Exhibit 10.1

 

 

CREDIT AND SECURITY AGREEMENT

 

among

 

EPIQ SYSTEMS, INC.,

as Borrower,

 

THE LENDERS NAMED HEREIN,

as Lenders,

 

and

 

KEYBANK NATIONAL ASSOCIATION,

as Lead Arranger, Sole Book Runner and Administrative Agent

 

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dated as of

July 20, 2004

 

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TABLE OF CONTENTS

 

ARTICLE I.  DEFINITIONS

 

 

Section 1.1.  Definitions

 

 

Section 1.2.  Accounting Terms

 

 

Section 1.3.  Terms Generally

 

 

 

 

ARTICLE II.  AMOUNT AND TERMS OF CREDIT

 

 

Section 2.1.  Amount and Nature of Credit

 

 

Section 2.2.  Revolving Credit

 

 

Section 2.3.  Term Loan

 

 

Section 2.4.  Interest

 

 

Section 2.5.  Evidence of Indebtedness

 

 

Section 2.6.  Notice of Credit Event; Funding of Loans

 

 

Section 2.7.  Payment on Loans and Other Obligations

 

 

Section 2.8.  Prepayment

 

 

Section 2.9.  Commitment and Other Fees

 

 

Section 2.10.  Modifications of Commitment

 

 

Section 2.11.  Computation of Interest and Fees

 

 

Section 2.12.  Mandatory Payment

 

 

Section 2.13.  Extension of Commitment

 

 

 

 

ARTICLE III.  ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED
CAPITAL; TAXES

 

 

Section 3.1.  Requirements of Law

 

 

Section 3.2.  Taxes

 

 

Section 3.3.  Funding Losses

 

 

Section 3.4.  Change of Lending Office

 

 

Section 3.5.  Eurodollar Rate Lending Unlawful; Inability to Determine Rate

 

 

Section 3.6.  Replacement of Lenders

 

 

 

 

ARTICLE IV.  CONDITIONS PRECEDENT

 

 

Section 4.1.  Conditions to Each Credit Event

 

 

Section 4.2.  Conditions to the First Credit Event

 

 

Section 4.3.  Post-Closing Conditions

 

 

 

 

ARTICLE V.  COVENANTS

 

 

Section 5.1.  Insurance

 

 

Section 5.2.  Money Obligations

 

 

Section 5.3.  Financial Statements and Information

 

 

Section 5.4.  Financial Records

 

 

Section 5.5.  Franchises; Change in Business

 

 

Section 5.6.  ERISA Compliance

 

 

Section 5.7.  Financial Covenants

 

 

Section 5.8.  Borrowing

 

 

Section 5.9.  Liens

 

 

Section 5.10.  Regulations T, U and X

 

 

Section 5.11.  Investments and Loans

 

 

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Section 5.12.  Merger and Sale of Assets

 

 

Section 5.13.  Acquisitions

 

 

Section 5.14.  Notice

 

 

Section 5.15.  Capital Distributions; Restricted Payments

 

 

Section 5.16.  Environmental Compliance

 

 

Section 5.17.  Affiliate Transactions

 

 

Section 5.18.  Use of Proceeds

 

 

Section 5.19.  Corporate Names

 

 

Section 5.20.  Subsidiary Guaranties, Security Documents

 

 

Section 5.21.  Restrictive Agreements

 

 

Section 5.22.  Other Covenants

 

 

Section 5.23.  Note Agreement

 

 

Section 5.24.  Amendment of Organizational Documents

 

 

Section 5.25.  Collateral

 

 

Section 5.26.  Property Acquired Subsequent to the Closing Date and Right to
Take Additional Collateral

 

 

 

 

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

 

 

Section 6.1.  Corporate Existence; Subsidiaries; Foreign Qualification

 

 

Section 6.2.  Corporate Authority

 

 

Section 6.3.  Compliance with Laws and Contracts

 

 

Section 6.4.  Litigation and Administrative Proceedings

 

 

Section 6.5.  Title to Assets

 

 

Section 6.6.  Liens and Security Interests

 

 

Section 6.7.  Tax Returns

 

 

Section 6.8.  Environmental Laws

 

 

Section 6.9.  Locations

 

 

Section 6.10.  Employee Benefits Plans

 

 

Section 6.11.  Consents or Approvals

 

 

Section 6.12.  Solvency

 

 

Section 6.13.  Financial Statements

 

 

Section 6.14.  Regulations

 

 

Section 6.15.  Material Agreements

 

 

Section 6.16.  Intellectual Property

 

 

Section 6.17.  Insurance

 

 

Section 6.18.  Deposit Accounts

 

 

Section 6.19.  Accurate and Complete Statements

 

 

Section 6.20.  Note Agreement

 

 

Section 6.21.  Investment Company; Holding Company

 

 

Section 6.22.  Defaults

 

 

 

 

ARTICLE VII. SECURITY

 

 

Section 7.1.  Security Interest in Collateral

 

 

Section 7.2.  Collections and Receipt of Proceeds by Borrower

 

 

Section 7.3.  Collections and Receipt of Proceeds by Agent

 

 

Section 7.4.  Use of Inventory and Equipment

 

 

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ARTICLE VIII.  EVENTS OF DEFAULT

 

 

Section 8.1.  Payments

 

 

Section 8.2.  Special Covenants

 

 

Section 8.3.  Other Covenants

 

 

Section 8.4.  Representations and Warranties

 

 

Section 8.5.  Cross Default

 

 

Section 8.6.  ERISA Default

 

 

Section 8.7.  Change in Control

 

 

Section 8.8.  Money Judgment

 

 

Section 8.9.  Security

 

 

Section 8.10.  Validity of Loan Documents

 

 

Section 8.11.  Solvency

 

 

 

 

ARTICLE IX.  REMEDIES UPON DEFAULT

 

 

Section 9.1.  Optional Defaults

 

 

Section 9.2.  Automatic Defaults

 

 

Section 9.3.  Letters of Credit

 

 

Section 9.4.  Offsets

 

 

Section 9.5.  Equalization Provision

 

 

Section 9.6.  Collateral

 

 

Section 9.7.  Other Remedies

 

 

Section 9.8.  Application of Proceeds

 

 

 

 

