FINANCING AGREEMENT
Dated as of May 16, 2006
by and among
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
 
THE LENDERS FROM TIME TO TIME PARTY HERETO,
 
ABLECO FINANCE LLC,
as Collateral Agent,
and
ABLECO FINANCE LLC
as Administrative Agent

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

              Page
ARTICLE I   DEFINITIONS; CERTAIN TERMS
    2  
 
       
Section 1.01    Definitions
    2  
Section 1.02    Terms Generally
    26  
Section 1.03    Accounting and Other Terms
    26  
Section 1.04    Time References
    26  
 
       
ARTICLE II   THE LOANS
    27  
 
       
Section 2.01    Commitments
    27  
Section 2.02    Making the Loans
    27  
Section 2.03    Repayment of Loans; Evidence of Debt
    30  
Section 2.04    Interest
    31  
Section 2.05    Reduction of Commitment; Prepayment of Loans
    32  
Section 2.06    Fees
    34  
Section 2.07    Securitization
    35  
Section 2.08    Taxes
    36  
 
       
ARTICLE IV   FEES, PAYMENTS AND OTHER COMPENSATION
    41  
 
       
Section 4.01    Audit and Collateral Monitoring Fees
    41  
Section 4.02    Payments; Computations and Statements
    41  
Section 4.03    Sharing of Payments, Etc.
    42  
Section 4.04    Apportionment of Payments
    43  
Section 4.05    Increased Costs and Reduced Return
    44  
 
       
ARTICLE V   CONDITIONS TO LOANS
    45  
 
       
Section 5.01    Conditions Precedent
    45  
Section 5.02    Conditions Precedent to All Loans
    50  
 
       
ARTICLE VI   REPRESENTATIONS AND WARRANTIES
    51  
 
       
Section 6.01   Representations and Warranties
    51  
 
       
ARTICLE VII   COVENANTS OF THE BORROWER
    59  
 
       
Section 7.01    Affirmative Covenants
    59  
Section 7.02    Negative Covenants
    67  
Section 7.03    Financial Covenants
    72  
 
       
ARTICLE VIII   MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND
OTHER COLLATERAL
    73  
 
       
Section 8.01    Collection of Accounts Receivable; Management of Collateral
    73  
Section 8.02    Accounts Receivable Documentation
    76  
Section 8.03    Status of Accounts Receivable and Other Collateral
    76  
Section 8.04    Collateral Custodian
    77  
 
       
ARTICLE IX   EVENTS OF DEFAULT
    77  

-i-

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

              Page
Section 9.01   Events of Default
    77  
 
       
ARTICLE X   AGENTS
    81  
 
       
Section 10.01    Appointment
    81  
Section 10.02    Nature of Duties
    82  
Section 10.03    Rights, Exculpation, Etc.
    82  
Section 10.04    Reliance
    83  
Section 10.05    Indemnification
    83  
Section 10.06    Agents Individually
    84  
Section 10.07    Successor Agent
    84  
Section 10.08    Collateral Matters
    84  
Section 10.09    Agency for Perfection
    86  
 
       
ARTICLE XI   GUARANTY
    86  
 
       
Section 11.01   Guaranty
    86  
Section 11.02    Guaranty Absolute
    87  
Section 11.03    Waiver
    87  
Section 11.04    Continuing Guaranty; Assignments
    88  
Section 11.05    Subrogation
    88  
 
       
ARTICLE XII   MISCELLANEOUS
    89  
 
       
Section 12.01    Notices, Etc.
    89  
Section 12.02    Amendments, Etc.
    90  
Section 12.03    No Waiver; Remedies, Etc.
    91  
Section 12.04    Expenses; Taxes; Attorneys’ Fees
    91  
Section 12.05    Right of Set-off
    92  
Section 12.06    Severability
    92  
Section 12.07    Assignments and Participations
    92  
Section 12.08    Counterparts
    95  
Section 12.09    GOVERNING LAW
    95  
Section 12.10   CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE
    95  
Section 12.11    WAIVER OF JURY TRIAL, ETC.
    96  
Section 12.12    Consent by the Agents and Lenders
    96  
Section 12.13    No Party Deemed Drafter
    97  
Section 12.14    Reinstatement; Certain Payments
    97  
Section 12.15    Indemnification
    97  
Section 12.16    Records
    98  
Section 12.17    Binding Effect
    98  
Section 12.18    Interest
    98  
Section 12.19    Confidentiality
    99  
Section 12.20    Integration
    100  

-ii-

 

--------------------------------------------------------------------------------

 

SCHEDULE AND EXHIBITS

     
Schedule C-1
  Lenders and Lenders’ Commitments
Schedule E-1
  Effective Date Acquisitions
Schedule P-1
  Approved Professionals
Schedule P-2
  Permitted Management Fees
Schedule T-1
  TTM EBITDA
 
   
Schedule 6.01(e)
  Subsidiaries
Schedule 6.01(f)
  Litigation; Commercial Tort Claims
Schedule 6.01(i)
  ERISA
Schedule 6.01(o)
  Real Property
Schedule 6.01(q)
  Operating Leases
Schedule 6.01(r)
  Environmental Matters
Schedule 6.01(s)
  Insurance
Schedule 6.01(v)
  Bank Accounts
Schedule 6.01(w)
  Intellectual Property
Schedule 6.01(x)
  Material Contracts
Schedule 6.01(dd)
  Name; Jurisdiction of Organization; Organizational ID Number; Chief Place of
Business; Chief Executive Office; FEIN
Schedule 6.01(ee)
  Tradenames
Schedule 6.01(ff)
  Collateral Locations
Schedule 7.02(a)
  Existing Liens
Schedule 7.02(b)
  Existing Indebtedness
Schedule 7.02(e)
  Existing Investments
Schedule 7.02(k)
  Limitations on Dividends and Other Payment Restrictions
 
   
Exhibit A-1
  Form of Assignment and Acceptance
Exhibit B-1
  Form of Borrowing Base Certificate
Exhibit L-1
  Form of LIBOR Notice
Exhibit Q-1
  Form of Intercompany Loan Agreement
Exhibit Q-2
  Form of Intercompany Security Documents
Exhibit 2.01(b)(ii)
  Form of Notice of Borrowing
Exhibit 5.01(d)
  Form of Opinion of Counsel

-iii-

 

--------------------------------------------------------------------------------

 

(PAUL HASTINGS LOGO) [w21425w2142500.gif]
Execution Copy
FINANCING AGREEMENT
          Financing Agreement, dated as of May 16, 2006, by and among COMPASS
GROUP DIVERSIFIED HOLDINGS LLC, a Delaware limited liability company (the
“Borrower”), the lenders from time to time party hereto (each a “Lender” and
collectively, the “Lenders”), ABLECO FINANCE LLC, a Delaware limited liability
company (“Ableco”), as collateral agent for the Lenders (in such capacity,
together with any successor collateral agent, the “Collateral Agent”), and
Ableco as administrative agent for the Lenders (in such capacity, together with
any successor administrative agent, the “Administrative Agent” and together with
the Collateral Agent, each an “Agent” and collectively, the “Agents”).
RECITALS
          The Borrower has asked the Lenders to extend credit to the Borrower
consisting of (a) a term loan in the principal amount of $50,000,000, (b) a
delayed draw term loan facility in a principal amount of up to $115,000,000, and
(c) a revolving credit facility in a principal amount of up to $60,000,000 at
any time outstanding. The proceeds of the term loan shall be used to
(i) partially finance the consummation of the acquisition by the Borrower of
controlling interests in (a) CBS, (b) Crosman, (c) Advanced Circuits, and
(d) Silvue, (ii) partially finance the consummation of Permitted Post-Effective
Date Acquisitions by the Borrower or its wholly-owned Subsidiaries, and
(iii) pay fees and expenses associated with the Permitted Acquisitions and the
financing transaction contemplated hereby. The proceeds of the loans made under
the revolving credit facility shall be used to (i) partially finance the
consummation of Permitted Acquisitions by the Borrower or its wholly-owned
Subsidiaries, (ii) pay fees and expenses associated with such Permitted
Acquisitions, and (iii) meet the ongoing working capital requirements and other
general corporate needs of the Borrower and each of its Subsidiaries. The
proceeds of the loans made under the delayed draw term loan facility shall be
used solely to (i) partially finance the consummation of Permitted
Post-Effective Date Acquisitions by the Borrower or its wholly-owned
Subsidiaries and (ii) pay fees and expenses associated with such Permitted
Post-Effective Date Acquisitions. The Lenders are severally, and not jointly,
willing to extend such credit to the Borrower subject to the terms and
conditions hereinafter set forth.
          In consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:

 

--------------------------------------------------------------------------------

 

ARTICLE I
DEFINITIONS; CERTAIN TERMS
          Section 1.01 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
          “Ableco” has the meaning specified therefor in the preamble hereto.
          “Account Debtor” means any Person who is or who may become obligated
under, with respect to, or on account of, an Account Receivable, chattel paper,
or a general intangible.
          “Account Receivable” means, with respect to any Person, all of such
Person’s now owned or hereafter acquired right, title, and interest with respect
to “accounts” (as that term is defined in Article 9 of the Code), and any and
all “supporting obligations” (as that term is defined in the Code) in respect
thereof.
          “Acquisition” means the purchase or other acquisition by (i) the
Borrower or a Portfolio Company (by merger, stock purchase, or otherwise) of not
less than 50.1% of the aggregate outstanding voting power of the Capital Stock
of any other Person, or (ii) the Borrower, a Portfolio Company or an acquisition
Subsidiary, wholly-owned by Borrower, of substantially all of the assets of any
other Person or comprising one or more divisions or other business units of such
other Person.
          “Action” has the meaning specified therefor in Section 12.12.
          “additional amount” has the meaning specified therefor in
Section 2.08(a)
          “Administrative Agent” has the meaning specified therefor in the
preamble hereto.
          “Administrative Agent’s Account” means an account at a bank designated
by the Administrative Agent from time to time as the account into which the
Borrower shall make all payments to the Administrative Agent for the benefit of
the Agents and the Lenders under this Agreement and the other Loan Documents.
          “Advanced Circuits” means Compass AC Holdings, Inc., a Delaware
corporation.
          “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise. Notwithstanding anything herein to the contrary, (a) in all events,
CGI, CGI Diversified Holdings, CGM, Massoud, Navco, Pharos, and Sostratus shall
each be conclusively presumed to be an Affiliate of the Borrower, and (b) in no
event shall any Agent or any Lender be considered an Affiliate of the Borrower.

- 2 -

--------------------------------------------------------------------------------

 

          “After Acquired Property” means any interest in real property with a
Current Value in excess of $250,000 in the case of a fee interest or requiring
the payment of annual rent exceeding in the aggregate $250,000 in the case of a
leasehold interest.
          “Agent” has the meaning specified therefor in the preamble hereto.
          “Agreement” means this Financing Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.
          “Applicable Period” means, in connection with the calculation of the
Fixed Charge Coverage Ratio, (a) with respect to the fiscal quarter ended
June 30, 2006, the period commencing on May 16, 2006 and ending on June 30,
2006, (b) with respect to the fiscal quarter ended September 30, 2006, the
period commencing on May 16, 2006 and ending on September 30, 2006, (c) with
respect to the fiscal quarter ended December 31, 2006, the period commencing on
May 16, 2006 and ending on December 31, 2006, (d) with respect to the fiscal
quarter ended March 31, 2007, the period commencing on May 16, 2006 and ending
on March 31, 2007 and (e) with respect to any fiscal quarter ending thereafter,
the twelve month period ending as of the end of such subsequent fiscal quarter.
          “Approved Professional” means any Person identified on Schedule P-1.
          “Assignment and Acceptance” means an assignment and acceptance entered
into by an assigning Lender and an assignee, and accepted by the Collateral
Agent, in accordance with Section 12.07 hereof and substantially in the form of
Exhibit A-1 hereto or such other form acceptable to the Collateral Agent.
          “Allocation Interests” means the interests in the Borrower issued to
CGM pursuant to the terms of the LLC Agreement.
          “Authorized Officer” means, with respect to any Person, the chief
executive officer, chief financial officer, president or executive vice
president of such Person.
          “Availability” means, at any time, the lesser of (i) the difference
between (a) the Borrowing Base, and (b) the sum of (1) the aggregate outstanding
principal amount of all Loans, and (2) the aggregate amount, if any, of all
trade payables of the Borrower and its Subsidiaries aged in excess of historical
levels, and (ii) the difference between (a) the Total Revolving Credit
Commitment, and (b) the sum of (1) the aggregate outstanding principal amount of
all Revolving Loans, (2) the L/C Reserve, (3) the Permitted Indebtedness Reserve
and (4) the aggregate amount, if any, of all trade payables of the Borrower and
its Subsidiaries aged in excess of historical levels.
          “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §
101, et seq.), as amended, and any successor statute.
          “Base LIBOR Rate” means the rate per annum, determined by
Administrative Agent in accordance with its customary procedures, and utilizing
such electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis

- 3 -

--------------------------------------------------------------------------------

 

of the rates at which Dollar deposits are offered to major banks in the London
interbank market on or about 11:00 a.m. (New York time) 2 Business Days prior to
the commencement of the applicable Interest Period, for a term and in amounts
comparable to the Interest Period and amount of the LIBOR Rate Loan requested by
the Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
          “Blocked Account Bank” has the meaning specified therefor in
Section 8.01(a).
          “Blocked Account” has the meaning specified therefor in
Section 8.01(a).
          “Board” means the Board of Governors of the Federal Reserve System of
the United States.
          “Borrower” has the meaning specified therefor in the preamble hereto.
          “Borrowing Base” means, as of any date of determination, the
difference between (a) the lesser of (i) the Leverage Ratio Limit, and (ii) the
Intercompany Debt Limit, and (b) the sum of (1) the L/C Reserve, (2) the
Permitted Indebtedness Reserve and (3) such other reserves as the Administrative
Agent may deem appropriate, to the extent that such imposition by Administrative
Agent is commercially reasonable under the circumstances.
          “Borrowing Base Certificate” means a certificate signed by an
Authorized Officer of the Borrower and setting forth the calculation of the
Borrowing Base in compliance with Section 7.01(a)(vi), substantially in the form
of Exhibit B-1.
          “Business Day” means any day that is not a Saturday, Sunday, or other
day on which banks are authorized or required to close in the State of New York,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in U.S. Dollar deposits in the London interbank market.
          “Capital Expenditures” means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that in accordance with GAAP are or should be included in
“property, plant and equipment” or in a similar fixed asset account on its
balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period.
          “Capital Guideline” means any law, rule, regulation, policy, guideline
or directive (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) (i) regarding capital adequacy,
capital ratios, capital requirements, the calculation of a bank’s capital or
similar matters, or (ii) affecting the amount of capital required to be obtained
or maintained by any Lender or any Person controlling any Lender or the manner
in which any Lender or any Person controlling any Lender, allocates capital to
any of its contingent liabilities, advances, acceptances, commitments, assets or
liabilities.
          “Capitalized Lease” means, with respect to any Person, any lease of
real or personal property by such Person as lessee which is (i) required under
GAAP to be capitalized on the balance sheet of such Person or (ii) a transaction
of a type commonly known as a “synthetic lease”

- 4 -

--------------------------------------------------------------------------------

 

(i.e. a lease transaction that is treated as an operating lease for accounting
purposes but with respect to which payments of rent are intended to be treated
as payments of principal and interest on a loan for Federal income tax
purposes).
          “Capitalized Lease Obligations” means, with respect to any Person,
obligations of such Person and its Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
          “Capital Stock” means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
          “Cash and Cash Equivalents” means all cash, deposit or securities
account balances, certificates of deposit or other financial instruments
properly classified as cash or cash equivalents under GAAP.
          “CBS” means CBS Personnel Holdings, Inc., a Delaware corporation.
          “CGI” means Compass Group Investments, Inc., a Bahamian international
business company.
          “CGI Diversified Holdings” means CGI Diversified Holdings, L.P., a
Bahamian limited partnership.
          “CGI Subscription Agreement” means a Share Purchase Agreement, dated
as of May 16, 2006, between the Trust and CGI Diversified Holdings, pursuant to
which CGI Diversified Holdings agrees to purchase not less than $86,000,000 of
shares of Capital Stock of the Trust on or before the Effective Date.
          “CGM” means Compass Group Management LLC, a Delaware limited liability
company.
          “Change in Law” has the meaning specified therefor in Section 4.05(a).
          “Change of Control” means each occurrence of any of the following:
               (a) the acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Exchange Act), other than
the Permitted Holder, of beneficial ownership of more than 20% of the aggregate
outstanding voting power of the Capital Stock of the Trust;
               (b) the Trust ceases to own and control, directly or indirectly,
100% of the shares of the Capital Stock (other than the Allocation Interests) of
the Borrower, except as a result of a Permitted Merger,
               (c) (i) Massoud ceases to be actively involved (on a full-time
basis) in the management and the investment decisions with respect to the
Borrower, and (ii) any two of

- 5 -

--------------------------------------------------------------------------------

 

Elias Sabo, Allen Offenberg and David Swanson cease to be actively involved (on
a full-time basis) in the management and the investment decisions with respect
to the Borrower, or
               (d) (i) the Trust consolidates with or merges into another entity
or conveys, transfers or leases all or substantially all of its property and
assets to any Person (other than, in connection with a Permitted Merger,
Borrower), or (ii) any entity consolidates with or merges into the Trust (other
than, in connection with a Permitted Merger, Borrower), which in either event
(i) or (ii) is pursuant to a transaction in which the outstanding voting Capital
Stock of the Trust is reclassified or changed into or exchanged for cash,
securities or other property, other than any such transaction in which the
Permitted Holder have a beneficial ownership in the aggregate of at least 20% of
the aggregate voting power of all Capital Stock of the resulting, surviving or
transferee entity.
          “Code” means the New York Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Collateral Agent’s Liens on any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority, or
remedies.
          “Collateral” means all of the property and assets and all interests
therein and proceeds thereof now owned or hereafter acquired by any Person upon
which a Lien is granted or purported to be granted by such Person as security
for all or any part of the Obligations.
          “Collateral Agent” has the meaning specified therefor in the preamble
hereto.
          “Collateral Agent Advances” has the meaning specified therefor in
Section 10.08(a).
          “Commitments” means, with respect to each Lender, such Lender’s
Revolving Credit Commitment, Delayed Draw Term Loan Commitment, and Term Loan
Commitment.
          “Consolidated EBITDA” means, with respect to any Person for any
period, (i) the Consolidated Net Income of such Person and its Subsidiaries for
such period, minus (ii) to the extent not otherwise deducted in the calculation
of Consolidated Net Income of such Person and its Subsidiaries for such period,
the aggregate amount of Transaction Services Fees paid by Borrower or any of its
Subsidiaries during such period to CGM, plus (iii) without duplication, the sum
of the following amounts of such Person and its Subsidiaries for such period and
to the extent deducted in determining Consolidated Net Income of such Person and
its Subsidiaries for such period: (A) Consolidated Net Interest Expense, (B) net
income tax expense, (C) depreciation expense, (D) amortization expense,
(E) Eligible Addbacks, (F) fees and expenses related to the consummation of the
transactions contemplated to be closed on the Effective Date under this
Agreement and the transactions contemplated by the Effective Date Acquisition
Agreements, (G) fees and expenses related to the consummation of any single
Permitted Post-Effective Date Acquisition or series of related Permitted
Post-Effective Date Acquisitions, in an amount not in excess of $5,000,000
individually, or $15,000,000 in the aggregate in connection

- 6 -

--------------------------------------------------------------------------------

 

with all Permitted Post-Effective Date Acquisitions per annum, (H) that amount,
if any, required to be reflected in the “minority interest” line item on
Borrower’s income statements for such period, (I) that amount, if any, required
to be reflected in the “accrual for supplemental put” (or like designation) line
item on the Borrower’s income statements for such period, to the extent that
such accrual is solely a non-cash accrual, (J) solely with respect to Silvue,
non-cash charges incurred as of the Effective Date to reflect the in-process
research and development acquired by Borrower in connection with the acquisition
of a Majority Interest in Silvue, (K) solely with respect to a Portfolio Company
and its Subsidiaries (it being understood that this clause (K) shall not apply
to the calculation of the Consolidated EBITDA of Borrower and its Subsidiaries),
the aggregate amount of management fees paid by such Portfolio Company during
such period to CGM (or if such fees are paid to any other Person by a Portfolio
Company prior to the time of acquisition by Borrower, to the extent such amounts
have been validated by an Approved Professional), and (L) to the extent not
included in any of the other items listed above in clauses (A) through (K), the
aggregate amount of all non-cash items deducted in the calculation of the
Consolidated Net Income of Borrower (exclusive of the Consolidated Net Income of
Borrower’s Subsidiaries) for such period.
          “Consolidated Net Income” means, with respect to any Person for any
period, the net income (loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination of Consolidated Net Income (without
duplication) (a) any non-cash extraordinary or non-recurring gains or losses or
non-cash gains or losses from Dispositions, (b) restructuring charges,
(c) effects of discontinued operations, (d) interest that is paid-in-kind and
(e) any tax refunds, net operating losses or other net tax benefits received
during such period on account of any prior period.
          “Consolidated Net Interest Expense” means, with respect to any Person
for any period, gross interest expense of such Person and its Subsidiaries for
such period determined on a consolidated basis and in accordance with GAAP
(including interest expense paid to Affiliates of such Person), less (i) the sum
of (A) interest income for such period (exclusive of, with respect to Borrower,
interest income from loans to Portfolio Companies pursuant to Qualified
Intercompany Loan Agreements) and (B) gains for such period on Hedging
Agreements (to the extent not included in interest income above and to the
extent not deducted in the calculation of gross interest expense), plus (ii) the
sum of (A) losses for such period on Hedging Agreements (to the extent not
included in such gross interest expense) and (B) the upfront costs or fees for
such period associated with Hedging Agreements (to the extent not included in
such gross interest expense), in each case, determined on a consolidated basis
and in accordance with GAAP.
          “Contingent Obligation” means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations (“primary obligations”) of
any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including (i) the direct or indirect guaranty, endorsement (other
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 a primary obligor, (ii) the obligation to make take-or-pay or similar
payments, if required, regardless of nonperformance by any other party or
parties to an agreement, (iii) any obligation of such Person, whether or not

- 7 -

--------------------------------------------------------------------------------

 

contingent, (A) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (B) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (C) to purchase
property, assets, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (D) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term “Contingent Obligation” shall not include any
product warranties extended in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
          “Crosman” means Crosman Acquisition Corporation, a Delaware
corporation.
          “Current Value” has the meaning specified therefor in Section 7.01(o).
          “Default” means an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default.
          “Defaulted Portfolio Company” means a Portfolio Company that is in
default of its Qualified Intercompany Loan Agreement due to the failure to make
payment of any amounts when due thereunder, which default has been uncured for
at least 90 days.
          “Delayed Draw Term Loan” and “Delayed Draw Term Loans” have the
meanings specified therefor in Section 2.01(a)(iii).
          “Delayed Draw Term Loan Commitment” means, with respect to each
Lender, the commitment of such Lender to make its portion of the Delayed Draw
Term Loan to the Borrower in the amount set forth in Schedule C-1 hereto, as the
same may be terminated or reduced from time to time in accordance with the terms
of this Agreement.
          “Delayed Draw Term Loan Commitment Expiry Date” means May 16, 2007
(the “Original Expiry Date”); provided, however, that if the Borrower has given
the Agents not less than 5 days prior written notice of its election to extend
the Original Expiry Date and so long as there is no Default or Event of Default
on the date of such notice or on the Original Expiry Date, the Delayed Draw Term
Loan Commitment Expiry Date shall be extended to May 16, 2008; (the “First
Extended Expiry Date”); provided further, however, that if the Borrower has
given the Agents not less than 5 days prior written notice of its election to
extend the First Extended Expiry Date and so long as there is no Default or
Event of Default on the date of such notice or on the First Extended Expiry
Date, the Delayed Draw Term Loan Commitment Expiry Date shall be extended to
May 16, 2009; provided, further, that in no event shall the Delayed Draw Term
Loan Commitment Expiry Date be later than the Final Maturity Date.

- 8 -

--------------------------------------------------------------------------------

 

          “Delayed Draw Term Loan Lender” means a Lender with a Delayed Draw
Term Loan Commitment.
          “Delayed Draw Term Loan Obligations” means any Obligations with
respect to the Delayed Draw Term Loan (including the principal thereof, the
interest thereon, and the fees and expenses specifically related thereto).
          “Disqualified EBITDA” means, at any time that the Borrower’s Leverage
Ratio (calculated as of the most recent date for which financial statements have
been prepared in accordance herewith) exceeds 1.0:1.0, 50% of the Consolidated
EBITDA of each Defaulted Portfolio Company, if any, plus 100% of the
Consolidated EBITDA of each Insolvent Portfolio Company, if any.
          “Disqualified Intercompany Debt” means, at any time that the
Borrower’s Leverage Ratio (calculated as of the most recent date for which
financial statements have been prepared in accordance herewith) exceeds 1.0:1.0,
100% of the amount of Indebtedness for borrowed money owed to the Borrower by
any Defaulted Portfolio Company or any Insolvent Portfolio Company.
          “Disposition” means any transaction, or series of related
transactions, pursuant to which any Person or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of (including by means of a merger or
consolidation) any property or assets (whether now owned or hereafter acquired)
to any other Person (other than a disposition to a Subsidiary of such disposing
Person), in each case, whether or not the consideration therefor consists of
cash, securities or other assets owned by the acquiring Person.
          “Dollar,” “Dollars” and the symbol “$” each means lawful money of the
United States of America.
          “Effective Date” means the date on or after May 16, 2006 and on or
before May 19, 2006, on which all of the conditions precedent set forth in
Section 5.01 are first satisfied or waived.
          “Effective Date Acquisition Agreement” means that certain Stock
Purchase Agreement, dated of even date herewith, by and among Borrower, as
purchaser, and CGI, Compass CS Partners, L.P., Compass CS II Partners, L.P.,
Compass Crosman Partners, L.P., Compass Advanced Partners, L.P., and Compass
Silvue Partners, LP, as the seller parties.
          “Effective Date Acquisition Documents” means the Effective Date
Acquisition Agreement and all other documents and agreements executed and
delivered in connection therewith.
          “Effective Date Acquisitions” means the acquisition by Borrower of the
Capital Stock of Advanced Circuits, CBS, Crosman and Silvue described on
Schedule E-1 hereto in accordance with the terms of the Effective Date
Acquisition Agreement.
          “Effective Date Portfolio Companies” means (a) Advanced Circuits,
(b) CBS, (c) Crosman, and (d) Silvue.

- 9 -

--------------------------------------------------------------------------------

 

          “Eligible Addbacks” means, as of any date of determination, solely
with respect to the Consolidated EBITDA of a Portfolio Company and its
Subsidiaries that is the subject of a Permitted Post-Effective Date Acquisition,
during the twelve month period ending as of the last day of the month
immediately preceding such date, to the extent that the following have been
validated by the Borrower’s Approved Professional, the sum of (a) the aggregate
amount of salary or other compensation paid by such Portfolio Company and its
Subsidiaries to the owners of its Capital Stock (other than Borrower and its
Affiliates) during such period, to the extent that such amount exceeds the
annual compensation required to be paid by such Portfolio Company and its
Subsidiaries to such Persons (or to other Persons hired to replace such Persons)
after the closing date of the applicable Permitted Post-Effective Date
Acquisition, (b) the aggregate amount paid by such Portfolio Company and its
Subsidiaries on account of rent with respect to the real property occupied by
such Portfolio Company and its Subsidiaries, to the extent that (i) such amount
exceeds the annual amount of rent required to be paid by such Portfolio Company
and its Subsidiaries pursuant to the real estate leases in effect on the closing
date of the applicable Permitted Post-Effective Date Acquisition and
(ii) Borrower has provided to the Agents copies of the applicable leases that
are in effect on the closing date of such Permitted Post-Effective Date
Acquisition, and (c) other amounts as may be approved from time to time by the
Agents in their discretion.
          “Employee Plan” means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained (or that was
maintained at any time during the six (6) calendar years preceding the date of
any borrowing hereunder) for employees of the Borrower or any of its ERISA
Affiliates.
          “Environmental Actions” means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication from any
Governmental Authority involving violations of Environmental Laws or Releases of
Hazardous Materials (i) from any assets, properties or businesses of the
Borrower of its Subsidiaries or any predecessor in interest; (ii) from adjoining
properties or businesses; or (iii) onto any facilities which received Hazardous
Materials generated by the Borrower or any predecessor in interest.
          “Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. § 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. § 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901, et seq.), the Federal Clean
Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as such laws may
be amended or otherwise modified from time to time, and any other present or
future federal, state, local or foreign statute, ordinance, rule, regulation,
order, judgment, decree, permit, license or other binding determination of any
Governmental Authority imposing liability or establishing standards of conduct
for protection of the environment or other government restrictions relating to
the protection of the environment or the release, emission, deposit, discharge,
leaching, migration or spill of any Hazardous Materials into the environment.
          “Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages,

- 10 -

--------------------------------------------------------------------------------

 

costs and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants and costs of investigations and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any Governmental Authority or any third party, and which
relate to the liability or potential liability of the Borrower with respect to
any environmental condition or a Release of Hazardous Materials from or onto
(i) any property currently or formerly owned by the Borrower or (ii) any Real
Property which received Hazardous Materials generated by the Borrower.
          “Environmental Lien” means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
          “ERISA Affiliate” means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which would be deemed to be a “controlled group”
within the meaning of Sections 414(b), (c), (m) and (o) of the IRC.
          “Escrow Agreement” means that certain Escrow Agreement dated as of
May 16, 2006 by and among Borrower, certain of Borrower’s Affiliates, and The
Bank of New York, as escrow agent thereunder, which is in form and substance
reasonably satisfactory to the Agents.
          “Event of Default” means any of the events set forth in Section 9.01.
          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
          “Extraordinary Receipts” means any cash received by the Borrower or
any of its Subsidiaries (but, with respect to such cash received by the
Portfolio Companies and their respective Subsidiaries, only to the extent of the
mandatory prepayments required to be made by such Portfolio Company and its
Subsidiaries under the applicable Qualified Intercompany Loan Agreement) not in
the ordinary course of business (and not consisting of proceeds of Dispositions
or Indebtedness), including (i) foreign, United States, state or local tax
refunds, (ii) pension plan reversions, (iii) proceeds of insurance,
(iv) judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action, (v) condemnation awards (and payments in
lieu thereof), (vi) indemnity payments and (vii) any purchase price adjustment
received in connection with any purchase agreement and any amounts received from
escrow arrangements in connection with any purchase agreement.
          “Federal Funds Rate” means, for any period, a fluctuating interest
rate per annum equal to, for each day during such period, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

- 11 -

--------------------------------------------------------------------------------

 

          “Fee Letter” means that certain fee letter, dated as of even date
herewith, among the Borrower and the Administrative Agent.
          “Field Survey and Audit” means a field survey and audit of the
Borrower and the Portfolio Companies and an appraisal of the Collateral and the
Intercompany Loan Collateral performed by auditors, examiners or appraisers
selected by the Collateral Agent, at the sole cost and expense of the Borrower.
          “Filing Authorization Letter” means a letter duly executed by the
Borrower authorizing the Collateral Agent to file financing statements in such
office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by
each Security Agreement.
          “Final Maturity Date” means May 16, 2011 or such earlier date on which
(a) the Total Revolving Credit Commitment is terminated for any reason or
(b) all or any portion of the Obligations shall become due and payable pursuant
to the terms of Section 9.01.
          “Financial Statements” means (i) in the case of CBS, for the year
ended December 31, 2005, its audited consolidated financial statements as of
such date, (ii) in the case of Crosman, (a) for the year ended June 30, 2005,
its audited consolidated financial statements as of such date, and (b) for the
quarter ended October 2, 2005, its unaudited consolidated financial statements
as of such date, (iii) in the case of Advanced Circuits, for the year ended
December 31, 2005, its audited consolidated financial statements as of such
date, and (iv) in the case of Silvue, for the year ended December 31, 2005, its
audited consolidated financial statements as of such date.
          “Fiscal Year” means the fiscal year of the Borrower and its
Subsidiaries ending on December 31st of each year.
          “Fixed Charge Coverage Ratio” means, with respect to any Person for
any period, the ratio of (i) the Consolidated EBITDA of such Person and its
Subsidiaries for such period, to (ii) the sum of (A) all principal of
Indebtedness of such Person and its Subsidiaries scheduled to be paid or prepaid
during such period, plus (B) Consolidated Net Interest Expense of such Person
and its Subsidiaries for such period, to the extent that such amount is required
to be reflected as a cash expense on such Person’s books and records, plus
(C) all income tax liabilities of such Person and its Subsidiaries that accrued
during such period, to the extent that the amount of such liabilities is greater
than zero and is required to be reflected as cash tax liabilities on such
Person’s books and records, plus (D) cash dividends or distributions paid by
such Person and its Subsidiaries (other than, in the case of the Borrower,
dividends or distributions paid to the Borrower or its wholly-owned
Subsidiaries) during such period, plus (E) Capital Expenditures made by such
Person and its Subsidiaries during such period. In determining the Fixed Charge
Coverage Ratio for a particular period, the calculation of the income tax
liabilities of such Person and its Subsidiaries described in clause (ii)(C) of
the immediately preceding sentence shall be made without giving effect to any
tax refunds, tax receivables, net operating losses or other net tax benefits
that were received or receivable during such period on account of any prior
periods.
          “Funding Losses” has the meaning specified therefor in
Section 2.04(d)(ii)(B).

