			—			—			—			939
Stock conversion program		4		601			—			—			(116	)		489
BALANCES, DECEMBER 31, 2005		2,124		17,158			107,105			1,721			(526	)		127,582
Adoption of SFAS 123(R)		—		(526	)		—			—			526			—
Net loss		—		—			(25,491	)		—			—			(25,491	)
Translation adjustment		—		—			—			1,726			—			1,726
Unrealized loss on derivative financial instruments (net of tax benefits of $200)		—		—			—			(478	)		—			(478	)
Total comprehensive loss																(24,243	)
Cash dividends declared of $.10 per share		—		—			(2,495	)		—			—			(2,495	)
Share-based compensation		—		2,555			—			—			—			2,555
Issuance / release of shares under employee benefit plans, including tax benefits (110,380 shares)		11		1,031			—			—			—			1,042
Issuance of shares pursuant to a business acquisition (7,221,458 shares)		722		80,447			—			—			—			81,169
BALANCES, DECEMBER 30, 2006		2,857		100,665			79,119			2,969			—			185,610
Net loss		—		—			(12,579	)		—			—			(12,579	)
Translation adjustment		—		—			—			5,556			—			5,556
Unrealized loss on derivative financial instruments (net of tax benefit of $1,544)		—		—			—			(2,732	)		—			(2,732	)
Pension adjustments		—		—			—			(244	)		—			(244	)
Other		—		—			—			99			—			99
Total comprehensive loss																(9,900	)
Share-based compensation		—		4,716			—			—			—			4,716
Adjustment to adopt FIN 48 (net of tax benefit of $781)		—		—			(226	)		—			—			(226	)
Issuance / release of shares under employee benefit plans, including tax benefits (438,423 shares)		44		3,846			—			—			—			3,890
Issuance of shares pursuant to a business acquisition (19,020 shares)		2		212			—			—			—			214
BALANCES, DECEMBER 29, 2007	$	2,903	$	109,439		$	66,314		$	5,648			—		$	184,304

The accompanying notes are an integral part of these statements.

46

X-RITE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year Ended
	December 29, 2007			December 30, 2006			December 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(12,579	)	$	(25,491	)	$	11,052
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation		6,943			5,464			3,875
Amortization of intangible assets		16,332			9,352			2,343
Amortization of deferred financing costs		1,559			624			—
Allowance for doubtful accounts		368			104			258
Deferred income taxes (benefit)		6,837			(6,286	)		1,378
Gain on sale of business, excluding income tax benefit of $1,859		(6,367	)		—			—
Gain on sale of investment		(837	)		—			—
Gain on sale of life insurance policies		—			—			(1,154	)
Share-based compensation		3,607			1,659			—
Tax benefit from stock options exercised		493			66			174
Excess tax benefit from stock-based compensation		(163	)		—			—
Gain on derivative financial instruments		—			(2,083	)		—
Acquired in-process research and development		—			11,107			—
Restructuring (including amortization expense of $133 in 2007 and $1,271 in 2006)		3,084			16,145			—
Write-off of deferred financing costs		5,448
Other		113			337			1,272
Changes in operating assets and liabilities net of effects from acquisitions:
Accounts receivable		2,619			9,951			(6,920	)
Inventories		(7,849	)		1,010			(3,397	)
Other current and non current assets		1,803			9,416			(2,236	)
Accounts payable		2,370			(2,243	)		1,302
Income taxes		88			(2,338	)		979
Other current and non-current liabilities		(15,072	)		(6,249	)		(44	)
Net cash provided by operating activities		8,797			20,545			8,882
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of short-term investments		—			18,619			1,940
Proceeds from maturities of short-term investments		—			552			505
Purchases of short-term investments		—			(4,310	)		(11,088	)
Capital expenditures		(7,632	)		(28,853	)		(4,655	)
Proceeds from sales of property and equipment		4,184			—			—
Investment in Founders’ life insurance, net		209			(421	)		(441	)
Proceeds from sales of life insurance policies		—			—			6,454
Proceeds from sale of Labsphere, Inc.		14,314			—			—
Increase in other assets		(3,699	)		(2,980	)		(3,928	)
Acquisitions, net of cash acquired		(176,052	)		(195,187	)		(750	)
Proceeds from derivative financial instruments		—			2,083			—
Other		81			257			(190	)
Net cash used for investing activities		(168,595	)		(210,240	)		(12,153	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net		(4,820	)		13,500			—
Proceeds from issuance of long-term debt		383,500			211,000			—
Payment of long-term debt		(199,910	)		(19,600	)		—
Excess tax benefit from stock-based compensation		163			—			—
Debt issuance costs		(15,911	)		(7,506	)		—
Dividends paid		—			(2,495	)		(1,124	)
Issuance of common stock		3,391			856			1,750
Net cash provided by (used for) financing activities		166,413			195,755			(374	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		809			320			448
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		7,424			6,380			(3,197	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		12,876			6,496			9,693
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	20,300		$	12,876		$	6,496

The accompanying notes are an integral part of these statements.

47

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

X-Rite, Incorporated is a technology company that develops a full range of color management systems. The Company’s technologies assist manufacturers, retailers, and distributors in achieving precise color appearance throughout their global supply chain. X-Rite products include hardware, software, and color standards which assist printing companies, graphic designers, and professional photographers in achieving precise color communication and reproduction across a wide range of devices. The Company’s products also provide retailers color harmony solutions at point of purchase. The key markets served include Imaging and Media, Retail, and Industrial.

Products are sold worldwide through the Company’s own sales personnel and through independent sales representatives and dealers. The Company is headquartered in Grand Rapids, Michigan and has other domestic operations in New Jersey and Massachusetts. In addition, the Company has locations in Switzerland, Germany, England, France, Italy, Spain, the Czech Republic, Russia, Hong Kong, China, Japan and Singapore. Manufacturing facilities are located in the United States, Switzerland, Germany, and Italy.

Principles of Consolidation

The consolidated financial statements include the accounts of X-Rite, Incorporated and its subsidiaries. All inter-company accounts and transactions have been eliminated.

Fiscal Year

The Company reports its operations and cash flows on a 52-53 week basis ending on the Saturday closest to December 31. The fiscal year ended December 29, 2007 (fiscal year 2007) contained 53 weeks, while the fiscal years ended December 30, 2006 (fiscal year 2006) and December 31, 2005 (fiscal year 2005) contained 52 weeks.

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts and notes payable, short-term and long-term debt, and derivative financial instruments. The Company’s estimate of the fair values of these financial instruments approximates their carrying amounts for the respective years. The Company does not hold or issue financial instruments for trading purposes.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments with maturities of three months or less when purchased to be cash equivalents.

Accounts Receivable Allowance

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects an estimate of the amounts that will not be collected. The valuation allowance is comprised of an allowance for doubtful accounts and sales returns. In addition to reviewing delinquent accounts receivable, other factors are considered in estimating the allowance, including historical data, customer types, credit worthiness and economic trends. Actual collections may differ, requiring adjustments to the allowance.

48

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Inventories

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market. Reserves are established for excess and obsolete inventory, based on material movement and a component of judgment for current events such as market conditions or technological advancement. Components of inventories are summarized as follows (in thousands):

	2007		2006
Raw materials	$	16,418	$	13,957
Work in process		28,532		5,297
Finished goods		16,889		10,911
	$	61,839	$	30,165

In connection with the acquisition of Pantone, Inc on October 24, 2007 the company had to write the acquired inventory balance up to fair market value. The write up of inventory in the amount of $15.4 million will be expensed as the related inventory is sold.

Property, Plant, and Equipment and Depreciation

Property, plant and equipment are stated at cost and include expenditures for major renewals and betterments. Maintenance and repairs that do not extend the lives of the respective assets are charged to expense as incurred. Depreciation expense is computed using the straight-line method over the estimated useful lives of the related assets. Estimated depreciable lives are as follows: buildings and improvements, 3 to 30 years; machinery and equipment, 3 to 8 years; and furniture and office equipment, 3 to 13 years.

Software Development Costs

Development costs incurred for research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility is achieved. After technological feasibility is achieved, any additional development costs are capitalized until the product is available for general release to customers and then amortized using the straight-line method over a three-year period.

The Company capitalized $3.7, $3.0 and $3.8 million of software development costs during 2007, 2006 and 2005, respectively. Amortization expense was $3.8, $4.4 and $1.5 million in 2007, 2006 and 2005, respectively. The 2007 and 2006 amortization expense figures include $0.1 million and $1.2 million, respectively, of amortization classified as a restructuring charge within cost of sales as it related to write-downs associated with product lines discontinued as part of the Company’s restructuring plans discussed in Note 4.

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires companies to review goodwill and intangible assets with indefinite useful lives for impairment annually, or more frequently if indicators of impairment occur. Impairment indicators could include a significant adverse change in the business climate, operating performance indicators, or the decision to sell or dispose of a reporting unit. The Company is required to test the carrying value of goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment). A discounted cash flow method is used to establish the fair

49

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

value of reporting units. This model requires the use of estimates about the future cash flows of each reporting unit to determine estimated fair values. An impairment charge is recognized for any amount by which the carrying amount of a reporting unit’s goodwill exceeds its fair value. Changes in forecasted operations and changes in discount rates can materially affect these estimates. Once an impairment of goodwill has been recorded it cannot be reversed. SFAS 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144).

Long Lived Assets

In accordance with SFAS 144, when there are indicators of impairment, the Company evaluates the recoverability of its long-lived assets by determining whether unamortized balances could be recovered through undiscounted future operating cash flows over the remaining lives of the assets. The estimated fair value is determined by discounting the expected future cash flows at a rate that is required for a similar investment with like risks. If the sum of the expected future cash flows is less than the carrying value of the assets, an impairment loss would be recognized for the excess of the carrying value over the fair value.

Assets held for sale are stated at the lower of depreciated cost or estimated fair value less costs to sell. As of December 29, 2007, the Company had $7.6 million in assets held for sale, which related to the Company’s former corporate headquarters (see Note 7).

Deferred Financing Costs

The Company capitalizes costs incurred in connection with the establishment of credit facilities and related borrowings. These costs are amortized to interest expense over the life of the borrowing or life of the credit facility using the straight-line method, which approximates the interest method. In the case of early debt principal repayments, the Company adjusts the value of the corresponding deferred financing costs with a charge to interest expense, and similarly adjusts the future amortization expense.

Derivative Financial Instruments

The Company uses derivative financial instruments to manage exposures to movements in interest rates. Derivatives are not used for speculative or trading purposes.

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as amended. As a result the Company recognizes derivative financial instruments in its consolidated financial statements at fair value regardless of the purpose or intent for holding the instruments. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective hedges, are originally recorded as a component of other comprehensive income, net of tax, and subsequently reclassified into earnings when the hedged exposure affects earnings. Changes in fair values of derivatives not qualifying as hedges are reported in earnings immediately.

Revenue Recognition

Revenue is recognized when earned in accordance with applicable accounting standards. Revenue from sales of products and services is recognized when a purchase order has been received, the product has been shipped or the service has been performed, the sales price is fixed and determinable, and collection of any resulting receivable is probable.

50

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For transactions involving the sale of software which is not incidental to the product, revenue is recognized in accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) No. 97-2, Software Revenue Recognition, as amended by SOP No. 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions (SOP 98-9). The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collection is probable. In instances where an arrangement contains multiple elements, revenue is deferred related to the undelivered elements to the extent that vendor-specific objective evidence of fair value (VSOE) exists for such elements. VSOE is the price charged when the element is sold separately. Revenue for the separate elements is only recognized where the functionality of the undelivered element is not essential to the delivered element.

Shipping and Handling

The Company records shipping and handling charged to customers in net sales and the related expenses in cost of sales in the Consolidated Statements of Operations.

Advertising Costs

Advertising costs are charged to operations in the period incurred and totaled $0.8, $0.6 and $0.8 million in 2007, 2006 and 2005, respectively.

Income Taxes

Income taxes are accounted for in accordance with SFAS No. 109 (SFAS 109), Accounting for Income Taxes. Income tax expense includes the current tax obligation or benefit and the change in deferred income tax balance for the period. Deferred income taxes result from the temporary differences between financial and income tax bases of certain assets and liabilities and are measured using the statutory tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to reverse. The Company records valuation allowances on its deferred income tax assets for which it is not more likely than not that a future benefit will be received. Uncertain tax positions are accounted for in accordance with FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes.

Self-Insurance Reserves

The Company is self insured up to certain limits for costs associated with benefits paid under health care programs for its domestic employees. The measurement of these costs requires the consideration of historic loss experience and judgments about the present and expected levels of costs per claim. These costs are accounted for through actuarial methods, which develop estimates of the undiscounted liability for claims incurred, including those claims incurred but not reported. This method provides estimates of future ultimate claim costs based on claims incurred as of the balance sheet date.

51

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accumulated Other Comprehensive Income

The components of ending accumulated other comprehensive income, net of tax, are as follows (in thousands):

	2007			2006
Currency translation adjustments	$	9,003		$	3,447
Net unrealized loss on derivative instruments		(3,210	)		(478	)
Pensions adjustments		(244	)		—
Other		99			—
Accumulated other comprehensive income	$	5,648		$	2,969

Stock Option Plans

At December 29, 2007, the Company has employee and outside director stock option plans which are described more fully in Note 9.

Prior to January 1, 2006, the Company’s employee and outside director share-based compensation plans were accounted for under the measurement and recognition provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, no compensation expense was recognized for stock options because the exercise price of the Company’s stock options equaled the market price of the underlying stock on the date of the grant. In accordance with SFAS No. 123, Accounting for Stock- Based Compensation (SFAS 123), the Company provided pro forma disclosures for each period as if the Company had applied the fair value-based method in measuring compensation expense for its share-based compensation plans.

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123(R)), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases under the Employee Stock Purchase Plan, based on estimated fair values. The Company has elected to use the modified prospective transition method; therefore prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (SAB 107), which provides supplemental implementation guidance for SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

52

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Per Share Data

Basic earnings per share (EPS) is computed by dividing net income by the weighted-average number of common shares outstanding in each year. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding plus all shares that would have been outstanding if every potentially dilutive common share had been issued. The following table reconciles the numerators and denominators used in the calculations of basic and diluted EPS for each of the last three years (in thousands, except per share data):

	2007			2006			2005
Net Income (Loss)
Income (loss) from continuing operations	$	(20,822	)	$	(27,144	)	$	9,406
Discontinued operations:
Income from operations		17			1,653			1,646
Net gain on sale		8,226			—			—
Net income (loss)	$	(12,579	)	$	(25,491	)	$	11,052
Weighted-Average Common Shares Outstanding
Basic		28,866			24,865			21,150
Diluted		28,866			24,865			21,419
Basic and Diluted Income (Loss) Per Share
Income (loss) from continuing operations	$	(.72	)	$	(1.09	)	$	.44
Discontinued operations
Income from operations		—			.06			.08
Net gain on sale		.28			—			—
Net income (loss)	$	(.44	)	$	(1.03	)	$	.52

Dilutive potential shares consist of employee stock options and restricted common stock awards. The number of stock options and awards that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 1,292,000 in 2007, 1,615,000 in 2006, and 1,220,000 in 2005.

Foreign Currency Translation

Most of the Company’s foreign operations use the local currency as their functional currency. Accordingly, foreign currency balance sheet accounts are translated into U.S. dollars at the exchange rate in effect at year-end, and income statement accounts are translated at the average rate of exchange in effect during the year. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income in the Consolidated Statements of Shareholders’ Investment. Gains and losses arising from re-measuring foreign currency transactions into the functional currency are included in the determination of net income. Net realized and unrealized losses from re-measurement of foreign currency transactions were $1.2, $0.7, and $0.1 million for 2007, 2006 and 2005, respectively.

Use of Estimates

The preparation of the Company’s consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate

53

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

outcome for these items based on the historic trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates; however, management believes that any subsequent revisions to estimates used would not have a material effect on the financial condition or results of operations of the Company.

New Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that permit, or in some cases require, estimates of fair market value. SFAS No. 157 also expands financial statement disclosure requirements about a company’s use of fair value measurements, including the effect of such measures on earnings. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 (fiscal year 2008 for the Company). In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, Partial Deferral of the Effective Date of Statement 157 (FSP 157-2). FSP 157-2 delays the effective date of SFAS No. 157, for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008 (fiscal year 2009 for the Company). The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of SFAS No. 115 (SFAS No. 159). SFAS No. 159 allows companies the option to measure eligible financial instruments at fair value. Such election, which may be applied on an instrument by instrument basis, is typically irrevocable once elected. The Company will adopt SFAS No. 159 effective December 30, 2007, as required, and anticipates it will not apply the fair value option to any of its financial instruments.

In December 2007 the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)). SFAS No. 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after an entity’s fiscal year that begins after December 15, 2008 (fiscal year 2009 for the Company). The Company expects the adoption will have an impact on the consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions consummated after the effective date. The Company will assess the impact of this standard on the consolidated financial statements if and when a future acquisition occurs.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. SFAS No. 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result

54

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. SFAS No. 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (fiscal year 2009 for the Company). Earlier adoption is prohibited. The Company currently does not have any noncontrolling interests and will assess the impact of this standard on the consolidated financial statements if and when a future acquisition occurs

Reclassifications

Certain prior year information has been reclassified to conform to the current year presentation, primarily as a result of discontinued operations.

NOTE 2—BUSINESS SEGMENTS

The company is comprised of two primary operating segments, as defined in SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. The Color Measurement segment consists of quality control instrumentation that measure, communicate, and simulate color. These products are used in several industries but in all cases their core application is the measurement of color. Company management views its products, technology, and key strategic decisions in terms of the global color measurement market and not the specific components of the markets it serves.

The Color Standards segment includes the operations of the Pantone, Inc. business unit. Pantone, Inc. is a leading developer and marketer of products for the accurate communication and reproduction of color, servicing worldwide customers in a variety of industries including imaging and media, textiles, digital technology, plastics, and paint. The company created the Color Standards business segment in connection with the acquisition of Pantone on October 24, 2007.

55

X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The performance of the operating segments is evaluated by the company’s management using various financial measures. The following is a summary of certain key financial measures for the respective fiscal years indicated.

(in thousands)	2007			2006			2005
Net Sales:
Color Measurement	$	239,698		$	167,641		$	119,626
Color Standards		9,012			—			—
Total	$	248,710		$	167,641		$	119,626
Depreciation and Amortization:
Color Measurement	$	21,666		$	16,087		$	6,218
Color Standards		1,742			—			—
Total	$	23,408		$	16,087		$	6,218
Operating Income (Loss):
Color Measurement	$	18,041		$	(25,660	)	$	14,230
Color Standards		(1,398	)		—			—
Total	$	16,643		$	(25,660	)	$	14,230
Capital Expenditures:
Color Measurement	$	7,623		$	28,853		$	4,655
Color Standards		9			—			—
Total	$	7,632		$	28,853		$	4,655
Total Assets:
Color Measurement	$	468,609		$	462,259		$	147,635
Color Standards		186,215			—			—
Total	$	654,824		$	462,259		$	147,635

The accounting policies used to determine profitability and total assets of the reportable operating segments are the same as those of the company, which are disclosed in Note 1.

The following table summarizes net sales from continuing operations by product line (in thousands):

	2007		2006		2005
Imaging and Media	$	124,209	$	78,849	$	47,802
Industrial		47,965		35,994		26,987
Color Support Services		28,285		21,850		12,816
Retail		22,249		20,674		24,592
Other		16,990		10,274		7,429
Color Measurement Segment		239,698		167,641		119,626
Color Standards Segment		9,012		—		—
Total Net Sales	$	248,710	$	167,641	$	119,626

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Sales by geographic area are based on the location of the customer. Long-lived assets consist of long-term assets of the company, excluding financial instruments and deferred tax assets. The following is a summary of geographic information for the respective fiscal years indicated. Individual foreign country information is not provided as none of the individual foreign countries in which we operate are considered material for separate disclosure based on quantitative and qualitative considerations (in thousands):

	2007		2006		2005
Domestic sales	$	85,326	$	65,847	$	61,711
International sales:
Europe		106,774		59,591		31,023
Asia		46,366		33,141		17,012
Other Countries		10,243		9,062		9,880
		163,384		101,794		57,915
Total net sales from continuing operations	$	248,710	$	167,641	$	119,626

The Company’s long-lived assets, primarily goodwill and intangible assets, are as follows (in thousands):

	2007		2006		2005
Long lived assets:
U.S. operations	$	470,001	$	318,856	$	44,631
International		14,810		15,067		2,563
	$	484,811	$	333,923	$	47,194

For fiscal year 2007 the Color Measurement segment had one significant customer which accounted for $28.3 million, or 11.4 percent, of total net sales in 2007. No single customer accounted for more than 10 percent of total net sales in 2006 or 2005.

NOTE 3—ACQUISITIONS

Pantone, Inc.

On October 24, 2007, the Company completed it’s acquisition of Pantone, Inc. (“Pantone”), for a purchase price of $174.4 million plus transaction costs. Pantone is a leader in color communication and specification standards in the creative design industries. The Company also provides color standards and design tools for the fashion, home furnishings, architecture, paint, interior and industrial design industries.

The following table summarizes the aggregate consideration paid for the acquisition (in thousands):

Cash consideration paid for Pantone	$	174,379
Transaction costs		1,738
Total acquisition consideration	$	176,117

The transaction was funded exclusively with cash, financed through new borrowings. Total cash acquired with the Pantone purchase was $0.7 million.

Assets acquired and liabilities assumed in the acquisition were recorded on the Company’s Consolidated Balance Sheets based on their estimated fair values as of the date of the acquisition. The results of operations of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pantone have been included in the Company’s Consolidated Statements of Operations since the date of the acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill. Pantone is included in the Company’s Color Standards segment; therefore all of the Goodwill recorded in the Pantone acquisition has been allocated to that segment. The purchase price allocation is preliminary and a final determination of required purchase accounting adjustments will be made upon finalization of working capital adjustments, asset valuations, and tax structuring decisions, as well as the completion of the integration process. Revisions to the fair values, which may be significant, will be recorded by the Company as further adjustments to the purchase price allocation. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on October 24, 2007 (in thousands):

Current assets		$	33,299
Property, plant and equipment			2,131
Goodwill			82,449
Identifiable intangible assets
Customer relationships (estimated useful lives of 15 years)	29,400
Trademarks and trade names (estimated useful lives of 10–30 years)	20,280
Technology and patents (estimated useful lives of 15 years)	9,100
Covenants not to compete (estimated useful life of 2–3 years)	13,400
Total intangible assets			72,180
Other assets			114
Total assets acquired			190,173
Current liabilities			(13,541	)
Long-term liabilities			(515	)
Total liabilities assumed			(14,056	)
Net assets acquired		$	176,117

As part of the purchase price allocation, an adjustment of $15.4 million was recorded to reflect the fair value of inventory at the date of the acquisition. Based on the average rate at which inventory turns, this adjustment is expected to be expensed through cost of sales during the next twelve months. As of December 29, 2007, the company expensed $2.6 million related to the fair value valuation of Pantone’s inventory. The identifiable intangible assets are amortized on a straight-line basis over their expected useful lives. The total weighted average amortization period for these intangible assets is 16 years.

The following unaudited pro forma information assumes the Pantone and Amazys acquisitions occurred as of the beginning of each of the periods presented. The pro forma information contains the actual combined operating results of X-Rite, Pantone and Amazys with the results prior to the acquisition date, adjusted to reflect the pro forma impact of the acquisition occurring at the beginning of the period. Pro forma adjustments include elimination of sales between X-Rite and Pantone during the period presented, the amortization of acquired intangible assets, and the interest expense on debt incurred to finance the transaction. The pro forma results are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the years presented (in thousands, except per share data):

	2007			2006
Revenue	$	283,353		$	262,611
Net loss		(31,988	)		(52,683	)
Basic and diluted loss per share	$	(1.11	)	$	(2.12	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amazys Holding AG

On July 5, 2006, the Company consummated its exchange offer (the “Offer”) for all publicly held registered shares of Amazys Holding AG (“Amazys”), a listed company incorporated in Switzerland. Amazys is a color management solutions company that develops, markets, and supports hardware, software and services to measure and communicate color for the imaging and media, photography, digital imaging, paints, plastics, apparel, textiles, and automotive industries.

In the Offer, the Company acquired an aggregate of 3,422,492 Amazys shares, representing approximately 99.7% of the shares outstanding on a fully diluted basis. On January 31, 2007, the Company completed the compulsory acquisition process under Swiss law whereby, each Amazys share that remained outstanding was cancelled and converted into the right to receive the Offer consideration. Pursuant to the terms of the Offer, the Company paid 2.11 shares of its common stock and 77 Swiss Francs (CHF) in cash for each tendered Amazys share. Cash consideration for this portion of the acquisition was $0.6 million including transaction costs, and the fair value of common stock issued was $0.2 million.

The following table summarizes the aggregate consideration paid for the acquisition, with a reconciliation to the total net assets acquired (in thousands, except share amounts):

Cash consideration for Amazys common shares tendered	$	215,787
Transaction costs		9,497
Total cash consideration		225,284
Fair value of X-Rite stock (7,240,478 shares)		81,383
Total acquisition consideration	$	306,667

The cash consideration exchanged for Amazys shares consisted of existing cash, the issuance of new debt totaling $205.0 million and cash of $2.1 million derived from the settlement of a derivative financial instrument associated with the transaction. Total cash acquired with the Amazys purchase was $29.2 million; of which $17.5 was used to pay down long-term debt incurred for the acquisition. The fair value of shares issued was determined based upon closing market price on the date of the acquisition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets acquired and liabilities assumed in the acquisition were recorded on the Company’s Consolidated Balance Sheets based on their estimated fair values as of the date of the acquisition. The results of operations of Amazys have been included in the Company’s Consolidated Statements of Operations since the date of the acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on July 5, 2006 (in thousands):

Current assets		$	75,215
Property, plant and equipment			9,734
Goodwill			196,566
Identifiable intangible assets
Customer relationships (estimated useful lives of 2 – 7 years)	9,963
Trademarks and trade names (estimated useful lives of 5 – 10 years)	4,410
Technology and patents (estimated useful lives of 3 – 7 years)	51,695
Covenants not to compete (estimated useful life of 2 years)	898
Acquired in-process Research and Development (IPR&D)	11,107
Total intangible assets			78,073
Other assets			8,665
Total assets acquired			368,253
Current liabilities			(33,294	)
Long-term liabilities			(28,292	)
Total liabilities assumed			(61,586	)
Net assets acquired		$	306,667

As part of the purchase price allocation, an adjustment of $4.9 million was recorded to reflect the fair value of inventory at the date of the acquisition. Based on the average rate at which inventory turns, this adjustment was fully expensed through cost of sales during the quarter ended September 30, 2006.

The identifiable intangible assets are amortized on a straight-line basis over their expected useful lives. The total weighted average amortization period for these intangible assets is 7 years. The acquired IPR&D intangible assets of $11.1 million were written off at the date of acquisition as technological feasibility had not been established and no future alternative uses existed. The value of the IPR&D was determined utilizing the income approach by determining cash flow projections related to the projects.

As of June 30, 2007, the Company had completed its analysis of the income tax matters and elections related to the Amazys acquisition and determined the final amount of deferred income taxes for temporary differences existing between the basis of assets and liabilities for financial reporting and income tax purposes. At December 30, 2006, the Company identified $23.5 million of deferred income tax liabilities that were recorded in purchase accounting. The Company decreased deferred income tax liabilities by $2.3 million during the quarter ended June 30, 2007, as a result of finalization of purchase accounting. In addition, the Company identified and recorded deferred income tax assets of $18.5 million during the quarter ended June 30, 2007 which decreased goodwill. These adjustments brought the net deferred income tax liability acquired to $2.7 million.

In connection with the Amazys acquisition and as part of the purchase price allocation, the Company recorded liabilities of $4.7 million related to involuntary terminations and relocation of certain Amazys employees, and $1.5 million related to facility closure costs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 4—RESTRUCTURING AND INTEGRATION

Restructuring

During 2007, the Company continued to execute the restructuring actions initiated in 2006 related to the integration of Amazys. The Company’s plan to integrate the two businesses includes closure of duplicate facilities, elimination of redundant jobs, and consolidation of product lines. The restructuring plan includes estimated workforce reductions of 81 employees, all of which have been completed as of December 29, 2007, facility closures of approximately 14,000 square feet, various asset write-downs, and related costs for consulting and legal fees. The work force reductions include approximately $6.0 million related to the former CEO’s contract settlement. Asset write-downs include inventory, tooling, capitalized software, and other intangible asset write-downs directly related to discontinued product lines. Of these asset write-downs, $6.4 million were classified as a component of cost of sales in 2007, while all other restructuring charges were included in a separate restructuring line within operating expenses on the accompanying Consolidated Statement of Operations.

The Company has fully executed its restructuring plan related to Amazys. The only future charges that the Company anticipates incurring for this restructuring are related to true-up of the former CEO’s severance estimate, the value of which is variable based on future results and stock price performance of the Company. The following table summarizes the severance accrual balances and utilization for these restructuring actions (in thousands):

	Severance			Asset Write Downs			Facility Exit and Lease Termination Costs			Other			Total
Charges incurred in 2006	$	8,895		$	6,843		$	—		$	407		$	16,145
Amounts paid or utilized in 2006		(2,379	)		(6,843	)		—			(407	)		(9,629	)
Balance at December 30, 2006	$	6,516		$	—		$	—		$	—		$	6,516
Charges incurred in 2007		2,052			594			176			262			3,084
Amounts paid or utilized in 2007		(4,202	)		(594	)		(176	)		(262	)		(5,234	)
Balance at December 29, 2007	$	4,366		$	—		$	—		$	—		$	4,366

As of December 29, 2007, the Company continues to evaluate restructuring activities, if any, associated with the Pantone acquisition.

Integration

Incremental costs incurred related to the integration of the Company’s acquisitions that do not qualify as restructuring under the provisions of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, have been included in a separate line on the Company’s Consolidated Statements of Operations titled “Integration”. These costs include costs related to personnel working fulltime on integration work, integration related travel, and outside consultants’ work on strategic planning and culture and synergy assessments. All costs included in this caption were solely related to the Company’s integration efforts and do not include normal business operating costs. Integration costs associated with the Amazys acquisition were $3.3 and $3.3 million for the fiscal years ended 2007 and 2006, respectively. Integration costs associated with the Pantone acquisition were $0.1 million for the fiscal year ended 2007.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 5—DISCONTINUED OPERATIONS

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company classifies a business component that has been disposed of as a discontinued operation if the cash flow of the component has been eliminated from the Company’s ongoing operations and the Company will no longer have any significant continuing involvement in the component.

On February 7, 2007, the Company completed the sale of its Labsphere subsidiary to Halma Holdings plc (“Halma”). Labsphere, which is based in North Sutton, New Hampshire, provides integrated spheres and systems as well as reflectance materials to the light measurement markets. This divestiture was part of the Company’s ongoing strategy to focus resources on its core color-related businesses. Under the terms of the agreement, Halma acquired all of the outstanding Labsphere stock for $14.3 million in cash. Proceeds from the sale were used to reduce the principal balance of the Company’s first lien credit facility.

The Company recorded a net gain on the sale of $8.2 million for the year ended December 29, 2007, which is presented as a gain on sale of discontinued operations in the accompanying Consolidated Statements of Operations. The results of operations for the Labsphere subsidiary through the date of sale were reported within discontinued operations in the accompanying Consolidated Statements of Operations. In accordance with SFAS 144, the Company has also reclassified the prior year statement of operations to present the results of Labsphere within discontinued operations. Interest expense was not allocated to Labsphere, therefore, all of the Company’s interest expense is included within continuing operations.

The components of the income (loss) from discontinued operations are presented below (in thousands):

	2007			2006		2005
Net sales	$	793		$	12,162	$	11,313
Income (loss) from operations before income taxes	$	(52	)	$	2,565	$	2,099
Income tax expense (benefit)		(69	)		912		453
Income from operations	$	17		$	1,653	$	1,646
Gain on sale	$	6,367
Income tax benefit		1,859
Net gain on sale	$	8,226

There were no remaining assets or liabilities of discontinued operations reported in the Consolidated Balance Sheets as of December 29, 2007. The assets and liabilities of Labsphere have not been reclassified for fiscal 2006. In addition, in the Consolidated Statements of Cash Flows the cash flows of discontinued operations were not disclosed separately in any period presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS

A summary of changes in goodwill by segment for the years ending December 29, 2007 and December 30, 2006, is as follows (in thousands):

	Color Measurement		Color Standards		Total
December 31, 2005	$	8,951	$	—	$	8,951
Acquisitions		193,961		—		193,961
Foreign currency adjustments		189		—		189
December 30, 2006		203,101		—		203,101
Acquisitions		2,606		82,449		85,055
Foreign currency adjustments		52		—		52
December 29, 2007	$	205,759	$	82,449	$	288,208

In 2006, the Company recorded $194.0 million of goodwill and $78.1 million in intangible assets in connection with the Amazys acquisition. During 2007, the Company recorded a final purchase accounting adjustments resulting in additional goodwill of $2.6 million. In connection with the Pantone acquisition in October 2007, the Company recorded $82.4 million of goodwill and $72.2 million of intangible assets. See Note 3 for further discussion of these acquisitions.

The following amounts were included in other intangibles as of December 29, 2007 and December 30, 2006 (in thousands):

	2006					2007
	Assets		Accumulated Amortization			Assets		Accumulated Amortization
Technology and patents	$	61,729	$	(12,461	)	$	52,633	$	(4,492	)
Customer relationships		42,443		(4,562	)		13,043		(2,023	)
Trademarks and trade names		25,704		(2,195	)		5,428		(1,307	)
Covenants not to compete		14,958		(2,302	)		1,570		(709	)
Total	$	144,834	$	(21,520	)	$	72,674	$	(8,531	)

As discussed in Note 1, the Company accounts for goodwill and other intangible assets in accordance with SFAS 142, which requires the Company to test the carrying value of goodwill for impairment at the reporting unit level annually, or more frequently if a triggering event occurs. As a matter of practice, the Company performs the required annual impairment testing during the fourth quarter of each fiscal year. The annual testing performed for the last three fiscal years indicated the fair value exceeded the recorded carrying value of the Company’s reporting units and accordingly no goodwill impairment charge was required for the years ending December 29, 2007, December 30, 2006, and December 31, 2005.

SFAS 142 also requires that intangible assets with determinable useful lives be amortized over their respective estimated useful lives and reviewed annually for impairment in accordance with SFAS 144. As a result of the product integration related to the Amazys acquisition, and in accordance with the provisions of SFAS 144, the Company wrote off $0.7 million in trademarks and trade names for the fiscal year end December 30, 2006. As this impairment was a direct result of product integration related to the Amazys acquisition, the charge was included in the Restructuring line on the Company’s Consolidated Statements of Operations (see Note 4 for further discussion of the restructuring).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The acquired in-process research and development intangible assets of $11.1 million recorded as part of the Amazys acquisition in 2006 were written off at the date of acquisition because technological feasibility had not been established and no future alternative uses existed at that date. The write-off was included in a separate line in the Company’s 2006 Consolidated Statements of Operations.

Amortization expense is computed using the straight-line method over the estimated useful lives of the intangible assets as follows:

Customer and distribution relationships	2 to 15 years
Trademarks and trade names	5 to 30 years
Technology and patents	3 to 15 years
Covenants not to compete	2 to 3 years

Amortization expense, excluding the impairment discussed above, was $13.0 million for 2007, $6.0 million for 2006 and $0.7 for 2005. Estimated amortization expense for intangible assets for each of the succeeding five years is as follows (in thousands):

2008	$	19,853
2009		18,017
2010		13,917
2011		12,456
2012		12,456

NOTE 7—SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Prior to July 1, 2006, the Company maintained a revolving line of credit agreement with a bank, which provided for maximum borrowings of $25 million with variable interest at LIBOR plus 75 to 100 basis points as defined in the agreement. Borrowings under this facility were unsecured and no compensating balances were required under the agreement. This agreement was terminated and replaced by a new revolving line of credit in conjunction with the Amazys acquisition.

In the first quarter of 2006, the Company incurred short-term borrowings of $13.5 million under its former revolving line of credit in connection with the acquisition of its new corporate headquarters and manufacturing facility in Grand Rapids, Michigan. This loan was converted to a mortgage loan in June 2006, secured by the Company’s former headquarters and manufacturing facility in Grandville, Michigan. The mortgage was renewed and extended in October of 2007 during which time the Company made a principal payment of $4.8 million. The new mortgage agreement requires monthly interest payments based on LIBOR plus 2.50%, with the principal balance due in full in June 2008. In December 2007, the Company entered into a definitive purchase agreement to sell the property for $13.1 million plus reimbursement of certain property tax assessment payments made prior to closing of the transaction. The purchase agreement provides for a 120 day due diligence period for the buyer to evaluate the property. The buyer has deposited an initial earnest money deposit of $125,000 with an escrow agent to be applied as a credit to the purchase price at closing. Final closing on the sale will be based on completion of the Buyer’s inspection and due diligence process as well as the granting of governmental approvals related to the future planned usage of the property.

In connection with the Amazys acquisition, the Company entered into secured senior credit facilities which provided for aggregate principal borrowings of up to $220 million and replaced the Company’s previous line-of-credit. The credit facilities consisted of a $160 million first lien loan, which was comprised of a $60 million seven-year term loan and a $40 million five-year revolving line of credit, and a $60 million six-year term

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

second lien loan. Obligations under these credit facilities were secured by essentially all of the tangible and intangible assets of the Company. Both facilities provided variable interest rate options from which the Company selected for interest calculations. Subsequent to the end of the third quarter 2007, the Company elected to change the indices to the Prime Rate plus 125 and 400 basis points for the first and second lien facilities, respectively, in anticipation of re-financing activity associated with the acquisition of Pantone, Inc., which was completed on October 24, 2007. See Note 3 for further discussion of the Pantone acquisition.

In connection with the Pantone acquisition, the Company entered into new secured senior credit facilities which provide for aggregate principal borrowings of up to $415 million and replace the Company’s previous credit facilities established with the Amazys acquisition. The new credit facilities consist of a $310 million first lien loan, which is comprised of a $270 million five-year term loan and a $40 million five-year revolving line of credit, and a $105 million six-year term second lien loan. Obligations under these credit facilities are secured by essentially all of the tangible and intangible assets of the Company. Both facilities provide variable indices from which the Company may select for interest calculations. As of December 29, 2007, the Company has selected the three month LIBOR plus 350 and 750 basis points for most of the first and second lien facilities, respectively, as its primary interest rate index. Interest payments on LIBOR based loans are payable on the last day of each interest period, not to exceed three months. A small portion of the credit facilities are tied to the prime rate and require interest payments on a scheduled quarterly basis.

As of December 29, 2007, the Company had $6.0 million drawn against the revolving line of credit. Further draws on the $40 million revolving line of credit will be restricted to a total outstanding balance of $31.3 million until such time that the mortgage loan on the Company’s Grandville, Michigan facility is repaid in full. The unused portion of the revolving credit facility is subject to a fee of 0.5% per annum.

The Company has entered into interest rate swap agreements to fix a substantial portion of its LIBOR exposure (See Note 8 for further discussion).

The Company recorded deferred financing costs in connection with the secured senior credit facilities discussed above. These costs are currently being amortized over the lives of the related facilities. The remaining unamortized balance as of December 29, 2007 was $15.8 million. In connection with this new financing, the Company wrote off $5.5 million of deferred financing costs associated with the prior credit facility

As of December 29, 2007 and December 30, 2006, the Company’s long-term debt consisted of the following (in thousands):

	2007			2006
First Lien Facility	$	270,000		$	119,400
Second Lien Facility		105,000			60,000
Revolving Line Of Credit		6,000			12,000
		381,000			191,400
Less current portion		(2,700	)		(1,200	)
Total long-term debt	$	378,300		$	190,200

As of December 29, 2007 and December 30, 2006, the credit facilities’ variable rates ranged from 7.13 to 12.38 percent and from 7.13 to 10.37 percent, respectively. As of these dates, the weighted average interest rates for all of the Company’s debt were 9.40 percent and 8.42 percent, respectively, exclusive of amortization of deferred financing costs and the effect of derivative instruments. Total interest expense incurred by the Company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

in 2007 was $22.1 million, including $1.6 million of amortization of deferred financing fees. Total interest expense incurred by the Company in 2006 was $8.8 million, including $0.6 million of amortization of deferred financing fees. In addition, $0.8 million of interest in 2006 was capitalized related to renovations of the Company’s corporate headquarters. Cash paid for interest during 2007 and 2006 totaled $20.4 million and $7.7 million, respectively.

The aggregate amount of long-term debt maturing in the next five years is as follows (in thousands):

	First Lien Credit Facility		Second Lien Credit Facility		Revolving Line of Credit		Total
2008	$	2,700	$	—	$	—	$	2,700
2009		2,700		—		—		2,700
2010		2,700		—		—		2,700
2011		2,700		—		—		2,700
2012		259,200		—		6,000		265,200
Thereafter		—		105,000		—		105,000
	$	270,000	$	105,000	$	6,000	$	381,000

In addition to the above repayment schedule, the Company is obligated to make additional principal payments in the amount of 75 percent of “consolidated excess cash flow”, as defined in the first lien credit facility agreement. Consolidated excess cash flow is a measure that starts with earnings before interest, depreciation, taxes, and amortization and adjusts for changes in working capital, capital expenditures, financing and asset sales used to fund capital expenditures, and tax provisions.

The credit facilities contain certain operational and financial covenants regarding the Company’s ability to create liens, incur indebtedness, make certain investments or acquisitions, enter into certain transactions with affiliates, incur capital expenditures beyond prescribed limits, and meet certain financial ratios. The Company was in compliance with all covenants as of December 29, 2007.

NOTE 8—DERIVATIVE FINANCIAL INSTRUMENTS

Foreign Currency Forward Contracts

The Company utilized foreign currency forward exchange contracts to manage the variability associated with the cash requirements associated with the acquisition of Amazys in 2006. These contracts had a notional value of CHF 260.1 million ($210.3 million USD) and were not designated as hedges as they did not meet the criteria specified by SFAS 133. The contracts expired on July 5, 2006, the date of the acquisition, in a net gain position of $2.1 million, which was recorded as a component of other income in the consolidated statements of operations.

Interest Rate Swaps

The Company utilizes interest rate swap agreements designated as cash flow hedges of the outstanding variable rate borrowings of the Company. These agreements result in the Company paying or receiving the difference between three month LIBOR and fixed interest rates at specified intervals, calculated based on the notional amounts. The interest rate differential to be paid or received is accrued as interest rates change and is recorded as interest income or expense. The effective portion of the derivative’s gain or loss is initially recorded

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as a component of accumulated other comprehensive income, net of taxes, and subsequently reclassified into earnings when the hedged interest expense affects earnings. The ineffective portion of the gain or loss, if any, is recognized in current period earnings in general and administrative expenses.

As of December 29, 2007, the combined notional amount of outstanding swap agreements was $336.1 million. Certain of these swap agreements have notional amounts that fluctuate over their lives. The fair value of outstanding interest rate swaps at December 29, 2007 was a liability of $4.9 million which was recorded in both current and long-term other accrued liabilities, depending on the expiration date of the underlying instrument. During 2007, the Company reclassified a $0.3 million benefit related to net interest settlements from other comprehensive income to interest expense. The impact of interest accruals on these instruments was not material. Ineffectiveness related to these swaps was not material in 2006 or 2007.

In 2008, the Company expects to reclassify a charge of $1.7 million from other comprehensive income to interest expense in connection with the swap position as of December 29, 2007.

At December 29, 2007, interest rate swap contract details were as follows (in thousands):

Expiration Date	Notional Amount	Floating LIBOR Rate	Fixed Rate
June, 2008	$32,500	5.141%	5.260%
June, 2009	42,500	5.141%	5.188%
June, 2010	53,100	5.141%	5.188%
December, 2011	58,000	4.858%	4.326%
December, 2012	50,000	4.858%	4.464%
December, 2012	50,000	4.858%	4.422%
December, 2012	50,000	4.858%	4.422%

The counterparty to all of the Company’s derivative financial instruments is a major financial institution with which the Company also has other financial relationships. The counterparty exposes the Company to credit loss in the event of non-performance. If the counterparty fails to meet the term of the agreement, the Company’s exposure is limited to the net amount that would have been received, if any, over each agreement’s remaining life. The Company does not anticipate non-performance by the counterparty given their high credit ratings, and no material loss would be expected from non-performance by the counterparty.

NOTE 9—SHARE-BASED COMPENSATION

Description of Share-Based Compensation Plans

Employee Stock Purchase Plan—The Company may sell up to one million shares of common stock to its employees under an employee stock purchase plan. Eligible employees who participate purchase shares quarterly at 85 percent of the market price on the date purchased.

Cash Bonus Conversion Plan—The Company had a Cash Bonus Conversion Plan that expired in 2005 after share purchases with 2004 bonuses payments were completed and was not renewed. This plan, which was allotted up to 400,000 shares of the Company’s common stock, provided an opportunity for certain executives of the Company to purchase restricted stock at 50 percent of market value, up to an amount equal to their annual cash bonus. Shares were issued in the name of the executive, who maintained all rights of a shareholder, subject to certain restrictions on transferability and a risk of forfeiture. The forfeiture provisions lapsed by 20 percent after six months and an additional 20 percent annually thereafter. The difference between the purchase price and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the fair value of the restricted stock at the date of purchase for shares subject to forfeiture provisions was charged to expense as the forfeiture provisions lapse. All forfeiture provisions have lapsed by the end of fiscal 2007.

Stock Option and Restricted Stock Plan—The Company has a stock incentive plan covering 3.5 million shares of common stock. This plan became effective on June 30, 2006, and replaced the Company’s previous option and restricted stock plans. The new plan permits stock options, stock appreciation rights, restricted stock awards, and restricted stock units to be granted to employees, the Company’s Board of Directors, and consultants and advisors to the Company. To date, only stock options and restricted stock awards have been granted under this plan. Stock options are granted with an exercise price equal to market price on the date of grant and are exercisable based on vesting schedules determined at the time of grant, which range from immediate to three year vesting. No options are exercisable later than ten years after the date of grant. Restricted shares awarded under this plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged, or otherwise disposed of during the restriction period. The restriction period is determined by a committee appointed by the Board of Directors and range from immediate to four years.

Valuation of Share-Based Compensation

Valuation and Amortization Method—The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. Restricted stock awards are valued at closing market price on the date of grant. Options and awards either cliff vest or are subject to graded vesting based upon either service or performance conditions. Compensation expense related to options and awards is recognized on a straight-line basis over their requisite service or performance periods. Compensation expense for shares issued under the Employee Stock Purchase Plan is recognized for 15 percent of the market value of shares purchased, in the quarter to which the purchases relate.

Expected Term—Expected term estimates for employee options are based upon prior exercise, cancellation, and expiration history, which the Company believes to be representative of future behavior. The Company has considered the effects of analyzing expected term separately for different groups of employees, and has concluded that historical exercise patterns are not significantly different between groups. Therefore, one expected term is used for all employee options.

Expected Volatility—The expected volatility is based upon historical volatility of the Company’s stock for a period of time equivalent to that of the expected term of the option. Consideration is given to unusual factors that might cause the historical period to be unrepresentative of future expectations.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of option grant for zero-coupon issues with terms equivalent to the expected term of the options.

Dividends—The Company’s dividend yield is calculated as the percentage of dividends issued on shares relative to the average market price of those shares and is calculated over an historical period equivalent to that of the expected term of the option. Beginning in 2007, the Company suspended its quarterly dividend payment, therefore options granted after 2006 have been valued using a zero percent dividend yield.

Forfeitures—The Company applies an estimated forfeiture rate to options as they vest. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience. In the Company’s pro forma information required under SFAS 123 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accuracy of Fair Value Estimates—The Black-Scholes model is a trading option-pricing model that does not consider the non-traded nature of employee stock options, the restrictions on trading, lack of transferability or the ability of the employees to forfeit options prior to expiration. If the model adequately permitted consideration of these characteristics, the resulting stock option valuations may be different. In addition, the valuation model relies on subjective assumptions that can materially affect the estimated value of options and it may not provide an accurate measure of the fair value of the Company’s stock options.

The Company used the following assumptions in valuing employee options granted during 2007, 2006, and 2005:

	2007	2006	2005
Dividend yield	0.0%	1.0%	0.9% –1.0%
Volatility	52% – 54%	56% –58%	43% – 52%
Risk-free interest rates	4.5% –4.8%	4.5% –5.2%	3.6% –3.9%
Expected term of options	7 years	7 years	6 years

Pro Forma Information Under SFAS 123 for Periods Prior to Fiscal 2006

As discussed in Note 1, prior to January 1, 2006, the Company accounted for share-based employee compensation under APB 25, therefore no compensation expense was recognized for stock option activities or shares issued under the Employee Stock Purchase Plan. Had compensation expense for the Company’s share-based compensation plans been determined based upon the fair value at the grant dates, consistent with SFAS 123, the Company’s net income and net income per share prior to the adoption of SFAS 123(R) would have been as follows (in thousands):

	2005
Net Income
Net Income—as reported	$	11,052
Deduct: Share-based compensation expense, fair value method (net of income tax)		(2,120	)
Pro forma net income	$	8,932
Basic net income per share
As reported	$	.52
Pro forma	$	.42
Diluted net income per share
As reported	$	.52
Pro forma	$	.42

On December 27, 2005, the Board of Directors of the Company approved the acceleration of vesting for unvested and out of the money (exercise price above current market price) stock options. There were no unvested options that were in the money at that date. As a result of this action, options to purchase 396,000 shares of common stock, that otherwise would have vested in 2006 and 2007, became fully vested. The decision to accelerate the vesting of these options was made primarily to reduce non-cash compensation expense that would have been recorded in future periods following the Company’s adoption of SFAS 123(R). As a result of this vesting acceleration, the Company reduced its non-cash compensation expense related to these options by approximately $0.8 million (pre-tax) in the aggregate over the Company’s 2006 and 2007 fiscal years, based on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

estimated value calculated using the Black-Scholes option-pricing model. The remaining pro-forma compensation expense under SFAS 123 relating to these early vested options was recognized in 2005 for the pro-forma disclosures presented above.

Stock Option and Award Activity

Restricted Stock Awards

Restricted stock activity for 2007 was as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested balance at December 30, 2006	123,780		$	10.72
Granted	343,041			13.51
Vested	(75,761	)		10.23
Forfeited	(9,813	)		12.50
Unvested balance at December 29, 2007	381,247		$	13.28

The total fair value of shares vested, determined as of the release date, during the year ended December 29, 2007 approximated $1.0 million. During the years ended December 30, 2006 and December 31, 2005, the weighted average grant date fair value of awards issued was $10.86 and $10.31 per share, respectively. The total fair value of shares vested, determined as of the release date, was $0.6 million during the year ended December 30, 2006 and was not significant during the year ended December 31, 2005.

Stock Options

Stock option activity for 2007 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (thousands)
Outstanding at December 30, 2006	2,330,455		$	11.88
Granted	441,764			12.67
Exercised	(340,021	)		9.20
Forfeited	(36,492	)		12.09
Expired	(217,600	)		16.16
Outstanding at December 29, 2007	2,178,106		$	12.03	5.83	$	2,046
Vested and expected to vest at December 29, 2007	2,127,775		$	12.03	5.76	$	2,040
Exercisable at December 29, 2007	1,539,980		$	11.94	4.58	$	1,979

The aggregate intrinsic value of options outstanding as of December 29, 2007, was calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that were in-the-money as of that date. Options that were not in-the-money as of that date, and therefore have a negative intrinsic value, have been excluded from this figure.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The weighted average grant date fair value of options granted during the year ended December 29, 2007, was $7.58 per share. The total intrinsic value of options exercised, determined as of the exercise date, during the same period was $1.4 million. During the years ended December 30, 2006 and December 31, 2005, the weighted average grant date fair value of options granted was $6.33 and $7.46 per share, respectively, and the total intrinsic value of options exercised, determined as of the exercise date, was $0.2 million and $1.0 million, respectively.

Share-Based Compensation Expense

Total share-based compensation expense recognized in the Consolidated Statements of Operations for the years ended December 29, 2007 and December 30, 2006 was as follows (in thousands):

	2007		2006
Stock options	$	1,938	$	1,242
Restricted stock		1,559		426
Employee stock purchase plan		46		60
Cash bonus conversion plan		94		180
		3,637		1,908
Accelerated vesting related to restructuring activities:		542		1,016
Total share-based compensation expense	$	4,179	$	2,924

All share-based compensation expense was recorded in the Consolidated Statements of Operations in the line in which the salary of the individual receiving the benefit was recorded. The total income tax benefit recognized related to this compensation was $0.7 million for the year ended December 29, 2007 and $0.5 million for the year ended December 30, 2006. As of December 29, 2007, there was unrecognized compensation cost for non-vested share-based compensation of $2.3 million related to options and $3.1 million related to restricted share awards. These costs are expected to be recognized over remaining weighted average periods of 1.67 and 1.74 years, respectively.

Cash received from options exercised during 2007 and 2006 was $3.1 and $0.5 million, respectively. The tax benefit that was recognized related to these option exercises was $0.4 and $0.1 million, respectively.

NOTE 10—EMPLOYEE BENEFIT PLANS

401(k) Retirement Savings Plans

The Company maintains 401(k) retirement savings plans for the benefit of substantially all full time U.S. employees. Investment decisions are made by individual employees. Investments in Company stock are not allowed under the plans. Participant contributions are matched by the Company based on applicable matching formulas. The Company’s matching expense for the plans was $0.8, $1.0, and $0.7 million in 2007, 2006 and 2005, respectively.

Defined Benefit Plan

The Company maintains a defined benefit plan for employees of its X-Rite, Europe subsidiary in Switzerland. The plan is part of an independent collective fund which provides pensions combined with life and disability insurance. The assets of the funded plan are held independently of the Company’s assets in a legally

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

distinct and independent collective trust fund which serves various unrelated employers. The Fund’s benefit obligations are fully reinsured by Swiss Life Insurance Company. The plan is valued by independent actuaries using the projected unit credit method. The liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increases, and pension adjustments.

On December 30, 2006, the Company adopted SFAS 158, which required the Company to recognize the funded status of its pension plan (measured as the difference between the fair value of plan assets and the projected benefit obligation) on the balance sheet as a net asset or liability. As of December 30, 2006, the Company’s net pension asset of $1.5 million was included in the other non-current assets line of its Consolidated Balance Sheets. The adoption of SFAS 158 had no effect on the Company’s Consolidated Statements of Operations.

The last actuarial valuation was carried out as of December 29, 2007. The amounts recognized in the Consolidated Balance Sheets, shown in other non-current assets, as of December 29, 2007 and December 30, 2006, were determined as follows (in thousands):

	2007			2006
Fair value of plan assets	$	22,867		$	20,828
Projected benefit obligation		(22,142	)		(19,342	)
Net asset in the balance sheet	$	725		$	1,486

The following weighted-average assumptions were used in accounting for the defined benefit plan:

	2007		2006
Discount rate	3.50	%	3.25	%
Expected return on plan assets	4.50	%	5.00	%
Future salary increases	1.50	%	1.50	%
Future pension increases	0.25	%	0.25	%

Future benefits, to the extent that they are based on compensation, include assumed salary increases, as presented above, consistent with past experience and estimates of future increases in the Swiss industrial labor market.

During the year ended December 29, 2007, the pension fund’s weighted average expected long-term rate of return on assets was 4.5 percent. In developing this assumption, the input from third party pension plan asset managers was evaluated, including their review of asset class return expectations, long-term inflation assumptions, and historical average return.

Net periodic pension cost has been included in the Company’s results since the acquisition of Amazys in July of 2006. Net periodic pension cost during 2007 and 2006 includes the following (in thousands):

	2007			2006
Current service costs	$	1,488		$	705
Interest		668			310
Expected return on plan assets		1,058	)		(500	)
Net periodic pension cost	$	1,098		$	515

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2007, the Company recorded a charge of $0.2 million in Other Comprehensive Income related to actuarial losses. This is the only amount in accumulated other comprehensive income related to the pension as of December 29, 2007. There was no pension related balance in accumulated other comprehensive income as of December 30, 2006.

Changes in pension benefit obligation during 2007 and 2006 were as follows (in thousands):

	2007			2006
Obligations at beginning of period	$	19,342		$	18,752
Purchase accounting adjustments		891			—
Service cost		1,488			705
Interest cost		668			310
Participant contributions		801			369
Actuarial gain		(2,341	)		—
Benefit payments		(374	)		(833	)
Foreign exchange translation effect		1,667			39
Obligations at end of period	$	22,142		$	19,342

During 2007, the Company finalized the purchase accounting for the Amazys acquisition (see Note 3 for further discussion), which included the final valuation of the pension plan as of the date of the acquisition resulting in a decrease of $0.9 million to the net pension asset.

Accumulated benefit obligations were $18.5 million as of December 29, 2007.

Changes in the fair value of plan assets for 2007 and 2006 were as follows (in thousands):

	2007			2006
Fair value at beginning of period	$	20,828		$	20,477
Benefit payments		(374	)		(833	)
Employer contributions		1,405			612
Participant contributions		801			369
Gain (loss) on plan assets		(1,513	)		116
Foreign exchange translation effect		1,720			87
Fair value at end of period	$	22,867		$	20,828

The weighted average actual asset allocations, by asset category, for the pension plan assets as of December 29, 2007 were as follows:

	2007		2006
Reinsurance contract with Swiss Life	88.8	%	88.1	%
Equity securities	4.7	%	5.1	%
Debt securities	1.5	%	1.5	%
Real estate	1.6	%	1.6	%
Other	3.4	%	3.7	%
Total	100.0	%	100.0	%

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The assets held under the collective reinsurance contract by the Plan’s re-insurer Swiss Life Insurance Company are invested in a mix of Swiss and international bond and equity securities within the limits prescribed by the Swiss Pension Law.

The following estimated future benefit payments, which reflect expected future service, are expected to be paid in the years indicated (in thousands):

2008	$	1,868
2009		1,634
2010		1,592
2011		1,697
2012		1,942
2013-2017		11,878

The Company expects to contribute $1.5 million to the Plan during 2008.

NOTE 11—INCOME TAXES

The provision (benefit) for income taxes associated with continuing operations consisted of the following (in thousands):

	2007			2006			2005
Current:
Federal	$	(2,566	)	$	(1,645	)	$	1,413
State		95			32			441
Foreign		5,198			2,865			148
		2,727			1,252			2,002
Deferred:
Federal		8,070			(6,300	)		1,528
State		(360	)		—			—
Foreign		(873	)		—			—
		6,837			(6,300	)		1,528
	$	9,564		$	(5,048	)	$	3,530

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Major components of the Company’s deferred income tax assets and liabilities are as follows (in thousands):

	2007			2006
Assets:
Net operating losses	$	19,231		$	5,682
XRV impairment allowances		3,343			3,658
Acquired intangibles		3,134			—
Tax credits		2,946			671
Capital losses		2,939			702
Accruals not currently deductible		2,903			2,200
Inventories		2,568			3,389
Severance accruals		1,926			1,833
Derivative financial instruments		1,730			67
Amortization of intangible assets		1,550			1,010
Share-based compensation		1,122			504
Tax accruals under FIN 48		966			—
Accounts receivable		408			195
Gain and losses on disposals		244			146
		45,010			20,057
Valuation allowance		(32,100	)		(7,182	)
Deferred income tax assets		12,910			12,875
Liabilities:
Acquired intangibles		18,228			21,577
Software development costs		2,156			2,073
Depreciation and amortization		1,653			898
Other		803			419
Deferred income tax liabilities		22,840			24,967
Net deferred income tax liabilities	$	(9,930	)	$	(12,092	)

Under FASB 109, the Company has recorded valuation allowances on many of its current deferred income tax assets, research and experimentation credit carry-forwards and net operating loss carry-forwards for which it is not more likely than not that a future benefit will be realized. The net operating loss carry-forwards relate to operations in the United States which expire at various rates through 2027 and also pertain to operations outside of the United States which do not have expiration dates.