ARTICLE X.  THE AGENT

 

 

Section 10.1.  Appointment and Authorization

 

 

Section 10.2.  Note Holders

 

 

Section 10.3.  Consultation With Counsel

 

 

Section 10.4.  Documents

 

 

Section 10.5.  Agent and Affiliates

 

 

Section 10.6.  Knowledge of Default

 

 

Section 10.7.  Action by Agent

 

 

Section 10.8.  Release of Collateral or Guarantor of Payment

 

 

Section 10.9.  Notice of Default

 

 

Section 10.10.  Indemnification of Agent

 

 

Section 10.11.  Successor Agent

 

 

 

 

ARTICLE XI.  MISCELLANEOUS

 

 

Section 11.1.  Lenders’ Independent Investigation

 

 

Section 11.2.  No Waiver; Cumulative Remedies

 

 

Section 11.3.  Amendments, Consents

 

 

Section 11.4.  Notices

 

 

Section 11.5.  Costs, Expenses and Taxes

 

 

Section 11.6.  Indemnification

 

 

Section 11.7.  Obligations Several; No Fiduciary Obligations

 

 

Section 11.8.  Execution in Counterparts

 

 

Section 11.9.  Binding Effect; Borrower’s Assignment

 

 

Section 11.10.  Lender Assignments

 

 

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Section 11.11.  Sale of Participations

 

 

Section 11.12.  Severability of Provisions; Captions; Attachments

 

 

Section 11.13.  Investment Purpose

 

 

Section 11.14.  Entire Agreement

 

 

Section 11.15.  Legal Representation of Parties

 

 

Section 11.16.  Governing Law; Submission to Jurisdiction

 

 

Jury Trial Waiver

 

 

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This CREDIT AND SECURITY AGREEMENT (as the same may from time to time be
amended, restated or otherwise modified, this “Agreement”) is made effective as
of the 20th day of July, 2004, among:

 

(a)                                  EPIQ SYSTEMS, INC., a Missouri corporation
(“Borrower”);

 

(b)                                 the lenders listed on Schedule 1 hereto and
each other Eligible Transferee, as hereinafter defined, that becomes a party
hereto pursuant to Section 2.10(b) or 11.10 hereof (collectively, the “Lenders”
and, individually, each a “Lender”); and

 

(c)                                  KEYBANK NATIONAL ASSOCIATION, as lead
arranger, sole book runner and administrative agent for the Lenders under this
Agreement (“Agent”).

 

WITNESSETH:

 

WHEREAS, Borrower, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;

 

NOW, THEREFORE, it is mutually agreed as follows:

 

ARTICLE I.  DEFINITIONS

 

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

 

“Accelerated Maturity Date” shall mean the date that is sixty (60) days prior to
the stated maturity (or date when scheduled principal payments are due), as in
effect from time to time, of the Convertible Subordinated Notes or any
replacement notes.

 

“Acceptable Non-Acceleration Event” shall mean any of the following events: (a)
if Borrower refinances the all of the outstanding Convertible Subordinated
Indebtedness with new Subordinated Indebtedness that, by its terms, has a stated
maturity (or has scheduled principal payments due) no earlier than sixty (60)
days after the Facility Maturity Date; (b) all of the Convertible Subordinated
Notes are converted into equity; (c) for the period commencing sixty (60) days
prior to the Facility Maturity Date through the Facility Maturity Date (or, if
earlier, until the repayment or conversion of all of the outstanding Convertible
Subordinated Notes), the Available Liquidity is, at all times, no less than an
amount equal to one hundred percent (100%) of the outstanding principal amount
of the Convertible Subordinated Notes; or (d) the Convertible Subordinated
Noteholders agree in writing (in form and substance reasonably acceptable to
Agent) to extend the stated maturity (or date when scheduled principal payments
are due) of the Convertible Subordinated Notes to a date that is no earlier than
sixty (60) days after the Facility Maturity Date.

 

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“Account” shall mean all accounts, as defined in the U.C.C.

 

“Account Debtor” shall mean any Person obligated to pay all or any part of any
Account in any manner and includes (without limitation) any Guarantor thereof.

 

“Acquisition” shall mean any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of any Person (other than a Company), or
any business or division of any Person (other than a Company), (b) the
acquisition of in excess of fifty percent (50%) of the stock (or other equity
interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.

 

“Additional Commitment” shall mean that term as defined in
Section 2.10(b) hereof.

 

“Additional Lender” shall mean an Eligible Transferee that shall become a
Revolving Lender hereunder during the Commitment Increase Period pursuant to
Section 2.10(b) hereof.

 

“Additional Lender Assumption Agreement” shall mean an additional lender
assumption agreement, in form and substance satisfactory to Agent, wherein an
Additional Lender shall become a Revolving Lender hereunder.

 

“Additional Lender Assumption Effective Date” shall mean that term as defined in
Section 2.10(b) hereof.

 

“Advantage” shall mean any payment (whether made voluntarily or involuntarily,
by offset of any deposit or other indebtedness or otherwise) received by any
Lender in respect of the Applicable Debt, if such payment results in that Lender
having less than its pro rata share (based upon its Applicable Commitment
Percentage and, in the case of an Equalization Event, based upon its
Equalization Percentage of the Obligations) of the Applicable Debt then
outstanding, than was the case immediately before such payment.

 

“Affiliate” shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and “control” (including
the correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”) shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Company, whether through
the ownership of voting securities, by contract or otherwise.

 

“Agent Fee Letter” shall mean the Agent Fee Letter between Borrower and Agent,
dated as of the Closing Date, as the same may from time to time be amended,
restated or otherwise modified.