- 12 -

--------------------------------------------------------------------------------

 

          “Funds Flow Agreement” means that certain Funds Flow Agreement, dated
of even date herewith, by and among Administrative Agent, the Lenders, and the
Borrower.
          “GAAP” means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis, provided that
for the purpose of Section 7.03 hereof and the definitions used therein, “GAAP”
shall mean generally accepted accounting principles in effect on the date hereof
and consistent with those used in the preparation of the Financial Statements,
provided, further, that if there occurs after the date of this Agreement any
change in GAAP that affects in any respect the calculation of any covenant
contained in Section 7.03 hereof, the Collateral Agent and the Borrower shall
negotiate in good faith amendments to the provisions of this Agreement that
relate to the calculation of such covenant with the intent of having the
respective positions of the Lenders and the Borrower after such change in GAAP
conform as nearly as possible to their respective positions as of the date of
this Agreement and, until any such amendments have been agreed upon, the
covenants in Section 7.03 hereof shall be calculated as if no such change in
GAAP has occurred.
          “Governmental Authority” means any nation or government, any Federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
          “Hazardous Materials” means (a) any element, compound or chemical that
is defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substance, extremely hazardous substance or
chemical, hazardous waste, special waste, or solid waste under Environmental
Laws or that is likely to cause immediately, or at some future time, harm to or
have an adverse effect on, the environment or risk to human health or safety,
including any pollutant, contaminant, waste, hazardous waste, toxic substance or
dangerous good which is defined or identified in any Environmental Law and which
is present in the environment in such quantity or state that it contravenes any
Environmental Law; (b) petroleum and its refined products; (c) polychlorinated
biphenyls; (d) any substance exhibiting a hazardous waste characteristic,
including corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any raw materials, building
components (including asbestos-containing materials) and manufactured products
containing hazardous substances listed or classified as such under Environmental
Laws.
          “Hedging Agreement” means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including any option with respect
to any of the foregoing and any combination of the foregoing agreements or
arrangements), and any confirmation executed in connection with any such
agreement or arrangement.
          “Highest Lawful Rate” means, with respect to any Agent or any Lender,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to such Agent or such Lender which are
currently in effect or, to the extent allowed by law, under

- 13 -

--------------------------------------------------------------------------------

 

such applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow.
          “HSR” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976
as in effect as of the Effective Date.
          “Indebtedness” means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money; (ii) all obligations of
such Person for the deferred purchase price of property or services (other than
trade payables or other accounts payable incurred in the ordinary course of such
Person’s business and not outstanding for more than 90 days after the date such
payable was created; (iii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest payments
are customarily made; (iv) all reimbursement, payment or other obligations and
liabilities of such Person created or arising under any conditional sales or
other title retention agreement with respect to property used or acquired by
such Person, even though the rights and remedies of the lessor, seller or lender
thereunder may be limited to repossession or sale of such property; (v) all
Capitalized Lease Obligations of such Person; (vi) all obligations and
liabilities, contingent or otherwise, of such Person, in respect of letters of
credit, acceptances and similar facilities; (vii) all obligations and
liabilities, calculated on a basis consistent with GAAP, under Hedging
Agreements; (viii) all Contingent Obligations (other than Contingent Obligations
in respect of funding commitments under any Qualified Intercompany Loan
Agreement and in respect of the “accrual for supplemental put” (or like
designation) line item on Borrower’s income statement, to the extent that such
accrual is solely a non-cash accrual); (ix) liabilities incurred by such Person
under Title IV of ERISA with respect to any plan (other than a Multiemployer
Plan) covered by Title IV of ERISA and maintained for employees of such Person
or any of its ERISA Affiliates; (x) withdrawal liability incurred by such Person
under ERISA by such Person or any of its ERISA Affiliates with respect to any
Multiemployer Plan; (xi) all monetary obligations under any receivables
factoring, receivable sales or similar transactions and all monetary obligations
under any synthetic lease, tax ownership/operating lease, off-balance sheet
financing or similar financing; and (xii) all obligations referred to in clauses
(i) through (xi) of this definition of another Person secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) a Lien upon property owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
The Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture in which such Person is a general partner or a joint venturer.
          “Indemnified Matters” has the meaning specified therefor in
Section 12.15.
          “Indemnitees” has the meaning specified therefor in Section 12.15.
          “Industry” means an “industry” as determined in accordance with the
North American Industry Classification System, as in effect from time to time.
          “Insolvency Proceeding” means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, or

- 14 -

--------------------------------------------------------------------------------

 

extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
          “Insolvent Portfolio Company” means a Portfolio Company that is in
default of its Qualified Intercompany Loan Agreement due to the commencement of
an Insolvency Proceeding with respect to such Portfolio Company.
          “Intercompany Debt Coverage Ratio” means, with respect to Borrower as
of any date, the ratio of (a) the sum of (i) Qualified Cash plus (ii) the
outstanding principal balance of all Qualified Intercompany Debt as of such date
to (b) the sum of (i) the outstanding principal balance of the Loans as of such
date plus (ii) the L/C Reserve as of such date plus (iii) the Permitted
Indebtedness Reserve as of such date.
          “Intercompany Debt Limit” means, as of any date of determination, the
sum of (i) Qualified Cash, and (ii) the aggregate amount of Qualified
Intercompany Debt calculated through the most recent date for which a Borrowing
Base Certificate has been delivered pursuant to Section 7.01(a).
          “Intercompany Loan Collateral” means all of the property and assets
and all interests therein and proceeds thereof now owned or hereafter acquired
by any Portfolio Company or its Subsidiaries upon which a Lien is granted or
purported to be granted by such Person as security for all or any part of its
Indebtedness under a Qualified Intercompany Loan Agreement, or a guaranty in
respect thereof.
          “Intercreditor Agreement” means that certain Intercreditor Agreement
dated contemporaneously herewith by and between Borrower and [U.S. Bank] which
is in form and substance satisfactory to Collateral Agent.
          “Interest Period” means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, 3 or 6 months thereafter; provided, however, that (a) if any Interest
Period would end on a day that is not a Business Day, such Interest Period shall
be extended (subject to clauses (c)-(e) below) to the next succeeding Business
Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (c) any Interest Period that would end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an 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), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3 or 6 months
after the date on which the Interest Period began, as applicable, and
(e) Borrower may not elect an Interest Period which will end after the Final
Maturity Date.
          “Inventory” means all of the Borrower’s now owned or hereafter
acquired right, title, and interest with respect to inventory as defined in the
Code.

- 15 -

--------------------------------------------------------------------------------

 

          “IRC” means the Internal Revenue Code of 1986, as amended (or any
successor statute thereto) and the regulations thereunder.
          “L/C Reserve” means an amount equal to the aggregate undrawn amount of
all outstanding letters of credit issued at the request of Borrower or any of
its Subsidiaries, including any letters of credit issued by U.S. Bank at the
request of CBS, but excluding (a) on or before the date that is 30 days after
the Effective Date, up to $3,500,000 of Indebtedness in respect of outstanding
letters of credit issued at the request of Silvue, and (b) any letters of
credit, to the extent that the issuer thereof is holding cash collateral to
secure such letters of credit and has released its Liens on all other assets of
Borrower’s Subsidiaries.
          “Lease” means any lease of real property to which the Borrower is a
party as lessor or lessee.
          “Lender” has the meaning specified therefor in the preamble hereto.
          “Leverage Ratio” means, as of any date of determination, the ratio of
(a) the result of (i) the sum of (A) the principal amount of the Loans
outstanding as of such date of determination plus (B) the L/C Reserve as of such
date of determination plus (C) the Permitted Indebtedness Reserve as of such
date of determination minus (ii) the amount of Restricted Cash as of such date
of determination, to (b) TTM EBITDA of the Borrower and its Subsidiaries for the
12 month period ended as of the last day of the month immediately preceding such
date of determination.
          “Leverage Ratio Limit” means, as of any date of determination, the
result of (a) (1) the TTM EBITDA of the Borrower calculated through the most
recent month for which financial statements have been delivered pursuant to
Section 7.01(a), minus (2) the amount of Disqualified EBITDA, if any, as of such
determination date times (b) 3.00.
          “Liabilities” has the meaning specified therefor in Section 2.07.
          “LIBOR Deadline” has the meaning set forth in Section 2.04(g)(ii)(A).
          “LIBOR Notice” means a written notice in the form of Exhibit L-1.
          “LIBOR Option” has the meaning specified therefor in
Section 2.04(g)(i).
          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan,
the greater of (a) 3% per annum, and (b) the rate per annum determined by
Administrative Agent (rounded upwards, if necessary, to the next 1/16%) by
dividing (i) the Base LIBOR Rate for such Interest Period, by (ii) 100% minus
the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
          “LIBOR Rate Loan” means each portion of a Loan that bears interest at
a rate determined by reference to the LIBOR Rate.
          “LIBOR Rate Margin” means (a) at any time that a Default or Event of
Default has occurred and is continuing, 5.5 percentage points and
(b) thereafter, so long as no Default or

- 16 -

--------------------------------------------------------------------------------

 

Event of Default has occurred and is continuing, the “LIBOR Rate Margin” set
forth in the table below that corresponds to the Leverage Ratio, as of the last
day of any month, reported to Agent as set forth in the next paragraph and as
otherwise determined in accordance with the other provisions of the next
paragraph.
          The LIBOR Rate Margin shall be determined from time to time based upon
the certificate delivered by the Borrower to the Administrative Agent in
accordance with Section 7.01(a), to be effective for the forthcoming month;
provided, however, if such certificate is not timely delivered to the
Administrative Agent, the LIBOR Rate Margin shall immediately be set at
5.5 percentage points until such time as such certificate is delivered and then
(without any retroactive effect and without constituting a waiver of any Default
or Event of Default arising as a result of any failure to timely deliver such
Compliance Certificate) shall be determined based upon the Leverage Ratio set
forth in such certificate; provided further, however, if the Borrower’s
financial statements are at any time restated or otherwise revised (including as
a result of an audit), such that the LIBOR Rate Margin would have been higher
than was otherwise in effect during any period, interest due under this
Agreement shall immediately be recalculated at such higher rate for any
applicable periods and shall be due and payable on demand.

                  LIBOR Rate Level   Leverage Ratio   Margin I   Less than
1.00:1.00   4.25 percentage points     Greater than or equal to     II   
1.00:1.00 but less than 1.50:1.00   4.50 percentage points      Greater than or
equal to     III    1.50:1.00 but less than 2.0:1.00   4.75 percentage points   
Greater than or equal to   IV   2.00:1.00 but less than 2.5:1.00  
5.0 percentage points   Greater than or equal to   V   2.50:1.00  
5.5 percentage points

          “Lien” means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including any conditional sale or title
retention arrangement, any Capitalized Lease and any assignment, deposit
arrangement or financing lease intended as, or having the effect of, security.
          “LLC Agreement” means that certain Amended and Restated Operating
Agreement of Borrower, dated of even date herewith, which is in form and
substance satisfactory to Collateral Agent.
          “Loan” means the Term Loan or any Delayed Draw Term Loan or Revolving
Loan made by an Agent or a Lender to the Borrower pursuant to Article II hereof.

- 17 -

--------------------------------------------------------------------------------

 

          “Loan Account” means an account maintained hereunder by the
Administrative Agent on its books of account at the Payment Office, and with
respect to the Borrower, in which the Borrower will be charged with all Loans
made to, and all other Obligations incurred by, the Borrower.
          “Loan Document” means this Agreement, the Fee Letter, the Funds Flow
Agreement, any Security Agreement, any Mortgage, any Filing Authorization
Letter, and any other agreement, instrument, and other document executed and
delivered pursuant hereto or thereto or otherwise evidencing or securing any
Loan or any other Obligation.
          “Majority Interest” means, in respect of any Person, the ownership and
voting control of more than 50% of (1) the outstanding Capital Stock having (in
the absence of contingencies) ordinary voting power to elect a majority of the
board of directors or other managing body of such Person, (2) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (3) in the case of a trust,
estate, association, joint venture or other entity, the beneficial interest in
such trust, estate, association or other entity business.
          “Management Agreement” means that certain Management Services
Agreement, dated as of even date herewith, by and between CGM and the Borrower,
in form and substance satisfactory to the Agents, as in effect on the date
hereof.
          “Massoud” means I. Joseph Massoud, an individual.
          “Material Adverse Effect” means a material adverse effect on any of
(i) the operations, business, assets, properties, financial condition or
prospects of any the Borrower or the Borrower and its Subsidiaries taken as a
whole, (ii) the ability of the Borrower to perform any of its obligations under
any Loan Document to which it is a party, (iii) the legality, validity or
enforceability of this Agreement or any other Loan Document, (iv) the rights and
remedies of any Agent or any Lender under any Loan Document, or (v) the
validity, perfection or priority of a Lien in favor of the Collateral Agent for
the benefit of the Agents and the Lenders on any of the Collateral.
          “Material Contract” means, with respect to any Person, (i) each
contract or agreement to which such Person is a party involving aggregate
consideration payable to or by such Person of $500,000 or more (other than
purchase orders in the ordinary course of the business of such Person and other
than contracts that by their terms may be terminated by such Person in the
ordinary course of its business upon less than 60 days notice without penalty or
premium), (ii) all other contracts or agreements material to the business,
operations, financial condition, performance, prospects or properties of such
Person or such Subsidiary, and (iii) all Qualified Intercompany Loan Documents
to which such Person is a party.
          “Moody’s” means Moody’s Investors Service, Inc. and any successor
thereto.
          “Mortgage” means a mortgage, deed of trust or deed to secure debt, in
form and substance satisfactory to the Collateral Agent.

- 18 -

--------------------------------------------------------------------------------

 

          “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any of its ERISA Affiliates
has contributed to, or has been obligated to contribute, at any time during the
preceding six (6) years.
          “Navco” means Navco Management, Inc., a Bahamian corporation.
          “Net Cash Proceeds” means, (i) with respect to any Disposition by any
Person, the amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by or on behalf of such Person, in connection therewith
after deducting therefrom only (A) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than Indebtedness assumed by the purchaser of
such asset) which is required to be, and is, repaid in connection with such
Disposition (other than Indebtedness under this Agreement), (B) reasonable
expenses related thereto incurred by such Person in connection therewith,
(C) transfer taxes paid to any taxing authorities by such Person in connection
therewith, and (D) net income taxes to be paid in connection with such
Disposition (after taking into account any tax credits or deductions and any tax
sharing arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person, or the sale or issuance by any Person of any shares
of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment or disposition of deferred consideration) by or on behalf of such Person
or such Subsidiary in connection therewith, after deducting therefrom only (A)
reasonable expenses related thereto incurred by such Person or such Subsidiary
in connection therewith, (B) transfer taxes paid by such Person or such
Subsidiary in connection therewith and (C) net income taxes to be paid in
connection therewith (after taking into account any tax credits or deductions
and any tax sharing arrangements); in each case of clause (i) and (ii) to the
extent, but only to the extent, that the amounts so deducted are (x) actually
paid to a Person that, except in the case of reasonable out-of-pocket expenses,
is not an Affiliate of such Person and (y) properly attributable to such
transaction or to the asset that is the subject thereof.
          “New Lending Office” has the meaning specified therefor in
Section 2.08(d).
          “Non-U.S. Lender” has the meaning specified therefor in
Section 2.08(d).
          “Notice of Borrowing” has the meaning specified therefor in
Section 2.02(a).
          “Obligations” means all present and future indebtedness, obligations,
and liabilities of the Borrower to the Agents and the Lenders, or any of them,
under the Loan Documents, whether or not the right of payment in respect of such
claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any proceeding
referred to in Section 9.01. Without limiting the generality of the foregoing,
the Obligations of the Borrower under the Loan Documents include (a) the
obligation (irrespective of whether a claim therefor is allowed in any
Insolvency Proceeding) to pay principal, interest, charges, expenses, fees,
attorneys’ fees and disbursements, indemnities and other amounts payable by such
Person under the Loan Documents, and (b) the obligation of such Person to
reimburse any amount in respect of any of the foregoing that any Agent or any
Lender (in its sole discretion) may elect to pay or advance on behalf of such
Person.

- 19 -

--------------------------------------------------------------------------------

 

          “Operating Lease Obligations” means all obligations for the payment of
rent for any real or personal property under leases or agreements to lease,
other than Capitalized Lease Obligations.
          “Other Taxes” has the meaning specified therefor in Section 2.08(b).
          “Participant Register” has the meaning specified therefor in
Section 12.07(g).
          “Payment Intangible” means, with respect to any Person, all of such
Person’s now owned or hereafter acquired right, title, and interest with respect
to “payment intangibles” (as that term is defined in Article 9 of the Code), and
any and all “supporting obligations” (as that term is defined in the Code) in
respect thereof.
          “Payment Office” means the Administrative Agent’s office located at
299 Park Avenue, 23rd Floor, New York, New York or at such other office or
offices of the Administrative Agent as may be designated in writing from time to
time by the Administrative Agent to the Collateral Agent and the Borrower.
          “PBGC” means the Pension Benefit Guaranty Corporation or any successor
thereto.
          “Permits” has the meaning specified therefor in Section 6.01(n).
          “Permitted Acquisition” means (a) the Effective Date Acquisitions, and
(b) any Permitted Post-Effective Date Acquisition.
          “Permitted Dispositions” means (a) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom and so long as
all of the Indebtedness owed by the subject Portfolio Company to the Borrower is
repaid in connection therewith, the Disposition by Borrower of such portion or
all of its Capital Stock in a Portfolio Company (including by means of a merger
or consolidation) such that after such Disposition Borrower no longer holds a
Majority Interest of such Portfolio Company, (b) sales or other dispositions of
obsolete or worn-out equipment in the ordinary course of business, (c) sales or
other dispositions of other property or assets for cash in an aggregate amount
not less than the fair market value of such property or assets, provided that
the Net Cash Proceeds of such Dispositions in the case of clauses (b) and (c) do
not exceed $1,000,000 in the aggregate in any twelve-month period, (d) the use
or transfer of money or Cash Equivalents by the Borrower in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (e) the
licensing by the Borrower, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, and (f) the granting of leases or subleases to other Persons not
materially interfering with the conduct of business of the Borrower.
          “Permitted Holder” means CGI Diversified Holdings and each of its
Affiliates.
          “Permitted Indebtedness” means:
               (a) any Indebtedness owing to any Agent and any Lender under this
Agreement or the other Loan Documents;

- 20 -

--------------------------------------------------------------------------------

 

               (b)[intentionally omitted];
               (c)Indebtedness evidenced by Capitalized Lease Obligations
entered into in order to finance Capital Expenditures made by the Borrower in
accordance with the provisions of Section 7.02(g), which Indebtedness, when
aggregated with the principal amount of all Indebtedness incurred under this
clause (c) and clause (d) of this definition, does not exceed $500,000 at any
time outstanding; and
               (d)purchase money Indebtedness incurred to enable the Borrower to
acquire equipment in the ordinary course of its business, which Indebtedness,
when aggregated with the principal amount of all Indebtedness incurred under
this clause (d) and clause (c) of this definition, does not exceed $500,000 at
any time outstanding.
          “Permitted Indebtedness Reserve” means an amount equal to the
aggregate amount of all outstanding purchase money Indebtedness or Capital Lease
Obligations of Borrower or any of its Subsidiaries.
          “Permitted Investments” means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency or instrumentality thereof and backed by the full faith and credit of the
United States, in each case, maturing within six months from the date of
acquisition thereof; (ii) commercial paper, maturing not more than 270 days
after the date of issue rated P-1 by Moody’s or A-1 by Standard & Poor’s;
(iii) certificates of deposit maturing not more than 270 days after the date of
issue, issued by commercial banking institutions and money market or demand
deposit accounts maintained at commercial banking institutions, each of which is
a member of the Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $500,000,000; (iv) repurchase agreements
having maturities of not more than 90 days from the date of acquisition which
are entered into with banks included in the commercial banking institutions
described in clause (iii) above and which are secured by readily marketable
direct obligations of the United States Government or any agency thereof,
(v) money market accounts maintained with mutual funds having assets in excess
of $2,500,000,000; and (vi) tax exempt securities rated A or better by Moody’s
or A+ or better by Standard & Poor’s.
          “Permitted Liens” means:
               (a)Liens securing the Obligations;
               (b)Liens for taxes, assessments, levies, and governmental charges
the payment of which is not required under Section 7.01(c);
               (c)Liens imposed by law, such as carriers’, warehousemen’s,
mechanics’, materialmen’s and other similar Liens arising in the ordinary course
of business and securing obligations (other than Indebtedness for borrowed
money) that are not overdue by more than 30 days or are being contested in good
faith and by appropriate proceedings promptly initiated and diligently
conducted, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;

- 21 -

--------------------------------------------------------------------------------

 

          (d) Liens described on Schedule 7.02(a), but not the extension of
coverage thereof to other property or assets
          (e) Liens arising under Capitalized Leases or securing purchase money
Indebtedness permitted under the definition of Permitted Indebtedness; provided,
however, that (A) no such Lien shall extend to or cover any other property of
the Borrower, and (B) the principal amount of the Indebtedness secured by any
such Lien shall not exceed the lesser of 80% of the fair market value or the
cost of the property so held or acquired;
          (f) deposits and pledges of cash securing (i) obligations incurred in
respect of workers’ compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are made or otherwise arise in the ordinary
course of business and secure obligations not past due;
          (g) easements, zoning restrictions and similar encumbrances on real
property and minor irregularities in the title thereto that do not (i) secure
obligations for the payment of money or (ii) materially impair the value of such
property or its use by the Borrower in the normal conduct of such Person’s
business;
          (h) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Borrower;
          (i) precautionary financing statement filings regarding operating
leases;
          (j) Liens arising out of the existence of judgments or awards not
giving rise to an Event of Default;
          (k) statutory and common law landlords’ liens under leases to which
the Borrower is a party;
          (l) Liens securing refinancing Indebtedness permitted to be incurred
hereunder; provided, that such Liens do not extend to any property or assets
other than the property or assets that served as collateral for the refinanced
Indebtedness; and
          (m) Liens permitted under the applicable Qualified Intercompany Loan
Agreement which secure Indebtedness of a Portfolio Company.
     “Permitted Management Fees” means management or consulting fees payable
pursuant to the terms of the Management Agreement (as in effect on the Effective
Date) and set forth on Schedule P-2.
     “Permitted Merger” has the meaning set forth in Section 7.02(c).
     “Permitted Modifications” means amendments, supplements, restatements or
other modifications of or to, and waivers and consents with respect to, any
conditions or other

- 22 -

--------------------------------------------------------------------------------

 

terms of Qualified Intercompany Loan Documents, other than such amendments,
supplements, restatements or other modifications of or to, and waivers and
consents as would, directly or indirectly, (a) permit any modification of any
payment obligation under any Qualified Intercompany Loan Document that is
adverse to Borrower, (b) result in an increase in any lending commitment of
Borrower or the amount of credit available to any Portfolio Company under any
Qualified Intercompany Loan Document, other than in connection with a Permitted
Post-Effective Date Acquisition in which the purchaser is a Portfolio Company,
(c) result in an extension of any date fixed for any payment under any Qualified
Intercompany Loan Document, (d) result in the release or subordination of any
Lien granted by any Portfolio Company to Borrower on all or any substantial
portion of any assets of such Portfolio Company, (e) permit (i) with respect to
any Effective Date Portfolio Company, Indebtedness in excess of $3,000,000, and
(ii) with respect to any other Portfolio Company, Indebtedness in excess of the
lesser of 37.5% of the TTM EBITDA (as of the date of the proposed modification)
of such Portfolio Company and $5,000,000 to be incurred by such Portfolio
Company, in each case exclusive of (i) Indebtedness owed to Borrower or
(ii) Indebtedness of CBS in respect of letters of credit issued by U.S. Bank in
an aggregate amount not to exceed $25,000,000; provided, that in no event shall
any Portfolio Company or any of its Subsidiaries be permitted to incur
Indebtedness in respect of letters of credit, to the extent that the aggregate
amount of such Indebtedness, when taken together with all other Indebtedness of
any Portfolio Company and its Subsidiaries in respect of letters of credit,
would exceed $30,000,000, (f) permit (i) with respect to any Effective Date
Portfolio Company, Liens securing Indebtedness in excess of $3,000,000, and
(ii) with respect to any other Portfolio Company, Indebtedness in excess of the
lesser of 37.5% of the TTM EBITDA (as of the date of the proposed modification)
of such Portfolio Company and $5,000,000 to be granted by such Portfolio Company
or any of its Subsidiaries, in each case exclusive of (x) Liens securing
Indebtedness owed to Borrower or (y) Liens securing Indebtedness of CBS in
respect of letters of credit issued by U.S. Bank in an aggregate amount not to
exceed $25,000,000; provided, that in no event shall any Portfolio Company or
any of its Subsidiaries be permitted to grant any Lien securing Indebtedness in
respect of letters of credit, to the extent that the aggregate amount of such
Indebtedness, when taken together with all other secured Indebtedness of any
Portfolio Company and its Subsidiaries in respect of letters of credit, would
exceed $30,000,000, (g) any Portfolio Company’s trailing twelve month
Consolidated EBITDA or Fixed Charge Coverage Ratio for any trailing twelve month
period to be less than 65% of the levels reasonably projected by such Portfolio
Company to be obtained by such Portfolio Company during such period, (h) any
Portfolio Company’s Leverage Ratio as of the end of any trailing twelve month
period to be more than 5.00:1.00, (i) permit any Portfolio Company or any of its
subsidiaries to pay any management, consulting fees or other similar payments,
to the extent that the aggregate amount of such management fees, consulting
fees, or other similar payments paid by Borrower or any of its Subsidiaries
during any fiscal year would exceed 2% of the amount of the Adjusted Net Assets
(as such term is defined in the Management Agreement) of the Borrower and its
Subsidiaries as of the last day of the immediately preceding fiscal quarter of
Borrower; provided, that in no event shall the provisions of this clause
(i) prevent any Subsidiary of Borrower from paying Transaction Services Fees to
CGM, (j) waive or eliminate any material conditions precedent to the commitments
of the Borrower under any Qualified Intercompany Loan Agreement, or
(k) eliminate any material representation, warranty, covenant or event of
default from any Qualified Intercompany Loan Document.