Valuation allowances of $10.5 million on deferred income tax assets related to the Amazys and Pantone acquisitions were recorded as an offset to Goodwill. The Company has aggregate valuation allowances of $11.5 million on deferred tax assets which if subsequently realized will be allocated to reduce goodwill associated with prior acquisitions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table represents a reconciliation of income taxes at the United States statutory rate with the effective rate as follows (in thousands):

	2007			2006			2005
Income taxes (benefit) computed at statutory rate of 35%	$	(3,940	)	$	(11,267	)	$	4,772
Increase (decrease) in taxes resulting from:
Change in valuation allowance		13,446			3,377			3,576
Rate differential on foreign income		(2,785	)		(317	)		(3,266	)
Foreign income subject to tax in the United States		1,456			—			—
Share-based compensation		544			275			—
FIN 48 interest included in income taxes		393			—			—
State income taxes		(264	)		21			287
Foreign sales corporation		—			(744	)		(810	)
Non-deductible in-process research and development costs		—			3,887			—
Research tax credits		—			(544	)		(461	)
Other		714			264			(568	)
	$	9,563		$	(5,048	)	$	3,530

Cash expended for income taxes was $1.3, $4.9, and $1.4 million in 2007, 2006 and 2005, respectively.

The Company expects to repatriate any future earnings of its non-U.S. operations to pay down existing debt. As of December 29, 2007 and December 30, 2006, the Company did not have material undistributed earnings from non-U.S. operations, and therefore, U.S. federal income and foreign withholding taxes associated therewith were not significant, after considering the effects of related foreign tax credits.

Uncertain Tax Positions

Effective December 31, 2006 (fiscal year 2007), the Company adopted the provisions of FIN 48. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 and prescribes a threshold of more likely than not to be sustained upon examination. The adjustment to retained earnings upon adoption of FIN 48 on December 31, 2006 was $0.2 million. The balance recorded as of December 29, 2007 is included as a component of the Company’s accrued income taxes.

The following table summarizes the activity related to amounts recorded for uncertain tax positions exclusive of interest and penalties from December 31, 2006 to December 29, 2007 (in thousands):

Balance as of December 31, 2006	$	4,331
Increases related to prior year tax positions		636
Decreases related to prior year tax positions		(532	)
Increases related to current year tax positions		88
Decreases related to settlements with taxing authorities		(49	)
Decreases related to the lapsing of the statute of limitations		(456	)
Balance as of December 29, 2007	$	4,018

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s FIN 48 liabilities are recorded as a component of accrued income taxes in the accompanying consolidated financial statements.

The Company is currently in negotiations or has settled several tax matters in 2008 with a value of $4.1 million, but does not anticipate other significant changes to its FIN 48 liabilities during the next twelve months.

Unrecognized tax benefits including interest and penalties, that, if recognized would favorably affect the Company’s effective tax rate in the future were $5.8 and $5.1 million as of December 29, 2007 and December 30, 2006, respectively.

It is the Company’s policy to include interest and penalties related to gross unrecognized tax benefits in its provision for income taxes. As of December 29, 2007, the Company had accrued $1.8 million for payment of interest and penalties.

The Company and its subsidiaries are periodically examined by various taxing authorities. The Company files federal state and local tax returns in the United States as well as several foreign countries. Its primary income tax jurisdictions are the United States and Switzerland. The Internal Revenue Service has examined the Company’s federal tax returns through 2001. The tax years 2002 -2007 remain subject to examination by the Internal Revenue Service for federal income tax purposes, and the years 2004-2007 remain subject to examination by the appropriate governmental agencies for Swiss tax purposes.

NOTE 12—FOUNDERS’ STOCK REDEMPTION AGREEMENTS

During 1998, the Company entered into agreements with its founding shareholders for the future repurchase of 4.5 million shares of the Company’s outstanding stock. The agreements were terminated in November 2004. At that time, 3.4 million shares remained subject to repurchase. Prior to their termination, the agreements required stock repurchases following the later of the death of each founder or his spouse. The cost of the repurchase agreements was to be funded by $160.0 million of proceeds from life insurance policies the Company purchased on the lives of certain of these individuals.

In June 2005, the Company entered into agreements with two life settlement providers for the sale of three life insurance policies owned by the Company with a total face value of $30.0 million. The Company received proceeds of $6.5 million, net of closing costs, from the sale of these policies. The Company recorded a gain of $1.2 million in the second quarter of 2005 in connection with the sale of these policies, which was included as a component of Operating Income. At December 29, 2007, the Company’s remaining life insurance portfolio consists of eleven policies with a face value of $130.0 million.

Under provisions of the life insurance policies originally purchased to fund the agreements, the Company is allowed to determine the timing and amount of premium payments. Premiums on the remaining policies total $3.5 million per year. The Company elected not to make premium payments for the 2007, 2006, and 2005 policy years. This election has not materially impacted the cash surrender values during those periods, nor is it expected to affect payment of future benefits under the policies. The Company continues to review its options with regard to the future of the remaining policies.

NOTE 13—CONCENTRATION OF CREDIT RISK

Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash equivalents, trade receivables, and interest rate derivatives. In all cases, the maximum exposure to loss from credit risk equals the gross fair value of the financial instruments. The

77

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

need for reserves for such losses is continually assessed, and historically has been within expectations. The Company does not require collateral or other security to support financial instruments subject to credit risk.

With respect to cash equivalents and interest rate derivatives, the Company’s credit risk is limited due to the counterparties being high credit quality financial institutions.

With respect to trade receivables, the Company’s credit risk is limited due to a relatively large customer base and its dispersion across different industries and geographic areas.

See Note 2 regarding revenues from significant customers.

NOTE 14—OPERATING LEASES

The Company leases real property, equipment and automobiles under agreements that expire on various dates. Certain leases contain renewal provisions and generally require the company to pay utilities, insurance, taxes, and other operating expenses. Future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 29, 2007, are as follows (in thousands):

2008	$	3,457
2009		2,783
2010		2,196
2011		1,959
2012		1,303

Total rental expense charged to continuing operations was $3.3, $2.2, and $1.3 million, in 2007, 2006, and 2005. Substantially all of the minimum rental payments under operating leases are related to rent expense.

NOTE 15—CONTINGENCIES, COMMITMENTS AND GUARANTEES

The Company is involved in legal proceedings, legal actions, and claims arising in the normal course of business, including proceedings related to product, labor, and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. The Company records amounts for losses that are deemed probable and subject to reasonable estimate. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial statements.

Pursuant to a standby letter of credit agreement, the Company has provided a financial guarantee to a third party on behalf of its subsidiary, located in England. The term of the letter of credit is one year, with an automatic renewal provision at the grantor’s discretion. The face amount of the agreement is 130,000 British pounds sterling or approximately $0.3 million at December 29, 2007.

The Company’s product warranty reserves were not significant.

NOTE 16—SHAREHOLDER PROTECTION RIGHTS AGREEMENT

In November of 2001, the Company’s Board of Directors adopted a Shareholder Protection Rights Plan (Plan), which was implemented in the first quarter of 2002. The Plan is designed to protect shareholders against unsolicited attempts to acquire control of the Company in a manner that does not offer a fair price to all shareholders.

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X-RITE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Under the Plan, one purchase right automatically trades with each share of the Company’s common stock. Each Right entitles a shareholder to purchase 1/100 of a share of junior participating preferred stock at a price of $30.00, if any person or group attempts certain hostile takeover tactics toward the Company. Under certain hostile circumstances, each Right may entitle the holder to purchase the Company’s common stock at one-half its market value or to purchase the securities of any acquiring entity at one-half their market value. Rights are subject to redemption by the Company at $.005 per Right and, unless earlier redeemed, will expire in the first quarter of 2012. Rights beneficially owned by holders of 15 percent or more of the Company’s common stock, or their transferees and affiliates, automatically become void.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Set forth below is a summary of the quarterly operating results on a consolidated basis for the years ended December 29, 2007 and December 30, 2006. Refer to Management’s Discussion and Analysis provided in Item 7 and the Notes to the Consolidated Financial Statements for further disclosure of significant accounting transactions that may have affected the quarterly operating results for each of the periods presented.

QUARTER	Sales		Gross Profit		Operating Income (Loss)			Net Income (Loss)			Diluted Earnings (Loss) Per Share
	(In thousands, except per share data)
2007:
First Quarter	$	57,717	$	35,836	$	5,008		$	7,810		$	.27
Second Quarter		60,745		36,967		6,913			2,068			.07
Third Quarter		55,561		30,858		443			(2,862	)		(.10	)
Fourth Quarter		74,687		42,576		4,279			(19,595	)		(.68	)
2006:
First Quarter	$	27,162	$	17,925	$	(380	)	$	236		$	.01
Second Quarter		28,859		17,649		(261	)		1,620			.07
Third Quarter		51,198		20,798		(29,962	)		(28,260	)		(.99	)
Fourth Quarter		60,422		34,750		4,943			913			.03

The aggregate quarterly earnings (loss) per share amounts as disclosed in the table above does not equal the 2006 annual diluted loss per share because each quarter is calculated independently of the annual period.

80

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE—None

ITEM 9A. CONTROLS AND PROCEDURES

(i) CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company’s senior management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report (the “Evaluation Date”). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that the Company’s disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(ii) INTERNAL CONTROLS OVER FINANCIAL REPORTING

(a) Management’s Report on Internal Control over Financial Reporting

Management’s Report on Internal Control over Financial Reporting is set forth on page 37 of this report on Form 10-K.

(b) Attestation Report of the Registered Public Accounting Firm.

The attestation report of Ernst & Young LLP, the Company’s independent registered public accounting firm, on the effectiveness of the Company’s internal control over financial reporting is set forth on page 38 of this report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no material changes in internal control over financial reporting that occurred during the quarter ended December 29, 2007 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION—None

81

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT, AND CORPORATE GOVERNANCE

(a) Directors

Information relating to directors appearing under the caption “Election of Directors” in the definitive Proxy Statement for the 2008 Annual Meeting of Shareholders is incorporated by reference.

(b) Officers

Information relating to executive officers is included in this report in Item 4 of Part I under the caption “Executive Officers of the Registrant.”

(c) Compliance with Section 16(a)

Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the caption “Compliance with Reporting Requirements” in the definitive Proxy Statement for the 2008 Annual meeting of Shareholders is incorporated herein by reference.

(d) Code of Ethics

The Company has adopted a code of ethics that applies to its senior executive team, including its Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. The code of ethics is posted on the Company’s website at www.xrite.com. The Company intends to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of its code of ethics that apply to the Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer by posting such information on the Company’s website. Copies of the code of ethics will be provided free of charge upon written request directed to Investor Relations at corporate headquarters.

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the caption “Executive Compensation” contained in the definitive Proxy Statement for the 2008 Annual Meeting of Shareholders is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained under the captions “Securities Ownership of Management” and “Securities Ownership of Certain Beneficial Owners and Equity Compensation Plan Summary” contained in the definitive Proxy Statement for the 2008 Annual Meeting of Shareholders is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information contained under the caption “Certain Relationships and Related Transactions” contained in the definitive Proxy Statement for the 2008 Annual Meeting of Shareholders is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information contained under the caption “Our Relationship with Our Independent Auditors” contained in the definitive Proxy Statement for the 2008 Annual Meeting of Shareholders is incorporated herein by reference.

82

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

(a) 1 The following financial statements, all of which are set forth in Item 8, are filed as a part of this report:

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	41
Report of Independent Registered Public Accounting Firm on Financial Statements	42
Consolidated Balance Sheets	43
Consolidated Statements of Operations	45
Consolidated Statements of Shareholders Investment	46
Consolidated Statements of Cash Flows	47
Notes to Consolidated Financial Statements	48

(a) 2 The following financial statements schedule is filed as a part of this report beginning on page 85:

Schedule II Valuation and Qualifying Accounts

(b) See Exhibit Index located on page 86.

(c) All other schedules required by Form 10-K Annual Report have been omitted because they were inapplicable, included in the notes to the consolidated financial statements, or otherwise not required under the instructions contained in Regulation S-X.

83

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

X-RITE, INCORPORATED

March 13, 2008	/s/    THOMAS J. VACCHIANO JR.
	Thomas J. Vacchiano Jr. Chief Executive Officer (principal executive officer)
March 13, 2008	/s/    LYNN J. LYALL
	Lynn J. Lyall, Executive Vice President and Chief Financial Officer
	(principal financial and accounting officer)

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below on this 13th day of March, 2008, by the following persons on behalf of the Registrant and in the capacities indicated.

Each director of the Registrant whose signature appears below, hereby appoints Thomas J. Vacchiano Jr. and Lynn J. Lyall, and each of them individually as his attorney-in-fact to sign in his name and on his behalf as a Director of the Registrant, and to file with the Commission any and all amendments to this report on Form 10-K to the same extent and with the same effect as if done personally.

/s/    GIDEON ARGOV         Gideon Argov, Director	/s/    STANLEY W. CHEFF         Stanley W. Cheff, Director
/s/    MARIO FONTANA         Mario Fontana, Director	/s/    L. PETER FRIEDER         L. Peter Frieder, Director
/s/    MASSIMO S. LATTMANN         Massimo S. Lattmann, Director	/s/    PAUL R. SYLVESTER         Paul R. Sylvester, Director
/s/    JOHN E. UTLEY         John E. Utley, Director	/s/    THOMAS J. VACCHIANO JR.         Thomas J. Vacchiano Jr., Director
/s/    MARK D. WEISHAAR         Mark D. Weishaar, Director

84

Valuation and Qualifying Accounts

X-Rite, Incorporated

	Balance at Beginning of Period		Additions Charged to Costs and Expenses		Deductions*		Deducted Balance at end of Period
	(in thousands)
Year ended December 29, 2007
Allowance for losses on accounts receivable	$	1,584	$	853	$	109	$	2,328
Year ended December 30, 2006
Allowance for losses on accounts receivable	$	1,185	$	786	$	387	$	1,584
Year ended December 31, 2005
Allowance for losses on accounts receivable	$	1,470	$	258	$	543	$	1,185

* Deductions represent uncollectible accounts written-off, net of recoveries.

85

EXHIBIT INDEX

2	Transaction Agreement dated as of January 30, 2006, between X-Rite, Incorporated and Amazys Holding AG (filed as exhibit to Form 8-K dated January 31, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
2(1)	Agreement and Plan of Merger by and among X-Rite, Incorporated and Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc., Pantone Asia, Inc. and Pantone Japan, Inc. and all of the Stockholders of each of the Companies and Stockholders’ Representation named herein dated August 23, 2007.
2(2)	Amendment Number 1 To Agreement and Plan of Merger by and among X-Rite, Incorporated and Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc., Pantone Asia, Inc. and Pantone Japan, Inc. and all of the Stockholders of each of the Companies and Stockholders’ Representation named herein dated October 15, 2007.
2(3)	Amendment Number 2 To Agreement and Plan of Merger by and among X-Rite, Incorporated and Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc., Pantone Asia, Inc. and Pantone Japan, Inc. and all of the Stockholders of each of the Companies and Stockholders’ Representation named herein dated October 24, 2007.
3(1)	Restated Articles of Incorporation (filed as exhibit to Form S-18 dated April 10, 1986 (Registration No. 33-3954C) and incorporated herein by reference).
3(2)	Certificate of Amendment to Restated Articles of Incorporation adding Article IX (filed as exhibit to Form 10-Q for the quarter ended June 30, 1987 (Commission File No. 0-14800) and incorporated herein by reference).
3(3)	Certificate of Amendment to Restated Articles of Incorporation amending Article III (filed as exhibit to Form 10-K for the year ended December 31, 1995 (Commission File No. 0-14800) and incorporated herein by reference).
3(4)	Certificate of Amendment to Restated Articles of Incorporation amending Article IV as filed with the Michigan Department of Consumer & Industry Services (filed as exhibit to Form 10-K for the year ended January 2, 1999 (Commission File No. 0-14800) and incorporated herein by reference).
3(5)	Amended and Restated Bylaws of X-Rite, Incorporated, as amended and restated November 14, 2006 (filed as exhibit to Form 8-K dated November 20, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
4(1)	X-Rite, Incorporated common stock certificate specimen (filed as exhibit to Form 10-Q for the quarter ended June 30, 1986 (Commission File No. 0-14800) and incorporated herein by reference).
4(2)	Shareholder Protection Rights Agreement, dated as of March 29, 2002, including as Exhibit A the form of Rights Certificate and of Election to Exercise, and as Exhibit B the form of Certificate of Adoption of Resolution Designating and Prescribing Rights, Preferences and Limitations of Junior Participating Preferred Stock of the Company (filed as exhibit to Form 10-K for the year ended December 29, 2001 (Commission File No. 0-14800) and incorporated herein by reference).

The following material contracts identified with “*” preceding the exhibit number are agreements or compensation plans with or relating to executive officers, directors or related parties.

*10(1)	Form of Indemnity Contract entered into between X-Rite, Incorporated and members of the board of directors (filed as exhibit to Form 10-Q for the quarter ended June 30, 1996 (Commission File No. 0-14800) and incorporated herein by reference).
*10(2)	Employment Arrangement Effective Upon a Change in Control entered into between X-Rite, Incorporated and certain persons together with a list of such persons (filed as exhibit to Form 10-K for the year ended January 1, 2000 (Commission File No. 0-14800) and incorporated herein by reference).

86

EXHIBIT INDEX—continued

*10(3)	Operating Agreement for XR Ventures, LLC, dated as of September 14, 2000, among XR Ventures, LLC, X-Rite, Incorporated, Dr. Peter M. Banks and Mr. James A. Knister (filed as exhibit to Form 10-Q for the quarter ended September 30, 2000 (Commission File No. 0-14800) and incorporated herein by reference).
*10(4)	Form of Indemnity Agreement entered into between X-Rite, Incorporated and members of its board of directors and officers together with a list of such persons (filed as exhibit to Form 10-Q for the quarter ended September 28, 2002 (Commission File No. 0-14800) and incorporated herein by reference).
*10(5)	Form of Indemnity Agreement entered into between X-Rite, Incorporated and Paul R. Sylvester (filed as exhibit to Form 10-Q for the quarter ended September 28, 2002 (Commission File No. 0-14800) and incorporated herein by reference).
*10(6)	Form of Indemnity Agreement entered into between X-Rite, Incorporated and Mark D. Weishaar (filed as exhibit to Form 10-Q for the quarter ended September 28, 2002 (Commission File No. 0-14800) and incorporated herein by reference).
*10(7)	X-Rite, Incorporated Amended and Restated Outside Director Stock Option Plan, effective as of January 26, 2003 (filed as Appendix A to the definitive proxy statement dated April 11, 2003 relating to the Company’s 2003 annual meeting (Commission File No. 0-14800) and incorporated herein by reference).
*10(8)	X-Rite, Incorporated Amended and Restated Employee Stock Option Plan, effective as of January 26, 2003 (filed as Appendix A to the definitive proxy statement dated April 11, 2003 relating to the Company’s 2003 annual meeting (Commission File No. 0-14800) and incorporated herein by reference).
*10(9)	Second Amendment to the Operating Agreement between X-Rite, Incorporated and XR Ventures, LLC, effective as of December 12, 2003 (filed as exhibit to Form 10-K for the year ended January 3, 2004 (Commission File No. 0-14800) and incorporated herein by reference).
*10(10)	X-Rite Incorporated Amended and Restated Employee Stock Purchase Plan, effective as of February 10, 2004 (filed as Appendix A to the definitive proxy statement dated April 7, 2004 relating to the Company’s 2004 annual meeting (Commission File No. 0-14800) and incorporated herein by reference).
*10(11)	First Amendment to the X-Rite, Incorporated Amended and Restated Outside Director Stock Option Plan, effective as of January 26, 2003 (filed as exhibit to Form 10-Q for the quarter ending July 3, 2004 (Commission File No. 0-14800) and incorporated herein by reference).
*10(12)	Third Amendment to the Operating Agreement between X-Rite, Incorporated and XR Ventures, LLC, effective as of December 12, 2003 (filed as exhibit to Form 10-Q for the quarter end April 3, 2004 (Commission File No. 0-14800) and incorporated herein by reference).
*10(13)	Form of Indemnity Agreement between X-Rite, Incorporated and L. Peter Frieder (filed as exhibit to Form 10-K for the year ended January 1, 2005 (Commission File No. 0-14800) and incorporated herein by reference).
*10(14)	Form of Stock Option Agreement from the 2003 Amended and Restated Outside Director Stock Option Plan (filed as exhibit to Form 10-K for the year ended January 1, 2005 (Commission File No. 0-14800) and incorporated herein by reference).
*10(15)	Form of Stock Option Agreement from the 2003 Amended and Restated Employee Stock Option Plan (filed as exhibit to Form 10-K for the year ended January 1, 2005 (Commission File No. 0-14800) and incorporated herein by reference).
*10(16)	Form of X-Rite, Incorporated Second Restricted Stock Plan Agreement (filed as exhibit to Form 10-K for the year ended January 1, 2005 (Commission File No. 0-14800) and incorporated herein by reference).

87

EXHIBIT INDEX—continued

*10(17)	Employment Agreement between X-Rite, Incorporated and Mary E. Chowning, effective as of January 30, 2006 (filed as exhibit to Form 8-K dated January 31, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
10(18)	Mortgage and Security Agreement, dated as of June 30, 2006, between X-Rite, Incorporated and Fifth Third Bank (filed as exhibit to Form 10-Q for the quarter ended July 1, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
*10(19)	Separation Agreement, dated as of July 5, 2006, between X-Rite, Incorporated and Dr. Peter Banks (filed as exhibit to Form 8-K dated July 7, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
*10(20)	Employment Agreement between X-Rite, Incorporated and Francis Lamy, effective as of July 5, 2006 (filed as exhibit to Form 8-K dated January 31, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
*10(21)	Employment Agreement between X-Rite, Incorporated and Thomas J. Vacchiano, Jr., effective as of July 5, 2006 (filed as exhibit to Form 8-K dated January 31, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
*10(22)	X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan, effective as of June 30, 2006 (filed as Exhibit A to the definitive proxy statement dated July 24, 2006 relating to the Company’s 2006 annual meeting (Commission File No. 0-14800) and incorporated herein by reference).
*10(23)	Form of Officer Stock Option Agreement under the X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan.
*10(24)	Form of Outside Director Stock Option Agreement under the X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan.
*10(25)	Form of Employee Stock Option Agreement under the X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan.
*10(26)	Form of Consultant & Advisor Stock Option Agreement under the X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan.
*10(27)	Form of Restricted Stock Agreement under the X-Rite, Incorporated 2006 Omnibus Long Term Incentive Plan.
*10(28)	Employment Agreement between X-Rite, Incorporated and Bernard J. Berg, effective as of February 20, 2007 (filed as exhibit to Form 8-K dated February 26, 2007 (Commission File No. 0-14800) and incorporated herein by reference).
*10(29)	Consulting Agreement between X-Rite, Incorporated and Bernard J. Berg, effective as of January 1, 2009 (filed as exhibit to Form 8-K dated February 26, 2007 (Commission File No. 0-14800) and incorporated herein by reference).
10(30)	Amended and Restated First Lien Credit and Guaranty Agreement dated as of June 30, 2006 among X-Rite, Incorporated as Borrower, Certain Subsidiaries of X-Rite, Incorporated as Guarantors, Various Lenders, Goldman Sachs Credit Partners L.P. as Lead Arranger and Bookrunner, Goldman Sachs Credit Partners L.P. as Administrative Agent and Collateral Agent and Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services Inc. as Syndication Agent (filed as exhibit to Form 10-Q for the quarter ended July 1, 2006 (Commission File No. 0-14800) and incorporated herein by reference).
10(31)	Amended and Restated Second Lien Credit and Guaranty Agreement dated as of June 30, 2006 among X-Rite, Incorporated as Borrower, Certain Subsidiaries of X-Rite, Incorporated as Guarantors, Various Lenders, Goldman Sachs Credit Partners L.P. as Lead Arranger, Bookrunner and Syndication Agent and Goldman Sachs Credit Partners L.P. as Administrative Agent and Collateral Agent (filed as exhibit to Form 10-Q for the quarter ended July 1, 2006 (Commission File No. 0-14800) and incorporated herein by reference).

88

EXHIBIT INDEX—continued

10(32)	Change of Control Severance Plan for Senior Executives dated April 1, 2007 (filed as exhibit to Form 8-K dated April 5, 2007 and incorporated here-in by reference).
10(33)	First Lien Credit and Guaranty Agreement dated as of October 24, 2007 among X-Rite, Incorporated, as Company, Certain Subsidiaries of X-Rite, Incorporated, as Guarantors, Various Lenders, Fifth Third Bank, a Michigan banking corporation, as Administrative Agent and Collateral Agent, Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., as Syndication Agent, National City Bank, as Co-documentation Agent, and LaSalle Bank Midwest, N.A., as Co-documentation Agent.
10(34)	Second Lien Credit and Guaranty Agreement dated as of October 24, 2007 among X-Rite, Incorporated, as Company, Certain Subsidiaries of X-Rite, Incorporated, as Guarantors, Various Lenders, GoldenTree Capital Solutions Fund Financing, as Lead Arranger, and The Bank of New York, as Administrative Agent and Collateral Agent.
14	X-Rite, Incorporated Code of Ethics for Senior Executive Team (filed as exhibit to Form 10-K for the year ended January 3, 2004 (Commission File No. 0-14800) and incorporated herein by reference).
21	Subsidiaries of X-Rite, Incorporated.
23	Consent of Independent Registered Public Accounting Firm.
31.1	Certification of the Chief Executive Officer and President of X-Rite, Incorporated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2	Certification of the Chief Financial Officer and Vice President of Finance of X-Rite, Incorporated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.1	Certification Pursuant To 18 U.S.C. Section 1350 as Adopted Pursuant To Section 906 of the Sarbanes -Oxley Act of 2002.

89

EX-2.1

Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

by and among

X-RITE, INCORPORATED,

and

PANTONE, INC., PANTONE GERMANY, INC., PANTONE INDIA, INC.,

PANTONE UK, INC., PANTONE ASIA, INC. and PANTONE JAPAN, INC.

and all of the Stockholders of each of the Companies and Stockholders’ Representative

named Herein

Dated as of August 23, 2007

	TABLE OF CONTENTS
	PAGE
	ARTICLE I
	DEFINITIONS
Section 1.1	Definitions	1
Section 1.2	Terms Defined Elsewhere	6
	ARTICLE II
	THE MERGERS
Section 2.1	The Mergers	9
Section 2.2	Closing	9
Section 2.3	Effective Time	9
Section 2.4	Effects of the Mergers	9
Section 2.5	Certificate of Incorporation and By-Laws	9
Section 2.6	Directors and Officers of the Surviving Corporations	10
Section 2.7	Conversion of Capital Stock	10
Section 2.8	Merger Consideration	12
Section 2.9	Merger Consideration Adjustments	12
Section 2.10	Estimated Merger Consideration	12
Section 2.11	Closing	13
Section 2.12	Final Merger Consideration Determination	13
Section 2.13	Allocation of Merger Consideration	14
	ARTICLE III
	REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Section 3.1	Organization and Standing	14
Section 3.2	Authorization	15
Section 3.3	No Conflict	15
Section 3.4	Consents	15
Section 3.5	Capital Stock of the Company	16
Section 3.6	Subsidiaries	16
Section 3.7	Financial Statements	16
Section 3.8	Absence of Certain Changes	17
Section 3.9	Litigation	18
Section 3.10	Compliance with Applicable Law	18
Section 3.11	Material Contracts	19
Section 3.12	Intellectual Property	19
Section 3.13	Affiliate Transactions	20

i

Section 3.14	Benefit Plans; Employees	20
Section 3.15	Taxes	21
Section 3.16	Environmental Matters	22
Section 3.17	Real and Personal Properties	23
Section 3.18	Products Liability	23
Section 3.19	Brokers	24
Section 3.20	Absence of Undisclosed Liabilities	24
Section 3.21	Accounts Receivable	24
Section 3.22	Inventory	24
Section 3.23	Customers and Suppliers	24
Section 3.24	Representations and Warranties	25
	ARTICLE IV
	REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1	Organization and Existence	25
Section 4.2	Authorization	25
Section 4.3	No Conflict	25
Section 4.4	Consents	26
Section 4.5	Litigation	26
Section 4.6	Brokers	26
Section 4.7	Investment Intent	26
Section 4.8	Available Funds	26
Section 4.9	Disclaimer Regarding Projections, Forecasts and Business Plans	27
	ARTICLE V
	COVENANTS
Section 5.1	Conduct of the Business	28
Section 5.2	Access to Information	29
Section 5.3	Reasonable Best Efforts	30
Section 5.4	Tax Matters	31
Section 5.5	Expenses	34
Section 5.6	Benefit Plans	34
Section 5.7	Termination of Certain Agreements	35
Section 5.8	[Intentionally Omitted]	35
Section 5.9	Parent’s Financing Activities	35
Section 5.10	Litigation Assistance	35
Section 5.11	Releases	36
Section 5.12	Compliance with the New Jersey Industrial Site Recovery Act	36
Section 5.13	Additional Agreements	38

ii

	ARTICLE VI
	CONDITIONS TO CLOSING
Section 6.1	Conditions to Each Party’s Obligation to Effect the Mergers	38
Section 6.2	Conditions to Obligation of Parent and the Merger Subs	38
Section 6.3	Conditions to Obligation of the Companies	39
	ARTICLE VII
	SURVIVAL OF REPRESENTATIONS AND
	WARRANTIES; INDEMNIFICATION
Section 7.1	General	40
Section 7.2	Survival	40
Section 7.3	Indemnification Covenants of Stockholders	40
Section 7.4	Indemnification Covenants of Parent	41
Section 7.5	Claims for Indemnification	41
Section 7.6	Limitations on Liability of the Stockholders	43
Section 7.7	Limitations on Liability of Parent	43
Section 7.8	Recovery	43
Section 7.9	Other Indemnification Matters	44
Section 7.10	Interest	44
Section 7.11	Exclusive Remedy	44
Section 7.12	Impact of Knowledge	44
Section 7.13	Mitigation	45
	ARTICLE VIII
	TERMINATION, AMENDMENT AND WAIVER
Section 8.1	Termination	45
Section 8.2	Amendments and Waivers	46
	ARTICLE IX
	MISCELLANEOUS
Section 9.1	Notices	46
Section 9.2	Company Schedule	47
Section 9.3	Severability	47
Section 9.4	Counterparts	47
Section 9.5	Entire Agreement; No Third Party Beneficiaries	48
Section 9.6	Governing Law	48
Section 9.7	Specific Performance	48
Section 9.8	Consent to Jurisdiction; Waiver of Jury Trial	48
Section 9.9	Publicity	49

iii

Section 9.10	Assignment	49
Section 9.11	Stockholders’ Representative	49
Section 9.12	Construction	50

iv

EXHIBITS
Exhibit A	Form of Escrow Agreement
Exhibit B	Debt Financing Commitment Letters
Exhibit C	Form of Non-Competition Agreement
Exhibit D	Form of Employment and Non-Competition Agreement (Herbert)
Exhibit E	Form of Employment and Non-Competition Agreement (Stolt)

v

AGREEMENT AND PLAN OF MERGER, dated as of August 23, 2007 (this “Agreement”), by and among X-Rite, Incorporated, a Michigan corporation (“Parent”), and Pantone, Inc., a Delaware corporation (“Company 1”), Pantone Germany, Inc., a Delaware corporation (“Company 2”), Pantone India, Inc., a Delaware corporation (“Company 3”), Pantone UK, Inc., a New Jersey corporation (“Company 4”), Pantone Asia, Inc., a New Jersey corporation (“Company 5”), and Pantone Japan, Inc., a New Jersey corporation (“Company 6” and, together with Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc. and Pantone Asia, Inc., the “Companies” and the term “Company” as used in this Agreement shall refer to each of the Companies, individually) and all of the stockholders of each of the Companies (each a “Stockholder” and collectively, the “Stockholders”), and Lawrence Herbert solely in his capacity as Stockholders’ Representative pursuant to Section 9.11.

WHEREAS, the Boards of Directors of each of the Companies and Parent believe it is in the best interests of their respective corporations and stockholders that the Companies be acquired by Parent through the statutory mergers of subsidiaries of Parent (“Merger Subs”, numbered 1-6) with the Companies (the “Mergers,” respectively numbered 1-6) and, in furtherance thereof, have deemed advisable, approved and adopted this Agreement and the Mergers;

WHEREAS, Parent, the Companies and the Stockholders have taken all necessary corporate action to approve the Mergers, this Agreement and the transactions contemplated hereby; and

WHEREAS, Parent and the Stockholders desire to make certain representations, warranties, covenants and other agreements in connection with the Mergers as set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and other agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement agree, and intend to be legally bound, as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used in the Agreement, the following terms shall have the following meanings:

“Action” shall mean any action, claim, suit, arbitration, proceeding or investigation by or before any Governmental Entity or arbitration tribunal.

“Accounts Receivable” shall mean all accounts receivable of the Company that represent rights to payment (other than rights to payment from an Affiliate of the Company or any Stockholder) arising from bona fide sales of goods or services by the Company in the Ordinary Course of Business.

“Adverse Consequences” shall mean all proceedings, claims, demands, orders, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, losses, damages,

deficiencies, costs of investigation, court costs, and other reasonable expenses (including interest, penalties and reasonable attorneys’ fees and expenses, whether in connection with Third Party Claims or claims among the parties inter se for the enforcement of the provisions of this Agreement); provided, however, that Adverse Consequences shall not include any punitive, statutory multiple or substantially similar non-compensatory damages or any valuation damages calculated using “multiple of earnings” or “multiple of cash flow” or similar valuation methodology (other than any of such damages payable by an Indemnified Party to a third party and which are indemnifiable pursuant to Article VII hereof).

“Affiliate” shall mean with respect to any Person, (a) any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, another Person, (b) any officer, director or shareholder of such Person, and (c) with respect to the Stockholders only, any parent, sibling, descendant or spouse of any Stockholder or of any of the foregoing or anyone sharing a home with such Stockholder or any of the foregoing.

“Applicable Foreign Antitrust Law” shall mean and include all foreign Applicable Law designed or intended to regulate competition or investment (foreign or otherwise) or to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

“Applicable Law” shall mean, with respect to any Person, any domestic or foreign, federal, state, provincial or local statute, law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree or other requirement of any Governmental Entity applicable to such Person or any of their respective properties or assets.

“Business Day” shall mean any day other than a Saturday or Sunday or any day banks in the State of New York are authorized or required to be closed.

“Cash” means, as of a given time, all cash, cash equivalents and marketable securities held by, or on behalf of, the Company or any of its Subsidiaries at such time, the value of which shall be determined in accordance with GAAP (including, if a negative amount, all fees, penalties and interest related to such negative amount).

“Cleanup Costs” shall mean costs and expenses to investigate, cleanup, remove, treat or remediate contamination arising or resulting from the Excepted Environmental Matters identified in the course of the ISRA process undertaken pursuant to the Agreement, but only to the extent that such costs are required by the NJDEP to achieve ISRA Clearance. Cleanup Costs shall also include costs and expenses related to obtaining deed restrictions, if required by the Remedial Investigation and as required by the NJDEP to achieve ISRA Clearance, but shall not include any costs or expenses related to operation and maintenance of any resulting Institutional Controls.

“Confidentiality Agreement” shall mean the letter agreement, agreed and accepted as of March 14, 2007, between Company 1 and Parent.

“control” (including its correlative meanings “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct, or cause the

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direction of, management or policies whether through ownership of securities or partnership or other ownership interests, by contract or otherwise.

“Encumbrances” shall mean any pledges, claims, liens, charges, encumbrances, restriction, easement, covenant, encroachment, right-of-way, title defect, options to purchase or lease or otherwise acquire any interest, and security interests of any kind or nature whatsoever and with respect to Shares, also means any voting trust, voting agreement, proxy, restriction on transfer, option, warrant, right of first offer or refusal or sale agreement. Rights granted to any licensee of any Intellectual Property owned by any Company or any of its Subsidiaries in the ordinary course of business shall not be considered Encumbrances hereunder.

“Environmental Hazardous Materials” shall mean (a) any petroleum or petroleum products, flammable materials, explosives, radioactive materials, radon gas, lead-based paint, friable asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls (PCBs), and toxic mold or fungus, (b) any chemicals, materials or substances that are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” “pollutants,” or words of similar import under any Environmental Law; and (c) any other chemical, material, substance or waste, exposure to which is prohibited, limited or regulated under any applicable Environmental Law.

“Environmental Laws” shall mean all foreign, federal, state, or local statutes, regulations, ordinances, codes, or decrees relating to public health and safety, worker health and safety (to the extent that such health or safety matters pertain to handling of or exposure to Environmental Hazardous Materials), pollution, or protection of the environment, including ambient air, land surface, surface water, groundwater or subsurface strata.

“Environmental Permits” shall mean all permits, licenses, registrations, and other authorizations required under applicable Environmental Laws.

“Escrow Agent” shall mean Deutsche Bank Trust Company Americas.

“Escrow Agreement” shall mean that certain Escrow Agreement entered into on the Closing Date among Parent, the Stockholders, the Stockholders’ Representative, and the Escrow Agent, in the form of Exhibit A attached to this Agreement.

“Escrow Amount” shall mean $10,000,000.

“Final Merger Consideration” shall mean the Merger Consideration as adjusted pursuant to Sections 2.9 and 2.12.

“GAAP” shall mean United States generally accepted accounting principles in the United States as set forth in the pronouncements of the Financial Accounting Standards Board, applied, to the extent consistent, in the manner used in preparing the latest audited balance sheet of each Company included in the Company Financial Statements.

“Governmental Entity” shall mean any foreign or domestic federal, state, provincial or local governmental authority, court, government or self-regulatory organization,

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commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

“Indebtedness” of a Company shall mean any (a) obligations relating to indebtedness for borrowed money, including any bank overdraft, (b) obligations evidenced by a note, bond, debenture or similar instrument, (c) obligations as lessee under leases required to be capitalized pursuant to GAAP, (d) obligations in respect of reimbursement obligations related to banker’s acceptances or letters of credit, (e) obligations for the deferred purchase price of property or services (other than current accounts payable to suppliers and similar accrued liabilities incurred in the Ordinary Course of Business), (f) indebtedness or obligations of the types referred to in the preceding clauses (a) through (e) of any other Person secured by any Encumbrance on any assets of the Company, even though the Company has not assumed or otherwise become liable for the payment thereof, (g) obligations of the Company in the nature of guarantees of obligations of the type described in clauses (a) through (f) above of any other Person, (h) obligations in respect of interest rate swaps or other interest rate hedging products or foreign currency exchange agreements or exchange rate hedging arrangements entered into by the Company, and (i) liability under any sale and leaseback transaction which does not create a liability on the balance sheet of the Company, in each case together with all accrued interest thereon and applicable prepayment, breakage or other premiums, fees or penalties as if payment of such Indebtedness came due in full immediately prior to the Effective Time.

“Inventory” shall mean all inventory, including raw material, work in process and finished goods, that is usable or salable by the Company in the Ordinary Course of Business, with current packaging.

“knowledge of Parent” shall mean the actual knowledge of any executive officer of Parent.

“knowledge of the Company” shall mean the actual knowledge after reasonable inquiry of the key executives set forth on Schedule 1.1(a).

“Material Adverse Effect” shall mean any circumstance, change in or effect on the Companies and their Subsidiaries that is or is reasonably likely to be materially adverse to the assets, results of operations or the financial condition of the Companies and their Subsidiaries, taken as a whole or which prevents the Companies as a whole from consummating the transactions contemplated by this Agreement; provided, however, that in determining whether there has been a Material Adverse Effect or a breach of a representation, warranty, covenant or agreement that is qualified by the term “Material Adverse Effect,” any adverse circumstance, change or effect principally attributable to any of the following shall be disregarded: (i) changes in GAAP or interpretations thereof; (ii) any actions taken, or failures to take action, in each case, to which Parent has consented; (iii) any existing event or occurrence or circumstance identified as materially adverse to the Companies on Schedule 1.1(b); (iv) the resignation or termination of any employee of the Company or any of its Subsidiaries, other than any employee with respect to which an employment agreement or noncompetition agreement is referenced in Section 6.2; (v) the identity of Parent; or (vi) the cost or terms of the Debt Financing or any replacement financing.

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“Ordinary Course of Business” shall mean the ordinary course of the business conducted by the respective Company, consistent with past practice, including with respect to quantity, amount and frequency.

“Permitted Encumbrances” shall mean (i) Encumbrances for Taxes, assessments or other charges by Governmental Entities not yet due and payable, (ii) inchoate mechanics’, materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar Encumbrances granted or which arise in the ordinary course of business, (iii) zoning, entitlement, building and other land use regulations imposed by governmental agencies having jurisdiction over any Real Property which are not violated by the current use and operation of the Real Property, (iv) deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, old age pension programs mandated under Applicable Law or other social security Law, and (v) covenants, conditions, restrictions, easements, encumbrances and other similar matters of record affecting title to but not adversely affecting current occupancy or use or value of the Real Property in any material respect.

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, association, organization, Governmental Entity or other entity.

“Pre-Closing Period” means any taxable period that ends on or prior to the Closing Date.

“Prepaid Expenses” shall mean any payments made prior to the Closing properly accounted for as a prepaid expense in accordance with GAAP, the benefit of which will inure to the Company after the Closing.

“Return” or “Returns” shall mean all returns, estimated returns, forms, declarations, reports, claims for refund or information returns or statements relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof filed or to be filed with any Tax Authority in connection with the determination, assessment or collection of Taxes.

“Shares” shall mean all of the issued and outstanding equity interests in any of the Companies.

“Software” shall mean all electronic data processing systems, information systems, programs, specifications, and computer software programs (and all enhancements, versions, releases, and updates thereto), including software compilations, software tool sets, compilers, higher level or “proprietary” languages and all related programming and user documentation, whether in source code, object code or human readable form.

“Subsidiary” shall mean, with respect to any specified Person, (a) a corporation fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (b) any partnership, joint venture, association, or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity.

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“Tax” or “Taxes” shall mean all federal, state, local and foreign income, profits, franchise, gross receipts, payroll, sales, employment, use, property, real estate, excise, value added, estimated, stamp, alternative or add-on minimum, environmental, withholding and any other taxes, duties or other governmental charges or assessments, together with all interest, penalties and additions imposed with respect to such amounts.

“Tax Authority” shall mean any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, any quasi-governmental body or any other authority responsible for the administration of Taxes.

“Transaction Expenses” shall mean any and all (a) legal, accounting, tax, consulting, financial advisory and other professional or transaction related costs, fees and expenses incurred by any Company or a subsidiary thereof in connection with this Agreement or in investigating, pursuing or completing the transactions contemplated hereby (including any amounts paid or payable to obtain any consents), (b) all payments, bonuses or severance which become due or are otherwise required to be made as a result of or in connection with the Closing or as a result of any change of control or other similar provisions, (c) all costs and expenses incurred by the Company in connection with actions taken by the Company to comply with ISRA prior to the Closing, including all costs and expenses of attorneys, environmental consultants and engineers retained by the Company to comply with ISRA to the extent due by the Company and not paid prior to the Closing and (d) any withholding, payroll, employment or other Taxes, if any, required to be withheld or paid by Parent (on behalf of a Company) or a Company with respect to the amounts payable pursuant to this Agreement or the amounts described in clause (a), (b) and (c).

“Working Capital” shall mean an amount equal to (a) the amount of the current assets (excluding Cash, current assets arising from intercompany transactions and Taxes), minus (b) the amount of the current liabilities (excluding Indebtedness and accrued interest thereon, Transaction Expenses, current liabilities arising from intercompany transactions and Taxes) of the Companies, on a consolidated basis, as determined in accordance with GAAP applied consistently and in accordance with the calculation on Schedule 1.1(c).

“Working Capital Deficit” means the amount by which the Working Capital as of the Closing Date is less than $11,393,486.

“Working Capital Excess” means the amount by which the Working Capital as of the Closing Date is more than $13,393,486.

Section 1.2 Terms Defined Elsewhere. The following terms are defined elsewhere in this Agreement, as indicated below:

“Accountants”	Section 2.12
“Agreement”	Preamble
“Allocation Schedules”	Section 5.4(c)(ii)
“Benefit Plans”	Section 3.14(a)
“Carlstadt Facility”	Section 5.12(a)

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“Certificate of Merger”	Section 2.3
“CIM”	Section 4.9(a)
“Closing”	Section 2.2
“Closing Balance Sheet”	Section 2.12
“Closing Cash”	Section 2.9(a)
“Closing Date”	Section 2.2
“Closing Statement”	Section 2.12
“COBRA”	Section 3.14(j)
“Code”	Section 3.14(c)
“Common Stock”	Section 2.7(a)(vi)
“Company” and “Companies”	Preamble
“Company 1”	Preamble
“Company 1 Common Stock”	Section 2.7(a)(i)
“Company 2”	Preamble
“Company 2 Common Stock”	Section 2.7(a)(ii)
“Company 3”	Preamble
“Company 3 Common Stock”	Section 2.7(a)(iii)
“Company 4”	Preamble
“Company 4 Common Stock”	Section 2.7(a)(iv)
“Company 5”	Preamble
“Company 5 Common Stock”	Section 2.7(a)(v)
“Company 6”	Preamble
“Company 6 Common Stock”	Section 2.7(a)(vi)
“Company Employees”	Section 3.14(a)
“Company Financial Statements”	Section 3.7
“Company Schedule”	Section 9.2
“Consent”	Section 3.4
“Contract”	Section 3.3
“Debt Financing”	Section 4.8(b)
“Debt Financing Commitment Letters”	Section 4.8(b)
“Delaware Courts”	Section 9.8(a)
“DGCL”	Section 2.1
“Dissenting Shares”	Section 2.9
“Excepted Environmental Matters”	Section 7.3(c)
“Effective Time”	Section 2.3
“ERISA”	Section 3.14(a)
“Estimated Merger Consideration”	Section 2.10
“Expenses”	Section 2.9(c)
“Extension Period”	Section 8.1(a)
“Extension Debt Financing”	Section 8.1(a)
“Filing”	Section 3.4
“Financing”	Section 4.8(b)
“Debt Financing Commitment Letters”	Section 4.8(b)
“Historic Fill”	Schedule 7.3(c)
“HSR Act”	Section 3.4
“Indebtedness Amount”	Section 2.9(b)

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“Indemnified Party”	Section 7.1
“Indemnifying Party”	Section 7.1
“Institutional Controls”	Section 5.12(c)
“Intellectual Property”	Section 3.12(b)
“ISRA”	Section 5.12(a)
“ISRA Clearance”	Section 5.12(a)
“Material Contract”	Section 3.11(b)
“Mergers”	Recitals
“Merger 1”	Recitals
“Merger 2”	Recitals
“Merger 3”	Recitals
“Merger 4”	Recitals
“Merger 5”	Recitals
“Merger 6”	Recitals
“Merger Consideration”	Section 2.7(a)
“Merger Sub 1”	Recitals
“Merger Sub 2”	Recitals
“Merger Sub 3”	Recitals
“Merger Sub 4”	Recitals
“Merger Sub 5”	Recitals
“Merger Sub 6”	Recitals
“Merger Subs”	Recitals
“NJBCA”	Section 2.1
“NJDEP”	Section 5.12(a)
“Offering Materials”	Section 5.10(a)
“Objections Statement”	Section 2.12
“Outside Date”	Section 8.1(a)
“Parent”	Preamble
“Parent Indemnities”	Section 7.3
“Permits”	Section 3.10
“Pre-Closing Taxes”	Section 5.4(a)(i)
“Product”	Section 3.18
“Real Property”	Section 3.17
“Released Claims”	Section 5.11
“Released Parties”	Section 5.11
“Released Stockholder Parties”	Section 7.11
“Releasors”	Section 5.11
“Required Amount”	Section 4.8(c)
“Section 338(h)(10) Elections”	Section 5.4(c)(i)
“Securities Act”	Section 4.7
“Stockholder” and “Stockholders”	Preamble
“Stockholder Indemnitees”	Section 7.4
“Stockholders’ Representative”	Section 9.11(a)
“Stockholders’ Representative Review Period”	Section 2.12
“Straddle Period Returns”	Section 5.4(a)(i)
“Straddle Statement”	Section 5.4(a)(i)

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“Surviving Corporation” and “Surviving Corporations”	Section 2.1
“Third Party Claim”	Section 7.5(b)
“Threshold Amount”	Section 7.6(b)
“Transfer Taxes”	Section 5.4(e)

ARTICLE II

THE MERGERS

Section 2.1 The Mergers. Upon the terms and subject to the conditions of this Agreement and the applicable provisions of the Delaware General Corporation Law (“DGCL”), at the Effective Time, Parent shall cause the Merger Subs to be formed and Merger Sub 1 shall be merged with and into Company 1, Merger Sub 2 shall be merged with and into Company 2 and Merger Sub 3 shall be merged with and into Company 3. Upon the terms and subject to the conditions of this Agreement and the applicable provisions of the New Jersey Business Corporation Act (“NJBCA”), at the Effective Time, Merger Sub 4 shall be merged with and into Company 4, Merger Sub 5 shall be merged with an into Company 5 and Merger Sub 6 shall be merged with and into Company 6. Following the Mergers, the separate corporate existence of the Merger Subs shall cease and the Companies shall continue as the surviving corporations (the “Surviving Corporations,” and the term “Surviving Corporation” as used in this Agreement shall refer to each of the Surviving Corporations, individually).

Section 2.2 Closing. The closing of the Mergers (the “Closing”) shall take place, simultaneously, at or be directed from the offices of McDermott Will & Emery LLP, 340 Madison Avenue, New York, New York 10173, at 10:00 a.m., local time, on the second business day after the conditions to the parties’ obligation to effect the Mergers contained in Article VI have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction thereof at the Closing), unless another date or place is agreed to in writing by the parties to this Agreement (the “Closing Date”).

Section 2.3 Effective Time. On the Closing Date, the parties shall cause the Mergers to be consummated by causing for each of the Mergers, a corresponding certificate of merger to be executed, filed and recorded in accordance with the relevant provisions of the DGCL or the NJBCA, as applicable (each a “Certificate of Merger”). Each of the Mergers shall become effective at the time of the filing with the Secretary of State of the State of Delaware or the Secretary of State of the State of New Jersey, as applicable, of the corresponding Certificate of Merger in accordance with the relevant provisions of the DGCL or the NJBCA, as applicable, or at such later time as shall be specified in the corresponding Certificate of Merger (the “Effective Time”).

Section 2.4 Effects of the Mergers. Merger 1, Merger 2 and Merger 3 shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL. Merger 4, Merger 5 and Merger 6 shall have the effects set forth in this Agreement and in the applicable provisions of the NJBCA.

Section 2.5 Certificate of Incorporation and By-Laws. The certificate of incorporation and by-laws of each of the Merger Subs as in effect at the Effective Time shall be

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the certificate of incorporation and by-laws of the corresponding Surviving Corporation, provided that such certificate of incorporation shall be appropriately amended to change the name of such Surviving Corporation to the name of the Company which preceded such Surviving Corporation prior to the Merger of such Merger Sub with and into such Company, and such by-laws shall be amended to reflect such change of name.

Section 2.6 Directors and Officers of the Surviving Corporations. The directors of each of the Merger Subs immediately prior to the Effective Time shall be the initial directors of the corresponding Surviving Corporation and will hold office from the Effective Time until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in the manner provided in the certificate of incorporation and by-laws of such Surviving Corporation, or as otherwise provided by Applicable Law. The officers of each of the Merger Subs immediately prior to the Effective Time shall be the initial officers of the corresponding Surviving Corporation and will hold office from the Effective Time until their respective successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in the manner provided in the certificate of incorporation and by-laws of such Surviving Corporation, or as otherwise provided by law.

Section 2.7 Conversion of Capital Stock. As of the Effective Time, by virtue of each of the Mergers and without any action on the part of any of the holders of the Shares or any action on the part of any holders of the capital stock of Parent or Merger Subs, the following shall occur:

(a) Conversion of Shares of the Companies. All Shares of the Companies shall be converted into the right to receive a proportionate share of an aggregate amount equal to $180,000,000, subject to adjustment pursuant to Section 2.9 and Section 2.12 (the “Merger Consideration”) in the following manner:

(i) Each issued and outstanding share of Class A voting common stock, par value $0.01 per share, and Class B nonvoting common stock, par value $0.01 per share, of Company 1 (the “Company 1 Common Stock”) (other than any Company 1 Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(ii) Each issued and outstanding share of common stock, no par value per share, of Company 2 (the “Company 2 Common Stock”) (other than any Company 2 Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(iii) Each issued and outstanding share of common stock, no par value per share, of Company 3 (the “Company 3 Common Stock”) (other than any Company 3

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Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(iv) Each issued and outstanding share of common stock, no par value per share, of Company 4 (the “Company 4 Common Stock”) (other than any Company 4 Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(v) Each issued and outstanding share of common stock, no par value per share, of Company 5 (the “Company 5 Common Stock”) (other than any Company 5 Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(vi) Each issued and outstanding share of common stock, no par value per share, of Company 6 (the “Company 6 Common Stock” and, together with the Company 1 Common Stock, the Company 2 Common Stock, the Company 3 Common Stock, the Company 4 Common Stock, the Company 5 Common Stock and the Company 5 Common Stock, the “Common Stock”) (other than any Company 6 Common Stock cancelled in accordance with Section 2.7(b)), shall be converted automatically into and shall thereafter represent the right to receive a portion of the Merger Consideration in cash, without interest, and payable to the holder thereof upon surrender of the certificate formerly representing such share in the manner provided in Section 2.8.

(b) Cancellation of Common Stock Owned by the Companies. At the Effective Time, any shares of Common Stock that are owned by any of the Companies immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof and without payment of any consideration therefor.

(c) Adjustments. If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of any of the Companies shall occur as a result of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period (excluding, in each case, normal quarterly cash dividends), the allocation of the Merger Consideration and any other similarly dependent items shall be equitably adjusted to reflect such change.

(d) Conversion of Capital Stock of Merger Subs. Each share of common stock of each of the Merger Subs issued and outstanding immediately prior to the Effective Time

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shall remain outstanding and shall represent one validly issued, fully paid and nonassessable share of common stock of the applicable Surviving Corporation.

Section 2.8 Merger Consideration.

(a) Closing Payments. Subject to satisfaction of the closing conditions and closing deliveries described in Article VI, at the Closing, Parent shall make payment of the Estimated Merger Consideration, less the Escrow Amount, by wire transfer of immediately available funds to each Stockholder of the amounts specified and to the account or accounts designated at least two Business Days prior to the Closing by the Stockholders’ Representative.

(b) Transfer Books; No Further Ownership Rights in Common Stock. At the Effective Time, the stock transfer books of the Companies shall be closed and thereafter there shall be no further registration of transfers of shares of Common Stock on the records of the Companies. From and after the Effective Time, the holders of certificates evidencing ownership of shares of Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Common Stock, except as otherwise provided for herein or by Applicable Law.

(c) No Liability. None of Parent or the Surviving Corporations shall be liable to any Stockholder for any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

Section 2.9 Merger Consideration Adjustments. The Merger Consideration shall be adjusted as follows:

(a) an amount (the “Closing Cash”) equal to the aggregate amount of Cash of the Companies, on a consolidated basis, as of the Effective Time will increase the Merger Consideration;

(b) an amount (the “Indebtedness Amount”) equal to the aggregate amount required to satisfy all Indebtedness of the Companies as of the Closing Date will reduce the Merger Consideration;

(c) an amount equal to the aggregate amount of the Transaction Expenses (which expenses shall not be, in whole or in part, incorporated into any calculation of Working Capital made pursuant to this Agreement) unpaid as of the Closing Date (the “Expenses”) will decrease the Merger Consideration and the Surviving Corporations shall pay any such Expenses when due;

(d) an amount equal to the Working Capital Excess, if any, as of the Closing Date will increase the Merger Consideration; and

(e) an amount equal to the Working Capital Deficit, if any, as of the Closing Date will reduce the Merger Consideration.

Section 2.10 Estimated Merger Consideration. Not less then five (5) days prior to the Closing Date, the Stockholders’ Representative shall deliver to Parent (a) a certificate

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signed by the Stockholders’ Representative setting forth the Stockholders’ Representative’s best estimate of the Closing Cash, Indebtedness Amount, Expenses and Working Capital Excess or Working Capital Deficit as of the Closing Date and (b) all records and work papers necessary to compute and verify the information set forth in such certificate, all of which must be reasonably acceptable to Parent. The Merger Consideration adjusted in accordance with Section 2.9 to reflect such estimates shall be the “Estimated Merger Consideration.”

Section 2.11 Closing.

(a) At the Closing, Parent shall pay the Indebtedness Amount pursuant to the payoff letters delivered by the Representative to Parent pursuant to Section 6.2.

(b) At the Closing, Parent shall pay the Expenses pursuant to the direction of the Stockholders’ Representative.

(c) At the Closing, Parent will deposit, or will cause to be deposited, with the Escrow Agent cash in an amount equal to the Escrow Amount to secure the obligations of the Stockholders under this Agreement. The Escrow Amount will be held and disbursed by the Escrow Agent solely for the purposes and in accordance with the terms of this Agreement and the Escrow Agreement.

(d) In addition, within ten (10) Business Days after the Final Merger Consideration becomes final and binding in accordance with Section 2.12:

(i) if the Final Merger Consideration exceeds the Estimated Merger Consideration, then such excess shall be paid by Parent to the Stockholders’ Representative, for the benefit of the Stockholders; or

(ii) if the Estimated Merger Consideration exceeds the Final Merger Consideration, then such excess shall be paid by the Stockholders’ Representative, on behalf of the Stockholders, to Parent in cash.

(e) All payments pursuant to this Section 2.11 shall be made by wire transfer of immediately available funds to an account designated by the recipient in writing.

Section 2.12 Final Merger Consideration Determination. Within seventy-five (75) days after the Closing Date, Parent shall prepare and deliver to the Stockholders’ Representative an unaudited balance sheet of the Companies on a consolidated basis as of the opening of business on the Closing Date, prepared in accordance with GAAP applied consistently with the past accounting practices of the Companies to the extent consistent with GAAP (the “Closing Balance Sheet”) and a statement setting forth Parent’s calculation of the Working Capital as of the Closing Date based on the Closing Balance Sheet and a statement of the Working Capital Excess or Working Capital Deficit, if any, and the Indebtedness Amount, Expenses and Closing Cash as of the Closing Date (the “Closing Statement”). If the Stockholders’ Representative has any objections to the Closing Balance Sheet or Closing Statement prepared by Parent, then the Stockholders’ Representative will deliver a detailed written statement (the “Objections Statement”) describing his objections to Parent within thirty (30) days after delivery of the Closing Balance Sheet and the Closing Statement (the

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“Stockholders’ Representative Review Period”). If the Stockholders’ Representative fails to deliver an Objections Statement within the Stockholders’ Representative Review Period, then the Closing Balance Sheet and Closing Statement shall become final and binding on all parties. If the Stockholders’ Representative delivers an Objections Statement within the Stockholders’ Representative Review Period, then the Stockholders’ Representative and Parent will use commercially reasonable efforts to resolve any such disputes, but if a final resolution is not obtained within thirty (30) days after the Representative has submitted any objections, any remaining matters which are in dispute will be resolved by the Boston, MA office of KPMG (the “Accountants”). The Accountants will prepare and deliver a written report to Parent and the Stockholders’ Representative and will submit a proposed resolution of such unresolved disputes promptly, but in any event within thirty (30) days after the dispute is submitted to the Accountants or as soon as possible thereafter. The Accountants’ determination of such unresolved disputes will be final and binding upon all parties and may be entered and enforced in any court having jurisdiction; provided, however, that no such determination shall be any more favorable to Parent than is set forth in the Closing Balance Sheet and the Closing Statement or any more favorable to the Stockholders’ Representative than is proposed in the Objections Statement. The costs, expenses and fees of the Accountants shall be borne by the Stockholders’ Representative (on behalf of the Stockholders), on the one hand, and Parent, on the other hand, based on the percentage which the portion of the contested amount not awarded to such party bears to the amount actually contested by such party. The final Closing Balance Sheet and Closing Statement, however determined pursuant to this Section 2.12, will produce the Working Capital Excess or Working Capital Deficit, if any, and the Indebtedness Amount, Expenses and Closing Cash to be used to determine the Final Merger Consideration.