 

“Applicable Commitment Fee Rate” shall mean:

 

(a)                                  for the period from the Closing Date
through August 31, 2004, forty-five (45) basis points; and

 

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(b)                                 commencing with the Consolidated financial
statements of Borrower for the fiscal quarter ending June 30, 2004, the number
of basis points set forth in the following matrix, based upon the result of the
computation of the Leverage Ratio, shall be used to establish the number of
basis points that will go into effect on September 1, 2004 and thereafter:

 

Leverage Ratio

 

Applicable Commitment Fee Rate

 

Greater than or equal to 2.00 to 1.00

 

50.00 basis points

 

Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00

 

45.00 basis points

 

Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00

 

40.00 basis points

 

Less than 1.00 to 1.00

 

35.00 basis points

 

 

After September 1, 2004, changes to the Applicable Commitment Fee Rate shall be
effective on the first day of each month following the date upon which Agent
received, or, if earlier, Agent should have received, pursuant to
Section 5.3(a) or (b) hereof, the financial statements of Borrower.  The above
matrix does not modify or waive, in any respect, the requirements of Section 5.7
hereof, the rights of Agent and the Lenders to charge the Default Rate, or the
rights and remedies of Agent and the Lenders pursuant to Articles VIII and IX
hereof.  Notwithstanding anything herein to the contrary, during any period when
Borrower shall have failed to timely deliver the financial statements pursuant
to Section 5.3(a) or (b) hereof, or the Compliance Certificate pursuant to
Section 5.3(c) hereof, and such failure has continued for five Business Days,
until such time as the appropriate financial statements and Compliance
Certificate are delivered, the Applicable Commitment Fee Rate shall be the
highest rate per annum indicated in the above pricing grid regardless of the
Leverage Ratio at such time.

 

“Applicable Commitment Percentage” shall mean, for each Lender:

 

(a)                                  with respect to the Revolving Credit
Commitment, the percentage, if any, set forth opposite such Lender’s name under
the column headed “Revolving Credit Commitment Percentage”, as listed in
Schedule 1 hereto; and

 

(b)                                 with respect to the Term Loan Commitment,
the percentage, if any, set forth opposite such Lender’s name under the column
headed “Term Loan Commitment Percentage”, as listed in Schedule 1 hereto.

 

“Applicable Debt” shall mean:

 

(a)                                  with respect to the Revolving Credit
Commitment, collectively, (i) all Indebtedness incurred by Borrower to the
Revolving Lenders pursuant to this Agreement and the other Loan Documents, and
includes, without limitation, the principal of and interest on all Revolving
Credit Notes and the Swing Line Note and all obligations with respect to Letters
of Credit, (ii) each extension, renewal or refinancing thereof, in whole or in
part, (iii) the commitment, prepayment and other fees and amounts payable
hereunder in connection with the

 

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Revolving Credit Commitment, and (iv) all Related Expenses incurred in
connection with the foregoing; and

 

(b)                                 with respect to the Term Loan Commitment,
collectively, (i) all Indebtedness incurred by Borrower to the Term Lenders
pursuant to this Agreement and the other Loan Documents, and includes, without
limitation, the principal of and interest on all Term Notes, (ii) each
extension, renewal or refinancing thereof in whole or in part, (iii) all
prepayment and other fees and amounts payable hereunder in connection with the
Term Loan Commitment, and (iv) all Related Expenses incurred in connection with
the foregoing.

 

“Applicable Margin” shall mean:

 

(a)                                  for the period from the Closing Date
through August 31, 2004, (i) two hundred fifty (250) basis points for Eurodollar
Loans, and (ii) seventy-five (75) basis points for Base Rate Loans; and

 

(b)                                 commencing with the Consolidated financial
statements of Borrower for the fiscal quarter ending June 30, 2004, the number
of basis points (depending upon whether Loans are Eurodollar Loans or Base Rate
Loans) set forth in the following matrix, based upon the result of the
computation of the Leverage Ratio, shall be used to establish the number of
basis points that will go into effect on September 1, 2004 and thereafter:

 

Leverage Ratio

 

Applicable Basis
Points for
Eurodollar Loans

 

Applicable Basis
Points for
Base Rate Loans

 

Greater than or equal to 2.50 to 1.00

 

300.00

 

125.00

 

Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00

 

275.00

 

100.00

 

Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00

 

250.00

 

75.00

 

Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00

 

225.00

 

50.00

 

Less than 1.00 to 1.00

 

200.00

 

25.00

 

 

After September 1, 2004, changes to the Applicable Margin shall be effective on
the first day of each month following the date upon which Agent received, or, if
earlier, Agent should have received, pursuant to Section 5.3(a) or (b) hereof,
the financial statements of Borrower.  The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights of
Agent and the Lenders to charge the Default Rate, or the rights and remedies of
Agent and the Lenders pursuant to Articles VIII and IX hereof.  Notwithstanding
anything herein to the contrary, during any period when Borrower shall have
failed to timely deliver the financial statements pursuant to Section 5.3(a) or
(b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof, and
such failure has continued for five Business Days, until such time as the
appropriate financial statements and Compliance Certificate are delivered, the
Applicable

 

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Margin shall be the highest rate per annum indicated in the above pricing grid
regardless of the Leverage Ratio at such time.

 

“Assignment Agreement” shall mean an Assignment and Acceptance Agreement in the
form of the attached Exhibit F.

 

“Authorized Officer” shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.

 

“Available Liquidity” shall mean, at any date, the sum of (a) cash on hand of
Borrower held at financial institutions located in the United States plus Cash
Equivalents in excess of Ten Million Dollars ($10,000,000), plus (b) Revolving
Credit Availability.

 

“Base Rate” shall mean a rate per annum equal to the greater of (a) the Prime
Rate or (b) one-half of one percent (.50%) in excess of the Federal Funds
Effective Rate.  Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.

 

“Base Rate Loan” shall mean a Revolving Loan or a portion of the Term Loan
described in Section 2.2(a) or 2.3 hereof that shall be denominated in Dollars
and on which Borrower shall pay interest at a rate based on the Derived Base
Rate.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which national banks are authorized or required to close, and, if the applicable
Business Day relates to a Eurodollar Loan, a day of the year on which dealings
in deposits are carried on in the London interbank Eurodollar market.

 

“Capital Distribution” shall mean a payment made, liability incurred or other
consideration given by a Company to any Person that is not a Company, for the
purchase, acquisition, redemption, repurchase or retirement of any capital stock
or other equity interest of such Company or as a dividend, return of capital or
other distribution (other than any stock dividend, stock split or other equity
distribution payable only in capital stock or other equity of such Company) in
respect of such Company’s capital stock or other equity interest.