- 23 -

--------------------------------------------------------------------------------

 

     “Permitted Post-Effective Date Acquisition” means any Acquisition (other
than any Effective Date Acquisition) so long as:
     (a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition;
     (b) the Person whose Capital Stock or assets is being acquired, (1) is
engaged in a business that is not a Prohibited Business, and (2) is located and
organized within the United States or Canada;
     (c) the Borrower has provided Agents with written confirmation, supported
by reasonably detailed calculations, that (1) the proposed Portfolio Company had
positive Consolidated EBITDA for the most recently completed 12 month period for
which financial statements are available, (2) unless the proposed Portfolio
Company is an addition to an existing Portfolio Company, the proposed Portfolio
Company had positive Consolidated EBITDA of not less than $5,000,000 for the
most recently completed 12 month period for which financial statements are
available, and (3) on a pro forma basis, created by adding the historical
combined financial statements of the Borrower (including the combined financial
statements of any other Person that was the subject of a prior Permitted
Acquisition during the relevant period) to the historical consolidated financial
statements of the Person to be acquired pursuant to the proposed Acquisition,
the Borrower would have been in compliance with the financial covenant in
Section 7.03(a) for the 12 months ending as of the month ended immediately prior
to the proposed date of consummation of such proposed Acquisition for which
there are available financial statements;
     (d) (1) in the case of an Acquisition by means of an asset sale, the
subject assets are being acquired in such Acquisition directly by the Borrower,
a Portfolio Company or by a wholly-owned direct Subsidiary of Borrower or such
Portfolio Company, (2) in the case of any other Acquisition, the subject Capital
Stock is being acquired in such Acquisition directly by the Borrower, (3) in the
case of an Acquisition directly by Borrower, the Borrower shall have executed
and delivered a pledge agreement respecting the Capital Stock being acquired or
owned and shall have delivered to Collateral Agent possession of the original
stock certificates respecting all of the issued and outstanding shares of
Capital Stock of such Person being acquired by the Borrower, together with stock
powers with respect thereto endorsed in blank, and in the case of an Acquisition
by a Portfolio Company, such Portfolio Company shall have executed and delivered
to the Borrower, pursuant to the terms of a Qualified Intercompany Loan
Agreement, a pledge agreement respecting the Capital Stock being acquired or
owned and shall have delivered to Borrower possession of the original stock
certificates respecting all of the issued and outstanding shares of Capital
Stock of such Person being acquired by such Portfolio Company, together with
stock powers with respect thereto endorsed in blank, (4) the Borrower shall have
caused such acquired Person (or such acquisition Subsidiary, as applicable) and
each of its Subsidiaries to execute and deliver a Qualified Intercompany Loan
Agreement, containing (A) terms and conditions (including tenor, amortization of
the Qualified Intercompany Debt, fees and interest rates) which are consistent
with such terms set forth in the Qualified Intercompany Loan Agreements executed
by Borrower with the Effective Date Portfolio Companies), (B) financial
covenants (including a minimum Consolidated EBITDA covenant, a minimum Fixed
Charge Coverage Ratio and a Maximum Leverage Ratio) which are discounted off the
levels

- 24 -

--------------------------------------------------------------------------------

 

reasonably projected by the applicable Portfolio Companies by not more than 35%,
(C) Indebtedness covenants that do not permit Indebtedness in excess of the
lesser of 37.5% of the TTM EBITDA of any Portfolio Company (as of the closing
date of the proposed Acquisition) and $5,000,000 to be incurred by such
Portfolio Company, other than (I) Indebtedness owed to Borrower or
(II) Indebtedness of CBS in respect of letters of credit issued by U.S. Bank in
an aggregate amount not to exceed $25,000,000; provided, that in no event shall
any Portfolio Company or any of its Subsidiaries be permitted to incur
Indebtedness in respect of letters of credit, to the extent that the aggregate
amount of such Indebtedness, when taken together with all other Indebtedness of
any Portfolio Company and its Subsidiaries in respect of letters of credit,
would exceed $30,000,000, (D) Liens covenants that do not permit Liens securing
Indebtedness in excess of the lesser of 37.5% of the TTM EBITDA of any Portfolio
Company (as of the closing date of the proposed Acquisition) and $5,000,000 to
be granted by such Portfolio Company other than (I) Liens securing Indebtedness
owed to Borrower and (II) Liens securing Indebtedness of CBS in respect of
letters of credit issued by U.S. Bank in an aggregate amount not to exceed
$25,000,000; provided, that in no event shall any Portfolio Company or any of
its Subsidiaries be permitted to grant Liens to secure Indebtedness in respect
of letters of credit, to the extent that the aggregate amount of such secured
Indebtedness, when taken together with all other secured Indebtedness of any
Portfolio Company and its Subsidiaries in respect of letters of credit, would
exceed $30,000,000, (E) covenants regarding various restricted payments,
including the payment of management, consulting fees or other similar payments,
to the extent that the aggregate amount of such management fees, consulting
fees, or other similar payments made by Borrower or any of its Subsidiaries
during any fiscal year would exceed 2% of the amount of the Adjusted Net Assets
(as such term is defined in the Management Agreement) of the Borrower and its
Subsidiaries as of the last day of the immediately preceding fiscal quarter of
Borrower; provided, that in no event shall such covenant prevent any Subsidiary
of Borrower from paying transaction fees to CGM in connection with the closing
of a Permitted Post-Effective Date Acquisition, and (F) other representations,
warranties, covenants and events of default that are consistent with the
provisions of the Qualified Intercompany Loan Agreements executed by Borrower
with the Effective Date Portfolio Companies or are customarily included in loan
documents based on the Industry of the applicable Portfolio Company, (5) the
Borrower shall have caused such acquired Person and each of its Subsidiaries to
execute and deliver such other Qualified Intercompany Loan Documents as are
necessary to obtain an enforceable and perfected first priority Lien upon all or
substantially all of the property and assets of such Person and each of its
Subsidiaries in order to secure the related Qualified Intercompany Debt and
which are consistent with the provisions of the Qualified Intercompany Loan
Documents executed by Borrower with the Effective Date Portfolio Companies or
are customarily included in loan documents based on the Industry of the
Portfolio Company, and (6) the amount of Indebtedness to be advanced by the
Borrower to the prospective Portfolio Company in connection with the
consummation of the proposed Acquisition shall not be less than 65% of the
proposed Purchase Price and shall not be greater than 90% of the proposed
Purchase Price;
     (e) such Acquisition shall be consensual and, if such Acquisition has been
submitted to the board of directors (or such other managing body) of the Person
whose Capital Stock is proposed to be acquired, shall have been approved by such
board of directors (or such other managing body) and shall not have been
preceded by an unsolicited tender offer for such Capital Stock by, or proxy
contest initiated by, the Borrower;

- 25 -

--------------------------------------------------------------------------------

 

     (f) the Borrower shall have delivered (i) projections for the Person whose
Capital Stock is proposed to be acquired, and (ii) updated pro forma Projections
for the Borrower and its Subsidiaries demonstrating compliance on a pro forma
basis with Section 7.03(a) for the 12 calendar months following the date of such
Acquisition, in form and content reasonably acceptable to the Agents;
     (g) the Borrower shall have delivered (i) a quality of earnings report from
a third party acceptable to the Agents, (ii) an environmental report from a
third party acceptable to the Agents, (iii) a background report relative to the
key members of management of the proposed Portfolio Company from a third party
acceptable to the Agents, (iv) an insurance evaluation report from a third party
acceptable to the Agents, and (v) if required by the Borrower, a fairness
opinion from a third party acceptable to the Agents, in each case, in form and
content reasonably acceptable to the Agents (it being understood that any
Approved Professional shall be deemed to be acceptable to the Agents); and
     (h) the aggregate amount of the sum of Availability and Qualified Cash
shall equal or exceed $5,000,000, both immediately prior to and immediately
after giving effect to such Acquisition.
     “Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
     “Pharos” means Pharos I LLC, a Delaware limited liability company.
     “Pharos Subscription Agreement” means a Share Purchase Agreement, dated as
of May 16, 2006, between the Trust and Pharos, pursuant to which Pharos agrees
to purchase not less than $4,000,000 of shares of Capital Stock of the Trust on
or before the Effective Date.
     “Portfolio Companies” means (a) the Effective Date Portfolio Companies, and
(b) any Person acquired by the Borrower, directly or indirectly, after the
Effective Date, and “Portfolio Company” means any one of them.
     “Post-Default Rate” means a rate of interest per annum equal to the rate of
interest otherwise in effect from time to time pursuant to the terms of this
Agreement plus 2.0 percentage points, or, if a rate of interest is not otherwise
in effect, interest at the highest rate specified herein for any Loan prior to
the Event of Default plus 2.0 percentage points.
     “Prohibited Business” means the acquisition of real estate for investment
purposes.
     “property” means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
     “Pro Rata Share” means:
     (a) with respect to a Lender’s obligation to make Revolving Loans and right
to receive payments of interest, fees, and principal with respect thereto, the
percentage obtained

- 26 -

--------------------------------------------------------------------------------

 

by dividing (i) such Lender’s Revolving Credit Commitment, by (ii) the Total
Revolving Credit Commitment, provided, that, if the Total Revolving Credit
Commitment has been reduced to zero, the numerator shall be the aggregate unpaid
principal amount of such Lender’s Revolving Loans (including Collateral Agent
Advances) and the denominator shall be the aggregate unpaid principal amount of
all Revolving Loans (including Collateral Agent Advances),
     (b) with respect to a Lender’s obligation to make the Term Loan and right
to receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender’s Term Loan Commitment, by
(ii) the Total Term Loan Commitment, provided that if the Total Term Loan
Commitment has been reduced to zero, the numerator shall be the aggregate unpaid
principal amount of such Lender’s portion of the Term Loan and the denominator
shall be the aggregate unpaid principal amount of the Term Loan, and
     (c) with respect to a Lender’s obligation to make the Delayed Draw Term
Loan and right to receive payments of interest, fees, and principal with respect
thereto, the percentage obtained by dividing (i) such Lender’s Delayed Draw Term
Loan Commitment, by (ii) the Total Delayed Draw Term Loan Commitment, provided
that if the Total Delayed Draw Term Loan Commitment has been reduced to zero,
the numerator shall be the aggregate unpaid principal amount of such Lender’s
portion of the Delayed Draw Term Loan and the denominator shall be the aggregate
unpaid principal amount of the Delayed Draw Term Loan, and
     (d) with respect to all other matters (including the indemnification
obligations arising under Section 10.05) pertaining to a Lender, the percentage
obtained by dividing (i) the sum of such Lender’s Revolving Credit Commitment,
the unpaid principal amount of such Lender’s portion of the Term Loan, and the
unpaid principal amount of such Lender’s portion of the Delayed Draw Term Loan,
by (ii) the sum of the Total Revolving Credit Commitment, the aggregate unpaid
principal amount of the Term Loan, and the aggregate unpaid principal amount of
the Delayed Draw Term Loan provided, that, if such Lender’s Revolving Credit
Commitment shall have been reduced to zero, such Lender’s Revolving Credit
Commitment shall be deemed to be the aggregate unpaid principal amount of such
Lender’s Revolving Loans (including Collateral Agent Advances) and if the Total
Revolving Credit Commitment shall have been reduced to zero, the Total Revolving
Credit Commitment shall be deemed to be the aggregate unpaid principal amount of
all Revolving Loans (including Collateral Agent Advances).
     “Purchase Price” means, with respect to any Acquisition, an amount equal to
the sum of (i) the aggregate consideration, whether cash, property or securities
(including the fair market value of any Capital Stock of the Trust or the
Borrower (or in the case of an Acquisition involving an asset sale, an
acquisition Subsidiary of the Borrower) issued in connection with such
Acquisition), paid or delivered directly or indirectly by the Borrower in
connection with such Acquisition, plus (ii) the aggregate amount of liabilities
of the acquired business (net of current assets of the acquired business) that
would be reflected on a balance sheet (if such were to be prepared) of the
Borrower and its Subsidiaries after giving effect to such Acquisition.
     “Qualified Cash” means, as of any date of determination, the amount of
unrestricted Cash and Cash Equivalents of the Borrower that is subject to a
control agreement in favor of Collateral Agent and that is on deposit with
banks, or in securities accounts with securities intermediaries, or any
combination thereof.

- 27 -

--------------------------------------------------------------------------------

 

     “Qualified Intercompany Debt” means, as of any date of determination, with
respect to a Portfolio Company, the result of (a) the lesser of (i) the amount
of Indebtedness for borrowed money owed by such Portfolio Company pursuant to a
Qualified Intercompany Loan Agreement; provided, however, that if more than one
Subsidiary of the Borrower is obligated under a single Qualified Intercompany
Loan Agreement, or under a guaranty in respect thereof, the amount of Qualified
Intercompany Debt for such Subsidiaries shall be the amount owed to the Borrower
under such Qualified Intercompany Loan Agreement calculated without duplication
of the separate obligations of each such Subsidiary, and (ii) the product of
5.00 times TTM EBITDA of such Subsidiary of the Borrower calculated as of the
last fiscal quarter for which financial statements as to such Subsidiary of the
Borrower have been delivered pursuant to Section 7.01(a), minus (b) the amount
of Disqualified Intercompany Debt.
     “Qualified Intercompany Loan Agreement” means a credit or loan agreement
between the Borrower, as the sole lender, and a Subsidiary or Subsidiaries of
the Borrower, as the borrower or co-borrowers, substantially in the form of
Exhibit Q-1, as modified by Permitted Modifications.
     “Qualified Intercompany Loan Document” means, with respect to each
Portfolio Company, a Qualified Intercompany Loan Agreement, a Security Agreement
pursuant to which such Portfolio Company and its Subsidiaries grant to Borrower,
as secured party, a first priority Lien in substantially all of their personal
property, one or more Mortgages pursuant to which such Portfolio Company and its
Subsidiaries grant to Borrower, as secured party, a first priority Lien in all
of its real property that would constitute After-Acquired Property, one or more
lockbox agreements and control agreements, any other agreement, instrument, or
other document executed, delivered, filed or recorded pursuant hereto or thereto
(including the Intercreditor Agreement) or otherwise evidencing or securing
Qualified Intercompany Debt (in each case substantially in the form of
Exhibit Q-2).
     “Rating Agencies” has the meaning specified therefor in Section 2.07.
     “Reference Bank” means JPMorgan Chase Bank, N.A., its successors or any
other commercial bank designated by the Administrative Agent to the Borrower
from time to time.
     “Reference Rate” means the greater of (a) 5.75% per annum, and (b) the rate
of interest publicly announced by the Reference Bank in New York, New York from
time to time as its reference rate, base rate or prime rate. The reference rate,
base rate or prime rate is determined from time to time by the Reference Bank as
a means of pricing some loans to its borrowers and neither is tied to any
external rate of interest or index nor necessarily reflects the lowest rate of
interest actually charged by the Reference Bank to any particular class or
category of customers. Each change in the Reference Rate shall be effective from
and including the date such change is publicly announced as being effective.
     “Reference Rate Loan” means each portion of a Loan that bears interest at a
rate determined by reference to the Reference Rate.
     “Reference Rate Margin” means (a) at any time that a Default or Event of
Default has occurred and is continuing, 3.25 percentage points and
(b) thereafter, so long as no Default

- 28 -

--------------------------------------------------------------------------------

 

or Event of Default has occurred and is continuing, the “Reference Rate Margin”
set forth in the table below that corresponds to the Leverage Ratio, as of the
last day of any month, reported to Agent as set forth in the next paragraph and
as otherwise determined in accordance with the other provisions of the next
paragraph.
     The Reference Rate Margin shall be determined from time to time based upon
the certificate delivered by the Borrower to the Administrative Agent in
accordance with Section 7.01(a), to be effective for the forthcoming month;
provided, however, if such certificate is not timely delivered to the
Administrative Agent, the Reference Rate Margin shall immediately be set at
3.25 percentage points until such time as such certificate is delivered and then
(without any retroactive effect and without constituting a waiver of any Default
or Event of Default arising as a result of any failure to timely deliver such
Compliance Certificate) shall be determined based upon the Leverage Ratio set
forth in such certificate; provided further, however, if the Borrower’s
financial statements are at any time restated or otherwise revised (including as
a result of an audit), such that the Reference Rate Margin would have been
higher than was otherwise in effect during any period, interest due under this
Agreement shall immediately be recalculated at such higher rate for any
applicable periods and shall be due and payable on demand.

                  Reference Rate Level   Leverage Ratio   Margin
I
  Less than 1.00:1.00   2.00 percentage points
II
  Greater than or equal to
1.00:1.00 but less than 1.50:1.00   2.25 percentage points
III
  Greater than or equal to
1.50:1.00 but less than 2.0:1.00   2.50 percentage points
IV
  Greater than or equal to 
2.00:1.00 but less than 2.5:1.00   2.75 percentage points
V
  Greater than or equal to
2.50:1.00   3.25 percentage points

     “Register” has the meaning specified therefor in Section 12.07(d).
     “Registered Loan” has the meaning specified therefore in Section 12.07(d).
     “Regulation T”, “Regulation U” and “Regulation X” mean, respectively,
Regulations T, U and X of the Board or any successor, as the same may be amended
or supplemented from time to time.
     “Reinvestment Eligible Funds” means (a) Net Cash Proceeds which, but for
the application of Section 2.05(d)(ii), would be required to be used to prepay
the Loans pursuant to Section 2.05(c)(v) or (b) Extraordinary Receipts
consisting of insurance or condemnation

- 29 -

--------------------------------------------------------------------------------

 

proceeds paid as the result of loss, destruction, casualty, condemnation or
expropriation which, but for the application of Section 2.05(d)(ii), would be
required to be used to prepay the Loans pursuant to Section 2.05(c)(vii).
     “Reinvestment Notice” has the meaning specified therefore in
Section 2.05(d).
     “Related Fund” means a fund, money market account, investment account or
other account managed by a Lender or an Affiliate of such Lender or its
investment manager.
     “Related Party Assignment” has the meaning specified therefor in Section
12.07(b).
     “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including the
movement of Hazardous Materials through or in the ambient air, soil, surface or
ground water, or property.
     “Remedial Action” means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials in the indoor or outdoor environment; (ii) prevent or
minimize a Release or threatened Release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or
(iv) any other actions authorized by 42 U.S.C. § 9601.
     “Reportable Event” means an event described in Section 4043 of ERISA (other
than an event not subject to the provision for 30-day notice to the PBGC under
the regulations promulgated under such Section).
     “Required Equity” has the meaning specified therefor in Section 5.01(g).
     “Required Lenders” means Lenders whose Pro Rata Shares (calculated under
clause (d) of the definition thereof) aggregate more than 50%.
     “Reserve Percentage” means, on any day, for any Lender, the maximum
percentage prescribed by the Board (or any successor Governmental Authority) for
determining the reserve requirements (including any basic, supplemental,
marginal, or emergency reserves) that are in effect on such date with respect to
eurocurrency funding (currently referred to as “eurocurrency liabilities”) of
that Lender, but so long as such Lender is not required or directed under
applicable regulations to maintain such reserves, the Reserve Percentage shall
be zero.
     “Restricted Account” means deposit account of Borrower (and for its
benefit) in the name of Collateral Agent and with respect to which, the
applicable bank which maintains such deposit account has agreed in writing in
favor of Collateral Agent that it will not transfer the Cash and Cash
Equivalents from such deposit account without the prior written consent of
Collateral Agent.

- 30 -

--------------------------------------------------------------------------------

 

     “Restricted Cash” means as of any date of determination, the amount of
unrestricted Cash and Cash Equivalents of the Borrower deposited in a Restricted
Account, to the extent that at the time of such deposit, the outstanding
principal balance of the Revolving Loans is equal to $0.
     “Revolving Credit Commitment” means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans to the Borrower in the amount
set forth opposite such Lender’s name in Schedule C-1 hereto, as such amount may
be terminated or reduced from time to time in accordance with the terms of this
Agreement.
     “Revolving Loan” and “Revolving Loans” have the meaning specified therefor
in Section 2.01(a)(i).
     “Revolving Loan Lender” means a Lender with a Revolving Credit Commitment.
     “Revolving Loan Obligations” means any Obligations with respect to the
Revolving Loans (including the principal thereof, the interest thereon, and the
fees and expenses specifically related thereto).
     “SEC” means the Securities and Exchange Commission or any other similar or
successor agency of the Federal government administering the Securities Act.
     “Securities Act” means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
     “Securitization” has the meaning specified therefor in Section 2.07.
     “Securitization Parties” has the meaning specified therefor in
Section 2.07.
     “Security Agreement” means a Security Agreement, in form and substance
reasonably satisfactory to Collateral Agent.
     “Settlement Period” has the meaning specified therefor in
Section 2.02(d)(i) hereof.
     “Silvue” means Silvue Technologies Group, Inc., a Delaware corporation.
     “Solvent” means, with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is not less than the
total amount of the liabilities of such Person, (ii) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in

- 31 -

--------------------------------------------------------------------------------

 

business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute unreasonably
small capital.
     “Sostratus” means Sostratus LLC, a Delaware limited liability company.
     “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies, Inc. and any successor thereto.
     “Subscription Documents” means (a) the CGI Subscription Agreement, (b) the
Pharos Subscription Agreement, and (c) the other instruments and agreements
entered into by the Trust in connection with the obtaining by the Trust of a
portion of the Required Equity from CGI Diversified and Pharos.
     “Subsidiary” means, with respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
estate, association, joint venture or other business entity (i) the accounts of
which would be consolidated with those of such Person in such Person’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP or (ii) of which at least a Majority Interest is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such Person.
     “Taxes” has the meaning specified therefor in Section 2.08(a).
     “Term Loan” has the meaning specified therefor in Section 2.01(a)(ii).
     “Term Loan Commitment” means, with respect to each Lender, the commitment
of such Lender to make its portion of the Term Loan to the Borrower in the
amount set forth in Schedule C-1 hereto, as the same may be terminated or
reduced from time to time in accordance with the terms of this Agreement.
     “Term Loan Lender” means a Lender with a Term Loan Commitment.
     “Term Loan Obligations” means any Obligations with respect to the Term Loan
(including the principal thereof, the interest thereon, and the fees and
expenses specifically related thereto).
     “Termination Event” means (i) a Reportable Event with respect to any
Employee Plan, (ii) any event that causes the Borrower or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate an Employee Plan or the
treatment of an Employee Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate an Employee
Plan, or (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Employee Plan.
     “Title Insurance Policy” means a mortgagee’s loan policy, in form and
substance reasonably satisfactory to the Collateral Agent, together with all
endorsements made from time to time thereto, issued by or on behalf of a title
insurance company reasonably satisfactory to the

- 32 -

--------------------------------------------------------------------------------

 

Collateral Agent, insuring the Lien created by a Mortgage in an amount and on
terms reasonably satisfactory to the Collateral Agent.
     “Total Commitment” means the sum of the Total Revolving Credit Commitment,
the Total Delayed Draw Term Loan Commitment, and the Total Term Loan Commitment.
     “Total Delayed Draw Term Loan Commitment” means the sum of the amounts of
the Lenders’ Delayed Draw Term Loan Commitments, which amount is $115,000,000 as
of the Effective Date.
     “Total Revolving Credit Commitment” means the sum of the amounts of the
Lenders’ Revolving Credit Commitments, which amount is $60,000,000 as of the
Effective Date.
     “Total Term Loan Commitment” means the sum of the amounts of the Lenders’
Term Loan Commitments, which amount is $50,000,000 as of the Effective Date.
     “Transaction Services Fees” means transaction fees paid by a Portfolio
Company or its Subsidiaries to CGM pursuant to the applicable transaction
services agreement with respect to certain transaction-related services
performed by CGM, such as those customarily performed by a third-party
consultant or financial advisor.
     “Transferee” has the meaning specified therefor in Section 2.08(a).
     “Trust” means Compass Diversified Trust, a Delaware statutory trust.
     “TTM EBITDA” means, as of any date of determination and with respect to a
Person, the Consolidated EBITDA of such Person and its Subsidiaries for the
12 month period most recently ended; provided, however, that:
     (a) for the purposes of any calculation of TTM EBITDA as of any date on or
before the first anniversary of the Effective Date, the Consolidated EBITDA of
the Borrower for each month during the twelve months prior to the Effective Date
shall be deemed to be as set forth on Schedule T-1,
     (b) if Borrower consummates a Permitted Post-Effective Date Acquisition,
then, as of any date of determination of Consolidated EBITDA of the Borrower,
100% of the acquired Person’s Consolidated EBITDA during the period from the
beginning of the measured 12 month period up to the last day of such measured
12 month period shall be included in the Borrower’s Consolidated EBITDA for such
12 month period;
     (c) (i) in order to include the Consolidated EBITDA of a Subsidiary of the
Borrower within the TTM EBITDA of the Borrower, the Borrower must own and
control at least a Majority Interest in such Person, and (ii) if, at any time,
the Borrower ceases to own and control a Majority Interest in a Person, the
Consolidated EBITDA of such Person shall immediately cease to be included within
the TTM EBITDA of the Borrower effective as of the beginning of the such
12 month period;

- 33 -

--------------------------------------------------------------------------------

 

     (d) if the Consolidated EBITDA of a Portfolio Company for such 12 month
period exceeds 35% (in the case of each Portfolio Company other than CBS) or 60%
(in the case of CBS) of the TTM EBITDA of all Portfolio Companies taken as a
whole, there shall be excluded from the TTM EBITDA of the Borrower such amount
of the Consolidated EBITDA of such Portfolio Company for such 12 month period so
that, after giving effect to such elimination, the Consolidated EBITDA of such
Portfolio Company for such 12 month period equals 35% or, in the case of CBS,
60% of the TTM EBITDA of all Portfolio Companies taken as a whole; and
     (e) if the Consolidated EBITDA of all Portfolio Companies that conduct
business within a single Industry for such 12 month period exceeds 35% (in the
case of Portfolio Companies that conduct business in an Industry other than the
temporary services Industry) or 60% (in the case of Portfolio Companies that
conduct business in the temporary services Industry) of the TTM EBITDA of all
Portfolio Companies taken as a whole, there shall be excluded from the TTM
EBITDA of the Borrower such amount of the Consolidated EBITDA of such Portfolio
Companies for such 12 month period so that, after giving effect to such
elimination, the Consolidated EBITDA of such Portfolio Companies for such
12 month period equals 35% or, in the case of Portfolio Companies that conduct
business in the temporary services Industry, 60% of the TTM EBITDA of all
Portfolio Companies taken as a whole.
     “WARN” has the meaning specified therefor in Section 6.01(z).
     Section 1.02 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “without limitation,” whether or not so
expressly stated in each such instance and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The word “will” shall be construed to have the same meaning and effect as the
word “shall.” Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights. References in this Agreement to “determination” by any Agent
include estimates honestly made by such Agent (in the case of quantitative
determinations) and beliefs honestly held by such Agent (in the case of
qualitative determinations).
     Section 1.03 Accounting and Other Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under GAAP. All terms used in this Agreement which are defined in Article 8
or Article 9 of the Code and which are not otherwise defined herein shall have
the same meanings herein as set forth therein.

- 34 -

--------------------------------------------------------------------------------

 

     Section 1.04 Time References. Unless otherwise indicated herein, all
references to time of day refer to Eastern Standard Time or Eastern daylight
saving time, as in effect in New York City on such day. For purposes of the
computation of a period of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”; provided, however, that with respect to a computation
of fees or interest payable to any Agent or any Lender , such period shall in
any event consist of at least one full day.
ARTICLE II
THE LOANS
     Section 2.01 Commitments. (a) Subject to the terms and conditions and
relying upon the representations and warranties herein set forth:
               (i) each Revolving Loan Lender severally agrees to make loans
(each, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the
Borrower at any time and from time to time from the Effective Date to the Final
Maturity Date, or until the earlier reduction of its Revolving Credit Commitment
to zero in accordance with the terms hereof, in an aggregate principal amount of
Revolving Loans at any time outstanding not to exceed the lesser of (A) the
result of (1) the amount of such Lender’s Revolving Credit Commitment minus
(2) the amount of such Lender’s Pro Rata Share of the L/C Reserve, and (B) the
amount of such Lender’s Pro Rata Share of the result of (1) the then extant
Borrowing Base, minus (2) the sum of (x) the outstanding principal amount of the
Term Loan, and (y) the outstanding principal balance of the Delayed Draw Term
Loans;
               (ii) each Term Loan Lender severally agrees to make a term loan
(collectively, the “Term Loan”) to the Borrower on the Effective Date, in an
aggregate principal amount equal to the amount of such Lender’s Term Loan
Commitment; and
               (iii) each Delayed Draw Term Loan Lender severally agrees to make
loans (each, a “Delayed Draw Term Loan” and, collectively, the “Delayed Draw
Term Loans”) to the Borrower at any time and from time to time from the
Effective Date to the Delayed Draw Term Loan Commitment Expiry Date, or until
the earlier reduction of its Delayed Draw Term Loan Commitment to zero in
accordance with the terms hereof, in an aggregate principal amount of Delayed
Draw Term Loans at any time outstanding not to exceed the lesser of (A) the
amount of such Lender’s Delayed Draw Term Loan Commitment, and (B) the amount of
such Lender’s Pro Rata Share of the result of (1) the then extant Borrowing
Base, minus (2) the sum of (x) the aggregate outstanding principal amount of the
Term Loan and (y) the outstanding principal balance of all Revolving Loans.
          (b) Notwithstanding the foregoing:
               (i) The aggregate principal amount of Revolving Loans outstanding
at any time to the Borrower shall not exceed the lower of (A) the result of
(1) the Total Revolving Credit Commitment minus (2) the sum of the L/C Reserve
and the Permitted Indebtedness Reserve and (B) the result of (1) the then extant
Borrowing Base, minus (2) the sum

- 35 -

--------------------------------------------------------------------------------

 

of (x) the outstanding principal amount of the Term Loan, and (y) the
outstanding principal balance of the Delayed Draw Term Loans. The Revolving
Credit Commitment of each Lender shall automatically and permanently be reduced
to zero on the Final Maturity Date. Within the foregoing limits, the Borrower
may borrow, repay and reborrow the Revolving Loans, on or after the Effective
Date and prior to the Final Maturity Date, subject to the terms, provisions and
limitations set forth herein.
               (ii) The aggregate principal amount of the Term Loan made on the
Effective Date shall not exceed the Total Term Loan Commitment. Any principal
amount of the Term Loan that is repaid or prepaid may not be reborrowed.
               (iii) The aggregate principal amount of the Delayed Draw Term
Loans made hereunder shall not exceed the lower of (A) the result of (1) the
Total Delayed Draw Term Loan Commitment minus (2) the sum of the L/C Reserve and
the Permitted Indebtedness Reserve and (B) the result of (1) the then extant
Borrowing Base, minus (2) the sum of (x) the outstanding principal amount of the
Term Loan, and (y) the outstanding principal balance of the Revolving Loans. Any
principal amount of any Delayed Draw Term Loan that is repaid or prepaid may not
be reborrowed.
     Section 2.02 Making the Loans. (a) The Borrower shall give the
Administrative Agent prior telephonic notice (immediately confirmed in writing,
in substantially the form of Exhibit 2.01(b)(ii) hereto (a “Notice of
Borrowing”)), not later than 12:00 noon (New York City time) on the date which
is, in the case of a Revolving Loan that is a LIBOR Rate Loan or a Delayed Draw
Term Loan, 3 Business Days, and in the case of a Revolving Loan that is a
Reference Rate Loan, 1 Business Day, prior to the date of the proposed Loan (or
such shorter period as the Administrative Agent is willing, in its sole
discretion, to accommodate from time to time). Such Notice of Borrowing shall be
irrevocable and shall specify (i) the principal amount of the proposed Loan,
(ii) the proposed borrowing date, which must be a Business Day, and, with
respect to the Term Loan, must be the Effective Date. The Administrative Agent
and the Lenders may act without liability upon the basis of written, telecopied
or telephonic notice believed by the Administrative Agent in good faith to be
from the Borrower (or from any Authorized Officer thereof designated in writing
purportedly from the Borrower to the Administrative Agent). The Borrower hereby
waives the right to dispute the Administrative Agent’s record of the terms of
any such telephonic Notice of Borrowing. The Administrative Agent and each
Lender shall be entitled to rely conclusively on any Authorized Officer’s
authority to request a Loan on behalf of the Borrower until the Administrative
Agent receives written notice to the contrary. The Administrative Agent and the
Lenders shall have no duty to verify the authenticity of the signature appearing
on any written Notice of Borrowing.
          (b) Each Notice of Borrowing pursuant to this Section 2.02 shall be
irrevocable and the Borrower shall be bound to make a borrowing in accordance
therewith. Each Revolving Loan shall be made in a minimum amount of $500,000 and
shall be in integral multiples of $100,000 in excess thereof. Each Delayed Draw
Term Loan shall be made in a minimum amount of $5,000,000 and shall be in
integral multiples of $1,000,000 in excess thereof.