Section 2.13 Allocation of Merger Consideration. Schedule 2.13 sets forth an allocation of the Merger Consideration to the Shares and the Noncompetition Agreement with Lawrence Herbert. Unless otherwise required by applicable Tax Law, the Stockholders and Parent will not, and will cause their respective Affiliates not to, take a position in any forum that is inconsistent with the details set forth in Schedule 2.13, including taking an inconsistent position on any Tax Return, before any Governmental Body charged with the collection of any Tax, or in any Proceeding relating to any Tax. The Stockholders and Parent will file all federal, state, local and foreign Tax Returns in accordance with Schedule 2.13.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

Except as set forth in the Company Schedule, each of the Stockholders hereby represents and warrants to Parent as follows, as of the date of this Agreement and as of the Closing Date:

Section 3.1 Organization and Standing. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the state set forth opposite its name on Schedule 3.1. The Company is qualified or otherwise authorized to act as a foreign corporation and is in good standing under the laws of every other jurisdiction in which such qualification or authorization is necessary under Applicable Law, except where the failure to be so qualified or otherwise authorized would not have a Material Adverse Effect. The Company has requisite power and authority to own, lease and operate its properties and to carry on its

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businesses as now conducted. The Company has made available or delivered to Parent, accurate and complete copies of the charter, bylaws or similar organizational documents, minute books and stock records of the Company.

Section 3.2 Authorization. The Company and each of the Stockholders has all necessary corporate and individual power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and its stockholders and no other corporate proceedings on the part of the Company and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by the Company and, assuming this Agreement is a valid and binding obligation of Parent, this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally or by general equitable principles. This Agreement has been duly executed and delivered by each Stockholder and, assuming this Agreement is a valid and binding obligation of Parent, this Agreement constitutes a legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally or general equitable principles.

Section 3.3 No Conflict. Neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the corresponding Merger, nor compliance by the Company with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation or by-laws of the Company or the certificate of incorporation or by-laws or the similar organizational documents of any Subsidiary of the Company, or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.4 are obtained and the filings referred to in Section 3.4 are made, violate any Applicable Law, or (iii) violate or constitute a default under any of the terms, conditions or provisions of any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, lease, contract or other agreement (each, a “Contract”) to which the Company or any Subsidiary of the Company is a party.

Section 3.4 Consents. Except as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), any Applicable Foreign Antitrust Law, ISRA (as defined below) or under the DGCL or the NJBCA, no consent, approval, license, permit, order or authorization (each, a “Consent”) of, or registration, declaration or filing (each, a “Filing”) with, any Governmental Entity is required for or in connection with the execution and delivery of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby.

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Section 3.5 Capital Stock of the Company.

(a) The authorized capital stock of the Company consists of the number of shares of Common Stock set forth opposite the Company’s name on Schedule 3.5, of which the number indicated on Schedule 3.5 is issued and outstanding and held of record by the respective Stockholders set forth on Schedule 3.5. All of such outstanding shares of capital stock are duly authorized and validly issued, fully paid and nonassessable. As of the date hereof, there are no shares of Common Stock held by the Company as treasury stock.

(b) (i) No shares of Common Stock have been issued in violation of any purchase option, call, right of first refusal, preemptive, subscription or similar rights under any provision of Applicable Law, the organizational documents of the Company, or any contract, agreement or instrument to which the Company is subject or by which it is bound; and (ii) there are no outstanding warrants, options, rights, agreements, convertible or exchangeable securities or other commitments (other than this Agreement) pursuant to which the Company is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of the Company.

(c) Each Stockholder has good and indefeasible title to all of the Shares listed opposite such Stockholder’s name on Schedule 3.5, free and clear of all Encumbrances and is the sole record and beneficial owner thereof.

Section 3.6 Subsidiaries. Schedule 3.6 sets forth a true, correct, and complete list of each Subsidiary of the Company and of each other stock, partnership, member or other owner or equity interest in another Person held by any Company or any Subsidiary. Each Subsidiary of the Company is duly organized, validly existing and, where applicable, in good standing under the laws of its jurisdiction of incorporation. Each Subsidiary of the Company is qualified or otherwise authorized to act as a foreign corporation and is in good standing under the laws of every other jurisdiction in which such qualification or authorization is necessary under Applicable Law, except where the failure to be so qualified or otherwise authorized would not have a Material Adverse Effect. All the outstanding shares of capital stock of such Subsidiaries are duly authorized and validly issued and outstanding, fully paid and nonassessable and owned of record and beneficially, either directly or indirectly, by the Company, as set forth on Schedule 3.6, free and clear of all Encumbrances, except for the Encumbrances set forth on Schedule 3.6. There are no outstanding warrants, options, rights, agreements, convertible or exchangeable securities or other commitments pursuant to which any of such Subsidiaries is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of such Subsidiary.

Section 3.7 Financial Statements. The Company has delivered or made available to Parent true and complete copies of the audited consolidated balance sheets of the Company for the fiscal years ended December 31, 2005 and 2006 and the related statements of income and cash flows for the fiscal years then ended and true and complete copies of the unaudited consolidated balance sheets of the Company for the six-month period ended June 30, 2007 and the related statements of income and cash flows for the six-month period then ended, and true and complete copies of the unaudited combined balance sheet of the Companies for the fiscal year ended December 31, 2006 and the six-month period ended June 30, 2007 and the

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related combined statement of income and cash flows for such periods (collectively, including any notes and schedules thereto, the “Company Financial Statements”). Except as otherwise indicated in the Company Financial Statements, the Company Financial Statements included in the Company Financial Statements have been prepared in accordance with GAAP consistently applied throughout the relevant periods and the balance sheets and statements of income present fairly, in all material respects, the consolidated financial position and the results of operations of the Company and its Subsidiaries as of the dates and for the periods presented therein.

Section 3.8 Absence of Certain Changes. Since December 31, 2006, except as set forth on Schedule 3.8, none of the following has occurred with respect to the Company (including any of the Company’s Subsidiaries):

(i) the Company has not conducted its business in any material respect not in the Ordinary Course of Business;

(ii) the Company has not suffered any Material Adverse Effect;

(iii) other than normal wear and tear, the Company has not experienced any damage, destruction or loss (whether or not covered by insurance) to its tangible assets or property in excess of $100,000;

(iv) the Company has not cancelled, compromised, waived, disposed of, permitted to lapse or released any material indebtedness owed to it or any material right or claim;

(v) the Company has not granted any increase in the wages, salaries or bonuses or other compensation arrangements or benefit programs of any of its employees other than annual increases in the Ordinary Course of Business, or paid or failed to pay any compensation or other employee benefits, royalties, commissions or other expenses when due;

(vi) no Person has accelerated, terminated, modified or canceled any Material Contract (as defined in Section 3.11);

(vii) the Company has not sold, leased, transferred, assigned or otherwise disposed of any of its assets or property (tangible or intangible) with a value in excess of $25,000, other than sales of Inventory in the Ordinary Course of Business;

(viii) the Company has not purchased any assets or property (tangible or intangible) with a value in excess of $25,000, except for purchases in the Ordinary Course of Business;

(ix) the Company has not made any commitments outside of the Ordinary Course of Business or in excess of $25,000 in the aggregate for capital expenditures to be paid after the Closing;

(x) the Company has not engaged in any promotional, sales or discount or other activity that has or could reasonably be expected to have the effect of

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accelerating sales or revenues prior to the Closing that would otherwise be expected to occur subsequent to the Closing;

(xi) the Company has not materially changed its method of doing business, including changing its inventory practices, pricing practices, supplier payment practices, selling or licensing practices (including any sales or licenses as to price, quantity or term not in the Ordinary Course of Business), collection practices, or levels of sales efforts;

(xii) the Company has not made any change in any method of accounting or accounting practice;

(xiii) the Company has not declared, set aside, made or paid any dividend or distribution with respect to its stock or other ownership interests or redeemed, purchased or otherwise acquired any Common Stock or other ownership interest of the Company;

(xiv) the Company has not made any Tax election or settled or compromised any Tax liability;

(xv) the Company has not made any payments of any form or kind to any Stockholder (or such Stockholder’s Affiliates) or other Affiliate of the Company, other than payment of salary to each Stockholder who is an employee in the Ordinary Course of Business and the distributions for the payment of Taxes with respect to the Company set forth on Schedule 3.8; and

(xvi) the Company has not agreed, whether in writing or otherwise, to take any action described in this Section.

Section 3.9 Litigation. There is no Action pending, or to the knowledge of the Company, threatened against the Company or any of its Subsidiaries. Schedule 3.9 lists all Actions involving the Company since January 2004. There is no Action pending, or to the knowledge of Stockholders, threatened against any Stockholder relating to this Agreement or the transactions contemplated hereby. There are no outstanding judgments, decrees, injunctions or orders of any Governmental Entity by which the Company or any of its Subsidiaries or any of their respective assets or properties are bound.

Section 3.10 Compliance with Applicable Law. (a) The Company and each of its Subsidiaries has been and is in compliance with all Applicable Laws except for any noncompliance that has been fully remedied and resolved and (b) the Company and its Subsidiaries have all governmental permits, licenses and authorizations necessary for the conduct of its business as presently conducted (the “Permits”) and are in compliance with the terms of the Permits; provided, however, that the Company makes no representation or warranty in this Section 3.10 with respect to Intellectual Property, employee and benefit matters, Taxes or environmental matters, which matters are exclusively addressed in Sections 3.12, 3.14, 3.15 and 3.16, respectively.

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Section 3.11 Material Contracts.

(a) Schedule 3.11(a) lists and the Company has made available to Parent accurate and complete copies of, the following contracts and agreements currently in effect: (i) each contract for the purchase of any materials, supplies or services that requires an expenditure by the Company or any of its Subsidiaries of more than $200,000; (ii) each personal property lease under which the Company or any of its Subsidiaries is either a lessor or lessee that requires payments or receipts of more than $200,000; (iii) each contract with a customer that requires payments to the Company or any of its Subsidiaries of more than $200,000; (iv) agreements granting or obtaining any right to use any Intellectual Property or Software rights (other than agreements granting rights to use readily available commercial software having an acquisition price of less than $200,000, and agreements in which grants of Intellectual Property are incidental and not material to such agreements); (v) each lease, purchase agreement or option with respect to Real Property; (vi) each collective bargaining, employment or consulting agreement; (vii) each agreement pursuant to which any Person will become entitled to any compensation, payment, benefit or vesting or modification thereof as a result of the consummation of the transactions contemplated by this Agreement; (viii) agreements and instruments relating to Indebtedness; (ix) each agreement or arrangement pursuant to which the Company has realized or may realize any Tax or fee relief or subsidy; and (x) each other commitment, agreement and instrument to which the Company or any of its Subsidiaries is a party or by which it or its properties are bound that has a term of more than one year or requires annual payments by the Company or such Subsidiary of more than $200,000.

(b) (x) Neither the Company nor any of its Subsidiaries is in breach or default under any Material Contract, and (y) to the knowledge of the Company, each of the Material Contracts is valid and in full force and effect. As used in this Agreement, the term “Material Contract” means any commitment, agreement, lease, order or instrument required to be set forth on Schedule 3.11(a).

Section 3.12 Intellectual Property.

(a) Schedule 3.12(a) sets forth, for the Intellectual Property owned or licensed by the Company or any of its Subsidiaries, a list of all U.S. and foreign: (i) patents and patent applications; (ii) trademark registrations and applications (including Internet domain name registrations); and (iii) copyright registrations and applications. The Company or one of its Subsidiaries owns or has a valid right to use all material Intellectual Property used in the conduct of its business as currently conducted.

(b) (i) The conduct of the business of the Company and its Subsidiaries has not infringed or violated and does not infringe or otherwise violate any Person’s Intellectual Property, and does not misappropriate any trade secret or know-how of any Person, and there is no such claim pending or to the knowledge of the Company threatened against the Company or any of its Subsidiaries, and (ii) no claim that a Person is infringing or otherwise violating any Intellectual Property owned by the Company or any of its Subsidiaries is, as of the date hereof, pending or threatened against any Person by the Company or any of its Subsidiaries. As used herein, the term “Intellectual Property” shall mean all patents, trademarks, service marks, trade

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names, Internet domain names, copyrights, trade secrets and other similar intellectual property, and any applications and registrations for the foregoing.

(c) Schedule 3.12(c) sets forth an accurate and complete list and summary description of all Software owned, licensed or otherwise used by the Company. Schedule 3.12(c) identifies or describes (i) Software which is owned by the Company, and (ii) Software which is licensed to the Company by third parties. With respect to the Software developed by or for the Company, all documentation is sufficient in detail and content to allow its full and proper use by the Company without reliance on the special knowledge or memory of third parties, in all material respects.

Section 3.13 Affiliate Transactions. There is no ongoing agreement or arrangement between any Stockholder or, to the knowledge of the Company or any Stockholder, any Affiliate of any Stockholder (other than the Company and its Subsidiaries), on the one hand, except for Benefit Plans (as defined below) and other compensation arrangements in the Ordinary Course of Business and transactions entered into on an arm’s length basis, all as set forth on Schedule 3.13.

Section 3.14 Benefit Plans; Employees.

(a) Schedule 3.14(a) lists each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) and any other benefit or incentive plan or agreement sponsored or maintained by the Company and its Subsidiaries for the benefit of current or former employees, directors or consultants of the Company or its Subsidiaries (such employees, the “Company Employees” and such plans and arrangements other than plans required by the law of any applicable jurisdiction to be sponsored or maintained, the “Benefit Plans”). True and complete copies (or descriptions if oral) of the Benefit Plans have been furnished or made available to Parent.

(b) Each Benefit Plan has been administered and has been and is in compliance with the terms of such plan and all Applicable Law.

(c) No “reportable event” (as such term is used in Section 4043 of ERISA), “prohibited transaction” (as such term is used in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”)), or “accumulated funding deficiency” (as such term is used in Section 412 or 4971 of the Code) has occurred.

(d) No Action or other proceeding involving any Benefit Plan has occurred or, to the knowledge of the Company, is threatened (other than routine claims for benefits by participants).

(e) Except as set forth on Schedule 3.14(e), neither the Company nor any of its Subsidiaries contributes to a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) and neither the Company nor any Subsidiary nor any member of the group required to be aggregated with the Company or any of its Subsidiaries for purposes of Title IV of ERISA has incurred any withdrawal liability under Title IV of ERISA which remains unsatisfied.

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(f) Except as set forth on Schedule 3.14(f), neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining or similar labor agreement, and there are no existing or, to the knowledge of the Company, threatened unfair labor practice charges or material labor disputes involving the employees of the Company or any of its Subsidiaries.

(g) With respect to each Benefit Plan that is a defined benefit pension plan, the present value of accrued benefits under such plan, based upon the actuarial assumptions used in the most recent actuarial report prepared by such plan’s actuary with respect to such plan did not exceed, as of its latest valuation date, the then current value of the assets of such plan allocable to such accrued benefits.

(h) All contributions to, and payments from, the Benefit Plans that have been required to be made in accordance with any Benefit Plan have been timely made. All contributions to the Benefit Plans for any period ending before the Closing Date that would have otherwise been accrued in accordance with GAAP as of the Closing Date shall have been made or accrued, including the Companies’ matching portion under the 401(k) plan. All amounts due under any of the Companies’ bonus or incentive plans shall have been paid or accrued in full as of the Closing Date.

(i) No Benefit Plan subject to Title IV of ERISA has been terminated within the last ten years. Neither the Company nor any trustee, administrator or other fiduciary of any Benefit Plan nor any agent of any of the foregoing has engaged in any transaction or acted or failed to act in a manner which could subject the Company to any liability for breach of fiduciary duty under ERISA or any other applicable Law. No event has occurred which would reasonably be expected to result in a tax imposed under Chapter 43 of the Code with respect to any Benefit Plan.

(j) The Company and each Benefit Plan subject to continuation coverage requirements under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”), has been and is in full compliance with all COBRA continuation coverage requirements.

(k) Except as set forth on Schedule 3.14(k), the Company does not maintain any employee benefit plans providing for post retirement benefits, including medical or life insurance benefits.

(l) The Company and each of its Subsidiaries has complied with all Applicable Laws relating to the employment of labor, including provisions relating to wages, hours, equal opportunity, occupational health and safety, severance and collective bargaining.

Section 3.15 Taxes.

(a) (i) All Returns required to be filed by, or with respect to any activities of, the Company or any of its Subsidiaries have been filed in a timely manner and are correct and complete; (ii) all Taxes with respect to the Company and its Subsidiaries have been paid or will be paid pursuant to Section 5.4; (iii) there is no action, suit, proceeding, investigation, claim or audit now pending, against, or with respect to, the Company or any of its Subsidiaries in respect

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of any Taxes or assessments; (iv) the Company is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code, and (v) the Company has complied in all respects with withholding Tax requirements.

(b) Effective as of June 1, 1984 for Company 1, January 1, 2003 for Company 2, August 9, 2006 for Company 3, February 16, 1993 for Company 4, September 26, 1994 for Company 5 and May 24, 2005 for Company 6, such Company has made, and provided Parent with copies which evidence, a valid election under Section 1362 of the Code and all corresponding relevant state or local tax provisions to be an S corporation within the meaning of Sections 1361 and 1362 of the Code effective for all taxable periods beginning on and subsequent to formation. Since formation, the Company, any of its Subsidiaries or any of their Stockholders have not (i) at any time taken any action inconsistent with the requirements of the Company’s S corporation status; (ii) failed at any time to take any action required in order to maintain the company’s S Corporation status; or (iii) terminated (whether inadvertently or otherwise) the Company’s S corporation elections at any time. Since formation, there were no recognized built in gains as defined in Section 1374 of the Code or any other entity level liability. Each Subsidiary is, and has at all times been, an entity disregarded for federal income tax purposes.

(c) The Company and each of its Subsidiaries has complied with all Applicable Laws relating to the payment of social security and other similar employment Taxes.

Section 3.16 Environmental Matters. Except as set forth on Schedule 3.16:

(a) (i) each of the Company and its Subsidiaries is in compliance and except for matters that have been fully resolved, has been in compliance with all applicable Environmental Laws, and possesses and complies with and except for matters that have been fully resolved, has possessed and complied with all applicable Environmental Permits required under applicable Environmental Laws to carry on its business; (ii) there are no Actions pending or, to the knowledge of the Company, threatened, that seek to enforce or impose liability under any applicable Environmental Law against the Company or any of its Subsidiaries, or to revoke or modify any Environmental Permit held by the Company or any of its Subsidiaries; (iii) there are no judgments, orders, decrees, settlements, or arbitral awards in effect under any applicable Environmental Laws to which the Company or any of its Subsidiaries is a party pursuant to which the Company or any of its Subsidiaries has any unfulfilled obligation; (iv) none of the Companies nor any Subsidiary has received any written notice or communication regarding any alleged violation of or liability under Environmental Laws; (v) none of the Companies or any Subsidiary has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, released, or exposed any Person to, any Environmental Hazardous Material except as would not reasonably be expected to result in liability under Environmental Laws; (vi) none of the Companies or any Subsidiary has owned or operated any property or facility that was or is contaminated by any Environmental Hazardous Material except as would not reasonably be expected to result in liability under Environmental Laws; (vii) none of the Companies nor any Subsidiary has assumed, undertaken or provided an indemnity with respect to any liability of any other Person relating to Environmental Laws pursuant to which the Company or any Subsidiary currently retains any actual or potential liability; (viii) the Companies have furnished to Parent true and correct copies of all environmental audits, assessments, reports and other material

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environmental documents relating to any Company’s or Subsidiary’s current and former facilities, properties and operations that are in its possession or under its reasonable control.

(b) There have been no releases of any Environmental Hazardous Materials by the Company or, to the Knowledge of the Company, by any other Person on or under any of the Real Estate, in each case, that would result in liability under applicable Environmental Laws.

(c) To the Knowledge of the Company, none of the leased Real Property is listed on the National Priorities List or the Comprehensive Environmental Response, Compensation and Liability Information System, both promulgated under CERCLA, or on any comparable state list, and the Company has not received any written notice from any Person under or relating to CERCLA or any comparable state or local Law with respect thereto.

(d) To the knowledge of the Company, no off-site location at which the Company has disposed or arranged for the disposal of any waste is listed on the National Priorities List or on any comparable state list, and the Company has not received any written notice from any Person with respect to any off-site location, of potential or actual liability or a written request for information from any Person under or relating to CERCLA or any comparable state or local Law.

(e) Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this Section 3.16 shall be deemed the only representations and warranties in this Agreement with respect to matters relating to Environmental Laws.

Section 3.17 Real and Personal Properties. As of the date of this Agreement, the Company and its Subsidiaries have good title to, or a valid and binding leasehold interest in (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law)), the real and tangible personal property used by the Company or its Subsidiaries in the business or reflected on the Company Financial Statements, free and clear of all Encumbrances, except for Permitted Encumbrances. Schedule 3.17(b) sets forth a complete and correct list of all real property owned or leased by the Company or its Subsidiaries and an indication of whether used, owned or leased and whether in the business of the Company (the “Real Property”). All buildings, improvements, furnishings, machinery and equipment of the Companies are in working condition and repair (ordinary wear and tear excepted) adequate for the operation of the business of the Company and its Subsidiaries.

Section 3.18 Products Liability. There is no Action pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries concerning any product that is designed, manufactured, distributed, or sold by the Company or any of its Subsidiaries (a “Product”), relating to or resulting from an alleged defect in the design, manufacture, materials or workmanship of any Product, or, with respect to any Product, any alleged failure to warn or any alleged breach of warranties or representations.

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Section 3.19 Brokers. Other than Goldman, Sachs & Co. (whose fees will be paid by the Company concurrent with the Closing and included in Transaction Expenses to the extent not paid by the Company), neither the Company nor any of its Subsidiaries has employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders’ fees or any other fees or commissions to investment bankers, brokers or finders in connection with the transactions contemplated by this Agreement for which the Company or any of its Subsidiaries has or could have any liability.

Section 3.20 Absence of Undisclosed Liabilities. Except to the extent reflected in the Company Schedule (or excluded from such schedule in accordance with thresholds stated herein) or on the most recent balance sheet included in the Company Financial Statements, the Company does not have any material liability or obligation of any nature, whether fixed or contingent, other than liabilities or obligations arising since the date of such balance sheet in the Ordinary Course of Business.

Section 3.21 Accounts Receivable. All Accounts Receivable of the Company reflected on the most recent balance sheet included in the Company Financial Statements, and all Accounts Receivable of the Company accrued since the date of such balance sheet are not, to the knowledge of the Company, subject to any pending or threatened defense, counterclaim, right of offset, returns, allowances or credits, and are collectible in the ordinary course of business using normal collection practices, except to the extent reserved against the accounts receivable or as reflected by prepayments.

Section 3.22 Inventory. The Inventory of the Company (a) is accounted for on a lower of cost using the first-in, first-out method or market basis in accordance with GAAP consistently applied, (b) does not include any items which are obsolete or of a quantity or quality not usable or salable in the Ordinary Course of Business and (c) includes only items sold by the Company in the Ordinary Course of Business. The inventory disposed of subsequent to the date of the most recent balance sheet included in the Company Financial Statements has been disposed of only in the Ordinary Course of Business.

Section 3.23 Customers and Suppliers.

(a) Schedule 3.23(a) sets forth a correct and complete list of the ten (10) largest (in terms of dollar volume of purchases) suppliers of products or services to the Companies taken as a whole and the twenty (20) largest (in terms of dollar volume of sales) customers of the Companies taken as a whole, each during the two preceding fiscal years and during the current fiscal year to the date of the most recent balance sheet included in the Company Financial Statements, showing the approximate total dollar amount of purchases or sales to each such supplier or customer during each such fiscal year. There are no outstanding disputes with any of such suppliers or customers.

(b) Since December 31, 2006, none of the customers or suppliers listed on Schedule 3.23(a) has provided the Company with written notice that it shall materially decrease the rate of business with the Company, or otherwise materially change the terms of its relationship with the Company.

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Section 3.24 Representations and Warranties. Notwithstanding anything contained in Article III or any other provision of this Agreement, it is the intent of each party to this Agreement that neither the Company nor any Stockholder is making any representation or warranty whatsoever, express or implied, except those representations and warranties set forth in Article III, and in entering into this Agreement and consummating the Transactions, Parent acknowledges and agrees that it is not relying on any statement, representation or warranty, including, but not limited to, those which may be contained in any confidential information memorandum or similar materials containing information regarding the Company, its Subsidiaries or any of their businesses or in any materials provided to Parent during the course of its due diligence investigation of the Company, other than those representations and warranties set forth in Article III of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby represents and warrants to each Company and the Stockholders’ Representative as follows:

Section 4.1 Organization and Existence. Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Michigan and has all corporate power and authority required to enter into this Agreement and consummate the transactions contemplated hereby.

Section 4.2 Authorization. Parent has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Parent of this Agreement and the consummation by each of the Transactions contemplated hereby have been duly authorized by all necessary action on the part of Parent and no other corporate proceedings on the part of Parent and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by Parent and, assuming this Agreement is a valid and binding obligation of the Companies and other parties hereto, this Agreement constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except to the extent that its enforceability may be limited by general equitable principles.

Section 4.3 No Conflict. Neither the execution and delivery of this Agreement by Parent, nor the consummation by Parent of the Mergers, nor compliance by Parent with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation or bylaws of Parent or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.4 are obtained and the filings referred to in Section 4.4 are made, violate any Applicable Law, or (iii) violate or constitute a default under any of the terms, conditions or provisions of any Contract to which Parent is a party which would materially impair the ability of Parent to effect the Closing.

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Section 4.4 Consents. Except as required under the HSR Act or any Applicable Foreign Antitrust Law, or under the DCGL or the NJBCA, no Consent of, or Filing with, any Governmental Entity which has not been obtained or made is required for or in connection with the execution and delivery of this Agreement by Parent, and the consummation by Parent of the Mergers contemplated hereby and thereby, other than such consents or filings the failure of which to obtain or make would not materially impair the ability of Parent to effect the Closing.

Section 4.5 Litigation. There are no Actions against Parent pending, or to the knowledge of Parent, threatened against Parent which seek to, and Parent are not subject to any judgments, decrees, injunctions or orders of any Governmental Entity which would, enjoin, rescind or materially delay the Mergers contemplated by this Agreement or otherwise prevent Parent from complying in all material respects with the terms and provisions of this Agreement.

Section 4.6 Brokers. Neither Parent nor any of its directors, officers, employees or affiliates has employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders’ fees or any other fees or commissions to investment bankers, brokers or finders in connection with the transactions contemplated by this Agreement for which the Company or any Stockholder or any affiliate thereof has or could have any liability.

Section 4.7 Investment Intent. The Parent acknowledges that neither the offer nor the sale of the Common Stock has been registered under the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the “Securities Act”), or under any state or foreign securities laws. The Parent is acquiring the Common Stock for its own account for investment, without a view to, or for a resale in connection with, the distribution thereof in violation of the Securities Act or any applicable state securities laws and with no present intention of distributing or reselling any part thereof. The Parent will not so distribute or resell any Common Stock in violation of any such law.

Section 4.8 Available Funds.

(a) To the knowledge of Parent, the Parent on the Closing Date will have, sufficient funds to purchase the Common Stock and pay the Merger Consideration in accordance with the terms hereof, pay all related fees and expenses, commence and effect all other transactions contemplated hereby.

(b) Exhibit B of this Agreement sets forth true, accurate and complete copies of executed commitment letters from Merill Lynch Capital, Fifth Third Bank, N.A., National City Bank, LaSalle Bank Midwest N.A. and GoldenTree Asset Management, L.P. (collectively, the “Debt Financing Commitment Letters”), pursuant to which, and subject to the terms and conditions thereof, the lender parties thereto have committed to lend the amounts set forth therein to Parent for the purpose of funding the transactions contemplated hereby (the “Debt Financing”).

(c) The Debt Financing Commitment Letters are in full force and effect and have not been withdrawn or terminated or otherwise amended or modified in any respect. Each

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of the Debt Financing Commitment Letters, in the form so delivered, is a legal, valid and binding obligation of Parent and, to the knowledge of Parent, the other parties thereto. There are no other agreements, side letters or arrangements relating to the Debt Financing Commitment Letters that could affect the availability of the Debt Financing. No event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent under any term or condition of the Debt Financing Commitment Letters, and Parent has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it contained in the Debt Financing Commitment Letters. Parent has fully paid any and all commitment fees or other fees required by the Debt Financing Commitment Letters to be paid on or before the date of this Agreement. The aggregate proceeds from the Debt Financing constitute all of the financing required to be provided by Parent, and are sufficient for the satisfaction of all of Parent’s obligations under this Agreement in an amount sufficient to consummate the transactions contemplated hereby, including the payment of the Merger Consideration and the payment of all associated costs and expenses (including any refinancing of indebtedness of Parent required in connection therewith, the “Required Amount”). The Debt Financing Commitment Letters contain all of the conditions precedent to the obligations of the parties thereunder to make the Debt Financing available to Parent on the terms therein. None of the Debt Financing Commitment Letters has been withdrawn and Parent does not know of any facts or circumstances that may be expected to result in any of the conditions set forth in the Debt Financing Commitment Letters not being satisfied.

(d) Parent’s obligations under this Agreement are not subject to any conditions regarding Parent’s, its affiliates’ or any other Person’s ability to obtain financing for the consummation of the Mergers or the transactions contemplated hereby.

(e) Assuming the satisfaction of the condition set forth in Section 6.2(a), Parent and the Surviving Corporations shall be solvent following the Closing, after giving effect to the Mergers contemplated in this Agreement, including any indebtedness incurred in connection therewith.

Section 4.9 Disclaimer Regarding Projections, Forecasts and Business Plans.

(a) In connection with Parent’s investigation of the Companies, Parent has received from the Companies and their affiliates, agents and representatives a Confidential Information Memorandum (the “CIM”) prepared by Goldman, Sachs & Co. and certain projections and other forecasts, including but not limited to projected financial statements, cash flow items and other data of the Companies and certain business plan information of the Companies. Parent acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts and plans. Accordingly, Parent acknowledges that, without limiting the generality of the last paragraph of Article III, none of the Companies, the Stockholders, or any of the representatives, agents or affiliates of the foregoing, have made any representation or warranty with respect to the CIM or such projections and other forecasts and plans.

(b) Notwithstanding anything contained in Article IV or any other provision of this Agreement, it is the intent of each party to this Agreement that Parent is not making any representation or warranty whatsoever, express or implied, except those representations and

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warranties set forth in this Article IV, and in entering into this Agreement and in consummating the Transactions, the Companies and the Stockholders acknowledge and agree that they are not relying on any statement, representation or warranty other than those representations and warranties set forth in this Article IV.

ARTICLE V

COVENANTS

Section 5.1 Conduct of the Business.

(a) From the date hereof until the Closing Date, except as (A) contemplated by this Agreement, (B) set forth in Schedule 5.1, or (C) as required by Applicable Law, each Company shall, and shall cause its Subsidiaries to, operate their business in the Ordinary Course of Business, and

(b) from the date hereof to the Closing Date, except as (A) contemplated by this Agreement, (B) set forth in Schedule 5.1 or (C) as required by Applicable Law, each Company and its Subsidiaries shall not do any of the following without the prior consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed):

(i) grant to any Company Employee any increase in compensation or benefits, except (1) for normal salary increases following performance reviews and payment of any performance-based incentives upon the achievement of performance goals as in effect immediately prior to the date of this Agreement, (2) in connection with any newly hired employees filling positions that are, as of the date of this Agreement, vacant (or which become vacant due to terminations of employment and/or promotions) and in connection with any promotions, (3) as may be required under existing Benefit Plans or (4) as may be required by Applicable Law;

(ii) make any material change in any method of accounting or accounting practice or policy other than as required by GAAP;

(iii) amend its certificate of incorporation, as amended through the date hereof, or by-laws (or other organizational documents);

(iv) redeem or otherwise acquire any shares of its capital stock or issue any capital stock;

(v) acquire all or a substantial portion of the assets or capital stock of any business or any corporation, partnership, association or other business organization or division thereof;

(vi) make or incur any capital expenditure which, individually, is in excess of $250,000;

(vii) pay, loan or advance any amount to any Person, or sell, transfer or lease any of its assets with a value in excess of $200,000, or enter into any agreement or

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arrangement with the Stockholders or any of their respective Affiliates (other than the Company and its Subsidiaries);

(viii) amend or terminate any Material Contract or Benefit Plan, or enter into any agreement that, if existing on the date of this Agreement, would be a Material Contract, except as required by Applicable Law or such Material Contract, and provided that, with respect to collective bargaining agreements, neither this clause (viii) nor any other provisions hereof shall be interpreted to interfere with the Company’s or any of its Subsidiaries’ duty under the National Labor Relations Act to bargain in good faith;

(ix) modify, amend, terminate or permit the lapse of, in any material manner, any lease of, operating agreement or other agreement relating to any real property owned or used by any of the Companies or their Subsidiaries (except for the lapse or termination of any lease or agreement in accordance with its terms);

(x) permit any of its assets to become subjected to any Encumbrance, other than Permitted Encumbrances and those Encumbrances existing prior to the date of this Agreement which would be removed at or prior to Closing or except as required by Applicable law;

(xi) other than the sale of inventory and the license of software in the ordinary course of business consistent with past practice, sell, lease or otherwise dispose of any of its assets; or

(xii) accelerate in any material respect the collection of Accounts Receivable other than in the Ordinary Course of Business;

(xiii) commit or pledge to make any material charitable contribution; or

(xiv) other than in the ordinary course of business consistent with past practices, incur or assume any liabilities, obligations or indebtedness for borrowed money or guarantee any such liabilities, obligations or indebtedness.

(c) Other than the right to consent or withhold consent with respect to the foregoing matters, nothing contained herein shall give Parent or any of the Merger Subs any right to manage, control, direct or be involved in the management of any Company, its Subsidiaries or the business prior to the Closing.

Section 5.2 Access to Information.

(a) From the date of this Agreement until the earlier of the termination of this Agreement and the Closing, each Company shall give Parent and its authorized representatives reasonable access to the offices, properties, books and records, and personnel of each Company and its Subsidiaries during normal business hours and upon reasonable prior notice; provided, however, that such access shall not unreasonably interfere with normal operations of any Company or its Subsidiaries, and shall furnish to Parent and its authorized representatives such financial and operating data and other information as Parent may reasonably request; provided, further, that the foregoing shall not require any Company or its Subsidiaries to provide any such

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access or furnish any such information that in its reasonable judgment would violate any Applicable Law or violate any obligations with respect to confidentiality or, in the reasonable judgment of such Company, compromise or constitute a waiver of any attorney-client or work product privilege of such Company or its Subsidiaries. Access pursuant to this Section 5.2 shall also include Parent’s access to the Carlstadt Facility for the purpose of conducting a Phase I environmental site assessment; provided, however that such Phase I access shall not include sampling of any media whatsoever, intrusive or otherwise, and provided further that Parent shall provide the Companies with copies of any resulting reports, summary charts or audits as promptly as practicable after the date of this Agreement but in no event later than 10 Business Days prior to Closing, whether in the form of final or draft documentation.

(b) Any information regarding any Company and its Subsidiaries obtained prior to, as of, or after, the date of this Agreement from or on behalf of such Company or any of its Subsidiaries by Parent shall be subject to the terms of the Confidentiality Agreement and such information shall be held in accordance with the terms of such Confidentiality Agreement.

(c) For the purposes of determining any payments pursuant to Section 2.11(d), from the date of the Closing until the date that all payments pursuant to Section 2.11(d) have been made, Parent shall cause each Surviving Corporation to give the Stockholders and their authorized representatives reasonable access to the books, records, financial and operating data and other information of each Surviving Corporation and its Subsidiaries that relate to preparation of the Closing Balance Sheet and Closing Statement during normal business hours and upon reasonable prior notice; provided, however, that such access shall not unreasonably interfere with normal operations of any Surviving Corporation or its Subsidiaries.

Section 5.3 Reasonable Best Efforts.

(a) Upon the terms and subject to the conditions provided in this Agreement, except as otherwise provided in this Agreement, each of the parties to this Agreement shall use its reasonable best efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other parties to this Agreement in doing all things necessary, under Applicable Law to consummate and make effective, in a reasonably expeditious manner, the transactions contemplated by this Agreement, including, but not limited to: (i) the satisfaction of the conditions precedent to the obligations of any of the parties hereto; (ii) the obtaining of all necessary actions or nonactions, consents and approvals from any Governmental Entity or other persons necessary in connection with the consummation of the transactions contemplated by this Agreement and the making of all necessary registrations and filings (including filings with Governmental Entities if any) and the taking of all reasonable steps as may be necessary to obtain an approval from, or to avoid an action or proceeding by, any Governmental Entity or other persons necessary in connection with the consummation of the transactions contemplated by this Agreement; (iii) the defending of any Actions, whether judicial or administrative, challenging this Agreement or the consummation of the transactions performed or consummated by such party in accordance with the terms of this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed; and (iv) the execution and delivery of such instruments, and the taking of such other actions as the other party hereto may reasonably require in order to carry out the intent of this Agreement. Without limiting the foregoing, each Company and Parent shall promptly (and in no

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event later than ten (10) business days following the date that this Agreement is executed) make or cause to be made all Filings required by the parties to this Agreement or on their behalf under the HSR Act or Applicable Foreign Antitrust Law relating to the transactions contemplated hereby and shall use their reasonable best efforts to cause the waiting period thereunder to expire as quickly as possible.

(b) To the extent required by their respective commitments to use reasonable best efforts set forth in Section 5.3(a), Parent and each Company agree to take promptly any and all steps necessary to avoid or eliminate each and every impediment and obtain all consents under any antitrust, competition or merger control laws that may be required by any foreign or U.S. federal, state or local antitrust or competition Governmental Entity, in each case with competent jurisdiction, so as to enable the parties to close the transactions contemplated by this Agreement as promptly as practicable, including committing to or effecting, by consent decree, hold separate orders, trust, or otherwise, the sale or disposition of such assets or businesses as are required to be divested in order to avoid the entry of, or to effect the dissolution of or vacate or lift, any Order, that would otherwise have the effect of preventing or materially delaying the consummation of the Mergers and the other transactions contemplated by this Agreement.

(c) Each party to this Agreement shall promptly inform the other parties of any communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement. If any party to this Agreement or affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the transactions contemplated by this Agreement, then such party shall use its reasonable best efforts to make, or cause to be made, as soon as practicable and after consultation with the other party, an appropriate response in compliance with such request.

(d) Notwithstanding anything in this Agreement to the contrary, nothing in this Section 5.3 shall require Parent to agree to the imposition of conditions or restrictions or the divestiture of assets of Parent or any of its Affiliates or of any of the Companies which would have a materially adverse effect on the business or financial condition of Parent or of the Companies taken as a whole.

Section 5.4 Tax Matters.

(a) Preparation and Filing of Returns and Payment of Taxes. The Stockholders’ Representative shall prepare and timely file or cause the Surviving Corporations to prepare and timely file all Returns with respect to each Company and any of its Subsidiaries for any Pre-Closing Period. To the extent that Parent is obligated to file such Returns, the Stockholders’ Representative (as defined below) shall deliver to Parent such Returns for its review and comment at least ten (10) days prior to the due date (including extensions) of any such Return. All such Returns shall be prepared and filed in a manner that is consistent, in all material respects, with the prior practice of each Company and any of its Subsidiaries (including, without limitation, prior Tax elections and accounting methods or conventions made or utilized by each Company and any of its Subsidiaries), except as required by Applicable Law or regulations. Parent shall sign and timely file or cause each Company and any of its Subsidiaries to sign and timely file all Returns. The Stockholders’ Representative, on behalf of the

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Stockholders, shall pay and indemnify and hold Parent and the Surviving Corporations harmless against all Taxes due with respect to any Pre-Closing Period.

(b) Tax Cooperation.

(i) For a period of seven years from and after the Closing, the Stockholders’ Representative and Parent agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information (including access to books and records), and assistance relating to each Company or any of its Subsidiaries as is reasonably requested for the filing of any Returns, for the preparation of any audit, and for the prosecution or defense of any claim, suit or proceeding related to any proposed adjustment. Any information obtained under this Section 5.4(b)(i) shall be kept confidential, except as may be otherwise necessary in connection with the filing of Returns or claims for refund or in conducting an audit or other proceeding. After the expiration of such seven-year period, the Stockholders’ Representative, Parent or the Surviving Corporations, as the case may be, may dispose of such information, books and records; provided that prior to such disposition, (1) the Stockholders’ Representative shall give Parent the opportunity, at Parent’s expense, to take possession of such information, books and records held by the Stockholders’ Representative; and (2) Parent shall give the Stockholders’ Representative the opportunity, at the Stockholders’ Representative’s expense, to take possession of such information, books and records held by the Surviving Corporations.

(ii) Parent and the Surviving Corporations shall not, without the prior written consent of the Stockholders’ Representative, amend any Return (except as required by Applicable Law), or waive or extend any statute of limitations, if any such amendment, waiver, or extension would increase the amount of Taxes payable by the Stockholders with respect to its ownership of Common Stock, the Merger Consideration or any distribution or payment made by any Company to Stockholders on or before the Closing Date.

(c) Section 338(h)(10) Election.

(i) Upon the request of Parent, the Stockholders shall join with Parent in an election with respect to the purchase and sale of the Common Stock under Section 338(h)(10) of the Code and any similar provisions of state and local Laws (all such elections being referred to collectively as the “Section 338(h)(10) Elections”). If Parent so requests, the Stockholders’ Representative shall deliver to Parent, at or prior to the Closing, a properly executed IRS Form 8023 containing information then available, which Parent shall file or cause to be filed with the Internal Revenue Service not later than thirty (30) days prior to the date such Section 338(h)(10) Elections are required to be filed. Parent and the Stockholders’ Representative shall, as promptly as practicable following the Closing Date, cooperate with each other to take all other actions necessary and appropriate (including filing such forms, returns, elections, schedules and other documents as may be required) otherwise to effect, perfect and timely preserve the Section 338(h)(10) Elections.

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(ii) If Section 338(h)(10) Elections are made Parent shall prepare and deliver to the Stockholders’ Representative (A) a schedule allocating the “aggregate deemed sales price,” as defined in Treasury Regulation Section 1.338-4, among the assets of the Company and (B) a complete set of IRS Forms 8883 (and any comparable forms required to be filed under Applicable Law) and any additional data or materials required to be attached thereto pursuant to the Treasury Regulations promulgated under Section 338 of the Code (the “Allocation Schedules”). The Allocation Schedules shall be reasonably satisfactory to the Stockholders’ Representative and shall be prepared in accordance with Section 338(h)(10) of the Code and the Treasury Regulations thereunder. Allocations to various asset groups shall be made based on appraisals with the allocation to inventory and accounts receivable being no more than an amount equal to the tax basis of each such asset.

(iii) The Stockholders’ Representative shall have thirty (30) days following receipt by it of the Allocation Schedules during which to dispute any item contained in the Allocation Schedules. If the Stockholders’ Representative fails to notify Parent of any such dispute within such 30-day period, the Allocation Schedules shall be deemed to have been accepted by the Stockholders’ Representative. If the Stockholders’ Representative timely notifies Parent of any such dispute, and the Stockholders’ Representative and Parent cannot resolve any such dispute within twenty (20) days of receipt by Parent of such notice, such dispute shall be resolved by the Accountants; the determination of the Accountants with respect to such dispute shall be made as promptly as practicable and shall be final and binding on the Stockholders’ Representative and Parent, and may be entered and enforced in any court having jurisdiction. The fees and expenses of the Accountants shall be borne equally by Parent and the Stockholders’ Representative.

(iv) If Section 338(h)(10) Elections are made, Parent and the Stockholders’ Representative shall report the Merger pursuant to this Agreement consistent with the Section 338(h)(10) Elections and the Allocation Schedules, and shall take no position to the contrary thereto in any Return, or in any proceeding before any Tax Authority or otherwise. Neither Parent nor the Stockholders shall take any action to modify any of the forms or reports (including any corrections, amendments or supplements thereto) that are required for the making of the Section 338(h)(10) Elections after their execution or to modify or revoke any of the Section 338(h)(10) Elections following the filing of the Form 8023 without the written consent of the other party, which consent shall not be unreasonably delayed or withheld.

(d) Survival of Obligations. Notwithstanding any other provision of this Agreement, the obligations of the parties set forth in this Section 5.4 shall remain in effect until the expiration of the applicable statutes of limitations (including valid extensions thereof).

(e) Transfer Taxes. All excise, sales, use, transfer (including real property transfer or gains), stamp, documentary, filing, recordation and other similar taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, resulting directly from the sale and transfer by the Stockholders’ Representative to Parent of the Common Stock (the “Transfer Taxes”), shall be borne fully by

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Parent. Any Returns that must be filed in connection with Transfer Taxes shall be prepared and filed when due by the party primarily or customarily responsible under the applicable local law for filing such Returns, and such party will use its commercially reasonable efforts to provide such Returns to the other party at least 10 days prior to the due date for such Returns.

Section 5.5 Expenses. Except as otherwise provided in this Agreement, whether or not the Closing takes place, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

Section 5.6 Benefit Plans.

(a) Earned Compensation and Benefits. Parent acknowledges that the Surviving Corporation and its Subsidiaries (or any successor thereof) is obligated to (i) pay in the ordinary course all amounts earned by the Company Employees under the Sales Incentive Program and any other incentive compensation plans and agreements set forth on Schedule 3.14(a) as of the Closing Date; (ii) pay in the ordinary course all salaries, wages and other base compensation to the Company Employees that has accrued but remains unpaid as of the Closing Date; (iii) on and after the Closing Date, honor, in accordance with their terms, all employment agreements and all Benefit Plans set forth on Schedule 3.14(a); (iv) on and after the Closing Date, honor in accordance with their terms, all collective bargaining agreements set forth on Schedule 3.14(f); and (v) on and after the Closing Date, permit the Company Employees to take all vacation and other paid time off which has been accrued but remains unused by such Company Employees (as reflected on the Closing Balance Sheet) pursuant to the Company’s vacation and paid time off policies. Except with respect to compensation and benefits accrued by the Company Employees as of the Closing Date, nothing contained herein shall be construed to limit the right of Parent to amend any Benefit Plan following the Closing Date in accordance with the terms thereof.

(b) Service Credit; Pre-Existing Conditions’ Co-payments and Deductibles

(i) Parent shall cause each Company Employee to be given credit for purposes of vacation accrual and eligibility for benefits for all service, on and prior to the Closing Date, with the corresponding Company or Subsidiary (to the extent taken into account or recognized by such Company or Subsidiary under the corresponding Benefit Plan in effect immediately prior to the Closing Date) under each employee benefit plan, program and arrangements maintained by the corresponding Company or Subsidiary or the Parent for his or her benefit on or after the Closing Date.

(ii) With respect to any welfare benefit plans maintained for the benefit of the Company Employees on and after the Closing Date, Parent shall (i) cause to be waived any pre-existing condition limitations and waiting periods to the full extent required by law, and (ii) to the extent practicable, give effect, in determining any deductible and maximum out-of-pocket limitations for the year in which the Closing Date occurs, to claims incurred and amounts paid by, and amounts reimbursed to, such employees under the corresponding Benefit Plan in effect immediately prior to the Closing Date.

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Section 5.7 Termination of Certain Agreements. All agreements between any Stockholder or any affiliate of any Stockholder (other than any Company and its Subsidiaries), on the one hand, and any Company or any of its Subsidiaries, on the other hand, shall be terminated as of the Closing Date, and all obligations and liabilities thereunder shall be satisfied on the Closing Date other than any agreements relating to the indemnification of current directors and officers of each Company or any of its Subsidiaries.

Section 5.8 [Intentionally Omitted].

Section 5.9 Parent’s Financing Activities.

(a) Parent acknowledges and agrees that each Company and the Stockholders have no responsibility for, or liability in connection with, any financing that Parent may raise in connection with the transactions contemplated hereby or any cooperation provided pursuant to this Agreement and Parent shall indemnify and hold harmless each Company, the Stockholders and their respective representatives and advisors from and against any and all Adverse Consequences suffered or incurred by any of them in connection with the financing or any information utilized in connection therewith; provided that none of the foregoing in this clause (a) shall affect the Stockholders’ obligations to indemnify Parent pursuant to Article VII.

(b) Parent shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate the financing necessary to pay the Required Amount for the consummation of the transactions contemplated by this Agreement at or prior to Closing. Parent shall keep each Company reasonably informed of material developments in respect of the financing process relating thereto; including without limitation by providing, upon request of any Company, updates on the status and terms of the Debt Financing and any replacement financing. In the period between the date hereof and the Closing Date, upon request of Parent, each Company shall, and shall use reasonable best efforts to cause its affiliates and representatives to, reasonably cooperate with Parent in connection with the Debt Financing. Parent shall promptly, upon request by any Company, reimburse such Company for all documented out-of-pocket expenses incurred by such Company or its affiliates or representatives in connection with such cooperation.

Section 5.10 Litigation Assistance. The Stockholders shall cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired prior to the Closing Date. The Stockholders’ cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. The Stockholders also shall cooperate with the Company in connection with any investigation or review by any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired prior to the Closing Date. The Company shall reimburse the Stockholders for any reasonable and out-of-pocket expenses incurred in connection with the Stockholders’ performance of obligations pursuant to this Section 5.10.

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Section 5.11 Releases. Each Stockholder, for itself and its heirs, personal representatives, successors and assigns (collectively, the “Releasors”), hereby forever fully and irrevocably releases and discharges Parent, the Companies and their respective predecessors, successors, direct or indirect subsidiaries and past and present stockholders, members (direct and indirect), managers, directors, officers, employees, agents, and representatives (collectively, the “Released Parties”) from any and all actions suits, claims, demands, debts, promises, judgments, liabilities or obligations of any kind whatsoever in law or equity and causes of action of every kind and nature, or otherwise (including claims for damages, costs, expense, and attorney’s, brokers’ and accountants fees and expenses) arising out of or related to events, facts, conditions or circumstances existing or arising prior to the Closing Date, which the Releasors can, shall or may have against the Released Parties, whether known or unknown, suspected or unanticipated as well as anticipated and that now exist or may hereinafter accrue based on matters now known as well as unknown (collectively, the “Released Claims”), and hereby irrevocably agree to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any Proceeding of any kind before any Governmental Body or other tribunal, against any Released Party based upon any Released Claim. Notwithstanding the preceding sentence of this Section 5.11, “Released Claims” does not include, and the provisions of this Section 5.11 shall not release or otherwise diminish, the obligations of Parent or the Company expressly set forth in any provisions of this Agreement or the agreements entered into as of the Closing as contemplated hereby.

Section 5.12 Compliance with the New Jersey Industrial Site Recovery Act.

(a) For the facility located in Carlstadt, New Jersey (the “Carlstadt Facility”), the Company shall be responsible for actions necessary to comply with the New Jersey Industrial Site Recovery Act (“ISRA”) prior to the Closing. The Company shall promptly provide Parent with advance copies of all submittals to be filed in connection with ISRA and shall incorporate any reasonable substantive comments provided by Parent into such filings; provided, that in so doing the Company shall not be unreasonably delayed in making such filings. The Company shall provide copies of correspondence and documents received from the New Jersey Department of Environmental Protection (“NJDEP”) to Parent on a timely basis. Without limiting the generality of the foregoing, with respect to the Carlstadt Facility, the Company (or if after Closing, the Stockholders’ Representative) shall, as appropriate and necessary under ISRA, (i) timely file a General Information Notice with NJDEP, (ii) use commercially reasonable efforts to secure prior to the Closing, (A) a written approval from the NJDEP of a negative declaration which has been submitted by the Company (or if after Closing, the Stockholders’ Representative) to the NJDEP and as required is supported by a Preliminary Assessment (as defined under ISRA) prepared in compliance with ISRA, (B) an unconditional “no further action” letter from NJDEP under ISRA or a “no further action” letter conditioned on the imposition of Institutional Controls, subject to the provisions in Section 5.12(c), (C) a written approval from NJDEP granting a De Minimis Quantity Exemption (as defined under ISRA), (D) a Letter of Non-Applicability from NJDEP, or (E) if, the Company (or if after Closing, the Stockholders’ Representative), applying commercially reasonable efforts, is unable to secure (A), (B), (C) or (D), NJDEP’s approval of a Remediation Agreement (as defined under ISRA) pursuant to Section 5.12(b) (any of (A), (B), (C), (D) or (E), an “ISRA Clearance”). Parent and, if after Closing, the Surviving Corporation shall use commercially reasonable efforts to cooperate with the Company (or if after Closing, the Stockholders’ Representative) in connection

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with its actions with respect to its compliance with ISRA, including with respect to executing any forms necessary to allow the parties hereto to timely consummate the transactions contemplated by this Agreement in accordance with ISRA requirements and access to the Carlstadt Facility as reasonably required. The Company shall be responsible for all costs and expenses incurred by the Company in connection with actions taken by the Company to comply with ISRA prior to the Closing, including all costs and expenses of attorneys, environmental consultants and engineers retained by the Company to comply with ISRA. Parent shall be responsible for its own cost and expenses in connection with monitoring the Company’s compliance with ISRA; provided that the foregoing shall not affect the Stockholders’ obligation to indemnify Parent pursuant to Article VII hereof. The Company and Parent acknowledge and agree that in order to timely consummate the transactions contemplated by this Agreement it may be necessary for the Surviving Corporation to enter into a Remediation Agreement pursuant to the conditions set forth in Sections 5.12(b) and (d), whereby the Surviving Corporation commits to comply with the requirements of ISRA after the Closing, subject to the Stockholders’ obligation to indemnify Parent pursuant to Article VII hereof, if applicable. Such Remediation Agreement may require Parent to establish financial assurance on behalf of the Surviving Corporation in accordance with NJDEP regulations.

(b) The Company shall use commercially reasonable efforts to secure ISRA Clearance prior to the Closing and shall keep the Parent reasonably informed about the Company’s progress in securing ISRA Clearance; provided, however, if ISRA Clearance has not been achieved by the Closing Date, the Company (after consulting with and obtaining the reasonable approval of Parent) or Parent shall, to the extent permitted by applicable Law, cause the Surviving Corporation to execute (or, if the Surviving Corporation is not able to execute, the Company shall execute) a Remediation Agreement as the responsible party with the NJDEP, and Parent shall provide financial assurance pursuant to ISRA and NJDEP requirements. The Stockholders’ Representative shall continue to complete actions pursuant to ISRA requirements up until, and to the extent required by ISRA and the NJDEP, the completion of a Remedial Investigation (as defined under ISRA). Immediately after the Closing and at the conclusion of the Remedial Investigation stage, if any, Parent shall cause Surviving Corporation to assume the obligations required to attain ISRA Clearance, and Parent shall cause the Surviving Corporation to commit to comply with ISRA in connection therewith.

(c) To the extent that the Company (or if after Closing, the Stockholders’ Representative) is able to reduce the costs for compliance with ISRA by agreeing to deed restrictions or institutional controls (including any classification exception area for groundwater) (collectively, the “Institutional Controls”), Parent agrees to cause the Surviving Corporation to accept such Institutional Controls and execute any documents related thereto as may reasonably be requested by the Company (or if after Closing, the Stockholders’ Representative); provided, that the Surviving Corporation is under no obligation to agree to such Institutional Controls if this will unreasonably interfere with the Surviving Corporation’s operation of the Business as currently operated following the Closing or result in significant expense increase or a reduction in profit margins, and the Company (or if after Closing, the Stockholders’ Representative) shall provide Parent with notice and consult with it prior to the imposition of any such Institutional Controls.

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(d) To the extent the Surviving Corporation is required to execute a Remediation Agreement and/or incurs Cleanup Costs related to the Excepted Environmental Matters, such Cleanup Costs shall be reimbursed to Parent pursuant to Section 7.3(c) of this Agreement and subject to Section 7.6(b).

Section 5.13 Additional Agreements. Parent shall use reasonable best efforts to negotiate in good faith employment and compensation arrangements with the individual listed on Schedule 5.13 to be entered into at the Closing.

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.1 Conditions to Each Party’s Obligation to Effect the Mergers. The respective obligations of each party to consummate the Closing shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions:

(a) any applicable waiting period under the HSR Act relating to the Mergers shall have expired or been terminated;

(b) no temporary restraining order, preliminary or permanent injunction, cease and desist order or other legal restraint or prohibition of any Governmental Entity preventing the purchase and sale contemplated hereby or the consummation of the transactions to be effected at the Closing shall be in effect; and

(c) the Company shall have secured ISRA Clearance or the NJDEP shall have submitted a final Remediation Agreement for execution by either the Company or the Surviving Corporation, as applicable.

Section 6.2 Conditions to Obligation of Parent and the Merger Subs. The obligation of Parent and the Merger Subs to consummate the Closing shall be subject to the satisfaction (or waiver, in whole or in part, to the extent permitted by Applicable Law, by Parent) at or prior to the Effective Time of each of the following conditions:

(a) the representations and warranties of the Stockholders contained in this Agreement (in each case, disregarding all materiality qualifications therein) that (i) are not made as of a specific date shall be true and correct (A) as of the date of this Agreement and (B) as of the Closing, as though made on and as of the Closing and as modified by an updated Company Schedule delivered to Parent not less than forty-eight (48) hours prior to the Closing and reflecting no Material Adverse Effect, and (ii) are made as of a specific date shall be true and correct as of such date except, in the case of each (i) and (ii), where the failure of such representations or warranties to be true and correct, in the aggregate, does not have a Material Adverse Effect.

(b) each Company shall have performed, in all material respects, all obligations and complied with, in all material respects, its agreements and covenants to be performed or complied with by it under this Agreement on or prior to the Closing Date;

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(c) each Company shall have delivered to Parent a certificate, dated the Closing Date, signed by a senior officer of such Company, and certifying as to the satisfaction by such Company of the applicable conditions specified in Sections 6.2(a) and 6.2(b);

(d) the Stockholders shall have delivered to Parent certificates representing all of the Shares accompanied by duly executed letters of transmittal in a form reasonably acceptable to Parent;

(e) the consent to the Merger of Pantone, Inc. of the lessor under the Lease Agreement between Commerce Boulevard, LLC and Pantone, Inc. shall have been obtained;

(f) the Stockholders shall have delivered to Parent, all in form reasonably satisfactory to Parent:

(i) evidence of the approval of the Mergers by the board of directors and all of the stockholders of each of the Companies;

(ii) a correct and complete Accounts Receivable aging schedule as of a date within seven (7) days prior to the Closing Date;

(iii) a Noncompetition Agreement from Lawrence Herbert substantially in the form of Exhibit C;

(iv) an Employment and Noncompetition Agreement with each of Richard Herbert and Lisa Herbert in substantially the form of Exhibit D;

(v) an Employment and Noncompetition Agreement with Juergen Stolt in substantially the form of Exhibit E;

(vi) a landlord’s estoppel certificate from the lessor to the Company of Real Estate located at 590 Commerce Boulevard, Carlstadt, New Jersey;

(vii) a partially completed and executed IRS Form 8023 (and any similar state forms) required to be filed in connection with the Section 338(h)(10) election;

(viii) the Escrow Agreement, executed on behalf of the Stockholders; and

(ix) pay-off letters with respect to all Indebtedness of any Company.

Section 6.3 Conditions to Obligation of the Companies. The obligation of each Company to consummate the Closing shall be subject to the satisfaction (or waiver, in whole or in part, to the extent permitted by Applicable Law, by each Company) at or prior to the Effective Time of each of the following conditions:

(a) the representations and warranties of Parent and the Merger Subs contained in this Agreement that (i) are not made as of a specific date shall be true and correct as

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of the date of this Agreement and as of the Closing, as though made on and as of the Closing, and (ii) are made as of a specific date shall be true and correct as of such date, in all material respects;

(b) Parent and the Merger Subs shall have performed all obligations and complied with, in all material respects, its agreements and covenants to be performed or complied with by each under this Agreement on or prior to the Closing Date; and

(c) Parent shall have each delivered to each Company a certificate, dated the Closing Date, signed by a senior officer of Parent, and certifying as to the satisfaction by each of the applicable conditions specified in Sections 6.3(a) and 6.3(b).

ARTICLE VII

SURVIVAL OF REPRESENTATIONS AND

WARRANTIES; INDEMNIFICATION

Section 7.1 General. From and after the Closing, the parties shall indemnify each other as provided in this Article VII. The party or parties seeking indemnification are sometimes referred to herein as the “Indemnified Party” and the party or parties against which indemnification is sought are sometimes referred to as the “Indemnifying Party.”

Section 7.2 Survival.

(a) All representations, warranties, covenants and agreements of the parties contained in this Agreement or any certificates delivered pursuant to this Agreement will survive the Closing Date and will not terminate except as otherwise provided in Section 7.2(b). The right to indemnification, payment of any losses or other remedy based on such representations, warranties, covenants, and agreements will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time after the Closing Date with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or agreements.