 

“Capitalized Lease Obligations” shall mean obligations of the Companies for the
payment of rent for any real or personal property under leases or agreements to
lease that, in accordance with GAAP, have been or should be capitalized on the
books of the lessee and, for purposes hereof, the amount of any such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Collateral Account” shall mean a commercial Deposit Account designated
“cash collateral account” and maintained by Borrower with Agent, without
liability by Agent or the Lenders to pay interest thereon, from which account
Agent, on behalf of the Lenders, subject to the provisions of Section 7.2
hereof, shall have the exclusive right to withdraw funds until all of the
Secured Obligations are paid in full.

 

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“Cash Equivalents” shall mean, as to any Person, (a) securities issued by, or
directly, unconditionally and fully guaranteed or insured by, the United States
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof) having maturities of
not more than one year from the date of acquisition by such Person; (b)
securities issued by, or directly, unconditionally and fully guaranteed or
insured by, any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s or Moody’s; (c) time deposits, certificates of deposit or
bankers’ acceptances of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any state thereof or the District of Columbia or any United
States branch of a foreign bank having, capital and surplus aggregating in
excess of Five Hundred Million Dollars ($500,000,000) and a rating of “A” (or
such other similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) with maturities of not more than one year from the date of
acquisition by such Person; (d) repurchase obligations with a term of not more
than thirty (30) days for underlying securities of the types described in
subpart (a) above entered into with any bank meeting the qualifications
specified in subpart (c) above, which repurchase obligations are secured by a
valid perfected security interest in the underlying securities; (e) commercial
paper issued by any Person incorporated in the United States rated at least A-2
or the equivalent thereof by Standard & Poor’s or at least P-2 or the equivalent
thereof by Moody’s, and in each case maturing not more than one year after the
date of acquisition by such Person; (f) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in subparts (a) through (e) above; and (g) demand deposit accounts
maintained in the ordinary course of business.

 

“Cash Security” shall mean all cash, instruments, Deposit Accounts and other
cash equivalents, whether matured or unmatured, whether collected or in the
process of collection, upon which a Company presently has or may hereafter have
any claim, wherever located, including but not limited to any of the foregoing
that are presently or may hereafter be existing or maintained with, issued by,
drawn upon, or in the possession of Agent or any Lender.

 

“Change in Control” shall mean (a) the acquisition of, or, if earlier, the
shareholder or director approval of the acquisition of, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Closing Date, by any Person (other than Tom Olofson or Christopher Olofson) or
group (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange
Act of 1934, as then in effect), of shares representing more than thirty percent
(30%) of the aggregate ordinary Voting Power represented by the issued and
outstanding capital stock of Borrower; (b) the occupation of a majority of the
seats (other than vacant seats) on the board of directors or other governing
body of Borrower by Persons who were neither (i) nominated by the board of
directors or other governing body of Borrower nor (ii) appointed or approved by
directors so nominated; or (c) the occurrence of a change in control, or other
similar provision, as defined in any Material Indebtedness Agreement.

 

“Closing Commitment Amount” shall mean Seventy-Five Million Dollars
($75,000,000).

 

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“Closing Date” shall mean the effective date of this Agreement as set forth in
the first paragraph of this Agreement.

 

“Closing Revolving Amount” shall mean Fifty Million Dollars ($50,000,000).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, together with
the rules and regulations promulgated thereunder.

 

“Collateral” shall mean all of Borrower’s existing and future (a) personal
property; (b) Accounts, instruments, contract rights, supporting obligations,
chattel paper, documents, Investment Property, letter-of-credit rights,
commercial tort claims, General Intangibles, Inventory and Equipment (other than
the following, but exclusive of proceeds of any of the following, (i) computer
equipment provided to bankruptcy trustees and located on their premises in the
ordinary course of Borrower’s business, (ii) fractional interests in aircraft
where a pledge is prohibited by the agreement among the holders of such
interests, (iii) equity interests in (A) any direct Foreign Subsidiary in excess
of sixty-five percent (65%) of the total outstanding equity interest of such
direct Foreign Subsidiary, and (B) any indirect Foreign Subsidiary, (iv)
licenses and contracts which by the terms of such licenses and contracts
prohibit the assignment of such agreements (to the extent such prohibition is
enforceable at law), and (v) fixed assets subject to a purchase money lien with
an underlying contract or agreement that prohibits the granting of a second lien
on such fixed assets, but only to the extent such prohibition is enforceable at
law and only as long as such liens attach to such fixed assets); (c) funds now
or hereafter on deposit in the Cash Collateral Account, if any; (d) Cash
Security (other than trust and payroll bank accounts); (e) the Real Property;
and (f) Proceeds of any of the foregoing.

 

“Commitment” shall mean the obligation hereunder of the Lenders, to make Loans
and to participate in the issuance of Letters of Credit pursuant to the
Revolving Credit Commitment and the Term Loan Commitment, up to the Total
Commitment Amount.

 

“Commitment Increase Period” shall mean the period from the Closing Date to the
date that is thirty (30) days prior to the last day of the Commitment Period.

 

“Commitment Period” shall mean the period from the Closing Date to the earlier
of the Accelerated Maturity Date or July 19, 2008 (or such earlier date on which
the Commitment shall have been terminated pursuant to Article IX hereof);
provided that there shall be no Accelerated Maturity Date if an Acceptable
Non-Acceleration Event shall occur prior to the Accelerated Maturity Date.

 

“Companies” shall mean Borrower and all Subsidiaries.

 

“Company” shall mean Borrower or a Subsidiary.

 

“Compliance Certificate” shall mean a certificate, substantially in the form of
the attached Exhibit E.

 

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“Consideration” shall mean, in connection with an Acquisition, the aggregate
consideration paid, including borrowed funds, cash, the issuance of securities
or notes, the assumption or incurring of liabilities (direct or contingent), the
payment of consulting fees or fees for a covenant not to compete and any other
consideration paid for such Acquisition.

 

“Consolidated” shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.13 hereof.

 

“Consolidated Capital Expenditures” shall mean, for any period, the amount of
capital expenditures of Borrower (specifically including software development
costs, but excluding capital expenditures directly financed through a
capitalized lease (with acceptable documentation available upon request of Agent
or any Lender)), as determined on a Consolidated basis and in accordance with
GAAP.