- 36 -

--------------------------------------------------------------------------------

 

          (c) (i) Except as otherwise provided in this Section 2.02(c), all
Loans under this Agreement shall be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares of the Total Revolving Credit
Commitment, the Total Delayed Draw Term Loan Commitment, and the Total Term Loan
Commitment, as the case may be, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender’s
obligations to make a Loan requested hereunder, nor shall the Commitment of any
Lender be increased or decreased as a result of the default by any other Lender
in that other Lender’s obligation to make a Loan requested hereunder, and each
Lender shall be obligated to make the Loans required to be made by it by the
terms of this Agreement regardless of the failure by any other Lender.
               (ii) Notwithstanding any other provision of this Agreement, and
in order to reduce the number of fund transfers among the Borrower, the Agents
and the Lenders, the Borrower, the Agents and the Lenders agree that the
Administrative Agent may (but shall not be obligated to), and the Borrower and
the Lenders hereby irrevocably authorize the Administrative Agent to, fund, on
behalf of the Lenders with a Revolving Credit Commitment, Revolving Loans
pursuant to Section 2.01, subject to the procedures for settlement set forth in
Section 2.02(d); provided, however, that (a) the Administrative Agent shall in
no event fund any such Revolving Loans if the Administrative Agent shall have
received written notice from the Collateral Agent or the Required Lenders prior
to the time of the proposed Revolving Loan that one or more of the conditions
precedent contained in Section 5.02 will not be satisfied at the time of the
proposed Revolving Loan, and (b) the Administrative Agent shall not otherwise be
required to determine that, or take notice whether, the conditions precedent in
Section 5.02 have been satisfied. If the Borrower gives a Notice of Borrowing
requesting a Revolving Loan and the Administrative Agent elects not to fund such
Revolving Loan on behalf of the Revolving Loan Lenders, then promptly after
receipt of the Notice of Borrowing requesting such Revolving Loan, the
Administrative Agent shall notify each Revolving Loan Lender of the specifics of
the requested Revolving Loan and that it will not fund the requested Revolving
Loan on behalf of the Revolving Loan Lenders. If the Administrative Agent
notifies the Revolving Loan Lenders that it will not fund a requested Revolving
Loan on behalf of such Revolving Loan Lenders, each Revolving Loan Lender shall
make its Pro Rata Share of the Revolving Loan available to the Administrative
Agent, in immediately available funds, at the Payment Office no later than 3:00
p.m. (New York City time) (provided that the Administrative Agent requests
payment from such Revolving Loan Lender not later than 1:00 p.m. (New York City
time)) on the date of the proposed Revolving Loan. The Administrative Agent will
make the proceeds of such Revolving Loans available to the Borrower on the day
of the proposed Revolving Loan by causing an amount, in immediately available
funds, equal to the proceeds of all such Revolving Loans received by the
Administrative Agent at the Payment Office or the amount funded by the
Administrative Agent on behalf of the Revolving Loan Lenders to be deposited in
an account designated by the Borrower.
               (iii) If the Administrative Agent has notified the Revolving Loan
Lenders that the Administrative Agent, on behalf of such Revolving Loan Lenders,
will fund a particular Revolving Loan pursuant to Section 2.02(c)(ii), the
Administrative Agent may assume that each such Revolving Loan Lender has made
such amount available to the Administrative Agent on such day and the
Administrative Agent, in its sole discretion, may, but shall not be obligated
to, cause a corresponding amount to be made available to the Borrower on

- 37 -

--------------------------------------------------------------------------------

 

such day. If the Administrative Agent makes such corresponding amount available
to the Borrower and such corresponding amount is not in fact made available to
the Administrative Agent by any such Revolving Loan Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Revolving Loan Lender together with interest thereon, for each day from the date
such payment was due until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate for 3 Business Days and thereafter at the
Reference Rate. During the period in which such Revolving Loan Lender has not
paid such corresponding amount to the Administrative Agent, notwithstanding
anything to the contrary contained in this Agreement or any other Loan Document,
the amount so advanced by the Administrative Agent to the Borrower shall, for
all purposes hereof, be a Revolving Loan made by the Administrative Agent for
its own account. Upon any such failure by a Revolving Loan Lender to pay the
Administrative Agent, the Administrative Agent shall promptly thereafter notify
the Borrower of such failure and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent for its own account.
               (iv) Nothing in this Section 2.02(c) shall be deemed to relieve
any Revolving Loan Lender from its obligations to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that the Administrative Agent or
the Borrower may have against any Revolving Loan Lender as a result of any
default by such Revolving Loan Lender hereunder.
          (d) (i) With respect to all periods for which the Administrative Agent
has funded Revolving Loans pursuant to Section 2.02(c), on Friday of each week,
or if the applicable Friday is not a Business Day, then on the following
Business Day, or such shorter period as the Administrative Agent may from time
to time select (any such week or shorter period being herein called a
“Settlement Period”), the Administrative Agent shall notify each Revolving Loan
Lender of the unpaid principal amount of the Revolving Loans outstanding as of
the last day of each such Settlement Period. In the event that such amount is
greater than the unpaid principal amount of the Revolving Loans outstanding on
the last day of the Settlement Period immediately preceding such Settlement
Period (or, if there has been no preceding Settlement Period, the amount of the
Revolving Loans made on the date of such Revolving Loan Lender’s initial
funding), each Revolving Loan Lender shall promptly (and in any event not later
than 2:00 p.m. (New York City time) if the Administrative Agent requests payment
from such Lender not later than 12:00 noon (New York City time) on such day)
make available to the Administrative Agent its Pro Rata Share of the difference
in immediately available funds. In the event that such amount is less than such
unpaid principal amount, the Administrative Agent shall promptly pay over to
each Revolving Loan Lender its Pro Rata Share of the difference in immediately
available funds. In addition, if the Administrative Agent shall so request at
any time when a Default or an Event of Default shall have occurred and be
continuing, or any other event shall have occurred as a result of which the
Administrative Agent shall determine that it is desirable to present claims
against the Borrower for repayment, each Revolving Loan Lender shall promptly
remit to the Administrative Agent or, as the case may be, the Administrative
Agent shall promptly remit to each Revolving Loan Lender, sufficient funds to
adjust the interests of the Revolving Loan Lenders in the then outstanding
Revolving Loans to such an extent that, after giving effect to such adjustment,
each such Revolving Loan Lender’s interest in the then outstanding Revolving
Loans will be equal to its Pro Rata Share thereof. The obligations of the
Administrative Agent and each Revolving Loan Lender under this

- 38 -

--------------------------------------------------------------------------------

 

Section 2.02(d) shall be absolute and unconditional. Each Revolving Loan Lender
shall only be entitled to receive interest on its Pro Rata Share of the
Revolving Loans which have been funded by such Revolving Loan Lender.
               (ii) In the event that any Revolving Loan Lender fails to make
any payment required to be made by it pursuant to Section 2.02(d)(i), the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Revolving Loan Lender together with interest thereon, for each
day from the date such payment was due until the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate for 3 Business Days and
thereafter at the Reference Rate. During the period in which such Revolving Loan
Lender has not paid such corresponding amount to the Administrative Agent,
notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the amount so advanced by the Administrative Agent to the
Borrower shall, for all purposes hereof, be a Revolving Loan made by the
Administrative Agent for its own account. Upon any such failure by a Revolving
Loan Lender to pay the Administrative Agent, the Administrative Agent shall
promptly thereafter notify the Borrower of such failure and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent for its
own account. Nothing in this Section 2.02(d)(ii) shall be deemed to relieve any
Revolving Loan Lender from its obligation to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that the Administrative Agent or
the Borrower may have against any Revolving Loan Lender as a result of any
default by such Revolving Loan Lender hereunder.
     Section 2.03 Repayment of Loans; Evidence of Debt. (a) The outstanding
principal of all Revolving Loans shall be due and payable on the Final Maturity
Date.
          (b) The outstanding principal of the Term Loan shall be repaid in full
on the earlier of (i) the termination of the Total Revolving Credit Commitment
and (ii) the Final Maturity Date.
          (c) The outstanding principal of the Delayed Draw Term Loans shall be
repaid in full on the earlier of (i) the termination of the Total Revolving
Credit Commitment and (ii) the Final Maturity Date.
          (d) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
          (e) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.
          (f) The entries made in the accounts maintained pursuant to paragraphs
(d) or (e) of this Section 2.03 shall be prima facie evidence of the existence
and amounts of the obligations recorded therein; provided that the failure of
any Lender or the

- 39 -

--------------------------------------------------------------------------------

 

Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
          (g) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) in a form furnished
by the Collateral Agent and reasonably satisfactory to the Borrower. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 12.07) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).
     Section 2.04 Interest. (a) Revolving Loans. Each Revolving Loan shall bear
interest on the principal amount thereof from time to time outstanding, from the
date of such Loan until such principal is repaid, as follows: (i) if the
relevant Revolving Loan is a LIBOR Rate Loan, at a rate per annum equal to the
LIBOR Rate plus the applicable LIBOR Rate Margin, and (ii) otherwise, at a rate
per annum equal to the Reference Rate plus the applicable Reference Rate Margin.
          (b) Term Loan. The Term Loan shall bear interest on the principal
amount thereof from time to time outstanding, from the date of the making of the
Term Loan until such principal amount is repaid, as follows: (i) if the relevant
portion of the Term Loan is a LIBOR Rate Loan, at a rate per annum equal to the
LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a rate per annum
equal to the Reference Rate plus the Reference Rate Margin.
          (c) Delayed Draw Term Loans. Each Delayed Draw Term Loan shall bear
interest on the principal amount thereof from time to time outstanding, from the
date of such Delayed Draw Term Loan until such principal amount is repaid, as
follows: (i) if the relevant Delayed Draw Term Loan is a LIBOR Rate Loan, at a
rate per annum equal to the LIBOR Rate plus the applicable LIBOR Rate Margin,
and (ii) otherwise, at a rate per annum equal to the Reference Rate plus the
applicable Reference Rate Margin.
          (d) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, all Loans, fees, indemnities, or any
other Obligations of the Borrower under this Agreement and the other Loan
Documents, shall bear interest, from the date such Event of Default occurred
until the date such Event of Default is cured or waived in writing in accordance
herewith, at a rate per annum equal at all times to the Post-Default Rate.
          (e) LIBOR Option.
               (i) Interest. In lieu of having interest charged at the rate
based upon the Reference Rate, the Borrower shall have the option (the “LIBOR
Option”) to have interest on all or a portion of the Loans be charged at a rate
of interest based upon the LIBOR

- 40 -

--------------------------------------------------------------------------------

 

Rate. On the last day of each applicable Interest Period, unless the Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Reference Rate Loans of the same type hereunder. At
any time that an Event of Default has occurred and is continuing, the Borrower
no longer shall have the option to request that Loans bear interest at the LIBOR
Rate and Administrative Agent shall have the right to convert the interest rate
on all outstanding LIBOR Rate Loans to the rate then applicable to Reference
Rate Loans hereunder.
               (ii) LIBOR Election.
                    (A) The Borrower may, at any time and from time to time, so
long as no Event of Default has occurred and is continuing, elect to exercise
the LIBOR Option by notifying Administrative Agent prior to 11:00 a.m. (New York
time) at least 3 Business Days prior to the commencement of the proposed
Interest Period (the “LIBOR Deadline”). Notice of the Borrower’s election of the
LIBOR Option for a permitted portion of the Loans and an Interest Period
pursuant to this Section shall be made by delivery to Administrative Agent of a
LIBOR Notice received by Administrative Agent before the LIBOR Deadline.
Promptly upon its receipt of each such LIBOR Notice, Administrative Agent shall
provide a copy thereof to each of the Lenders having a Commitment of the type to
which such LIBOR Notice relates.
                    (B) Each LIBOR Notice shall be irrevocable and binding on
the Borrower. In connection with each LIBOR Rate Loan, the Borrower shall
indemnify, defend, and hold Administrative Agent and the Lenders harmless
against any loss, cost, or expense incurred by Administrative Agent or any
Lender as a result of (1) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (2) the conversion of any LIBOR Rate Loan
other than on the last day of the Interest Period applicable thereto, or (3) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, “Funding Losses”). Funding Losses shall, with respect to
Administrative Agent or any Lender, be deemed to equal the amount determined by
Administrative Agent or such Lender to be the excess, if any, of (x) the amount
of interest that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the last day
of the then current Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have been the Interest
Period therefor), minus (y) the amount of interest that would accrue on such
principal amount for such period at the interest rate which Administrative Agent
or such Lender would be offered were it to be offered, at the commencement of
such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Administrative Agent or a Lender delivered to
the Borrower setting forth any amount or amounts that Administrative Agent or

- 41 -

--------------------------------------------------------------------------------

 

such Lender is entitled to receive pursuant to this Section shall be conclusive
absent manifest error.
                    (C) The Borrower shall have not more than 10 LIBOR Rate
Loans in effect at any given time. The Borrower only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$100,000 in excess thereof.
               (iii) Prepayments. The Borrower may prepay LIBOR Rate Loans at
any time without premium or penalty (other than with respect to Funding Losses
as set forth above, and except as otherwise set forth in the Fee Letter);
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Administrative Agent of proceeds of Collections in accordance
with Section 4.04 or for any other reason, including early termination of the
term of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, the Borrower shall indemnify, defend, and hold
Administrative Agent and the Lenders and their participants harmless against any
and all Funding Losses in accordance with subsection (ii) above.
               (iv) Special Provisions Applicable to LIBOR Rate.
                    (A) The LIBOR Rate may be adjusted by Administrative Agent
with respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give the Borrower and Administrative Agent
notice of such a determination and adjustment and Administrative Agent promptly
shall transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, the Borrower may, by notice to such affected
Lender (1) require such Lender to furnish to the Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for determining the
amount of such adjustment, or (2) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under subsection
(ii)(B) above).
                    (B) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such

- 42 -

--------------------------------------------------------------------------------

 

Lender shall give notice of such changed circumstances to Administrative Agent
and the Borrower and Administrative Agent promptly shall transmit the notice to
each other Lender and (1) in the case of any LIBOR Rate Loans of such Lender
that are outstanding, the date specified in such Lender’s notice shall be deemed
to be the last day of the Interest Period of such LIBOR Rate Loans, and interest
upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the
rate then applicable to Reference Rate Loans, and (2) the Borrower shall not be
entitled to elect the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.
               (v) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Administrative Agent, nor any Lender,
nor any of their participants, is required actually to acquire eurodollar
deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if each
Lender or its participants had match funded any Obligation as to which interest
is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
          (f) Interest Payment. Interest on each Loan shall be payable monthly,
in arrears, on the first day of each month, commencing on the first day of the
month following the month in which such Loan is made and at maturity (whether
upon demand, by acceleration or otherwise). Interest at the Post-Default Rate
shall be payable on demand. The Borrower hereby authorizes the Administrative
Agent to, and the Administrative Agent may, from time to time, charge the Loan
Account pursuant to Section 4.02 with the amount of any interest payment due
hereunder.
          (g) General. All interest shall be computed on the basis of a year of
360 days for the actual number of days, including the first day but excluding
the last day, elapsed.
     Section 2.05 Reduction of Commitment; Prepayment of Loans.
          (a) Reduction of Commitments.
               (i) Revolving Credit Commitments. The Total Revolving Credit
Commitment shall terminate on the Final Maturity Date. Once reduced, the Total
Revolving Credit Commitment may not be increased.
               (ii) Term Loan. The Total Term Loan Commitment shall terminate
upon the making of the Term Loan on the Effective Date.
               (iii) Delayed Draw Term Loan Commitments. The Total Delayed Draw
Term Loan Commitment shall terminate on the Delayed Draw Term Loan Commitment
Expiry Date. Upon the making of a Delayed Draw Term Loan, the Total Delayed Draw
Term Loan Commitment shall be reduced by the amount of such Delayed Draw Term
Loan. Once reduced, the Delayed Draw Term Loan Commitment may not be increased.
Each such reduction of the Delayed Draw Term Loan Commitment shall reduce the
Delayed Draw

- 43 -

--------------------------------------------------------------------------------

 

Term Loan Commitment of each Lender proportionately in accordance with its Pro
Rata Share thereof.
          (b) Optional Prepayment.
               (i) Revolving Loans. The Borrower may prepay without penalty or
premium the principal of any Revolving Loan, in whole or in part.
               (ii) Term Loan. The Borrower may, upon at least 5 Business Days
prior written notice to the Administrative Agent, prepay without penalty or
premium (except as otherwise set forth in the Fee Letter) the principal of the
Term Loan, in whole or in part. Each prepayment made pursuant to this
Section 2.05(b)(ii) shall be accompanied by the payment of accrued interest to
the date of such payment on the amount prepaid.
               (iii) Delayed Draw Term Loan. The Borrower may, upon at least 5
Business Days prior written notice to the Administrative Agent, prepay without
penalty or premium (except as otherwise set forth in the Fee Letter) the
principal of the Delayed Draw Term Loans, in whole or in part. Each prepayment
made pursuant to this Section 2.05(b)(iii) shall be accompanied by the payment
of accrued interest to the date of such payment on the amount prepaid.
          (c) Mandatory Prepayment.
               (i) The Borrower will immediately prepay the Loans at any time
when the aggregate principal amount of all Loans exceeds the then extant
Borrowing Base, to the full extent of any such excess. On each day that any
Loans are outstanding, the Borrower shall hereby be deemed to represent and
warrant to the Agents and the Lenders that the Borrowing Base calculated as of
such day equals or exceeds the aggregate principal amount of all Loans
outstanding on such day.
               (ii) The Borrower will immediately prepay the outstanding
principal amount of the Term Loan and the Delayed Draw Term Loans in the event
that the Total Revolving Credit Commitment is terminated for any reason.
               (iii) [intentionally omitted].
               (iv) [intentionally omitted].
               (v) Immediately upon receipt of any proceeds of any Disposition
by the Borrower (or a sale of all or substantially all of the assets of a
Portfolio Company), the Borrower shall prepay the outstanding principal amount
of the Revolving Loans in an amount equal to 100% of the Net Cash Proceeds
received by the Borrower (or the Portfolio Company in the case of a sale of all
or substantially all of its assets) in connection with such Disposition (or the
Portfolio Company in the case of a sale of all or substantially all of its
assets). Nothing contained in this clause (v) shall permit the Borrower to make
a Disposition of any property other than a Permitted Disposition.

- 44 -

--------------------------------------------------------------------------------

 

               (vi) Upon the issuance or incurrence by the Borrower of any
Indebtedness (other than Permitted Indebtedness), or the sale or issuance by the
Borrower of any shares of its Capital Stock, the Borrower shall prepay the
Revolving Loans in an amount equal to 100% of the Net Cash Proceeds received by
the Borrower in connection therewith. The provisions of this subsection (vi)
shall not be deemed to be implied consent to any such issuance, incurrence or
sale otherwise prohibited by the terms and conditions of this Agreement.
               (vii) Upon the receipt by the Borrower or any of its Subsidiaries
of any Extraordinary Receipts, the Borrower shall prepay the outstanding
principal of the Revolving Loans in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts.
          (d) Application of Payments.
               (i) Each prepayment made pursuant to subsections (c)(v), (c)(vi)
or (c)(vii) above shall be applied to the Revolving Loans, until paid in full.
Each prepayment made pursuant to subsection (c)(i) above shall be applied first
to the Revolving Loans, second to the Term Loan and third to the Delayed Draw
Term Loan.
               (ii) The foregoing to the contrary notwithstanding, Borrower
shall not be required to make a prepayment otherwise required pursuant to
Section 2.05(c)(v) or Section 2.05(c)(vii) with Reinvestment Eligible Funds so
long as: (A) no Default or Event of Default has occurred and is continuing on
the date such Person receives such Reinvestment Eligible Funds or on the date
such amounts are to be released to Borrower pursuant to this
Section 2.05(d)(ii), (B) the Borrower delivers a notice (a “Reinvestment
Notice”) on or prior to the date that the applicable Person receives the monies
constituting such Reinvestment Eligible Funds notifying the Agents of the intent
of the applicable Person to use such Reinvestment Eligible Funds (1) to repair,
restore, or replace the assets that were the subject of the Disposition,
casualty or condemnation giving rise to such amounts with assets of equal or
greater fair market value which will be useful in the conduct of their business
in accordance with past practice, (2) within the period specified in such
notice, which period shall not to exceed the earlier of (x) 180 days after the
receipt of such Reinvestment Eligible Funds by the applicable Person and (y) the
Final Maturity Date, and (C) pending the reinvestment described in clause (B)(1)
above, such Reinvestment Eligible Amounts are deposited in a cash collateral
account over which Collateral Agent (on behalf of the Lenders) or the Borrower
(in the case of a Disposition involving assets or Extraordinary Receipts of a
Portfolio Company) has a perfected first-priority Lien. If all or any portion of
such Reinvestment Eligible Funds are not used in accordance with the preceding
sentence within the period specified in the Reinvestment Notice, the remaining
portion shall be applied to the Loans in accordance with Section 2.05(d)(i) on
the last day of such specified period.
          (e) Interest and Fees. Any prepayment made pursuant to this
Section 2.05 (other than prepayments made pursuant to subsections (c)(i), and
(c)(ii) of this Section 2.05) shall be accompanied by the payment of accrued
interest on the principal amount being prepaid to the date of prepayment, and if
such prepayment would reduce the amount of the outstanding Loans to zero at a
time when the Total Revolving Credit Commitment has been

- 45 -

--------------------------------------------------------------------------------

 

terminated, such prepayment shall be accompanied by the payment of all fees
accrued to such date pursuant to Section 2.06.
          (f) Cumulative Prepayments. Except as otherwise expressly provided in
this Section 2.05, payments with respect to any subsection of this Section 2.05
are in addition to payments made or required to be made under any other
subsection of this Section 2.05.
     Section 2.06 Fees. In addition to the fees set forth in this Agreement, the
Borrower shall pay to the Administrative Agent the fees set forth in the Fee
Letter in the amounts and on the dates set forth in the Fee Letter.
     Section 2.07 Securitization. The Borrower hereby acknowledges that the
Lenders and their Affiliates may sell or securitize the Loans (a
“Securitization”) through the pledge of the Loans as collateral security for
loans to the Lenders or their Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the
Lenders or their Affiliates or direct or indirect interests will be rated by
Moody’s, Standard & Poor’s or one or more other rating agencies (the “Rating
Agencies”). The Borrower shall cooperate with the Lenders and their Affiliates
to effect the Securitization including by (a) amending this Agreement and the
other Loan Documents, and executing such additional documents, as reasonably
requested by the Lenders in connection with the Securitization, provided that
(i) any such amendment or additional documentation does not impose material
additional costs on the Borrower and (ii) any such amendment or additional
documentation does not materially adversely affect the rights, or materially
increase the obligations, of the Borrower under the Loan Documents or change or
affect in a manner adverse to the Borrower the financial terms of the Loans,
(b) providing such information as may be reasonably requested by the Lenders in
connection with the rating of the Loans or the Securitization, and (c) providing
in connection with any rating of the Loans a certificate (i) agreeing to
indemnify the Lenders and their Affiliates, any of the Rating Agencies, or any
party providing credit support or otherwise participating in the Securitization
(collectively, the “Securitization Parties”) for any losses, claims, damages or
liabilities (the “Liabilities”) to which the Lenders, their Affiliates or such
Securitization Parties may become subject insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
Loan Document or in any writing delivered by or on behalf of the Borrower to any
Agent or Lender in connection with any Loan Document or arise out of or are
based upon the omission to state therein a material fact required to be stated
therein, or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and such indemnity
shall survive any transfer by the Lenders or their successors or assigns of the
Loans and (ii) agreeing to reimburse the Agents, the Lenders and their
Affiliates for any legal or other expenses reasonably incurred by such Persons
in connection with defending the Liabilities.
     Section 2.08 Taxes.
     (a) Any and all payments by the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on the net
income of any Agent or any Lender (or any transferee or assignee thereof,
including a participation holder (any such entity, a “Transferee”)) by the

- 46 -

--------------------------------------------------------------------------------

 

jurisdiction in which such Person is organized or has its principal lending
office (all such nonexcluded taxes, levies, imposts, deductions, charges
withholdings and liabilities, collectively or individually, “Taxes”). If the
Borrower shall be required to deduct any Taxes from or in respect of any sum
payable hereunder to any Agent or any Lender (or any Transferee), (i) the sum
payable shall be increased by the amount (an “additional amount”) necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.08) such Agent or such Lender (or
such Transferee) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
     (b) In addition, the Borrower 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 Loan Document (“Other Taxes”). The Borrower shall deliver to each Agent
and each Lender official receipts in respect of any Taxes or Other Taxes payable
hereunder promptly after payment of such Taxes or Other Taxes.
     (c) The Borrower hereby agrees to indemnify and agrees to hold each Agent
and each Lender harmless from and against Taxes and Other Taxes (including,
Taxes and Other Taxes imposed on any amounts payable under this Section 2.08)
paid by such Person, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be paid within 10 days from the
date on which any such Person makes written demand therefore specifying in
reasonable detail the nature and amount of such Taxes or Other Taxes.
     (d) Each Lender that is organized under the laws of a jurisdiction outside
the United States (a “Non-U.S. Lender”) agrees that it shall, no later than the
Effective Date (or, in the case of a Lender which becomes a party hereto
pursuant to Section 12.07 after the Effective Date, promptly after the date upon
which such Lender becomes a party hereto) deliver to the Agents (or, in the case
of a participant, to the Lender granting the participation only) a properly
completed and duly executed copy of either U.S. Internal Revenue Service Form
W-8BEN, W-8ECI or W-8IMY or any subsequent versions thereof or successors
thereto, in each case claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax and payments of interest hereunder. In addition, in the
case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Internal Revenue Code, such Non-U.S.
Lender hereby represents to the Agents and the Borrower that such Non-U.S.
Lender is not a bank for purposes of Section 881(c) of the Internal Revenue
Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Internal Revenue Code) of the Trust and is not a
controlled foreign corporation related to the Trust (within the meaning of
Section 864(d)(4) of the Internal Revenue Code), and such Non-U.S. Lender agrees
that it shall promptly notify the Agents in the event any such representation is
no longer accurate. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a “New Lending Office”). In addition,
such Non-U.S. Lender shall deliver such forms within 20 days after receipt of a
written request therefor from any Agent, the assigning Lender or the Lender
granting a participation, as

- 47 -

--------------------------------------------------------------------------------

 

applicable. Notwithstanding any other provision of this Section 2.08, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this
Section 2.08(d) that such Non-U.S. Lender is not legally able to deliver.
     (e) The Borrower shall not be required to indemnify any Non-U.S. Lender, or
pay any additional amounts to any Non-U.S. Lender, in respect of United States
Federal withholding tax pursuant to this Section 2.08 to the extent that (i) the
obligation to withhold amounts with respect to United States Federal withholding
tax existed on the date such Non-U.S. Lender became a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on the date
such participation holder became a Transferee hereunder) or, with respect to
payments to a New Lending Office, the date such Non-U.S. Lender designated such
New Lending Office with respect to a Loan; provided, however, that this clause
(i) shall not apply to the extent the indemnity payment or additional amounts
any Transferee, or Lender (or Transferee) through a New Lending Office, would be
entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the Person making the assignment,
participation or transfer to such Transferee, or Lender (or Transferee) making
the designation of such New Lending Office, would have been entitled to receive
in the absence of such assignment, participation, transfer or designation, or
(ii) the obligation to pay such additional amounts would not have arisen but for
a failure by such Non-U.S. Lender to comply with the provisions of clause
(d) above.
     (f) The obligations of the Borrower under this Section 2.08 shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
FEES, PAYMENTS AND OTHER COMPENSATION
     Section 4.01 Audit and Collateral Monitoring Fees. The Borrower
acknowledges that pursuant to Section 7.01(f), representatives of the Agents may
visit the Borrower or any of its Subsidiaries or conduct audits, inspections or
field examinations of the Borrower or any of its Subsidiaries and valuations or
appraisals of any or all of the Collateral or the Intercompany Loan Collateral
or business or enterprise valuations of the Borrower or any of its Subsidiaries
at any time and from time to time in a manner so as to not unduly disrupt the
business of such Person. The Borrower agrees to pay (i) $1,500 per day per
examiner plus the examiner’s out-of-pocket costs and reasonable expenses
incurred in connection with all such visits, audits, inspections, valuations,
and field examinations and (ii) the cost of all audits, appraisals and business
valuations (including enterprise valuation appraisals) conducted by third party
auditors or appraisers on behalf of the Agents; provided, however, that so long
as no Default or Event of Default has occurred and is continuing, Borrower shall
not be required to reimburse the Agents for more than two audits, appraisals or
valuations (which shall include not

- 48 -

--------------------------------------------------------------------------------

 

more than one business valuation) with respect to Borrower or any Portfolio
Company during any Fiscal Year.
     Section 4.02 Payments; Computations and Statements. (a) The Borrower will
make each payment under this Agreement not later than 12:00 noon (New York City
time) on the day when due, in lawful money of the United States of America and
in immediately available funds, to the Administrative Agent’s Account. All
payments received by the Administrative Agent after 12:00 noon (New York City
time) on any Business Day will be credited to the Loan Account on the next
succeeding Business Day. All payments shall be made by the Borrower without
set-off, counterclaim, deduction or other defense to the Agents and the Lenders.
Except as provided in Section 2.02, after receipt, the Administrative Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal ratably to the Lenders in accordance with their Pro Rata Shares and
like funds relating to the payment of any other amount payable to any Lender to
such Lender, in each case to be applied in accordance with the terms of this
Agreement, provided that the Administrative Agent will cause to be distributed
all interest and fees received from or for the account of the Borrower not less
than once each month and in any event promptly after receipt thereof. The
Lenders and the Borrower hereby authorize the Administrative Agent to, and the
Administrative Agent shall, from time to time, charge the Loan Account of the
Borrower with any amount due and payable by the Borrower under any Loan
Document. Each of the Lenders and the Borrower agrees that the Administrative
Agent shall have the right to make such charges whether or not any Default or
Event of Default shall have occurred and be continuing or whether any of the
conditions precedent in Section 5.02 have been satisfied. Any amount charged to
the Loan Account of the Borrower shall be deemed a Revolving Loan hereunder made
by the Revolving Loan Lenders to the Borrower, funded by the Administrative
Agent on behalf of the Revolving Loan Lenders and subject to Section 2.02 of
this Agreement. The Lenders and the Borrowers confirm that any charges which the
Administrative Agent may so make to the Loan Account of the Borrowers as herein
provided will be made as an accommodation to the Borrowers and solely at the
Administrative Agent’s discretion, provided that the Administrative Agent shall
from time to time upon the request of the Collateral Agent, charge the Loan
Account of the Borrowers with any amount due and payable under any Loan
Document. Whenever any payment to be made under any such Loan Document shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall in such
case be included in the computation of interest or fees, as the case may be. All
computations of fees shall be made by the Administrative Agent on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such fees are payable.
Each determination by the Administrative Agent of an interest rate or fees
hereunder shall be conclusive and binding for all purposes in the absence of
manifest error.
          (b) The Administrative Agent shall provide the Borrower, promptly
after the end of each calendar month, a summary statement (in the form from time
to time used by the Administrative Agent) of the opening and closing daily
balances in the Loan Account of the Borrower during such month, the amounts and
dates of all Loans made to the Borrower during such month, the amounts and dates
of all payments on account of the Loans to the Borrower during such month and
the Loans to which such payments were applied, the amount of interest accrued on
the Loans to the Borrower during such

- 49 -

--------------------------------------------------------------------------------

 

month, the amount of charges to the Loan Account, and the amount and nature of
any charges to the Loan Account made during such month on account of fees,
commissions, expenses and other Obligations. All entries on any such statement
shall be presumed to be correct and, 30 days after the same is sent, shall be
final and conclusive absent manifest error.
     Section 4.03 Sharing of Payments, Etc. Except as provided in Section 2.02
hereof, if any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of any
Obligation in excess of its ratable share of payments on account of similar
obligations obtained by all the Lenders, such Lender shall forthwith purchase
from the other Lenders such participations in such similar obligations held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender’s ratable share (according to the proportion
of (i) the amount of such Lender’s required repayment to (ii) the total amount
so recovered from the purchasing Lender of any interest or other amount paid by
the purchasing Lender in respect of the total amount so recovered). The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 4.03 may, to the fullest extent permitted by law,
exercise all of its rights (including the Lender’s right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
     Section 4.04 Apportionment of Payments. Subject to Section 2.02 hereof and
to any written agreement among the Agents or the Lenders:
          (a) all payments of principal and interest in respect of outstanding
Loans, all payments of fees (other than the audit and collateral monitoring fees
provided for in Section 4.01) and all other payments in respect of any other
Obligations, shall be allocated by the Administrative Agent among such of the
Lenders as are entitled thereto, in proportion to their respective Pro Rata
Shares or otherwise as provided herein or, in respect of payments not made on
account of Loans as designated by the Person making payment when the payment is
made.
          (b) After the occurrence and during the continuance of an Event of
Default, the Administrative Agent may, and upon the direction of the Required
Lenders shall, apply all payments in respect of any Obligations and all proceeds
of the Collateral, subject to the provisions of this Agreement, (i) first,
ratably to pay the Obligations in respect of any fees, expense reimbursements,
indemnities and other amounts then due to the Agents until paid in full; (ii)
second, ratably to pay any fees and indemnities then due to the Revolving Loan
Lenders until paid in full; (iii) third, ratably to pay interest due in respect
of the Revolving Loans, and Collateral Agent Advances until paid in full; (iv)
fourth, ratably to pay principal of the Revolving Loans, and Collateral Agent
Advances until paid in full; (v) fifth, ratably to pay any fees and indemnities
then due to the Term Loan Lenders until paid in full; (vi) sixth, ratably to pay
interest due in respect of the Term Loan until paid in full; (vii) seventh,
ratably to pay principal of the Term Loan until paid in full, (viii) eighth,
ratably to pay any fees and indemnities then due to the Delayed Draw Term Loan
Lenders until paid in full; (ix) ninth, ratably to pay interest due in respect
of the Delayed Draw Term Loans until paid in full; (x) tenth, ratably to pay
principal

- 50 -

--------------------------------------------------------------------------------

 

of the Delayed Draw Term Loans until paid in full, and (xi) eleventh, to the
ratable payment of all other Obligations then due and payable.
          (c) In each instance, so long as no Event of Default has occurred and
is continuing, Section 4.04(b) shall not be deemed to apply to any payment by
the Borrower specified by the Borrower to the Administrative Agent to be for the
payment of Term Loan Obligations or Delayed Draw Term Loan Obligations then due
and payable under any provision of this Agreement or the prepayment of all or
part of the principal of the Term Loan or Delayed Draw Term Loans in accordance
with the terms and conditions of Section 2.05.
          (d) For purposes of Section 4.04(b), (other than clause
(viii) thereof) “paid in full” means with respect to any Obligations, payment of
all amounts owing under the Loan Documents in respect of such Obligations,
including fees, interest, default interest, interest on interest, expense
reimbursements and indemnities, specifically including in each case any of the
foregoing which would accrue after the commencement of any Insolvency Proceeding
irrespective of whether a claim is allowable in such Insolvency Proceeding,
except to the extent that default or overdue interest (but not any other
interest) and fees, each arising from or related to a default, are disallowed in
any Insolvency Proceeding; provided, however, that for purposes of such clause
(viii), “paid in full” means with respect to any Obligations, payment of all
amounts owing under the Loan Documents in respect of such Obligations, including
fees, interest, default interest, interest on interest, expense reimbursements
and indemnities, specifically including in each case any of the foregoing which
would accrue after the commencement of any Insolvency Proceeding irrespective of
whether a claim is allowable in such Insolvency Proceeding.
          (e) In the event of a direct conflict between the priority provisions
of this Section 4.04 and other provisions contained in any other Loan Document,
it is the intention of the parties hereto that both such priority provisions in
such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 4.04 shall control and govern.
     Section 4.05 Increased Costs and Reduced Return. (a) If any Lender or any
Agent shall have determined that the adoption or implementation of, or any
change in, any law, rule, treaty or regulation, or any policy, guideline or
directive of, or any change in, the interpretation or administration thereof by,
any court, central bank or other administrative or Governmental Authority, or
compliance by any Lender or any Agent or any Person controlling any such Lender
or any such Agent with any directive of, or guideline from, any central bank or
other Governmental Authority or the introduction of, or change in, any
accounting principles applicable to any Lender, any Agent or any Person
controlling any such Lender, any such Agent (in each case, whether or not having
the force of law) (each, a “Change in Law”), shall (i) subject any Lender, any
Agent or any Person controlling any such Lender or any such Agent to any tax,
duty or other charge with respect to this Agreement or any Loan made by such
Lender or such Agent or change the basis of taxation of payments to any Lender,
any Agent or any Person controlling any such Lender or any such Agent of any
amounts payable hereunder (except for taxes on the overall net income of any
Lender, any Agent or any Person controlling any such Lender or any such Agent),
(ii) impose, modify or deem applicable any reserve, special deposit