(b) Any representation and warranty set forth in Article III or Article IV (other than Section 3.14(l) (but only in respect of Adverse Consequences arising out of or in connection with Taxes) and Section 3.15 which shall survive the Closing Date for the period of time specified in the applicable statute of limitations and Sections 3.16 and 7.3(c) which shall survive the Closing Date for a period of seven (7) years) shall terminate on the date that is one (1) year after the Closing Date unless the notice referred to in Section 7.5(a) shall have been given to the Indemnifying Party with respect to any breach or inaccuracy of such representation and warranty on or before such date. Notwithstanding the foregoing, any claim for indemnification under this Article VII may be made at any time without limitation if such claim is related to (a) any fraud or knowing or intentional misrepresentation by any party in connection with this Agreement or (b) any breach of the representations and warranties in Section 3.1, 3.2 or 3.5.

Section 7.3 Indemnification Covenants of Stockholders. The Stockholders shall, jointly and severally, indemnify Parent for and hold Parent harmless from and against the

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entirety of any Adverse Consequences sustained or incurred by Parent (including any Adverse Consequences sustained or incurred after the end of any applicable survival period) for which a notice has been delivered prior to the end of the applicable survival period in accordance with Section 7.5 hereof resulting from or arising out of:

(a) any breach or inaccuracy of any representation or warranty made by the Stockholders to Parent in this Agreement or in any certificate or other document delivered by the Stockholders or the Company to Parent in connection with Section 6.2(f) at Closing;

(b) any failure of the Stockholders or any Company to comply with, or any breach or nonfulfillment by the Stockholders or any Company of, any covenant or agreement of the Stockholders of any Company set forth in this Agreement or in any certificate delivered by the Stockholders or any Company in connection with the transactions contemplated hereby; and

(c) the Cleanup Costs related to the two items on Schedule 7.3(c) (the “Excepted Environmental Matters”) including any releases of Environmental Hazardous Materials attributable to the transformer referred to in item 1 and any releases of Environmental Hazardous Materials attributable to the Historic Fill referred to in item 2.

References to Parent in this Section 7.3 includes its shareholders and other Affiliates, the Surviving Corporations, and their respective officers, directors, agents, successors and assigns (the “Parent Indemnitees”).

Section 7.4 Indemnification Covenants of Parent. Parent shall indemnify the Stockholders for and hold the Stockholders harmless from and against the entirety of any Adverse Consequences sustained or incurred by the Stockholders (including any Adverse Consequences sustained or incurred after the end of the applicable survival period) resulting from or arising out of:

(a) any breach or inaccuracy of any representation or warranty made by Parent to the Stockholders in this Agreement or in any certificate or other document delivered by Parent to the Stockholders in connection with the transactions contemplated hereby; and

(b) any failure of Parent to comply with, or any breach or nonfulfillment by Parent of, any covenant or agreement of Parent set forth in this Agreement or in any certificate or other document delivered by Parent to the Stockholders in connection with the transactions contemplated hereby or thereby.

References to any Stockholders in this Section 7.4 includes their respective Affiliates, agents, successors and assigns (the “Stockholder Indemnitees”).

Section 7.5 Claims for Indemnification.

(a) Promptly upon the Indemnified Party obtaining knowledge of any facts causing it to believe that it has a claim for indemnification against the Indemnifying Party hereunder, the Indemnified Party shall give written notice of such claim to the Indemnifying Party. Such written notice shall set forth in reasonable detail the nature and (to the extent then known) the amount of the claim. Notwithstanding the foregoing, the Indemnified Party’s right of

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indemnification hereunder shall not be affected by its failure to give or by its delay in giving such notice unless, and then only to the extent that, the rights of the Indemnifying Party are materially prejudiced as a result of such failure or delay.

(b) The Indemnified Party shall tender to the Indemnifying Party the defense of any Proceeding brought by any third party (hereinafter “Third Party Claim”). The Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 10 Business Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill the Indemnifying Party’s indemnification obligations hereunder, (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom of practice adverse to the continuing business interests or the reputation of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. Failure by the Indemnifying Party to assume such defense shall be deemed a waiver by the Indemnifying Party of its right to so defend.

(c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 7.5(b) above, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, and (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party unless such judgment or settlement provides solely for payment by the Indemnifying Party, a full release of the Indemnified Party for any and all obligations with respect to the Third Party Claim and no admission of wrongdoing by the Indemnified Party.

(d) If the Indemnifying Party does not assume the defense of any Third Party Claim as provided herein or if any of the conditions specified in Section 7.5(b) is or becomes unsatisfied, then (i) the Indemnified Party may defend against such Third Party Claim in such manner that the Indemnified Party deems advisable or appropriate and may settle such Third Party Claim or consent to the entry of judgment with respect thereto upon such terms as it deems advisable or appropriate, (ii) the Indemnifying Party shall reimburse the Indemnified Party promptly and periodically for the costs and expenses sustained or incurred by the Indemnified Party in the defense or settlement of such Third Party Claim (including attorneys’ fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may sustain or incur resulting from, arising out of, relating

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to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Article VII.

(e) The parties shall cooperate with each other in connection with any Third Party Claim and provide each other with access to relevant personnel, books, records and other information in its possession.

Section 7.6 Limitations on Liability of the Stockholders.

(a) Except with respect to any fraud or knowing or intentional misrepresentation by the Stockholders in connection with this Agreement, Parent Indemnitees shall not be entitled to indemnification pursuant to Section 7.3(a) until the aggregate amount of the Stockholders’ indemnification obligations to Parent Indemnitees for Adverse Consequences pursuant to this Article VII, determined without regard to this Section 7.6, exceeds the amount equal to $2,000,000 (the “Threshold Amount”), in which event the Stockholders’ indemnification obligations shall be for the amount of all Adverse Consequences subject to indemnification in excess of the Threshold Amount. Notwithstanding the foregoing, the Threshold Amount shall not be applicable to indemnification pursuant to Section 7.3(c).

(b) Notwithstanding anything else to the contrary contained in this Agreement, except with respect to any fraud or knowing or intentional misrepresentation by the Stockholders in connection with this Agreement, the Stockholders’ maximum aggregate indemnification obligations to Parent Indemnitees pursuant to Sections 7.3(a) and 7.3(c), collectively, shall not exceed $10,000,000.

Section 7.7 Limitations on Liability of Parent.

(a) Except with respect to any fraud or knowing or intentional misrepresentation by Parent in connection with this Agreement, Stockholder Indemnitees shall not be entitled to indemnification pursuant to Section 7.4(a) until the aggregate amount of Parent’s indemnification obligations to Stockholder Indemnitees for Adverse Consequences pursuant to this Article VII, determined without regard to this Section 7.7, exceeds the Threshold Amount, in which event Parent’s indemnification obligations shall be for the amount of Adverse Consequences subject to indemnification in excess of such Threshold Amount.

(b) Notwithstanding anything else to the contrary contained in this Agreement, except with respect to any fraud or knowing or intentional misrepresentation by Parent in connection with this Agreement, Parent’s maximum aggregate indemnification obligations to Stockholder Indemnitees pursuant to Section 7.4(a), collectively, shall not exceed $10,000,000.

Section 7.8 Recovery. Parent shall be entitled to recover any Adverse Consequences to which the Parent Indemnitees are entitled to indemnification pursuant to this Agreement first from the Escrow Amount and then, only after release of the Escrow Amount (other than amounts retained for pending claims, if any), from the Stockholders pro rata in proportion to the portion of the Merger Consideration received by such Stockholder pursuant to this Agreement.

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Section 7.9 Other Indemnification Matters.

(a) All indemnification payments under this Article VII will be deemed adjustments to the Merger Consideration.

(b) No Person shall be entitled to recover any amount under this Article VII for any Adverse Consequence to the extent such Adverse Consequence has been directly or indirectly remedied by indemnification already paid to such Person or its Affiliates pursuant to this Article VII.

(c) The amount of any Adverse Consequences for which indemnification is provided under this Article VII shall be net of any amounts recovered by the Indemnified Party under insurance policies with respect to such Adverse Consequences (but shall include such Indemnified Party’s reasonable expenses incurred in obtaining such recovery and any resulting increase in premiums). If any Adverse Consequences are paid and an Indemnified Party thereafter receives a related insurance recovery, then such Indemnified Party will pay the amount thereof to the Indemnifying Party promptly after such recovery.

Section 7.10 Interest. Any Adverse Consequence subject to indemnification under this Article VII shall bear interest from (a) the later of (i) the Indemnifying Party’s receiving notice of such Adverse Consequence, and (ii) the date such Adverse Consequence is sustained or incurred, until (b) the date on which such Adverse Consequence is indemnified pursuant to the provisions hereof, at a rate equal to the lesser of 9% per annum or the maximum rate permitted by Applicable Law. Such interest shall be payable in immediately available funds upon demand.

Section 7.11 Exclusive Remedy. After the Effective Time, indemnification under this Article VII shall be the sole and exclusive remedy of Parent Indemnitees for any breach of a representation or warranty contained in Article III, except with respect to fraud and knowing and intentional misrepresentations. In furtherance of the foregoing, each of Parent and the Merger Subs hereby waives, on behalf of itself and on behalf of all Parent Indemnitees, from and after the Closing, to the fullest extent permitted under Applicable Law, any and all rights and claims (other than claims of fraud and knowing and intentional misrepresentations) for Adverse Consequences it may have against the Stockholders and their respective Affiliates (collectively, the “Released Stockholder Parties”) relating to the representations and warranties in this Agreement, and the Companies and their respective assets and liabilities, and agrees not to bring or threaten to bring or otherwise join in such claim against the Released Stockholder Parties or any of them.

Section 7.12 Impact of Knowledge. If any Stockholder proves that Parent had “knowledge” (as defined in Article I) prior to the date hereof of any breach in any representation or warranty set forth in Article III, then, only to the extent of such knowledge, Parent Indemnities shall not be entitled to be indemnified pursuant to this Agreement, to sue for damages or to assert any other right or remedy for any Adverse Consequences arising out of or relating to such breach, notwithstanding anything to the contrary contained herein or in any certificate delivered pursuant hereto. Notwithstanding the foregoing, the parties expressly agree

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that for purposes of this Section 7.12 Parent shall not be deemed to have “knowledge” (as defined in Article I) of the matters set forth in items 1 and 2 of Schedule 7.3(c).

Section 7.13 Mitigation. The Indemnified Party and the Indemnifying Party shall cooperate with each other in good faith with respect to resolving any claim or liability with respect to which a Person is entitled to indemnity, including by making good faith commercially reasonable efforts to mitigate or resolve any such claim or liability.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

Section 8.1 Termination.

(a) This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing (i) by mutual written consent of each Company and Parent, (ii) by either the Company or Parent, if the Closing does not occur on or prior to the date that is 120 days after the date of this Agreement (as extended pursuant to the provision below, the “Outside Date”); provided, however, that the party seeking termination pursuant to this clause (ii) is not in material breach of its representations, warranties or agreements contained in this Agreement, or (iii) by each Company or Parent if the Closing shall not have occurred on or prior to the date that is ten (10) Business Days following the date on which all of the conditions to Closing in Article VI are satisfied or waived and such failure to close is a breach of the agreements of the other party contained in this Agreement; provided further that if, as of the Outside Date, all conditions set forth in Article VI shall have been satisfied or waived (other than those that are satisfied by action taken at the Closing) other than the condition set forth in Section 6.1(a), then either any Company or Parent may extend the Outside Date to up to 270 days after the date of this Agreement (the period from 120 days after the date of this Agreement until any extension up to 270 days after the date of this Agreement is referred to as the “Extension Period”), by providing written notice to the other party. During any Extension Period Parent shall use reasonable best efforts to obtain the Debt Financing or to obtain alternative financing on terms that are comparable to or more favorable to Parent than the terms of the Debt Financing ( the “Extension Debt Financing”); provided that Parent shall not be obligated to consummate the Closing during the Extension Period unless it has obtained the Extension Debt Financing; and further provided, that if Parent uses such reasonable best efforts and is unable to obtain the Extension Debt Financing by the end of the Extension Period, then Parent may terminate this Agreement at the end of the Extension Period. Notwithstanding the foregoing, nothing in the preceding sentence shall affect Parent’s obligations to consummate the Closing prior to any Extension Period.

(b) In the event of termination by any party to this Agreement pursuant to this Section 8.1, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated, without further action by any party. If the transactions contemplated by this Agreement are terminated as provided herein, Parent shall, upon request by any Company, promptly redeliver to each Company all written or electronic information furnished to Parent in accordance with the Confidentiality Agreement.

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(c) If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in this Section 8.1, this Agreement shall become null and void and of no further force and effect, except for the provisions of (i) Sections 3.19 and 4.6 relating to broker’s fees, (ii) Section 5.5 relating to certain expenses, (iii) this Section 8.1, (iv) and Article IX. Nothing in this Section 8.1 shall be deemed to release any party to this Agreement from any liability for any breach by such party of the terms and provisions of this Agreement prior to such termination. of this Agreement that such other party was or is obligated to comply with or perform.

Section 8.2 Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of Parent and each Company. Any of the parties to this Agreement may, by an instrument in writing signed on behalf of such party, waive compliance by any other party to this Agreement with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Notices. All notices, requests and other communications hereunder shall be in writing (including wire, telefax or similar writing) and shall be sent, delivered or mailed, addressed, or telefaxed:

(a) if to Parent, to:

X-Rite, Incorporated

4300 44th Street SE

Grand Rapids, MI 49512

Attention: Chief Executive Officer

Facsimile: (616) 803-2530

with a copy (which shall not constitute notice) to:

McDermott Will & Emery LLP

227 W. Monroe Street

Chicago, IL 60606

Attention: Helen R. Friedli, P.C.

Facsimile: (312) 984-7700

(b) if to any of the Companies, to:

305 Clarke Ave

Palm Beach, Florida 33480-6126

Attention: Lawrence Herbert

Facsimile: (561) 655-8156

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with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, New York 10036

Attention: Mark N. Kaplan

Facsimile: (212) 735-2000

Each such notice, request or other communication shall be given (i) by mail (postage prepaid, registered or certified mail, return receipt requested), (ii) by hand delivery, (iii) by nationally recognized courier service or (iv) by telefax, receipt confirmed (with a confirmation copy to be sent by first class mail; provided that the failure to send such confirmation copy shall not prevent such telefax notice from being effective). Each such notice, request or communication shall be effective (i) if mailed, three days after mailing at the address specified in this Section 9.1 (or in accordance with the latest unrevoked written direction from such party), (ii) if delivered by hand or by nationally recognized courier service, when delivered at the address specified in this Section 9.1 (or in accordance with the latest unrevoked written direction from the receiving party) and (iii) if given by telefax, when such telefax is transmitted to the telefax number specified in this Section 9.1 (or in accordance with the latest unrevoked written direction from the receiving party), and the appropriate confirmation is received.

Section 9.2 Company Schedule. Disclosures by any Company included in any schedule to this Agreement (the “Company Schedule”) shall be considered to be made for purposes only of all schedules in which such disclosure is made or cross-referenced. Inclusion of any matter or item in any Schedule does not imply that such matter or item would, under the provisions of this Agreement, have to be included in any schedules in the Company Schedule or that such matter or term is otherwise material. In addition, matters disclosed in any schedules in the Company Schedule are not necessarily limited to matters required by this Agreement to be disclosed in the schedules in the Company Schedule, and any such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature.

Section 9.3 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid or enforceable, such provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 9.4 Counterparts. This Agreement may be executed in two (2) or more counterparts (including by means of facsimile), each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement. Delivery of an

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executed counterpart of a signature page to this Agreement by facsimile or confirmed e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.5 Entire Agreement; No Third Party Beneficiaries. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties to this Agreement with respect to the subject matter hereof and (b) is not intended to confer upon any Person (including any Company Employee or financing source of Parent) other than the parties to this Agreement, any rights or remedies hereunder; provided that nothing in this Agreement shall be construed to modify or supersede the Confidentiality Agreement, it being understood that such Confidentiality Agreement shall continue to be in full force and effect notwithstanding the execution or termination of this Agreement.

Section 9.6 Governing Law. This agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware; provided, that matters relating to Merger 4, Merger 5 and Merger 6 shall be governed by the NJBCA.

Section 9.7 Specific Performance. The parties to this Agreement hereby agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, notwithstanding anything to the contrary herein, it is hereby agreed that the parties to this Agreement shall be entitled to injunction(s), specific performance and/or other equitable remedies to enforce specifically the terms and provisions hereof relating to the parties’ obligations to consummate the Closing or the terms and provisions hereof or in any agreement executed in connection with the transactions contemplated hereby, in each case, in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 9.8 Consent to Jurisdiction; Waiver of Jury Trial.

(a) Each of the parties to this Agreement irrevocably submits to the exclusive jurisdiction of the state or federal courts in the State of Delaware, County of New Castle (“Delaware Courts”), for any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof, except for any dispute under Sections 2.12 or 5.4(c) or any disputes arising under the agreements contemplated in Sections 6.2(f)(iii), (iv) and (v), which shall be settled in accordance with the procedures set forth in those Sections or agreements. Each of the parties to this Agreement hereby further agrees that service of any process, summons, notice or document by United States registered mail to the respective address of such party set forth in Section 9.1 shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties to this Agreement hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the state or federal courts of the State of Delaware, County of New Castle, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party hereby waives, to the fullest extent permitted by applicable

48

Law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or any transaction contemplated hereby. Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 9.8.

Section 9.9 Publicity. None of the parties to this Agreement nor their respective Affiliates shall issue or cause the publication of any press release or other public announcement or communication with respect to the transactions contemplated by this Agreement without the consent of each Company and Parent, which consent shall not be unreasonably withheld or withdrawn, except to the minimum extent necessary to comply with the requirements of law or the regulations or policies of any securities exchange, in which case the party to this Agreement required to make the release or statement or communication shall allow each Company or Parent, as the case may be, reasonable time to comment on such release or statement or communication in advance of such issuance, disclosure or filing.

Section 9.10 Assignment. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties to this Agreement without the prior written consent of each of the other parties to this Agreement; provided that Parent may assign and pledge its rights to indemnification hereunder to its lenders or any agent thereof pursuant to any security agreement entered into in connection with any loan agreement, and to any agent or any lenders or any other party in connection with foreclosure proceedings or any other enforcement of remedies under a security agreement by any agent or lender thereunder or otherwise. Any such assignment will not relieve Parent from any liability or obligations under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors and permitted assigns. Any attempted assignment in violation of the terms of this Section 9.10 shall be null and void, ab initio.

Section 9.11 Stockholders’ Representative.

(a) Lawrence Herbert shall be appointed and authorized a agent and representative under this Agreement (the “Stockholders’ Representative”) to take such action, as he determines in his judgment appropriate, on behalf of the Companies and the Stockholders, to exercise such rights, power and authority, as such Companies and Stockholders may have under this Agreement and otherwise as are authorized, delegated and granted to the Stockholders’ Representative on behalf of such Person.

(b) The Stockholders’ Representative shall not (i) be liable to the Stockholders for any actions taken or omitted to be taken by it or any agent employed by it under or in connection with this Agreement or the transactions contemplated hereby, or (ii) owe any fiduciary duty or have any fiduciary responsibility to any of the Stockholders or the Company as a result of actions taken as the Stockholders’ Representative pursuant to this Agreement, except for such actions taken or omitted to be taken resulting from the Stockholders’ Representative’s willful misconduct. The Stockholders’ Representative shall not be liable to any Stockholder for

49

any apportionment or distribution of payments made by it in good faith, and, if any such apportionment or distribution is subsequently determined to have been made in error, the sole recourse of any Stockholder to whom payment was due, but not made, shall be to recover from other Stockholders, as applicable, any payment in excess of the amount to which they are determined to have been entitled pursuant to this Agreement.

Section 9.12 Construction.

(a) The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

(b) The descriptive headings herein are inserted for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless otherwise noted, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement. All references to this Agreement shall be deemed to include this Agreement and all Exhibits and Schedules to this Agreement, which are made a part hereof and incorporated herein by reference. All references to sections shall be deemed to be references to sections of this Agreement unless specified otherwise. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. Unless otherwise indicated, references in this Agreement to dollars are to United States dollars.

50

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

PANTONE, INC.

By:

Name:

Title:

PANTONE GERMANY, INC.

By:

Name:

Title:

PANTONE INDIA, INC.

By:

Name:

Title:

PANTONE UK, INC

By:

Name:

Title:

PANTONE ASIA, INC.

By:

Name:

Title:

[Agreement and Plan of Merger Execution Page]

51

PANTONE JAPAN, INC.
By:
Name:
Title:
X-RITE, INCORPORATED
By:
Name:
Title:
STOCKHOLDER
Name:	Lawrence Herbert
STOCKHOLDER
Name:	Richard Herbert
STOCKHOLDER
Name:	Lisa Herbert
STOCKHOLDER
Name:	Victoria Herbert

[Agreement and Plan of Merger Execution Page]

52

STOCKHOLDER

Name: Loren Herbert

STOCKHOLDER

Name : Retained Annuity Trust

Solely in his capacity as

Stockholders’ Representative:

Lawrence Herbert

[Agreement and Plan of Merger Execution Page]

53

EX-2.2

Exhibit 2(2)

AMENDMENT NO. 1 TO AGREEMENT

AND PLAN OF MERGER

THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (the “Amendment”), is made and entered into as of October 15, 2007, by and among X-Rite Incorporated, a Michigan corporation (the “Parent”), and Pantone, Inc., a Delaware corporation (“Company 1”), Pantone Germany, Inc., a Delaware corporation (“Company 2”), Pantone India, Inc., a Delaware corporation (“Company 3”), Pantone UK, Inc., a New Jersey corporation (“Company 4”), Pantone Asia, Inc., a New Jersey corporation (“Company 5”), and Pantone Japan, Inc., a New Jersey corporation (“Company 6”, and together with Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc., and Pantone Asia, Inc., the “Companies” and the term “Company” as used in this Agreement shall refer to each of the Companies, individually.

RECITALS

WHEREAS, the Parent, Companies, stockholders of the Companies and Lawrence Herbert are parties to that certain Agreement and Plan of Merger dated as of August 23, 2007 (the “Merger Agreement”);

WHEREAS, capitalized terms used herein, unless otherwise herein defined, are used with the meanings given them in the Merger Agreement;

WHEREAS, pursuant to Section 8.2 of the Merger Agreement, the Companies, on the one hand, and Parent, on the other hand, desire to amend the Merger Agreement to provide that at the Effective Time Company 4, Company 5, and Company 6 shall merge with and into Merger Sub 4, Merger Sub 5, and Merger Sub 6, respectively, with such Merger Subs surviving such mergers as Delaware corporations;

WHEREAS, Section 2.2 of the Merger Agreement provides that the Closing shall take place on the second business day after the conditions to the parties’ obligations to effect the Mergers contained in Article VI have been satisfied (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction thereof at the Closing); and

WHEREAS, the parties have agreed that the closing will occur on October 24, 2007.

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises set forth herein, the parties hereto hereby agree as follows:

1. Amendment to Section 2.1 of the Merger Agreement. Section 2.1 of the Merger Agreement is hereby revised and amended by replacing the second and third sentences of such section with the following sentences:

“Upon the terms and subject to the conditions of this Agreement and the applicable provisions of the New Jersey Business Corporation Act (“NJBCA”) and the DGCL, at the Effective Time, Company 4 shall be merged with and into Merger Sub 4, Company 5 shall be merged with an into Merger Sub 5 and Company 6 shall be merged with and into Merger Sub 6. Following the Mergers, the separate corporate existences of each of Merger Sub 1, Merger Sub 2 and Merger Sub 3 shall cease and Company 1, Company 2 and Company 3 shall continue as surviving corporations, and the separate corporate existence of Company 4, Company 5 and Company 6 shall cease and Merger Sub 4, Merger Sub 5 and Merger Sub 6 shall continue as surviving corporations (together with Company 1, Company 2, and Company 3, the “Surviving Corporations,” and the term “Surviving Corporation” as used in this Agreement shall refer to each of the Surviving Corporations, individually).”

2. Amendment to Section 2.2 of the Merger Agreement. Section 2.2 of the Merger Agreement is hereby revised and amended by inserting immediately after the parenthetical “(the “Closing Date”)” the following phrase: “; it being understood that the parties to this Agreement have agreed hereto by this writing to establish the Closing Date as October 24, 2007”.

3. Amendment to Section 2.3 of the Merger Agreement. The second sentence of Section 2.3 of the Merger Agreement is hereby revised and amended by replacing the word “or” that immediately follows the word “Delaware” with the words “and/or”.

4. Amendment to Section 2.4 of the Merger Agreement. The second sentence of Section 2.4 of the Merger Agreement is hereby revised and amended by adding the defined term “and DGCL” immediately after the defined term “NJBCA”.

5. Amendment to Section 8.1(a)(iii). Section 8.1(a)(iii) of the Merger Agreement is hereby revised and amended in its entirety to read as follows:

“by each Company or Parent if the Closing shall not have occurred on or prior to October 26, 2007 and such failure to close is a breach of the agreements of the other party contained in this Agreement”

6. Amendment to Section 8.2. The first sentence of Section 8.2 of the Merger Agreement is hereby revised and amended in its entirety to read: “This Agreement may not be amended except by an instrument in writing signed on behalf of Parent, each Company and the Stockholders’ Representative.”

2

7. Waiver. In consideration for entering into this Amendment, Parent hereby irrevocably and unconditionally waives any breach by the Companies of the Merger Agreement that is caused by the amendments contained in paragraphs 1, 3 and 4 of this Amendment, and the Companies, Stockholders and Stockholders’ Representative hereby irrevocably and unconditionally waive any breach by the Parent of the Merger Agreement that is caused by any failure to effect the Closing prior to October 24, 2007. Each of the parties hereto agree and acknowledge that no waiver herein shall operate as a waiver of any other or future breach or right under the Merger Agreement nor shall any single or partial exercise of any right hereunder or under the Merger Agreement preclude any other or further exercise of any other right hereunder or under the Merger Agreement. No failure or delay by the parties to the Merger Agreement in exercising any right hereunder or under the Merger Agreement shall operate as a waiver thereof other than as expressly set forth in this Amendment. Any agreement on the part of the Companies or Stockholders Representative to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of the Companies and the Stockholders’ Representative.

8. General Provisions.

(a) Except as expressly amended, modified, agreed, waived, released or settled herein, including without limitation in the recitals hereto, the Merger Agreement shall remain unchanged and in full force and effect, and as amended or modified herein, the Merger Agreement is hereby ratified, approved and confirmed in all respects.

(b) After the date hereof all references in the Merger Agreement to the “Agreement,” “herein,” “hereof” and the like, shall refer to the Merger Agreement as amended or modified herein.

(c) This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

[SIGNATURE PAGE FOLLOWS]

3

IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

PANTONE, INC.
By:
	Name:
	Title:
PANTONE GERMANY, INC.
By:
	Name:
	Title:
PANTONE INDIA, INC.
By:
	Name:
	Title:
PANTONE UK, INC
By:
	Name:
	Title:
PANTONE ASIA, INC.
By:
	Name:
	Title:
STOCKHOLDERS’ REPRESENTATIVE
Lawrence Herbert

PANTONE JAPAN, INC.
By:
	Name:
	Title:
X-RITE, INCORPORATED
By:
	Name:
	Title:

2

EX-2.3

Exhibit 2(3)

AMENDMENT NO. 2 TO AGREEMENT

AND PLAN OF MERGER

THIS AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER (the “Amendment”), is made and entered into as of October 24, 2007, by and among X-Rite Incorporated, a Michigan corporation (the “Parent”), the Stockholders’ Representative, Pantone, Inc., a Delaware corporation, Pantone Germany, Inc., a Delaware corporation, Pantone India, Inc., a Delaware corporation, Pantone UK, Inc., a New Jersey corporation, Pantone Asia, Inc., a New Jersey corporation, and Pantone Japan, Inc., a New Jersey corporation (together with Pantone, Inc., Pantone Germany, Inc., Pantone India, Inc., Pantone UK, Inc., and Pantone Asia, Inc., the “Companies”), and CC Acquisition Trust, Richard Herbert Trust, Lisa Herbert Trust, Victoria Herbert Trust, and Loren Herbert Trust as Stockholders

RECITALS

WHEREAS, the Parent, the Companies, Lawrence Herbert, Richard Herbert, Lisa Herbert, Victoria Herbert, Loren Herbert and the Retained Annuity Trust are parties to that certain Agreement and Plan of Merger dated as of August 23, 2007 (as amended by that certain Amendment No. 1 to the Agreement and Plan of Merger dated October 15, 2007, the “Merger Agreement”);

WHEREAS, capitalized terms used herein, unless otherwise herein defined, are used with the meanings given them in the Merger Agreement; and

WHEREAS, pursuant to Section 8.2 of the Merger Agreement, the Companies, Parent, and Stockholders’ Representative, desire to amend the Merger Agreement to provide that the CC Acquisition Trust, Richard Herbert Trust, Lisa Herbert Trust, Victoria Herbert Trust, and Loren Herbert Trust be added as Stockholders to the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises set forth herein, the parties hereto hereby agree as follows:

1. Agreement to be Bound. Each of CC Acquisition Trust, Richard Herbert Trust, Lisa Herbert Trust, Victoria Herbert Trust, and Loren Herbert Trust agree that upon the execution of this Amendment, such Person shall become bound by and a party to the Merger Agreement and shall be fully bound by and subject to, all of the applicable benefits, rights, restrictions and obligations of the Merger Agreement as though an original party thereto and shall be deemed a Stockholder for purposes of being bound thereby.

2. No Other Changes. Except as expressly amended, modified, agreed, waived, released or settled herein, including without limitation in the recitals hereto, the Merger Agreement shall remain unchanged (including,

without limitation, with respect to the obligations of Lawrence Herbert and Richard Herbert as individuals under Section 7.8 of the Merger Agreement) and in full force and effect, and as amended or modified herein, the Merger Agreement is hereby ratified, approved and confirmed in all respects.

3. Future References. After the date hereof all references in the Merger Agreement to the “Agreement,” “herein,” “hereof” and the like, shall refer to the Merger Agreement as amended or modified herein.

4. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

PANTONE, INC.
By:
	Name:
	Title:
PANTONE GERMANY, INC.
By:
	Name:
	Title:
PANTONE INDIA, INC.
By:
	Name:
	Title:
PANTONE UK, INC
By:
	Name:
	Title:
PANTONE ASIA, INC.
By:
	Name:
	Title:
STOCKHOLDERS’ REPRESENTATIVE
Lawrence Herbert

PANTONE JAPAN, INC.
By:
	Name:
	Title:
X-RITE, INCORPORATED
By:
	Name:
	Title:
STOCKHOLDER
CC Acquisition Trust
By:
	Name:
	Title:
STOCKHOLDER
Richard Herbert Trust
By:
	Name:
	Title:
STOCKHOLDER
Lisa Herbert Trust
By:
	Name:
	Title:

STOCKHOLDER
Victoria Herbert Trust
By:
	Name:
	Title:
STOCKHOLDER
Loren Herbert Trust
By:
	Name:
	Title:

EX-10.33

Exhibit 10.33

EXECUTION VERSION

FIRST LIEN CREDIT AND GUARANTY AGREEMENT

dated as of October 24, 2007

among

X-RITE, INCORPORATED,

as Company,

CERTAIN SUBSIDIARIES OF X-RITE, INCORPORATED,

as Guarantors,

VARIOUS LENDERS,

FIFTH THIRD BANK, a Michigan banking corporation,

as Administrative Agent and Collateral Agent,

MERRILL LYNCH CAPITAL, A DIVISION OF

MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.,

as Syndication Agent,

NATIONAL CITY BANK,

as Co-Documentation Agent,

and

LASALLE BANK MIDWEST, N.A.,

as Co-Documentation Agent.

$310,000,000 Senior Secured First Priority Credit Facilities

FIFTH THIRD BANK,

as Co-Lead Arranger and Co-Bookrunner

MERRILL LYNCH CAPITAL, A DIVISION OF

MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.,

as Co-Lead Arranger and Co-Bookrunner

NATIONAL CITY BANK,

as Co-Lead Arranger

TABLE OF CONTENTS

		Page
SECTION 1.	DEFINITIONS AND INTERPRETATION	1
1.1.	Definitions	1
1.2.	Accounting Terms	31
1.3.	Interpretation, etc	31
SECTION 2.	LOANS AND LETTERS OF CREDIT	31
2.1.	Term Loans	31
2.2.	Revolving Loans	32
2.3.	Swing Line Loans	33
2.4.	Issuance of Letters of Credit and Purchase of Participations Therein	36
2.5.	Pro Rata Shares; Availability of Funds.	39
2.6.	Use of Proceeds	40
2.7.	Evidence of Debt; Register; Lenders’ Books and Records; Notes.	40
2.8.	Interest on Loans	41
2.9.	Conversion/Continuation.	43
2.10.	Default Interest	44
2.11.	Fees	44
2.12.	Scheduled Payments/Commitment Reductions.	45
2.13.	Voluntary Prepayments/Commitment Reductions	46
2.14.	Mandatory Prepayments/Commitment Reductions	47
2.15.	Application of Prepayments/Reductions	49
2.16.	General Provisions Regarding Payments.	49
2.17.	Ratable Sharing	51
2.18.	Making or Maintaining Eurodollar Rate Loans	52
2.19.	Increased Costs; Capital Adequacy.	53
2.20.	Taxes; Withholding, etc	55
2.21.	Obligation to Mitigate	57
2.22.	Defaulting Lenders	57
2.23.	Removal or Replacement of a Lender	58
SECTION 3.	CONDITIONS PRECEDENT	59
3.1.	Conditions to Loans on the Closing Date	59
3.2.	Conditions to All Other Credit Extensions	61
SECTION 4.	REPRESENTATIONS AND WARRANTIES	62
4.1.	Organization; Requisite Power and Authority; Qualification	62
4.2.	Capital Stock and Ownership	62
4.3.	Due Authorization	62
4.4.	No Conflict	63
4.5.	Governmental Consents	63
4.6.	Binding Obligation	63
4.7.	Historical Financial Statements	63

ii

4.8.	Projections	64
4.9.	No Material Adverse Change	64
4.10.	Intentionally Omitted.	64
4.11.	Adverse Proceedings, etc	64
4.12.	Payment of Taxes	64
4.13.	Properties	64
4.14.	Environmental Matters	65
4.15.	No Defaults	65
4.16.	Material Contracts	66
4.17.	Governmental Regulation	66
4.18.	Margin Stock	66
4.19.	Employee Matters	66
4.20.	Employee Benefit Plans	66
4.21.	Certain Fees	67
4.22.	Solvency	67
4.23.	Compliance with Statutes, Etc	67
4.24.	Disclosure	67
4.25.	Patriot Act	68
4.26.	Insignificant Domestic Subsidiaries	68
4.27.	Certain Other Representations and Warranties	68
SECTION 5.	AFFIRMATIVE COVENANTS	68
5.1.	Financial Statements and Other Reports	68
5.2.	Existence	72
5.3.	Payment of Taxes and Claims	72
5.4.	Maintenance of Properties	73
5.5.	Insurance	73
5.6.	Books and Records; Inspections	73
5.7.	Lenders Meetings	74
5.8.	Compliance with Laws	74
5.9.	Environmental	74
5.10.	Subsidiaries	75
5.11.	Additional Material Real Estate Assets	76
5.12.	Interest Rate Protection	77
5.13.	Further Assurances	78
5.14.	Miscellaneous Business Covenants	78
5.15.	Intentionally Omitted	79
5.16.	Evidence of Insurance	79
5.17.	Fees and Expenses	79
5.18.	Transaction Costs	80
5.19.	Perfection of Security Interests	80
5.20.	Intentionally Omitted.	80
5.21.	Existing Indebtedness.	80
5.22.	Life Insurance Policies	81
5.23.	Existing Headquarters Asset Sale	81

iii

SECTION 6.	NEGATIVE COVENANTS	81
6.1.	Indebtedness	81
6.2.	Liens	83
6.3.	Equitable Lien	85
6.4.	No Further Negative Pledges	85
6.5.	Restricted Junior Payments	85
6.6.	Restrictions on Subsidiary Distributions	86
6.7.	Investments	86
6.8.	Financial Covenants	87
6.9.	Fundamental Changes; Disposition of Assets; Acquisitions	90
6.10.	Disposal of Subsidiary Interests	91
6.11.	Sales and Lease-Backs	91
6.12.	Transactions with Shareholders and Affiliates	92
6.13.	Conduct of Business	92
6.14.	Intentionally Omitted	92
6.15.	Amendments or Waivers of Certain Related Agreements	92
6.16.	Amendments or Waivers with respect to Certain Indebtedness	92
6.17.	Fiscal Year	93
SECTION 7.	GUARANTY	93
7.1.	Guaranty of the Obligations	93
7.2.	Contribution by Guarantors	93
7.3.	Payment by Guarantors	94
7.4.	Liability of Guarantors Absolute	94
7.5.	Waivers by Guarantors	96
7.6.	Guarantors’ Rights of Subrogation, Contribution, etc	96
7.7.	Subordination of Other Obligations	97
7.8.	Continuing Guaranty	97
7.9.	Authority of Guarantors or Company	98
7.10.	Financial Condition of Company	98
7.11.	Bankruptcy, etc	98
7.12.	Discharge of Guaranty Upon Sale of Guarantor	99
SECTION 8.	EVENTS OF DEFAULT	99
8.1.	Events of Default	99
SECTION 9.	AGENTS	102
9.1.	Appointment of Agents	102
9.2.	Powers and Duties	102
9.3.	General Immunity	103
9.4.	Agents Entitled to Act as Lender	104
9.5.	Lenders’ Representations, Warranties and Acknowledgment	104
9.6.	Right to Indemnity	105
9.7.	Successor Administrative Agent, Collateral Agent and Swing Line Lender	105
9.8.	Collateral Documents and Guaranty.	106
9.9.	Withholding Tax	107

iv

SECTION 10.	MISCELLANEOUS	107
10.1.	Notices.	107
10.2.	Expenses	108
10.3.	Indemnity	109
10.4.	Set-Off	110
10.5.	Amendments and Waivers.	110
10.6.	Successors and Assigns; Participations	112
10.7.	Independence of Covenants	115
10.8.	Survival of Representations, Warranties and Agreements	115
10.9.	No Waiver; Remedies Cumulative	116
10.10.	Marshalling; Payments Set Aside	116
10.11.	Severability	116
10.12.	Obligations Several; Independent Nature of Lenders’ Rights	116
10.13.	Headings	116
10.14.	APPLICABLE LAW	117
10.15.	CONSENT TO JURISDICTION	117
10.16.	WAIVER OF JURY TRIAL	117
10.17.	Confidentiality	118
10.18.	Usury Savings Clause	118
10.19.	Counterparts	119
10.20.	Effectiveness	119
10.21.	Patriot Act	119
10.22.	Electronic Execution of Assignments	119
10.23.	No Fiduciary Duty	119

v

APPENDICES:	A-1	Term Loan Commitments
	A-2	Revolving Commitments
	B	Notice Addresses
SCHEDULES:	1.1 (a)	Existing Interest Rate Agreements
	1.1 (b)	Key-Person Life Insurance Policies
	4.1	Jurisdictions of Organization and Qualification
	4.2	Capital Stock and Ownership
	4.5	Governmental Consents
	4.13	Real Estate Assets
	4.16	Material Contracts
	4.21	Certain Fees
	4.26	Insignificant Domestic Subsidiaries
	5.14	Existing Pantone Accounts
	6.1	Certain Indebtedness
	6.2	Certain Liens
	6.6	Certain Restrictions on Subsidiary Distributions
	6.7	Certain Investments
	6.12	Certain Affiliate Transactions
EXHIBITS:	A-1	Funding Notice
	A-2	Conversion/Continuation Notice
	A-3	Issuance Notice
	B-1	Term Loan Note
	B-2	Revolving Loan Note
	B-3	Swing Line Note
	C	Compliance Certificate
	D	[Reserved]
	E	Assignment Agreement
	F	Certificate Re Non-Bank Status
	G	[Reserved]
	H	Counterpart Agreement
	I	Pledge and Security Agreement
	J	Collateral Assignment Agreement
	K	Landlord Waiver and Consent Agreement
	L	Intercreditor Agreement

vi

FIRST LIEN CREDIT AND GUARANTY AGREEMENT

This FIRST LIEN CREDIT AND GUARANTY AGREEMENT, dated as of October 24, 2007, is entered into by and among X-RITE, INCORPORATED, a Michigan corporation (“Borrower” or “Company”), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party hereto from time to time, FIFTH THIRD BANK, a Michigan banking corporation (in its individual capacity, “Fifth Third”), as administrative agent (in such capacity, together with its permitted successors in such capacity, “Administrative Agent”) and as collateral agent (in such capacity, together with its permitted successor in such capacity, “Collateral Agent”), MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. (in its individual capacity, “Merrill Lynch”), as syndication agent (in such capacity, “Syndication Agent”), NATIONAL CITY BANK (in its individual capacity, “National City”), as co-documentation agent (in such capacity, the “National City Co-Documentation Agent”), LASALLE BANK MIDWEST N.A., as co-documentation agent (in such capacity, the “LaSalle Co-Documentation Agent”; the National City Co-Documentation Agent and the LaSalle Co-Documentation Agent are referred to herein collectively as the “Co-Documentation Agents”), Fifth Third, as Co-Lead Arranger and Co-Bookrunner, Merrill Lynch, as Co-Lead Arranger and Co-Bookrunner, and National City, as Co-Lead Arranger.

RECITALS:

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, Lenders have agreed to extend certain credit facilities to Company, in an aggregate amount not to exceed $310,000,000, consisting of (a) a Term Loan in an aggregate original principal amount of $270,000,000, the proceeds of which shall be used as follows: (i) to consummate the Refinancing; (ii) to pay a portion of the merger consideration due and owing by Company in accordance with the terms set forth in the Pantone Merger Agreement; and (iii) to pay fees, commissions and expenses as of the Closing Date in connection therewith and (b) up to $40,000,000 aggregate principal amount of Revolving Commitments, the proceeds of which shall be used to provide for ongoing working capital requirements of Company and its Subsidiaries after the Closing Date and for general corporate purposes.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1. Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average

British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 Page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by the Administrative Agent for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of Administrative Agent, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement.

“Administrative Agent” as defined in the preamble hereto.

“Adverse Proceeding” means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Company or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Company or any of its Subsidiaries, threatened against or affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries.

“Affected Lender” as defined in Section 2.18(b).

“Affected Loans” as defined in Section 2.18(b).

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 5% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

“Agent” means each of Administrative Agent, Syndication Agent, Collateral Agent and the Co-Documentation Agents.

“Agent Affiliates” as defined in Section 10.1(b).

“Aggregate Amounts Due” as defined in Section 2.17.

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“Aggregate Payments” as defined in Section 7.2.

“Agreement” means this First Lien Credit and Guaranty Agreement, dated as of October 24, 2007, as it may be amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced from time to time.

“Amazys” means Amazys Holding AG, a Swiss company, together with its Subsidiaries.

“Applicable Margin” means (x) with respect to the Loans that are Eurodollar Loans, three and one half percent (3.50%) per annum and (y) with respect to Loans that are Base Rate Loans, two and one half percent (2.50%) per annum.

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“Approved Electronic Communications” means any notice, demand, communication, information, document or other material that any Credit Party provides to Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Agents or to the lenders by means of electronic communications pursuant to Section 10.1(b).

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Company or any Guarantor Subsidiary), in one transaction or a series of transactions, of all or any part of Company’s or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired or leased, including, without limitation, the Capital Stock of any of Company’s Subsidiaries, other than (i) inventory (or other assets) sold or leased in the ordinary course of business (excluding any such sales or leases by operations or divisions discontinued or to be discontinued), and (ii) sales of other assets for aggregate consideration of less than $1,000,000 in the aggregate during any Fiscal Year.

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent.

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“Assignment Effective Date” as defined in Section 10.6(b).

“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus  ¹/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.

“Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.

“Board of Governors” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.

“Borrower” as defined in the preamble hereto.

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the States of New York, Michigan or Ohio, or is a day on which banking institutions located in such states are authorized or required by law or other governmental action to close and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

“Cash Equivalents” means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States

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Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s.

“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.

“Change of Control” means, at any time, (i) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) (a) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Company or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Company; (ii) the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of Company cease to be occupied by Persons who were nominated for election by the board of directors of Company, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors; or (iv) any “change of control” or similar event under the Second Lien Credit Agreement shall occur.

“Class” means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having Term Loan Exposure, and (b) Lenders having Revolving Exposure (including Swing Line Lender); and (ii) with respect to Loans, each of the following classes of Loans: (a) Term Loans and (b) Revolving Loans (including Swing Line Loans).

“Closing Date” means the date on which the conditions precedent set forth in Section 3.1 shall have been satisfied or waived, which date is October 24, 2007.

“Co-Documentation Agents” as defined in the preamble hereto.

“Collateral” means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

“Collateral Agent” as defined in the preamble hereto.

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“Collateral Assignment Agreement” means the Collateral Assignment of Merger Documents, dated as of October 24, 2007, by and among Company and Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit J, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

“Collateral Documents” means the Pledge and Security Agreement, the Collateral Assignment Agreement, the intellectual property security agreements executed in connection therewith, the collateral assignments of insurance policies, if any, executed in connection therewith, the Mortgages, the Landlord Waiver and Consent Agreements, and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations.

“Collateral Questionnaire” means a certificate in form satisfactory to Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party.

“Commitment” means any Revolving Commitment or Term Loan Commitments.

“Company” as defined in the preamble hereto.

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

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for Company and its Subsidiaries on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes based on income, (d) total depreciation expense, (e) total amortization expense, (f) cash restructuring charges in connection with the Pantone Mergers and the Prior Tender Offer of up to $12,500,000 in the aggregate with respect to all such charges, (g) non-cash charges associated with the fair market value of Company’s life insurance policy portfolio of up to $1,000,000 per Fiscal Year, (h) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period), minus (ii) other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period); for purposes of the calculation of (x) Consolidated Adjusted EBITDA and (y) the covenants set forth in Section 6.8, Consolidated Adjusted EBITDA for Company and its Subsidiaries at all times prior to December 31, 2008 shall be as set forth below for the Fiscal Quarters set forth below:

Fiscal Quarter ending	Pre-Closing Consolidated Adjusted EBITDA
3/31/07	$	16,200,000
6/30/07	$	19,100,000
9/30/07	$	9,800,000

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For the fiscal month ending closest to October 31, 2007, Consolidated Adjusted EBITDA shall be deemed to equal actual Consolidated Adjusted EBITDA for such fiscal month, adjusted in a manner consistent with the methodology used in calculating the Pre-Closing Consolidated Adjusted EBITDA for the periods set forth above.

“Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of Company and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of Company and its Subsidiaries, inclusive of capitalized software costs and acquisitions of real property.

“Consolidated Capital Expenditures Limitation” as defined in Section 6.8(c).

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for such period, excluding any amount not payable in Cash, but excluding therefrom any cash or non-cash expenses and cash or non-cash charges related to the repayment of the Existing Indebtedness.

“Consolidated Current Assets” means, as at any date of determination, the total assets of Company and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of Company and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) the Consolidated Working Capital Adjustment, minus (ii) the sum, without duplication, of the amounts for such period of (a) Consolidated Capital Expenditures (net of any proceeds of (y) any related financings with respect to such expenditures and (z) any sales of assets used to finance such expenditures), (b) Consolidated Cash Interest Expense, and (c) provisions for current taxes based on income of Company and its Subsidiaries and payable in cash with respect to such period.

“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Company and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Company and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in Section 2.11(e) payable on or before the Closing Date; provided that Consolidated Interest Expense shall exclude interest expense on Indebtedness incurred and outstanding in accordance with Section 6.1(n).

“Consolidated Net Income” means, for any period, (i) the net income (or loss) of Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of

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any Person (other than a Subsidiary of Company) in which any other Person (other than Company or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Company or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or that Person’s assets are acquired by Company or any of its Subsidiaries, (c) the income of any Subsidiary of Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses.

“Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that Consolidated Total Debt shall exclude Indebtedness incurred and outstanding in accordance with Section 6.1(n).

“Consolidated Working Capital” means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities.

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Contributing Guarantors” as defined in Section 7.2.

“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.

“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Credit Party pursuant to Section 5.10.

“Credit Date” means the date of a Credit Extension.

“Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Intercreditor Agreement, any documents or certificates executed by Company in favor of Issuing Bank relating to Letters of Credit, and all other documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, Issuing Bank or any Lender in connection herewith.

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“Credit Extension” means the making of a Loan or the issuing of a Letter of Credit.

“Credit Party” means each Person (other than any Agent, Issuing Bank or any Lender or any other representative thereof) from time to time party to a Credit Document.

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Company’ and its Subsidiaries’ operations and not for speculative purposes.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender.

“Default Period” means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.13 or Section 2.14 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to Company and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on which Company, Administrative Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing.

“Defaulted Loan” as defined in Section 2.22.

“Defaulting Lender” as defined in Section 2.22.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

“Dollars” and the sign “$” mean the lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

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“Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; provided, no Affiliate of Company (and no competitor of Company or any of its Subsidiaries engaged in the same or similar line of business of Company or any of its Subsidiaries) shall be an Eligible Assignee.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Company, any of its Subsidiaries or any of their respective ERISA Affiliates.

“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene or the protection of human, plant or animal health or welfare, in any manner applicable to Company or any of its Subsidiaries or any Real Property.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Company or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Company or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Company or such Subsidiary and with respect to liabilities arising after such period for which Company or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those

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for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Company, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Company, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore, or the receipt by Company, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Company, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Company, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

“Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.

“Event of Default” means each of the conditions or events set forth in Section 8.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Excluded Equity Issuance” means Cash proceeds resulting from the issuance of (a) Capital Stock by the Company to management or employees of the Company or any of its

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Subsidiaries under any employee stock option or stock purchase plan or other employee benefits plan in existence from time to time, (b) Capital Stock by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company constituting an Investment permitted under Section 6.7, and (c) Capital Stock by a Foreign Subsidiary to qualify directors where required to satisfy requirements of applicable law, in each instance, with respect to the ownership of Capital Stock of such Foreign Subsidiary.

“Existing Headquarters Asset” as defined in Section 5.23.

“Existing Headquarters Asset Sale” as defined in Section 5.23.

“Existing Headquarters Guaranty” means that certain Guaranty Agreement dated as of June 30, 2006 made by each Guarantor Subsidiary in favor of Fifth Third, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof; provided that any additional Person that becomes a Subsidiary Guarantor hereunder may become a party thereto.

“Existing Headquarters Loan” means that certain Term Loan Note effective as of June 30, 2006 payable by the Company in favor of Fifth Third, secured only by the Existing Headquarters Mortgage, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Existing Headquarters Mortgage” means that certain Mortgage effective as of June 30, 2006, by the Company in favor of Fifth Third, encumbering only the Existing Headquarters Asset and securing only the Existing Headquarters Loan, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Existing Headquarters Reserve” means, (a) prior to the payment in full of the obligations under the Existing Headquarters Loan, the greater of (x) $13,500,000 (or, in the event a portion of the outstanding principal amount of the Existing Headquarters Loan is paid in accordance with the terms of the Existing Headquarters Loan (as in effect on the date hereof) within thirty (30) days following the Closing Date, $8,680,000) and (y) at the reasonable discretion of the Administrative Agent, the aggregate amount, including principal, interest and fees, due and payable under the Existing Headquarters Loan and (b) on or after the payment in full of the obligations under the Existing Headquarters Loan, zero (0). For the avoidance of doubt the Existing Headquarters Reserve shall be zero in the event that any Revolving Loan is concurrently used when made to repay in full the obligations under the Existing Headquarters Loan.

“Existing Indebtedness” means (a) all Indebtedness and other obligations outstanding (other than indemnities and other similar obligations not then due and payable) under the Existing X-Rite First Lien Credit Agreement and the “Credit Documents” under and as defined in the Existing X-Rite First Lien Credit Agreement, (b) all Indebtedness and other obligations outstanding (other than indemnities and other similar obligations not then due and payable) under the Existing X-Rite Second Lien Credit Agreement and the “Credit Documents” under and as defined in the Existing X-Rite Second Lien Credit Agreement, and (c) all Indebtedness and

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other obligations outstanding (other than indemnities and other similar obligations not then due and payable) under the Existing Pantone Credit Facility and Existing Pantone Credit Facility Documents.

“Existing Interest Rate Agreements” means those certain fixed rate swap agreements entered into by and between the Company and Goldman Sachs Capital Markets, L.P. described on Schedule 1.1(a) attached hereto that were entered into prior to the date hereof in connection with the Existing X-Rite First Lien Credit Agreement.

“Existing Pantone Credit Facility” means that certain $7,000,000 Secured Demand Credit Facility, effective as of August 27, 2004, between Pantone, Inc. and Brown Brothers Harriman & Co.

“Existing Pantone Credit Facility Documents” means that certain Secured Promissory Note, dated as of August 27, 2004, issued by Pantone in the amount of $1,000,000 in connection with the Existing Pantone Credit Facility, and all other security agreements, pledge agreements, guarantees, instruments, documents and agreements delivered by Pantone or any guarantor under the Existing Pantone Credit Facility in order to grant the secured party under the Existing Pantone Credit Facility a Lien on any real, personal or mixed property of Pantone or any guarantor under the Existing Pantone Credit Facility.

“Existing X-Rite First Lien Credit Agreement” means the Amended and Restated First Lien Credit and Guaranty Agreement, dated as of June 30, 2006 (as amended, restated, supplemented or otherwise modified prior to the Closing Date), among Company, certain subsidiaries of Company, as guarantors, the lenders party thereto, Fifth Third, as administrative agent and collateral agent, and Merrill Lynch, as syndication agent.

“Existing X-Rite Second Lien Credit Agreement” means the Amended and Restated Second Lien Credit and Guaranty Agreement, dated as of June 30, 2006 (as amended by the First Amendment to Second Lien Credit Agreement, dated as of February 7, 2007, and as further amended, restated, supplemented or otherwise modified prior to the Closing Date), among Company, certain subsidiaries of Company, as guarantors, the lenders party thereto, and Goldman Sachs Credit Partners L.P., as lead arranger, bookrunner, syndication agent, administrative agent and collateral agent.

“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Company or any of its Subsidiaries or any of their respective predecessors or Affiliates.

“Fair Share Contribution Amount” as defined in Section 7.2.

“Fair Share” as defined in Section 7.2.

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 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 by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, (i) if such

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day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent, in its capacity as a Lender, on such day on such transactions as determined by Administrative Agent.

“Fifth Third” as defined in the preamble hereto.

“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of Company that such financial statements fairly present, in all material respects, the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Financial Plan” as defined in Section 5.1(i).

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien ranks first in priority to all other Liens, other than any Permitted Lien that is permitted to have higher priority.

“Fiscal Quarter” means each three (3) fiscal month period ending closest to or on March 31, June 30, September 30 or December 31.

“Fiscal Year” means each fiscal year of Company and its Subsidiaries ending on the Saturday closest to December 31 of each calendar year.

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary. “Funding Default” as defined in Section 2.22. “Funding Guarantors” as defined in Section 7.2. “Funding Notice” means a notice substantially in the form of Exhibit A-1.

“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

“Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or

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instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Grantor” as defined in the Pledge and Security Agreement.

“Guaranteed Obligations” as defined in Section 7.1.

“Guarantor” means each Domestic Subsidiary of Company, and to the extent no material adverse tax consequences to the Company would result therefrom, each Foreign Subsidiary of Borrower.

“Guarantor Subsidiary” means each Guarantor.

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

“Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Real Property or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past or current activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement entered into with a Lender Counterparty required or permitted by this Agreement.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

“Historical Financial Statements” means, as of the Closing Date, (i) the audited financial statements of the Company and its Subsidiaries, for the immediately preceding two Fiscal Years, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (ii) the unaudited financial statements of the Company and its Subsidiaries as at the most recently ended Fiscal Quarter, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the three, six or nine month period, as applicable, ending on such date,

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(iii) the audited financial statements of the Pantone Targets and their respective Subsidiaries, for the immediately preceding two Fiscal Years, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (iv) the unaudited financial statements of the Pantone Targets and their respective Subsidiaries as at the most recently ended Fiscal Quarter, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the six month period ended June 30, 2007, and in the case of clauses (i) through (iv), certified by the chief financial officer of Company that they fairly present, in all material respects, the financial condition of Company and its Subsidiaries and the Pantone Targets and their respective Subsidiaries, as applicable, as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Increased-Cost Lenders” as defined in Section 2.23.

“Indebtedness”, as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including, without limitation, any Interest Rate Agreement and Currency Agreement, whether entered into for hedging or speculative purposes; provided, in no event shall obligations under any Interest Rate Agreement and any Currency Agreement be deemed “Indebtedness” for any purpose under Section 6.8.

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“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the statements contained in the commitment letter delivered by any Lender to Company with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Company or any of its Subsidiaries.

“Indemnitee” as defined in Section 10.3.

“Insignificant Domestic Subsidiaries” shall mean any Subsidiary set forth on Schedules 4.26 hereof, unless and until such Insignificant Subsidiary has become a Guarantor hereunder in accordance with Section 5.10 hereof.

“Installment” as defined in Section 2.12(a).

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the date hereof, substantially, in the form of Exhibit L, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Interest Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period then ended to (ii) Consolidated Cash Interest Expense for such four-Fiscal Quarter period. For purposes of calculating Interest Coverage Ratio for any period ending prior to December 31, 2008, Consolidated Cash Interest Expense shall be calculated as follows: Consolidated Cash Interest Expense (a) for the measurement period ending December 31, 2007 shall equal Consolidated Cash Interest Expense for the period from November 1, 2007 through December 31, 2007 multiplied by 6, (b) for the measurement period ending on March 31, 2008 shall equal Consolidated Cash Interest Expense for the period from November 1, 2007 through March 31, 2008 multiplied by 12/5, (c) for the measurement period ending on June 30, 2008 shall equal Consolidated Cash Interest Expense for the period from November 1, 2007 through June 30,

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2008 multiplied by 3/2 and (d) for the measurement period ending September 30, 2008 shall equal Consolidated Cash Interest Expense for the period from November 1, 2007 through September 30, 2008 multiplied by 12/11.

“Interest Payment Date” means with respect to (i) any Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Eurodollar Rate Loan and the final maturity date of such Loan; provided that in the case of each Interest Period of longer than three months “Interest Payment Date” shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period.

“Interest Period” means, in connection with a Eurodollar Rate Loan, an interest period of one, two, three or six months, as selected by the Company in the applicable Funding Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to the Term Loans shall extend beyond the Term Loan Maturity Date; and (d) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with Company’ and its Subsidiaries’ operations and not for speculative purposes, including, without limitation, the Existing Interest Rate Agreements.

“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the Closing Date and from time to time hereafter, and any successor statute.

“Investment” means (i) any direct or indirect purchase or other acquisition by Company or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person; (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Company from any Person, of any Capital Stock of such Person; and (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Company or any of its Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not

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current assets or did not arise from sales to that other Person in the ordinary course of business. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

“Issuance Notice” means an Issuance Notice substantially in the form of Exhibit A-3.

“Issuing Bank” means Fifth Third, or any of its permitted successors and assigns in such capacity.

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided, in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Key-Person Life Insurance Policies” mean, collectively, the life insurance policies described on Schedule 1.1(b).

“Landlord Waiver and Consent Agreement” means a Landlord Waiver and Consent Agreement substantially in the form of Exhibit K with such amendments or modifications as may be approved by Collateral Agent.

“LaSalle Co-Documentation Agent” as defined in the preamble hereto.

“Lead Arranger” as defined in the preamble hereto.

“Leasehold Property” means any leasehold interest of any Credit Party as lessee under any lease of real property.

“Lender” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.

“Lender Counterparty” means (a) each Lender or any Affiliate of a Lender counterparty to a Hedge Agreement (including any Person who is a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after entering into a Hedge Agreement, ceases to be a Lender) including, without limitation, each such Affiliate that enters into a joinder agreement acceptable to the Collateral Agent, (b) any other Person reasonably acceptable to the Administrative Agent and the Company who has entered into a Hedge Agreement with the Company and a joinder agreement acceptable to the Collateral Agent with the Collateral Agent, and (c) Goldman Sachs Capital Markets, L.P. and/or any of its Affiliates, solely to the extent that Goldman Sachs Capital Markets, L.P. and/or the applicable Affiliates have delivered a joinder agreement acceptable to the Collateral Agent.

“Letter of Credit” means a commercial or standby letter of credit issued or to be issued by Issuing Bank pursuant to this Agreement.