 

“Consolidated Current Assets” shall mean, at any date, the current assets of
Borrower, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Current Liabilities” shall mean, at any date, the current
liabilities of Borrower, as determined on a Consolidated basis and in accordance
with GAAP.

 

“Consolidated Depreciation and Amortization Charges” shall mean, for any period,
the aggregate of all depreciation and amortization charges of Borrower for such
period, as determined on a Consolidated basis and in accordance with GAAP;
provided that, notwithstanding the foregoing, Consolidated Depreciation and
Amortization Charges shall include any component of Consolidated Interest
Expense resulting from the amortization of any loan fees and Consolidated
Interest Expense resulting from imputed interest that is added to the principal
balance of the underlying Indebtedness.

 

“Consolidated EBITDA” shall mean, for any period, on a Consolidated basis and in
accordance with GAAP, Consolidated Net Earnings for such period plus the
aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (a) Consolidated Interest Expense, (b) Consolidated Income Tax
Expense, (c) Consolidated Depreciation and Amortization Charges, (d) (i)
extraordinary or unusual non-cash losses not incurred in the ordinary course of
business but that were counted in the net income calculation for such period,
minus (ii) extraordinary or unusual non-cash gains not incurred in the ordinary
course of business but that were counted in the net income calculation for such
period, (e) unamortized costs, fees and expenses incurred in connection with the
transactions contemplated by this Agreement and any Acquisition (occurring prior
to, on or subsequent to the Closing Date), (f) expenses and charges which will
be indemnified or reimbursed to the extent such amounts are covered by funds in
a valid escrow account or similar arrangement, (g) any other component of net
income (or net loss) which is non-cash and will not convert to cash within one
year, including without exception any charges related to the granting of
share-based payments to employees or directors; provided, however, that any time
an Acquisition on an on-going business is made pursuant to Section 5.13 hereof,
Consolidated EBITDA shall be recalculated to include the

 

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EBITDA of the acquired company as if such Acquisition had been completed on the
first day of the relevant measuring period, and (h) Acquisition-related
expenses, in the aggregate for all Companies, up to Four Million Dollars
($4,000,000) during any twelve (12) month period; provided that, for purposes of
calculating Consolidated EBITDA, Consolidated EBITDA shall be deemed to be (A)
Fourteen Million Nine Hundred Ninety-Nine Thousand Dollars ($14,999,000) for the
fiscal quarter of Borrower ending September 30, 2003, (B) Twelve Million Eight
Hundred Thousand Dollars ($12,800,000) for the fiscal quarter of Borrower ending
December 31, 2003, and (C) Ten Million Six Hundred Twenty-Six Thousand Dollars
($10,626,000) for the fiscal quarter of Borrower ending March 31, 2004.

 

“Consolidated Fixed Charges” shall mean, for any period, on a Consolidated basis
and in accordance with GAAP, without duplication, the aggregate of
(a) Consolidated Interest Expense (including, without limitation, the “imputed
interest” portion of Capitalized Lease Obligations, synthetic leases and asset
securitizations, if any, and excluding (i) any fees (including underwriting
fees) and expenses paid in connection with the consummation of Acquisitions
(occurring prior to, on or subsequent to the Closing Date), (ii) any payments
made to obtain a Hedge Agreement, and (iii) any agent or collateral monitoring
fees paid or required to be paid pursuant to this Agreement) paid in cash,
(b) Consolidated Income Tax Expense paid in cash, (c) scheduled principal
payments on Consolidated Funded Indebtedness (other than optional prepayments of
the Revolving Credit Notes and scheduled payments on the Convertible
Subordinated Indebtedness), and (d) Capital Distributions.

 

“Consolidated Funded Indebtedness” shall mean, at any date, all Indebtedness
(including, but not limited to, current, long-term and Subordinated
Indebtedness, if any) of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated Income Tax Expense” shall mean, for any period, all provisions for
taxes based on the net income of Borrower (including, without limitation, any
additions to such taxes, and any penalties and interest with respect thereto),
and all franchise taxes of Borrower to the extent such taxes have been imposed
in lieu of income taxes, as determined on a Consolidated basis and in accordance
with GAAP.

 

“Consolidated Interest Expense” shall mean, for any period, the interest expense
of Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP; provided that, notwithstanding the foregoing, Consolidated
Interest Expense shall exclude any interest expense resulting from the
amortization of any loan fees, and interest expense resulting from imputed
interest that is added to the principal balance of the underlying Indebtedness.

 

“Consolidated Net Earnings” shall mean, for any period, the net income (loss) of
Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated Net Worth” shall mean, at any date, the stockholders’ equity of
Borrower, determined as of such date on a Consolidated basis and in accordance
with GAAP.

 

“Consolidated Senior Funded Indebtedness” shall mean, at any date, Consolidated
Funded Indebtedness less Subordinated Indebtedness of the Companies.

 

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“Control Agreement” shall mean each Control Agreement among a Credit Party,
Agent and a depository institution, dated on or after the Closing Date, as the
same may from time to time be amended, restated or otherwise modified.

 

“Controlled Group” shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).

 

“Convertible Subordinated Documents” shall mean the Note Agreement, the
Convertible Subordinated Notes, and any other agreement entered into or
delivered in connection therewith.

 

“Convertible Subordinated Indebtedness” shall mean the Subordinated Indebtedness
under or in respect of the Convertible Subordinated Notes, in the original
principal amount of up to Fifty Million Dollars ($50,000,000).

 

“Convertible Subordinated Noteholders” shall mean any Buyer, as defined in the
Note Agreement, and any holder of the Convertible Subordinated Notes.

 

“Convertible Subordinated Notes” shall mean those certain $50,000,000 4%
Contingent Convertible Subordinated Notes due June 15, 2007, issued pursuant to
the Note Agreement, as the same may from time to time be amended, restated or
otherwise modified with the prior written consent of the Required Lenders.

 

“Credit Event” shall mean the making by the Lenders of a Loan, the conversion by
the Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the
Lenders of a Eurodollar Loan after the end of the applicable Interest Period,
the making by the Swing Line Lender of a Swing Loan, or the issuance by the
Fronting Lender of a Letter of Credit.

 

“Credit Party” shall mean Borrower and any Subsidiary or other Affiliate that is
a Guarantor of Payment.