- 51 -

--------------------------------------------------------------------------------

 

or similar requirement against any Loan, or against assets of or held by, or
deposits with or for the account of, or credit extended by, any Lender, any
Agent or any Person controlling any such Lender or any such Agent or (iii)
impose on any Lender, any Agent or any Person controlling any such Lender or any
such Agent any other condition regarding this Agreement or any Loan, and the
result of any event referred to in clauses (i), (ii) or (iii) above shall be to
increase the cost to any Lender or any Agent of making any Loan, or agreeing to
make any Loan or to reduce any amount received or receivable by any Lender or
any Agent hereunder, then, upon demand by any such Lender or any such Agent, the
Borrower shall pay to such Lender or such Agent such additional amounts as will
compensate such Lender, or such Agent for such increased costs or reductions in
amount.
          (b) If any Lender or any Agent shall have determined that any Change
in Law either (i) affects or would affect the amount of capital required or
expected to be maintained by any Lender, any Agent or any Person controlling
such Lender or such Agent and any Lender or any Agent determines that the amount
of such capital is increased as a direct or indirect consequence of any Loans
made or maintained, any Lender’s, any Agent’s or any such other controlling
Person’s other obligations hereunder, or (ii) has or would have the effect of
reducing the rate of return on any Lender’s or any Agent’s any such other
controlling Person’s capital to a level below that which such Lender, such Agent
or such controlling Person could have achieved but for such circumstances as a
consequence of any Loans made or maintained, or any agreement to make Loans, or
such Lender’s, such Agent’s or such other controlling Person’s other obligations
hereunder (in each case, taking into consideration, such Lender’s, or such
Agent’s or such other controlling Person’s policies with respect to capital
adequacy), then, upon demand by any Lender or any Agent, the Borrower shall pay
to such Lender or such Agent from time to time such additional amounts as will
compensate such Lender or such Agent for such cost of maintaining such increased
capital or such reduction in the rate of return on such Lender’s or such Agent’s
or such other controlling Person’s capital.
          (c) All amounts payable under this Section 4.05 shall bear interest
from the date that is ten (10) days after the date of demand by any Lender or
any Agent until payment in full to such Lender or such Agent at the Reference
Rate. A certificate of such Lender or such Agent claiming compensation under
this Section 4.05, specifying the event herein above described and the nature of
such event shall be submitted by such Lender or such Agent to the Borrower,
setting forth the additional amount due and an explanation of the calculation
thereof, and such Lender’s or such Agent’s reasons for invoking the provisions
of this Section 4.05, and shall be final and conclusive absent manifest error.
ARTICLE V
CONDITIONS TO LOANS
     Section 5.01 Conditions Precedent. The obligation of any Lender to make the
initial Loans (or any other Person to otherwise to extend any credit provided
for hereunder), is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the conditions precedent set forth below:

- 52 -

--------------------------------------------------------------------------------

 

          (a) Payment of Fees, Etc. The Borrower shall have paid all fees,
costs, expenses and taxes then payable pursuant to Sections 2.06 or 12.04.
          (b) Representations and Warranties; No Event of Default. The following
statements shall be true and correct: (i) the representations and warranties
contained in Article VI and in each other Loan Document, certificate or other
writing delivered to any Agent or any Lender pursuant hereto or thereto on or
prior to the Effective Date are true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the Effective Date as though made
on and as of such date (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified date)
and (ii) no Default or Event of Default shall have occurred and be continuing on
the Effective Date or would result from this Agreement or the other Loan
Documents becoming effective in accordance with its or their respective terms.
          (c) Legality. The making of the initial Loans shall not contravene any
law, rule or regulation applicable to any Agent, any Lender .
          (d) Delivery of Documents. The Collateral Agent shall have received on
or before the Effective Date the following, each in form and substance
satisfactory to the Collateral Agent and, unless indicated otherwise, dated the
Effective Date:
               (i) a Security Agreement, duly executed by the Borrower, together
with the original stock certificates representing all of the Capital Stock of
the Borrower’s Subsidiaries and all intercompany promissory notes issued to the
Borrower, accompanied by undated stock powers executed in blank and other proper
instruments of transfer;
               (ii) the Fee Letter duly executed by the Borrower;
               (iii) the Funds Flow Agreement, duly executed by the Borrower,
               (iv) a Filing Authorization Letter, duly executed by the
Borrower, together with appropriate financing statements duly filed in such
office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by
each Security Agreement;
               (v) certified copies of all effective financing statements which
name as debtor the Borrower and which are filed in the offices referred to in
clause (iv) above, together with copies of such financing statements, none of
which, except as otherwise agreed in writing by the Collateral Agent, shall
cover any of the Collateral and the results of searches for any tax Lien and
judgment Lien filed against Borrower or its property, which results, except as
otherwise agreed to in writing by the Collateral Agent, shall not show any such
Liens;
               (vi) the Escrow Agreement and related payment direction letter
referred to therein, each duly executed by each party thereto;

- 53 -

--------------------------------------------------------------------------------

 

               (vii) a copy of the resolutions of the Borrower, certified as of
the Effective Date by an Authorized Officer thereof, authorizing (A) the
transactions contemplated by the Loan Documents to which the Borrower is or will
be a party, and (B) the execution, delivery and performance by the Borrower of
each Loan Document to which the Borrower is or will be a party and the execution
and delivery of the other documents to be delivered by such Person in connection
herewith and therewith;
               (viii) a certificate of an Authorized Officer of the Borrower,
certifying the names and true signatures of the representatives of the Borrower
authorized to sign each Loan Document to which the Borrower is or will be a
party and the other documents to be executed and delivered by the Borrower in
connection herewith and therewith, together with evidence of the incumbency of
such authorized officers;
               (ix) a certificate of the appropriate official(s) of the state of
organization and each state of foreign qualification of the Borrower certifying
as to the subsistence in good standing of, and the payment of taxes by, the
Borrower in such states;
               (x) a true and complete copy of the certificate of formation of
the Borrower certified as of a recent date not more than 30 days prior to the
Effective Date by an appropriate official of the State of Delaware which shall
set forth the same complete name of the Borrower as is set forth herein and the
organizational number of the Borrower, if an organized number is issued in such
jurisdiction;
               (xi) a copy of the LLC Agreement, the Subscription Documents, the
Management Agreement and the Material Contracts of Borrower, together with all
amendments thereto, certified as of the Effective Date by an Authorized Officer
of the Borrower as true and correct copies thereof, together with a certificate
of an Authorized Officer of Borrower stating that such agreements remain in full
force and effect and that the Borrower has not breached or defaulted in any of
its obligations under such agreements;
               (xii) an opinion of Squire, Sanders & Dempsey L.L.P., counsel to
the Borrower, substantially in the form of Exhibit 5.01(d);
               (xiii) a certificate of an Authorized Officer of the Borrower,
certifying as to the matters set forth in Section 5.01(b);
               (xiv) a copy of the Financial Statements, together with a
certificate of an Authorized Officer of the Borrower setting forth all existing
Indebtedness, pending or threatened litigation or claims and other contingent
liabilities of the Borrower and its Subsidiaries (after giving effect to the
Effective Date Acquisitions);
               (xv) a copy of the financial projections described in
Section 6.01(g)(ii) hereof, which projections shall be satisfactory in form and
substance to the Agents;
               (xvi) a certificate of the chief financial officer of the
Borrower, setting forth in reasonable detail the calculations required to
establish compliance, on a pro forma basis after giving effect to the Effective
Date Acquisitions, with each of the financial covenants contained in
Section 7.03;

- 54 -

--------------------------------------------------------------------------------

 

               (xvii) a certificate of the chief financial officer of the
Borrower, certifying as to the solvency of the Borrower, which certificate shall
be satisfactory in form and substance to the Collateral Agent;
               (xviii) a certificate of an Authorized Officer of the Borrower,
certifying the names and true signatures of the persons that are authorized to
provide Notices of Borrowing, and all other notices under this Agreement and the
other Loan Documents;
               (xix) copies of (a) each of the Qualified Intercompany Loan
Documents entered into with the Effective Date Portfolio Companies, (b) UCC, tax
lien, and litigation searches relative to each of the Effective Date Portfolio
Companies, (c) copies of the resolutions, incumbency certificates, and
organizational documents with respect to the Effective Date Portfolio Companies,
(d) copies of the financing statements and Mortgages (together with (x) a
satisfactory Phase I Environmental Site Assessment, in form and substance, by an
independent firm satisfactory to Collateral Agent, (y) a survey in form and
substance satisfactory to Collateral Agent, certified to Collateral Agent and
the issuer of the Title Insurance Policy, and (z) a Title Insurance Policy, in
each case, with respect to any real property owned by any Effective Date
Portfolio Company), indicating the filing or recordation thereof and the
relevant filing or recordation information, (e) copies of UCC termination
statements from any holder of a Lien that is not a permitted lien under the
applicable Qualified Intercompany Loan Agreement, (f) payoff letters executed by
the applicable lender or lenders that are being repaid with the initial proceeds
of the loans under the Qualified Intercompany Loan Agreement, (g) legal opinions
of counsel to each of the Effective Date Portfolio Companies relative to the
Qualified Intercompany Loan Documents, and (h) documents, certificates, and
instruments as are customary for leveraged financings, in each case, in form and
substance satisfactory to the Agents;
               (xx) the Borrower shall have received all material licenses,
approvals or evidence of other material actions required by any Governmental
Authority (including under HSR) in connection with the execution and delivery by
the Borrower of the Effective Date Acquisition Documents and with the
consummation of the transactions contemplated thereby;
               (xxi) such depository account, blocked account, lockbox account
and similar agreements and other documents, each in form and substance
satisfactory to the Agents, as the Agents may request with respect to the
Borrower’s and the Effective Date Portfolio Companies’ cash management systems;
and
               (xxii) such other agreements, instruments, approvals, opinions
and other documents, each satisfactory to the Collateral Agent in form and
substance, as the Collateral Agent may reasonably request.
          (e) Material Adverse Effect. The Collateral Agent shall have
determined, in its sole judgment, that (i) no event or development with respect
to Crosman shall have occurred since June 30, 2005 which could reasonably be
expected to result in a Material Adverse Effect, and (ii) no event or
development with respect to Borrower or any of its Subsidiaries other than
Crosman shall have occurred since December 31, 2005 which could reasonably be
expected to result in a Material Adverse Effect.

- 55 -

--------------------------------------------------------------------------------

 

          (f) Consummation of the Effective Date Acquisitions. Concurrently with
the making of the initial Loans, (i) Borrower shall have purchased pursuant to
the Effective Date Acquisition Agreements (no provisions of which shall have
been amended or otherwise modified or waived without the prior written consent
of the Agents), and shall have become the owner, free and clear of all Liens
other than Permitted Liens, of all of the shares of Capital Stock of the
Effective Date Portfolio Companies described on Schedule 5.01(f) for a Purchase
Price not in excess of $325,000,000, (ii) the proceeds of the Term Loan shall
have been used, in connection with proceeds of the Required Equity, to make
loans pursuant to a Qualified Intercompany Loan Agreement in order to repay, in
full, all existing Indebtedness for borrowed money of the Effective Date
Portfolio Companies (other than letters of credit issued by U.S. Bank National
Association for the benefit of CBS).
          (g) Required Equity. Agents shall have received reasonably
satisfactory evidence that (i) the Trust’s S-1 Registration Statement has become
effective under the Securities Act, (ii) the Trust shall have received gross
proceeds from its initial public offering of its Capital Stock of at least
[$195,000,000,] (iii) the Trust shall have received Net Cash Proceeds from the
private placement of its Capital Stock pursuant to the Subscription Documents of
at least $90,000,000 (the amount required to be received by the Trust pursuant
to this subsection (g), the “Required Equity”), and (ii) the Trust shall have
contributed 100% of the Required Equity proceeds to the equity of the Borrower.
          (h) Proceedings; Receipt of Documents. All proceedings in connection
with the making of the initial Loans and the other transactions contemplated by
this Agreement and the other Loan Documents, and all documents incidental hereto
and thereto, shall be satisfactory to the Collateral Agent and its counsel, and
the Collateral Agent and such counsel shall have received all such information
and such counterpart originals or certified or other copies of such documents as
the Collateral Agent or such counsel may reasonably request.
          (i) Management Reference Checks. The Collateral Agent shall have
received satisfactory reference checks for key management of the Borrower.
          (j) Due Diligence. The Agents shall have completed their business and
legal due diligence with respect to the Borrower and the results thereof shall
be acceptable to the Agents, in their sole and absolute discretion subject to
commercially reasonable standards. Without limiting the foregoing, (i) the
Collateral Agent shall have received a Field Survey and Audit relative to the
Effective Date Portfolio Companies, dated not earlier than 30 days prior to the
Effective Date, and such Field Survey and Audit and the results thereof shall be
acceptable to the Collateral Agent, in its sole and absolute discretion, and
(ii) the capital structure of Borrower and its Subsidiaries (including the
amounts and terms of the Indebtedness of Borrower and its Subsidiaries) shall be
satisfactory to the Agents in their sole and absolute discretion subject to
commercially reasonable standards.
          (k) Management Agreement. The Management Agreement and the terms and
provisions thereof shall be in form and substance reasonably satisfactory to the
Collateral Agent.

- 56 -

--------------------------------------------------------------------------------

 

               (l) Availability. After giving effect to the L/C Reserve, the
Permitted Indebtedness Reserve and all Loans to be made on the Effective Date,
the Availability shall not be less than $35,000,000. The Borrower shall deliver
to the Collateral Agent a certificate of the chief financial officer of the
Borrower certifying as to the calculation of Availability.
          Section 5.02 Conditions Precedent to All Loans. The obligation of any
Agent or any Lender to make any Loan is subject to the fulfillment of each of
the following conditions precedent:
               (a) Payment of Fees, Etc. The Borrower shall have paid all fees,
costs, expenses and taxes then payable by the Borrower pursuant to this
Agreement and the other Loan Documents, including Sections 2.06 and 12.04
hereof.
               (b) Representations and Warranties; No Event of Default. The
following statements shall be true and correct, and the submission by the
Borrower to the Administrative Agent of a Notice of Borrowing with respect to
each such Loan, and the Borrower’s acceptance of the proceeds of such Loan,
shall each be deemed to be a representation and warranty by the Borrower on the
date of such Loan that: (i) the representations and warranties contained in
Article VI and in each other Loan Document, certificate or other writing
delivered any Agent or any Lender pursuant hereto or thereto on or prior to the
date of such Loan are true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) on and as of such date as though made on and as of such date, and
(ii) at the time of and after giving effect to the making of such Loan and the
application of the proceeds thereof, no Default or Event of Default has occurred
and is continuing or would result from the making of the Loan to be made.
               (c) Legality. The making of such Loan shall not contravene any
law, rule or regulation applicable to any Agent or any Lender.
               (d) Notices. The Administrative Agent shall have received a
Notice of Borrowing pursuant to Section 2.02 hereof.
          Section 5.03 Conditions Precedent to All Loans In Connection With
Permitted Post-Effective Date Acquisitions. The obligation of any Agent or any
Lender to make any Loan that is to be used in connection with the consummation
of any Permitted Post-Effective Date Acquisition (whether to make payment of the
Purchase Price or to make a loan under a Qualified Intercompany Loan Agreement)
is subject to the fulfillment of each of the following additional conditions
precedent:
               (a) Delivery of Documents. The Collateral Agent shall have
received at least 5 Business Days prior to the Borrowing Date the following,
each in form and substance satisfactory to the Collateral Agent:
                    (i) copies of each of the Qualified Intercompany Loan
Documents entered into with the prospective Portfolio Company,

- 57 -

--------------------------------------------------------------------------------

 

                    (ii) UCC, tax lien, and litigation searches relative to the
prospective Portfolio Company,
                    (iii) copies of the resolutions, incumbency certificates,
and organizational documents of the prospective Portfolio Company,
                    (iv) copies of the financing statements and, if the
prospective Portfolio Company owns real property that would constitute
After-Acquired Property, Mortgages (together with (x) a satisfactory Phase I
Environmental Site Assessment by an independent firm reasonably satisfactory to
Collateral Agent, (y) a satisfactory survey certified to Borrower and the issuer
of the Title Insurance Policy, and (z) a Title Insurance Policy for the benefit
of Borrower, in each case, with respect to any real property owned by the
proposed Portfolio Company) indicating the filing or recordation thereof and the
relevant filing or recordation information,
                    (v) copies of UCC termination statements from any holder of
a Lien that is not a permitted lien under the applicable Qualified Intercompany
Loan Agreement,
                    (vi) payoff letters executed by the applicable lender or
lenders that are being repaid with the initial proceeds of the loans under the
Qualified Intercompany Loan Agreement,
                    (vii) legal opinions of counsel to the proposed Portfolio
Company relative to the Qualified Intercompany Loan Documents, and
                    (viii) such other documents, certificates, and instruments
as are customary for leveraged financings, in each case, in form and substance
reasonably satisfactory to the Agents.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
          Section 6.01 Representations and Warranties. The Borrower hereby
represents and warrants to the Agents and the Lenders as follows:
               (a) Organization, Good Standing, Etc. The Borrower and each of
its Subsidiaries (i) is a corporation, limited liability company or limited
partnership duly organized, validly existing and in good standing under the laws
of the state or jurisdiction of its organization, (ii) has all requisite power
and authority to conduct its business as now conducted and as currently
contemplated, (iii) in the case of the Borrower, has all requisite power and
authority to make the borrowings hereunder, and to execute and deliver each Loan
Document to which it is a party, and to consummate the transactions contemplated
thereby, (iv) in the case of the Borrower’s Subsidiaries, has all requisite
power and authority to make the borrowings under the Qualified Intercompany Loan
Agreement to which it is a party, and to execute and deliver each Qualified
Intercompany Loan Document to which it is a party, and to consummate the
transactions contemplated thereby and (v) is duly qualified to do business and
is in good standing

- 58 -

--------------------------------------------------------------------------------

 

in each jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such qualification
necessary.
               (b) Authorization, Etc. The execution, delivery and performance
by (x) the Borrower of each Loan Document to which it is or will be a party, and
(y) each Subsidiary of Borrower of each Qualified Intercompany Loan Document to
which it is or will be a party, (i) have been duly authorized by all necessary
action, (ii) do not and will not contravene its charter or by-laws, its limited
liability company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any applicable law or any contractual
restriction binding on or otherwise affecting it or any of its properties,
(iii) do not and will not result in or require the creation of any Lien (other
than pursuant to any Loan Document or any Qualified Intercompany Loan Document,
as applicable) upon or with respect to any of its properties, and (iv) do not
and will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to its operations or any of its properties.
               (c) Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required in connection with the due execution, delivery and performance by
(i) the Borrower of any Loan Document to which it is or will be a party or
(ii) any Subsidiary of Borrower of any Qualified Intercompany Loan Document to
which it is or will be a party.
               (d) Enforceability of Loan Documents and the Qualified
Intercompany Loan Documents. This Agreement is, and each other Loan Document to
which the Borrower is or will be a party, and each Qualified Intercompany Loan
Document to which a Subsidiary of Borrower is or will be a party, when delivered
hereunder or thereunder, will be, a legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws.
               (e) Subsidiaries. Schedule 6.01(e) is a complete and correct
description of the name, jurisdiction of incorporation and ownership of the
outstanding Capital Stock of each Subsidiary of the Borrower. All of the issued
and outstanding shares of Capital Stock of such Subsidiaries have been validly
issued and are fully paid and nonassessable, and the holders thereof are not
entitled to any preemptive, first refusal or other similar rights. Except as
indicated on such Schedule, all such Capital Stock is owned by the Borrower,
free and clear of all Liens.
               (f) Litigation; Commercial Tort Claims. Except as set forth in
Schedule 6.01(f), (i) there is no pending or, to the knowledge of the Borrower,
threatened action, suit or proceeding affecting the Borrower before any court or
other Governmental Authority or any arbitrator that (A) if adversely determined,
could reasonably be expected to result in a Material Adverse Effect or
(B) relates to this Agreement or any other Loan Document or any transaction
contemplated hereby or thereby and (ii) as of the Effective Date, the Borrower
does not hold any commercial tort claims in respect of which a claim has been
filed in a court of law or a written notice by an attorney has been given to a
potential defendant.

- 59 -

--------------------------------------------------------------------------------

 

               (g) Financial Condition.
                    (i) The Financial Statements, copies of which have been
delivered to each Agent and each Lender, fairly present, in all material
respects, the consolidated financial condition of applicable Effective Date
Portfolio Company as at the respective dates thereof and the consolidated
results of operations of such Person and its Subsidiaries for the fiscal periods
ended on such respective dates, all in accordance with GAAP, and (x) no event or
development with respect to Crosman has occurred since June 30, 2005 which could
reasonably be expected to result in a Material Adverse Effect, and (y) no event
or development with respect to Borrower or any of its Subsidiaries other than
Crosman has occurred since December 31, 2005 which could reasonably be expected
to result in a Material Adverse Effect.
                    (ii) The Borrower has heretofore furnished to each Agent and
each Lender (A) projected quarterly balance sheets, income statements and
statements of cash flows of the Borrower and its Subsidiaries for the period
from April 1, 2006, through December 31, 2006, and (B) projected annual balance
sheets, income statements and statements of cash flows of the Borrower and its
Subsidiaries for the Fiscal Years ending in 2006 through 2009, which projected
financial statements shall be updated from time to time pursuant to
Section 7.01(a)(vii). Such projections, as so updated, are believed by the
Borrower at the time furnished to be reasonable, have been prepared on a
reasonable basis and in good faith by the Borrower, and have been based on
assumptions believed by the Borrower to be reasonable at the time made and upon
the best information then reasonably available to the Borrower, and the Borrower
is not aware of any facts or information that would lead it to believe that such
projections, as so updated, are incorrect or misleading in any material respect.
               (h) Compliance with Law, Etc. The Borrower is not in violation of
its organizational documents, any law, rule, regulation, judgment or order of
any Governmental Authority applicable to it or any of its property or assets, or
any material term of any Material Contract binding on or otherwise affecting it
or any of its properties, and no Default or Event of Default has occurred and is
continuing.
               (i) ERISA. Except as set forth on Schedule 6.01(i), (i) each
Employee Plan is in substantial compliance with ERISA and the IRC, (ii) no
Termination Event has occurred nor is reasonably expected to occur with respect
to any Employee Plan, (iii) the most recent annual report (Form 5500 Series)
with respect to each Employee Plan, including any required Schedule B (Actuarial
Information) thereto, copies of which have been filed with the Internal Revenue
Service and delivered to the Agents, is complete and correct and fairly presents
the funding status of such Employee Plan, and since the date of such report
there has been no material adverse change in such funding status, (iv) copies of
each agreement entered into with the PBGC, the U.S. Department of Labor or the
Internal Revenue Service with respect to any Employee Plan have been delivered
to the Agents, (v) no Employee Plan had an accumulated or waived funding
deficiency or permitted decrease which would create a deficiency in its funding
standard account or has applied for an extension of any amortization period
within the meaning of Section 412 of the IRC at any time during the previous
60 months, and (vi) no Lien imposed under the IRC or ERISA exists or is likely
to arise on account of any Employee Plan within the meaning of Section 412 of
the IRC. Except as set forth on Schedule 6.01(i), neither the Borrower nor any
of its ERISA Affiliates has incurred any withdrawal liability under ERISA

- 60 -

--------------------------------------------------------------------------------

 

with respect to any Multiemployer Plan, or is aware of any facts indicating that
it or any of its ERISA Affiliates may in the future incur any such withdrawal
liability. Neither the Borrower nor any of its ERISA Affiliates nor any
fiduciary of any Employee Plan has (A) engaged in a nonexempt prohibited
transaction described in Sections 406 of ERISA or 4975 of the IRC, (B) failed to
pay any required installment or other payment required under Section 412 of the
IRC on or before the due date for such required installment or payment,
(C) engaged in a transaction within the meaning of Section 4069 of ERISA or
(D) incurred any liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premium payments which have become due
which are unpaid. There are no pending or, to the knowledge of the Borrower,
threatened claims, actions, proceedings or lawsuits (other than claims for
benefits in the normal course) asserted or instituted against (1) any Employee
Plan or its assets, (2) any fiduciary with respect to any Employee Plan, or
(3) the Borrower or any of its ERISA Affiliates with respect to any Employee
Plan. Except as required by Section 4980B of the Internal Revenue Code, neither
the Borrower nor any of its ERISA Affiliates maintains an employee welfare
benefit plan (as defined in Section 3(1) of ERISA) which provides health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of the Borrower or any of its ERISA Affiliates or
coverage after a participant’s termination of employment.
               (j) Taxes, Etc. All Federal, state and local tax returns and
other reports required by applicable law to be filed by the Borrower or any of
its Subsidiaries have been filed, or extensions have been obtained, and all
taxes, assessments and other governmental charges imposed upon the Borrower or
any of its Subsidiaries or any property of the Borrower or any of its
Subsidiaries and which have become due and payable have been paid, except to the
extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment thereof
in accordance with GAAP.
               (k) Regulations T, U and X. Neither the Borrower nor any of its
Subsidiaries is nor will it be engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation T, U or X), and no proceeds of any Loan or any Qualified Intercompany
Debt will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock.
               (l) Nature of Business. The Borrower is not engaged in any
business other than the ownership of Capital Stock of its Portfolio Companies
and lending money to the Portfolio Companies pursuant to the Qualified
Intercompany Loan Documents.
               (m) Adverse Agreements, Etc. The Borrower is not a party to any
agreement or instrument, or subject to any charter, limited liability company
agreement, partnership agreement or other corporate, partnership or limited
liability company restriction or any judgment, order, regulation, ruling or
other requirement of a court or other Governmental Authority, which has, or
could reasonably be expected to result in, a Material Adverse Effect.
               (n) Permits, Etc. The Borrower has, and is in compliance with,
all permits, licenses, authorizations, approvals, entitlements and
accreditations required for such

- 61 -

--------------------------------------------------------------------------------

 

Person lawfully to own, lease, manage or operate, or to acquire, each business
currently owned, leased, managed or operated, or to be acquired, by such Person.
No condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and there is no claim
that any thereof is not in full force and effect.
               (o) Properties. The Borrower has good and marketable title to,
valid leasehold interests in, or valid licenses to use, all property and assets
material to its business, free and clear of all Liens, except Permitted Liens.
All such properties and assets are in good working order and condition, ordinary
wear and tear excepted.
               (p) Full Disclosure. The Borrower has disclosed to the Agents and
Lenders all agreements, instruments and corporate or other restrictions to which
it is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
None of the other reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower to the Agents in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which it
was made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. There
is no contingent liability or fact that could reasonably be expected to result
in a Material Adverse Effect which has not been set forth in a footnote included
in the Financial Statements or a Schedule hereto.
               (q) Operating Lease Obligations. On the Effective Date, the
Borrower has no Operating Lease Obligations other than the Operating Lease
Obligations set forth on Schedule 6.01(q).
               (r) Environmental Matters. Except as set forth on
Schedule 6.01(r), (i) the operations of the Borrower are in compliance with all
Environmental Laws; (ii) there has been no Release at any of the properties
owned or operated by the Borrower or a predecessor in interest, or at any
disposal or treatment facility which received Hazardous Materials generated by
the Borrower or any predecessor in interest which could reasonably be expected
to result in a Material Adverse Effect; (iii) no Environmental Action has been
asserted against the Borrower or any predecessor in interest nor does the
Borrower have knowledge or notice of any threatened or pending Environmental
Action against the Borrower or any predecessor in interest which could
reasonably be expected to result in a Material Adverse Effect; (iv) no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by the Borrower or any predecessor in
interest which could reasonably be expected to result in a Material Adverse
Effect; (v) no property now or formerly owned or occupied by the Borrower has
been used as a treatment or disposal site for any Hazardous Material; (vi) the
Borrower has not failed to report to the proper Governmental Authority the
occurrence of any Release which is required to be so reported by any
Environmental Laws which could reasonably be expected to result in a Material
Adverse Effect; (vii) the Borrower holds all licenses, permits and approvals
required under any Environmental Laws in connection with the operation of the

- 62 -

--------------------------------------------------------------------------------

 

business carried on by it, except for such licenses, permits and approvals as to
which the Borrower’s failure to maintain or comply with could not reasonably be
expected to result in a Material Adverse Effect; and (viii) the Borrower has not
received any notification pursuant to any Environmental Laws that (A) any work,
repairs, construction or Capital Expenditures are required to be made in respect
as a condition of continued compliance with any Environmental Laws, or any
license, permit or approval issued pursuant thereto or (B) any license, permit
or approval referred to above is about to be reviewed, made subject to
limitations or conditions, revoked, withdrawn or terminated, in each case,
except as could not reasonably be expected to result in a Material Adverse
Effect.
               (s) Insurance. The Borrower keeps its property adequately insured
and maintains (i) insurance to such extent and against such risks, including
fire, as is customary with companies in the same or similar businesses,
(ii) worker’s compensation insurance in the amount required by applicable law,
(iii) as promptly as practicable, but in any event within 30 days after the
Effective Date, public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law or as may be reasonably required by the Collateral Agent
(including against larceny, embezzlement or other criminal misappropriation).
Schedule 6.01(s) sets forth a list of all insurance maintained by the Borrower
on the Effective Date.
               (t) Use of Proceeds. The proceeds of (i) the Revolving Loans
shall be used by Borrower to (1) make loans to Portfolio Companies, (2) finance
the payment of a portion of the Purchase Price of Portfolio Companies acquired
after the Effective Date, (3) pay fees and expenses in connection with the
transactions contemplated hereby, and (4) fund working capital of the Borrower,
(ii) the Term Loan shall be used by the Borrower to (1) make loans on the
Effective Date to the Effective Date Portfolio Companies, (2) pay fees and
expenses in connection with the transactions contemplated hereby, and (3) fund
working capital of the Borrower, and (iii) the Delayed Draw Term Loan shall be
used by the Borrower to (1) finance the payment of a portion of the Purchase
Price of Portfolio Companies acquired after the Effective Date and (2) pay fees
and expenses in connection with such Acquisitions.
               (u) Solvency. After giving effect to the transactions
contemplated by this Agreement and before and after giving effect to each Loan,
the Borrower is Solvent.
               (v) Location of Bank Accounts. Schedule 6.01(v) sets forth a
complete and accurate list as of the Effective Date of all deposit, checking and
other bank accounts, all securities and other accounts maintained with any
broker dealer and all other similar accounts maintained by the Borrower,
together with a description thereof (i.e., the bank or broker dealer at which
such deposit or other account is maintained and the account number and the
purpose thereof).
               (w) Intellectual Property. Except as set forth on
Schedule 6.01(w), the Borrower owns or licenses or otherwise has the right to
use all licenses, permits, patents, patent applications, trademarks, trademark
applications, service marks, tradenames, copyrights, copyright applications,
franchises, authorizations, non-governmental licenses and permits and