“Letter of Credit Sublimit” means the lesser of (i) $5,000,000 and (ii) the aggregate unused amount of the Revolving Commitments then in effect.

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“Letter of Credit Usage” means, as at any date of determination, the sum of (i) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Company.

“Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter or other date of determination of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such date or if such date of determination is not the last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the most recently concluded Fiscal Quarter.

“Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease or license in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.

“Loan” means a Term Loan, a Revolving Loan, and a Swing Line Loan.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.

“Material Adverse Effect” means a material adverse effect on and/or material adverse developments with respect to (i) the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company and its Subsidiaries taken as a whole; (ii) the ability of any Credit Party to fully and timely perform its Obligations; (iii) the legality, validity, binding effect or enforceability against a Credit Party of a Credit Document to which it is a party; or (iv) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document.

“Material Contract” means any contract or other arrangement to which Company or any of its Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.

“Material Real Estate Asset” means any fee-owned Real Estate Asset having a fair market value in excess of $250,000 per parcel as of the date of the acquisition thereof, other than the Existing Headquarters Asset for so long as such asset is permitted to be encumbered, and is encumbered, by the Existing Headquarters Mortgage.

“Merrill Lynch” as defined in the preamble hereto.

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

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“Mortgage” means any deed of trust, leasehold deed of trust, mortgage, leasehold mortgage, deed to secure debt, leasehold deed to secure debt or other document creating a Lien on a Real Estate Asset or any interest in a Real Estate Asset.

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Company and its Subsidiaries in the form prepared for presentation to senior management thereof for the applicable month, Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate.

“National City” as defined in the preamble hereto.

“National City Co-Documentation Agent” as defined in the preamble hereto.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Company or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale and (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Company or any of its Subsidiaries in connection with such Asset Sale.

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or proceeds received by Company or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder or (b) as a result of the taking of any assets of Company or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and reasonable costs incurred by Company or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Company or such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith.

“Nonpublic Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

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“Non-US Lender” as defined in Section 2.20(c).

“Note” means a Term Loan Note, a Revolving Loan Note or a Swing Line Note.

“Notice” means a Funding Notice, an Issuance Notice, or a Conversion/ Continuation Notice.

“Obligations” means all obligations of every nature of each Credit Party, including obligations from time to time owed to the Agents (including former Agents), the Lenders or any of them and Lender Counterparties, under the Credit Agreement or any other Credit Document or Hedge Agreement (including, without limitation, with respect to a Hedge Agreement, (i) obligations under the Existing Interest Rate Agreements and (ii) obligations owed thereunder to any person who was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was entered into), whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, premiums, fees, expenses, indemnification or otherwise.

“Obligee Guarantor” as defined in Section 7.7.

“Organizational Documents” means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Taxes” as defined in Section 2.20(b).

“Pantone” means Pantone, Inc., a Delaware corporation, and successor by merger to Pantone Merger Sub, Inc., a Delaware corporation.

“Pantone Asia” means Pantone Asia, Inc., a Delaware corporation, formerly known as Pantone Asia Merger Sub, Inc., and successor by merger to Pantone Asia, Inc., a New Jersey corporation.

“Pantone Germany” means Pantone Germany, Inc., a Delaware corporation, and successor by merger to Pantone Germany Merger Sub, Inc., a Delaware corporation.

“Pantone India” means Pantone India, Inc., a Delaware corporation, and successor by merger to Pantone India Merger Sub, Inc., a Delaware corporation.

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“Pantone Japan” means Pantone Japan, Inc., a Delaware corporation, formerly known as Pantone Japan Merger Sub, Inc., and successor by merger to Pantone Japan, Inc., a New Jersey corporation.

“Pantone UK” means Pantone UK, Inc., a Delaware corporation, formerly known as Pantone UK Merger Sub, Inc., and successor by merger to Pantone U.K., Inc., a New Jersey corporation.

“Pantone Merger Agreement” means that certain Agreement and Plan of Merger dated as of August 23, 2007, by and among the Company, the Pantone Targets, each “Stockholder” (as such term is defined therein) and Lawrence Herbert, as the stockholders representative.

“Pantone Merger Documents” means the Pantone Merger Agreement and all schedules, exhibits and annexes thereto and all side letters, agreements and documents affecting the terms thereof or entered into in connection therewith, including, without limitation, (a) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone Merger Sub, Inc., a Delaware corporation, with and into Pantone, (b) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone Germany Merger Sub, Inc., a Delaware corporation, with and into Pantone Germany, (c) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone India Merger Sub, Inc., a Delaware corporation, with and into Pantone India, (d) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone Asia, Inc., a New Jersey corporation, with and into Pantone Asia and evidencing the name change of from “Pantone Asia Mergers Sub, Inc.”, to “Pantone Asia, Inc.”, (e) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone Japan, Inc., a New Jersey corporation, with and into Pantone Japan and evidencing the name change of from “Pantone Japan Merger Sub, Inc.”, to “Pantone Japan, Inc.”, and (f) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone U.K., Inc., a New Jersey corporation, with and into Pantone UK and evidencing the name change of from “Pantone UK Merger Sub, Inc.”, to “Pantone UK, Inc.”.

“Pantone Mergers” means, collectively, (a) the merger of Pantone Merger Sub, Inc., a Delaware corporation, with and into Pantone, with Pantone as the surviving entity, (b) the merger of Pantone Asia, Inc., a New Jersey corporation, with and into Pantone Asia, with Pantone Asia as the surviving entity, (c) the merger of Pantone Germany Merger Sub, Inc., a Delaware corporation, with and into Pantone Germany, with Pantone Germany as the surviving entity, (d) the merger of Pantone India Merger Sub, Inc., a Delaware corporation, with and into Pantone India, with Pantone India as the surviving entity, (e) the merger of Pantone Japan, Inc., a New Jersey corporation, with and into Pantone Japan, with Pantone Japan as the surviving entity, and (f) the merger of Pantone U.K., Inc., a New Jersey corporation with and into Pantone UK, with Pantone UK as the surviving entity.

“Pantone Targets” means, collectively, Pantone, Pantone Germany, Pantone India, Pantone UK, Pantone Asia and Pantone Japan.

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

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

“Permitted Acquisition” means any acquisition by Company or any of its wholly-owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or a business line or unit or a division of, any Person; provided,

(a) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(b) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;

(c) in the case of the acquisition of Capital Stock, all of the Capital Stock (except for any such Securities in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Company in connection with such acquisition shall be owned 100% by Company or a Guarantor Subsidiary thereof, and Company shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of Company, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable;

(d) Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended, (as determined in accordance with Section 6.8(e))(except that, for such purpose, the maximum permitted Leverage Ratio as of any date prior to the last day of the Fiscal Quarter ending on or closest to March 31, 2008 shall be deemed to be 6.00 to 1.00);

(e) Company shall have delivered to Administrative Agent (A) at least ten (10) Business Days prior to such proposed acquisition, a Compliance Certificate evidencing compliance with Section 6.8 as required under clause (iv) above, together with all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.8;

(f) after giving effect to such acquisition (and the borrowing of any Loans in connection therewith), the Revolving Commitments shall exceed the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve by at least $15,000,000; and

(g) any Person or assets or division as acquired in accordance herewith shall be in same or similar business or same or similar lines of business in which Company and/or its Subsidiaries were engaged as of the Closing Date.

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.

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“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Phase I Report” means, with respect to any Real Property, a report that (i) conforms to the ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527 and (ii) was conducted no more than six months prior to the date such report is required to be delivered hereunder, by one or more environmental consulting firms reasonably satisfactory to Administrative Agent.

“Platform” as defined in Section 5.1(q).

“Pledge and Security Agreement” means the Pledge and Security Agreement dated of even date herewith by and among Company, each Guarantor and the Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit I, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Pledge Threshold” as defined in Section 5.13.

“Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

“Principal Office” means, for each of Administrative Agent, Swing Line Lender and Issuing Bank, such Person’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Company, Administrative Agent and each Lender.

“Prior Tender Offer” means the tender offer by the Company to acquire all the issued and outstanding Securities of Amazys that resulted in the acquisition of substantially all of the issued and outstanding Securities of Amazys by the Company on July 5, 2006.

“Projections” as defined in Section 4.8.

“Pro Rata Share” means (i) with respect to all payments, computations and other matters relating to the Term Loan of any Lender, the percentage obtained by dividing (a) the Term Loan Exposure of that Lender by (b) the aggregate Term Loan Exposure of all Lenders and (ii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure of all Lenders.

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“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property.

“Real Property” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased and operated or used by Company or any of its Subsidiaries or any of their respective predecessors or Affiliates.

“Refinancing” means the payment in full in cash of the Existing Indebtedness and the termination of all commitments provided thereunder and the discharge and/or release of all guarantees and collateral provided in connection therewith.

“Refunded Swing Line Loans” as defined in Section 2.3(b)(iv).

“Register” as defined in Section 2.7(b).

“Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.

“Regulation FD” means Regulation FD as promulgated by the US Securities and Exchange Commission under the Securities Act and Exchange Act as in effect from time to time.

“Reimbursement Date” as defined in Section 2.4(d).

“Related Agreements” means, collectively, the Pantone Merger Documents, the Second Lien Credit Agreement and all “Credit Documents” under and as defined in the Second Lien Credit Agreement.

“Related Fund” means, any (i) investment company, fund, trust, securitization vehicle or conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business or (ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or any entity described in the preceding clause (i) and that, with respect to each of the preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person (other than a natural person) or an Affiliate of a Person (other than a natural person) that administers or manages a Lender.

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Replacement Lender” as defined in Section 2.23.

“Requisite Class Lenders” means, at any time of determination, (i) for the Class of Lenders having Term Loan Exposure, Lenders holding more than 50% of the aggregate Term Loan Exposure of all Lenders and (ii) for the Class of Lenders having Revolving Exposure, Lenders holding more than 50% of the aggregate Revolving Exposure of all Lenders.

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“Requisite Lenders” means one or more Lenders having or holding Term Loan Exposure and/or Revolving Exposure and representing more than 50% of the sum of (i) the aggregate Term Loan Exposure of all Lenders and (ii) the aggregate Revolving Exposure of all Lenders.

“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares or units of any Capital Stock of Company or any Subsidiary of Company now or hereafter outstanding, except a dividend payable solely in shares or units of any Capital Stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Capital Stock of Company or any Subsidiary of Company now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Capital Stock of Company or any Subsidiary of Company now or hereafter outstanding and (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to the Existing Headquarters Loan or Indebtedness under the Second Lien Credit Agreement.

“Revolving Commitment” means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Revolving Commitment, if any, is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Closing Date is $40,000,000.

“Revolving Commitment Period” means the period from the Closing Date to but excluding the Revolving Commitment Termination Date.

“Revolving Commitment Termination Date” means the earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the date the Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14, and (iii) the date of the termination of the Revolving Commitments pursuant to Section 8.1.

“Revolving Exposure” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment; and (ii) after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (b) in the case of Issuing Bank, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations by Lenders in such Letters of Credit), (c) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans.

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“Revolving Loan” means a Loan made by a Lender to Company pursuant to Section 2.2(a).

“Revolving Loan Note” means a promissory note in the form of Exhibit B-2, as it may be amended, supplemented or otherwise modified from time to time.

“S&P” means Standard & Poor’s Ratings Services.

“Second Lien Administrative Agent” means The Bank of New York, or any successor or assign to the extent permitted in the Second Lien Credit Agreement.

“Second Lien Collateral Agent” means The Bank of New York, or any successor or assign to the extent permitted in the Second Lien Credit Agreement.

“Second Lien Credit Agreement” means the Second Lien Credit and Guaranty Agreement dated as of October 24, 2007 among Company and the Guarantors party thereto, the Second Lien Administrative Agent, GoldenTree Capital Solutions Fund Financing, as sole lead arranger and sole bookrunner, the Second Lien Collateral Agent and lenders party thereto, as it may be further amended, modified, renewed, refunded, replaced or refinanced from time to time.

“Second Lien Indebtedness” means the Second Lien Term Loans, together with capitalized interest, if any, and fees, costs and other amounts, in each case incurred pursuant to the terms of the Second Lien Indebtedness Documents.

“Second Lien Indebtedness Documents” means the Second Lien Credit Agreement, including the exhibits and schedules thereto, and all agreements, documents and instruments executed in connection therewith, in each case, as amended, restated, supplemented or otherwise modified in accordance with the terms of the Intercreditor Agreement.

“Second Lien Indebtedness Liens” means Liens in favor of the Second Lien Collateral Agent second in priority to the Liens granted to Administrative Agent under the Loan Documents (but in any event subject to Permitted Liens), for the benefit of the Second Lien Collateral Agent, the Second Lien Administrative Agent and the Second Lien Lenders on the assets and Capital Stock of the Company’s Subsidiaries with respect to which Administrative Agent shall have a prior perfected Lien.

“Second Lien Lender Parties” means the Second Lien Administrative Agent, the Second Lien Collateral Agent and each Second Lien Lender.

“Second Lien Lenders” means each “Lender” under and as defined in the Second Lien Credit Agreement and any other lender thereunder, together with their respective successors and assigns.

“Second Lien Term Loans” means the term loans in the principal amount of $105,000,000, made on the Closing Date under the Second Lien Credit Agreement.

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“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Solvent” means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s present assets; (b) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on such date of determination and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under the Bankruptcy Code and other applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

“Subject Transaction” as defined in Section 6.8(e).

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding. For the avoidance of doubt, from and after the Closing Date, the Pantone Targets and each of their respective Subsidiaries shall constitute Subsidiaries of the Company.

“Swing Line Lender” means Fifth Third, or any of its permitted successors and assigns in such capacity.

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“Swing Line Loan” means a Loan made by Swing Line Lender to Company pursuant to Section 2.3.

“Swing Line Note” means a promissory note in the form of Exhibit B-3, as it may be amended, supplemented or otherwise modified from time to time.

“Swing Line Sublimit” means the lesser of (i) $5,000,000.00, and (ii) the aggregate unused amount of Revolving Commitments then in effect.

“Syndication Agent” as defined in the preamble hereto.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed and all interest, penalties, additions to tax and all other liabilities with respect thereto; provided, “Tax on the overall net income” of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office).

“Term Loan” means the Term Loans made by the Lenders to Company pursuant to Section 2.1(a).

“Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Term Loan and “Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Term Loan Commitment, if any, is set forth on Appendix A-1. The aggregate amount of the Term Loan Commitments as of the Closing Date shall be $270,000,000.

“Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Term Loans of such Lender; provided, at any time prior to the making of the Term Loans, the Term Loan Exposure of any Lender shall be equal to such Lender’s Term Loan Commitment.

“Term Loan Maturity Date” means the earlier of (i) the fifth anniversary of the Closing Date, and (ii) the date that all Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“Term Loan Note” means a promissory note in the form of Exhibit B-1, as it may be amended, supplemented or otherwise modified from time to time.

“Terminated Lender” as defined in Section 2.23.

“Title Policy” as defined in Section 5.19(c)(iv).

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“Total Utilization of Revolving Commitments” means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans, and (iii) the Letter of Credit Usage.

“Transaction Costs” means the interest, premiums, fees, costs and expenses payable by Company or any of Company’s Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents and the Related Agreements.

“Type of Loan” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base Rate Loan.

“X-Rite International” means X-Rite International, Inc., a corporation formed under the laws of Barbados.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Company to Lenders pursuant to Section 5.1(b) and 5.1(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements.

1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter.

SECTION 2. LOANS AND LETTERS OF CREDIT

2.1. Term Loans.

(a) Loan Commitments. Subject to the terms and conditions hereof, each Lender severally agrees to make, on the Closing Date, a Term Loan to Company in an amount

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not to exceed such Lender’s Term Loan Commitment. Company may make only one borrowing under the Term Loan Commitment which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a)(i) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Term Loans shall be paid in full no later than the Term Loan Maturity Date. Each Lender’s Term Loan Commitment shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender’s Term Loan Commitment on such date.

(b) Borrowing Mechanics for Term Loans.

(i) Company shall deliver to Administrative Agent a fully executed Funding Notice no later than three Business Days (or such shorter period as Administrative Agent may agree) prior to the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing.

(ii) Each Lender shall make its Term Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) (or such later time as agreed to by Administrative Agent and each Lender) on the Closing Date, by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent, or by such time and at such location as the Administrative Agent shall otherwise reasonably agree. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Term Loan available to Company on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Term Loans received by Administrative Agent from Lenders to be credited to the account of Company at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Company.

2.2. Revolving Loans.

(a) Revolving Commitments. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans to Company in an aggregate amount up to but not exceeding such Lender’s Revolving Commitment; provided, that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may be repaid and reborrowed during the Revolving Commitment Period. Each Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date.

(b) Borrowing Mechanics for Revolving Loans.

(i) Except pursuant to 2.4(d), Revolving Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount, and Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount.

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(ii) Whenever Company desires that Lenders make Revolving Loans, Company shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 10:00 a.m. (New York City time) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan (or, in connection with any Advances made on the Closing Date, such shorter period as Administrative Agent shall approve). Except as otherwise provided herein, a Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith.

(iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by facsimile with reasonable promptness, but (provided Administrative Agent shall have received such notice by 12:00 p.m. (New York City time)) not later than 2:00 p.m. (New York City time) on the same day as Administrative Agent’s receipt of such Notice from Company.

(iv) Each Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent, or, with respect to any Advances made on the Closing Date, by such time and at such location as the Administrative Agent shall otherwise reasonably agree. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Revolving Loans received by Administrative Agent from Lenders to be credited to the account of Company at the Principal Office designated by Administrative Agent or such other account as may be designated in writing to Administrative Agent by Company.

2.3. Swing Line Loans.

(a) Swing Line Loans Commitments. During the Revolving Commitment Period (but only from and after the appointment of a Swing Line Lender hereunder in accordance with the definition thereof), subject to the terms and conditions hereof, Swing Line Lender hereby agrees to make Swing Line Loans to Company in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided, that after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.3 may be repaid and reborrowed during the Revolving Commitment Period. Swing Line Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans and the Revolving Commitments shall be paid in full no later than such date.

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(b) Borrowing Mechanics for Swing Line Loans.

(i) Swing Line Loans shall be made in an aggregate minimum amount of $250,000 and integral multiples of $100,000 in excess of that amount.

(ii) Whenever Company desires that Swing Line Lender make a Swing Line Loan, Company shall deliver to Administrative Agent a Funding Notice no later than 1:00 p.m. (New York City time) on the proposed Credit Date.

(iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited to the account of Company at Administrative Agent’s Principal Office, or to such other account as may be designated in writing to Administrative Agent by Company.

(iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by Company pursuant to Section 2.13, Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Company), no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Company) requesting that each Lender holding a Revolving Commitment make Revolving Loans that are Base Rate Loans to Company on such Credit Date in an amount equal to the amount of such Swing Line Loans (the “Refunded Swing Line Loans”) outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Company, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender’s outstanding Revolving Loans to Company and shall be due under the Revolving Loan Note issued by Company to Swing Line Lender. Company hereby authorizes Administrative Agent and Swing Line Lender to charge Company’s accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded

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Swing Line Loans to the extent of the proceeds of such Revolving Loans made by Lenders, including the Revolving Loans deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17.

(v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day’s notice from Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of Swing Line Lender. In order to evidence such participation each Lender holding a Revolving Commitment agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In the event any Lender holding a Revolving Commitment fails to make available to Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate, as applicable.

(vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, any Credit Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Credit Party; (D) any breach of this Agreement or any other Credit Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that such obligations of each Lender are subject to the condition that Swing Line Lender believed in good faith that all conditions under Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made, or the satisfaction of any such condition not satisfied had been waived by the Requisite Lenders prior to or at the time such Refunded Swing Line Loans or other unpaid Swing Line Loans were made;

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and (2) Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default or (B) at a time when a Funding Default exists unless Swing Line Lender has entered into arrangements satisfactory to it and Company to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s participation in such Swing Ling Loan, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding Swing Line Loans.

2.4. Issuance of Letters of Credit and Purchase of Participations Therein.

(a) Letters of Credit. During the Revolving Commitment Period (but only from and after the appointment of an Issuing Bank hereunder in accordance with the definition thereof), and otherwise subject to the terms and conditions hereof, Issuing Bank agrees to issue Letters of Credit for the account of Company in the aggregate amount up to but not exceeding the Letter of Credit Sublimit; provided, (i) each Letter of Credit shall be denominated in Dollars; (ii) the stated amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to Issuing Bank; (iii) after giving effect to such issuance, in no event shall the sum of the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve exceed the Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit then in effect; (v) in no event shall any standby Letter of Credit have an expiration date later than the earlier of (1) the Revolving Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any commercial Letter of Credit (x) have an expiration date later than the earlier of (1) the Revolving Loan Commitment Termination Date and (2) the date which is one year from the date of issuance of such commercial Letter of Credit or (b) be issued if such commercial Letter of Credit is otherwise unacceptable to Issuing Bank in its reasonable discretion. Subject to the foregoing, Issuing Bank may agree that a standby Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each, unless Issuing Bank elects not to extend for any such additional period; provided, Issuing Bank shall not extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time Issuing Bank must elect to allow such extension; provided, further, in the event a Funding Default exists, Issuing Bank shall not be required to issue any Letter of Credit unless Issuing Bank has entered into arrangements satisfactory to it and Company to eliminate Issuing Bank’s risk with respect to the participation in Letters of Credit of the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage.

(b) Notice of Issuance. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent an Issuance Notice no later than 12:00 p.m. (New York City time) at least three Business Days (in the case of standby letters of credit) or five Business Days (in the case of commercial letters of credit), or in each case such shorter period as may be agreed to by Issuing Bank in any particular instance, in advance of the proposed date of issuance. Upon satisfaction or waiver of the conditions set forth in Section 3.2, Issuing Bank shall issue the requested Letter of Credit only in accordance with Issuing Bank’s standard operating procedures. Upon the issuance of any Letter of Credit or amendment or modification to a Letter of Credit, Issuing Bank shall promptly notify each Lender of such issuance, which notice shall be accompanied by a copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lender’s respective participation in such Letter of Credit pursuant to Section 2.4(e).

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(c) Responsibility of Issuing Bank With Respect to Requests for Drawings and Payments. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between Company and Issuing Bank, Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by Issuing Bank, by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, any action taken or omitted by Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not give rise to any liability on the part of Issuing Bank to Company. Notwithstanding anything to the contrary contained in this Section 2.4(c), Company shall retain any and all rights it may have against Issuing Bank for any liability arising solely out of the gross negligence or willful misconduct of Issuing Bank.

(d) Reimbursement by Company of Amounts Drawn or Paid Under Letters of Credit. In the event Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall immediately notify Company and Administrative Agent, and Company shall reimburse Issuing Bank on or before the Business Day immediately following the date on which such drawing is honored (the “Reimbursement Date”) in an amount in Dollars and in same day funds equal to the amount of such honored drawing; provided, anything contained herein to the contrary notwithstanding, (i) unless Company shall have notified Administrative Agent and Issuing Bank prior to 10:00 a.m. (New York City time) on the date such drawing is honored that Company intends to reimburse Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, Company shall be deemed to have given a timely Funding Notice to Administrative Agent requesting Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver of the conditions specified in

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Section 3.2, Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse Issuing Bank for the amount of such honored drawing; and provided further, if for any reason proceeds of Revolving Loans are not received by Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, Company shall reimburse Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this Section 2.4(d) shall be deemed to relieve any Lender holding a Revolving Commitment from its obligation to make Revolving Loans on the terms and conditions set forth herein, and Company shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.4(d).

(e) Lenders’ Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Lender having a Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that Company shall fail for any reason to reimburse Issuing Bank as provided in Section 2.4(d), Issuing Bank shall promptly notify each Lender holding a Revolving Commitment of the unreimbursed amount of such honored drawing and of such Lender’s respective participation therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each Lender holding a Revolving Commitment shall make available to Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first business day (under the laws of the jurisdiction in which such office of Issuing Bank is located) after the date notified by Issuing Bank. In the event that any Lender fails to make available to Issuing Bank on such business day the amount of such Lender’s participation in such Letter of Credit as provided in this Section 2.4(e), Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Issuing Bank for the correction of errors among banks and thereafter at the Base Rate. Nothing in this Section 2.4(e) shall be deemed to prejudice the right of any Lender to recover from Issuing Bank any amounts made available by such Lender to Issuing Bank pursuant to this Section in the event that it is determined that the payment with respect to a Letter of Credit in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of Issuing Bank. In the event Issuing Bank shall have been reimbursed by other Lenders pursuant to this Section 2.4(e) for all or any portion of any drawing honored by Issuing Bank under a Letter of Credit, such Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under this Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of all payments subsequently received by Issuing Bank from Company in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on Appendix B or at such other address as such Lender may request.

(f) Obligations Absolute. The obligation of Company to reimburse Issuing Bank for drawings honored under the Letters of Credit issued by it and to repay any Revolving

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Loans made by Lenders pursuant to Section 2.4(d) and the obligations of Lenders under Section 2.4(e) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank, Lender or any other Person or, in the case of a Lender, against Company, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (vi) any breach hereof or any other Credit Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Default shall have occurred and be continuing; provided, in each case, that payment by Issuing Bank under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of Issuing Bank under the circumstances in question.

(g) Indemnification. Without duplication of any obligation of Company under Section 10.2 or 10.3, in addition to amounts payable as provided herein, Company hereby agrees to protect, indemnify, pay and save harmless Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of Issuing Bank or (2) the wrongful dishonor by Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act.

2.5. Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares. All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitment or any Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.

(b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such

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Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.5(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments and Revolving Commitments hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder.

2.6. Use of Proceeds. The proceeds of the Term Loans shall be used on the Closing Date solely (i) to pay the merger consideration due and owing in connection with the Pantone Mergers, in accordance with the terms set forth in the Pantone Merger Agreement (as in effect on the date hereof), (ii) to refinance all the Existing Indebtedness of Company and the Pantone Targets, and (iii) to pay fees, commissions and expenses as of the Closing Date in connection therewith. The proceeds of the Revolving Commitments being used solely to provide for ongoing working capital requirements of Company and its Subsidiaries after the Closing Date and for general corporate purposes No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Exchange Act.

2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Company to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Company, absent manifest error; provided, that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Company’s Obligations in respect of any applicable Loans; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.

(b) Register. Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at the Principal Office a register for the recordation of the names and addresses of Lenders, the Revolving Loan Commitments and the principal amount (and stated interest thereon) of the Loans of each Lender from time to time (the “Register”). The Register shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in

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the Register the Revolving Commitments and the Loans in accordance with the provisions of Section 10.6, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; provided, failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Company’s Obligations in respect of any Loan. Company hereby designates the Administrative Agent to serve as Company’s agent solely for purposes of maintaining the Register as provided in this Section 2.7, and Company hereby agrees that, to the extent Administrative Agent serves in such capacity, the Administrative Agent and its officers, directors, employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”

(c) Notes. If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Company’s receipt of such notice) a Note or Notes to evidence such Lender’s Term Loan or Revolving Loan or Swing Line Loan, as the case may be.

2.8. Interest on Loans

(a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:

(i) in the case of a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

(ii) in the case of a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin; and

(b) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin.

(c) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan which can be made and maintained as Base Rate Loans only), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Company and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; provided, until the date which is the earlier of (i) the completion of the primary syndication as determined by the Agents and (ii) sixty (60) days following the Closing Date, the Term Loans shall be maintained as either (A) Eurodollar Rate Loans having an Interest Period of one (1) month or (B) Base Rate Loans. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.

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(d) In connection with Eurodollar Rate Loans there shall be no more than ten (10) Interest Periods outstanding at any time. In the event Company fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Company shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender.

(e) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Term Loan, the last Interest Payment Date with respect to such Term Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

(f) Except as otherwise set forth herein, interest on each Loan (i) with respect to Revolving Loans, shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) with respect to Term Loans, shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date; (iii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iv) shall accrue on a daily basis and shall be payable in arrears at maturity of the Loans, including final maturity of the Loans; provided, however, with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.

(g) Company agrees to pay to Issuing Bank, with respect to drawings honored under any Letter of Credit, interest on the amount paid by Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of Company at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans, and (ii) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans.

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(h) Interest payable pursuant to Section 2.8(g) shall be computed on the basis of a 365/366-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by Issuing Bank of any payment of interest pursuant to Section 2.8(g), Issuing Bank shall distribute to each Lender, out of the interest received by Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event Issuing Bank shall have been reimbursed by Lenders for all or any portion of such honored drawing, Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of any interest received by Issuing Bank in respect of that portion of such honored drawing so reimbursed by Lenders for the period from the date on which Issuing Bank was so reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by Company.

2.9. Conversion/Continuation.

(a) Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing, Company shall have the option:

(i) to convert at any time all or any part of any Term Loan or Revolving Loan equal to $1,000,000 and integral multiples of $500,000 in excess of that amount from one Type of Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Company shall pay all amounts due under Section 2.18 in connection with any such conversion; or

(ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $1,000,000 and integral multiples of $500,000 in excess of that amount as a Eurodollar Rate Loan.

(b) Company shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 1:00 p.m. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith.

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2.10. Default Interest. At the election of the Requisite Lenders, after the occurrence of an Event of Default and for so long as it continues (or automatically while any Event of Default under subsection 8.1(f) or 8.1(g) exists), the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans); provided, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.

2.11. Fees.

(a) Company agrees to pay to Lenders:

(i) having Revolving Exposure, commitment fees equal to (1) the average of the daily difference between (a) the Revolving Commitments and (b) the sum of (x) the aggregate principal amount of all outstanding Revolving Loans plus (y) the maximum amount available to be drawn under all Letters of Credit, times (2) 0.50% per annum;

(ii) having Revolving Exposure, letter of credit fees equal to (1) the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans, times (2) the average aggregate daily maximum amount available to be drawn under all such Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).

All fees referred to in this Section 2.11(a) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof.

(b) Intentionally Omitted.

(c) Company agrees to pay directly to Issuing Bank, for its own account, the following fees:

(i) a fronting fee equal to 0.250%, per annum, times the average aggregate daily maximum amount available to be drawn under all Letters of Credit (determined as of the close of business on any date of determination); and

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(ii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with Issuing Bank’s standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.

(d) All fees referred to in Section 2.11(a) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the Revolving Commitment Period, commencing on the first such date to occur after the Closing Date, and on the Revolving Commitment Termination Date.

(e) In addition to any of the foregoing fees, Company agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon.

2.12. Scheduled Payments/Commitment Reductions.

(a) Scheduled Installments. The principal amounts of the Term Loans shall be repaid in consecutive quarterly installments (each, an “Installment”) in the aggregate amounts set forth below on the four quarterly scheduled Interest Payment Dates applicable to Term Loans, commencing December 31, 2007 (with the remaining balance of the Term Loans due and payable in full in cash on the Term Loan Maturity Date):

Date	Term Loan Installment
December 31, 2007	$	675,000
March 31, 2008	$	675,000
June 30, 2008	$	675,000
September 30, 2008	$	675,000
December 31, 2008	$	675,000
March 31, 2009	$	675,000
June 30, 2009	$	675,000
September 30, 2009	$	675,000
December 31, 2009	$	675,000
March 31, 2010	$	675,000
June 30, 2010	$	675,000
September 30, 2010	$	675,000
December 31, 2010	$	675,000
March 31, 2011	$	675,000
June 30, 2011	$	675,000
September 30, 2011	$	675,000
December 31, 2011	$	675,000
March 31, 2012	$	675,000
June 30, 2012	$	675,000
September 30, 2012	$	675,000
October 24, 2012	$	256,500,000

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Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans, in accordance with Sections 2.13, 2.14 and 2.15, as applicable; and (y) the Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Term Loan Maturity Date.

2.13. Voluntary Prepayments/Commitment Reductions.

(a) Voluntary Prepayments.

(i) Any time and from time to time:

(1) with respect to Base Rate Loans, Company may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount;

(2) with respect to Eurodollar Rate Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; and

(3) with respect to Swing Line Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $250,000, and in integral multiples of $100,000 in excess of that amount.

(ii) All such prepayments shall be made:

(1) upon not less than one Business Day’s prior written or telephonic notice in the case of Base Rate Loans;

(2) upon not less than three Business Days prior written or telephonic notice in the case of Eurodollar Rate Loans; and

(3) upon written or telephonic notice on the date of prepayment, in the case of Swing Line Loans;

in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

(b) Voluntary Commitment Reductions.

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(i) Company may, upon not less than three Business Days’ prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty except as provided in Section 2.18(c), the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction; provided, any such partial reduction of the Revolving Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount.

(ii) Company’s notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in Company’s notice and shall reduce the Revolving Commitment of each Lender proportionately to its Pro Rata Share thereof.

2.14. Mandatory Prepayments/Commitment Reductions.

(a) Asset Sales. No later than the third (3^rd) Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such Net Asset Sale Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent that aggregate Net Asset Sale Proceeds from the Closing Date through the applicable date of determination do not exceed $5,000,000, Company shall have the option, directly or through one or more of its Subsidiaries, to invest Net Asset Sale Proceeds (other than Net Asset Sale Proceeds from any Existing Headquarters Asset Sale) within one hundred eighty days of receipt thereof in long-term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments); provided still further, that on or prior to June 30, 2008, the Net Asset Sale Proceeds from the Existing Headquarters Asset Sale may be applied first against the Existing Headquarters Loan, with any such Net Asset Sale Proceeds remaining after payment in full in cash of the Existing Headquarters Loan being applied as otherwise required by this Section 2.14(a) (without being reinvested as otherwise permitted by Section 2.14(a)).

(b) Insurance/Condemnation Proceeds. No later than the first Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent that aggregate Net Insurance/Condemnation Proceeds from the Closing Date through the applicable date of determination do not exceed $5,000,000, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within one hundred eighty days of receipt thereof in long term productive assets of the

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general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof; provided further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments).

(c) Key-Man Life Insurance. No later than the first Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any proceeds of any Key Person Life Insurance Policy, Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such proceeds.

(d) Issuance of Debt and Equity. On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the issuance of Capital Stock of the Company or its Subsidiaries or the incurrence of any Indebtedness of Company or any of its Subsidiaries (other than (x) Excluded Equity Issuances and (y) with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1), Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

(e) Consolidated Excess Cash Flow. In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year ending on December 31, 2008), Company shall, no later than ninety days after the end of such Fiscal Year, prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to (i) 75% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Term Loans and Revolving Loans to the extent the Revolving Commitments are permanently reduced in connection with such repayments of Revolving Loans; provided, for any Fiscal Year in which the Leverage Ratio (determined by reference to the Compliance Certificate delivered pursuant to Section 5.1(d) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be 3.00 to 1.00 or less, Company shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 50% of such Consolidated Excess Cash Flow.

(f) Revolving Loans and Swing Loans. Company shall from time to time prepay first, the Swing Line Loans, and second, the Revolving Loans to the extent necessary so that the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve shall not at any time exceed the Revolving Commitments then in effect.

(g) Prepayment Certificate. Concurrently with any prepayment of the Loans and/or reduction of the Revolving Commitments pursuant to Sections 2.14(a) through 2.14(e), Company shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Company shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Company shall promptly make an additional prepayment of the Loans and/or the Revolving Commitments shall

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be permanently reduced in an amount equal to such excess, and Company shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.

2.15. Application of Prepayments/Reductions.

(a) Application of Voluntary Prepayments by Type of Loans. Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by Company in the applicable notice of prepayment; provided, in the event Company fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:

first, to repay outstanding Swing Line Loans to the full extent thereof;

second, to repay outstanding Revolving Loans to the full extent thereof; and

third, to prepay all remaining installments of the Term Loans pro rata against all such scheduled installments based upon the respective amounts thereof.

(b) Application of Mandatory Prepayments by Type of Loans. Any amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied as follows:

first, to prepay all remaining installments of Term Loans pro rata against all such scheduled installments based upon the respective amounts thereof;

second, to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment;

third, to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Commitments by the amount of such prepayment;

fourth, to prepay outstanding reimbursement obligations with respect to Letters of Credit and to further permanently reduce the Revolving Loan Commitments by the amount of such prepayment;

fifth, to cash collateralize Letters of Credit and to further permanently reduce the Revolving Loan Commitments by the amount of such cash collateralization; and

sixth, to prepay the outstanding principal balance of the Second Lien Term Loans and any other Second Lien Indebtedness then due and payable.

(c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans. Considering each Class of Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to Section 2.18(c).

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2.16. General Provisions Regarding Payments.

(a) All payments by Company of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 2:00 p.m. (New York City time) on the date due at the Principal Office designated by Administrative Agent for the account of Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Company on the next succeeding Business Day.

(b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid.

(c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent.

(d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(e) Subject to the provisos set forth in the definition of “Interest Period” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder, unless such succeeding Business Day occurs after the Term Loan Maturity Date, with respect to the Term Loan, or after the Revolving Commitment Termination Date, with respect to Revolving Loans, in which case, such payment shall be made on the immediately preceding Business Day.

(f) Company hereby authorizes Administrative Agent to charge Company’s accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).

(g) Administrative Agent shall deem any payment by or on behalf of Company hereunder that is not made in same day funds prior to 2:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Company and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no

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event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.

(h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, Administrative Agent shall apply any and all payments or proceeds received by Administrative Agent in respect of the Obligations, and any and all proceeds of Collateral received by Administrative Agent, in the following order: first, to all fees, costs, indemnities, liabilities, obligations and expenses incurred by or owing to the Administrative Agent and/or the Syndication Agent with respect to this Agreement, the other Credit Documents or the Collateral; second, to all fees, costs, indemnities, liabilities, obligations and expenses incurred by or owing to any Lender with respect to this Agreement, the other Credit Documents or the Collateral; third, to accrued and unpaid interest on the Obligations (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts); fourth, to the principal amount of the Obligations outstanding, and to the Obligations owing to any Lender Counterparty in respect of any Interest Rate Agreement required or permitted pursuant to the terms of this Agreement, fifth, to provide cash collateral to secure any and all Letters of Credit and future payment of related fees, sixth, to any other indebtedness or obligations of Company owing to the Agents or any Lender under the Credit Documents, and seventh, to Obligations owing to any Lender Counterparty in respect of any Currency Agreement permitted pursuant to the terms of this Agreement.

2.17. Ratable Sharing. Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien,

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set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.

2.18. Making or Maintaining Eurodollar Rate Loans.

(a) Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company.

(b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the Closing Date which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender’s obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, Company shall have the option, subject to the provisions of Section 2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to

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Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.18(b) shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.

(c) Compensation for Breakage or Non-Commencement of Interest Periods. Company shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan (including, without limitation, pursuant to Section 2.13(c) hereof); or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company.

(d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender.

(e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided, however, each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19.

2.19. Increased Costs; Capital Adequacy.

(a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application

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thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the Closing Date (or in the case of any Lender that becomes a party after the Closing Date, the date that such Lender becomes a party hereto), or compliance by such Lender with any guideline, request or directive issued or made after the Closing Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(b)) shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or Revolving Commitments or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such

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Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

2.20. Taxes; Withholding, etc.

(a) Payments to Be Free and Clear. All sums payable by or on behalf of any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment.

(b) Withholding of Taxes; Other Taxes. If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(b)) under any of the Credit Documents: (i) Company shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Company becomes aware of it; (ii) Company shall pay or cause to be paid any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made (including deductions applicable to additional sums payable pursuant to this paragraph (b)); and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Company shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided, no such additional amount shall be required to be paid to any Lender under clause (iii) above except to the extent that any change after the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the Closing Date or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender; provided that additional amounts shall be payable to a Lender to the extent such Lender’s assignor was entitled to receive such additional amounts. In addition, each Credit Party agrees to pay to the relevant Governmental Authority in accordance

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with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Credit Document (“Other Taxes”). Each Credit Party shall deliver to Administrative Agent and each Lender an official receipt (or, if an official receipt is not available, such other evidence of payment as shall be satisfactory to Administrative Agent and such Lender) in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.

(c) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent for transmission to Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN, W-8ECI and/or W-8IMY (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “U.S. Lender”) and is not an exempt recipient within the meaning of Treasury Regulation Section 1.6049-4(c) shall deliver to Administrative Agent and Company on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent for transmission to Company two new original copies of Internal Revenue Service Form W-8BEN, W-8ECI and/or W-8IMY (or, in each case, any successor forms), or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such Lender, and such other documentation required

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under the Internal Revenue Code and reasonably requested by Company to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence. Company shall not be required to pay any additional amount to any Non-US Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence referred to in the second sentence of this Section 2.20(c), or (2) to notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided, if such Lender shall have satisfied the requirements of the first sentence of this Section 2.20(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.20(c) shall relieve Company of its obligation to pay any additional amounts pursuant this Section 2.20 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein.

2.21. Obligation to Mitigate. Each Lender (which term shall include Issuing Bank for purposes of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Revolving Commitments, Loans or Letters of Credit or the interests of such Lender; provided, such Lender will not be obligated to utilize such other office pursuant to this Section 2.21 unless Company agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Company pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error.

2.22. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event that any Lender, other than at the direction or request of any regulatory agency or authority, defaults (a “Defaulting Lender”) in its obligation to fund (a “Funding Default”) any Revolving Loan or its portion of any unreimbursed payment under Section 2.3(b)(iv) or 2.4(e) (in each case, a “Defaulted Loan”), then (a) during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of

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voting on any matters (including the granting of any consents or waivers) with respect to any of the Credit Documents; (b) to the extent permitted by applicable law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary prepayment of the Revolving Loans shall, if Company so directs at the time of making such voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such Defaulting Lender had no Revolving Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (ii) any mandatory prepayment of the Revolving Loans shall, if Company so directs at the time of making such mandatory prepayment, be applied to the Revolving Loans of other Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that Company shall be entitled to retain any portion of any mandatory prepayment of the Revolving Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b); (c) such Defaulting Lender’s Revolving Commitment and outstanding Revolving Loans and such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage shall be excluded for purposes of calculating the Revolving Commitment fee payable to Lenders in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any Revolving Commitment fee pursuant to Section 2.11 with respect to such Defaulting Lender’s Revolving Commitment in respect of any Default Period with respect to such Defaulting Lender; and (d) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. No Revolving Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.22, performance by Company of its obligations hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Funding Default or the operation of this Section 2.22. The rights and remedies against a Defaulting Lender under this Section 2.22 are in addition to other rights and remedies which Company may have against such Defaulting Lender with respect to any Funding Default and which Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default.

2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to Company that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Company’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender, (ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Company’s request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each a “Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), Company may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such

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Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions of Section 10.6 and the assignment fees, if any, in connection with such assignment shall be paid as follows: (x) Company shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased Cost Lender or a Non-Consenting Lender and (y) the Defaulting Lender shall pay the fees, if any, payable thereunder in connection with any such assignment from such Defaulting Lender; provided, (1) on the date of such assignment, the Terminated Lender shall sell, at par, and assign all Loans and Revolving Commitments and the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment, Company shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided, Company may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, Company shall have caused each outstanding Letter of Credit issued thereby to be cancelled. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender.

SECTION 3. CONDITIONS PRECEDENT

3.1. Conditions to Loans on the Closing Date. The obligation of each Lender to make the Loans on the Closing Date is subject to the satisfaction of the following conditions:

(a) Certain Documents. The Administrative Agent and the Lenders shall have received on or prior to the Closing Date each of the following, each dated the Closing Date unless otherwise agreed by the Administrative Agent and the Lenders, in form and substance satisfactory to the Administrative Agent and the Lenders:

(i) this Agreement duly executed by the Company and each Guarantor, for the account of each Lender having requested the same by notice to the Administrative Agent and the Company received by each at least 3 Business Days prior to the Closing Date (or such later date as may be agreed by the Company), Notes evidencing each applicable Loan and conforming to the requirements set forth in Section 2.7(c); and

(ii) the agreements, documents, instruments and other items set forth on the Closing Agenda and Document Checklist attached hereto as Exhibit 3.1, each duly executed and notarized, in each instance, to the extent applicable.

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(b) Fee and Expenses. There shall have been paid to the Administrative Agent and the Lenders, for the account of the Administrative Agent and each Lender, as the case may be, all fees and all reimbursements of costs or expenses, in each case due and payable under any Related Agreements on or before the Closing Date.

(c) Related Transactions. The Administrative Agent and the Lenders shall be satisfied that, subject only to the funding of the initial Loans hereunder, the use of proceeds thereof and the use of proceeds of the Second Lien Term Loan, (i) as certified to the Administrative Agent and the Lenders, the Pantone Mergers have been consummated in accordance with the Pantone Merger Agreement and the Pantone Merger Documents and the Pantone Merger Agreement shall not have been altered, amended or otherwise changed or supplemented, or any condition therein waived, if such alteration, amendment, change, supplement, or waiver would be adverse to the interest of the Lenders in any material respects, in any such case without the prior written consent of the Administrative Agent and the Lenders (which consent shall not be unreasonably be withheld), (ii) all related governmental and third party approvals necessary in connection with the closing of the Pantone Mergers shall have been obtained and shall be in full force and effect and all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all applicable rules and regulations thereunder shall have expired or been terminated, (iii) Company shall have received the proceeds of the Second Lien Term Loans, (iv) the Second Lien Indebtedness Documents and the Intercreditor Agreement shall have been approved by the Agents and the Lenders, which approval may not be unreasonably withheld, and each Lenders’ and Agent’s approval of the Second Lien Indebtedness Documents and the Intercreditor Agreement shall be deemed given by its execution and delivery of its respective signature page to this Agreement and (v) all Existing Indebtedness will have been repaid in full, as evidenced by payoff letters duly executed and delivered by the Company and the Pantone Targets, as applicable, and the existing lenders party thereto.

(d) Representations and Warranties. The representations and warranties (i) of the Company contained in Sections 4.1(a), 4.1(b), 4.3, 4.5, 4.6, 4.17 (solely with respect to the Investment Company Act of 1940), 4.18, 4.22 and 4.25 of this Agreement and Section 4.1(a)(vii) of the Pledge and Security Agreement shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein and (ii) set forth in Article III of the Pantone Merger Agreement (but only to the extent that the Company (or an affiliate thereof) has the right to terminate its obligations under the Pantone Merger Agreement as a result of the breach of such representations and warranties in the Pantone Merger Agreement and determined without regard to whether any notices required to be delivered in connection therewith) shall be true and correct in all respects.

(e) Financial Statements. Administrative Agent shall have received and approved true and complete copies of the audited consolidated balance sheets of each of the Company and the Pantone Targets for the Fiscal Years ended December 31, 2005 and December 31, 2006 and the related statements of income and cash flows for the Fiscal Years then ended and true and complete copies of the unaudited consolidated balance sheets of each of the Company and the Pantone Targets for the period ended June 30, 2007 and the related statements of income and cash flows for the six (6) month period then ended.

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(f) Material Adverse Effect. Since December 31, 2006, there shall not have occurred any event, condition or circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have, a “Material Adverse Effect” (as defined in the Pantone Merger Agreement).

(g) Event of Default. At the time of the Loans no Default or Event of Default shall have occurred and be continuing.

(h) Closing Date. Lenders shall have made the Loans to be made on the Closing Date to Company on or before December 22, 2007.

(i) Availability. No Revolving Loans shall be borrowed on the Closing Date.

(j) Funding Notice. Administrative Agent shall have received a Funding Notice in accordance with Section 2.1(b).

3.2. Conditions to All Other Credit Extensions

(a) Conditions Precedent. The obligation of each Lender to make any Loan (other than Loans made on the Closing Date) or Issuing Bank to issue any Letter of Credit:

(i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be;

(ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments plus the Existing Headquarters Reserve then in effect shall not exceed the Revolving Commitments then in effect;

(iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date;

(iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; and

(v) on or before the date of issuance of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as Issuing Bank may reasonably require in connection with the issuance of such Letter of Credit.

Any Agent or Requisite Lenders shall be entitled, but not obligated to, request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Requisite Lender such request is warranted under the circumstances.

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(b) Notices. Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Company may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion/continuation or issuance of a Letter of Credit, as the case may be; provided each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the applicable date of borrowing, continuation/conversion or issuance. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Company or for otherwise acting in good faith.

SECTION 4. REPRESENTATIONS AND WARRANTIES

In order to induce Lenders and Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Lender and Issuing Bank on the Closing Date and on each Credit Date, that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made after giving effect to the Pantone Mergers and the borrowings under the Second Lien Credit Agreement contemplated hereby):

4.1. Organization; Requisite Power and Authority; Qualification. Each of Company and its Subsidiaries (a) is duly organized or formed, as applicable, validly existing and in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite corporate or limited liability company, as applicable, power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.

4.2. Capital Stock and Ownership. The Capital Stock of each of Company and its Subsidiaries has been duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Company or any of its Subsidiaries is a party requiring, and there is no membership interest or other Capital Stock of Company or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Company or any of its Subsidiaries of any additional membership interests or other Capital Stock of Company or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Capital Stock of Company or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Company and each of its Subsidiaries in their respective Subsidiaries as of the date hereof.

4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto.

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4.4. No Conflict. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate any provision of any law or any governmental rule or regulation applicable to Company or any of its Subsidiaries, any of the Organizational Documents of Company or any of its Subsidiaries, or any order, judgment or decree of any court or other agency of government binding on Company or any of its Subsidiaries except to the extent such violation could not be reasonably expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Company or any of its Subsidiaries except to the extent such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Company or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of Secured Parties); or (d) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of Company or any of its Subsidiaries, except for such approvals or consents were obtained on or before the date hereof (to the extent required to be so obtained by such date) or otherwise by the Closing Date, and disclosed in writing to Lenders and except for any such approvals or consents the failure of which to obtain will not have a Material Adverse Effect.

4.5. Governmental Consents. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except as otherwise set forth in the Related Agreements and on Schedule 4.5 hereto, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, as of the Closing Date.

4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

4.7. Historical Financial Statements. The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. As of the date hereof, neither Company nor any of its Subsidiaries has any contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company and any of its Subsidiaries taken as a whole.

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4.8. Projections. On and as of the date hereof, the projections of Company and its Subsidiaries for the period of Fiscal Year 2008 through and including Fiscal Year 2011 (the “Projections”) are based on good faith estimates and assumptions made by the management of Company; provided, the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material; provided further, as of the date hereof, management of Company believed that the Projections were reasonable and attainable.

4.9. No Material Adverse Change. Since December 30, 2006, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.

4.10. Intentionally Omitted.

4.11. Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Company nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3, all tax returns and reports of Company and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon Company and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Company knows of no proposed tax assessment against Company or any of its Subsidiaries which is not being actively contested by Company or such Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. Neither Company not any of its Subsidiaries has ever been a party to an understanding or arrangement constituting a “tax shelter” within the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of the Internal Revenue Code, or has ever “participated” in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4.

4.13. Properties.

(a) Title. Each of Company and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (iii) good title to (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.5 and in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the

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date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.

(b) Real Estate. As of the date hereof, Schedule 4.13 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Credit Party, regardless of whether such Credit Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Company does not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles.

4.14. Environmental Matters. Neither Company nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Company nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law that, individually or in the aggregate, could be expected to have a Material Adverse Effect. There are and, to each of Company’ and its Subsidiaries’ knowledge, have been, no conditions, occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Company or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Company nor any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor of Company or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Real Property, and none of Company’ or any of its Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent, except in compliance with Environmental Laws. Compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to Company or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect.

4.15. No Defaults. Neither Company nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect.

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4.16. Material Contracts. Schedule 4.16 contains a true, correct and complete list of all the Material Contracts in effect on the date hereof, and except as described thereon, all such Material Contracts are in full force and effect and no defaults currently exist thereunder.

4.17. Governmental Regulation. Neither Company nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. Neither Company nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

4.18. Margin Stock. Neither Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors.

4.19. Employee Matters. Neither Company nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Company or any of its Subsidiaries, or to the best knowledge of Company, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Company or any of its Subsidiaries or to the best knowledge of Company, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and (c) to the best knowledge of Company, no union representation question existing with respect to the employees of Company or any of its Subsidiaries and, to the best knowledge of Company, no union organization activity that is taking place, except (with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect.

4.20. Employee Benefit Plans. Company, each of its Subsidiaries and each of their respective ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status. No liability to the PBGC (other than

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required premium payments), the Internal Revenue Service, any Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Company, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA Event has occurred or is reasonably expected to occur. Except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Company, any of its Subsidiaries or any of their respective ERISA Affiliates. The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Company, any of its Subsidiaries or any of their ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Company, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA is zero. Company, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.

4.21. Certain Fees. Other than as set forth on Schedule 4.21, no broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby.

4.22. Solvency. Each Credit Party is and, upon the incurrence of any Obligation by such Credit Party on any date on which this representation and warranty is made, will be, Solvent.

4.23. Compliance with Statutes, Etc. Each of Company and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Company or any of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

4.24. Disclosure. No representation or warranty of the Company, the Pantone Targets, or any of their respective Subsidiaries contained in any Credit Document, any Related Agreement, or in any other documents, certificates or written statements furnished to Lenders by or on behalf of Company, the Pantone Targets, or any of their respective Subsidiaries for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to Company or the Pantone Targets, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are

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based upon good faith estimates and assumptions believed by Company or Pantone Targets to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. There are no facts known (or which should upon the reasonable exercise of diligence be known) to Company or the Pantone Targets (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby.

4.25. Patriot Act. To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.26. Insignificant Domestic Subsidiaries. As of the Closing Date, each Insignificant Domestic Subsidiary is described on Schedule 4.26. Each of the Insignificant Domestic Subsidiaries conducts (and shall conduct) no operations and has (and shall have) no assets and no liabilities, in each case, individually or in the aggregate, with a fair market value in excess of $500,000.

4.27. Certain Other Representations and Warranties. As of the Closing Date, (i) each of the representations and warranties contained in the Second Lien Credit Agreement made by each Credit Party is true and correct in all material respects (without duplication of any materiality qualifiers contained therein), (ii) each of the representations and warranties contained in the Pantone Merger Agreement made by the Company is true and correct in all material respects (without duplication of any materiality qualifiers contained therein), and (iii) to the knowledge of the Company, each of the representations and warranties contained in the Pantone Merger Agreement made by Persons other than the Company is true and correct in all material respects (without duplication of any materiality qualifiers contained therein).

SECTION 5. AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations and cancellation or expiration of all Letters of Credit, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5.

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5.1. Financial Statements and Other Reports. Company will deliver to Administrative Agent, Lead Arranger and Lenders:

(a) Intentionally Omitted.

(b) Quarterly Financial Statements. As soon as available, and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the consolidated and consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated (and with respect to statements of income, consolidating) statements of income, stockholders’ equity and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto;

(c) Annual Financial Statements. As soon as available, and in any event within 90 days after the end of each Fiscal Year, (i) the consolidated and consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and with respect to statements of income, consolidating) statements of income, stockholders’ equity and cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon of Ernst & Young LLP or other independent certified public accountants of recognized national standing selected by Company, and reasonably satisfactory to Administrative Agent (which report shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together with a written statement by such independent certified public accountants stating (1) that their audit examination has included a review of the terms of the Credit Documents and (2) whether, in connection therewith, any condition or event that constitutes a Default or an Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof;

(d) Compliance Certificate. Together with each delivery of financial statements of Company and its Subsidiaries pursuant to Sections 5.1(b) and 5.1(c), a duly executed and completed Compliance Certificate;

(e) Statements of Reconciliation after Change in Accounting Principles. If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Company and its Subsidiaries delivered pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together

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with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form and substance satisfactory to Administrative Agent;

(f) Notice of Default. Promptly upon any officer of Company obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Company with respect thereto; (ii) that any Person has given any notice to Company or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto;

(g) Notice of Litigation. Promptly upon any officer of Company obtaining knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not previously disclosed in writing by Company to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to Company to enable Lenders and their counsel to evaluate such matters;

(h) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Company, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Company, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by Company, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request;

(i) Financial Plan. As soon as practicable and in any event no later than forty-five (45) days following the first Business Day of each Fiscal Year, a consolidated plan and financial forecast for the then current Fiscal Year and the forthcoming two (2) Fiscal Years (or portions thereof) on a year by year basis, and for the then current Fiscal Year on a quarter by quarter basis (a “Financial Plan”), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Company and its Subsidiaries for each such Fiscal Year, together with pro forma Compliance Certificates for each such Fiscal Year and an explanation of the assumptions on which such forecasts are based, and (ii) forecasted consolidated statements of income and cash flows of Company and its Subsidiaries for each month of each such Fiscal Year and (iii) forecasts demonstrating projected compliance with the requirements of Section 6.8 through the final maturity date of the Loans;

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(j) Insurance Report. As soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Company and its Subsidiaries and all material insurance coverage planned to be maintained by Company and its Subsidiaries in the immediately succeeding Fiscal Year;

(k) Notice of Change in Board of Directors. With reasonable promptness, written notice of any change in the board of directors (or similar governing body) of Company or Company;

(l) Notice Regarding Material Contracts. Promptly, and in any event within ten (10) Business Days (i) after any Material Contract of Company or any of its Subsidiaries is terminated or amended in a manner that could result in a Material Adverse Effect to Company or such Subsidiary, as the case may be, or (ii) any new Material Contract is entered into, a written statement describing such event, with copies of such material amendments or new contracts, delivered to Administrative Agent (to the extent such delivery is permitted by the terms of any such Material Contract, provided, no such prohibition on delivery shall be effective if it were bargained for by Company or its applicable Subsidiary with the intent of avoiding compliance with this Section 5.1(l)), and an explanation of any actions being taken with respect thereto;

(m) Intentionally Omitted.

(n) Information Regarding Collateral. (a) Company will furnish to Collateral Agent prompt written notice of any change (i) in any Credit Party’s corporate name, (ii) in any Credit Party’s identity or corporate structure or (iii) in any Credit Party’s jurisdiction of organization, or (iv) in any Credit Party’s Federal Taxpayer Identification Number or state organizational identification number. Company agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Collateral Documents. Company also agrees promptly to notify Collateral Agent if any material portion of the Collateral is damaged or destroyed;

(o) Annual Collateral Verification. Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(c) and on the date hereof, Company shall deliver to Collateral Agent a certificate of its Authorized Officer (i) either confirming that there has been no change in such information since the date of the Collateral Questionnaire delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes and (ii) certifying that all Uniform Commercial Code financing statements (including fixtures filings, as applicable) and all supplemental intellectual property security agreements or other appropriate filings, recordings or registrations, have been filed of record in each governmental, municipal or other

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appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to effect, protect and perfect the security interests under the Collateral Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);

(p) Other Information. (A) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Company to its security holders acting in such capacity or by any Subsidiary of Company to its security holders other than Company or another Subsidiary of Company, (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Company or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, (iii) all press releases and other statements made available generally by Company or any of its Subsidiaries to the public concerning material developments in the business of Company or any of its Subsidiaries of a kind generally required to be filed by the Company and its Subsidiaries on Form 8-K, and (B) such other information and data with respect to Company or any of its Subsidiaries as from time to time may be reasonably requested by Administrative Agent; and

(q) Certification of Public Information. Concurrently with the delivery of any document or notice required to be delivered pursuant to this Section 5.1, Company shall indicate in writing whether such document or notice contains Nonpublic Information. Any document or notice required to be delivered pursuant to this Section 5.1 shall be deemed to contain Nonpublic Information unless Company specifies otherwise. Company and each Lender acknowledges that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to Company, its Subsidiaries or their securities) and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform”), any document or notice which contains Nonpublic Information (or is deemed to contain Nonpublic Information) shall not be posted on that portion of the Platform designated for such public side Lenders.

5.2. Existence. Except as otherwise permitted under Section 6.9, each Credit Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided, no Credit Party (other than Company with respect to existence) or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders.

5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause each of its Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings

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promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Company or any of its Subsidiaries).

5.4. Maintenance of Properties. Each Credit Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Company and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof.

5.5. Insurance. Company will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Company and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Company will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors, and (b) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance shall (i) name Collateral Agent, on behalf of Secured Parties as an additional insured thereunder as its interests may appear and (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to Collateral Agent, that names Collateral Agent, on behalf of Secured Parties, as the loss payee thereunder and provides for at least thirty days’ prior written notice to Collateral Agent of any modification or cancellation of such policy.

5.6. Books and Records; Inspections. Each Credit Party will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity in all material respects with GAAP shall be made of all dealings and transactions in relation to its business and activities. Each Credit Party will, and will cause each of its Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested.

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5.7. Lenders Meetings. Company will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Company’s corporate offices (or at such other location as may be agreed to by Company and Administrative Agent) at such time as may be agreed to by Company and Administrative Agent.

5.8. Compliance with Laws. Each Credit Party will comply, and shall cause each of its Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.9. Environmental.