 

“Current Ratio” shall mean, at any time, as determined on a Consolidated basis
and in accordance with GAAP, the ratio of (a) Consolidated Current Assets (for
the most recently completed fiscal quarter of Borrower) to (b) Consolidated
Current Liabilities (for the most recently completed fiscal quarter of
Borrower); provided, however, that, for purposes of calculating the Current
Ratio, Consolidated Current Liabilities shall exclude the current portion of
Subordinated Indebtedness and the Revolving Credit Exposure.

 

“Default” shall mean an event or condition that constitutes, or with the lapse
of any applicable grace period or the giving of notice or both would constitute,
an Event of Default, and that has not been waived by the Required Lenders in
writing.

 

“Default Rate” shall mean (a) with respect to any Loan, a rate per annum equal
to two percent (2%) in excess of the rate otherwise applicable thereto, and
(b) with respect to any other amount, if no rate is specified or available, a
rate per annum equal to two percent (2%) in excess of the Derived Base Rate from
time to time in effect.

 

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“Deposit Account” shall mean (a) a deposit account, as defined in the U.C.C.,
(b) any other deposit account, and (c) any demand, time, savings, checking,
passbook, or a similar account maintained with a bank, savings and loan
association, credit union, or similar organization.

 

“Derived Base Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Base Rate Loans plus the
Base Rate.

 

“Derived Eurodollar Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Eurodollar Loans plus the
Eurodollar Rate.

 

“Disposition” shall mean the lease, transfer or other disposition of assets
(whether in one or more transaction) by a Company, other than a sale, lease,
transfer or other disposition made by a Company in the ordinary course of
business.

 

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

 

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

 

“Dormant Subsidiary” shall mean a Company that (a) is not a Credit Party,
(b) has aggregate assets of less than Two Hundred Fifty Thousand Dollars
($250,000), and (c) has no direct or indirect Subsidiaries with aggregate assets
for all such Subsidiaries of more than Two Hundred Fifty Thousand Dollars
($250,000).

 

“EBITDA” shall mean, for any period, in accordance with GAAP, the net earnings
of a Person for such period plus the aggregate amounts deducted in determining
such net earnings in respect of (a) interest expense of such Person, (b) income
taxes of such Person, and (c) the aggregate of all depreciation and amortization
charges of such Person, (d) (i) extraordinary or unusual non-cash losses not
incurred in the ordinary course of business of such Person but that were counted
in the net income calculation for such period, minus (ii) extraordinary or
unusual non-cash gains not incurred in the ordinary course of business of such
Person but that were counted in the net income calculation for such period, (e)
expenses and charges which will be indemnified or reimbursed to the extent such
amounts are covered by funds in a valid escrow account or similar arrangement,
and (f) any other component of net income (or net loss) which is non-cash and
will not convert to cash within one year, including without exception any
charges related to the granting of share-based payments to employees or
directors.

 

“Eligible Transferee” shall mean a commercial bank, financial institution or
other “accredited investor” (as defined in SEC Regulation D) that is not
Borrower, a Subsidiary or an Affiliate.

 

“Environmental Laws” shall mean all provisions of law (including the common
law), statutes, ordinances, codes, rules, guidelines, policies, procedures,
orders-in-council, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards which are legally binding and
promulgated by a Governmental Authority or by any court, agency,

 

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instrumentality, regulatory authority or commission of any of the foregoing
concerning environmental health or safety and protection of, or regulation of
the discharge of substances into, the environment.

 

“Equalization Event” shall mean the earlier of (a) the occurrence of an Event of
Default under Section 8.11 hereof, or (b) the acceleration of the maturity of
the Obligations after the occurrence of an Event of Default.

 

“Equalization Percentage” shall mean that term as defined in Section 9.5 hereof.

 

“Equipment” shall mean all equipment, as defined in the U.C.C.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated pursuant thereto.

 

“ERISA Event” shall mean (a) the existence of a condition or event with respect
to an ERISA Plan that would reasonably be expected to result in the imposition
of an excise tax or any other liability on a Company or of the imposition of a
Lien on the assets of a Company; (b) the engagement by a Controlled Group member
in a non-exempt “prohibited transaction” (as defined under ERISA Section 406 or
Code Section 4975) or a breach of a fiduciary duty under ERISA that could
reasonably be expected to result in liability to a Company; (c) the application
by a Controlled Group member for a waiver from the minimum funding requirements
of Code Section 412 or ERISA Section 302 or a Controlled Group member is
required to provide security under Code Section 401(a)(29) or ERISA Section 307;
(d) the occurrence of a Reportable Event with respect to any Pension Plan as to
which notice is required to be provided to the PBGC; (e) the withdrawal by a
Controlled Group member from a Multiemployer Plan in a “complete withdrawal” or
a “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and
4205, respectively); (f) notice that any Multiemployer Plan is in reorganization
under ERISA Section 4241; (g) the taking by the PBGC of any steps to terminate a
Pension Plan or appoint a trustee to administer a Pension Plan, or the taking by
a Controlled Group member of any steps to terminate a Pension Plan; (h) the
commencement, existence or threatening of a claim, action, suit, audit or
investigation with respect to an ERISA Plan, other than a routine claim for
benefits; or (i) any incurrence by a Controlled Group member of any liability
for post-retirement benefits under any Welfare Plan, other than as required by
ERISA Section 601, et. seq. or Code Section 4980B.

 

“ERISA Plan” shall mean an “employee benefit plan” (within the meaning of ERISA
Section 3(3)) that a Controlled Group member at any time sponsors, maintains,
contributes to, has liability with respect to or has an obligation to contribute
to such plan.

 

“Eurocurrency Liabilities” shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

 

“Eurodollar” shall mean a Dollar denominated deposit in a bank or branch outside
of the United States.

 

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“Eurodollar Loan” shall mean a Revolving Loan or a portion of the Term Loan
described in Section 2.2(a) or 2.3 hereof that shall be denominated in Dollars
and on which Borrower shall pay interest at a rate based upon the Derived
Eurodollar Rate.