- 63 -

--------------------------------------------------------------------------------

 

other intellectual property rights that are necessary for the operation of its
business, without infringement upon or conflict with the rights of any other
Person with respect thereto, except for such infringements and conflicts which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. Set forth on Schedule 6.01(w) is a complete and
accurate list as of the Effective Date of all such material licenses, permits,
patents, patent applications, trademarks, trademark applications, service marks,
tradenames, copyrights, copyright applications, franchises, authorizations,
non-governmental licenses and permits and other intellectual property rights of
the Borrower. No slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower infringes upon or conflicts with any rights owned by
any other Person, and no claim or litigation regarding any of the foregoing is
pending or threatened, except for such infringements and conflicts which could
not reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect. To the knowledge of the Borrower, no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code is pending or proposed, which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
               (x) Material Contracts. Set forth on Schedule 6.01(x) is a
complete and accurate list as of the Effective Date of all Material Contracts of
the Borrower, showing the parties and amendments and modifications thereto. Each
such Material Contract (i) is in full force and effect and is binding upon and
enforceable against the Borrower that is a party thereto and, to the knowledge
of the Borrower, all other parties thereto in accordance with its terms,
(ii) other than Permitted Modifications of Qualified Intercompany Loan
Documents, has not been otherwise amended or modified, and (iii) except as has
been disclosed in writing to the Agents in relation to Qualified Intercompany
Loan Documents, is not in default due to the action of the Borrower or, to the
knowledge of the Borrower, any other party thereto.
               (y) Investment Company Act. The Borrower is not an “investment
company” or an “affiliated person” or “promoter” of, or “principal underwriter”
of or for, an “investment company”, as such terms are defined in the Investment
Company Act of 1940, as amended.
               (z) Employee and Labor Matters. There is (i) no unfair labor
practice complaint pending or, to the knowledge of the Borrower, threatened
against the Borrower before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against the Borrower which arises
out of or under any collective bargaining agreement, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or threatened
against the Borrower or (iii) to the knowledge of the Borrower, no union
representation question existing with respect to the employees of the Borrower
and no union organizing activity taking place with respect to any of the
employees of the Borrower. Neither the Borrower nor any of its ERISA Affiliates
has incurred any liability or obligation under the Worker Adjustment and
Retraining Notification Act (“WARN”) or similar state law, which remains unpaid
or unsatisfied. The hours worked and payments made to employees of the Borrower
have not been in violation of the Fair Labor Standards Act or any other
applicable legal requirements, except to the extent such violations could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. All material payments due from the Borrower on account of wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability

- 64 -

--------------------------------------------------------------------------------

 

on the books of the Borrower, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
               (aa) [intentionally omitted].
               (bb) No Bankruptcy Filing. Neither the Borrower nor any Portfolio
Company is contemplating either the filing of a petition by it under any state,
federal or foreign bankruptcy or insolvency laws or the liquidation of all or a
major portion of the Borrower’s or any Portfolio Company’s assets or property,
and the Borrower does not have any knowledge of any Person contemplating the
filing of any such petition against it or a Portfolio Company.
               (cc) Separate Existence.
                    (i) All customary formalities regarding the separate
existence of the Borrower have been at all times since its formation observed.
                    (ii) The Borrower has at all times since its formation
accurately maintained its financial statements, accounting records and other
organizational documents separate from those of any Affiliate of the Borrower
and any other Person. The Borrower has not at any time since its formation
commingled its assets with those of any of its Affiliates or any other Person.
The Borrower has at all times since its formation accurately maintained its own
bank accounts and separate books of account.
                    (iii) The Borrower has at all times since its formation paid
its own liabilities from its own separate assets.
                    (iv) The Borrower has at all times since its formation
identified itself in all dealings with the public, under its own name and as a
separate and distinct Person. The Borrower has not at any time since its
formation identified itself as being a division or a part of any other Person.
               (dd) Name; Jurisdiction of Organization; Organizational ID
Number; Chief Place of Business; Chief Executive Office; FEIN. Schedule 6.01(dd)
sets forth a complete and accurate list as of the date hereof of (i) the exact
legal name of the Borrower, (ii) the jurisdiction of organization of the
Borrower, (iii) the organizational identification number of the Borrower (or
indicates that the Borrower has no organizational identification number),
(iv) each place of business of the Borrower, (v) the chief executive office of
the Borrower and (vi) the federal employer identification number of the
Borrower.
               (ee) Tradenames. Schedule 6.01(ee) hereto sets forth a complete
and accurate list as of the Effective Date of all tradenames used by the
Borrower.
               (ff) Locations of Collateral. There is no location at which the
Borrower has any Collateral other than (i) those locations listed on
Schedule 6.01(ff) and (ii) any other locations approved in writing by the
Collateral Agent from time to time.
               (gg) Security Interests. Each Security Agreement creates in favor
of the Collateral Agent, for the benefit of the Agents and the Lenders, a legal,
valid and enforceable

- 65 -

--------------------------------------------------------------------------------

 

security interest in the Collateral covered thereby. Upon the filing of the
financing statements described in Section 5.01(d)(iv), such security interests
in and Liens on the Collateral granted thereby shall be perfected, first
priority security interests (subject to Permitted Liens), and no further
recordings or filings are or will be required in connection with the creation,
perfection or enforcement of such security interests and Liens. Each Qualified
Intercompany Loan Document which includes a grant of a Lien creates in favor of
the Borrower a legal, valid and enforceable security interest in the collateral
covered thereby. Upon the filing of the financing statements anticipated to be
filed thereunder, such security interests in and Liens on the collateral granted
thereby shall be perfected, first priority security interests (subject to Liens
permitted thereunder), and no further recordings or filings are or will be
required in connection with the creation, perfection or enforcement of such
security interests and Liens.
               (hh) Schedules. All of the information which is required to be
scheduled to this Agreement is set forth on the Schedules attached hereto, is
correct and accurate and does not omit to state any information material
thereto.
               (ii) Representations and Warranties in Documents; No Default. All
representations and warranties set forth in this Agreement and the other Loan
Documents are true and correct in all respects at the time as of which such
representations were made and on the Effective Date. No Event of Default has
occurred and is continuing and no condition exists which constitutes a Default
or an Event of Default.
               (jj) Acquisition Documents and Required Equity Documents. As of
the Effective Date, the Borrower has delivered to the Agents a complete and
correct copy of the Subscription Documents, the Effective Date Acquisition
Agreement, the LLC Agreement and the Management Agreement (including all
schedules, exhibits, amendments, supplements, modifications, and assignments).
The Borrower is not in default in the performance or compliance with any
provisions thereof and each of such agreements comply in all material respects
with, and the initial public offering of the Trust’s Capital Stock has been
consummated in accordance with, in all material respects, all applicable laws
(including HSR). The Subscription Documents, the Effective Date Acquisition
Agreement, the LLC Agreement and the Management Agreement are in full force and
effect as of the Effective Date and have not been terminated, rescinded or
withdrawn as of such date. The execution, delivery and performance of
Subscription Documents, the Effective Date Acquisition Agreement, the LLC
Agreement and the Management Agreement do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority, other than consents or approvals that have
been obtained and that are still in full force and effect. To the best of the
Borrower’s knowledge, none of the representations or warranties of any other
Person in any of the Subscription Documents, the Effective Date Acquisition
Agreement, the LLC Agreement and the Management Agreement contains any untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading.
ARTICLE VII
COVENANTS OF THE BORROWER

- 66 -

--------------------------------------------------------------------------------

 

          Section 7.01 Affirmative Covenants. So long as any principal of or
interest on any Loan, or any other Obligation (whether or not due) shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will:
               (a) Reporting Requirements. Furnish to each Agent and each
Lender:
                    (i) as soon as available and in any event within 45 days
after the end of each fiscal quarter of the Borrower, consolidated and
consolidating (by Portfolio Company) balance sheets, consolidated and
consolidating (by Portfolio Company) statements of operations and retained
earnings and consolidated and consolidating (by Portfolio Company) statements of
cash flows of the Borrower and its Subsidiaries as at the end of such quarter,
and for the period commencing at the end of the immediately preceding Fiscal
Year and ending with the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding date or period of the
immediately preceding Fiscal Year, all in reasonable detail and certified by an
Authorized Officer of the Borrower as fairly presenting, in all material
respects, the financial position of the Borrower and its Subsidiaries as of the
end of such quarter and the results of operations and cash flows of the Borrower
and its Subsidiaries for such quarter, in accordance with GAAP applied in a
manner consistent with that of the most recent audited financial statements of
the Borrower and its Subsidiaries furnished to the Agents and the Lenders,
subject to normal year-end audit adjustments and the absence of footnotes;
                    (ii) as soon as available, and in any event within 90 days
after the end of each Fiscal Year of the Borrower, consolidated and
consolidating (by Portfolio Company) balance sheets, consolidated and
consolidating (by Portfolio Company) statements of operations and retained
earnings and consolidated and consolidating (by Portfolio Company) statements of
cash flows of the Borrower and its Subsidiaries as at the end of such Fiscal
Year, setting forth in each case in comparative form the corresponding figures
for the immediately preceding Fiscal Year, all in reasonable detail and prepared
in accordance with GAAP, and accompanied by a report and an unqualified opinion,
prepared in accordance with generally accepted auditing standards, of
independent certified public accountants of recognized standing selected by the
Borrower and satisfactory to the Agents (which opinion shall be without (A) a
“going concern” or like qualification or exception, (B) any qualification or
exception as to the scope of such audit, or (C) any qualification which relates
to the treatment or classification of any item and which, as a condition to the
removal of such qualification, would require an adjustment to such item, the
effect of which would be to cause any noncompliance with the provisions of
Section 7.03, together with a written statement of such accountants (1) to the
effect that, in making the examination necessary for their audit of such
financial statements, they have not obtained any knowledge of the existence of
an Event of Default or a Default under Section 7.03 and (2) if such accountants
shall have obtained any knowledge of the existence of an Event of Default or
such Default under Section 7.03, describing the nature thereof;
                    (iii) as soon as available, and in any event within 30 days
after the end of each fiscal month of the Borrower, internally prepared
consolidated and consolidating (by Portfolio Company) balance sheets,
consolidated and consolidating (by Portfolio Company) statements of operations
and retained earnings and consolidated and consolidating (by Portfolio Company)
statements of cash flows as at the end of such fiscal month, and for the period
commencing at the end of the immediately preceding Fiscal Year and ending with
the end of

- 67 -

--------------------------------------------------------------------------------

 

such fiscal month, in each case, all in reasonable detail and certified by an
Authorized Officer of the Borrower as fairly presenting, in all material
respects, the financial position of the Borrower and its Subsidiaries as at the
end of such fiscal month and the results of operations, retained earnings and
cash flows of the Borrower and its Subsidiaries for such fiscal month, in
accordance with GAAP applied in a manner consistent with that of the most recent
audited financial statements furnished to the Agents and the Lenders, except
that such monthly financial statements (A) will not reflect a periodic
revaluation or approximation of the “supplemental put” line item, (B) will not
reflect a recalculation of the “minority interest” line item, (C) will be
subject to normal year-end adjustments and (D) will not contain footnotes;
                    (iv) simultaneously with the delivery of the financial
statements of the Borrower and its Subsidiaries required by clauses (i),
(ii) and (iii) of this Section 7.01(a), a certificate of an Authorized Officer
of the Borrower (A) stating that such Authorized Officer has reviewed the
provisions of this Agreement and the other Loan Documents and has made or caused
to be made under his or her supervision a review of the condition and operations
of the Borrower and its Subsidiaries during the period covered by such financial
statements with a view to determining whether the Borrower and its Subsidiaries
were in compliance with all of the provisions of this Agreement and such Loan
Documents at the times such compliance is required hereby and thereby, and that
such review has not disclosed, and such Authorized Officer has no knowledge of,
the existence during such period of an Event of Default or Default or, if an
Event of Default or Default existed, describing the nature and period of
existence thereof and the action which the Borrower and its Subsidiaries propose
to take or have taken with respect thereto and (B) stating that such Authorized
Officer has reviewed the provisions of the Qualified Intercompany Loan
Agreements and the other Qualified Intercompany Loan Documents and has made or
caused to be made under his or her supervision a review of the condition and
operations of the Portfolio Companies and their Subsidiaries during the period
covered by such financial statements with a view to determining whether the
Portfolio Companies and their Subsidiaries were in compliance with all of the
provisions of the Qualified Intercompany Loan Agreements and the other Qualified
Intercompany Loan Documents at the times such compliance is required hereby and
thereby, and that such review has not disclosed, and such Authorized Officer has
no knowledge of, the existence during such period of a default or event of
default thereunder or, if a default or event of default existed, describing the
nature and period of existence thereof and the action which the Borrower propose
to take or has taken with respect thereto, (C) attaching a schedule showing the
calculation of the financial covenants specified in Section 7.03 (including a
calculation that details the Leverage Ratio in a manner to enable the
Administrative Agent to determine the then applicable LIBOR Rate Margin and the
Reference Rate Margin) and (D) attaching copies of all compliance certificates
delivered in connection with the Qualified Intercompany Loan Agreements;
                    (v) as soon as available and in any event within 10 days
after the end of each fiscal month of the Borrower, reports in form and detail
satisfactory to the Agents and certified by an Authorized Officer of the
Borrower as being accurate and complete listing (A) all Payment Intangibles of
the Borrower as of such day, which shall include the amount and other detail
reasonably requested by the Agents regarding each Payment Intangible, together
with a reconciliation of such schedule with the schedule delivered to the Agents
pursuant to this clause (v)(A) for the immediately preceding fiscal month, all
in detail and in

- 68 -

--------------------------------------------------------------------------------

 

form satisfactory to the Agents and (B) the aggregate amount of Cash and Cash
Equivalents of Borrower and of Borrower’s Subsidiaries as of the end of the such
preceding fiscal month;
                    (vi) as soon as available and in any event within 30 days
after the end of each month commencing with the month during which the Effective
Date occurs, a Borrowing Base Certificate, current as of the close of business
on the last day of such month, supported by schedules showing the derivation
thereof and containing such detail and other information as any Agent may
request from time to time, provided that (A) the Borrowing Base set forth in the
Borrowing Base Certificate shall be effective from and including the date such
Borrowing Base Certificate is duly received by the Agents but not including the
date on which a subsequent Borrowing Base Certificate is received by the Agents,
and (B) in the event of any dispute about the eligibility of any component of
the Borrowing Base included in the calculation of the Borrowing Base, such
Agent’s good faith judgment shall control;
                    (vii) no later than 30 days after the commencement of each
Fiscal Year, financial projections, supplementing and superseding the financial
projections for the period referred to in Section 6.01(g)(ii)(A), displayed on a
month by month basis and otherwise in form and substance reasonably satisfactory
to the Agents for such Fiscal Year for the Borrower and its Subsidiaries, all
such financial projections to be prepared on a reasonable basis and in good
faith, and to be based on assumptions believed by the Borrower to be reasonable
at the time made and from the best information then available to the Borrower;
                    (viii) promptly after submission to any Governmental
Authority, all documents and information furnished to such Governmental
Authority in connection with any investigation of the Borrower other than
routine inquiries by such Governmental Authority;
                    (ix) as soon as possible, and in any event within 3 Business
Days of an Authorized Officer’s knowledge of an Event of Default or Default or
the occurrence of any event or development that could reasonably be expected to
result in a Material Adverse Effect, the written statement of an Authorized
Officer of the Borrower setting forth the details of such Event of Default or
Default or other event or development having a Material Adverse Effect and the
action which the Borrower proposes to take with respect thereto;
                    (x) (A) as soon as possible and in any event within 10 days
after the Borrower or any ERISA Affiliate thereof knows or has reason to know
that (1) any Reportable Event with respect to any Employee Plan has occurred,
(2) any other Termination Event with respect to any Employee Plan has occurred,
or (3) an accumulated funding deficiency has been incurred or an application has
been made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including installment payments) or an extension of any
amortization period under Section 412 of the IRC with respect to an Employee
Plan, a statement of an Authorized Officer of the Borrower setting forth the
details of such occurrence and the action, if any, which the Borrower or such
ERISA Affiliate proposes to take with respect thereto, (B) promptly and in any
event within 3 Business Days after receipt thereof by the Borrower or any ERISA
Affiliate thereof from the PBGC, copies of each notice received by the Borrower
or any ERISA Affiliate thereof of the PBGC’s intention to terminate any Plan or
to have a trustee appointed to administer any Plan, (C) promptly and in any
event within 10 days after the filing thereof with the Internal Revenue Service
if requested by any Agent, copies of

- 69 -

--------------------------------------------------------------------------------

 

each Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Employee Plan and Multiemployer Plan, (D) promptly and in
any event within 10 days after the Borrower or any ERISA Affiliate thereof knows
or has reason to know that a required installment within the meaning of
Section 412 of the IRC has not been made when due with respect to an Employee
Plan, (E) promptly and in any event within 3 Business Days after receipt thereof
by the Borrower or any ERISA Affiliate thereof from a sponsor of a Multiemployer
Plan or from the PBGC, a copy of each notice received by the Borrower or any
ERISA Affiliate thereof concerning the imposition or amount of withdrawal
liability under Section 4202 of ERISA or indicating that such Multiemployer Plan
may enter reorganization status under Section 4241 of ERISA, and (F) promptly
and in any event within 10 days after the Borrower or any ERISA Affiliate
thereof sends notice of a plant closing or mass layoff (as defined in WARN) to
employees, copies of each such notice sent by the Borrower or such ERISA
Affiliate thereof;
                    (xi) promptly after the commencement thereof but in any
event not later than 5 Business Days after service of process with respect
thereto on, or the obtaining of knowledge thereof by, the Borrower, notice of
each action, suit or proceeding before any court or other Governmental Authority
or other regulatory body or any arbitrator which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
                    (xii) as soon as possible and in any event within 5 Business
Days after execution, receipt or delivery thereof, copies of any material
notices that the Borrower executes or receives in connection with any Material
Contract;
                    (xiii) promptly after the sending or filing thereof, copies
of all statements, reports and other information the Borrower sends to any
holders of its Indebtedness or its securities or files with the SEC or any
national (domestic or foreign) securities exchange;
                    (xiv) promptly upon receipt thereof, copies of all financial
reports (including management letters), if any, submitted to the Borrower by its
auditors in connection with any annual or interim audit of the books thereof;
and
                    (xv) promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of the Borrower
as any Agent may from time to time may reasonably request.
               (b) Additional Collateral. Execute and deliver to the Collateral
Agent promptly and in any event within 10 days after the formation or
acquisition of a new Portfolio Company (A) certificates evidencing all of the
Capital Stock of such Portfolio Company owned by the Borrower (“Pledged Stock”),
(B) undated stock powers executed in blank with respect to such Pledged Stock,
and (C) such opinion of counsel and such approving certificate of such Portfolio
Company as the Collateral Agent may reasonably request in respect of complying
with any legend on any such certificate or any other matter relating to such
Pledged Stock, and (D) such other agreements, instruments, approvals, legal
opinions or other documents reasonably requested by the Collateral Agent in
order to create, perfect, establish the first priority of or otherwise protect
any Lien purported to be covered by any Security Agreement, or Mortgage,
executed by the Borrower or otherwise to effect the intent that the Capital
Stock of such Portfolio Company

- 70 -

--------------------------------------------------------------------------------

 

owned by the Borrower and all Indebtedness owed by such Portfolio Company and
its Subsidiaries to the Borrower shall become Collateral for the Obligations.
               (c) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations, orders (including, without limitation, all Environmental
Laws), judgments and awards (including any settlement of any claim that, if
breached, could give rise to any of the foregoing), such compliance to include
(i) paying before the same become delinquent all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any of its properties, and (ii) paying all other lawful claims which if
unpaid might become a Lien or charge upon any of its properties, except, in each
case, to the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with GAAP.
               (d) Preservation of Existence, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, its existence, rights
and privileges, and become or remain, and cause each of its Subsidiaries to
become or remain, duly qualified and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary.
               (e) Keeping of Records and Books of Account. Keep, and cause each
of its Subsidiaries to keep, adequate records and books of account, with
complete entries made to permit the preparation of financial statements in
accordance with GAAP.
               (f) Inspection Rights. Permit, and cause each of its Subsidiaries
to permit, the agents and representatives of any Agent at any time and from time
to time during normal business hours, at the expense of the Borrower to the
extent provided in Section 4.01, to examine and make copies of and abstracts
from its records and books of account, to visit and inspect its properties, to
verify leases, notes, accounts receivable, deposit accounts and its other
assets, to conduct audits, physical counts, valuations, appraisals, Phase I
Environmental Site Assessments (and, if requested by the Collateral Agent based
upon the results of any such Phase I Environmental Site Assessment, a Phase II
Environmental Site Assessment) or examinations and to discuss its affairs,
finances and accounts with any of its directors, officers, managerial employees,
independent accountants or any of its other representatives.
               (g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its properties
which are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted, and comply, and
cause each of its Subsidiaries to comply, at all times with the provisions of
all leases to which it is a party as lessee or under which it occupies property,
so as to prevent any loss or forfeiture thereof or thereunder.
               (h) Maintenance of Insurance. On and after the date that is
30 days after the Effective Date with respect to the Borrower (and on the
Effective Date with respect to the Borrower’s Subsidiaries), maintain, and cause
each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations (including comprehensive

- 71 -

--------------------------------------------------------------------------------

 

general liability, hazard, rent and business interruption insurance) with
respect to its properties (including all real properties leased or owned by it)
and business, in such amounts and covering such risks as is required by any
Governmental Authority having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies in similar
businesses similarly situated. All policies covering the Collateral are to be
made payable to the Collateral Agent for the benefit of the Agents and the
Lenders, as its interests may appear, in case of loss, under a standard
non-contributory “lender” or “secured party” clause and are to contain such
other provisions as the Collateral Agent may require to fully protect the
Lenders’ interest in the Collateral and to any payments to be made under such
policies. All certificates of insurance of Borrower are to be delivered to the
Collateral Agent on or before the date that is 35 after the Effective Date and
the policies are to be premium prepaid, with the loss payable and additional
insured endorsement of policies of the Borrower in favor of the Collateral
Agent, and shall provide for not less than 30 days prior written notice to the
Collateral Agent of the exercise of any right of cancellation. If the Borrower
fails to maintain such insurance on or before the date that is 35 days after the
Effective Date, the Collateral Agent may arrange for such insurance, but at the
Borrower’s expense and without any responsibility on the Collateral Agent’s part
for obtaining the insurance, the solvency of the insurance companies, the
adequacy of the coverage, or the collection of claims. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent shall have
the sole right, in the name of the Lenders and the Borrower, to file claims
under any insurance policies of the Borrower, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
               (i) Obtaining of Permits, Etc. Obtain, maintain and preserve, and
cause each of its Subsidiaries to obtain, maintain and preserve, and take all
necessary action to timely renew, all permits, licenses, authorizations,
approvals, entitlements and accreditations which are necessary or useful in the
proper conduct of its business.
               (j) Environmental. (i) Keep any property either owned or operated
by it or any of its Subsidiaries free of any Environmental Liens; (ii) comply,
and cause each of its Subsidiaries to comply, in all material respects with
Environmental Laws and provide to the Collateral Agent any documentation of such
compliance which the Collateral Agent may reasonably request; (iii) provide the
Agents written notice within 5 days of any Release of a Hazardous Material in
excess of any reportable quantity from or onto property owned or operated by it
or any of its Subsidiaries and take any Remedial Actions required to abate said
Release; (iv) promptly provide the Agents with written notice within 10 days of
the receipt of any of the following: (A) notice that an Environmental Lien has
been filed against any property of the Borrower; (B) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against the Borrower; and (C) notice of a violation, citation or other
administrative order which could reasonably be expected to result in a Material
Adverse Effect and (v) defend, indemnify and hold harmless the Agents and the
Lenders and their transferees, and their respective employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses (including attorney and
consultant fees, investigation and laboratory fees, court costs and litigation
expenses) arising out of (A) the presence, disposal, release or threatened
release of any

- 72 -

--------------------------------------------------------------------------------

 

Hazardous Materials on any property at any time owned or occupied by the
Borrower (or its predecessors in interest or title), (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials, (C) any investigation, lawsuit brought
or threatened, settlement reached or government order relating to such Hazardous
Materials, (D) any violation of any Environmental Law or (E) any Environmental
Action filed against any Agent or any Lender.
               (k) Further Assurances. Take such action and execute, acknowledge
and deliver, at its sole cost and expense, such agreements, instruments or other
documents as any Agent may require from time to time in order (i) to carry out
more effectively the purposes of this Agreement and the other Loan Documents,
(ii) to subject to valid and perfected first priority Liens (subject to
Permitted Liens) any of the Collateral or any other property of the Borrower,
(iii) to establish and maintain the validity and effectiveness of any of the
Loan Documents and the validity, perfection and priority of the Liens intended
to be created thereby, and (iv) to better assure, convey, grant, assign,
transfer and confirm unto each Agent and each Lender the rights now or hereafter
intended to be granted to it under this Agreement or any other Loan Document. In
furtherance of the foregoing, to the maximum extent permitted by applicable law,
the Borrower (A) authorizes each Agent to execute any such agreements,
instruments or other documents in the Borrower’s name and to file such
agreements, instruments or other documents in any appropriate filing office,
(B) authorizes each Agent to file any financing statement required hereunder or
under any other Loan Document, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of the
Borrower, and (C) ratifies the filing of any financing statement, and any
continuation statement or amendment with respect thereto, filed without the
signature of the Borrower prior to the date hereof.
               (l) Change in Collateral; Collateral Records. (i) Give the
Collateral Agent not less than 30 days prior written notice of any change in the
location of any Collateral, other than to (or in-transit between) locations set
forth on Schedule 6.01(ff) and with respect to which the Collateral Agent has
filed financing statements and otherwise fully perfected its Liens thereon,
(ii) advise the Collateral Agent promptly, in sufficient detail, of any material
adverse change relating to the type, quantity or quality of the Collateral or
the Lien granted thereon and (iii) execute and deliver, and cause each of its
Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of
the Agents and the Lenders from time to time, solely for the Collateral Agent’s
convenience in maintaining a record of Collateral, such written statements and
schedules as the Collateral Agent may reasonably require, designating,
identifying or describing the Collateral.
               (m) Landlord Waiver. At any time that Borrower changes the
location of its books and records, obtain written access agreements and
subordinations or waivers, in form and substance satisfactory to the Collateral
Agent, with respect to the books, records and Collateral at such location.
               (n) [intentionally omitted].
               (o) After Acquired Property. Upon the acquisition by it of any
After Acquired Property, promptly so notify the Collateral Agent (and in any
event within 1 Business

- 73 -

--------------------------------------------------------------------------------

 

Day of such acquisition), setting forth with specificity a description of the
interest acquired, the location of thereof, any structures or improvements
thereon and either an appraisal or the Borrower’s good-faith estimate of the
current value thereof (for purposes of this Section, the “Current Value”). The
Collateral Agent shall notify the Borrower whether it intends to require, with
respect to such After Acquired Property, a Mortgage and the other documents
referred to below or in the case of leasehold, a leasehold Mortgage or
landlord’s waiver (pursuant to Section 7.01(m) hereof). Upon receipt of such
notice requesting a Mortgage, Borrower shall immediately furnish to the
Collateral Agent the following, each in form and substance reasonably
satisfactory to the Collateral Agent: (i) a Mortgage with respect to such real
property and related assets located at the After Acquired Property, each duly
executed and in recordable form; (ii) evidence of the recording of the Mortgage
referred to in clause (i) above in such office or offices as may be necessary
or, in the opinion of the Collateral Agent, desirable to create and perfect a
valid and enforceable first priority lien such After Acquired Property or to
otherwise protect the rights of the Agents and the Lenders thereunder, (iii) a
Title Insurance Policy, (iv) a survey of such real property, certified to the
Collateral Agent and to the issuer of the Title Insurance Policy by a licensed
professional surveyor reasonably satisfactory to the Collateral Agent, (v) Phase
I Environmental Site Assessments with respect to such real property, certified
to the Collateral Agent by a company reasonably satisfactory to the Collateral
Agent, (vi) in the case of a leasehold interest, a certified copy of the lease
between the landlord and the Borrower with respect to such real property in
which the Borrower has a leasehold interest, and the certificate of occupancy
with respect thereto, (vii) in the case of a leasehold interest, an attornment
and nondisturbance agreement between the landlord (and any fee mortgagee) with
respect to such real property and the Collateral Agent, and (viii) such other
documents or instruments (including guarantees and opinions of counsel) as the
Collateral Agent may reasonably require. The Borrower shall pay all fees and
expenses, including reasonable attorneys’ fees and expenses, and all title
insurance charges and premiums, in connection with the Borrower’s obligations
under this Section 7.01(o).
               (p) Fiscal Year. Commencing with the 2007 Fiscal Year, cause the
Fiscal Year of the Borrower and its Subsidiaries to end on December 31st of each
calendar year unless the Agents consent to a change in such fiscal year of the
Borrower and its Subsidiaries (and appropriate related changes to this
Agreement).
               (q) Post-Closing Covenants.
                    (i) Within 35 days after the Effective Date, Borrower shall
provide the Agents with evidence of the insurance coverage required by
Section 7.01 and the terms of each Security Agreement and such other insurance
coverage with respect to the business and operations of the Borrower and the
Portfolio Companies as the Collateral Agent may reasonably request, in each
case, where requested by the Collateral Agent, with such endorsements as to the
named insureds or loss payees thereunder as the Collateral Agent may request and
providing that such policy may be terminated or canceled (by the insurer or the
insured thereunder) only upon 30 days prior written notice to the Collateral
Agent and each such named insured or loss payee;
                    (ii) Within 30 days after the Effective Date, Borrower shall
deliver to the Agents a landlord waiver, in form and substance satisfactory to
the Collateral

- 74 -

--------------------------------------------------------------------------------

 

Agent, executed by the landlord with respect to Borrower’s location in Westport,
Connecticut; and
                    (iii) Within 90 days after the Effective Date, Borrower
shall deliver to the Agents control agreements with respect to the Blocked
Accounts which comply with the requirements of Article VIII of this Agreement.
               (r) Borrowing Base. Maintain all Loans in compliance with the
then current Borrowing Base.
          Section 7.02 Negative Covenants. So long as any principal of or
interest on any Loan, or any other Obligation (whether or not due) shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall
not:
               (a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien upon or with respect to any of its properties, whether now owned or
hereafter acquired; file or suffer to exist under the Uniform Commercial Code or
any similar law or statute of any jurisdiction, a financing statement (or the
equivalent thereof) that names it as debtor; sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof); sell any of its property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable) with
recourse to it or assign or otherwise transfer any account or other right to
receive income; other than, as to all of the above, Permitted Liens.
               (b) Indebtedness. Create, incur, assume, guarantee or suffer to
exist, or otherwise become or remain liable with respect to any Indebtedness
other than Permitted Indebtedness.
               (c) Fundamental Changes; Dispositions. Wind-up, liquidate or
dissolve, or merge, consolidate or amalgamate with any Person, or convey, sell,
lease or sublease, transfer or otherwise dispose of, whether in one transaction
or a series of related transactions, all or any part of its business, property
or assets, whether now owned or hereafter acquired (or agree to do any of the
foregoing), or purchase or otherwise acquire, whether in one transaction or a
series of related transactions, all or substantially all of the assets of any
Person (or any division thereof) (or agree to do any of the foregoing);
provided, however, that (i) the Trust may merge with and into the Borrower (a
“Permitted Merger”), so long as (A) Borrower would be the survivor thereof,
(B) no other provision of this Agreement would be violated thereby, (C) Borrower
gives the Agents at least 30 days prior written notice of such merger, (D) no
Default or Event of Default shall have occurred and be continuing either before
or after giving effect to such transaction, (E) the Lenders’ rights in any
Collateral, including the existence, perfection and priority of any Lien
thereon, are not adversely affected by such merger; and (ii) the Borrower may
make Permitted Dispositions and Permitted Acquisitions.
               (d) Change in Nature of Business; Change in Independent Certified
Public Accountant. Make any change in the nature of its business as described in
Section 6.01(l) or acquire any properties or assets that are not reasonably
related to the conduct of such business