(a) Environmental Disclosure. Company will deliver to Administrative Agent and Lenders:

(i) as soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Company or any of its Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to environmental matters at any Real Property or with respect to any Environmental Claims that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (1) any Release required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (2) any remedial action taken by Company or any other Person in response to (A) any Hazardous Materials Activities the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect, and (3) Company or Company’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property that could cause such Real Property or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws;

(iii) as soon as practicable following the sending or receipt thereof by Company or any of its Subsidiaries, a copy of any and all written communications with respect to (1) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect, (2) any Release required to be reported to any federal, state or local governmental or regulatory agency, and (3) any request for information from any governmental agency that suggests such agency is investigating whether Company or any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity;

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(iv) prompt written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by Company or any of its Subsidiaries that could reasonably be expected to (A) expose Company or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (B) affect the ability of Company or any of its Subsidiaries to maintain in full force and effect all material Governmental Authorizations required under any Environmental Laws for their respective operations and (2) any proposed action to be taken by Company or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Company or any of its Subsidiaries to any additional material obligations or requirements under any Environmental Laws; and

(v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this Section 5.9(a).

(b) Hazardous Materials Activities, Etc. Each Credit Party shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.10. Subsidiaries.

(a) In the event that any Person becomes a Domestic Subsidiary of Company, or, after the Closing Date, any Insignificant Domestic Subsidiary acquires assets with a fair market value of $500,000 or more, Company shall, on or prior to the date such Person become a Domestic Subsidiary or within 30 days of such Insignificant Domestic Subsidiary acquiring such assets, (a) promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 5.19(a) and 5.19(c), (c) deliver to Administrative Agent and Collateral Agent (i) sufficient copies of the Organizational Document executed and delivered by such Domestic Subsidiary, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated a recent date; (ii) signature and incumbency certificates of the officers of such Domestic Subsidiary executing the Counterpart Agreement; (iii) resolutions of the Board of Directors or similar governing body of such Domestic Subsidiary approving and authorizing the execution, delivery and performance of the Counterpart Agreement, certified by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority of such Domestic Subsidiary’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date; and (v) such other documents as

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Administrative Agent may reasonably request and (c) a written opinion of counsel for the Credit Parties as to such matters related thereto as the Collateral Agent may request in form and substance reasonably acceptable to the Collateral Agent. In the event that any Person becomes a Foreign Subsidiary of Company, and the ownership interests of such Foreign Subsidiary are owned by Company or by any Domestic Subsidiary thereof, Company shall, or shall cause such Domestic Subsidiary to, deliver to Collateral Agent all such documents, instruments, agreements, and certificates as are similar to those described in clause (a)(iii) above, and Company shall, within thirty (30) days after such Person becomes a Foreign Subsidiary, take or shall cause such Domestic Subsidiary to take all of the actions referred to in Sections 5.19(a) and 5.19(b) necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge and Security Agreement in 65% of the voting Capital Stock of such Foreign Subsidiary and 100% of the non-voting Capital Stock of such Foreign Subsidiary. To the extent no material adverse tax consequences to Company would result therefrom, within thirty (30) days after such Person becomes a Foreign Subsidiary, Company shall cause such Foreign Subsidiary to (A) execute a security agreement compatible with the laws of such Foreign Subsidiary’s jurisdiction in form and substance reasonably satisfactory to Collateral Agent and (B) to take all actions necessary or advisable in the opinion of Collateral Agent to cause the Lien created by the applicable Collateral Document to be duly perfected to the extent required by such agreement in accordance with all applicable law, including the filing of financing statements in such jurisdictions as may be reasonably requested by Collateral Agent. With respect to each such Subsidiary, Company shall promptly send to Collateral Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Company, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Company; provided, such written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof.

(b) Within 60 days of the end of each Fiscal Year (or such later date as Collateral Agent, in its sole discretion, may consent), Company shall deliver to Collateral Agent: (1) a report setting forth the percentage of net invoiced sales of the Company attributable to each Foreign Subsidiary whose Capital Stock is required to be pledged to Collateral Agent under Section 5.10(a); and (2) with respect to any Foreign Subsidiary referred to in the preceding clause (1) whose sales represent more than 10.0% of the sales of the Company, on a consolidated basis, to the extent a security agreement or similar instrument governed by the law of the jurisdiction of formation of any such Foreign Subsidiary has not previously been delivered to Collateral Agent, security agreements or similar instruments governed by the laws of the jurisdiction of formation of any such Foreign Subsidiary pursuant to which security agreements or similar instruments Company would grant to Collateral Agent a perfected security interest in the Capital Stock of any such Foreign Subsidiary; provided, however, that such security interest shall be granted only if and to the extent required by Section 5.10(a). All such security agreements or similar instruments shall be in form and substance reasonably satisfactory to Collateral Agent.

5.11. Additional Material Real Estate Assets. In the event that any Credit Party acquires a Material Real Estate Asset or a Real Estate Asset owned on the Closing Date becomes a Material Real Estate Asset, and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party shall promptly take all such actions and execute and deliver, or cause to be

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executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates necessary in order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to in this Section 5.11, perfected First Priority security interest in such Real Estate Assets, which such documents shall include:

(a) a fully executed and notarized Mortgage, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering such Real Estate Asset;

(b) an opinion of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) from the state in which such Real Estate Asset is located with respect to the enforceability of the form of Mortgage to be recorded in such state and such other matters as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent;

(c) (i) an ALTA mortgagee title insurance policy or unconditional commitment therefor issued by a title company reasonably satisfactory to Collateral Agent with respect to such Real Estate Asset (each, a “Title Policy”), in an amount not less than the fair market value of such Real Estate Asset, together with a title report issued by a title company with respect thereto and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to Collateral Agent and (ii) evidence satisfactory to Collateral Agent that such Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of such Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording such Mortgage in the appropriate real estate records;

(d) evidence of flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in compliance with any applicable regulations of the Board of Governors, in form and substance reasonably satisfactory to Collateral Agent; and

(e) an ALTA survey of such Real Estate Asset, certified to Collateral Agent, in form and substance reasonably satisfactory to Collateral Agent.

In addition to the foregoing, Company shall, at the request of Requisite Lenders, deliver, from time to time, to Administrative Agent such appraisals as are required by law or regulation of Real Estate Assets with respect to which Collateral Agent has been granted a Lien. In addition to the foregoing, if the Company acquires a Material Real Estate Asset which has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, the Company promptly provide Collateral Agent with a Phase I Report for each Material Real Estate Asset so acquired, in a form reasonably satisfactory to the Administrative Agent.

5.12. Interest Rate Protection. No later than ninety (90) days following the Closing Date and at all times thereafter until the third anniversary of the Closing Date, Company shall obtain and cause to be maintained protection against fluctuations in interest rates pursuant to one or more Interest Rate Agreements in form and substance reasonably satisfactory to

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Administrative Agent, in order to ensure that no less than 50% of the aggregate principal amount of the total Indebtedness of Company and its Subsidiaries then outstanding from time to time is either (i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears interest at a fixed rate. Each Existing Interest Rate Agreement shall be included for purposes of determining compliance with the foregoing sentence for so long as such Existing Interest Rate Agreement is outstanding.

5.13. Further Assurances.

(a) At any time or from time to time upon the request of Administrative Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by Guarantors and are secured by substantially all of the assets of Company, and its Subsidiaries and all of the outstanding Capital Stock of Company and its Subsidiaries (subject to limitations contained in the Credit Documents with respect to Foreign Subsidiaries). If at any time the gross revenues of X-Rite GmbH exceed the foreign currency equivalent of $5,000,000 for any trailing twelve month period (the “Pledge Threshold”) the Company shall (a) provide prompt written notice thereof to the Administrative Agent and (b) cause each of X-Rite Global, Incorporated and X-Rite Holdings, Inc. to deliver, as soon as practicable and in any event within thirty (30) days following the date on which the Pledge Threshold has been reached, (i) a share pledge agreement entered into among X-Rite Global, Incorporated, X-Rite Holdings, Inc. and the Collateral Agent, and acknowledged by X-Rite GmbH, fully effective and valid under German law, (ii) an opinion of German counsel issued to the Collateral Agent in respect of the foregoing share pledge agreement and (iii) all other documents reasonably necessary to perfect the Collateral Agent’s security interest in 65% of the voting Capital Stock of X-Rite GmbH (including stock certificates representing 65% of such voting Capital Stock of X-Rite GmbH) and 100% of the non-voting Capital Stock of X-Rite GmbH (including stock certificates representing 100% of such non-voting Capital Stock of X-Rite GmbH, if any).

(b) In the event X-Rite International, Inc., a corporation formed under the laws of Barbados, is not dissolved on or prior to December 31, 2007, the Company shall deliver to Administrative Agent and to Collateral Agent all such documents, agreements, instruments and certificates as are similar to those described in Section 5.10(a)(iii) above, and Company shall take all of the actions necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of the Secured Parties, under the Pledge and Security Agreement in 65% of the voting Capital Stock of X-Rite International, Inc. and 100% of the non-voting Capital Stock of X-Rite International, Inc.

5.14. Miscellaneous Business Covenants. Unless otherwise consented to by Agents or Requisite Lenders:

(a) Non-Consolidation. Company will and will cause each of its Subsidiaries to: (i) maintain entity records and books of account separate from those of any other entity

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which is an Affiliate of such entity; (ii) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity; and (iii) provide that its board of directors or other analogous governing body will hold all appropriate meetings to authorize and approve such entity’s actions, which meetings will be separate from those of other entities.

(b) Cash Management Systems. Company and its Subsidiaries shall maintain cash management systems (a) at the financial institutions engaged by the Company and its Subsidiaries as of the Closing Date; provided that on or before the Closing Date the holder of such account and the financial institution maintaining such account shall execute and the Company shall deliver to Collateral Agent an Uncertificated Securities Control Agreement, a Securities Account Control Agreement and a Deposit Account Control Agreement, as applicable, substantially in the form of Exhibit B, C and D, respectively, to the Pledge and Security Agreement or, in each case, similar forms of documents reasonably acceptable to the Collateral Agent or (b) at such other financial institutions reasonably acceptable to Agents. The foregoing notwithstanding, as soon as reasonably practicable, and in no event later than one hundred eighty (180) days following the Closing Date (or such later date as the Administrative Agent may agree to in its reasonable discretion), the Company shall, and shall cause Pantone (or such other Subsidiary of Company) to, either (x) deliver fully executed Securities Account Control Agreements and/or Deposit Account Control Agreements, as applicable, executed by Bank of America and Brown Brothers & Harriman, as applicable, in each case in form and substance reasonably satisfactory to Administrative Agent with respect to each bank account, lock box, securities account and other similar account maintained at such institutions and described on Schedule 5.14 (collectively, the “Existing Pantone Accounts”) or (y) close such Existing Pantone Accounts and transfer any amounts on deposit in such Existing Pantone Accounts to Fifth Third, or another bank, who executes a Securities Account Control Agreement or a Deposit Account Control Agreement, as applicable, in form and substance reasonably satisfactory to Administrative Agent and Collateral Agent.

(c) Filing of Agreement. Within four days of the date hereof, provided that Company or any of its Subsidiaries is otherwise required to file periodic reports with the Securities and Exchange Commission, Company or such Subsidiaries shall file a copy of this Agreement and the schedules hereto as a material contract with the US Securities and Exchange Commission.

5.15. Intentionally Omitted.

5.16. Evidence of Insurance. The Company shall deliver to the Collateral Agent, on or prior to the Closing Date, a certificate from Company’s insurance broker or other evidence satisfactory to the Collateral Agent that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect, together with endorsements naming the Collateral Agent, for the benefit of Secured Parties, as additional insured and loss payee thereunder to the extent required under Section 5.5.

5.17. Fees and Expenses. On or prior to the Closing Date, Company shall pay all fees and expenses due and payable as of the Closing Date referred to in Section 2.11 and Section 10.2.

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5.18. Transaction Costs. On or prior to the Closing Date, Company shall deliver to Administrative Agent Company’s reasonable best estimate of the Transactions Costs (other than fees payable to any agent hereunder).

5.19. Perfection of Security Interests. The Company shall, no later than the Closing Date, in order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the personal property Collateral, provide to the Collateral Agent:

(a) evidence satisfactory to Collateral Agent of the compliance by each Credit Party of their obligations under the Pledge and Security Agreement and the other Collateral Documents (including, without limitation, their obligations to execute and deliver UCC financing statements, originals of securities, instruments and chattel paper and any agreements governing deposit and/or securities accounts as provided therein);

(b) opinions of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) with respect to the creation and perfection of the security interests in favor of Collateral Agent in such Collateral and such other matters governed by the laws of each jurisdiction in which any Credit Party or any personal property Collateral is located as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent; and

(c) evidence that each Credit Party shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument (including without limitation, (x) a Landlord Waiver and Consent Agreement executed by the landlord of any Leasehold Property and by the applicable Credit Party and (y) any intercompany notes evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b)) and made or caused to be made any other filing and recording (other than as set forth herein) reasonably required by Collateral Agent.

5.20. Intentionally Omitted.

5.21. Existing Indebtedness. On the Closing Date, Company and its Subsidiaries shall (i) repay in full all Indebtedness outstanding under the Existing X-Rite First Lien Credit Agreement, the Existing X-Rite Second Lien Credit Agreement and the Existing Pantone Credit Agreement, (ii) terminate any commitments to lend or make other extensions of credit thereunder, (iii) deliver to Administrative Agent all documents or instruments necessary to release all Liens securing Indebtedness outstanding under the Existing X-Rite First Lien Credit Agreement, the Existing X-Rite Second Lien Credit Agreement and the Existing Pantone Credit Agreement or other obligations of Company and its Subsidiaries thereunder being repaid on the Closing Date, and (iv) make arrangements satisfactory to Administrative Agent with respect to the cancellation of any letters of credit outstanding thereunder or the issuance of Letters of Credit to support the obligations of Company and its Subsidiaries with respect thereto.

(b) On or before the earlier of the date of the Existing Headquarters Asset Sale and June 30, 2008, Company and its Subsidiaries shall (i) repay in full all Indebtedness outstanding under the Existing Headquarters Loan with the proceeds of the Existing

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Headquarters Asset Sale, (ii) terminate any commitments to lend or make other extensions of credit thereunder and (iii) deliver to Administrative Agent all documents or instruments necessary to release all Liens (including, without limitation, the Existing Headquarters Mortgage) securing Indebtedness outstanding under the Existing Headquarters Loan or other obligations of Company and its Subsidiaries thereunder being repaid in connection with the closing of the Existing Headquarters Asset Sale.

5.22. Life Insurance Policies. As soon as reasonably practicable, but in any event no later that thirty (30) days following the Closing Date (or such later date as the Administrative Agent shall approve, acting reasonably), the Company shall deliver, or cause to be delivered, evidence that each of the Key Person Life Insurance Policies has been collaterally assigned to the Administrative Agent for the benefit of the Lenders.

5.23. Existing Headquarters Asset Sale. On or prior to June 30, 2008 (or such later date as the Administrative Agent shall approve, acting reasonably), (a) the Company shall dispose of its headquarters as of the Closing Date, commonly known as 3100 44^th Street Southwest, Grandville, Michigan (the “Existing Headquarters Asset”), pursuant to an Asset Sale (the “Existing Headquarters Asset Sale”), (b) consideration received for such Asset Sale shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Company (or similar governing body)), (c) no less than 100% thereof shall be paid in Cash, and (d) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a); provided that such Net Asset Sale Proceeds shall be payable against the Existing Headquarters Loan (and thereafter the Loans) no later than the third (3^rd) Business Day following the date of receipt by Company or any of its Subsidiaries of such Net Asset Sale Proceeds, and such Net Asset Sale Proceeds may not be reinvested as otherwise permitted by Section 2.14(a).

SECTION 6. NEGATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations and cancellation or expiration of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6.

6.1. Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:

(a) the Obligations;

(b) Indebtedness of (i) any Guarantor Subsidiary to Company or to any other Guarantor Subsidiary, or of Company to any Guarantor Subsidiary; or (ii) any Foreign Subsidiary (as obligor) to any Credit Party (as maker); provided that the aggregate amount of all such Indebtedness of any Foreign Subsidiaries to any one or more Credit Parties, together with all other Investments made in accordance with Section 6.7(b)(iii), shall not exceed the amount of Investments that the Credit Parties are permitted to make under Section 6.7(b)(iii); and provided further, (A) all such Indebtedness shall be evidenced by promissory notes and all such notes shall be subject to a First Priority Lien pursuant to the Pledge and Security Agreement, (B) all such

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Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of any applicable promissory notes or an intercompany subordination agreement that in any such case, is reasonably satisfactory to Administrative Agent, and (C) any payment by any such Guarantor Subsidiary under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such Subsidiary to Company or to any of its Subsidiaries for whose benefit such payment is made;

(c) Intentionally Omitted;

(d) Indebtedness incurred by Company or any of its Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guaranties or letters of credit, surety bonds or performance bonds securing the performance of Company or any such Subsidiary pursuant to such agreements, in connection with Permitted Acquisitions or permitted dispositions of any business, assets or Subsidiary of Company or any of its Subsidiaries;

(e) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal or similar obligations incurred in the ordinary course of business;

(f) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;

(g) guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of Company and its Subsidiaries;

(h) guaranties by Company of Indebtedness of a Guarantor Subsidiary or guaranties by a Subsidiary of Company of Indebtedness of Company or a Guarantor Subsidiary with respect, in each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1; provided, that, if such Indebtedness is subordinate to the Obligations, such guaranty shall be subordinate to the Obligations to the same extent;

(i) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof are not less favorable to the obligor thereon or to the Lenders than the Indebtedness being refinanced or extended, and the average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (A) include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended, renewed or refinanced, (B) exceed in a principal amount the Indebtedness being renewed, extended or refinanced or (C) be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom;

(j) Indebtedness with respect to Capital Leases and purchase money Indebtedness in an aggregate amount not to exceed at any time $3,000,000 (including any purchase money Indebtedness acquired in connection with a Permitted Acquisition); provided,

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any such purchase money Indebtedness (i) shall be secured only to the asset acquired in connection with the incurrence of such Indebtedness, and (ii) shall constitute not less than 85% of the aggregate consideration paid with respect to such asset;

(k) other unsecured Indebtedness of Company and its Subsidiaries, in an aggregate amount not to exceed at any time $3,000,000;

(l) the Second Lien Indebtedness owed under the Second Lien Credit Agreement in an aggregate principal amount not to exceed $105,000,000 plus any accrued interest or fees, and, subject to the terms of the Intercreditor Agreement, Indebtedness incurred to refinance, renew or replace such Indebtedness in whole or in part; provided that, (i) the terms and conditions of such Indebtedness, taken as a whole, are no less favorable in any material respect to the obligors thereof or the Lenders than the Second Lien Credit Agreement, (ii) no Subsidiary of Company that is not a Guarantor hereunder shall be a guarantor of such refinancing, renewal or replacement and (iii) the average life to maturity thereof is greater than or equal to that of the Second Lien Term Loans;

(m) Indebtedness in an amount not to exceed $35,000,000 of Company to Amazys; provided that (i) all such Indebtedness shall be evidenced by promissory notes in form and substance reasonably satisfactory to the Administrative Agent, (ii) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to an intercreditor or subordination agreement, at the option of the Administrative Agent, governed by the law of the jurisdiction of formation of the intercompany creditor, that in any case is reasonably satisfactory to Administrative Agent, (iii) the final maturity of such Indebtedness shall not be or become due earlier than at least six (6) months after the later of the Term Loan Maturity Date or the Revolving Commitment Termination Date, and (iv) such Indebtedness shall require no mandatory payment of principal, interest, fees or other amounts and no payment of such principal, interest fees or other amounts (whether mandatory or voluntary) shall be made (other than in accordance with and subject to the limitations set forth in Section 6.7(b)(iii) as if such payment were an Investment for purposes of Section 6.7), prior to at least six (6) months after the later of the Term Loan Maturity Date and the Revolving Commitment Termination Date; and

(n) from the Closing Date, through and including the date that is the earlier of (i) the date of the Existing Headquarters Asset Sale and (ii) June 30, 2008, the Existing Headquarters Loan and the Existing Headquarters Guaranty; provided that such Existing Headquarters Loan shall be repaid in cash in full on the earlier of (x) the date of the Existing Headquarters Asset Sale and (y) June 30, 2008; provided, further that the Existing Headquarters Guaranty shall be cancelled and released upon the repayment in full of the Existing Headquarters Loan.

6.2. Liens. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Company or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State or under any similar recording or notice statute, except:

(a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document;

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(b) Liens for Taxes not yet due and payable, or if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves have been made in accordance with GAAP;

(c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;

(d) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;

(e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Company or any of its Subsidiaries;

(f) any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder;

(g) Liens solely on any cash earnest money deposits made by Company or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(j) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;

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(k) licenses of patents, trademarks and other intellectual property rights granted by Company or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of Company or such Subsidiary;

(l) Liens described in Schedule 6.2;

(m) Liens securing Indebtedness permitted pursuant to Section 6.1(j); provided, any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;

(n) Second Lien Indebtedness Liens;

(o) other Liens on assets other than the Collateral securing Indebtedness in an aggregate amount not to exceed $5,000,000 at any time outstanding; and

(p) from the Closing Date, through and including the date that is the earlier of (i) the date of the Existing Headquarters Asset Sale and (ii) June 30, 2008, the Existing Headquarters Mortgage; provided that such Existing Headquarters Mortgage shall be fully released on the earlier of the date of (x) the Existing Headquarters Asset Sale and (y) June 30, 2008.

6.3. Equitable Lien. If any Credit Party shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not otherwise permitted hereby.

6.4. No Further Negative Pledges. Except with respect to (a) specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset Sale, (b) the Second Lien Credit Agreement and any collateral documents related thereto as in effect on the date hereof and (c) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be) no Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired.

6.5. Restricted Junior Payments. Except as provided herein, no Credit Party shall, nor shall it permit any of its Subsidiaries or Affiliates through any manner or means or through any other Person to, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment, except that the forgoing shall not prohibit any Subsidiary from making dividends or distributions, directly or indirectly, to Company or to any Wholly-Owned Subsidiary of Company, and except that:

(a) Subject to the terms of the Intercreditor Agreement, Company may make regularly scheduled payments of interest with respect of the Indebtedness incurred under the Second Lien Credit Agreement in accordance with the terms thereof, and only to the extent required by the Second Lien Credit Agreement as in effect on the date hereof or as modified in accordance with the terms set forth in the Intercreditor Agreement;

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(b) Intentionally Omitted; and

(c) from the Closing Date, through and including the date that is the earlier of (x) the Existing Headquarters Asset Sale and (y) June 30, 2008, Company may make (i) regularly scheduled payments of interest in respect of the Indebtedness outstanding under the Existing Headquarters Loan (as in effect on the date hereof) in accordance with the terms thereof and (ii) a single voluntary pre-payment of principal (and accrued interest) in respect of the Indebtedness outstanding under the Existing Headquarters Loan (as in effect on the date hereof) (A) with the proceeds of the Existing Headquarters Asset Sale and/or (B) with cash on hand or with the proceeds of a Revolving Loan, provided, in each case, that the Company shall promptly comply with its obligations under Section 5.11.

6.6. Restrictions on Subsidiary Distributions. Except as provided herein and the Second Lien Credit Agreement, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Company to (a) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by Company or any other Subsidiary of Company, (b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, (c) make loans or advances to Company or any other Subsidiary of Company, or (d) transfer, assign or lease any of its property or assets to Company or any other Subsidiary of Company other than restrictions (i) in agreements evidencing Indebtedness permitted by Section 6.1(j) that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement or (iv) described on Schedule 6.6.

6.7. Investments. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except:

(a) Investments in Cash and Cash Equivalents;

(b) (i) equity Investments owned as of the Closing Date in any Subsidiary, (ii) Investments made after the Closing Date in any wholly-owned Guarantor Subsidiary, and (iii) Investments made after the Closing Date in any Foreign Subsidiaries (which, for the avoidance of doubt, shall include (x) loans borrowed by any Foreign Subsidiary from any Credit Party under Section 6.1(b)(ii) and (y) cash payments of interest, fees, principal or other amounts by any Credit Party to any Foreign Subsidiary in respect of obligations under any loans borrowed by any Credit Party from any Foreign Subsidiary under Section 6.1(m)) in an amount not to exceed $4,000,000 in the aggregate;

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(c) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors and (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business consistent with the past practices of Company and its Subsidiaries;

(d) intercompany loans to the extent permitted under Section 6.1(b);

(e) Consolidated Capital Expenditures permitted by Section 6.8(c);

(f) loans and advances to employees of Company and its Subsidiaries made in the ordinary course of business in an aggregate principal amount not to exceed $2,000,000 in the aggregate;

(g) Investments constituting Permitted Acquisitions permitted pursuant to Section 6.9;

(h) Investments described in Schedule 6.7; and

(i) other Investments in an aggregate amount not to exceed at any time $3,500,000.

Notwithstanding the foregoing, in no event shall any Credit Party make any Investment which results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under the terms of Section 6.5.

6.8. Financial Covenants.

(a) Interest Coverage Ratio. Company shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter ending closest to the dates set forth below, beginning with the Fiscal Quarter ending closest to March 31, 2008, to be less than the correlative ratio indicated in the following table:

Fiscal Quarter Ended	Interest Coverage Ratio
March 31, 2008	1.30 to 1.00
June 30, 2008	1.40 to 1.00
September 30, 2008	1.50 to 1.00
December 31, 2008	1.75 to 1.00
March 31, 2009	1.90 to 1.00
June 30, 2009	2.00 to 1.00
September 30, 2009	2.00 to 1.00

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Fiscal Quarter Ended	Interest Coverage Ratio
December 31, 2009	2.25 to 1.00
March 31, 2010	2.50 to 1.00
June 30, 2010	2.75 to 1.00
September 30, 2010	2.75 to 1.00
December 31, 2010	3.00 to 1.00
March 31, 2011	3.25 to 1.00
June 30, 2011	3.50 to 1.00
September 30, 2011	3.75 to 1.00
December 31, 2011 and the last day of each calendar quarter ending thereafter	4.00 to 1.00

(b) Leverage Ratio. Company shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter ending closest to the dates set forth below, beginning with the Fiscal Quarter ending closest to March 31, 2008, to exceed the correlative ratio indicated in the following table:

Fiscal Quarter Ended	Leverage Ratio
March 31, 2008	6.00 to 1.00
June 30, 2008	5.75 to 1.00
September 30, 2008	5.50 to 1.00
December 31, 2008	5.25 to 1.00
March 31, 2009	5.00 to 1.00
June 30, 2009	4.75 to 1.00
September 30, 2009	4.75 to 1.00
December 31, 2009	4.50 to 1.00
March 31, 2010	4.25 to 1.00
June 30, 2010	4.00 to 1.00
September 30, 2010	4.00 to 1.00
December 31, 2010	4.00 to 1.00
March 31, 2011	4.00 to 1.00
June 30, 2011 and the last day of each calendar quarter ending thereafter	3.75 to 1.00

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(c) Maximum Consolidated Capital Expenditures. Company shall not, and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount for Company and its Subsidiaries in excess of the corresponding amount set forth below opposite such Fiscal Year (such amount the “Consolidated Capital Expenditure Limitation”):

Fiscal Year	Consolidated Capital Expenditures Limitation
Fiscal Year 2007	$	10,000,000
Fiscal Year 2008 and each Fiscal Year ending thereafter	$	10,000,000

; provided, however, in the event the Company and its Subsidiaries do not expend the entire Consolidated Capital Expenditure Limitation in any Fiscal Year, the Company may carry forward to the immediately succeeding Fiscal Year one hundred percent (100%) of the unutilized portion (but in no event more than $3,500,000). All Consolidated Capital Expenditures shall first be applied to reduce the applicable Consolidated Capital Expenditure Limitation and then to reduce the carry-forward from the previous Fiscal Year, if any.

(d) Minimum Consolidated Adjusted EBITDA. Company shall not permit Consolidated Adjusted EBITDA as of the last day of any Fiscal Quarter ending closest to the dates set forth below, beginning with the Fiscal Quarter ending closest to March 31, 2008, to be less than the correlative amount indicated in the following table:

Fiscal Quarter Ended	Amount
March 31, 2008	$	60,000,000
June 30, 2008	$	65,000,000
September 30, 2008	$	67,500,000
December 31, 2008	$	72,500,000
March 31, 2009	$	75,000,000
June 30, 2009	$	77,500,000
September 30, 2009	$	80,000,000
December 31, 2009	$	82,500,000
March 31, 2010	$	85,000,000
June 30, 2010	$	87,500,000
September 30, 2010	$	90,000,000

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Fiscal Quarter Ended	Amount
December 31, 2010	$	92,500,000
March 31, 2011	$	95,000,000
June 30, 2011	$	97,500,000
September 30, 2011 and the last day of each calendar quarter ending thereafter	$	100,000,000

(e) Certain Calculations. With respect to any period during which a Permitted Acquisition or an Asset Sale has occurred (each, a “Subject Transaction”), for purposes of determining compliance with the financial covenants set forth in this Section 6.8, Consolidated Adjusted EBITDA shall be calculated with respect to such period on a pro forma basis (including pro forma adjustments arising out of events which are directly attributable to a specific transaction, are factually supportable and are expected to have a continuing impact, in each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which would include cost savings resulting from head count reduction, closure of facilities and similar restructuring charges, which pro forma adjustments shall be certified by the chief financial officer of Company) using the historical audited financial statements of any business so acquired or to be acquired or sold or to be sold and the consolidated financial statements of Company and its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated or incurred or repaid at the beginning of such period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the weighted average of the interest rates applicable to outstanding Loans incurred during such period).

6.9. Fundamental Changes; Disposition of Assets; Acquisitions. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or leased, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and expenditures constituting Consolidated Capital Expenditures in the ordinary course of business) the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except:

(a) any Subsidiary of Company may be merged with or into any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any Guarantor Subsidiary; provided, in the case of such a merger, such Guarantor Subsidiary shall be the continuing or surviving Person;

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(b) sales or other dispositions of assets that do not constitute Asset Sales;

(c) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, are less than $5,000,000; provided (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Company (or similar governing body)), (2) no less than 85% thereof shall be paid in Cash, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a);

(d) Asset Sales set forth on Schedule 6.9;

(e) disposals of obsolete, worn out or surplus equipment;

(f) Permitted Acquisitions, provided, the total consideration paid or payable (including without limitation, any deferred payment) for all such Permitted Acquisitions consummated during (i) any Fiscal Year shall not exceed $10,000,000 in the aggregate and (ii) the term of this Agreement shall not exceed $40,000,000 in the aggregate;

(g) Investments made in accordance with Section 6.7;

(h) Intentionally Omitted;

(i) for the avoidance of doubt, Capital Expenditures constituting the acquisition of Intellectual Property through the purchase, in one transaction or a series of transactions, of the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person in an aggregate amount not to exceed $500,000 in any Fiscal Year;

(j) the Existing Headquarters Asset Sale made in accordance with Section 5.23; and

(k) on the Closing Date, the Pantone Mergers in accordance with the terms set forth in the Pantone Merger Documents.

6.10. Disposal of Subsidiary Interests. Except for any sale of all of its interests in the Capital Stock of any of its Subsidiaries in compliance with the provisions of Section 6.9, no Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to another Credit Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law.

6.11. Sales and Lease-Backs. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now

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owned or hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Company or any of its Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Credit Party to any Person (other than Company or any of its Subsidiaries) in connection with such lease.

6.12. Transactions with Shareholders and Affiliates. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of Company on terms that are less favorable to Company or that Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not such a holder or Affiliate; provided, the foregoing restriction shall not apply to (a) any transaction between Company and any Guarantor Subsidiary; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Company and its Subsidiaries; (c) compensation arrangements for officers and other employees of Company and its Subsidiaries entered into in the ordinary course of business; and (d) transactions described in Schedule 6.12.

6.13. Conduct of Business. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by such Credit Party on the Closing Date and similar or related businesses and (ii) such other lines of business as may be consented to by Requisite Lenders.

6.14. Intentionally Omitted.

6.15. Amendments or Waivers of Certain Related Agreements. No Credit Party shall nor shall it permit any of its Subsidiaries to, agree to any material amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under any Related Agreement (other than the Second Lien Indebtedness Documents) after the date hereof without in each case obtaining the prior written consent of Requisite Lenders to such amendment, restatement, supplement or other modification or waiver. No Credit Party shall agree to any material amendment to any Second Lien Indebtedness Document in contravention of the Intercreditor Agreement.

6.16. Amendments or Waivers with respect to Certain Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of the Existing Headquarters Loan or the Existing Headquarters Guaranty, or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate on the Existing Headquarters Loan, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of the Existing Headquarters Loan (or of any guaranty thereof), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of the Existing Headquarters Loan (or a trustee or other representative on their behalf) which would be adverse to any Credit Party or Lenders.

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6.17. Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to change its Fiscal Year-end from the Saturday closest to December 31 of each calendar year.

SECTION 7. GUARANTY

7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided, solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.

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7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Company’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Company and any Beneficiary with respect to the existence of such Event of Default;

(c) the obligations of each Guarantor hereunder are independent of the obligations of Company and the obligations of any other guarantor (including any other Guarantor) of the obligations of Company, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Company or any of such other guarantors and whether or not Company is joined in any such action or actions;

(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

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(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Hedge Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Company or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents or any Hedge Agreements; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents or any Hedge Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents or any of the Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary

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might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Company or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Company, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedge Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may

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hereafter have against Company or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Company with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Company, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Company or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Company, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. Notwithstanding anything to the contrary contained herein, effective upon any sale, registration, assignment or transfer of or foreclosure on, or any other disposition or remedial action in respect of, any Capital Stock of the Company or any Subsidiary of any Guarantor or the Company by any Agent or any Lender pursuant to the Credit Documents and/or applicable law, all such rights and claims of subrogation, contribution, indemnification, exoneration, reimbursement and enforcement against the Company, any Subsidiary of any Guarantor or any Subsidiary of the Company shall be, and hereby are, forever extinguished and indefeasibly waived and released by each Guarantor.

7.7. Subordination of Other Obligations. Any Indebtedness of Company or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.

7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving

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Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

7.9. Authority of Guarantors or Company. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them.

7.10. Financial Condition of Company. Any Credit Extension may be made to Company or continued from time to time, and any Hedge Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Company at the time of any such grant or continuation or at the time such Hedge Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Company. Each Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Credit Documents and the Hedge Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Beneficiary.

7.11. Bankruptcy, etc. (a)So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against Company or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company or any other Guarantor or by any defense which Company or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

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(c) In the event that all or any portion of the Guaranteed Obligations are paid by Company, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale.

SECTION 8. EVENTS OF DEFAULT

8.1. Events of Default. If any one or more of the following conditions or events shall occur:

(a) Failure to Make Payments When Due. Failure by Company to pay (i) when due any amount of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee, expense reimbursement or any other amount due hereunder within five days after the date due; or

(b) Default in Other Agreements. (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in an individual principal amount of $5,000,000 or more or with an aggregate principal amount of $10,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Credit Party with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or

(c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.6, Section 5.1(b), Section 5.1(c), Section 5.1(d), Section 5.1(f), Section 5.1(i), Section 5.2, Section 5.5, Section 5.12, Section 5.16, Section 5.17, Section 5.18, Section 5.19, Section 5.21 or Section 6; or

(d) Breach of Representations, etc. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any

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statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; or

(e) Other Defaults Under Credit Documents. Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not have been remedied or waived within thirty days after the earlier of (i) an officer of such Credit Party becoming aware of such default or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or

(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Company or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Company or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Company or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Company or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Company or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty days without having been dismissed, bonded or discharged; or

(g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Company or any of its Subsidiaries shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Company or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Company or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of Company or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or

(h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $5,000,000 or (ii) in the aggregate at any time an amount in excess of $10,000,000 (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Company or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty days (or in any event later than five days prior to the date of any proposed sale thereunder); or

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(i) Dissolution. Any order, judgment or decree shall be entered against any Credit Party decreeing the dissolution or split up of such Credit Party and such order shall remain undischarged or unstayed for a period in excess of thirty days; or

(j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of Company, any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $2,000,000 during the term hereof; or (ii) there exists any fact or circumstance that reasonably could be expected to result in the imposition of a Lien or security interest under Section 412(n) of the Internal Revenue Code or under ERISA; or

(k) Change of Control. A Change of Control shall occur;

(l) Guaranties, Collateral Documents and other Credit Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement, the Intercreditor Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party, or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by the Collateral Documents; or

(m) Material Litigation. Any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental agency shall exist that at any time could reasonably be expected to have a Material Adverse Effect.

THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g), automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or with the consent of) Requisite Lenders, upon notice to Company by Administrative Agent, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall

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have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; provided, the foregoing shall not affect in any way the obligations of Lenders holding Revolving Commitments under Section 2.3(b)(iv) or Section 2.4(e); (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents; (D) Administrative Agent shall direct Company to pay (and Company hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Sections 8.1(f) and (g) to pay) to Administrative Agent such additional amounts of cash as reasonable requested by Issuing Bank, to be held as security for Company’s reimbursement Obligations in respect of Letters of Credit then outstanding; and (E) Administrative Agent may exercise all rights and remedies available at law or in equity.

SECTION 9. AGENTS

9.1. Appointment of Agents. Merrill Lynch, is hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes Merrill Lynch to act as Syndication Agent in accordance with the terms hereof and the other Credit Documents. LaSalle Bank Midwest, N.A. and National City are each hereby appointed as Co-Documentation Agent hereunder, and each Lender hereby authorizes LaSalle Bank Midwest, N.A. and National City to act as Co-Documentation Agent in accordance with the terms hereof and the other Credit Documents. Fifth Third is hereby appointed Administrative Agent and Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Fifth Third to act as Administrative Agent and Collateral Agent in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Company or any of its Subsidiaries. Each of Syndication Agent and each Co-Documentation Agent, if any, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates. Merrill Lynch, in its capacity as Syndication Agent, and LaSalle Bank Midwest, N.A. and National City in their respective capacities as Co-Documentation Agent, shall be entitled to all benefits of this Section 9. Neither the Syndication Agent nor the Co-Documentation Agents shall have any duties or responsibilities, nor shall the Co-Documentation Agent or the Syndication Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Co-Documentation Agents or the Syndication Agent.

9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights

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and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein.

9.3. General Immunity.

(a) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by any Agent on behalf of any Credit Party to any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof.

(b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Company and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5).

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(c) Delegation of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.3 and of Section 9.6 shall apply to any of the Affiliates of any Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agents. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of the Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.

9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Company or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company for services in connection herewith and otherwise without having to account for the same to Lenders. Each Lender hereto acknowledges that Fifth Third is, as of the date hereof, the lender and agent in respect of the Existing Headquarters Loan and the Existing Headquarters Mortgage. (Each Lender agrees that Fifth Third in its capacity as Lender or Agent hereunder, shall be under no obligation to release any Liens in respect of the Existing Headquarters Loan and the Existing Headquarters Mortgage so long as any Indebtedness, obligations and liabilities secured thereby remain unpaid.

9.5. Lenders’ Representations, Warranties and Acknowledgment.

(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Company and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own

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appraisal of the creditworthiness of Company and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.

(b) Each Lender, by delivering its signature page to this Agreement or an Assignment Agreement and funding its Loan on any Credit Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable, on such Credit Date.

(c) Notwithstanding anything herein to the contrary, each Lender acknowledges that the lien and security interest granted to the Collateral Agent pursuant to the Pledge and Security Agreement and the exercise of any right or remedy by the Collateral Agent thereunder are subject to the provisions of the Intercreditor Agreement and that in the event of any conflict between the terms of the Intercreditor Agreement and the Pledge and Security Agreement, the terms of the Intercreditor Agreement shall govern and control.

9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Credit Documents; provided, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender. Administrative Agent may resign at any time by giving thirty days’ prior written notice thereof to Lenders and Company, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Company and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days’ notice to Company, to appoint a successor Administrative Agent. Upon the acceptance of any

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appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any resignation or removal of Fifth Third as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of Fifth Third or its successor as Collateral Agent, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder. Any resignation or removal of Fifth Third or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of Fifth Third or its successor as Swing Line Lender, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (a) Company shall prepay any outstanding Swing Line Loans made by the retiring or removed Administrative Agent in its capacity as Swing Line Lender, (b) upon such prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to Company for cancellation, and (c) Company shall issue, if so requested by successor Administrative Agent and Swing Line Loan Lender, a new Swing Line Note to the successor Administrative Agent and Swing Line Lender, in the principal amount of the Swing Line Loan Sublimit then in effect and with other appropriate insertions.

9.8. Collateral Documents and Guaranty.

(a) Agents under Collateral Documents and Guaranty. Each Lender hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, (i) to be the agent for and representative of the Secured Parties with respect to the Guaranty, the Collateral and the Collateral Documents and (ii) to enter into the Intercreditor Agreement, and each Lender acknowledges that it has received a copy of the Intercreditor Agreement and agrees to be bound by the terms of the Intercreditor Agreement. Subject to Section 10.5, without further written consent or authorization from any Secured Party, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted pursuant to this Agreement or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented.

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(b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Credit Documents to the contrary notwithstanding, Company, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, acting at the direction (or with the consent) of, and on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale.

9.9. Withholding Tax. To the extent required by any applicable law, Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective, such Lender shall indemnify Administrative Agent fully for all amounts paid, directly or indirectly, by Administrative Agent as tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

SECTION 10. MISCELLANEOUS

10.1. Notices.

(a) Notices Generally. Any notice or other communication herein required or permitted to be given to a Credit Party, Syndication Agent, Collateral Agent, Administrative Agent, Swing Line Lender, Issuing Bank or any Co-Documentation Agent, if any, shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided, no notice to any Agent shall be effective until received by such Agent; provided further, any such notice or other communication shall at the request of the Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto as designated by the Administrative Agent from time to time.

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(b) Electronic Communications. Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Section 2 if such Lender or the Issuing Bank, as applicable, has notified Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. Administrative Agent or Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

Each of the Credit Parties understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of Administrative Agent.

The Platform and any Approved Electronic Communications are provided “as is” and “as available”. None of the Agents or any of their respective officers, directors, employees, agents, advisors or representatives (the “Agent Affiliates”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.

Each of the Credit Parties, the Lenders and the Agents agree that Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with Administrative Agent’s customary document retention procedures and policies.

10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, Company agrees to pay promptly (a) all the actual and reasonable costs and expenses of preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) all the costs of furnishing all opinions by counsel for Company and the

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other Credit Parties; (c) the reasonable fees, expenses and disbursements of counsel to Agents in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Company; (d) all the actual costs and reasonable expenses of creating and perfecting and recording Liens in favor of Collateral Agent, for the benefit of the Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Requisite Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (e) all the actual costs and reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers; (f) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (g) all other actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (h) after the occurrence of a Default or an Event of Default, all costs and expenses, including reasonable attorneys’ fees and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of Default (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.

10.3. Indemnity.

(a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and the officers, partners, members, directors, trustees, employees, agents, sub-agents and Affiliates of each Agent and each Lender (each, an “Indemnitee”), from and against any and all Indemnified Liabilities; provided, no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against Lenders, Agents and their respective Affiliates, directors, employees, attorneys, agents or sub-agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable

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legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and Company hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Credit Party against and on account of the obligations and liabilities of any Credit Party to such Lender hereunder, the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Credit Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured.

10.5. Amendments and Waivers.

(a) Requisite Lenders’ Consent. Subject to Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders.

(b) Affected Lenders’ Consent. Without the written consent of the Requisite Lenders and each Lender (other than a Defaulting Lender) that would be affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i) extend the scheduled final maturity of any Loan or Note;

(ii) waive, reduce or postpone any scheduled repayment (but not prepayment);

(iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Commitment Termination Date;

(iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium payable hereunder;

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(v) extend the time for payment of any such interest or fees;

(vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit;

(vii) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c);

(viii) amend the definition of “Requisite Lenders” or “Pro Rata Share”; provided, with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata Share” on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date;

(ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Credit Documents;

(x) permit an Interest Period on any Class of Loan held by such Lender with a duration in excess of six months; or

(xi) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document.

(c) Other Consents. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall:

(i) increase any Revolving Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided, no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Commitment of any Lender;

(ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender;

(iii) amend the definition of “Requisite Class Lenders” without the consent of Requisite Class Lenders of each Class; provided, with the consent of the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of such “Requisite Class Lenders” on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date;

(iv) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of Requisite Class Lenders

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of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided, Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered;

(v) amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.4(e) without the written consent of Administrative Agent and of Issuing Bank; or

(vi) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent.

(d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.

10.6. Successors and Assigns; Participations.

(a) Generally. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Register. Company, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of an Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.6(d). Each assignment shall be recorded in the Register on the Business Day the Assignment Agreement is received by the Administrative Agent, if received by 12:00 noon New York City time, and on the following Business Day if received after such time, prompt notice thereof shall be provided to Company and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any Person who, at the time of making such request

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or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.

(c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Loans owing to it or other Obligations (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments):

(i) to any Person meeting the criteria of clause (i) of the definition of the term of “Eligible Assignee” upon the giving of notice to Company and Administrative Agent;

(ii) to any Person meeting the criteria of clause (ii) of the definition of the term of “Eligible Assignee” upon giving of notice to Company and Administrative Agent and, in the case of assignments of Revolving Loans or Revolving Commitments to any such Person (except in the case of assignments made, on or prior to the Closing Date, by or to Fifth Third or, after the Closing Date, by the Administrative Agent), consented to by each of Company and Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or, (y) in the case of Company, required at any time an Event of Default shall have occurred and then be continuing); provided, further each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than (A) $2,500,000 (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Revolving Loans and (B) $1,000,000 (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Term Loans of the assigning Lender) with respect to the assignment of Term Loans; and

(iii) to any Person meeting the criteria of clause (ii) of the definition of the term of “Eligible Assignee” in connection with the assignments of the Term Loans, the Revolving Loans and the Revolving Commitments in connection with the initial syndication by the Lenders of the Term Loans, the Revolving Loans and the Revolving Commitments.

(d) Mechanics. Subject to the other requirements of this Section 10.6, assignments and assumptions of Term Loans shall only be effected by manual execution and delivery to the Administrative Agent of an Assignment Agreement with the prior written consent of each of Company and Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or (y) in the case of Company, required at any time an Event of Default shall have occurred and then be continuing). Assignments and assumptions of Revolving Loans and Revolving Commitments shall only be effected by manual execution and delivery to the Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to Administrative Agent such forms, certificates or other

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evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c).

(e) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).

(f) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date); provided, anything contained in any of the Credit Documents to the contrary notwithstanding, (y) Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Company shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the outstanding Loans of the assignee and/or the assigning Lender.

(g) Participations. Each Lender shall have the right at any time to sell one or more participations to any Person (other than Company, any of its Subsidiaries or any of its Affiliates) in all or any part of its Commitments, Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended

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beyond the Revolving Commitment Termination Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under the Collateral Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. Company agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, (i) a participant shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with Company’s prior written consent and (ii) a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless Company is notified of the participation sold to such participant and such participant agrees, for the benefit of Company, to comply with Section 2.20 as though it were a Lender. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were a Lender.

(h) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including, without limitation, any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided, that no Lender, as between Company and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided further, that in no event shall the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.

10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b) and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.

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10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents or any of the Hedge Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

10.11. Severability. In case any provision in or obligation hereunder or under any other Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

116

10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS

117

WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.17. Confidentiality. Each Agent and each Lender shall hold all non-public information regarding Company and its Subsidiaries and their businesses identified as such by Company and obtained by such Agent or Lender pursuant to the requirements hereof in accordance with such Agent’s or Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by Company that, in any event, each Agent and each Lender may make (i) disclosures of such information to Affiliates of such Agent or Lender and to their respective agents and advisors (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any pledge referred to in Section 10.6(i) or any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Hedge Agreements (provided, such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from any of the Agents or any Lender, (iv) disclosures in connection with the exercise of any remedies hereunder or under any other Credit Document and (v) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Agent and each Lender shall make reasonable efforts to notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Credit Documents.

10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate

118

until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Company shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Company to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to Company.

10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

10.20. Effectiveness. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof.

10.21. Patriot Act. Each Lender and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies Company, which information includes the name and address of Company and other information that will allow such Lender or Administrative Agent, as applicable, to identify Company in accordance with the Patriot Act.

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

10.23. No Fiduciary Duty. Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of Company. Company agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lenders and Company or its affiliates. You acknowledge and agree that (i) the transactions contemplated by the Credit Documents are arm’s-length commercial transactions between the Lenders, on the one hand, and Company, on the other, (ii) in connection therewith

119

and with the process leading to such transaction each of the Lenders is acting solely as a principal and not the agent or fiduciary of Company, its management, creditors or any other Person, (iii) no Lender has assumed an advisory or fiduciary responsibility in favor of Company with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether any Lender or any of its affiliates has advised or is currently advising Company on other matters) or any other obligation to Company except the obligations expressly set forth in the Credit Documents and (iv) Company has consulted its own legal and financial advisors to the extent it deemed appropriate. Company further acknowledges and agrees that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Company agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to Company, in connection with such transaction or the process leading thereto.

[Remainder of page intentionally left blank]

120

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

COMPANY:
X-RITE , INCORPORATED, a Michigan corporation
By:
Name:	Mary E. Chowning
Title:	Vice President and Chief Financial Officer

First Lien Credit and Guaranty Agreement

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

GUARANTORS:
OTP, INCORPORATED, a Michigan corporation
MONACO ACQUISITION COMPANY, a Michigan corporation
X-RITE GLOBAL, INCORPORATED, a Michigan corporation
X-RITE HOLDINGS, INC., a Michigan corporation
X-RITE MA, INCORPORATED, a Michigan corporation
HOLOVISION ACQUISITION COMPANY, a Michigan corporation
XR VENTURES, LLC, a Michigan limited liability company
GRETAGMACBETH LLC, a Delaware limited liability company
PANTONE, INC., a Delaware corporation, and successor by merger to Pantone Merger Sub, Inc., a Delaware corporation
PANTONE ASIA, INC., a Delaware corporation, formerly known as Pantone Asia Merger Sub, Inc., and successor by merger to Pantone Asia, Inc., a New Jersey corporation
PANTONE GERMANY, INC., a Delaware corporation, and successor by merger to Pantone Germany Merger Sub, Inc., a Delaware corporation
PANTONE INDIA, INC., a Delaware corporation, and successor by merger to Pantone India Merger Sub, Inc., a Delaware corporation
PANTONE JAPAN, INC., a Delaware corporation, formerly known as Pantone Japan Merger Sub, Inc., and successor by merger to Pantone Japan, Inc., a New Jersey corporation
PANTONE U.K., INC., a Delaware corporation, formerly known as Pantone UK Merger Sub, Inc., and successor by merger to Pantone U.K., Inc., a New Jersey corporation
By:
Name:	Mary E. Chowning
Title:	Vice President

First Lien Credit and Guaranty Agreement

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

FIFTH THIRD BANK, a Michigan banking corporation, as Co-Lead Arranger, Co-Book Runner, Administrative Agent, Collateral Agent and a Lender
By:
Name:	Scott R. DeMeester
Title:	Vice President

First Lien Credit and Guaranty Agreement

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

MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., as Co-Lead Arranger, Co-Book Runner, Syndication Agent and as a Lender
By:
Name:	Joseph Lazewski
Title:	Vice President

First Lien Credit and Guaranty Agreement

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

NATIONAL CITY BANK, as Co-Documentation Agent, Co-Lead Arranger and as a Lender
By:
Name:
Title:	Senior Vice President

First Lien Credit and Guaranty Agreement

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

LASALLE BANK MIDWEST N.A., as Co-Documentation Agent and as a Lender
By:
Name:	Joel Brandt
Title:	First Vice President

First Lien Credit and Guaranty Agreement

APPENDIX A 1

TO FIRST LIEN CREDIT AND GUARANTY AGREEMENT

Term Loan Commitments

Lender	Term Loan Commitment		Pro Rata Share
Fifth Third Bank	$	86,896,551.72	32.2	%
Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc.	$	85,517,241.38	31.7	%
National City Bank	$	64,827,586.21	24.0	%
LaSalle Bank Midwest N.A.	$	32,758,620.69	12.1	%
Total	$	270,000,000.00	100	%

APPENDIX A-1-1

APPENDIX A 2

TO FIRST LIEN CREDIT AND GUARANTY AGREEMENT

Revolving Commitments

Lender	Revolving Commitment		Pro Rata Share
Fifth Third Bank	$	20,000,000	50	%
National City Bank	$	10,000,000	25	%
LaSalle Bank Midwest N.A.	$	10,000,000	25	%
Total	$	40,000,000	100	%

APPENDIX A-2-1

APPENDIX B

TO FIRST LIEN CREDIT AND GUARANTY AGREEMENT

Notice Addresses

COMPANY AND GUARANTORS:

X-Rite, Incorporated

3100 44^th Street SW

Grandville, MI 49418

Attention: Mary Chowning

Telecopier: (616) 257-3710

in each case, with a copy to:

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, Illinois 60606

Attention: Michael L. Boykins

Telecopier: (312) 984-7700

FIFTH THIRD BANK, as Co-Lead Arranger, Co-Book Runner, Administrative Agent, Collateral Agent and as a Lender:

Fifth Third Bank

Fifth Third Center

38 Fountain Square Plaza

MD 109047

Cincinnati, Ohio 45263

Attention: Loan Syndications/Judy Huls

Telecopier: (513) 579-4224

in each case, with a copy to:

Chapman and Cutler LLP

111 West Monroe Street

Chicago, IL 60603-4080

Attn: David Schrodt, Esq.

Telecopier: (312) 516-1902

MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., as Co-Lead Arranger, Co-Bookrunner, Syndication Agent and a Lender:

Merrill Lynch Capital

222 N LaSalle Street, 16th Floor

Chicago, IL 60601

Attention: Michael Griffin, Assistant Vice President

Telecopier: (312) 499-3125

APPENDIX A-2-1

NATIONAL CITY BANK, as Co-Documentation Agent, Co-Lead Arranger and a Lender:

National City Bank

6750 Miller Road, Brecksville Ohio 44141

Attention: Carolyn Evans

Title: Participation/Syndication Servicing

Telecopier: (440) 546-7349

LASALLE BANK MIDWEST N.A., as Co-Documentation Agent and a Lender:

LaSalle Bank Midwet N.A.

LaSalle Bank—Commercial Banking

40 Pearl Street NW

Grand Rapids, MI 49501

Attention: Joel Brandt, First Vice President

Facsimile: (616) 451-7909

APPENDIX A-2-2

EX-10.34

Exhibit 10.34

EXECUTION VERSION

SECOND LIEN CREDIT AND GUARANTY AGREEMENT

dated as of October 24, 2007

among

X-RITE, INCORPORATED,

as Borrower,

CERTAIN SUBSIDIARIES OF X-RITE, INCORPORATED,

as Guarantors,

VARIOUS LENDERS,

GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING,

as Lead Arranger,

and

THE BANK OF NEW YORK,

as Administrative Agent and Collateral Agent

$105,000,000 Senior Secured Second Priority Credit Facility

TABLE OF CONTENTS

	Page
SECTION 1. DEFINITIONS AND INTERPRETATION	2
1.1. Definitions	2
1.2. Accounting Terms	28
1.3. Interpretation, etc.	28
SECTION 2. LOANS	28
2.1. Loans	28
2.2. [Reserved]	29
2.3. [Reserved]	29
2.4. [Reserved]	29
2.5. Pro Rata Shares; Availability of Funds	29
2.6. Use of Proceeds.	30
2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.	30
2.8. Interest on Loans	30
2.9. Conversion/Continuation	32
2.10. Default Interest	32
2.11. Fees	33
2.12. Payment at Maturity	33
2.13. Voluntary Prepayments; Call Protection	33
2.14. Mandatory Prepayments/Commitment Reductions	34
2.15. Application of Prepayments	35
2.16. General Provisions Regarding Payments	36
2.17. Ratable Sharing	37
2.18. Making or Maintaining Eurodollar Rate Loans	38
2.19. Increased Costs; Capital Adequacy	39
2.20. Taxes; Withholding, etc.	41
2.21. Obligation to Mitigate	43
2.22. [Reserved]	43
2.23. Removal or Replacement of a Lender	44
SECTION 3. CONDITIONS PRECEDENT	45
3.1. Closing Date	45
3.2. Notices	49
SECTION 4. REPRESENTATIONS AND WARRANTIES	49
4.1. Organization; Requisite Power and Authority; Qualification.	49
4.2. Capital Stock and Ownership	49
4.3. Due Authorization	50
4.4. No Conflict	50
4.5. Governmental Consents	50
4.6. Binding Obligation	50
4.7. Historical Financial Statements	50
4.8. Projections	51
4.9. No Material Adverse Change	51

ii

4.10. [Reserved]	51
4.11. Adverse Proceedings, Etc.	51
4.12. Payment of Taxes.	51
4.13. Properties	51
4.14. Environmental Matters	52
4.15. No Defaults	53
4.16. Material Contracts	53
4.17. Governmental Regulation	53
4.18. Margin Stock	53
4.19. Employee Matters	53
4.20. Employee Benefit Plans	53
4.21. Certain Fees	54
4.22. Solvency	54
4.23. Compliance with Statutes, Etc.	54
4.24. Disclosure	54
4.25. USA PATRIOT Act	55
4.26. Insignificant Domestic Subsidiaries	55
SECTION 5. AFFIRMATIVE COVENANTS	55
5.1. Financial Statements and Other Reports	55
5.2. Existence	59
5.3. Payment of Taxes and Claims	59
5.4. Maintenance of Properties	60
5.5. Insurance	60
5.6. Books and Records; Inspections	60
5.7. Lenders Meetings	60
5.8. Compliance with Laws	60
5.9. Environmental	61
5.10. Subsidiaries	62
5.11. Additional Material Real Estate Assets	63
5.12. Interest Rate Protection	64
5.13. Further Assurances	64
5.14. Miscellaneous Business Covenants	65
5.15. Transaction Costs	65
5.16. Life Insurance Policies	66
5.17. Existing Headquarters Asset Sale	66
SECTION 6. NEGATIVE COVENANTS	66
6.1. Indebtedness	66
6.2. Liens	68
6.3. Equitable Lien	70
6.4. No Further Negative Pledges	70
6.5. Restricted Junior Payments	70
6.6. Restrictions on Subsidiary Distributions	71
6.7. Investments	71
6.8. Financial Covenants	72
6.9. Fundamental Changes; Disposition of Assets; Acquisitions	74

iii

6.10. Disposal of Subsidiary Interests	76
6.11. Sales and Lease-Backs	76
6.12. Transactions with Shareholders and Affiliates.	76
6.13. Conduct of Business	76
6.14. Amendments or Waivers of Related Agreements	76
6.15. Amendments or Waivers with respect to Certain Indebtedness	76
6.16. Fiscal Year	77
SECTION 7. GUARANTY	77
7.1. Guaranty of the Obligations	77
7.2. Contribution by Guarantors	77
7.3. Payment by Guarantors	78
7.4. Liability of Guarantors Absolute	78
7.5. Waivers by Guarantors	80
7.6. Guarantors’ Rights of Subrogation, Contribution, etc.	81
7.7. Subordination of Other Obligations	81
7.8. Continuing Guaranty	82
7.9. Authority of Guarantors or Borrower	82
7.10. Financial Condition of Borrower	82
7.11. Bankruptcy, etc.	82
7.12. Discharge of Guaranty Upon Sale of Guarantor	83
SECTION 8. EVENTS OF DEFAULT	83
8.1. Events of Default	83
SECTION 9. AGENTS	86
9.1. Appointment of Agents.	86
9.2. Powers and Duties	86
9.3. General Immunity	86
9.4. Agents Entitled to Act as Lender	88
9.5. Lenders’ Representations, Warranties and Acknowledgment	88
9.6. Right to Indemnity	89
9.7. Successor Administrative Agent and Collateral Agent	89
9.8. Collateral Documents and Guaranty	90
9.9. Withholding Tax	90
SECTION 10. MISCELLANEOUS	91
10.1. Notices	91
10.2. Expenses	92
10.3. Indemnity	93
10.4. Set-Off	93
10.5. Amendments and Waivers	94
10.6. Successors and Assigns; Participations	95
10.7. Independence of Covenants	98
10.8. Survival of Representations, Warranties and Agreements	98
10.9. No Waiver; Remedies Cumulative	99
10.10. Marshalling; Payments Set Aside	99

iv

10.11. Severability	99
10.12. Obligations Several; Independent Nature of Lenders’ Rights	99
10.13. Headings	99
10.14. APPLICABLE LAW	100
10.15. CONSENT TO JURISDICTION	100
10.16. WAIVER OF JURY TRIAL	100
10.17. Confidentiality	101
10.18. Usury Savings Clause	101
10.19. Counterparts	102
10.20. Effectiveness	102
10.21. USA PATRIOT Act	102
10.22. Electronic Execution of Assignments	102
10.23. No Fiduciary Duty	102

APPENDICES:	A	Commitments
	B	Notice Addresses
	C	Closing Documents
SCHEDULES:	1.1(a)	Existing Interest Rate Agreements
	1.1(b)	Key Person Life Insurance Policies
	3.1(l)	Closing Date Mortgaged Properties
	4.1	Jurisdictions of Organization and Qualification
	4.2	Capital Stock and Ownership
	4.5	Governmental Consents
	4.13	Real Estate Assets
	4.16	Material Contracts
	4.21	Certain Fees
	4.26	Insignificant Domestic Subsidiaries
	5.13(c)	Collateral Matters
	5.14	Existing Pantone Accounts
	6.1	Certain Indebtedness
	6.2	Certain Liens
	6.6	Certain Restrictions on Subsidiary Distributions
	6.7	Certain Investments
	6.9	Certain Asset Sales
	6.12	Certain Affiliate Transactions
EXHIBITS:	A-1	Funding Notice
	A-2	Conversion/Continuation Notice
	B	Note
	C	Compliance Certificate
	D-1	Opinion of McDermott, Will & Emery LLP
	D-2	Opinion of Dickinson Wright PLLC
	E	Assignment Agreement
	F	Certificate Re Non-Bank Status

v

G	Counterpart Agreement
H	Pledge and Security Agreement
I	Collateral Assignment
J	Mortgage
K	Landlord Waiver and Consent Agreement
L	Intercreditor Agreement

vi

SECOND LIEN CREDIT AND GUARANTY AGREEMENT

This SECOND LIEN CREDIT AND GUARANTY AGREEMENT, dated as of October 24, 2007, is entered into by and among X-RITE, INCORPORATED, a Michigan corporation (“Borrower”), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party hereto from time to time, GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING (“GoldenTree”), as sole lead arranger and sole bookrunner (in such capacities, “Lead Arranger”), and THE BANK OF NEW YORK (“BNY”), as Administrative Agent (in such capacity, together with its permitted successors in such capacity, “Administrative Agent”) and as Collateral Agent (in such capacity, together with its permitted successors in such capacity, “Collateral Agent”).