 

“Eurodollar Rate” shall mean, with respect to a Eurodollar Loan, for any
Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) two Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is unavailable from Reuters, from any other similar company or
service that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for Dollar deposits in
immediately available funds with a maturity comparable to such Interest Period,
provided that, in the event that such rate quotation is not available for any
reason, then the Eurodollar Rate shall be the average (rounded upward to the
nearest 1/16th of 1%) of the per annum rates at which deposits in immediately
available funds in Dollars for the relevant Interest Period and in the amount of
the Eurodollar Loan to be disbursed or to remain outstanding during such
Interest Period, as the case may be, are offered to Agent (or an affiliate of
Agent, in Agent’s discretion) by prime banks in any Eurodollar market reasonably
selected by Agent, determined as of 11:00 A.M. (London time) (or as soon
thereafter as practicable), two Business Days prior to the beginning of the
relevant Interest Period pertaining to such Eurodollar Loan hereunder; by
(b) 1.00 minus the Reserve Percentage.

 

“Event of Default” shall mean an event or condition that shall constitute an
event of default as defined in Article VII hereof.

 

“Excluded Taxes” shall mean net income taxes (and franchise taxes imposed in
lieu of net income taxes) imposed on Agent or any Lender by the Governmental
Authority located in the jurisdiction where Agent or such Lender is organized or
conducts business (other than any such connection arising solely from Agent or
such Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any other Loan Document).

 

“Existing Letter of Credit” shall mean that term as defined in
Section 2.2(b)(vi) hereof.

 

“Facility Maturity Date” shall mean the last day of the Commitment Period.

 

“Federal Funds Effective Rate” shall mean, for any day, the rate per annum
(rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the Closing Date.

 

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“Financial Officer” shall mean any of the following officers: chief executive
officer, president, chief financial officer or treasurer.  Unless otherwise
qualified, all references to a Financial Officer in this Agreement shall refer
to a Financial Officer of Borrower.

 

“Fixed Charge Coverage Ratio” shall mean, as determined for the most recently
completed four fiscal quarters of Borrower, on a Consolidated basis and in
accordance with GAAP, the ratio of (a) (i) Consolidated EBITDA minus (ii)
Consolidated Capital Expenditures (excluding Consolidated Capital Expenditures
that are made (A) in connection with an Acquisition permitted pursuant to
Section 5.13 hereof, (B) in connection with leasehold improvements (but only to
the extent such improvements are reimbursable by the landlord), or (C) with the
net proceeds of Dispositions of capital assets (excluding real estate), to
(b) Consolidated Fixed Charges.

 

“Foreign Subsidiary” shall mean a Subsidiary that is organized outside of the
United States.

 

“Fronting Lender” shall mean, as to any Letter of Credit transaction hereunder,
Agent as issuer of the Letter of Credit, or, in the event that Agent either
shall be unable to issue or shall agree that another Revolving Lender may issue,
a Letter of Credit, such other Revolving Lender as shall agree to issue the
Letter of Credit in its own name, but on behalf of the Revolving Lenders
hereunder.

 

“GAAP” shall mean generally accepted accounting principles in the United States
as then in effect, which shall include the official interpretations thereof by
the Financial Accounting Standards Board (or agencies within the United States.
accounting profession with similar or delegated functions and recognized by the
Financial Accounting Standards Board as having authority to issue such
interpretations), applied on a basis consistent with the past accounting
practices and procedures of Borrower and the SEC, which are applicable to the
circumstances as of the date of determination.

 

“General Intangibles” shall mean all (a) general intangibles, as defined in the
U.C.C.; (b) choses in action, causes of action, all customer lists, corporate or
other business records, inventions, designs, patents, patent applications,
service marks, registrations, trade names, trademarks, copyrights, licenses,
goodwill, computer software, rights to indemnification and tax refunds; and (c)
Proceeds of any of the foregoing, irrespective of the form or kind thereof.

 

“Governmental Authority” shall mean any nation or government, any state,
province or territory or other political subdivision thereof, any governmental
agency, department, authority, instrumentality, regulatory body, court, central
bank or other governmental entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization.

 

“Guarantor” shall mean a Person that shall have pledged its credit or property
in any manner for the payment or other performance of the indebtedness, contract
or other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection),

 

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surety, co-maker, endorser or Person that shall have agreed conditionally or
otherwise to make any purchase, loan or investment in order thereby to enable
another to prevent or correct a default of any kind.

 

“Guarantor of Payment” shall mean each of the Companies set forth on Schedule 2
hereto, that are each executing and delivering a Guaranty of Payment, or any
other Person that shall deliver a Guaranty of Payment to Agent subsequent to the
Closing Date.

 

“Guaranty of Payment” shall mean each Guaranty of Payment executed and delivered
on or after the Closing Date in connection with this Agreement by the Guarantors
of Payment, as the same may from time to time be amended, restated or otherwise
modified.

 

“Hedge Agreement” shall mean any (a) hedge agreement, interest rate swap, basis
swap agreement, cap, collar or floor agreement, or other interest rate
management device (including forward rate agreements) entered into by a Company
with any Person in connection with any Indebtedness of such Company, or (b)
currency swap agreement, forward currency purchase agreement or similar
arrangement or agreement designed to protect against fluctuations in currency
exchange rates entered into by a Company with any Person.

 

“Indebtedness” shall mean, for any Company (excluding in all cases trade
payables payable in the ordinary course of business by such Company and accrued
expenses), without duplication, (a) all obligations to repay borrowed money,
direct or indirect, incurred or assumed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional sales or
other title retention agreements, (d) all obligations (contingent or otherwise)
under any letter of credit or banker’s acceptance, (e) all net obligations under
any currency swap agreement, interest rate swap, cap, collar or floor agreement
or other interest rate management device or any Hedge Agreement, (f) all
synthetic leases, (g) all lease obligations that have been or should be
capitalized on the books of such Company in accordance with GAAP, (h) all
obligations of such Company with respect to asset securitization financing
programs, (i) all obligations to advance funds to, or to purchase assets,
property or services from, any other Person in order to maintain the financial
condition of such Person, (j) all indebtedness secured by a Lien on the property
of a Company, whether or not such indebtedness shall have been assumed by such
Company, provided that if such Company has not assumed or otherwise become
liable for such indebtedness, such indebtedness shall be measured at the fair
market value of such property securing such indebtedness at the time of
determination, (k) all indebtedness of any partnership of which any Company is a
general partner, (l) any other transaction (including forward sale or purchase
agreements) having the commercial effect of a borrowing of money entered into by
such Company to finance its operations or capital requirements, and (m) any
guaranty of any obligation described in subparts (a) through (l) hereof.