- 75 -

--------------------------------------------------------------------------------

 

activities. Make any change in its independent certified public accountant
without the prior written consent of the Agents.
               (e) Loans, Advances, Investments, Etc. Make or commit or agree to
make any loan, advance guarantee of obligations, other extension of credit or
capital contributions to, or hold or invest in or commit or agree to hold or
invest in, or purchase or otherwise acquire or commit or agree to purchase or
otherwise acquire any shares of the Capital Stock, bonds, notes, debentures or
other securities of, or make or commit or agree to make any other investment in,
any other Person, or purchase or own any futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or permit any of its Subsidiaries to
do any of the foregoing, except for: (i) investments existing on the date
hereof, as set forth on Schedule 7.02(e) hereto, but not any increase in the
amount thereof as set forth in such Schedule or any other modification of the
terms thereof, (ii) loans and advances by the Borrower to a Portfolio Company
pursuant to its Qualified Intercompany Loan Agreement; provided, however, that,
without the prior written consent of the Agents, the Borrower shall not make
loans or advances to a Portfolio Company in excess of the borrowing formulas set
forth in the applicable Qualified Intercompany Loan Agreement as in effect on
the date when such agreement was originally executed and delivered, as modified
by Permitted Modifications, (iii) Permitted Acquisitions, and (iv) Permitted
Investments.
               (f) Lease Obligations. Create, incur or suffer to exist any
obligations as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction, or (ii) for the
payment of rent for any real or personal property under leases or agreements to
lease other than (A) Capitalized Lease Obligations which would not cause the
aggregate amount of all obligations under Capitalized Leases entered into after
the Effective Date owing by the Borrower in any Fiscal Year to exceed the
amounts set forth in subsection (g) of this Section 7.02, and (B) Operating
Lease Obligations which would not cause the aggregate amount of all Operating
Lease Obligations owing by the Borrower in any Fiscal Year to exceed $2,000,000.
               (g) Capital Expenditures. Make or commit or agree to make any
Capital Expenditure (by purchase or Capitalized Lease) that would cause the
aggregate amount of all Capital Expenditures made by the Borrower (exclusive of
Capital Expenditures made by the Portfolio Companies and their respective
Subsidiaries) to exceed $2,000,000 in any Fiscal Year during which the Leverage
Ratio of Borrower is, at any time, greater than 2.0:1.00.
               (h) Restricted Payments. (i) Declare or pay any dividend or other
distribution, direct or indirect, on account of any Capital Stock of the
Borrower, now or hereafter outstanding, (ii) make any repurchase, redemption,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Capital Stock of the Borrower
or any direct or indirect parent of the Borrower, now or hereafter outstanding,
(iii) make any payment to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights for the purchase or acquisition of shares of
any class of Capital Stock of the Borrower, now or hereafter outstanding, or
(iv) pay any management fees or any other fees or expenses (including the
reimbursement thereof by the Borrower) pursuant to any management, consulting or
other services agreement to any of the shareholders or other equityholders of
the

- 76 -

--------------------------------------------------------------------------------

 

Borrower or other Affiliates, or to any other Subsidiaries or Affiliates of the
Borrower; provided, however, that (x) Borrower may make payments of Permitted
Management Fees, and (y) so long as no Default or Event of Default has occurred
and is continuing or would result therefrom (A) the Borrower may pay dividends
or make distributions or advances to the Trust (1) in amounts necessary to pay
customary expenses of the Trust in the ordinary course of its business solely as
a result of its ownership and operation of the Borrower and its Subsidiaries and
(2) in amounts necessary to enable the Trust to pay taxes when due and owing
solely as a result of its ownership of the Borrower and its Subsidiaries,
(B) any Subsidiary of the Borrower may pay dividends to the Borrower, and
(C) the Trust may pay dividends in the form of common Capital Stock and (D) so
long as Availability both before and after giving effect thereto is not less
than $5,000,000, the Borrower may make payment of dividends or other
distributions to the Trust; provided, however, that if as of any date the Fixed
Charges Coverage Ratio of the Borrower and its Subsidiaries for the Applicable
Period most recently ended is less than 1.00:1.00, the aggregate amount of such
distributions to the Trust during any fiscal quarter shall not be greater than
the amount of distributions paid by the Borrower to the Trust during the
immediately preceding fiscal quarter.
               (i) Federal Reserve Regulations. Permit any Loan or the proceeds
of any Loan under this Agreement to be used for any purpose that would cause
such Loan to be a margin loan under the provisions of Regulation T, U or X of
the Board.
               (j) Transactions with Affiliates. Enter into, renew, extend or be
a party to, or permit any of its Subsidiaries to enter into, renew, extend or be
a party to, any transaction or series of related transactions (including the
purchase, sale, lease, transfer or exchange of property or assets of any kind or
the rendering of services of any kind) with any Affiliate, except (i) in the
ordinary course of business in a manner and to an extent consistent with past
practice and necessary or desirable for the prudent operation of its business,
for fair consideration and on terms no less favorable to it or its Subsidiaries
than would be obtainable in a comparable arm’s length transaction with a Person
that is not an Affiliate thereof, (ii) transactions permitted by Section 7.02(e)
or (h) and (iii) the Management Agreement, the CGI Subscription Agreement and
the Pharos Subscription Agreement.
               (k) Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. Create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of the Borrower (i) to pay dividends
or to make any other distribution on any shares of Capital Stock of such
Subsidiary owned by the Borrower or any of its Subsidiaries, (ii) to pay or
prepay any Indebtedness owed to the Borrower or any of its Subsidiaries,
(iii) to make loans or advances to the Borrower or any of its Subsidiaries or
(iv) to transfer any of its property or assets to the Borrower or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
provided, however, that nothing in any of clauses (i) through (iv) of this
Section 7.02(k) shall prohibit or restrict compliance with:
               (A) this Agreement and the other Loan Documents;
               (B) any Qualified Intercompany Loan Document;

- 77 -

--------------------------------------------------------------------------------

 

               (C) agreements in effect on the date of this Agreement and
described on Schedule 7.02(k);
               (D) any applicable law, rule or regulation (including applicable
currency control laws and applicable state corporate statutes restricting the
payment of dividends in certain circumstances);
               (E) in the case of clause (iv), any agreement setting forth
customary restrictions on the subletting, assignment or transfer of any property
or asset that is leased or licensed; or
               (F) in the case of clause (iv), any agreement, instrument or
other document evidencing a Permitted Lien that restricts, on customary terms,
the transfer of any property or assets subject thereto.
               (l) Limitation on Issuance of Capital Stock. Except for the
issuance or sale of common stock or its equivalent by the Borrower to the Trust
(or after a Permitted Merger involving the Borrower and the Trust, by the
Borrower), issue or sell or enter into any agreement or arrangement for the
issuance and sale of any shares of its Capital Stock, any securities convertible
into or exchangeable for its Capital Stock or any warrants.
               (m) Modifications of Indebtedness, Organizational Documents and
Certain Other Agreements; Etc. (i) Amend, modify, waive, or otherwise change (or
permit the amendment, modification or other change in any manner of) any of the
provisions of any of its or its Subsidiaries’ Indebtedness or of any instrument
or agreement (including any Qualified Intercompany Loan Document, purchase
agreement, indenture, loan agreement or security agreement) relating to any such
Indebtedness except for Permitted Modifications, (ii) except for the
Obligations, make any voluntary or optional payment, prepayment, redemption,
defeasance, sinking fund payment or other acquisition for value of any of its
Indebtedness (including by way of depositing money or securities with the
trustee therefor before the date required for the purpose of paying any portion
of such Indebtedness when due), or refund, refinance, replace or exchange any
other Indebtedness for any such Indebtedness (except to the extent such
Indebtedness is otherwise expressly permitted by the definition of “Permitted
Indebtedness”), or make any payment, prepayment, redemption, defeasance, sinking
fund payment or repurchase of any outstanding Indebtedness as a result of any
asset sale, change of control, issuance and sale of debt or equity securities or
similar event, or give any notice with respect to any of the foregoing,
(iii) except as permitted by Section 7.02(c), amend, modify or otherwise change
its name, jurisdiction of organization, organizational identification number or
FEIN, (iv) amend, modify or otherwise change its certificate of incorporation or
bylaws (or other similar organizational documents), including by the filing or
modification of any certificate of designation, or any agreement or arrangement
entered into by it, with respect to any of its Capital Stock (including any
shareholders’ agreement), or enter into any new agreement with respect to any of
its Capital Stock, except any such amendments, modifications or changes or any
such new agreements or arrangements pursuant to this clause (iv) that either
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, or (v) amend, modify or otherwise change (or permit
the amendment, modification or other change in any manner of) any of the
provisions of the Management Agreement.

- 78 -

--------------------------------------------------------------------------------

 

               (n) Investment Company Act of 1940. Engage in any business, enter
into any transaction, use any securities or take any other action (including
disposing of Capital Stock of Portfolio Companies) or permit any of its
Subsidiaries to do any of the foregoing, that would cause it or any of its
Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an “investment
company” or a company “controlled” by an “investment company” not entitled to an
exemption within the meaning of such Act.
               (o) Compromise of Payment Intangibles. Compromise or adjust any
Payment Intangible (or extend the time of payment thereof) or grant any
discounts, allowances or credits.
               (p) ERISA. (i) Engage, or permit any ERISA Affiliate to engage,
in any transaction described in Section 4069 of ERISA; (ii) engage, or permit
any ERISA Affiliate to engage, in any prohibited transaction described in
Section 406 of ERISA or 4975 of the IRC for which a statutory or class exemption
is not available or a private exemption has not previously been obtained from
the U.S. Department of Labor; (iii) adopt or permit any ERISA Affiliate to adopt
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA
which provides benefits to employees after termination of employment other than
as required by Section 601 of ERISA or applicable law; (iv) fail to make any
contribution or payment to any Multiemployer Plan which it or any ERISA
Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; or (v) fail, or permit any
ERISA Affiliate to fail, to pay any required installment or any other payment
required under Section 412 of the IRC on or before the due date for such
installment or other payment.
               (q) Environmental. Permit the use, handling, generation, storage,
treatment, release or disposal of Hazardous Materials at any property owned or
leased by it or any of its Subsidiaries, except in compliance with Environmental
Laws in a manner that such handling, generation, storage, treatment, release or
disposal of Hazardous Materials could not reasonably be expected to result in a
Material Adverse Effect.
               (r) Certain Agreements. Agree to any material amendment or other
material change to or material waiver of any of its rights under any Material
Contract except for Permitted Modifications of the Qualified Intercompany Loan
Documents.
          Section 7.03 Financial Covenants. So long as any principal of or
interest on any Loan, or any other Obligation (whether or not due) shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall
not:
               (a) Leverage Ratio. Commencing June 30, 2006, permit the Leverage
Ratio of the Borrower and its Subsidiaries for the period ended as of the last
day of any month to be greater than 3.00:1.00.
               (b) [intentionally omitted].
               (c) Fixed Charge Coverage Ratio. At any time when (i) the
Leverage Ratio of Borrower and its Subsidiaries is greater than 1.5:1.0 or
(ii) Intercompany Debt Coverage

- 79 -

--------------------------------------------------------------------------------

 

Ratio of Borrower and its Subsidiaries is less than 1.5:1.0, permit the Fixed
Charge Coverage Ratio of the Borrower and its Subsidiaries for the Applicable
Period most recently ended (x) to be less than 0.9:1.0 as of the end of any
fiscal quarter, or (y) to be less than 1.0:1.0 as of the end of any two
consecutive fiscal quarters.
               (d) Consolidated TTM EBITDA. At any time when the Leverage Ratio
of Borrower and its Subsidiaries is greater than 1.5:1.0, permit the TTM EBITDA
of the Borrower and its Subsidiaries for the period ended as of the last day of
any fiscal quarter to be less than $40,000,000. Upon the consummation of a
Permitted Post-Effective Date Acquisition, the required level of TTM EBITDA set
forth in the first sentence of this covenant shall be automatically increased by
an amount equal to the result of (i) 80% of amount of TTM EBITDA with respect to
the Person or Persons that are proposed to be acquired in connection therewith
(as reasonably projected by Borrower pursuant to projections that are reasonably
satisfactory to the Agents) minus (ii) $2,000,000. If at any time after the
Effective Date, Borrower consummates a Disposition of 100% of the Capital Stock
held by Borrower with respect to a Portfolio Company, then (to the extent that
the TTM EBITDA of the Person or Persons who are the subject of such Disposition
were included in the projections described below on the Effective Date) the
required level of TTM EBITDA set forth in the first sentence of this covenant
shall be automatically decreased by an amount equal to the result of (x) 80% of
amount of TTM EBITDA with respect to the Person or Persons that are the subject
of the proposed Disposition (as set forth in the financial projections described
in Section 6.01(g)(ii) hereof) minus (y) $2,000,000. Borrower, the Agents and
the Lenders shall execute any amendment to this Agreement reasonably required in
order to document any of the foregoing changes to this financial covenant.
ARTICLE VIII
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS RECEIVABLE AND OTHER COLLATERAL
          Section 8.01 Collection of Accounts Receivable; Management of
Collateral.
               (a) On or prior to the date that is 90 days after the Effective
Date, the Borrower shall use its best efforts to assist the Administrative Agent
in establishing, and, during the term of this Agreement, maintaining blocked
accounts (the “Blocked Accounts”) with respect to the Borrower’s principal
concentration accounts with the financial institution set forth on Schedule 8.01
hereto (the “Blocked Account Bank”), and entering into a control agreement
relating to the Blocked Account with the Borrower, Collateral Agent, and the
Blocked Account Bank. The Borrower shall irrevocably instruct its Portfolio
Companies to remit all payments to be made by them to Borrower, whether by means
of checks or other drafts or by wire transfer or by Automated Clearing House,
Inc. payment, to a Blocked Account and shall instruct the Blocked Account Bank
to deposit all amounts received by it to a Blocked Account at such Blocked
Account Bank on the day received or, if such day is not a Business Day, on the
next succeeding Business Day. All checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness received directly by the
Borrower from any Account Debtor, as proceeds from its Accounts Receivable or
Payment Intangibles, or as proceeds of any other Collateral or Intercompany Loan
Collateral, shall be held by the Borrower in trust and upon receipt be deposited
by the Borrower in original form and no later than the next Business Day

- 80 -

--------------------------------------------------------------------------------

 

after receipt thereof into a Blocked Account. The Borrower shall not commingle
such collections with its own funds or with the proceeds of any assets not
included in the Collateral or Intercompany Loan Collateral. All funds received
in the Blocked Accounts, after the occurrence and during the continuance of an
Event of Default, upon request by Collateral Agent, shall be sent by wire
transfer or Automated Clearing House, Inc. payment to the Payment Office to be
credited to the Administrative Agent’s Account for application at the end of
each Business Day when such funds are received in Administrative Agent’s Account
to reduce the then principal balance of the Loans in accordance with
Section 4.04, conditional upon final payment to the Administrative Agent. No
checks, drafts or other instruments received by the Administrative Agent shall
constitute final payment to the Administrative Agent unless and until such
checks, drafts or instruments have actually been collected.
               (b) After the occurrence and during the continuance of an Event
of Default, the Collateral Agent may send a notice of assignment or notice of
security interest to any and all of the Borrower’s Account Debtors and,
thereafter, the Collateral Agent shall have the sole right to collect the
Accounts Receivable and Payment Intangibles of the Borrower or take possession
of the Collateral and the books and records relating thereto. After the
occurrence and during the continuation of an Event of Default, the Borrower and
its Subsidiaries shall not, without prior written consent of the Collateral
Agent, grant any extension of time of payment of any Account Receivable or
Payment Intangible, compromise or settle any Account Receivable or Payment
Intangible for less than the full amount thereof, release, in whole or in part,
any Person or property liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
               (c) The Borrower hereby appoints each Agent or its designee on
behalf of such Agent as the Borrower’s attorney-in-fact with power exercisable
during the continuance of an Event of Default to (i) endorse the Borrower’s name
upon any notes, acceptances, checks, drafts, money orders or other evidences of
payment relating to the Accounts Receivable or Payment Intangibles of the
Borrower, (ii) sign the Borrower’s name on any invoice or bill of lading
relating to any of the Accounts Receivable or Payment Intangibles of the
Borrower, drafts against Account Debtors with respect to Accounts Receivable or
Payment Intangibles of the Borrower, assignments and verifications of Accounts
Receivable or Payment Intangibles and notices to Account Debtors with respect to
Accounts Receivable or Payment Intangibles of the Borrower, (iii) send
verification of Accounts Receivable of the Borrower, and (iv) notify the Postal
Service authorities to change the address for delivery of mail addressed to the
Borrower to such address as such Agent may designate and to do all other acts
and things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission (other than acts of
omission or commission constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction), or for any
error of judgment or mistake of fact or law; this power being coupled with an
interest is irrevocable until all of the Loans and other Obligations under the
Loan Documents are paid in full and all of the Commitments are terminated.
               (d) Nothing herein contained shall be construed to constitute any
Agent as agent of the Borrower for any purpose whatsoever, and the Agents shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (other than from

- 81 -

--------------------------------------------------------------------------------

 

acts of omission or commission constituting gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction). The Agents shall not, under any circumstance or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Accounts
Receivable of the Borrower or any instrument received in payment thereof or for
any damage resulting therefrom (other than acts of omission or commission
constituting gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction). The Agents, by anything herein
or in any assignment or otherwise, do not assume any of the obligations under
any contract or agreement assigned to any Agent and shall not be responsible in
any way for the performance by the Borrower of any of the terms and conditions
thereof.
               (e) Collateral Agent hereby agrees that, so long as no Default or
Event of Default has occurred and is continuing or would result therefrom, upon
the prior written request of Borrower, Collateral Agent shall consent to the
transfer of all or a portion of the Restricted Cash from the Restricted Account
as requested by Borrower solely to (i) fund a voluntary prepayment of the Term
Loan or the Delayed Draw Term Loans, or (ii) partially fund a Permitted
Post-Effective Date Acquisition. Borrower and the Lenders hereby acknowledge and
agree that, unless Collateral Agent agrees otherwise in the exercise its sole
and absolute discretion, the Restricted Cash shall not be used for any other
purpose. All such Restricted Cash shall be held by Collateral Agent to secure
the Obligations and, upon the occurrence of and during the continuance of an
Event of Default, at the election of Collateral Agent, may be applied to the
Obligations in accordance with the priorities set forth in Section 4.04.
               (f) If any Account Receivable or Payment Intangible of the
Borrower includes a charge for any tax payable to any Governmental Authority,
each Agent is hereby authorized (but in no event obligated) in its discretion to
pay the amount thereof to the proper taxing authority for the Borrower’s account
and to charge the Borrower therefor. The Borrower shall notify the Agents if any
Account Receivable or Payment Intangible of the Borrower includes any taxes due
to any such Governmental Authority and, in the absence of such notice, the
Agents shall have the right to retain the full proceeds of such Account
Receivable or Payment Intangible and shall not be liable for any taxes that may
be due by reason of such Account Receivable or Payment Intangible.
               (g) Notwithstanding any other terms set forth in the Loan
Documents, the rights and remedies of the Agents and the Lenders herein
provided, and the obligations of the Borrower set forth herein, are cumulative
of, may be exercised singly or concurrently with, and are not exclusive of, any
other rights, remedies or obligations set forth in any other Loan Document or as
provided by law.
          Section 8.02 Accounts Receivable Documentation. The Borrower will at
such intervals as the Agents may require, execute and deliver confirmatory
written assignments of the Accounts Receivable or Payment Intangibles to the
Agents and furnish such further schedules or information as any such Agent may
require relating to such Accounts Receivable or Payment Intangibles; provided
that so long as no Default or Event of Default has occurred and is continuing,
the Agents shall not request any of the foregoing more frequently than one time
per annum. In addition, the Borrower shall notify the Agents of any
non-compliance in respect of the representations, warranties and covenants
contained in Section 8.03. The items to be

- 82 -

--------------------------------------------------------------------------------

 

provided under this Section 8.02 are to be in form reasonably satisfactory to
the Agents and are to be executed and delivered to the Agents from time to time
solely for their convenience in maintaining records of the Collateral. The
Borrower’s failure to give any of such items to the Agents shall not affect,
terminate, modify or otherwise limit the Collateral Agent’s Lien on the
Collateral.
          Section 8.03 Status of Accounts Receivable and Other Collateral. With
respect to Collateral of the Borrower at the time the Collateral becomes subject
to the Collateral Agent’s Lien, the Borrower covenants, represents and warrants:
(a) the Borrower shall be the sole owner, free and clear of all Liens (except
for the Liens granted in the favor of the Collateral Agent for the benefit of
the Agents and the Lenders and Permitted Liens), and shall be fully authorized
to sell, transfer, pledge or grant a security interest in each and every item of
said Collateral; (b) each Payment Intangible identified by Borrower in a
Borrowing Base report submitted to either Agent shall be a good and valid
account representing a bona fide indebtedness incurred by the Portfolio Company
therein named; (c) no Payment Intangible identified by Borrower in a Borrowing
Base report submitted to either Agent shall be subject to any defense, offset,
counterclaim, discount or allowance; (d) none of the transactions underlying or
giving rise to any Payment Intangible identified by Borrower in a Borrowing Base
report submitted to either Agent shall violate any applicable state or federal
laws or regulations, and all documents relating thereto shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms; (e) no agreement under which any deduction or
offset of any kind may be granted or shall have been made by the Borrower at or
before the time any Payment Intangible identified by Borrower in a Borrowing
Base report submitted to either Agent is created; (f) all agreements,
instruments and other documents relating to any Payment Intangible identified by
Borrower in a Borrowing Base report submitted to either Agent shall be true and
correct and in all material respects what they purport to be; (g) all signatures
and endorsements that appear on all material agreements, instruments and other
documents relating to any Payment Intangible identified by Borrower in a
Borrowing Base report submitted to either Agent shall be genuine and all
signatories and endorsers shall have full capacity to contract; (h) the Borrower
shall maintain books and records pertaining to said Collateral in such detail,
form and scope as the Agents shall reasonably require; (i) [intentionally
omitted]; (j) the Borrower will, immediately upon learning thereof, report to
the Agents any material loss or destruction of, or substantial damage to, any of
the Intercompany Loan Collateral, and any other matters affecting the value,
enforceability or collectability of any of the Intercompany Loan Collateral;
(k) if any amount payable under or in connection with any Payment Intangible is
evidenced by a promissory note or other instrument, such promissory note or
instrument shall be immediately pledged, endorsed, assigned and delivered to the
Collateral Agent for the benefit of the Agents and the Lenders as additional
Collateral; (l) [intentionally omitted]; (m) [intentionally omitted]; and
(n) the Borrower is not and shall not be entitled to pledge any Agent’s or any
Lender’s credit on any purchases or for any purpose whatsoever.
          Section 8.04 Collateral Custodian. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may at any time and
from time to time employ and maintain on the premises of the Borrower a
custodian selected by the Collateral Agent who shall have full authority to do
all acts necessary to protect the Agents’ and the Lenders’ interests. The
Borrower hereby agrees to cooperate with any such custodian and to do whatever
the Collateral Agent may reasonably request to preserve the Collateral. All
costs and

- 83 -

--------------------------------------------------------------------------------

 

expenses incurred by the Collateral Agent by reason of the employment of the
custodian shall be the responsibility of the Borrower and charged to the Loan
Account.
ARTICLE IX
EVENTS OF DEFAULT
          Section 9.01 Events of Default. If any of the following Events of
Default shall occur and be continuing:
               (a) the Borrower shall fail to pay any principal of or interest
on any Loan, any Collateral Agent Advance, or any fee, indemnity or other amount
payable under this Agreement or any other Loan Document when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise);
               (b) any representation or warranty made or deemed made by or on
behalf of the Borrower or by any officer of the foregoing under or in connection
with any Loan Document or under or in connection with any report, certificate,
or other document delivered to any Agent, any Lender pursuant to any Loan
Document shall have been incorrect in any material respect when made or deemed
made;
               (c) the Borrower shall fail to perform or comply with any
covenant or agreement contained in clauses (a), (b), (c), (f), (g), (h), (o),
(q) or (r) of Section 7.01, Section 7.02, Section 7.03 or Article VIII, or the
Borrower shall fail to perform or comply with any covenant or agreement
contained in any Security Agreement to which it is a party or any Mortgage to
which it is a party;
               (d) the Borrower shall fail to perform or comply with any other
term, covenant or agreement contained in any Loan Document to be performed or
observed by it and, except as set forth in subsections (a), (b) and (c) of this
Section 9.01, such failure, if capable of being remedied, shall remain
unremedied for 15 days after the earlier of the date a senior officer of the
Borrower becomes aware of such failure and the date written notice of such
default shall have been given by any Agent to the Borrower;
               (e) the Borrower shall fail to pay any principal of or interest
or premium on any of its Indebtedness (excluding the Obligations) to the extent
that the aggregate principal amount of all such Indebtedness exceeds $1,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness, or any other default under any agreement or instrument relating to
any such Indebtedness, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed, purchased or defeased
or an offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case, prior to the stated maturity thereof;

- 84 -

--------------------------------------------------------------------------------

 

               (f) the Borrower (i) shall institute any proceeding or voluntary
case seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for any such Person or for any substantial part of its
property, (ii) shall be generally not paying its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall take any
action to authorize or effect any of the actions set forth above in this
subsection (f);
               (g) any proceeding shall be instituted against the Borrower
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for any
such Person or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceeding (including the entry of an order for
relief against any such Person or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property) shall occur;
               (h) any provision of any Loan Document shall at any time for any
reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the Borrower intended to be a party thereto,
or the validity or enforceability thereof shall be contested by any party
thereto, or a proceeding shall be commenced by the Borrower or any Governmental
Authority having jurisdiction over any of them, seeking to establish the
invalidity or unenforceability thereof, or the Borrower shall deny in writing
that it has any liability or obligation purported to be created under any Loan
Document;
               (i) any Security Agreement, any Mortgage or any other security
document in respect of Collateral purported to be covered thereby, after
delivery thereof pursuant hereto, shall for any reason fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien in favor of the Collateral Agent for the benefit of
the Agents and the Lenders on any Collateral purported to be covered thereby;
               (j) any bank at which any deposit account, blocked account, or
lockbox account of the Borrower is maintained shall fail to comply with any of
the terms of any deposit account, blocked account, lockbox account or similar
agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of the Borrower shall fail to
comply with any of the terms of any investment property control agreement to
which such Person is a party;
               (k) one or more judgments, awards, or orders (or any settlement
of any claim that, if breached, could result in a judgment, order, or award) for
the payment of money exceeding $1,000,000 in the aggregate shall be rendered
against the Borrower and remain unsatisfied, or the Borrower shall agree to the
settlement of any one or more pending or threatened actions, suits, or
proceedings affecting the Borrower before any court or other

- 85 -

--------------------------------------------------------------------------------

 

Governmental Authority or any arbitrator or mediator, providing for the payment
of money exceeding $1,000,000 in the aggregate, and in the case of any such
judgment or order either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment, order, award or settlement, or
(ii) there shall be a period of 10 consecutive days after entry thereof during
which a stay of enforcement of any such judgment, order, award or settlement, by
reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment, order, award or settlement shall not give rise
to an Event of Default under this subsection if and for so long as (A) the
amount of such judgment, order, award or settlement is covered by a valid and
binding policy of insurance between the defendant and the insurer covering full
payment thereof and (B) such insurer has been notified, and has not disputed the
claim made for payment, of the amount of such judgment, order, award or
settlement;
               (l) the Borrower is enjoined, restrained or in any way prevented
by the order of any court or any Governmental Authority from conducting all or
any material part of its business for more than 15 days;
               (m) any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than 15 days, the cessation or substantial curtailment of
revenue producing activities at any facility of the Borrower, if any such event
or circumstance could reasonably be expected to result in a Material Adverse
Effect;
               (n) any cessation of a substantial part of the business of the
Borrower for a period which materially and adversely affects the ability of the
Borrower to continue its business on a profitable basis;
               (o) the loss, suspension or revocation of, or failure to renew,
any license or permit now held or hereafter acquired by the Borrower, if such
loss, suspension, revocation or failure to renew could reasonably be expected to
result in a Material Adverse Effect;
               (p) the indictment, or the threatened indictment of the Borrower
under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against the Borrower, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture to
any Governmental Authority of any material portion of the property of such
Person;
               (q) the Borrower or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, the Borrower or any of its ERISA Affiliates
incurs a withdrawal liability in an annual amount exceeding $1,000,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof the Borrower’s or any of its ERISA Affiliates’ annual
contribution requirements with respect to such Multiemployer Plan increases in
an annual amount exceeding $1,000,000;

- 86 -

--------------------------------------------------------------------------------

 

               (r) any Termination Event with respect to any Employee Plan shall
have occurred, and, 30 days after notice thereof shall have been given to the
Borrower by any Agent, (i) such Termination Event (if correctable) shall not
have been corrected, and (ii) the then current value of such Employee Plan’s
vested benefits exceeds the then current value of assets allocable to such
benefits in such Employee Plan by more than $500,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the IRC, the liability is in excess of such amount);
               (s) the Borrower shall be liable for any Environmental
Liabilities and Costs the payment of which could reasonably be expected to
result in a Material Adverse Effect;
               (t) a Change of Control shall have occurred; or
               (u) an event or development occurs which could reasonably be
expected to result in a Material Adverse Effect;
          then, and in any such event, the Collateral Agent may, and shall at
the request of the Required Lenders, by notice to the Borrower, (i) terminate or
reduce all Commitments, whereupon all Commitments shall immediately be so
terminated or reduced, (ii) declare all or any portion of the Loans then
outstanding to be due and payable, whereupon all or such portion of the
aggregate principal of all Loans, all accrued and unpaid interest thereon, all
fees and all other amounts payable under this Agreement and the other Loan
Documents shall become due and payable immediately, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower and (iii) exercise any and all of its other rights and remedies
under applicable law, hereunder and under the other Loan Documents; provided,
however, that upon the occurrence of any Event of Default described in
subsection (f) or (g) of this Section 9.01, without any notice to the Borrower
or any other Person or any act by any Agent or any Lender, all Commitments shall
automatically terminate and all Loans then outstanding, together with all
accrued and unpaid interest thereon, all fees and all other amounts due under
this Agreement and the other Loan Documents shall become due and payable
automatically and immediately, without presentment, demand, protest or notice of
any kind, all of which are expressly waived by the Borrower.
ARTICLE X
AGENTS
          Section 10.01 Appointment. Each Lender (and each subsequent maker of
any Loan by its making thereof) hereby irrevocably appoints and authorizes the
Administrative Agent and the Collateral Agent to perform the duties of each such
Agent as set forth in this Agreement including: (i) to receive on behalf of each
Lender any payment of principal of or interest on the Loans outstanding
hereunder and all other amounts accrued hereunder for the account of the Lenders
and paid to such Agent, and, subject to Section 2.02 of this Agreement, to
distribute promptly to each Lender its Pro Rata Share of all payments so
received; (ii) to distribute to each Lender copies of all material notices and
agreements received by such Agent and not required to be delivered to each
Lender pursuant to the terms of this Agreement,

- 87 -

--------------------------------------------------------------------------------

 

provided that the Agents shall not have any liability to the Lenders for any
Agent’s inadvertent failure to distribute any such notices or agreements to the
Lenders; (iii) to maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Loans, and
related matters and to maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Collateral and
related matters; (iv) to execute or file any and all financing or similar
statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to this Agreement or any other Loan Document; (v) to make the Loans and
Collateral Agent Advances, for such Agent or on behalf of the applicable Lenders
as provided in this Agreement or any other Loan Document; (vi) to perform,
exercise, and enforce any and all other rights and remedies of the Lenders with
respect to the Borrower, the Obligations, or otherwise related to any of same to
the extent reasonably incidental to the exercise by such Agent of the rights and
remedies specifically authorized to be exercised by such Agent by the terms of
this Agreement or any other Loan Document; (vii) to incur and pay such fees
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to this Agreement or any other Loan Document; and
(viii) subject to Section 10.03 of this Agreement, to take such action as such
Agent deems appropriate on its behalf to administer the Loans and the Loan
Documents and to exercise such other powers delegated to such Agent by the terms
hereof or the other Loan Documents (including the power to give or to refuse to
give notices, waivers, consents, approvals and instructions and the power to
make or to refuse to make determinations and calculations) together with such
powers as are reasonably incidental thereto to carry out the purposes hereof and
thereof. As to any matters not expressly provided for by this Agreement and the
other Loan Documents (including enforcement or collection of the Loans), the
Agents shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions of the Required Lenders shall be binding upon all
Lenders and all makers of Loans.
          Section 10.02 Nature of Duties. The Agents shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. The duties of the Agents shall be mechanical and
administrative in nature. The Agents shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any other Loan Document, express or implied, is
intended to or shall be construed to impose upon the Agents any obligations in
respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Borrower in
connection with the making and the continuance of the Loans hereunder and shall
make its own appraisal of the creditworthiness of the Borrower and the value of
the Collateral, and the Agents shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into their possession
before the initial Loan hereunder or at any time or times thereafter, provided
that, upon the reasonable request of a Lender, each Agent shall provide to such
Lender any documents or reports delivered to such Agent by the Borrower pursuant
to the terms of this Agreement or any other Loan Document. If any Agent seeks
the consent or approval of the Required Lenders to the taking or refraining from
taking any action hereunder, such Agent shall send notice thereof to each
Lender. Each Agent

- 88 -

--------------------------------------------------------------------------------

 

shall promptly notify each Lender any time that the Required Lenders have
instructed such Agent to act or refrain from acting pursuant hereto.
          Section 10.03 Rights, Exculpation, Etc. The Agents and their
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by them under or in connection with this Agreement
or the other Loan Documents, except for their own gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agents
(i) may treat the payee of any Loan as the owner thereof until the Collateral
Agent receives written notice of the assignment or transfer thereof, pursuant to
Section 12.07 hereof, signed by such payee and in form satisfactory to the
Collateral Agent; (ii) may consult with legal counsel (including counsel to any
Agent or counsel to the Borrower), independent public accountants, and other
experts selected by any of them and shall not be liable for any action taken or
omitted to be taken in good faith by any of them in accordance with the advice
of such counsel or experts; (iii) make no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
certificates, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Person, the existence or possible existence of any Default or Event of Default,
or to inspect the Collateral or other property (including the books and records)
of any Person; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made
any representation or warranty regarding the existence, value or collectability
of the Collateral, the existence, priority or perfection of the Collateral
Agent’s Lien thereon, or any certificate prepared by the Borrower in connection
therewith, nor shall the Agents be responsible or liable to the Lenders for any
failure to monitor or maintain any portion of the Collateral. The provisions of
this Section 10.03 are subject to, and shall not limit in any respect, the
provisions of Section 12.07. The Agents shall not be liable for any
apportionment or distribution of payments made in good faith pursuant to
Section 4.04, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Lender to whom
payment was due but not made, shall be to recover from other Lenders any payment
in excess of the amount which they are determined to be entitled. The Agents may
at any time request instructions from the Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Loan
Documents the Agents are permitted or required to take or to grant, and if such
instructions are promptly requested, the Agents shall be absolutely entitled to
refrain from taking any action or to withhold any approval under any of the Loan
Documents until they shall have received such instructions from the Required
Lenders. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against any Agent as a result of such Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of the Required Lenders.
          Section 10.04 Reliance. Each Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper

- 89 -

--------------------------------------------------------------------------------

 

Person, and with respect to all matters pertaining to this Agreement or any of
the other Loan Documents and its duties hereunder or thereunder, upon advice of
counsel selected by it.
          Section 10.05 Indemnification. To the extent that any Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify such Agent from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against such Agent in any way relating to or arising
out of this Agreement or any of the other Loan Documents or any action taken or
omitted by such Agent under this Agreement or any of the other Loan Documents,
in proportion to each Lender’s Pro Rata Share, including advances and
disbursements made pursuant to Section 10.08; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
liability resulted from such Agent’s gross negligence or willful misconduct. The
obligations of the Lenders under this Section 10.05 shall survive the payment in
full of the Loans and the termination of this Agreement.
          Section 10.06 Agents Individually. With respect to its Pro Rata Share
of the Total Commitment hereunder and the Loans made by it, each Agent shall
have and may exercise the same rights and powers hereunder and is subject to the
same obligations and liabilities as and to the extent set forth herein for any
other Lender or maker of a Loan. The terms “Lenders” or “Required Lenders” or
any similar terms shall, unless the context clearly otherwise indicates, include
each Agent in its individual capacity as a Lender or one of the Required
Lenders. Each Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with the
Borrower as if it were not acting as an Agent pursuant hereto without any duty
to account to the other Lenders.
          Section 10.07 Successor Agent. (a) Each Agent may resign from the
performance of all its functions and duties hereunder and under the other Loan
Documents at any time by giving at least 30 Business Days prior written notice
to the Borrower and each Lender. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clauses (b) and
(c) below or as otherwise provided below.
               (b) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any Agent’s
resignation hereunder as an Agent, the provisions of this Article X shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Agreement and the other Loan Documents.
               (c) If a successor Agent shall not have been so appointed within
said thirty (30) Business Day period, the retiring Agent, with the consent of
the other Agent shall then appoint a successor Agent who shall serve as an Agent
until such time, if any, as the Required Lenders, with the consent of the other
Agent, appoint a successor Agent as provided above.