RECITALS:

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, Borrower and the Pantone Targets are parties to that certain Agreement and Plan of Merger, dated as of August 23, 2007 (the “Pantone Merger Agreement”), by and among Borrower, the Pantone Targets, each stockholder party thereto and Lawrence Herbert, as the stockholder representative, pursuant to which Borrower intends to acquire (the “Acquisition”) all of the issued and outstanding stock of the Pantone Targets and which Acquisition will be consummated through the Pantone Mergers;

WHEREAS, immediately after giving effect to the Acquisition, each Pantone Target will be a direct wholly owned Subsidiary of Borrower;

WHEREAS, Lenders have agreed to extend certain Loans to Borrower in an aggregate principal amount not to exceed $105,000,000, the proceeds of which, together with the proceeds of the First Lien Term Loans, will be used on the Closing Date in accordance with the provisions of this Agreement to (a) finance, in part, the Acquisition, (b) to consummate the Refinancing and (c) to pay related Transaction Costs in connection with the foregoing.

WHEREAS, Borrower has agreed to secure all of its Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a Second Priority Lien on substantially all of its assets, including a pledge of all of the Capital Stock of each of its Domestic Subsidiaries and 65% of all the Capital Stock of each of its first-tier Foreign Subsidiaries; and

WHEREAS, Guarantors have agreed to guarantee the obligations of Borrower hereunder and to secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a Second Priority Lien on substantially all of their respective assets.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

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SECTION 1. DEFINITIONS AND INTERPRETATION

1.1. Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“Acquisition” as defined in the Recitals hereto.

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 Page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by BNY for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of Lead Arranger, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement. The Adjusted Eurodollar Rate shall be subject to a floor of 3.00%.

“Administrative Agent” as defined in the preamble hereto.

“Adverse Proceeding” means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Borrower or any of its Subsidiaries, threatened against or affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries.

“Affected Lender” as defined in Section 2.18(b).

“Affected Loans” as defined in Section 2.18(b).

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the

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purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 5% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

“Agent” means each of Administrative Agent and Collateral Agent. “Agent Affiliates” as defined in Section 10.1(b).

“Aggregate Amounts Due” as defined in Section 2.17. “Aggregate Payments” as defined in Section 7.2.

“Agreement” means this Second Lien Credit and Guaranty Agreement, dated as of October 24, 2007, as it may be amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced from time to time.

“Amazys” means Amazys Holding AG, a Swiss company, together with its Subsidiaries.

“Applicable Margin” means with respect to any Loans (i) that are Eurodollar Loans, 7.50% per annum and (ii) that are Base Rate Loans, 6.50% per annum.

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“Approved Electronic Communications” means any notice, demand, communication, information, document or other material that any Credit Party provides to Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Agents or to the lenders by means of electronic communications pursuant to Section 10.1(b).

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“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Borrower or any Guarantor), in one transaction or a series of transactions, of all or any part of Borrower’s or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired or leased, including, without limitation, the Capital Stock of any of Borrower’s Subsidiaries, other than (i) inventory (or other assets) sold or leased in the ordinary course of business (excluding any such sales or leases by operations or divisions discontinued or to be discontinued), and (ii) sales of other assets for aggregate consideration of less than $1,000,000 in the aggregate during any Fiscal Year.

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by Requisite Lenders.

“Assignment Effective Date” as defined in Section 10.6(b).

“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus  ¹/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. The Base Rate shall be subject to a floor of 2.00%.

“Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.

“Beneficiary” means each Agent and Lender.

“BNY” as defined in the preamble hereto.

“Board of Governors” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.

“Borrower” as defined in the preamble hereto.

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or Michigan or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) with respect to all notices, determinations, fundings and

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payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

“Cash Equivalents” means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s.

“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.

“Change of Control” means, at any time, (i) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) (a) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Borrower or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Borrower; (ii) the majority of the seats (other than vacant seats) on the board of directors (or

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similar governing body) of Borrower cease to be occupied by Persons who were nominated for election by the board of directors of Borrower, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors; or (iv) any “change of control” or similar event under the First Lien Credit Agreement shall occur.

“Change in Law” means any change in law, treaty, regulation or similar rule or in the interpretation, administration or application thereof.

“CLO” means any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender.

“Closing Date” means the date on which the conditions precedent set forth in Section 3.1 shall have been satisfied or waived, which date is October 24, 2007.

“Closing Date Mortgaged Property” as defined in Section 3.1(l)(i).

“Collateral” means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

“Collateral Agent” as defined in the preamble hereto.

“Collateral Assignment Agreement” means the Collateral Assignment of Merger Documents, dated as of October 24, 2007, by and among Borrower and Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit I, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

“Collateral Documents” means the Pledge and Security Agreement, the Collateral Assignment Agreement, the intellectual property security agreements executed in connection therewith, the collateral assignments of insurance policies, if any, executed in connection therewith, the Mortgages and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations.

“Collateral Questionnaire” means a certificate in form satisfactory to Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party.

“Commitment” means the commitment of a Lender to make or otherwise fund a Loan and “Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Commitment is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Commitments as of the Closing Date is $105,000,000.

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“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C-1.

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for Borrower and its Subsidiaries on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes based on income, (d) total depreciation expense, (e) total amortization expense, (f) cash restructuring charges in connection with the Acquisition and the Prior Tender Offer of up to $12,500,000 in the aggregate with respect to all such charges, (g) non-cash charges associated with the fair market value of Borrower’s life insurance policy portfolio of up to $1,000,000 per Fiscal Year, (h) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period), minus (ii) other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash items in any prior period); for purposes of the calculation of (x) Consolidated Adjusted EBITDA and (b) the covenants set forth in Section 6.8, Consolidated Adjusted EBITDA for Borrower and its Subsidiaries shall be as set forth below for the Fiscal Quarters set forth below:

Fiscal Quarter Ended	Pre-Closing Consolidated Adjusted EBITDA
3/31/07	$	16,200,000
6/30/07	$	19,100,000
9/30/07	$	9,800,000

For the fiscal month ending closest to October 31, 2007, Consolidated Adjusted EBITDA shall be deemed to equal actual Consolidated Adjusted EBITDA for such fiscal month, adjusted in a manner consistent with the methodology used in calculating the “Pre-Closing Consolidated Adjusted EBITDA” for the periods set forth above.

“Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of Borrower and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of Borrower and its Subsidiaries, inclusive of capitalized software costs and acquisitions of real property.

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for such period, excluding any amount not payable in Cash, but excluding therefrom any cash or non-cash expenses and cash or non-cash charges related to the repayment of the Existing Indebtedness.

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“Consolidated Current Assets” means, as at any date of determination, the total assets of Borrower and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of Borrower and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) the Consolidated Working Capital Adjustment, minus (ii) the sum, without duplication, of the amounts for such period of (a) Consolidated Capital Expenditures (net of any proceeds of (x) any related financings with respect to such expenditures and (y) any sales of assets used to finance such expenditures), (b) Consolidated Cash Interest Expense, and (c) provisions for current taxes based on income of Borrower and its Subsidiaries and payable in cash with respect to such period.

“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Borrower and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Borrower and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in Section 2.11 payable on or before the Closing Date; provided that Consolidated Interest Expense shall exclude interest expense on Indebtedness incurred and outstanding in accordance with Section 6.1(m).

“Consolidated Net Income” means, for any period, (i) the net income (or loss) of Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any Person (other than a Subsidiary of Borrower) in which any other Person (other than Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Borrower or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or that Person’s assets are acquired by Borrower or any of its Subsidiaries, (c) the income of any Subsidiary of Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses.

“Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that Consolidated Total Debt shall exclude Indebtedness incurred and outstanding in accordance with Section 6.1(m).

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“Consolidated Working Capital” means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities.

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Contributing Guarantors” as defined in Section 7.2.

“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.

“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit G delivered by a Credit Party pursuant to Section 5.10.

“Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Intercreditor Agreement, and all other documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent or any Lender in connection herewith.

“Credit Party” means each Person (other than any Agent or any Lender or any other representative thereof) from time to time party to a Credit Document.

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Borrower’ and its Subsidiaries’ operations and not for speculative purposes.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

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“Dollars” and the sign “$” mean the lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

“Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; provided, no Affiliate of Borrower (and no competitor of Borrower or any of its Subsidiaries engaged in the same or similar line of business of Borrower or any of its Subsidiaries) shall be an Eligible Assignee.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.

“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene or the protection of human, plant or animal health or welfare, in any manner applicable to Borrower or any of its Subsidiaries or any Real Property.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Borrower or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower or any such Subsidiary within the meaning of this definition with respect to

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the period such entity was an ERISA Affiliate of Borrower or such Subsidiary and with respect to liabilities arising after such period for which Borrower or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for thirty (30)-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Borrower, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

“Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.

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“Event of Default” means each of the conditions or events set forth in Section 8.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Excluded Equity Issuance” means Cash proceeds resulting from the issuance of (a) Capital Stock by Borrower to management or employees of Borrower or any of its Subsidiaries under any employee stock option or stock purchase plan or other employee benefits plan in existence from time to time, (b) Capital Stock by a wholly owned Subsidiary of Borrower to Borrower or another wholly owned Subsidiary of Borrower constituting an Investment permitted under Section 6.7, and (c) Capital Stock by a Foreign Subsidiary to qualify directors where required to satisfy requirements of applicable law, in each instance, with respect to the ownership of Capital Stock of such Foreign Subsidiary.

“Existing First Lien Credit Agreement” means the Amended and Restated First Lien Credit and Guaranty Agreement, dated as of June 30, 2006 (as amended, restated, supplemented or otherwise modified prior to the Closing Date), among Borrower, certain subsidiaries of Borrower, as guarantors, the lenders party thereto, Fifth Third, as administrative agent and collateral agent, and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., as syndication agent.

“Existing Headquarters Asset” as defined in Section 5.17.

“Existing Headquarters Asset Sale” as defined in Section 5.17.

“Existing Headquarters Guaranty” means that certain Guaranty Agreement dated as of June 30, 2006 made by each Guarantor Subsidiary in favor of Fifth Third, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof; provided that any additional Person that becomes a Subsidiary Guarantor hereunder may become a party thereto.

“Existing Headquarters Loan” means that certain Term Loan Note effective as of June 30, 2006 payable by the Company in favor of Fifth Third, secured only by the Existing Headquarters Mortgage, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Existing Headquarters Mortgage” means that certain Mortgage effective as of June 30, 2006, by the Company in favor of Fifth Third, encumbering only the Existing Headquarters Asset and securing only the Existing Headquarters Loan, as it has been, and as it may further be, amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Existing Indebtedness” means (a) all Indebtedness and other obligations outstanding (other than indemnities and other similar obligations not then due and payable) under the Existing First Lien Credit Agreement and the “Credit Documents” under and as defined in the Existing First Lien Credit Agreement, (b) all Indebtedness and other obligations outstanding (other than indemnities and other similar obligations not then due and payable)

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under the Existing Second Lien Credit Agreement and the “Credit Documents” under and as defined in the Existing Second Lien Credit Agreement and (c) all Indebtedness and other obligations outstanding (other than indemnities and other similar obligations not then due and payable) under the Existing Pantone Credit Facility and Existing Pantone Credit Facility Documents.

“Existing Interest Rate Agreements” means those certain fixed rate swap agreements entered into by and between Borrower and Goldman Sachs Capital Markets, L.P. described on Schedule 1.1(a) that were entered into prior to the date hereof in connection with the Existing First Lien Credit Agreement.

“Existing Pantone Credit Facility” means that certain $7,000,000 Secured Demand Credit Facility, effective as of August 27, 2004, between Pantone, Inc. and Brown Brothers Harriman & Co.

“Existing Pantone Credit Facility Documents” means that certain Secured Promissory Note, dated as of August 27, 2004, issued by Pantone in the amount of $1,000,000 in connection with the Existing Pantone Credit Facility, and all other security agreements, pledge agreements, guarantees, instruments, documents and agreements delivered by Pantone or any guarantor under the Existing Pantone Credit Facility in order to grant the secured party under the Existing Pantone Credit Facility a Lien on any real, personal or mixed property of Pantone or any guarantor under the Existing Pantone Credit Facility.

“Existing Second Lien Credit Agreement” means the Amended and Restated First Lien Credit and Guaranty Agreement, dated as of June 30, 2006 (as amended by the First Amendment to Second Lien Credit Agreement, dated as of February 7, 2007, and as further amended, restated, supplemented or otherwise modified prior to the Closing Date), among Borrower, certain subsidiaries of Borrower, as guarantors, the lenders party thereto, and Goldman Sachs Credit Partners L.P., as lead arranger, bookrunner, syndication agent, administrative agent and collateral agent.

“Fair Share Contribution Amount” as defined in Section 7.2.

“Fair Share” as defined in Section 7.2.

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 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 by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to BNY on such day on such transactions.

“Fifth Third” means Fifth Third Bank, a Michigan banking corporation.

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“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of Borrower that such financial statements fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Financial Plan” as defined in Section 5.1(i).

“First Lien Collateral Agent” means the “Collateral Agent” under and as defined in the First Lien Credit Agreement.

“First Lien Credit Agreement” means the First Lien Credit and Guaranty Agreement, dated as of the date hereof, among Borrower, the guarantors party thereto, Fifth Third, as co-lead arranger, co-bookrunner, administrative agent and collateral agent, Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., as co-lead arranger, co-bookrunner and syndication agent, National City Bank, as co-lead arranger and co-documentation agent, LaSalle Bank Midwest N.A., as co-documentation agent, and the lenders party thereto, as it may be amended, modified, renewed, refunded, replaced or refinanced from time to time in accordance with this Agreement and the Intercreditor Agreement.

“First Lien Credit Documents” means the “Credit Documents” under and as defined in the First Lien Credit Agreement.

“First Lien Term Loans” means the term loans in an aggregate principal amount of $270,000,000 made to Borrower on the Closing Date pursuant to the First Lien Credit Agreement.

“Fiscal Quarter” means each three (3) fiscal month period ending closest to or on March 31, June 30, September 30 or December 31.

“Fiscal Year” means each fiscal year of Borrower and its Subsidiaries ending on the Saturday closest to December 31 of each calendar year.

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary. “Funding Guarantors” as defined in Section 7.2.

“Funding Notice” means a notice substantially in the form of Exhibit A-1.

“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

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“GoldenTree” as defined in the preamble hereto.

“Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Grantor” as defined in the Pledge and Security Agreement.

“Guaranteed Obligations” as defined in Section 7.1.

“Guarantor” means each Domestic Subsidiary of Borrower and, to the extent no material adverse tax consequences to Borrower would result therefrom, each Foreign Subsidiary of Borrower.

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

“Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Real Property or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past or current activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement required or permitted by this Agreement.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

“Historical Financial Statements” means, as of the Closing Date, (i) the audited financial statements of Borrower and its Subsidiaries for the immediately preceding two Fiscal

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Years, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, (ii) the unaudited financial statements of Borrower and its Subsidiaries as at the most recently ended Fiscal Quarter, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the three-, six-or nine-month period, as applicable, ending on such date, (iii) the audited financial statements of the Pantone Targets and their respective Subsidiaries for the immediately preceding two Fiscal Years, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (iv) the unaudited financial statements of the Pantone Targets and their respective Subsidiaries as at the most recently ended Fiscal Quarter, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the six month period ended June 30, 2007, and, in the case of clauses (i) through (iv), certified by the chief financial officer of Borrower that they fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries and the Pantone Targets and their respective Subsidiaries, as applicable, as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Increased-Cost Lenders” as defined in Section 2.23.

“Indebtedness”, as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including, without limitation, any Interest Rate Agreement and Currency Agreement, whether entered into

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for hedging or speculative purposes; provided, in no event shall obligations under any Interest Rate Agreement or any Currency Agreement be deemed “Indebtedness” for any purpose under Section 6.8.

“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Loans or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the statements contained in the commitment letter delivered by any Lender to Borrower with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrower or any of its Subsidiaries.

“Indemnitee” as defined in Section 10.3.

“Insignificant Domestic Subsidiaries” shall mean any Subsidiary set forth on Schedule 4.26, unless and until such Insignificant Subsidiary has become a Guarantor hereunder in accordance with Section 5.10 hereof.

“Intercreditor Agreement” means the Intercreditor Agreement dated as of October 24, 2007, substantially, in the form of Exhibit L, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Interest Payment Date” means with respect to (i) any Base Rate Loan, each March 31, June 30 , September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Loan that is a Eurodollar Rate Loan, the last day of each Interest Period applicable to such Eurodollar Rate Loan and the final maturity date of such Loan; provided, in the case of each Interest Period of longer than three months “Interest Payment Date” shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period.

“Interest Period” means, in connection with a Eurodollar Rate Loan, an interest period of one-, two-, three- or six-months, as selected by Borrower in the applicable Funding

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Notice or Conversion/Continuation Notice, (i) initially, commencing on the Closing Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) of this definition, end on the last Business Day of a calendar month; and (c) no Interest Period shall extend beyond the Maturity Date.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with Borrower’ and its Subsidiaries’ operations and not for speculative purposes, including, without limitation, the Existing Interest Rate Agreements.

“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the Closing Date and from time to time hereafter, and any successor statute.

“Investment” means (i) any direct or indirect purchase or other acquisition by Borrower or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person; (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Borrower from any Person, of any Capital Stock of such Person; and (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Borrower or any of its Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided, in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Key Person Life Insurance Policies” mean, collectively, the life insurance policies described on Schedule 1.1(b).

“Landlord Waiver and Consent Agreement” means a Landlord Waiver and Consent Agreement substantially in the form of Exhibit K with such amendments or modifications as may be approved by Requisite Lenders.

“Lead Arranger” as defined in the preamble hereto.

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“Leasehold Property” means any leasehold interest of any Credit Party as lessee under any lease of real property.

“Lender” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.

“Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter or other date of determination of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such date or if such date of determination is not the last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the most recently concluded Fiscal Quarter.

“Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease or license in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.

“Loan” means a term loan made by a Lender to Borrower pursuant to Section 2.1(a).

“Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Loans of such Lender; provided, at any time prior to the making of the Loans, the Loan Exposure of any Lender shall be equal to such Lender’s Commitment.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.

“Material Adverse Effect” means a material adverse effect on and/or material adverse developments with respect to (i) the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole; (ii) the ability of any Credit Party to fully and timely perform its Obligations; (iii) the legality, validity, binding effect or enforceability against a Credit Party of a Credit Document to which it is a party; or (iv) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document.

“Material Contract” means any contract or other arrangement to which Borrower or any of its Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.

“Material Real Estate Asset” means any fee-owned Real Estate Asset having a fair market value in excess of $250,000 per parcel as of the date of the acquisition thereof, other than the Existing Headquarters Asset for so long as such asset is permitted to be encumbered, and is encumbered, by the Existing Headquarters Mortgage.

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“Maturity Date” means the earlier of (i) the sixth (6^th) anniversary of the Closing Date, and (ii) the date that all Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“Merger” as defined in the Recitals hereto.

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

“Mortgage” means a Mortgage substantially in the form of Exhibit J, as it may be amended, supplemented or otherwise modified from time to time.

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Borrower and its Subsidiaries in the form prepared for presentation to senior management thereof for the applicable month, Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale and (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Borrower or any of its Subsidiaries in connection with such Asset Sale.

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or proceeds received by Borrower or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder or (b) as a result of the taking of any assets of Borrower or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and reasonable costs incurred by Borrower or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Borrower or such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith.

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“Nonpublic Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

“Non-US Lender” as defined in Section 2.20(d).

“Note” means a promissory note in the form of Exhibit B, as it may be amended, supplemented or otherwise modified from time to time.

“Notice” means a Funding Notice or a Conversion/ Continuation Notice.

“Obligations” means all obligations of every nature of each Credit Party, including obligations from time to time owed to the Agents (including former Agents), the Lenders or any of them, under the Credit Agreement or any other Credit Document, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), premiums. fees, expenses, indemnification or otherwise.

“Obligee Guarantor” as defined in Section 7.7.

“Organizational Documents” means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Taxes” as defined in Section 2.20(c).

“Pantone” means Pantone, Inc., a Delaware corporation, and successor by merger to Pantone Merger Sub, Inc., a Delaware corporation.

“Pantone Asia” means Pantone Asia, Inc., a Delaware corporation, formerly known as Pantone Asia Merger Sub, Inc., and successor by merger to Pantone Asia, Inc., a New Jersey corporation.

“Pantone Germany” means Pantone Germany, Inc., a Delaware corporation, and successor by merger to Pantone Germany Merger Sub, Inc., a Delaware corporation.

“Pantone India” means Pantone India, Inc., a Delaware corporation, and successor by merger to Pantone India Merger Sub, Inc., a Delaware corporation.

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“Pantone Japan” means Pantone Japan, Inc., a Delaware corporation, formerly known as Pantone Japan Merger Sub, Inc., and successor by merger to Pantone Japan, Inc., a New Jersey corporation.

“Pantone UK” means Pantone U.K., Inc., a Delaware corporation, formerly known as Pantone UK Merger Sub, Inc., and successor by merger to Pantone U.K., Inc., a New Jersey corporation.

“Pantone Merger Agreement” as defined in the Recitals hereto.

“Pantone Merger Documents” means the Pantone Merger Agreement and all schedules, exhibits and annexes thereto and all side letters, agreements and documents affecting the terms thereof or entered into in connection therewith, including, without limitation, (a) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone Merger Sub, Inc., a Delaware corporation, with and into Pantone, (b) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone Germany Merger Sub, Inc., a Delaware corporation, with and into Pantone Germany, (c) that certain Certificate of Merger filed with the Secretary of State of the State of Delaware evidencing the merger of Pantone India Merger Sub, Inc., a Delaware corporation, with and into Pantone India, (d) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone Asia, Inc., a New Jersey corporation, with and into Pantone Asia and evidencing the name change of from “Pantone Asia Mergers Sub, Inc.” to “Pantone Asia, Inc.”, (e) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone Japan, Inc., a New Jersey corporation, with and into Pantone Japan and evidencing the name change of from “Pantone Japan Merger Sub, Inc.” to “Pantone Japan, Inc.”, and (f) those certain Certificates of Merger filed with the Secretary of State of the State of New Jersey and the Secretary of State of the State of Delaware evidencing the merger of Pantone U.K., Inc., a New Jersey corporation, with and into Pantone UK and evidencing the name change of from “Pantone UK Merger Sub, Inc.” to “Pantone U.K., Inc.”

“Pantone Mergers” means, collectively, (a) the merger of Pantone Merger Sub, Inc., a Delaware corporation, with and into Pantone, with Pantone as the surviving entity, (b) the merger of Pantone Asia, Inc., a New Jersey corporation, with and into Pantone Asia, with Pantone Asia as the surviving entity, (c) the merger of Pantone Germany Merger Sub, Inc., a Delaware corporation, with and into Pantone Germany, with Pantone Germany as the surviving entity, (d) the merger of Pantone India Merger Sub, Inc., a Delaware corporation, with and into Pantone India, with Pantone India as the surviving entity, (e) the merger of Pantone Japan, Inc., a New Jersey corporation, with and into Pantone Japan, with Pantone Japan as the surviving entity, and (f) the merger of Pantone U.K., Inc., a New Jersey corporation with and into Pantone UK, with Pantone UK as the surviving entity.

“Pantone Targets” means, collectively, Pantone, Pantone Asia, Pantone Germany, Pantone India, Pantone Japan and Pantone UK.

“Participant Register” as defined in Section 10.6(g)(ii).

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

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

“Permitted Acquisition” means any acquisition by Borrower or any of its wholly owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or a business line or unit or a division of, any Person; provided,

(i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;

(iii) in the case of the acquisition of Capital Stock, all of the Capital Stock (except for any such Securities in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Borrower in connection with such acquisition shall be owned 100% by Borrower or a Guarantor thereof, and Borrower shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of Borrower, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable;

(iv) Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended, (as determined in accordance with Section 6.8(e)) (except that, for such purpose, the maximum permitted Leverage Ratio as of any date prior to the last day of the Fiscal Quarter ending on or closest to March 31, 2008 shall be deemed to be 6.50 to 1.00);

(v) Borrower shall have delivered to Lead Arranger (A) at least ten (10) Business Days prior to such proposed acquisition, a Compliance Certificate evidencing compliance with Section 6.8 as required under clause (iv) above, together with all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.8;

(vi) after giving effect to such acquisition (and the borrowing of any “Revolving Loans” under and as defined in the First Lien Credit Agreement in connection therewith, the “Revolving Commitments” under and as defined in the First Lien Credit Agreement shall exceed the “Total Utilization of Revolving Commitments” under and as defined in the First Lien Credit Agreement plus the “Existing Headquarters Reserve” under and as defined in the First Lien Credit Agreement by at least $15,000,000; and

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(vii) any Person or assets or division as acquired in accordance herewith shall be in same or similar business or same or similar lines of business in which Borrower and/or its Subsidiaries were engaged as of the Closing Date.

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Phase I Report” means, with respect to any Real Property, a report that (i) conforms to the ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527 and (ii) was conducted no more than six months prior to the date such report is required to be delivered hereunder, by one or more environmental consulting firms reasonably satisfactory to Lead Arranger.

“Platform” as defined in Section 5.1(q).

“Pledge and Security Agreement” means the Second Lien Pledge and Security Agreement, dated as of October 24, 2007, by and among Borrower, each Guarantor and Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit H, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Pledge Threshold” as defined in Section 5.13.

“Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

“Principal Office” means Administrative Agent’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as Administrative Agent may from time to time designate in writing to Borrower and each Lender.

“Prior Tender Offer” means the tender offer by Borrower to acquire all the issued and outstanding Securities of Amazys that resulted in the acquisition of substantially all of the issued and outstanding Securities of Amazys by the Company on July 5, 2006.

“Projections” as defined in Section 4.8.

“Pro Rata Share” means with respect to any Lender, the percentage obtained by dividing (a) the Loan Exposure of that Lender by (b) the aggregate Loan Exposure of all Lenders.

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“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property.

“Real Property” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased and operated or used by Borrower or any of its Subsidiaries or any of their respective predecessors or Affiliates.

“Refinancing” means the payment in full in cash of the Existing Indebtedness and the termination of all commitments provided thereunder and the discharge and/or release of all guarantees and collateral provided in connection therewith.

“Register” as defined in Section 2.7(b).

“Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.

“Regulation FD” means Regulation FD as promulgated by the US Securities and Exchange Commission under the Securities Act and Exchange Act as in effect from time to time.

“Related Agreements” means, collectively, the Pantone Merger Documents, the First Lien Credit Agreement and all “Credit Documents” under and as defined in the First Lien Credit Agreement.

“Related Fund” means, (i) with respect to any Lender, a CLO managed by such Lender or by an Affiliate of such Lender and (ii) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Related Party Assignment” as defined in Section 10.6(b).

“Related Party Register” as defined in Section 10.6(b).

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Replacement Lender” as defined in Section 2.23.

“Required Prepayment Date” as defined in Section 2.15(b).

“Requisite Lenders” means one or more Lenders having or holding Loan Exposure representing more than 50% of the aggregate Loan Exposure of all Lenders.

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“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares or units of any Capital Stock of Borrower or any Subsidiary of Borrower now or hereafter outstanding, except a dividend payable solely in shares or units of any Capital Stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Capital Stock of Borrower or any Subsidiary of Borrower now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Capital Stock of Borrower or any Subsidiary of Borrower now or hereafter outstanding and (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to the Existing Headquarters Loan.

“S&P” means Standard & Poor’s Ratings Services.

“Second Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is (i) the only Lien to which such Collateral is subject, other than any Permitted Lien and (ii) second in priority by contract only to the Liens created under or relating to the First Lien Credit Agreement or by contract or applicable law to any Permitted Lien which is permitted to have priority pursuant to the terms of Section 6.2.

“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Solvent” means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s present assets; (b) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on such date of determination and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under the Bankruptcy Code and other applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time,

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represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No.5).

“Subject Transaction” as defined in Section 6.8(d).

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding. For the avoidance of doubt, from and after the Closing Date, the Pantone Targets and each of their respective Subsidiaries shall constitute Subsidiaries of Borrower.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed and all interest, penalties, additions to tax and all other liabilities with respect thereto; provided, “Tax on the overall net income” of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is located on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office).

“Terminated Lender” as defined in Section 2.23.

“Title Policy” as defined in Section 3.1(l)(iii).

“Transaction Costs” means the interest, premiums, fees, costs and expenses payable by Borrower or any of Borrower’s Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents and the Related Agreements.

“Trigger Fiscal Quarter” as defined in Section 6.8(a).

“Type of Loan” means a Base Rate Loan or a Eurodollar Rate Loan.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“U.S. Lender” as defined in Section 2.20(d).

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“USA PATRIOT Act” as defined in Section 4.25.

“Waivable Mandatory Prepayment” as defined in Section 2.15(b).

“X-Rite International” means X-Rite International, Inc., a corporation formed under the laws of Barbados.

1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Borrower to Lenders pursuant to Sections 5.1(b) and 5.1(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements.

1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. Any terms defined herein by reference to the First Lien Credit Agreement and any sections of the First Lien Credit Agreement referenced herein shall include any similar terms as defined or similar sections, as the case may be, in any refinancing of the First Lien Credit Agreement that is permitted under this Agreement and the Intercreditor Agreement.

SECTION 2. LOANS

2.1. Loans

(a) Loan Commitments. Subject to the terms and conditions hereof, each Lender severally agrees to make, on the Closing Date, a Loan to Borrower in an amount equal to such Lender’s Commitment. Borrower may make only one borrowing under the Commitment which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Loans shall be paid in full no later than the Maturity Date. Each Lender’s Commitment shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender’s Commitment on such date.

(b) Borrowing Mechanics for Loans. Borrower shall deliver to Administrative Agent a fully executed Funding Notice no later than three Business Days (or such shorter period

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as Administrative Agent may agree) prior to the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing.

Each Lender shall make its Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) (or such later time as agreed to by Administrative Agent and each Lender) on the Closing Date, by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent, or by such time and at such location as Administrative Agent shall otherwise reasonably agree. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Loan available to Borrower on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Borrower at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Borrower.

2.2. [Reserved]

2.3. [Reserved]

2.4. [Reserved]

2.5. Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares. All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.

(b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the Closing Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on the Closing Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on the Closing Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on the Closing Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from the Closing Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Borrower and Borrower shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from the Closing Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans.

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Nothing in this Section 2.5(b) shall be deemed to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder.

2.6. Use of Proceeds. The proceeds of the Loans shall be used on the Closing Date solely (i) to finance, in part, the Acquisition, (ii) to consummate the Refinancing and (iii) to pay the Transaction Costs.

2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrower, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any applicable Loans; and provided, further, that in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern, absent manifest error.

(b) Register. Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at the Principal Office a register for the recordation of the names and addresses of Lenders and the principal amount (and stated interest thereon) of the Loans of each Lender from time to time (the “Register”). The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in the Register the Loans in accordance with the provisions of Section 10.6, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Borrower and each Lender, absent manifest error; provided, failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any Loan. Borrower hereby designates BNY to serve as Borrower’s agent solely for purposes of maintaining the Register as provided in this Section 2.7, and Borrower hereby agrees that, to the extent BNY serves in such capacity, BNY and its officers, directors, employees, agents, subagents and affiliates shall constitute “Indemnitees.”

(c) Notes. If so requested by any Lender by written notice to Borrower (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrower’s receipt of such notice) a Note to evidence such Lender’s Loan.

2.8. Interest on Loans

(a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:

(i) in the case of a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

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(ii) in the case of a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin.

(b) The basis for determining the rate of interest with respect to any Loan and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Borrower and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; provided, until the date which is the earlier of (i) the completion of the primary syndication of the Loans as determined by the Agents and (ii) sixty (60) days following the Closing Date, the Loans shall be maintained as either (A) Eurodollar Rate Loans having an Interest Period of one (1) month or (B) Base Rate Loans. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.

(c) In connection with Eurodollar Rate Loans there shall be no more than ten (10) Interest Periods outstanding at any time. In the event Borrower fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower and each Lender.

(d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or the last Interest Payment Date with respect to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

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(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of the Loans, including final maturity of the Loans; provided, however, with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.

2.9. Conversion/Continuation.

(a) Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing, Borrower shall have the option:

to convert at any time all or any part of any Loan equal to $1,000,000 and integral multiples of $250,000 in excess of that amount from one Type of Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion; or

upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $1,000,000 and integral multiples of $250,000 in excess of that amount as a Eurodollar Rate Loan.

(b) Borrower shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 1:00 p.m. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Borrower shall be bound to effect a conversion or continuation in accordance therewith.

2.10. Default Interest. Upon the occurrence and during the continuance of an Event of Default under Section 8.1(a), the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans); provided, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this

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Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.

2.11. Fees. Borrower agrees to pay to Agents for the account of Agents and Lenders, as applicable, such fees in the amounts and at the times separately agreed upon.

2.12. Payment at Maturity. The Loans, together with all other amounts owed hereunder with respect thereto, shall be paid in full no later than the Maturity Date.

2.13. Voluntary Prepayments; Call Protection.

(a) Voluntary Prepayments.

Subject to Section 2.13(b) below, at any time and from time to time:

(1) with respect to Base Rate Loans, Borrower may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount; and

(2) with respect to Eurodollar Rate Loans, Borrower may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $250,000 and integral multiples of $100,000 in excess of that amount.

All such prepayments shall be made:

(3) upon not less than one Business Day’s prior written or telephonic notice in the case of Base Rate Loans; and

(4) upon not less than three Business Days’ prior written or telephonic notice in the case of Eurodollar Rate Loans.

in each case given to Administrative Agent by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or original notice by telefacsimile or telephone to each Lender). Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

(b) Call Protection. In the event that the Loans are prepaid or repaid in whole or in part on or prior to the second anniversary of the Closing Date, Borrower shall pay to the Lenders a prepayment premium on the amount so prepaid or repaid as follows:

Relevant period	Prepayment premium as a percentage of the amount so prepaid or repaid
On or prior to the first anniversary of the Closing Date	2.0	%
On or prior to the second anniversary of the Closing Date but after the first anniversary of the Closing Date	1.0	%
After the second anniversary of the Closing Date	0.0	%

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2.14. Mandatory Prepayments/Commitment Reductions.

(a) Asset Sales. No later than the third (3^rd) Business Day following the date of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the Loans as set forth in Section 2.15 in an aggregate amount equal to such Net Asset Sale Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent that aggregate Net Asset Sale Proceeds from the Closing Date through the applicable date of determination do not exceed $5,000,000, Borrower shall have the option, directly or through one or more of its Subsidiaries, to invest Net Asset Sale Proceeds within 180 days of receipt thereof in long-term productive assets of the general type used in the business of Borrower and its Subsidiaries; provided, further, that on or prior to June 30, 2008, the Net Asset Sale Proceeds from the Existing Headquarters Asset Sale may be applied first against the Existing Headquarters Loan, with any such Net Asset Sale Proceeds remaining after payment in full in cash of the Existing Headquarters Loan being applied as otherwise required by this Section 2.14(a) (without being reinvested as otherwise permitted by Section 2.14(a)).

(b) Insurance/Condemnation Proceeds. No later than the first Business Day following the date of receipt by Borrower or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans as set forth in Section 2.15 in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent that aggregate Net Insurance/Condemnation Proceeds from the Closing Date through the applicable date of determination do not exceed $5,000,000, Borrower shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within 180 days of receipt thereof in long term productive assets of the general type used in the business of Borrower and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof.

(c) Key-Man Life Insurance Proceeds. No later than the first Business Day following the date of receipt by Borrower or any of its Subsidiaries, or Administrative Agent as loss payee, of any net proceeds of any Key Person Life Insurance Policy, Borrower shall prepay the Loans as set forth in Section 2.15 in an aggregate amount equal to such net proceeds.

(d) Issuances of Debt and Equity. On the date of receipt by Borrower or any of its Subsidiaries of any Cash proceeds from the issuance of Capital Stock of Borrower or any of its Subsidiaries or the incurrence of any Indebtedness of Borrower or any of its Subsidiaries (other than (x) Excluded Equity Issuances and (y) with respect to any Indebtedness permitted to

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be incurred pursuant to Section 6.1), Borrower shall prepay the Loans as set forth in Section 2.15 in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

(e) Consolidated Excess Cash Flow. In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year ending on December 31, 2008), Borrower shall, no later than ninety days after the end of such Fiscal Year, prepay the Loans as set forth in Section 2.15 in an aggregate amount equal to (i) 75% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Loans; provided, for any Fiscal Year in which the Leverage Ratio (determined by reference to the Compliance Certificate delivered pursuant to Section 5.1(d) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be 3.00:1.00 or less, Borrower shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 50% of such Consolidated Excess Cash Flow.

(f) Notwithstanding anything in Section 2.13(a) or Section 2.14(a), (b), (c), (d) or (e) to the contrary, no mandatory prepayment of outstanding Loans shall be required under such Sections until the “Discharge of First Lien Obligations” under and as defined in the Intercreditor Agreement.

(g) Prepayment Premium. Any prepayments made pursuant to Section 2.14(a) through 2.14(d) shall be subject to the Call Protection provisions of Section 2.13(b).

(h) Prepayment Certificate. Concurrently with any prepayment of the Loans pursuant to Sections 2.14(a) through 2.14(e), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans in an amount equal to such excess, and Borrower shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.

2.15. Application of Prepayments.

(a) Any prepayment shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans.

(b) Anything contained herein to the contrary notwithstanding, so long as any Loans are outstanding, in the event Borrower is required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Loans, not less than three Business Days prior to the date (the “Required Prepayment Date”) on which Borrower is required to make such Waivable Mandatory Prepayment, Borrower shall notify Administrative Agent of the amount of such prepayment, and Administrative Agent will promptly thereafter notify each Lender of the amount of such Lender’s Pro Rata Share of such Waivable Mandatory Prepayment. Each such Lender may, in its sole discretion, waive the payment to such Lender of such Waivable

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Mandatory Prepayment by giving written notice to Borrower and Administrative Agent of its election to do so on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify Borrower and Administrative Agent in writing of its election to waive such Waivable Mandatory Prepayment on or before the first Business Day prior to the Required Prepayment Date shall not be deemed to have waived its rights to receive such Waivable Mandatory Prepayment, and such Lender shall receive such Waivable Mandatory Prepayment on the Required Prepayment Date). On the Required Prepayment Date, Borrower shall pay to Administrative Agent that portion of the Waivable Mandatory Prepayment payable to those Lenders that have not, in accordance with this Section 2.15(b), waived such Waivable Mandatory Prepayment, to prepay the Loans of such Lenders (which prepayment shall be applied in accordance with Section 2.15). The remaining amount of the Waivable Mandatory Prepayment shall be retained by Borrower and used for any purpose not prohibited by this Agreement or the other Credit Documents.

2.16. General Provisions Regarding Payments.

(a) All payments by Borrower of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 2:00 p.m. (New York City time) on the date due at the Principal Office designated by Administrative Agent for the account of Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrower on the next succeeding Business Day.

(b) All payments in respect of the principal amount of any Loan shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid.

(c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent.

(d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(e) Whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day unless such succeeding Business Day occurs after the Maturity Date, in which case, such payment shall be made on the immediately preceding Business Day.

(f) Borrower hereby authorizes Administrative Agent to charge Borrower’s accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).

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(g) Administrative Agent shall deem any payment by or on behalf of Borrower hereunder that is not made in same day funds prior to 2:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Borrower and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.

(h) Subject to the terms of the Intercreditor Agreement, if an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 7.2 of the Pledge and Security Agreement.

2.17. Ratable Sharing. Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.

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2.18. Making or Maintaining Eurodollar Rate Loans.

(a) Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Borrower and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrower and Lenders that the circumstances giving rise to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given by Borrower with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Borrower.

(b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Borrower and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the Closing Date which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Borrower and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender’s obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, Borrower shall have the option, subject to the provisions of Section 2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.18(b) shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.

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(c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan (including, without limitation, pursuant to Section 2.13(b) hereof); or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Borrower.

(d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender.

(e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided, however, each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19.

2.19. Increased Costs; Capital Adequacy.

(a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the Closing Date (or in the case of any Lender that becomes a party after the Closing Date, the date that such Lender becomes a party hereto), or compliance by such Lender with any guideline, request or directive issued or made after the Closing Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the

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other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or participations therein or other obligations hereunder with respect to the Loans to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

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2.20. Taxes; Withholding, etc.

(a) Payments to Be Free and Clear. All sums payable by or on behalf of any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment.

(b) Withholding of Taxes. If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender under any of the Credit Documents: (i) Borrower shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrower becomes aware of it; (ii) Borrower shall pay or cause to be paid any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made (including deductions applicable to additional sums payable pursuant to this paragraph (b)); and (iv) within thirty (30) days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty (30) days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Borrower shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided, no such additional amount shall be required to be paid to any Lender under clause (iii) above except to the extent that any change after the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the Closing Date or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender; provided that additional amounts shall be payable to a Lender to the extent such Lender’s assignor was entitled to receive such additional amounts.

(c) Other Taxes. In addition, each Credit Party agrees to pay to the relevant Governmental Authority in accordance with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Credit Document (“Other Taxes”). Each Credit Party shall deliver to Administrative Agent and each Lender an official receipt (or, if an official receipt is not available, such other evidence of payment as shall be satisfactory to Administrative Agent and such Lender) in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.

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(d) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent for transmission to Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, to the assigning Lender only), on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Borrower or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN, W-8ECI and/or W-8IMY (or, in each case, any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, at the request of the assigning Lender only) to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, at the request of the assigning Lender only) to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “U.S. Lender”) and is not an exempt recipient within the meaning of Treasury Regulation Section 1.6049-4(c) shall deliver to Administrative Agent and Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, at the request of the assigning Lender only) on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(d) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent for transmission to Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, at the request of the assigning Lender only) two new original copies of Internal Revenue Service Form W-8BEN, W-8ECI and/or W-8IMY (or, in each case, any successor forms), or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, at the request of the

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assigning Lender only) to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Borrower of its inability to deliver any such forms, certificates or other evidence. Borrower shall not be required to pay any additional amount to any Non-US Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence referred to in the first sentence of this Section 2.20(d), or (2) upon the request of Borrower or Administrative Agent for such form, certificates or other evidence, to notify Administrative Agent and Borrower (or, in the case of an assignee pursuant to a Related Party Assignment, notify the assigning Lender only) of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided, if such Lender shall have satisfied the requirements of the first sentence of this Section 2.20(d) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable (other than pursuant to the last sentence of this Section 2.20(d)), nothing in this last sentence of Section 2.20(d) shall relieve Borrower of its obligation to pay any additional amounts pursuant this Section 2.20 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein.

(e) Notwithstanding anything in Section 2.20(a), (b), (c) or (d) to the contrary, a Lender shall not be required to deliver any form pursuant to Section 2.20(d) that such Lender is not legally able to deliver.

2.21. Obligation to Mitigate. Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, fund or maintain its Loans, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Loans through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Loans or the interests of such Lender; provided, such Lender will not be obligated to utilize such other office pursuant to this Section 2.21 unless Borrower agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.

2.22. [Reserved]

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2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to Borrower that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Borrower’s request for such withdrawal; or (b) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each a “Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender or Non-Consenting Lender (the “Terminated Lender”), Borrower may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans in full to one or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions of Section 10.6 and the assignment fees, if any, in connection with such assignment shall be paid as follows: Borrower shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased Cost Lender or a Non-Consenting Lender; provided, (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the principal of all outstanding Loans of the Terminated Lender; (2) on the date of such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment; (3) on the next Interest Payment Date, an amount equal to accrued interest and all accrued, but theretofore unpaid fees pursuant to Section 2.11, if any, shall be paid to Terminated Lender and Replacement Lender in accordance with Section 10.6(d); and (4) in the event such Terminated Lender is a Non-Consenting Lender, (I) Borrower shall pay any amounts payable to such Non-Consenting Lender pursuant to Section 2.13(b), and (II) each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender. Upon the prepayment of all amounts owing to any Terminated Lender such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. Each Lender agrees that if Borrower exercises its option hereunder to cause an assignment by such Lender as a Non-Consenting Lender or Terminated Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 10.6. In the event that a Lender does not comply with the requirements of the immediately preceding sentence within one Business Day after receipt of such notice, each Lender hereby authorizes and directs Administrative Agent to execute and deliver such documentation as may be required to give effect to an assignment in accordance with Section 10.6 on behalf of a Non-Consenting Lender or Terminated Lender and any such documentation so executed by Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 10.6.

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SECTION 3. CONDITIONS PRECEDENT

3.1. Closing Date. The obligation of each Lender to make a Loan on the Closing Date is subject to the satisfaction of the following conditions on or before the Closing Date:

(a) Credit Documents and Other Documents. Lead Arranger and the Lenders shall have received on or prior to the Closing Date each of the following, each dated the Closing Date unless otherwise agreed by Lead Arranger and the Lenders, in form and substance satisfactory to Lead Arranger and the Lenders:

(i) this Agreement and each other Credit Document, executed and delivered by each applicable Credit Party, for the account of each Lender having requested the same by notice to Lead Arranger and Borrower received by each at least 3 Business Days prior to the Closing Date (or such later date as may be agreed by Borrower); and

(ii) the other agreements, documents, instruments and other items set forth on the Closing Agenda and Document Checklist attached hereto as Appendix I, each duly executed and notarized, in each instance, to the extent applicable.

(b) Fees and Expenses. There shall have been paid to Administrative Agent and the Lenders, for the account of Administrative Agent and each Lender, as the case may be, all fees and all reimbursements of costs or expenses, in each case due and payable under the Credit Documents and any Related Agreements on or before the Closing Date.

(c) Related Transactions. Lead Arranger and the Lenders shall be satisfied that:

(i) as certified to Administrative Agent and the Lenders, the Acquisition (including the Pantone Mergers) shall have been concurrently consummated in accordance with the terms of the Pantone Merger Agreement and the other Pantone Merger Documents. The Pantone Merger Documents shall not have been amended or otherwise modified in any manner adverse to the Lenders in any material respect, and no material provision of the Pantone Merger Documents shall have been waived, amended, supplemented or otherwise modified in any manner without the prior written approval of the Lenders (which approval shall not be unreasonably withheld);

(ii) all related governmental and third party approvals necessary in connection with the transactions contemplated by the Pantone Merger Documents shall have been obtained and shall be in full force and effect and all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all applicable rules and regulations thereunder shall have expired or been terminated;

(iii) Borrower shall have received or shall concurrently receive at least $270,000,000 in gross cash proceeds from the borrowing of First Lien Term Loans;

(iv) the First Lien Credit Documents and the Intercreditor Agreement shall have been approved by Agents and the Lenders, which approval may not be unreasonably withheld, and each Lender’s and Agent’s approval of the First Lien Credit Documents and the Intercreditor Agreement shall be deemed given by its execution and delivery of its respective signature page to this Agreement; and

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(v) Lead Arranger shall have received or shall concurrently receive (A) reasonably satisfactory evidence that the Existing Indebtedness shall have been terminated and all amounts thereunder shall have been paid in full and all commitments to lend or make other extensions of credit thereunder shall have been terminated and (B) reasonably satisfactory arrangements shall have been made for the termination of all Liens granted in connection therewith.

(d) Representations and Warranties. Each of the representations and warranties (a) made by any Credit Party in Sections 4.1(a), 4.1(b), 4.3, 4.5, 4.6, 4.17 (solely with respect to the Investment Company Act of 1940), 4.18, 4.22 and 4.25 and Section 4.1(a)(vii) of the Pledge and Security Agreement shall be true and correct as of the Closing Date, with the same effect as if made on such date, and (b) made by the Pantone Targets in the Pantone Merger Agreement (but only to the extent that Borrower (or an Affiliate thereof) has the right to terminate its obligations under the Pantone Merger Agreement as a result of a breach of such representations and warranties in the Pantone Merger Agreement (determined without regard to whether any notice is required to be delivered by Borrower)) shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the Closing Date.

(e) Financial Statements. Lenders shall have received from Borrower the Historical Financial Statements.

(f) No Material Adverse Effect. Since December 31, 2006, there shall not have occurred any event, condition or circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have, a “Material Adverse Effect” under and as defined in the Pantone Merger Agreement.

(g) No Event of Default. At the time of funding of the Loans, no Default or Event of Default shall have occurred and be continuing.

(h) Closing Date. Lenders shall have made the Loans to the Company on or before November 1, 2007.

(i) Funding Notice. Administrative Agent shall have received a Funding Notice in accordance with Section 2.1(b).

(j) Organizational Documents; Incumbency. Lead Arranger shall have received (i) sufficient copies of each Organizational Document executed and delivered by each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of such Person executing the Credit Documents to which it is a party; (iii) resolutions of the Board of Directors or similar governing body of each Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents and the Related Agreements to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without

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modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority of each Credit Party’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Closing Date; and (v) such other documents as Lead Arranger may reasonably request.

(k) Personal Property Collateral. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid, perfected Second Priority security interest in the personal property Collateral, the Credit Parties shall have delivered to Lead Arranger and Collateral Agent:

(i) evidence satisfactory to Lead Arranger of the compliance by each Credit Party of their obligations under the Pledge and Security Agreement and the other Collateral Documents (including, without limitation, their obligations to execute and deliver UCC financing statements, originals of securities, certificates, stock powers, instruments and chattel paper, intellectual property security agreements and any agreements governing deposit and/or securities accounts as provided therein), including, without limitation, delivery of the items set forth on Schedule 3.1(k);

(ii) opinions of counsel (which counsel shall be reasonably satisfactory to Lead Arranger) with respect to the creation and perfection of the security interests in favor of Collateral Agent in such Collateral and such other matters governed by the laws of each jurisdiction in which any Credit Party or any personal property Collateral is located as Lead Arranger may reasonably request, in each case in form and substance reasonably satisfactory to Lead Arranger; and

(iii) evidence that each Credit Party shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument (including, without limitation, (A) a Landlord Waiver and Consent Agreement executed by the landlord of any Leasehold Property and by the applicable Credit Party and (B) any intercompany notes evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b)) and made or caused to be made any other filing and recording (other than as set forth herein) reasonably required by Lead Arranger.

(l) Real Estate Assets. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected Second Priority security interest in certain Real Estate Assets, Lead Arranger and Collateral Agent shall have received from Borrower and each applicable Guarantor:

(i) fully executed and notarized Mortgages, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.1(l) (each, a “Closing Date Mortgaged Property”);

(ii) an opinion of counsel (which counsel shall be reasonably satisfactory to Lenders) in the state in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the form of Mortgage to be recorded in such state and such other matters as Lenders may reasonably request, in each case in form and substance reasonably satisfactory to Lenders;

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(iii) (A) ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title company reasonably satisfactory to Lenders with respect to each Closing Date Mortgaged Property (each, a “Title Policy”), in amounts not less than the fair market value of each Closing Date Mortgaged Property, together with a title report issued by a title company with respect thereto, dated not more than thirty (30) days prior to the Closing Date, and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to Lenders and (B) evidence satisfactory to Lenders that such Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages for each Closing Date Mortgaged Property in the appropriate real estate records;

(iv) evidence of flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors, in form and substance reasonably satisfactory to Lenders; and

(v) ALTA surveys of all Closing Date Mortgaged Properties, certified to Collateral Agent, in form and substance reasonably satisfactory to Lenders.

(m) Evidence of Insurance. Lead Arranger and Collateral Agent shall have received a certificate from Borrower’s insurance broker or other evidence satisfactory to it that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect, together with endorsements naming Collateral Agent, for the benefit of Secured Parties, as additional insured and loss payee thereunder to the extent required under Section 5.5.

(n) Opinions of Counsel to Credit Parties. Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of McDermott Will & Emery LLP and Dickinson Wright PLLC, counsel for Credit Parties, in the forms of Exhibits D-1 and D-2, respectively, and as to such other matters as Lead Arranger may reasonably request, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to Lead Arranger (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).

(o) Solvency Certificate. On the Closing Date, Lead Arranger shall have received a solvency certificate from the chief financial officer of Borrower, in form and substance reasonably acceptable to Lead Arranger.

(p) No Litigation. There shall not exist any action, suit, investigation, litigation, proceeding, hearing or other legal or regulatory developments, pending or threatened in any court or before any arbitrator or Governmental Authority that, in the reasonable opinion of Lead

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Arranger, singly or in the aggregate, materially impairs the Acquisition, the financing thereof or any of the other transactions contemplated by the Credit Documents, or that could have a Material Adverse Effect.

3.2. Notices Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Borrower may give Administrative Agent telephonic notice by the required time of any proposed borrowing or conversion/continuation, as the case may be; provided each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the applicable date of borrowing or continuation/conversion. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Borrower or for otherwise acting in good faith.

SECTION 4. REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this Agreement and to make each Loan to be made thereby, each Credit Party represents and warrants to each Lender, on the Closing Date, that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made after giving effect to the Acquisition and the borrowings under the First Lien Credit Agreement):

4.1. Organization; Requisite Power and Authority; Qualification. Each of Borrower and its Subsidiaries (a) is duly organized or formed, as applicable, validly existing and in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite corporate or limited liability company, as applicable, power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.

4.2. Capital Stock and Ownership. The Capital Stock of each of Borrower and its Subsidiaries has been duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower or any of its Subsidiaries is a party requiring, and there is no membership interest or other Capital Stock of Borrower or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Borrower or any of its Subsidiaries of any additional membership interests or other Capital Stock of Borrower or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Capital Stock of Borrower or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Borrower and each of its Subsidiaries in their respective Subsidiaries as of the date hereof.

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4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto.

4.4. No Conflict. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate any provision of any law or any governmental rule or regulation applicable to Borrower or any of its Subsidiaries, any of the Organizational Documents of Borrower or any of its Subsidiaries, or any order, judgment or decree of any court or other agency of government binding on Borrower or any of its Subsidiaries except to the extent such violation could not be reasonably expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrower or any of its Subsidiaries except to the extent such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrower or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of Secured Parties); or (d) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of Borrower or any of its Subsidiaries, except for such approvals or consents were obtained on or before the date hereof (to the extent required to be so obtained by such date) or otherwise by the Closing Date, and disclosed in writing to Lenders and except for any such approvals or consents the failure of which to obtain will not have a Material Adverse Effect.

4.5. Governmental Consents. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except as otherwise set forth in the Related Agreements and on Schedule 4.5 hereto, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, as of the Closing Date.

4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

4.7. Historical Financial Statements. The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. As of the date hereof, neither Borrower nor any of its Subsidiaries has any contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not

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reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower and any of its Subsidiaries taken as a whole.

4.8. Projections. On and as of the date hereof, the projections of Borrower and its Subsidiaries for the period of Fiscal Year 2008 through and including Fiscal Year 2011 (the “Projections”), are based on good faith estimates and assumptions made by the management of Borrower; provided, the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material; provided further, as of the date hereof, management of Borrower believed that the Projections were reasonable and attainable.

4.9. No Material Adverse Change. Since December 30, 2006, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.

4.10. [Reserved].

4.11. Adverse Proceedings, Etc. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3, all tax returns and reports of Borrower and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon Borrower and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Borrower knows of no proposed tax assessment against Borrower or any of its Subsidiaries which is not being actively contested by Borrower or such Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. Neither Borrower not any of its Subsidiaries has ever been a party to an understanding or arrangement constituting a “tax shelter” within the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of the Internal Revenue Code, or has ever “participated” in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4.

4.13. Properties.

(a) Title. Each of Borrower and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of

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leasehold interests in real or personal property), and (iii) good title to (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.5 and in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.

(b) Real Estate. As of the date hereof, Schedule 4.13 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Credit Party, regardless of whether such Credit Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Borrower does not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles.

4.14. Environmental Matters. Neither Borrower nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law that, individually or in the aggregate, could be expected to have a Material Adverse Effect. There are and, to each of Borrower’ and its Subsidiaries’ knowledge, have been, no conditions, occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Borrower or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor of Borrower or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Real Property, and none of Borrower’ or any of its Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent, except in compliance with Environmental Laws. Compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to Borrower or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect.

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4.15. No Defaults. Neither Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect.

4.16. Material Contracts. Schedule 4.16 contains a true, correct and complete list of all the Material Contracts in effect on the date hereof, and except as described thereon, all such Material Contracts are in full force and effect and no defaults currently exist thereunder.

4.17. Governmental Regulation. Neither Borrower nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. Neither Borrower nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

4.18. Margin Stock. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors.

4.19. Employee Matters. Neither Borrower nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Borrower or any of its Subsidiaries, or to the best knowledge of Borrower, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Borrower or any of its Subsidiaries or to the best knowledge of Borrower, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and (c) to the best knowledge of Borrower, no union representation question existing with respect to the employees of Borrower or any of its Subsidiaries and, to the best knowledge of Borrower, no union organization activity that is taking place, except (with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect.

4.20. Employee Benefit Plans. Borrower, each of its Subsidiaries and each of their respective ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. Each Employee Benefit Plan which is

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intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status. No liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Borrower, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA Event has occurred or is reasonably expected to occur. Except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates. The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Borrower, any of its Subsidiaries or any of their ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Borrower, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA is zero. Borrower, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.

4.21. Certain Fees. Other than as set forth on Schedule 4.21, no broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby.

4.22. Solvency. Each Credit Party is and, upon the incurrence of any Obligation by such Credit Party on any date on which this representation and warranty is made, will be, Solvent.

4.23. Compliance with Statutes, Etc. Each of Borrower and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Borrower or any of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

4.24. Disclosure. No representation or warranty of Borrower, any Pantone Entity or any of their respective Subsidiaries contained in any Credit Document, any Related Agreement, or in any other documents, certificates or written statements furnished to Lenders by or on behalf of Borrower, any Pantone Entity or any of their respective Subsidiaries for use in

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connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to Borrower or such Pantone Entity, in the case of any document not furnished by any of them) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Borrower or such Pantone Entity to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. There are no facts known (or which should upon the reasonable exercise of diligence be known) to Borrower or any Pantone Entity (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby.