- 90 -

--------------------------------------------------------------------------------

 

          Section 10.08 Collateral Matters.
               (a) The Collateral Agent may from time to time make such
disbursements and advances (“Collateral Agent Advances”) which the Collateral
Agent, in its sole discretion, deems necessary or desirable to preserve,
protect, prepare for sale or lease or dispose of the Collateral or any portion
thereof, to enhance the likelihood or maximize the amount of repayment by the
Borrower of the Loans, and other Obligations or to pay any other amount
chargeable to the Borrower pursuant to the terms of this Agreement, including
costs, fees and expenses as described in Section 12.04. The Collateral Agent
Advances shall be repayable on demand and be secured by the Collateral. The
Collateral Agent Advances shall constitute Obligations hereunder which may be
charged to the Loan Account in accordance with Section 4.02. The Collateral
Agent shall notify each Lender and the Borrower in writing of each such
Collateral Agent Advance, which notice shall include a description of the
purpose of such Collateral Agent Advance. Without limitation to its obligations
pursuant to Section 10.05, each Lender agrees that it shall make available to
the Collateral Agent, upon the Collateral Agent’s demand, in Dollars in
immediately available funds, the amount equal to such Lender’s Pro Rata Share of
each such Collateral Agent Advance. If such funds are not made available to the
Collateral Agent by such Lender, the Collateral Agent shall be entitled to
recover such funds on demand from such Lender, together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to the Collateral Agent, at the Federal Funds Rate for 3 Business Days and
thereafter at the Reference Rate.
               (b) The Lenders hereby irrevocably authorize the Collateral
Agent, at its option and in its discretion, to release any Lien granted to or
held by the Collateral Agent upon any Collateral upon termination of the Total
Commitment and payment in full in cash of all Obligations; or constituting
property being sold or disposed of in compliance with the terms of this
Agreement and the other Loan Documents; or constituting property in which the
Borrower owned no interest at the time the Lien was granted or at any time
thereafter; or if approved, authorized or ratified in writing by the Lenders.
Upon request by the Collateral Agent at any time, the Lenders will confirm in
writing the Collateral Agent’s authority to release particular types or items of
Collateral pursuant to this Section 10.08(b).
               (c) Without in any manner limiting the Collateral Agent’s
authority to act without any specific or further authorization or consent by the
Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in
writing, upon request by the Collateral Agent, the authority to release
Collateral conferred upon the Collateral Agent under Section 10.08(b). Upon
receipt by the Collateral Agent of confirmation from the Lenders of its
authority to release any particular item or types of Collateral, and upon prior
written request by the Borrower, the Collateral Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Collateral Agent
for the benefit of the Agents and the Lenders upon such Collateral; provided,
however, that (i) the Collateral Agent shall not be required to execute any such
document on terms which, in the Collateral Agent’s opinion, would expose the
Collateral Agent to liability or create any obligations or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Lien upon (or obligations of the Borrower in respect of) all
interests in the Collateral retained by the Borrower.

- 91 -

--------------------------------------------------------------------------------

 

               (d) The Collateral Agent shall have no obligation whatsoever to
any Lender to assure that the Collateral exists or is owned by the Borrower or
is cared for, protected or insured or has been encumbered or that the Lien
granted to the Collateral Agent pursuant to this Agreement or any other Loan
Document has been properly or sufficiently or lawfully created, perfected,
protected or enforced or is entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Collateral Agent in this Section 10.08 or in any
other Loan Document, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Collateral Agent
may act in any manner it may deem appropriate, in its sole discretion, given the
Collateral Agent’s own interest in the Collateral as one of the Lenders and that
the Collateral Agent shall have no duty or liability whatsoever to any other
Lender, except as otherwise provided herein.
          Section 10.09 Agency for Perfection. Each Lender hereby appoints each
Agent and each other Lender as agent and bailee for the purpose of perfecting
the security interests in and liens upon the Collateral in assets which, in
accordance with Article 9 of the Code, can be perfected only by possession or
control (or where the security interest of a secured party with possession or
control has priority over the security interest of another secured party) and
each Agent and each Lender hereby acknowledges that it holds possession or
control of any such Collateral for the benefit of the Collateral Agent as
secured party. Should any Lender obtain possession or control of any such
Collateral, such Lender shall notify the Collateral Agent thereof, and, promptly
upon the Collateral Agent’s request therefor shall deliver possession or control
of such Collateral to the Collateral Agent or in accordance with the Collateral
Agent’s instructions. The Borrower by its execution and delivery of this
Agreement hereby consents to the foregoing.
ARTICLE XI
[INTENTIONALLY OMITTED]

- 92 -

--------------------------------------------------------------------------------

 

ARTICLE XII
MISCELLANEOUS
          Section 12.01 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied or
delivered, if to the Borrower, at the following address:
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
61 Wilton Road, 2nd Floor
Westport, CT 06880
Attention: Chief Financial Officer
Telephone: (203) 221-1703
Telecopier: (203) 221-8253
with a copy to:
SQUIRE, SANDERS & DEMPSEY LLP
312 Walnut Street, Suite 3500
Cincinnati, OH 45202
Attention Stephen C. Mahon, Esq.
Telephone: (513) 361-1230
Telecopier: (513) 361-1201
if to the Administrative Agent, to it at the following address:
ABLECO FINANCE LLC
299 Park Avenue, 23rd Floor
New York, New York 10171
Attention: Timothy D. Fording
Telephone: 212-891-2147
Telecopier: 212-909-1488
if to the Collateral Agent, to it at the following address:
ABLECO FINANCE LLC
299 Park Avenue, 23rd Floor
New York, New York 10171
Attention: Timothy D. Fording
Telephone: 212-891-2147
Telecopier: 212-909-1488

- 93 -

--------------------------------------------------------------------------------

 

in each case, with a copy to:
PAUL, HASTINGS, JANOFSKY & WALKER LLP
515 South Flower Street
Los Angeles, CA 90071
Attention: John Francis Hilson, Esq.
Telephone: 213-683-6300
Telecopier: 213-996-3300
          or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties complying as to delivery
with the terms of this Section 12.01. All such notices and other communications
shall be effective, (i) if mailed, when received or 3 days after deposited in
the mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation received, or (iii) if delivered, upon delivery, except that notices
to any Agent pursuant to Articles II and III shall not be effective until
received by such Agent , as the case may be.
          Section 12.02 Amendments, Etc. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders or by the Collateral Agent with
the consent of the Required Lenders (and with respect to any amendments to this
Agreement or any Loan Document, the Borrower), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given, provided, however, that no amendment, waiver or consent shall
(i) increase the Commitment of any Lender (other than any such increase that
results from the extension of the Original Expiry Date to a date that is not
later than May 16, 2009), reduce the principal of, or interest on, the Loans
payable to any Lender, reduce the amount of any fee payable for the account of
any Lender, or postpone or extend any date fixed for any payment of principal
of, or interest or fees on, the Loans payable to any Lender, in each case
without the written consent of any Lender affected thereby, (ii) increase the
Total Commitment without the written consent of each Lender, (iii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Loans that is required for the Lenders or any of them to take any action
hereunder, (iv) amend the definition of “Required Lenders” or “Pro Rata Share”,
(v) release all or a substantial portion of the Collateral (except as otherwise
provided in this Agreement and the other Loan Documents), subordinate any Lien
granted in favor of the Collateral Agent for the benefit of the Agents and the
Lenders, or release the Borrower, (vi) amend, modify or waive Section 4.04 or
this Section 12.02 of this Agreement, or (vii) amend the definitions of
“Borrowing Base”, “Defaulted Portfolio Company”, “Disqualified EBITDA”,
“Disqualified Intercompany Debt”, “Intercompany Debt Limit”, “Leverage Ratio”,
“Leverage Ratio Limit”, “Qualified Cash”, and “Qualified Intercompany Debt”, in
each case, without the written consent of each Lender. Notwithstanding the
foregoing, (x) no amendment, waiver or consent shall, unless in writing and
signed by an Agent, affect the rights or duties of such Agent (but not in its
capacity as a Lender) under this Agreement or the other Loan Documents, and
(y) any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Agents and the Lenders among themselves,
and that does not affect the rights or obligations of Borrower, shall not
require consent by or the agreement of Borrower.

- 94 -

--------------------------------------------------------------------------------

 

          Section 12.03 No Waiver; Remedies, Etc. No failure on the part of any
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
or under any other Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of the Agents and the Lenders provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Agents and the Lenders
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the Agents and the Lenders to exercise any of their
rights under any other Loan Document against such party or against any other
Person.
          Section 12.04 Expenses; Taxes; Attorneys’ Fees. The Borrower will pay
on demand, all costs and expenses reasonably incurred by or on behalf of each
Agent (and, in the case of clause (a) below, each Agent and GoldenTree High
Yield Partners, L.P. and its Affiliates, and in the case of clauses (b) through
(m) below, each Agent and each Lender), regardless of whether the transactions
contemplated hereby are consummated, including reasonable fees, costs, client
charges and expenses of counsel for each Agent (and, in the case of clauses
(b) through (m) below, each Lender), accounting, due diligence, periodic field
audits, physical counts, valuations, investigations, searches and filings,
monitoring of assets, appraisals of Collateral, title searches and reviewing
environmental assessments, miscellaneous disbursements, examination, travel,
lodging and meals, arising from or relating to: (a) the negotiation,
preparation, execution, delivery, performance and administration of this
Agreement and the other Loan Documents (including the preparation of any
additional Loan Documents pursuant to Section 7.01(b) or the review of any of
the agreements, instruments and documents referred to in Section 7.01(f)), (b)
any requested amendments, waivers or consents to this Agreement or the other
Loan Documents whether or not such documents become effective or are given,
(c) the preservation and protection of any of the Lenders’ rights under this
Agreement or the other Loan Documents, (d) the defense of any claim or action
asserted or brought against any Agent or any Lender by any Person that arises
from or relates to this Agreement, any other Loan Document, the Agents’ or the
Lenders’ claims against the Borrower, or any and all matters in connection
therewith, (e) the commencement or defense of, or intervention in, any court
proceeding arising from or related to this Agreement or any other Loan Document,
(f) the filing of any petition, complaint, answer, motion or other pleading by
any Agent or any Lender, or the taking of any action in respect of the
Collateral or other security, in connection with this Agreement or any other
Loan Document, (g) the protection, collection, lease, sale, taking possession of
or liquidation of, any Collateral or other security in connection with this
Agreement or any other Loan Document, (h) any attempt to enforce any Lien or
security interest in any Collateral or other security in connection with this
Agreement or any other Loan Document, (i) any attempt to collect from the
Borrower, (j) all liabilities and costs arising from or in connection with the
past, present or future operations of the Borrower involving any damage to real
or personal property or natural resources or harm or injury alleged to have
resulted from any Release of Hazardous Materials on, upon or into such property,
(k) any Environmental Liabilities and Costs incurred in connection with the
investigation, removal, cleanup or remediation of any Hazardous Materials
present or arising out of the operations of any facility owned or operated by
the Borrower, (l) any Environmental Liabilities and Costs incurred in connection
with any Environmental Lien, or (m) the receipt by any Agent or any Lender of
any advice from professionals with respect to any of the foregoing. Without
limitation

- 95 -

--------------------------------------------------------------------------------

 

of the foregoing or any other provision of any Loan Document: (x) the Borrower
agrees to pay all stamp, document, transfer, recording or filing taxes or fees
and similar impositions now or hereafter determined by any Agent or any Lender
to be payable in connection with this Agreement or any other Loan Document, and
the Borrower agrees to save each Agent and each Lender harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions, (y) the Borrower agrees to pay all broker fees that may become due
in connection with the transactions contemplated by this Agreement and the other
Loan Documents, and (z) if the Borrower fails to perform any covenant or
agreement contained herein or in any other Loan Document, any Agent may itself
perform or cause performance of such covenant or agreement, and the expenses of
such Agent incurred in connection therewith shall be reimbursed on demand by the
Borrower.
          Section 12.05 Right of Set-off.
               (a) Each of the Lenders agrees that it shall not, without the
express written consent of the Collateral Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of the
Collateral Agent, set off against the Obligations, any amounts owing by such
Lender to Borrower or any deposit accounts of Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so in writing by the Collateral Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
               (b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Administrative Agent pursuant to the terms
of this Agreement, or (ii) payments from Administrative Agent in excess of such
Lender’s ratable portion of all such distributions by Administrative Agent, such
Lender promptly shall (1) turn the same over to Administrative Agent, in kind,
and with such endorsements as may be required to negotiate the same to
Administrative Agent, or in immediately available funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that to the extent that such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
          Section 12.06 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

- 96 -

--------------------------------------------------------------------------------

 

          Section 12.07 Assignments and Participations. (a) This Agreement and
the other Loan Documents shall be binding upon and inure to the benefit of the
Borrower and each Agent and each Lender and their respective successors and
assigns; provided, however, that the Borrower may not assign or transfer any of
its rights hereunder or under the other Loan Documents without the prior written
consent of each Lender and any such assignment without the Lenders’ prior
written consent shall be null and void.
          (b) Each Lender may with the written consent of the Collateral Agent,
assign to one or more other lenders or other entities all or a portion of its
rights and obligations under this Agreement with respect to all or a portion of
its Commitment and Loans made by it; provided, however, that (i) such assignment
is in an amount which is at least $5,000,000 or a multiple of $1,000,000 in
excess thereof (or the remainder of such Lender’s Commitment) and (ii) the
parties to each such assignment shall execute and deliver to the Collateral
Agent, for its acceptance, an Assignment and Acceptance, together with any
promissory note subject to such assignment and such parties shall deliver to the
Collateral Agent, for the benefit of the Collateral Agent, a processing and
recordation fee of $5,000 (except the payment of such fee shall not be required
(y) in connection with an assignment by a Lender to a Lender, an Affiliate of
such Lender or to a Related Fund of such Lender or (z) if Collateral Agent, in
its sole discretion, waives payment of such fee). Upon such execution, delivery
and acceptance, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least 3 Business Days after the
delivery thereof to the Collateral Agent (or such shorter period as shall be
agreed to by the Collateral Agent and the parties to such assignment), (A) the
assignee thereunder shall become a “Lender” hereunder and, in addition to the
rights and obligations hereunder held by it immediately prior to such effective
date, have the rights and obligations hereunder that have been assigned to it
pursuant to such Assignment and Acceptance and (B) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
          (c) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto; (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or the performance or observance by
the Borrower of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
such other documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the assigning
Lender, any Agent or any Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in

- 97 -

--------------------------------------------------------------------------------

 

taking or not taking action under this Agreement and the other Loan Documents;
(v) such assignee appoints and authorizes the Agents to take such action as
agents on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agents by the terms hereof and
thereof, together with such powers as are reasonably incidental hereto and
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
          (d) The Collateral Agent shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain, or cause to be maintained at the
Payment Office, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register (the “Register”) for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Loans (and stated interest thereon) (the “Registered Loans”). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
          (e) Upon receipt by the Collateral Agent of an Assignment and
Acceptance, and subject to any consent required from the Collateral Agent
pursuant to Section 12.07(b) (which consent of the Collateral Agent must be
evidenced by the Collateral Agent’s execution of an acceptance to such
Assignment and Acceptance), the Collateral Agent shall accept the Assignment and
Acceptance and record the information contained therein in the Register.
          (f) A Registered Loan (and the registered note, if any, evidencing the
same) may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register (and each registered note shall expressly so
provide). Any assignment or sale of all or part of such Registered Loan (and the
registered note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the registered note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such registered note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new registered notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the registered note, if any, evidencing the same), the Agents shall
treat the Person in whose name such Registered Loan (and the registered note, if
any, evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon, notwithstanding notice to the contrary.
          (g) In the event that any Lender sells participations in a Registered
Loan, such Lender shall maintain a register for this purpose as a non-fiduciary
agent of the Borrower on which it enters the name of all participants in the
Registered Loans held by it and the principal amount (and stated interest
thereon) of the portion of the Registered Loan that is the subject of the
participation (the “Participant Register”). A Registered Loan (and the
registered note, if any, evidencing the same) may be participated in whole or in
part only by registration of such participation on the Participant Register (and
each registered note shall expressly so provide).

- 98 -

--------------------------------------------------------------------------------

 

Any participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register. Any such Participant Register shall
be available for inspection by the Borrower, any Agent and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
          (h) Any Non-U.S. Lender who is assigned an interest in any portion of
such Registered Loan pursuant to an Assignment and Acceptance shall comply with
Section 2.08(d).
          (i) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, all or a portion of its
Commitments or the Loans made by it); provided, that (i) such Lender’s
obligations under this Agreement (including without limitation, its Commitments
hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and the other Loan
Documents; and (iii) a participant shall not be entitled to require such Lender
to take or omit to take any action hereunder except (A) action directly
effecting an extension of the maturity dates or decrease in the principal amount
of the Loans, (B) action directly effecting an extension of the due dates or a
decrease in the rate of interest payable on the Loans or the fees payable under
this Agreement, or (C) actions directly effecting a release of all or a
substantial portion of the Collateral or the Borrower (except as set forth in
Section 10.08 of this Agreement or any other Loan Document). The Borrower agrees
that each participant shall be entitled to the benefits of Section 2.08 and
Section 4.05 of this Agreement with respect to its participation in any portion
of the Commitments and the Loans as if it was a Lender.
          Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
          Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK.
          Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
EACH OF THE PARTIES HERETO AGREE THAT ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE
COURTS OF THE

- 99 -

--------------------------------------------------------------------------------

 

STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT COLLATERAL AGENT’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE COLLATERAL AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR PROCEEDING BROUGHT IN
THE UNITED STATES OF AMERICA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS BY THE MAILING (BY REGISTERED MAIL OR
CERTIFIED MAIL, POSTAGE PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO THE
BORROWER, C/O THE BORROWER, AT THE BORROWER’S ADDRESS FOR NOTICES AS SET FORTH
IN SECTION 12.01. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENTS AND THE LENDERS TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
          Section 12.11 WAIVER OF JURY TRIAL, ETC. THE BORROWER, EACH AGENT AND
EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS

- 100 -

--------------------------------------------------------------------------------

 

AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER CERTIFIES THAT NO
OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN
THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE
FOREGOING WAIVERS. THE BORROWER HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT.
          Section 12.12 Consent by the Agents and Lenders. Except as otherwise
expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
“Action”) of any Agent or any Lender shall be permitted or required pursuant to
any provision hereof or any provision of any other agreement to which the
Borrower is a party and to which any Agent or any Lender has succeeded thereto,
such Action shall be required to be in writing and may be withheld or denied by
such Agent or such Lender, in its sole discretion, with or without any reason,
and without being subject to question or challenge on the grounds that such
Action was not taken in good faith.
          Section 12.13 No Party Deemed Drafter. Each of the parties hereto
agrees that no party hereto shall be deemed to be the drafter of this Agreement.
          Section 12.14 Reinstatement; Certain Payments. If any claim is ever
made upon any Agent or any Lender for repayment or recovery of any amount or
amounts received by such Agent or such Lender in payment or on account of any of
the Obligations, such Agent or such Lender shall give prompt notice of such
claim to each other Agent and Lender and the Borrower, and if such Agent or such
Lender repays all or part of such amount by reason of (i) any judgment, decree
or order of any court or administrative body having jurisdiction over such Agent
or such Lender or any of its property, or (ii) any good faith settlement or
compromise of any such claim effected by such Agent, such Lender with any such
claimant, then and in such event the Borrower agrees that (A) any such judgment,
decree, order, settlement or compromise shall be binding upon it notwithstanding
the cancellation of any Indebtedness hereunder or under the other Loan Documents
or the termination of this Agreement or the other Loan Documents, and (B) it
shall be and remain liable to such Agent or such Lender hereunder for the amount
so repaid or recovered to the same extent as if such amount had never originally
been received by such Agent or such Lender.
          Section 12.15 Indemnification. In addition to the Borrower’s other
Obligations under this Agreement, the Borrower agrees to defend, protect,
indemnify and hold harmless each Agent, each Lender and all of their respective
officers, directors, employees, attorneys, consultants and agents (collectively
called the “Indemnitees”) from and against any and all losses, damages,
liabilities, obligations, penalties, fees, reasonable costs and expenses
(including reasonable attorneys’ fees, costs and expenses) incurred by such
Indemnitees, whether prior to or from and after the Effective Date, whether
direct, indirect or consequential, as a result of or arising from or relating to
or in connection with any of the following: (i) the negotiation, preparation,
execution or performance or enforcement of this Agreement, any other Loan
Document or of any other document executed in connection with the transactions
contemplated

- 101 -

--------------------------------------------------------------------------------

 

by this Agreement, (ii) any Agent’s or any Lender’s furnishing of funds to the
Borrower under this Agreement or the other Loan Documents, including the
management of any such Loans, (iii) any matter relating to the financing
transactions contemplated by this Agreement or the other Loan Documents or by
any document executed in connection with the transactions contemplated by this
Agreement or the other Loan Documents, or (iv) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto (collectively, the “Indemnified Matters”);
provided, however, that the Borrower shall not have any obligation to any
Indemnitee under this Section 12.15 for any Indemnified Matter caused by the
gross negligence or willful misconduct of such Indemnitee, as determined by a
final judgment of a court of competent jurisdiction. Such indemnification for
all of the foregoing losses, damages, fees, costs and expenses of the
Indemnitees are chargeable against the Loan Account. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section 12.15
may be unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees. This Indemnity shall survive the repayment
of the Obligations and the discharge of the Liens granted under the Loan
Documents.
          Section 12.16 Records. The unpaid principal of and interest on the
Loans, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, the Commitments, and the accrued
and unpaid fees payable pursuant to the Fee Letter, shall at all times be
ascertained from the records of the Agents, which shall be conclusive and
binding absent manifest error.
          Section 12.17 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, each Agent and each Lender and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender, and their respective successors and assigns, except that
the Borrower shall not have the right to assign their rights hereunder or any
interest herein without the prior written consent of each Lender, and any
assignment by any Lender shall be governed by Section 12.07 hereof.
          Section 12.18 Interest. It is the intention of the parties hereto that
each Agent and each Lender shall conform strictly to usury laws applicable to
it. Accordingly, if the transactions contemplated hereby or by any other Loan
Document would be usurious as to any Agent or any Lender under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to such
Agent or such Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in this Agreement
or any other Loan Document or any agreement entered into in connection with or
as security for the Obligations, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to any Agent
or any Lender that is contracted for, taken, reserved, charged or received by
such Agent or such Lender under this Agreement or any other Loan Document or
agreements or otherwise in connection with the Obligations shall under no
circumstances exceed the maximum amount allowed by such applicable law, any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Agent or such Lender on the principal amount of the Obligations (or, to
the extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by such Agent or such Lender, as applicable,
to the

- 102 -

--------------------------------------------------------------------------------

 

Borrower); and (ii) in the event that the maturity of the Obligations is
accelerated by reason of any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Agent or any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Agent or such Lender, as applicable, as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Agent or such Lender, as applicable, on the principal amount of
the Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Agent or such
Lender to the Borrower). All sums paid or agreed to be paid to any Agent or any
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extent permitted by law applicable to such Agent or such Lender, be amortized,
prorated, allocated and spread throughout the full term of the Loans until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at an time and from time to time (i) the amount of interest payable to any Agent
or any Lender on any date shall be computed at the Highest Lawful Rate
applicable to such Agent or such Lender pursuant to this Section 12.18 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Agent or such Lender would be less than the
amount of interest payable to such Agent or such Lender computed at the Highest
Lawful Rate applicable to such Agent or such Lender, then the amount of interest
payable to such Agent or such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Agent or such Lender until the total amount of interest
payable to such Agent or such Lender shall equal the total amount of interest
which would have been payable to such Agent or such Lender if the total amount
of interest had been computed without giving effect to this Section 12.18.
          For purposes of this Section 12.18, the term “applicable law” shall
mean that law in effect from time to time and applicable to the loan transaction
between the Borrower, on the one hand, and the Agents and the Lenders, on the
other, that lawfully permits the charging and collection of the highest
permissible, lawful non-usurious rate of interest on such loan transaction and
this Agreement, including laws of the State of New York and, to the extent
controlling, laws of the United States of America.
          The right to accelerate the maturity of the Obligations does not
include the right to accelerate any interest that has not accrued as of the date
of acceleration.
          Section 12.19 Confidentiality. Each Agent and each Lender agrees (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature and in accordance with safe and sound practices of comparable
companies, any material non-public information supplied to it by the Borrower
pursuant to this Agreement or the other Loan Documents which is identified in
writing by the Borrower as being confidential at the time the same is delivered
to such Person (and which at the time is not, and does not thereafter become,
publicly available or available to such Person from another source not known to
be subject to a confidentiality obligation to such Person not to disclose such
information), provided that nothing herein shall limit the disclosure of any
such

- 103 -

--------------------------------------------------------------------------------

 

information (i) to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for any Agent or any Lender, (iii) to examiners,
auditors, accountants or Securitization Parties, (iv) in connection with any
litigation to which any Agent or any Lender is a party or (v) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first agrees, in writing,
to be bound by confidentiality provisions similar in substance to this
Section 12.19. Each Agent and each Lender agrees that, upon receipt of a request
or identification of the requirement for disclosure pursuant to clause
(iv) hereof, it will make reasonable efforts to keep the Borrower informed of
such request or identification; provided that the Borrower acknowledges that
each Agent and each Lender may make disclosure as required or requested by any
Governmental Authority or representative thereof and that each Agent and each
Lender may be subject to review by Securitization Parties or other regulatory
agencies and may be required to provide to, or otherwise make available for
review by, the representatives of such parties or agencies any such non-public
information.
          Section 12.20 Section Headings. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
          Section 12.21 Integration. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.

- 104 -

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

            BORROWER:       COMPASS GROUP DIVERSIFIED
HOLDINGS LLC, a Delaware
limited liability company
    By:           Name:           Title:        

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

              COLLATERAL AGENT AND     ADMINISTRATIVE AGENT:
 
            ABLECO FINANCE LLC
 
       
 
  By:    
 
       
 
  Name:    
 
  Title:    

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

            LENDERS:       ABLECO FINANCE LLC
      By:           Name:           Title:        

              A3 FUNDING LP
 
       
 
  By:   A3 FUND MANAGEMENT LLC,
 
      its General Partner

                  By:           Name:           Title:        

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

     
 
  LENDERS:
 
   
 
  GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

     
 
  GOLDENTREE CAPITAL OPPORTUNITIES, L.P.

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

     
 
  GOLDENTREE HIGH YIELD PARTNERS (100), L.P.

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

     
 
  GOLDENTREE HIGH YIELD PARTNERS, L.P.

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

     
 
  GOLDENTREE HIGH YIELD PARTNERS II, L.P.

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

     
 
  CITI GOLDENTREE, LTD.

         
 
  By:   GOLDENTREE ASSET
MANAGEMENT, LP

                  By:           Name:           Its authorized signatory     

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

     
 
  LENDERS:
 
   
 
  FORTRESS CREDIT OPPORTUNITIES I LP

         
 
  By:   FORTRESS CREDIT
OPPORTUNITIES I GP LLC, its
general partner

                  By:           Name:           Title:        

[SIGNATURE PAGE TO FINANCING AGREEMENT]

 

--------------------------------------------------------------------------------

 

     
 
  LENDERS:
 
   
 
  NEWSTAR WAREHOUSE FUNDING 2005 LLC

         
 
  By:   NEWSTAR FINANCIAL, INC., its Manager

                  By:           Name:           Its authorized signatory     

     
 
  NEWSTAR SHORT-TERM FUNDING LLC

         
 
  By:   NEWSTAR FINANCIAL, INC.,
its Designated Manager

                  By:           Name:           Its authorized signatory     

     
 
  NEWSTAR CP FUNDING LLC

         
 
  By:   NEWSTAR FINANCIAL, INC.,
 
      its Designated Manager

                  By:           Name:           Its authorized signatory     

[SIGNATURE PAGE TO FINANCING AGREEMENT]