4.25. USA PATRIOT Act. To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “USA PATRIOT Act”). No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.26. Insignificant Domestic Subsidiaries. As of the Closing Date, each Insignificant Domestic Subsidiary is described on Schedule 4.26. Each of the Insignificant Domestic Subsidiaries conducts (and shall conduct) no operations and has (and shall have) no assets and no liabilities, in each case, individually or in the aggregate, with a fair market value in excess of $500,000.

SECTION 5. AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that until payment in full of all Obligations, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5.

5.1. Financial Statements and Other Reports. Borrower will deliver (to the extent applicable) to Administrative Agent, Lead Arranger and Lenders:

(a) [Reserved].

(b) Quarterly Financial Statements. As soon as available, and in any event within forty-five (45) days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the consolidated and consolidating balance sheets of Borrower and its Subsidiaries as at

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the end of such Fiscal Quarter and the related consolidated (and with respect to statements of income, consolidating) statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto;

(c) Annual Financial Statements. As soon as available, and in any event within ninety (90) days after the end of each Fiscal Year, (i) the consolidated and consolidating balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and with respect to statements of income, consolidating) statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon of Ernst & Young LLP or other independent certified public accountants of recognized national standing selected by Borrower, and reasonably satisfactory to Requisite Lenders (which report shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together with a written statement by such independent certified public accountants stating (1) that their audit examination has included a review of the terms of the Credit Documents and (2) whether, in connection therewith, any condition or event that constitutes a Default or an Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof;

(d) Compliance Certificate. Together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Sections 5.1(b) and 5.1(c), a duly executed and completed Compliance Certificate;

(e) Statements of Reconciliation after Change in Accounting Principles. If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Borrower and its Subsidiaries delivered pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form and substance satisfactory to Requisite Lenders;

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(f) Notice of Default. Promptly upon any officer of Borrower obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Borrower with respect thereto; (ii) that any Person has given any notice to Borrower or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto;

(g) Notice of Litigation. Promptly upon any officer of Borrower obtaining knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not previously disclosed in writing by Borrower to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to Borrower to enable Lenders and their counsel to evaluate such matters;

(h) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Requisite Lenders shall reasonably request;

(i) Financial Plan. As soon as practicable and in any event no later than forty-five (45) days following the first Business Day of each Fiscal Year, a consolidated plan and financial forecast for the then current Fiscal Year and the forthcoming two (2) Fiscal Years (or portions thereof) on a year by year basis, and for the then current Fiscal Year on a quarter by quarter basis (a “Financial Plan”), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for each such Fiscal Year, together with pro forma Compliance Certificates for each such Fiscal Year and an explanation of the assumptions on which such forecasts are based, and (ii) forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for each month of each such Fiscal Year and (iii) forecasts demonstrating projected compliance with the requirements of Section 6.8 through the final maturity date of the Loans;

(j) Insurance Report. As soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance satisfactory to Requisite Lenders outlining all

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material insurance coverage maintained as of the date of such report by Borrower and its Subsidiaries and all material insurance coverage planned to be maintained by Borrower and its Subsidiaries in the immediately succeeding Fiscal Year;

(k) Notice of Change in Board of Directors. With reasonable promptness, written notice of any change in the board of directors (or similar governing body) of Borrower or Borrower;

(l) Notice Regarding Material Contracts. Promptly, and in any event within ten (10) Business Days (i) after any Material Contract of Borrower or any of its Subsidiaries is terminated or amended in a manner that could result in a Material Adverse Effect to Borrower or such Subsidiary, as the case may be, or (ii) any new Material Contract is entered into, a written statement describing such event, with copies of such material amendments or new contracts, delivered to Administrative Agent (to the extent such delivery is permitted by the terms of any such Material Contract, provided, no such prohibition on delivery shall be effective if it were bargained for by Borrower or its applicable Subsidiary with the intent of avoiding compliance with this Section 5.1(l)), and an explanation of any actions being taken with respect thereto;

(m) Information Regarding Collateral. (a) Borrower will furnish to Collateral Agent prompt written notice of any change (i) in any Credit Party’s corporate name, (ii) in any Credit Party’s identity or corporate structure, (iii) in any Credit Party’s jurisdiction of organization or (iv) in any Credit Party’s Federal Taxpayer Identification Number or state organizational identification number. Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Collateral Documents. Borrower also agrees promptly to notify Collateral Agent if any material portion of the Collateral is damaged or destroyed;

(n) Annual Collateral Verification. Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(c) and on the date hereof, Borrower shall deliver to Collateral Agent a certificate of its Authorized Officer (i) either confirming that there has been no change in such information since the date of the Collateral Questionnaire delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes and (ii) certifying that all Uniform Commercial Code financing statements (including fixtures filings, as applicable) and all supplemental intellectual property security agreements or other appropriate filings, recordings or registrations, have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to effect, protect and perfect the security interests under the Collateral Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);

(o) Other Information. (A) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally

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by Borrower to its security holders acting in such capacity or by any Subsidiary of Borrower to its security holders other than Borrower or another Subsidiary of Borrower, (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Borrower or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, (iii) all press releases and other statements made available generally by Borrower or any of its Subsidiaries to the public concerning material developments in the business of Borrower or any of its Subsidiaries of a kind generally required to be filed by Borrower and its Subsidiaries on Form 8-K, and (B) such other information and data with respect to Borrower or any of its Subsidiaries as from time to time may be reasonably requested by Requisite Lenders; and

(p) Certification of Public Information. Concurrently with the delivery of any document or notice required to be delivered pursuant to this Section 5.1, Borrower shall indicate in writing whether such document or notice contains Nonpublic Information. Any document or notice required to be delivered pursuant to this Section 5.1 shall be deemed to contain Nonpublic Information unless Borrower specifies otherwise. Borrower and each Lender acknowledges that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to Borrower, its Subsidiaries or their securities) and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform”), any document or notice which contains Nonpublic Information (or is deemed to contain Nonpublic Information) shall not be posted on that portion of the Platform designated for such public side Lenders.

5.2. Existence. Except as otherwise permitted under Section 6.9, each Credit Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided, no Credit Party (other than Borrower with respect to existence) or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders.

5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause each of its Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Borrower or any of its Subsidiaries).

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5.4. Maintenance of Properties. Each Credit Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof.

5.5. Insurance. Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrower and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Borrower will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors, and (b) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance shall (i) name Collateral Agent, on behalf of Secured Parties as an additional insured thereunder as its interests may appear and (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to Lenders, that names Collateral Agent, on behalf of Secured Parties, as the loss payee thereunder and provides for at least thirty (30) days’ prior written notice to Collateral Agent of any modification or cancellation of such policy.

5.6. Books and Records; Inspections. Each Credit Party will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity in all material respects with GAAP shall be made of all dealings and transactions in relation to its business and activities. Each Credit Party will, and will cause each of its Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested.

5.7. Lenders Meetings. Borrower will, upon the request of Requisite Lenders, participate in a meeting of Lenders once during each Fiscal Year to be held at Borrower’s corporate offices (or at such other location as may be agreed to by Borrower and Requisite Lenders) at such time as may be agreed to by Borrower and Requisite Lenders.

5.8. Compliance with Laws. Each Credit Party will comply, and shall cause each of its Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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5.9. Environmental.

(a) Environmental Disclosure. Borrower will deliver to Administrative Agent and Lenders:

(i) as soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Borrower or any of its Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to environmental matters at any Real Property or with respect to any Environmental Claims that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (1) any Release required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (2) any remedial action taken by Borrower or any other Person in response to (A) any Hazardous Materials Activities the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect, and (3) Borrower or Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property that could cause such Real Property or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws;

(iii) as soon as practicable following the sending or receipt thereof by Borrower or any of its Subsidiaries, a copy of any and all written communications with respect to (1) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect, (2) any Release required to be reported to any federal, state or local governmental or regulatory agency, and (3) any request for information from any governmental agency that suggests such agency is investigating whether Borrower or any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity;

(iv) prompt written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by Borrower or any of its Subsidiaries that could reasonably be expected to (A) expose Borrower or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (B) affect the ability of Borrower or any of its Subsidiaries to maintain in full force and effect all material Governmental Authorizations required under any Environmental Laws for their respective operations and (2) any proposed action to be taken by Borrower or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Borrower or any of its Subsidiaries to any additional material obligations or requirements under any Environmental Laws; and

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(v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by Requisite Lenders in relation to any matters disclosed pursuant to this Section 5.9(a).

(b) Hazardous Materials Activities, Etc. Each Credit Party shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.10. Subsidiaries.

(a) In the event that any Person becomes a Domestic Subsidiary of Borrower, or, after the Closing Date, any Insignificant Domestic Subsidiary acquires assets with a fair market value of $500,000 or more, Borrower shall, on or prior to the date such Person become a Domestic Subsidiary or within thirty (30) days of such Insignificant Domestic Subsidiary acquiring such assets, (i) promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, (ii) take all such actions and execute and deliver, or cause to be executed and delivered, to Lead Arranger and Collateral Agent all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(k) and 3.1(l), (iii) deliver to Administrative Agent and Collateral Agent (A) sufficient copies of the Organizational Document executed and delivered by such Domestic Subsidiary, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated a recent date; (B) signature and incumbency certificates of the officers of such Domestic Subsidiary executing the Counterpart Agreement; (C) resolutions of the Board of Directors or similar governing body of such Domestic Subsidiary approving and authorizing the execution, delivery and performance of the Counterpart Agreement, certified by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (D) a good standing certificate from the applicable Governmental Authority of such Domestic Subsidiary’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date; (E) a written opinion of counsel for the Credit Parties as to such matters related thereto as Requisite Lenders may request in form and substance reasonably acceptable to Requisite Lenders and (F) such other documents as Requisite Lenders may reasonably request. In the event that any Person becomes a Foreign Subsidiary of Borrower, and the ownership interests of such Foreign Subsidiary are owned by Borrower or by any Domestic Subsidiary thereof, Borrower shall, or shall cause such Domestic Subsidiary to, deliver to Administrative Agent and Collateral Agent all such documents, instruments, agreements, and certificates as are similar to those described in clause (a)(iii) above, and Borrower shall, within thirty (30) days after such Person becomes a Foreign Subsidiary, take or

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shall cause such Domestic Subsidiary to take all of the actions referred to in Sections 3.1(k) and 3.1(l) necessary to grant and to perfect a Second Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge and Security Agreement in 65% of the voting Capital Stock of such Foreign Subsidiary and 100% of the non-voting Capital Stock of such Foreign Subsidiary. To the extent no material adverse tax consequences to Borrower would result therefrom, within thirty (30) days after such Person becomes a Foreign Subsidiary, Borrower shall cause such Foreign Subsidiary to (A) execute a security agreement compatible with the laws of such Foreign Subsidiary’s jurisdiction in form and substance reasonably satisfactory to Requisite Lenders and (B) to take all actions necessary or advisable in the opinion of Requisite Lenders to cause the Lien created by the applicable Collateral Document to be duly perfected to the extent required by such agreement in accordance with all applicable law, including the filing of financing statements in such jurisdictions as may be reasonably requested by Requisite Lenders. With respect to each such Subsidiary, Borrower shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Borrower, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Borrower; provided, such written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof.

(b) Within sixty (60) days of the end of each Fiscal Year (or such later date as Requisite Lenders, in their sole discretion, may consent), Borrower shall deliver to Collateral Agent: (1) a report setting forth the percentage of net invoiced sales of Borrower attributable to each Foreign Subsidiary whose Capital Stock is required to be pledged to Collateral Agent under Section 5.10(a); and (2) with respect to any Foreign Subsidiary referred to in the preceding clause (1) whose sales represent more than 10.0% of the sales of Borrower, on a consolidated basis, to the extent a security agreement or similar instrument governed by the law of the jurisdiction of formation of any such Foreign Subsidiary has not previously been delivered to Collateral Agent, security agreements or similar instruments governed by the laws of the jurisdiction of formation of any such Foreign Subsidiary pursuant to which security agreements or similar instruments Borrower would grant to Collateral Agent a perfected security interest in the Capital Stock of any such Foreign Subsidiary; provided, however, that such security interest shall be granted only if and to the extent required by Section 5.10(a). All such security agreements or similar instruments shall be in form and substance reasonably satisfactory to Lenders.

5.11. Additional Material Real Estate Assets. In the event that any Credit Party acquires a Material Real Estate Asset or a Real Estate Asset owned on the Closing Date becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party shall promptly take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Sections 3.1(k) and 3.1(l) with respect to each such Material Real Estate Asset necessary in order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to in this Section 5.11, perfected Second Priority security interest in such Real Estate Asset. In addition to the foregoing, Borrower shall, at the request of Requisite Lenders, deliver, from time to time, to Administrative Agent such appraisals as are required by law or regulation of Real Estate Assets with respect to which Collateral Agent has been granted a Lien. In addition to the foregoing, if

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Borrower acquires a Material Real Estate Asset which has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, Borrower shall promptly provide Collateral Agent with a Phase I Report for each Material Real Estate Asset so acquired, in a form reasonably satisfactory to Lenders.

5.12. Interest Rate Protection. No later than ninety (90) days following the Closing Date and at all times thereafter until the third anniversary of the Closing Date, Borrower shall obtain and cause to be maintained protection against fluctuations in interest rates pursuant to one or more Interest Rate Agreements in form and substance reasonably satisfactory to Lenders, in order to ensure that no less than 50% of the aggregate principal amount of the total Indebtedness of Borrower and its Subsidiaries then outstanding from time to time is either (a) subject to such Interest Rate Agreements or (b) Indebtedness that bears interest at a fixed rate. Each Existing Interest Rate Agreement shall be included for purposes of determining compliance with the foregoing sentence for so long as such Existing Interest Rate Agreement is outstanding.

5.13. Further Assurances. (a) At any time or from time to time upon the request of Requisite Lenders, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Requisite Lenders, Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Requisite Lenders, Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by Guarantors and are secured by substantially all of the assets of Borrower, and its Subsidiaries and all of the outstanding Capital Stock of Borrower and its Subsidiaries (subject to limitations contained in the Credit Documents with respect to Foreign Subsidiaries). If at any time the gross revenues of X-Rite GmbH exceed the foreign currency equivalent of $5,000,000 for any trailing twelve month period (the “Pledge Threshold”), Borrower shall (a) provide prompt written notice thereof to Administrative Agent and (b) cause each of X-Rite Global, Incorporated and X-Rite Holdings, Inc. to deliver, as soon as practicable and in any event within thirty (30) days following the date on which the Pledge Threshold has been reached, (i) a share pledge agreement entered into among X-Rite Global, Incorporated, X-Rite Holdings, Inc. and Collateral Agent, and acknowledged by X-Rite GmbH, fully effective and valid under German law, (ii) an opinion of German counsel issued to Collateral Agent in respect of the foregoing share pledge agreement and (iii) all other documents reasonably necessary to perfect Collateral Agent’s security interest in 65% of the voting Capital Stock of X-Rite GmbH (including stock certificates representing 65% of such voting Capital Stock, if any) and 100% of the non-voting Capital Stock of X-Rite GmbH (including stock certificates representing 100% of such non-voting Capital Stock, if any).

(b) In the event that X-Rite International is not dissolved on or prior to December 31, 2007, Borrower shall deliver to Administrative Agent and Collateral Agent all such documents, instruments, agreements, and certificates as are similar to those described in Section 5.10(a)(iii), and Borrower shall take all of actions (including, without limitation, those referred to in Sections 3.1(k) and 3.1(l)) necessary to grant and to perfect a Second Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge and Security Agreement in 65% of the voting Capital Stock of X-Rite International and 100% of the non-voting Capital Stock of X-Rite International.

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(c) Borrower shall, and shall cause its Subsidiaries to, deliver each of the items described on Schedule 5.13(c) within the period or by the date specified therein (or by such later date as may have been agreed to by Required Lenders in their reasonable discretion).

5.14. Miscellaneous Business Covenants. Unless otherwise consented to by Agents or Requisite Lenders:

(a) Non-Consolidation. Borrower will and will cause each of its Subsidiaries to: (i) maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity; (ii) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity; and (iii) provide that its board of directors or other analogous governing body will hold all appropriate meetings to authorize and approve such entity’s actions, which meetings will be separate from those of other entities.

(b) Cash Management Systems. Borrower and its Subsidiaries shall maintain cash management systems (a) at the financial institutions engaged by Borrower and its Subsidiaries as of the Closing Date; provided that on or before the Closing Date the holder of such account and the financial institution maintaining such account shall execute and Borrower shall deliver to Collateral Agent an Uncertificated Securities Control Agreement, a Securities Account Control Agreement and a Deposit Account Control Agreement, as applicable, substantially in the form of Exhibit B, C and D, respectively, to the Pledge and Security Agreement or, in each case, similar forms of documents reasonably acceptable to Lenders or (b) at such other financial institutions reasonably acceptable to Agents. The foregoing notwithstanding, as soon as reasonably practicable, and in no event later than 180 days following the Closing Date (or such later date as Required Lenders may agree to in their reasonable discretion), Borrower shall, and shall cause Pantone (or such other Subsidiary of Borrower) to, either (x) deliver fully executed Securities Account Control Agreements and/or Deposit Account Control Agreements, as applicable, executed by Bank of America, N.A. or Brown Brothers & Harriman, as applicable, in each case in form and substance reasonably satisfactory to Lenders with respect to each bank account, lock box, securities account and other similar account maintained at such institutions and described on Schedule 5.14 (collectively, the “Existing Pantone Accounts”) or (y) close such Existing Pantone Accounts and transfer any amounts on deposit in such Existing Pantone Accounts only to one or more accounts with a bank who has agreed to comply with Collateral Agent’s entitlement orders without further consent from Borrower or any of its Subsidiaries, in each case pursuant to a securities account control agreement or deposit account control agreement, as applicable, in form and substance reasonably satisfactory to Lenders.

(c) Filing of Agreement. Within four days of the date hereof, provided that Borrower or any of its Subsidiaries is otherwise required to file periodic reports with the Securities and Exchange Commission, Borrower or such Subsidiaries shall file a copy of this Agreement and the schedules hereto as a material contract with the US Securities and Exchange Commission.

5.15. Transaction Costs. On or prior to the Closing Date, Borrower shall deliver to Administrative Agent Borrower’s reasonable best estimate of the Transactions Costs (other than fees payable to any agent hereunder).

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5.16. Life Insurance Policies. As soon as reasonably practicable, but in any event no later that thirty (30) days following the Closing Date (or such later date as Lenders shall approve in their reasonable discretion), Borrower shall deliver, or cause to be delivered, evidence that each of the Key Person Life Insurance Policies has been collaterally assigned to Collateral Agent for the benefit of the Secured Parties.

5.17. Existing Headquarters Asset Sale. On or prior to June 30, 2008 (or such later date as Lenders shall approve, acting reasonably), (a) Borrower shall dispose of its headquarters as of the Closing Date, commonly known as 3100 44th Street Southwest, Grandville, Michigan (the “Existing Headquarters Asset”), pursuant to an Asset Sale (the “Existing Headquarters Asset Sale”), (b) consideration received for such Asset Sale shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Borrower (or similar governing body)), (c) no less than 100% thereof shall be paid in Cash, and (d) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a); provided that such Net Asset Sale Proceeds shall be payable against the Existing Headquarters Loan (and thereafter the Loans) no later than the third (3rd) Business Day following the date of receipt by Borrower or any of its Subsidiaries of such Net Asset Sale Proceeds, and such Net Asset Sale Proceeds may not be reinvested as otherwise permitted by Section 2.14(a).

SECTION 6. NEGATIVE COVENANTS

Each Credit Party covenants and agrees that until payment in full of all Obligations, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6.

6.1. Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:

(a) the Obligations;

(b) Indebtedness of (i) any Guarantor to Borrower or to any other Guarantor, or of Borrower to any Guarantor; or (ii) any Foreign Subsidiary (as obligor) to any Credit Party (as maker); provided that the aggregate amount of all such Indebtedness of any Foreign Subsidiaries to any one or more Credit Parties, together with all other Investments made in accordance with Section 6.7(b)(iii), shall not exceed the amount of Investments that the Credit Parties are permitted to make under Section 6.7(b)(iii); and provided further, (A) all such Indebtedness shall be evidenced by promissory notes and all such notes shall be subject to a Second Priority Lien pursuant to the Pledge and Security Agreement, (B) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of any applicable promissory notes or an intercompany subordination agreement that in any such case, is reasonably satisfactory to Requisite Lenders, and (C) any payment by any such Guarantor under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such Subsidiary to Borrower or to any of its Subsidiaries for whose benefit such payment is made;

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(c) Indebtedness incurred by Borrower or any of its Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guaranties or letters of credit, surety bonds or performance bonds securing the performance of Borrower or any such Subsidiary pursuant to such agreements, in connection with Permitted Acquisitions or permitted dispositions of any business, assets or Subsidiary of Borrower or any of its Subsidiaries;

(d) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal or similar obligations incurred in the ordinary course of business;

(e) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;

(f) guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of Borrower and its Subsidiaries;

(g) guaranties by Borrower of Indebtedness of a Guarantor or guaranties by a Subsidiary of Borrower of Indebtedness of Borrower or a Guarantor with respect, in each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1; provided that, if such Indebtedness is subordinate to the Obligations, such guaranty shall be subordinate to the Obligations to the same extent;

(h) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof are not less favorable to the obligor thereon or to the Lenders than the Indebtedness being refinanced or extended, and the average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (A) include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended, renewed or refinanced, (B) exceed in a principal amount the Indebtedness being renewed, extended or refinanced or (C) be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom;

(i) Indebtedness with respect to Capital Leases and purchase money Indebtedness in an aggregate amount not to exceed at any time $4,000,000 (including any purchase money Indebtedness acquired in connection with a Permitted Acquisition); provided, any such purchase money Indebtedness (i) shall be secured only to the asset acquired in connection with the incurrence of such Indebtedness, and (ii) shall constitute not less than 85% of the aggregate consideration paid with respect to such asset;

(j) other unsecured Indebtedness of Borrower and its Subsidiaries, in an aggregate amount not to exceed at any time $4,000,000;

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(k) (i) Indebtedness in respect of the First Lien Credit Agreement in an aggregate principal amount not to exceed (A) $341,000,000 minus (B) the sum of all principal payments of First Lien Term Loans (including voluntary and mandatory prepayments) and permanent reductions of revolving loan commitments under the First Lien Credit Documents after the date hereof accompanied by principal payments of revolving loans under the First Lien Credit Documents, and, subject to the terms of the Intercreditor Agreement, Indebtedness incurred to refinance, renew or replace such Indebtedness in whole or in part; provided that, no Subsidiary of Borrower that is not a Guarantor hereunder shall be a guarantor of such refinancing, renewal or replacement and (ii) Indebtedness of Borrower or any of its Subsidiaries under Hedge Agreements;

(l) Indebtedness in an amount not to exceed $35,000,000 of Borrower to Amazys; provided that (i) all such Indebtedness shall be evidenced by promissory notes in form and substance reasonably satisfactory to Requisite Lenders, (ii) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to an intercreditor or subordination agreement, at the option of Requisite Lenders, governed by the law of the jurisdiction of formation of the intercompany creditor, that in any case is reasonably satisfactory to Requisite Lenders, (iii) the final maturity of such Indebtedness shall not be or become due earlier than at least six (6) months after the later of the Term Loan Maturity Date or the Revolving Commitment Termination Date, and (iv) such Indebtedness shall require no mandatory payment of principal, interest, fees or other amounts and no payment of such principal, interest fees or other amounts (whether mandatory or voluntary) shall be made (other than in accordance with and subject to the limitations set forth in Section 6.7(b)(iii) as if such payment were an Investment for purposes of Section 6.7), prior to at least six (6) months after the Maturity Date; and

(m) from the Closing Date, through and including the date that is the earlier of (i) the date of the Existing Headquarters Asset Sale and (ii) June 30, 2008, the Existing Headquarters Loan and the Existing Headquarters Guaranty; provided that such Existing Headquarters Loan shall be repaid in cash in full on the earlier of (x) the date of the Existing Headquarters Asset Sale and (y) June 30, 2008; provided, further that the Existing Headquarters Guaranty shall be cancelled and released upon the repayment in full of the Existing Headquarters Loan.

6.2. Liens. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State or under any similar recording or notice statute, except:

(a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document;

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(b) Liens for Taxes not yet due and payable, or if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves have been made in accordance with GAAP;

(c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;

(d) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;

(e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;

(f) any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder;

(g) Liens solely on any cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(j) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;

(k) licenses of patents, trademarks and other intellectual property rights granted by Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of Borrower or such Subsidiary;

(l) Liens described in Schedule 6.2;

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(m) Liens securing Indebtedness permitted pursuant to Section 6.1(i); provided, any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;

(n) subject to the terms of the Intercreditor Agreement, Liens in favor of the First Lien Collateral Agent for the benefit of the “First Lien Claimholders” under and as defined in the Intercreditor Agreement;

(o) other Liens on assets other than the Collateral securing Indebtedness in an aggregate amount not to exceed $6,000,000 at any time outstanding; and

(p) from the Closing Date, through and including the date that is the earlier of (i) the date of the Existing Headquarters Asset Sale and (ii) June 30, 2008, the Existing Headquarters Mortgage; provided that such Existing Headquarters Mortgage shall be fully released on the earlier of the date of (x) the Existing Headquarters Asset Sale and (y) June 30, 2008.

6.3. Equitable Lien. If any Credit Party shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not otherwise permitted hereby.

6.4. No Further Negative Pledges. Except with respect to (a) specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset Sale, (b) the First Lien Credit Agreement and any collateral documents related thereto as in effect on the date hereof and (c) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be) no Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired.

6.5. Restricted Junior Payments. No Credit Party shall, nor shall it permit any of its Subsidiaries or Affiliates through any manner or means or through any other Person to, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment, except that (a) the foregoing shall not prohibit any Subsidiary of Borrower from making dividends or distributions, directly or indirectly, to Borrower or to any wholly owned Subsidiary of Borrower and (b) from the Closing Date, through and including the date that is the earlier of (x) the Existing Headquarters Asset Sale and (y) June 30, 2008, Company may make (i) regularly scheduled payments of interest in respect of the Indebtedness outstanding under the Existing Headquarters Loan (as in effect on the date hereof) in accordance with the terms thereof and (ii) a single voluntary prepayment of principal (and accrued interest) in respect of the Indebtedness outstanding under the Existing Headquarters Loan (as in effect on the date hereof) (A) with the proceeds of the Existing

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Headquarters Asset Sale and/or (B) with cash on hand or with the proceeds of a Revolving Loan, provided, in each case, that the Company shall promptly comply with its obligations under Section 5.11.

6.6. Restrictions on Subsidiary Distributions. Except as provided herein and the First Lien Credit Agreement, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Borrower to (a) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by Borrower or any other Subsidiary of Borrower, (b) repay or prepay any Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of Borrower, (c) make loans or advances to Borrower or any other Subsidiary of Borrower, or (d) transfer, assign or lease any of its property or assets to Borrower or any other Subsidiary of Borrower other than restrictions (i) in agreements evidencing Indebtedness permitted by Section 6.1(i) that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement or (iv) described on Schedule 6.6.

6.7. Investments. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except:

(a) Investments in Cash and Cash Equivalents;

(b) (i) equity Investments owned as of the Closing Date in any Subsidiary, (ii) Investments made after the Closing Date in any wholly owned Guarantor, and (iii) Investments made after the Closing Date in any Foreign Subsidiaries (which, for the avoidance of doubt, shall include (x) loans borrowed by any Foreign Subsidiary from any Credit Party under Section 6.1(b)(ii) and (y) cash payments of interest, fees, principal or other amounts by any Credit Party to any Foreign Subsidiary in respect of obligations under any loans borrowed by any Credit Party from any Foreign Subsidiary under Section 6.1(j)) in an amount not to exceed $4,000,000 in the aggregate;

(c) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors and (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business consistent with the past practices of Borrower and its Subsidiaries;

(d) intercompany loans to the extent permitted under Section 6.1(b);

(e) Consolidated Capital Expenditures permitted by Section 6.8(c);

(f) loans and advances to employees of Borrower and its Subsidiaries made in the ordinary course of business in an aggregate principal amount not to exceed $2,250,000 in the aggregate;

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(g) the Acquisition and Permitted Acquisitions permitted pursuant to Section 6.9;

(h) Investments described in Schedule 6.7; and

(i) other Investments in an aggregate amount not to exceed at any time $3,850,000.

Notwithstanding the foregoing, in no event shall any Credit Party make any Investment which results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under the terms of Section 6.5.

6.8. Financial Covenants.

(a) Consolidated Adjusted EBITDA. Borrower shall not permit Consolidated Adjusted EBITDA as at the end of any Fiscal Quarter ending closest to the dates set forth below, beginning with the Fiscal Quarter ending closest to March 31, 2008, for the four Fiscal Quarter period then ended to be less than the correlative amount indicated in the following table under the heading “Consolidated Adjusted EBITDA”:

Fiscal Quarter Ended	Consolidated Adjusted EBITDA		Additional Interest Consolidated Adjusted EBITDA
March 31, 2008	$	54,000,000	$	57,500,000
June 30, 2008	$	59,000,000	$	62,000,000
September 30, 2008	$	62,000,000	$	65,000,000
December 31, 2008	$	65,500,000	$	68,500,000
March 31, 2009	$	67,750,000	$	71,375,000
June 30, 2009	$	70,000,000	$	73,750,000
September 30, 2009	$	72,250,000	$	76,125,000
December 31, 2009	$	75,000,000	$	77,000,000
March 31, 2010	$	76,500,000		N/A
June 30, 2010	$	78,750,000		N/A
September 30, 2010	$	81,000,000		N/A
December 31, 2010	$	83,250,000		N/A
March 31, 2011	$	85,500,000		N/A
June 30, 2011	$	87,750,000		N/A
September 30, 2011	$	90,000,000		N/A
December 31, 2011 and each	$	90,000,000		N/A

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Fiscal Quarter Ended	Consolidated Adjusted EBITDA	Additional Interest Consolidated Adjusted EBITDA
Fiscal Quarter thereafter

; provided that in the event Borrower’s Consolidated Adjusted EBITDA as at the end of any Fiscal Quarter ending closest to the dates set forth above for the four Fiscal Quarter period then ended is equal to or greater than the correlative amount indicated in the table above under the heading “Consolidated Adjusted EBITDA” but less than the correlative amount indicated in the table above under the heading “Additional Interest Consolidated Adjusted EBITDA” for any Fiscal Quarter (any such Fiscal Quarter, a “Trigger Fiscal Quarter”) (i) occurring in Fiscal Year 2008, Borrower shall pay additional interest on the unpaid principal amount of the Loans equal to 2.00% per annum, and (ii) occurring in Fiscal Year 2009, Borrower shall pay additional interest on the unpaid principal amount of the Loans equal to 1.50% per annum, which additional interest shall, in the case of clauses (i) and (ii), (x) accrue for a period of at least two (2) consecutive Fiscal Quarters beginning with the Fiscal Quarter following such Trigger Fiscal Quarter until the end of the Fiscal Quarter during which Borrower’s Consolidated Adjusted EBITDA as at the end of such Fiscal Quarter for the four Fiscal Quarter period then ended shall be equal to or greater than the correlative amount indicated in the table above under the heading “Additional Interest Consolidated Adjusted EBITDA” and (y) be computed and payable in accordance with Sections 2.8(d) and 2.8(e).

(b) Leverage Ratio. Borrower shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter ending closest to the dates set forth below, beginning with the Fiscal Quarter ending closest to March 31, 2008, to exceed the correlative ratio indicated in the following table:

Fiscal Quarter Ended	Leverage Ratio
March 31, 2008	6.50 to 1.00
June 30, 2008	6.25 to 1.00
September 30, 2008	5.92 to 1.00
December 31, 2008	5.70 to 1.00
March 31, 2009	5.50 to 1.00
June 30, 2009	5.25 to 1.00
September 30, 2009	5.25 to 1.00
December 31, 2009	5.00 to 1.00
March 31, 2010	4.75 to 1.00
June 30, 2010	4.50 to 1.00
September 30, 2010	4.50 to 1.00

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Fiscal Quarter Ended	Leverage Ratio
December 31, 2010	4.50 to 1.00
March 31, 2011	4.50 to 1.00
June 30, 2011	4.25 to 1.00
September 30, 2011	4.25 to 1.00
December 31, 2011 and each Fiscal Quarter thereafter	4.25 to 1.00

(c) Maximum Consolidated Capital Expenditures. Borrower shall not, and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount for Borrower and its Subsidiaries in excess of the corresponding amount set forth below opposite such Fiscal Year; provided, such amount for any Fiscal Year shall be increased by an amount equal to the excess, if any, (but in no event more than $4,000,000) of such amount for the previous Fiscal Year (as adjusted in accordance with this proviso) over the actual amount of Consolidated Capital Expenditures for such previous Fiscal Year:

Fiscal Year	Consolidated Capital Expenditures
2007 and each Fiscal Year thereafter	$	10,000,000

(d) Certain Calculations. With respect to any period during which a Permitted Acquisition or an Asset Sale has occurred (each, a “Subject Transaction”), for purposes of determining compliance with the financial covenants set forth in this Section 6.8, Consolidated Adjusted EBITDA shall be calculated with respect to such period on a pro forma basis (including pro forma adjustments arising out of events which are directly attributable to a specific transaction, are factually supportable and are expected to have a continuing impact, in each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which would include cost savings resulting from head count reduction, closure of facilities and similar restructuring charges, which pro forma adjustments shall be certified by the chief financial officer of Borrower) using the historical audited financial statements of any business so acquired or to be acquired or sold or to be sold and the consolidated financial statements of Borrower and its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated or incurred or repaid at the beginning of such period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the weighted average of the interest rates applicable to outstanding Loans incurred during such period).

6.9. Fundamental Changes; Disposition of Assets; Acquisitions. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger or

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consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or leased, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and Consolidated Capital Expenditures in the ordinary course of business) the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except:

(a) any Subsidiary of Borrower may be merged with or into any Guarantor, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any Guarantor; provided, in the case of such a merger, such Guarantor shall be the continuing or surviving Person;

(b) sales or other dispositions of assets that do not constitute Asset Sales;

(c) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, are less than $6,000,000; provided (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Borrower (or similar governing body)), (2) no less than 85% thereof shall be paid in Cash, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a);

(d) Asset Sales set forth on Schedule 6.9;

(e) disposals of obsolete, worn out or surplus property;

(f) (i) the Acquisition and (ii) Permitted Acquisitions, provided that, solely in the case of this clause (ii), the total consideration paid or payable (including, without limitation, any deferred payment) for all such Permitted Acquisitions consummated during (A) any Fiscal Year shall not exceed $12,000,000 in the aggregate, and (B) the term of this Agreement shall not exceed $42,000,000 in the aggregate;

(g) Investments made in accordance with Section 6.7;

(h) for the avoidance of doubt, Capital Expenditures constituting the acquisition of Intellectual Property through the purchase, in one transaction or a series of transactions, of the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person in an aggregate amount not to exceed $600,000 in any Fiscal Year; and

(i) the Existing Headquarters Asset Sale made in accordance with Section 5.17.

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6.10. Disposal of Subsidiary Interests. Except for any sale of all of its interests in the Capital Stock of any of its Subsidiaries in compliance with the provisions of Section 6.9, no Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to another Credit Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law.

6.11. Sales and Lease-Backs. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Borrower or any of its Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Credit Party to any Person (other than Borrower or any of its Subsidiaries) in connection with such lease.

6.12. Transactions with Shareholders and Affiliates. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of Borrower on terms that are less favorable to Borrower or that Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not such a holder or Affiliate; provided, the foregoing restriction shall not apply to (a) any transaction between Borrower and any Guarantor; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Borrower and its Subsidiaries; (c) compensation arrangements for officers and other employees of Borrower and its Subsidiaries entered into in the ordinary course of business; and (d) transactions described in Schedule 6.12.

6.13. Conduct of Business. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by such Credit Party on the Closing Date and similar or related businesses and (ii) such other lines of business as may be consented to by Requisite Lenders.

6.14. Amendments or Waivers of Related Agreements. No Credit Party shall nor shall it permit any of its Subsidiaries to (except, in the case of the First Lien Credit Documents, as otherwise provided in the Intercreditor Agreement) agree to any material amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under any Related Agreement after the Closing Date without in each case obtaining the prior written consent of Requisite Lenders to such amendment, restatement, supplement or other modification or waiver.

6.15. Amendments or Waivers with respect to Certain Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of the Existing Headquarters Loan or the Existing Headquarters Guaranty, or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate on the Existing Headquarters Loan, change

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(to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of the Existing Headquarters Loan (or of any guaranty thereof), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of the Existing Headquarters Loan (or a trustee or other representative on their behalf) which would be adverse to any Credit Party or Lenders.

6.16. Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to change its Fiscal Year-end from the Saturday closest to December 31 of each calendar year.

SECTION 7. GUARANTY

7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided, solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an

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amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.

7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;

(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrower or any of such other guarantors and whether or not Borrower is joined in any such action or actions;

(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any

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portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement or any

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agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents or any of the Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Borrower or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

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7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been indefeasibly paid in full, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. Notwithstanding anything to the contrary contained herein, effective upon any sale, registration, assignment or transfer of or foreclosure on, or any other disposition or remedial action in respect of, any Capital Stock of Borrower or any Subsidiary of Borrower or of any Guarantor by any Agent or any Lender pursuant to the Credit Documents and/or applicable law, all such rights and claims of subrogation, contribution, indemnification, exoneration, reimbursement and enforcement against Borrower, any Subsidiary of Borrower or any Subsidiary of any Guarantor shall be, and hereby are, forever extinguished and indefeasibly waived and released by each Guarantor.

7.7. Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.

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7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

7.9. Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

7.10. Financial Condition of Borrower. Any Loan may be made to Borrower or continued from time to time, without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Credit Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower now known or hereafter known by any Beneficiary.

7.11. Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

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(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale.

SECTION 8. EVENTS OF DEFAULT

8.1. Events of Default. If any one or more of the following conditions or events shall occur:

(a) Failure to Make Payments When Due. Failure by Borrower to pay (i) when due any amount of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; or (ii) any interest on any Loan or any fee, expense reimbursement or any other amount due hereunder within five days after the date due; or

(b) Default in Other Agreements. (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in an individual principal amount of $6,000,000 or more or with an aggregate principal amount of $12,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Credit Party with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided, that with respect to any failure to pay or breach or default under the First Lien Credit Agreement, such event shall only constitute an Event of Default hereunder if there is an Event of Default (as defined in the First Lien Credit Agreement) under subsection 8.1(a) of the First Lien Credit Agreement, if the Indebtedness in respect of the First Lien Credit Agreement shall have been accelerated or if sixty (60) days have passed since the date of any other Event of Default under the First Lien Credit Agreement and such Event of Default has not been cured or waived during such period; or

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(c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.6, Section 5.1(b), Section 5.1(c), Section 5.1(d), Section 5.1(f), Section 5.1(i), Section 5.2, Section 5.5, Section 5.12, Section 5.15 or Section 6; or

(d) Breach of Representations, etc. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; or

(e) Other Defaults Under Credit Documents. Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not have been remedied or waived within thirty (30) days after the earlier of (i) an officer of such Credit Party becoming aware of such default or (ii) receipt by Borrower of notice from Administrative Agent or any Lender of such default; or

(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Borrower or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Borrower or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Borrower or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Borrower or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Borrower or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or

(g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Borrower or any of its Subsidiaries shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Borrower or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Borrower or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of Borrower or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or

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(h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $6,000,000 or (ii) in the aggregate at any time an amount in excess of $12,000,000 (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Borrower or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event later than five days prior to the date of any proposed sale thereunder); or

(i) Dissolution. Any order, judgment or decree shall be entered against any Credit Party decreeing the dissolution or split up of such Credit Party and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days; or

(j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $3,000,000 during the term hereof; or (ii) there exists any fact or circumstance that reasonably could be expected to result in the imposition of a Lien or security interest under Section 412(n) of the Internal Revenue Code or under ERISA; or

(k) Change of Control. A Change of Control shall occur;

(l) Guaranties, Collateral Documents and other Credit Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement, the Intercreditor Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party, or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by the Collateral Documents; or

(m) Material Litigation. Any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental agency shall exist that at any time could reasonably be expected to have a Material Adverse Effect.

THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g), automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or with the consent of) Requisite Lenders, upon notice to Borrower by Administrative Agent, (A) each of the following shall immediately become due and payable, in each case without

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presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, and (II) all other Obligations; (B) subject to the Intercreditor Agreement, Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents; and (C) subject to the Intercreditor Agreement, Administrative Agent may exercise all rights and remedies available at law or in equity.

SECTION 9. AGENTS

9.1. Appointment of Agents. BNY is hereby appointed Administrative Agent and Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes BNY to act as Administrative Agent and Collateral Agent in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrower or any of its Subsidiaries.

9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein. Administrative Agent hereby agrees that it shall (i) furnish to GoldenTree, in its capacity as Lead Arranger, upon GoldenTree’s request, a copy of the Register, (ii) cooperate with GoldenTree in granting access to any Lenders (or potential lenders) who GoldenTree identifies to the Platform and (iii) maintain GoldenTree’s access to the Platform.

9.3. General Immunity.

(a) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by any Agent on behalf of any Credit Party to any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the

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financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the component amounts thereof.

(b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Borrower and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5). References in this Agreement, if any, to “determination” by Administrative Agent or Collateral Agent shall be to Administrative Agent or Collateral Agent, as the case may be, acting at the direction of Lead Arranger and/or Required Lenders.

(c) Delegation of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.3 and of Section 9.6 shall apply to any of the Affiliates of any Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agents. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory

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rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of the Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.

9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent to the extent, if any, in its individual capacity as a Lender hereunder. With respect to its participation, if any, in the Loans, each Agent, to the extent it is also a Lender hereunder, shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent, if also a Lender hereunder, in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Borrower or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection herewith and otherwise without having to account for the same to Lenders.

9.5. Lenders’ Representations, Warranties and Acknowledgment.

(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrower and its Subsidiaries in connection with Loans hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrower and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.

(b) Each Lender, by delivering its signature page to this Agreement or an Assignment Agreement and funding its Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable, on the Closing Date.

(c) Notwithstanding anything herein to the contrary, each Lender acknowledges that the lien and security interest granted to Collateral Agent pursuant to the Pledge and Security Agreement and the exercise of any right or remedy by Collateral Agent thereunder are subject to the provisions of the Intercreditor Agreement and that in the event of any conflict between the terms of the Intercreditor Agreement and the Pledge and Security Agreement, the terms of the Intercreditor Agreement shall govern and control.

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9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Credit Documents; provided, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

9.7. Successor Administrative Agent and Collateral Agent Administrative Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to Lenders and Borrower, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrower and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days’ notice to Borrower, to appoint a successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any resignation or removal of BNY as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of BNY or its successor as Collateral Agent, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder.

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9.8. Collateral Documents and Guaranty.

(a) Agents under Collateral Documents and Guaranty. Each Lender hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, (i) to be the agent for and representative of Secured Parties with respect to the Guaranty, the Collateral and the Collateral Documents and (ii) to enter into the Intercreditor Agreement, and each Lender acknowledges that it has received a copy of the Intercreditor Agreement and agrees to be bound by the terms of the Intercreditor Agreement. Subject to Section 10.5, without further written consent or authorization from any Secured Party, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) in connection with a sale or disposition of assets permitted by this Agreement, release any Lien encumbering any item of Collateral that is the subject of such sale or other disposition of assets or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented.

(b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Credit Documents to the contrary notwithstanding, Borrower, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, acting at the direction (or with the consent) of, and on behalf of Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale, and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale.

9.9. Withholding Tax. To the extent required by any applicable law, Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective, such Lender shall indemnify Administrative Agent fully for all amounts paid, directly or indirectly, by Administrative Agent as tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

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SECTION 10. MISCELLANEOUS

10.1. Notices.

(a) Notices Generally. Any notice or other communication herein required or permitted to be given to a Credit Party, Collateral Agent or Administrative Agent shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided, no notice to any Agent shall be effective until received by such Agent; provided further, any such notice or other communication shall at the request of Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto as designated by Administrative Agent from time to time.

(b) Electronic Communications.

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

Each of the Credit Parties understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of Administrative Agent.

The Platform and any Approved Electronic Communications are provided “as is” and “as available”. None of the Agents or any of their respective officers, directors, employees, agents,

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advisors or representatives (the “Agent Affiliates”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.

Each of the Credit Parties, the Lenders and the Agents agree that Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with Administrative Agent’s customary document retention procedures and policies.

10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to pay promptly (a) all the actual and reasonable costs and expenses of Agents and Lead Arranger with respect to the preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) all the costs of furnishing all opinions by counsel for Borrower and the other Credit Parties; (c) the reasonable fees, expenses and disbursements of counsel to Agents and Lead Arranger (in each case, including, without duplication, allocated costs of internal counsel) in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Borrower; (d) all the actual costs and reasonable expenses of creating, perfecting and recording Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Requisite Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (e) all the actual costs and reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers; (f) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (g) all other actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (h) after the occurrence of a Default or an Event of Default, all costs and expenses, including reasonable attorneys’ fees (including, without duplication, allocated costs of internal counsel) and costs of settlement, incurred by any Agent or Lender in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of Default (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.

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10.3. Indemnity.

(a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and the officers, partners, members, directors, trustees, employees, agents, sub-agents and Affiliates of each Agent and each Lender (each, an “Indemnitee”), from and against any and all Indemnified Liabilities; provided, no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against Lenders, Agents and their respective Affiliates, directors, employees, attorneys, agents or sub-agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and Borrower hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

10.4. Set-Off. Subject to the Intercreditor Agreement, in addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Credit Party against and on account of the obligations and liabilities of any Credit Party to such Lender hereunder and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto or with any other Credit Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured.

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10.5. Amendments and Waivers.

(a) Requisite Lenders’ Consent. Subject to the additional requirements of Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders.

(b) Affected Lenders’ Consent. Without the written consent of each Lender that would be affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i) extend the scheduled final maturity of any Loan or Note;

(ii) increase the Commitment of such affected Lender;

(iii) waive, reduce or postpone any scheduled repayment (but not prepayment);

(iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium payable hereunder;

(v) extend the time for payment of any such interest or fees;

(vi) reduce the principal amount of any Loan;

(vii) amend, modify, terminate or waive any provision of this Section 10.5(b), Section 10.5(c) or any other provision of this Agreement that expressly provides that the consent of all Lenders is required;

(viii) amend the definition of “Requisite Lenders” or “Pro Rata Share”; provided, with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata Share” on substantially the same basis as the Commitments and the Loans are included on the Closing Date;

(ix) release all or any material portion of the Collateral or all or substantially all Guarantors from the Guaranty except as expressly provided in the Credit Documents;

(x) subordinate any Lien granted in favor of Collateral Agent for the benefit of Secured Parties;

(xi) permit an Interest Period with a duration in excess of six months; or

(xii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document.

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(c) Other Consents. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent.

(d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.

10.6. Successors and Assigns; Participations.

(a) Generally. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Register and Related Party Register. In the case of any Related Party Assignment, the Lender making such Related Party Assignment shall, on behalf of and acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a comparable register to the Register described in Section 2.7(b) herein for such assignments (the “Related Party Register”). Borrower, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register or the Related Party Register following receipt of an Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.6(d). Each assignment shall be recorded in the Register or the Related Party Register on the Business Day the Assignment Agreement is received by Administrative Agent (or, in the case of a Related Party Assignment, the assigning Lender), if received by 12:00 noon New York City time, and on the following Business Day if received after such time, prompt notice thereof shall be provided to Borrower and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.

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(c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Loans owing to it or other Obligations (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments):

(i) other than in connection with a Related Party Assignment, to any Person meeting the criteria of clause (i) of the definition of the term of “Eligible Assignee” upon the giving of notice to Borrower and Administrative Agent; and

(ii) to any Person meeting the criteria of clause (ii) of the definition of the term of “Eligible Assignee” upon giving of notice to Borrower and Administrative Agent; provided, further each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than $1,000,000 (or such lesser amount as may be agreed to by Borrower and Lenders or as shall constitute the aggregate amount of the Loans of the assigning Lender) with respect to the assignment of Loans.

Notwithstanding anything to the contrary contained in this Section 10.6(c), a Lender may assign any or all of its rights under the Credit Documents to an Affiliate of such Lender or a Related Fund of such Lender without delivering an Assignment Agreement to the Administrative Agent or to any other Person (any such assignment, a “Related Party Assignment”); provided, however, that (w) Borrower and Agents may continue to deal solely and directly with such assigning Lender until an Assignment Agreement has been delivered to Administrative Agent for recordation on the Register, (x) Agents may continue to deal solely and directly with such assigning Lender until receipt by Administrative Agent of a copy of the executed Assignment Agreement pursuant to Section 10.6(d), (y) the failure of such assigning Lender to deliver an Assignment Agreement to Administrative Agent shall not affect the legality, validity, or binding effect of such assignment, and (z) an Assignment Agreement between the assigning Lender and an Affiliate of such Lender or a Related Fund of such Lender shall be effective as of the date specified in such Assignment Agreement and recorded on the Related Party Register (as defined below).

(d) Mechanics. Subject to the other requirements of and except as otherwise provided in this Section 10.6, assignments and assumptions of Loans shall be effected by manual execution and delivery to Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(d).

(e) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment Effective Date

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that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the Loans; and (iii) it will make or invest in Loans for its own account in the ordinary course of its business and without a view to distribution of such Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of Loans or any interests therein shall at all times remain within its exclusive control).

(f) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date); provided, anything contained in any of the Credit Documents to the contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); and (iii) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the outstanding Loans of the assignee and/or the assigning Lender.

(g) Participations. (i) Each Lender shall have the right at any time to sell one or more participations to any Person (other than Borrower, any of its Subsidiaries or any of its Affiliates) in all or any part of its Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under the Collateral Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. Borrower agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, (i) a participant shall not be entitled to receive any greater payment under Section 2.19

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or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless (A) the sale of the participation to such participant is made with Borrower’s prior written consent or (B) the entitlement to the greater payment resulted from a Change In Law after the date the participant became a participant hereunder, and (ii) a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless, at the time the participant is claiming the benefits of Section 2.20, Borrower is notified of the participation sold to such participant and such participant agrees, for the benefit of Borrower, to comply with Section 2.20 as though it were a Lender. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were a Lender.

(ii) In the event that any Lender sells participations in a Loan, such Lender shall, on behalf of and acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name of all participants in the Loans held by it and the principal amount (and stated interest thereon) of the portion of the Loan which is the subject of the participation (the “Participant Register”). A Loan may be participated in whole or in part only by registration of such participation on the Participant Register (and each note shall expressly so provide). Any participation of such Loan may be effected only by the registration of such participation on the Participant Register. The Participant Register shall be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice.

(h) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including, without limitation, any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided that no Lender, as between Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided, further, that in no event shall the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.

10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Loan. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b) and 9.6 shall survive the payment of the Loans and the termination hereof.

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10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

10.11. Severability. In case any provision in or obligation hereunder or under any other Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

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10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS

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WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.17. Confidentiality. Each Agent (which term shall for the purposes of this Section 10.17 include Lead Arranger) and each Lender shall hold all non-public information regarding Borrower and its Subsidiaries and their businesses identified as such by Borrower and obtained by such Agent or Lender pursuant to the requirements hereof in accordance with such Agent’s or Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by Borrower that, in any event, each Agent and each Lender may make (i) disclosures of such information to Affiliates of such Agent or Lender and to their respective agents and advisors (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any pledge referred to in Section 10.6(i) or any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Hedge Agreements (provided, such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from any of the Agents or any Lender, (iv) disclosures in connection with the exercise of any remedies hereunder or under any other Credit Document and (v) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Agent and each Lender shall make reasonable efforts to notify Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Credit Documents.

10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the

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outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to Borrower.

10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

10.20. Effectiveness. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Borrower and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof.

10.21. USA PATRIOT Act. Each Lender and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or Administrative Agent, as applicable, to identify Borrower in accordance with the USA PATRIOT Act.

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

10.23. No Fiduciary Duty. Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of Borrower. Borrower agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lenders and Borrower or its affiliates. You acknowledge and agree that (i) the transactions contemplated by the Credit Documents are arm’s-length

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commercial transactions between the Lenders, on the one hand, and Borrower, on the other, (ii) in connection therewith and with the process leading to such transaction each of the Lenders is acting solely as a principal and not the agent or fiduciary of Borrower, its management, creditors or any other Person, (iii) no Lender has assumed an advisory or fiduciary responsibility in favor of Borrower with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether any Lender or any of its affiliates has advised or is currently advising Borrower on other matters) or any other obligation to Borrower except the obligations expressly set forth in the Credit Documents and (iv) Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate. Borrower further acknowledges and agrees that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to Borrower, in connection with such transaction or the process leading thereto.

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

BORROWER
X-RITE, INCORPORATED
By:
Name:	Mary E. Chowning
Title:	Vice President
GUARANTORS
OTP, INCORPORATED
By:
Name:	Mary E. Chowning
Title:	Vice President
MONACO ACQUISITION COMPANY
By:
Name:	Mary E. Chowning
Title:	Vice President
X-RITE GLOBAL, INCORPORATED
By:
Name:	Mary E. Chowning
Title:	Vice President
X-RITE HOLDINGS, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President

Second Lien Credit and Guaranty Agreement

X-RITE MA INCORPORATED
By:
Name:	Mary E. Chowning
Title:	Vice President
HOLO VISION ACQUISITION COMPANY
By:
Name:	Mary E. Chowning
Title:	Vice President
XR VENTURES, LLC
By:
Name:	Mary E. Chowning
Title:	Vice President
GRETAGMACBETH, LLC
By:
Name:	Mary E. Chowning
Title:	Vice President
PANTONE, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President
PANTONE ASIA, INC.
By.
Name:	Mary E. Chowning
Title:	Vice President

Second Lien Credit and Guaranty Agreement

PANTONE GERMANY, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President
PANTONE INDIA, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President
PANTONE JAPAN, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President
PANTONE UK, INC.
By:
Name:	Mary E. Chowning
Title:	Vice President

Second Lien Credit and Guaranty Agreement

THE BANK OF NEW YORK, as Administrative Agent and Collateral Agent
By:
Name:	CHRISTINA CHANG
Title:	VICE PRESIDENT

Second Lien Credit and Guaranty Agreement

GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING as Lead Arranger
By:
Name:	Karen Weber
Title:	Director - Bank Debt

Second Lien Credit and Guaranty Agreement

GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING
By: Goldentree Asset Management, LP as a Lender
By:
Name:	Karen Weber
Title:	Director - Bank Debt
GOLDENTREE CAPITAL OPPORTUNITIES, LP
By: Goldentree Asset Management, LP as a Lender
By:
Name:	Karen Weber
Title:	Director - Bank Debt
GOLDENTREE MULTISTRATEGY SUBSIDIARY LLC
By: Goldentree Asset Management, LP as a Lender
By:
Name:	Karen Weber
Title:	Director - Bank Debt
GOLDENTREE 2004 TRUST
By: Goldentree Asset Management, LP as a Lender
By:
Name:	Karen Weber
Title:	Director - Bank Debt

Second Lien Credit and Guaranty Agreement

ARES CAPITAL CORPORATION as a Lender
By:
Name:	Michael Arougheti
Title:	President

Second Lien Credit and Guaranty Agreement

ABLECO FINANCE LLC, as a Lender
By:
Name:	Kevin Genda
Title:	Vice Chairman

Second Lien Credit and Guaranty Agreement

APPENDIX A

TO SECOND LIEN

CREDIT AND GUARANTY AGREEMENT

Commitments

Lender	Commitment		Pro Rata Share
GoldenTree Capital Solutions Fund Financing	$	12,768,000.00	12.16	%
GoldenTree Capital Opportunities, LP	$	3,192,000.00	3.04	%
GoldenTree MultiStrategy Subsidiary LLC	$	8,075,000.00	7.69	%
GoldenTree 2004 Trust	$	47,365,000.00	45.11	%
Ableco Finance LLC	$	16,800,000	16.00	%
Ares Capital Corporation	$	16,800,000	16.00	%
Total	$	105,000,000	100	%

APPENDIX A

APPENDIX B

TO SECOND LIEN

CREDIT AND GUARANTY AGREEMENT

Notice Addresses

BORROWER AND GUARANTORS

X-Rite, Incorporated

3100 44^th Street SW

Grandville, MI 49418

Attention: Mary Chowning

Telecopier: (616) 257-3710

in each case, with a copy to:

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, Illinois 60606

Attention: Michael L. Boykins

Telecopier: (312) 984-7700

APPENDIX B-1

GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING,

as Lead Arranger and as a Lender:

GoldenTree Capital Solutions Fund Financing

c/o GoldenTree Asset Management, L.P.

300 Park Avenue, 21^st Floor

New York, NY 10022

Attention: Karen Weber

Attention: Jason Chen

Telecopier: (212) 847-3535

in each case, with a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention: Peter Labonski

Telecopier: (212) 906-4864

THE BANK OF NEW YORK,

as Administrative Agent and Collateral Agent:

The Bank of New York

101 Barclay Street – 8 East

New York, NY 10286

Attention: Christina Chang

Telecopier: (212) 815-3115

in each case, with a copy to:

Emmet, Marvin & Martin, LLP

120 Broadway

New York, NY 10271

Attention: Richard S. Talesnick

Telecopier: (212) 238-3100

EX-21

EXHIBIT 21

X-RITE, INCORPORATED

LIST OF CONSOLIDATED SUBSIDIARIES

1. X-Rite Global, Incorporated

2. X-Rite Holdings, Inc.

3. GretagMacbeth, LLC

4. X-Rite MA, Incorporated

5. Monaco Acquisition Company

6. OTP, Inc.

7. Holovision Acquisition Company

8. XR Ventures LLC

9. Pantone, Inc.

10. Pantone Germany, Inc.

11. Pantone India, Inc.

12. Pantone UK, Inc.

13. Pantone Asia, Inc.

14. Pantone Japan, Inc.

15. Amazys Holding AG

16. X-Rite Holding AG

17. Amazys Beteiligungen GmbH

18. X-Rite Europe AG (f/k/a Gretag-Macbeth AG)

19. X-Rite International, Inc.

20. X-Rite Méditerranée SARL

21. X-Rite Italy S.R.L.

22. GretagMacbeth (Italy) S.R.L.

23. Viptronic S.R.L.

24. X-Rite Iberica

25. X-Rite GmbH

26. Gretag-Macbeth GmbH

27. LOGO Betiligungsgesellchaft mbH

28. LOGO Kommunikations- und Drucktechnik GmbH & Co. KG

29. Pantone GmbH

30. X-Rite spol, s.r.o.

31. X-Rite Limited

32. GretagMacbeth Limited

33. X-Rite Asia Pacific Limited

34. X-Rite Asia Pacific Pte Ltd

35. X-Rite (Shanghai) Color Management Co., Ltd.

36. X-Rite, (Shanghai) International Trading Limited

37. GretagMacbeth (Shanghai) Company Limited

38. X-Rite Kabushiki Kaisha

39. Pantone KK

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-29288, 33-29290, 33-82258, 33-82260, 333-111263, 333-111264, 333-117066, and 333-136945 pertaining to various employee stock incentive plans and Form S-3 No. 333-145615) and in the related prospectuses of our reports dated March 7, 2008 with respect to the consolidated financial statements and schedule of X-Rite, Incorporated and subsidiaries and the effectiveness of internal control over financial reporting of X-Rite, Incorporated and subsidiaries, included in this Annual Report (Form 10-K) for the fiscal year ended December 29, 2007.

/s/    Ernst & Young

Grand Rapids, Michigan

March 7, 2008

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Vacchiano Jr., certify that:

1. I have reviewed this report on Form 10-K of X-Rite, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors :

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2008

/s/    THOMAS J. VACCHIANO JR        

Thomas J. Vacchiano Jr

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Lynn J. Lyall, certify that:

1. I have reviewed this report on Form 10-K of X-Rite, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors :

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2008

/s/    LYNN J. LYALL        

Lynn J. Lyall

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of X-Rite, Incorporated, (the “Company”) on Form 10-K for the period ending December 29, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge (1) the Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/    THOMAS J. VACCHIANO JR.         Thomas J. Vacchiano Jr. /s/    LYNN J. LYALL         Lynn J. Lyall

March 13, 2008

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to X-Rite, Incorporated, and will be retained by X-Rite, Incorporated, and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-K and shall not be considered filed as part of the Form 10-K.