 

“Intellectual Property Collateral Assignment Agreement” shall mean an
Intellectual Property Collateral Assignment Agreement executed and delivered on
or after the Closing Date by Borrower or a Guarantor of Payment, wherein
Borrower or such Guarantor of Payment, as the case may be, has granted to Agent,
for the benefit of the Lenders, a security interest in and a collateral
assignment of all intellectual property owned by Borrower or such Guarantor of
Payment, as the same may from time to time be amended, restated or otherwise
modified.

 

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“Interest Adjustment Date” shall mean the last day of each Interest Period.

 

“Interest Period” shall mean, with respect to a Eurodollar Loan, the period
commencing on the date such Eurodollar Loan is made and ending on the last day
of such period, as selected by Borrower pursuant to the provisions hereof, and,
thereafter (unless such Eurodollar Loan is converted to a Base Rate Loan), each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of such period, as selected by
Borrower pursuant to the provisions hereof.  The duration of each Interest
Period for a Eurodollar Loan shall be one month, two months, three months or six
months in each case as Borrower may select upon notice, as set forth in
Section 2.6 hereof; provided that, if Borrower shall fail to so select the
duration of any Interest Period for a Eurodollar Loan at least three Business
Days prior to the Interest Adjustment Date applicable to such Eurodollar Loan,
Borrower shall be deemed to have converted such Eurodollar Loan to a Base Rate
Loan at the end of the then current Interest Period.

 

“Inventory” shall mean all inventory, as defined in the U.C.C.

 

“Investment Property” shall mean all investment property, as defined in the
U.C.C., unless the Uniform Commercial Code as in effect in another jurisdiction
would govern the perfection and/or priority of a security interest in investment
property, and, in such case, “investment property” shall be defined in
accordance with the law of that jurisdiction as in effect from time to time.

 

“Lender Credit Exposure” shall mean, for any Lender, at any time, the aggregate
of such Lender’s respective pro rata shares of the Revolving Credit Exposure and
the Term Loan Exposure.

 

“Letter of Credit” shall mean a standby letter of credit that shall be issued by
the Fronting Lender for the account of Borrower or a Guarantor of Payment,
including amendments thereto, if any, and shall have an expiration date no later
than the earlier of (a) one year after its date of issuance or (b) fifteen (15)
days prior to the last day of the Commitment Period.

 

“Letter of Credit Commitment” shall mean the commitment of the Fronting Lender,
on behalf of the Revolving Lenders, to issue Letters of Credit in an aggregate
face amount of up to Ten Million Dollars ($10,000,000).

 

“Letter of Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate undrawn face amount of all issued and outstanding Letters of Credit,
and (b) the aggregate of the draws made on Letters of Credit that have not been
reimbursed by Borrower or converted to a Revolving Loan pursuant to
Section 2.2(b)(iv) hereof.

 

“Leverage Ratio” shall mean, as determined on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Consolidated Funded Indebtedness (for the
most recently completed fiscal quarter of Borrower) to (b) Consolidated EBITDA
(for the most recently completed four fiscal quarters of Borrower).

 

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“Lien” shall mean any mortgage, deed of trust, security interest, lien
(statutory or other), charge, encumbrance on, pledge or deposit of, or
conditional sale, leasing, sale with a right of redemption or other title
retention agreement and any capitalized lease with respect to any property (real
or personal) or asset.

 

“Liquidity” shall mean, at any date, an amount equal to the sum of (a) cash, (b)
Cash Equivalents having maturities of not more than one year from the date of
acquisition; and (c) the Revolving Credit Availability.

 

“Loan” shall mean a Revolving Loan, a Swing Loan or the Term Loan granted to
Borrower by the Lenders in accordance with Section 2.2 or 2.3 hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, each Note, each
Guaranty of Payment, all documentation relating to each Letter of Credit, each
Security Document and the Agent Fee Letter, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced, and any
other document delivered pursuant thereto.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of Borrower, (b) the business, operations, property, condition (financial or
otherwise) or prospects of the Companies taken as a whole, (c) the ability of
Borrower or the Companies to perform its or their obligations under this
Agreement or any of the other Loan Documents, or (d) the validity or
enforceability of the Loan Documents or the rights and remedies of Agent or the
Lenders hereunder or thereunder.

 

“Material Indebtedness Agreement” shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing any Indebtedness of any Company or the Companies in
excess of the amount of Three Million Dollars ($3,000,000).

 

“Maximum Amount” shall mean, for each Lender, the amount set forth opposite such
Lender’s name under the column headed “Maximum Amount” as set forth on
Schedule 1 hereto, subject to decreases determined pursuant to Section 2.10(a)
hereof, increases pursuant to Section 2.10(b) hereof and assignments of
interests pursuant to Section 11.10 hereof; provided, however, that the Maximum
Amount for the Swing Line Lender shall exclude the Swing Line Commitment (other
than its pro rata share), and the Maximum Amount of the Fronting Lender shall
exclude the Letter of Credit Commitment (other than its pro rata share).

 

“Maximum Commitment Amount” shall mean One Hundred Million Dollars
($100,000,000).

 

“Maximum Revolving Amount” shall mean Seventy-Five Million Dollars
($75,000,000).

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor to such
company.

 

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“Mortgage” shall mean each Open-End Mortgage, Assignment of Leases and Rents and
Security Agreement (or comparable document), relating to the Real Property,
executed and delivered by a Credit Party, to further secure the obligations
under the Loan Documents, as the same may from time to time be amended, restated
or otherwise modified.

 

“Multiemployer Plan” shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.

 

“Note” shall mean a Revolving Credit Note, the Swing Line Note or a Term Note,
or any other promissory note delivered pursuant to this Agreement.

 

“Note Agreement” shall mean the Security Purchase Agreement, dated as of
June 10, 2004, by and among Borrower and the Buyers, as defined therein, as the
same may from time to time be amended, restated or otherwise modified with the
prior written consent of the Required Lenders.

 

“Notice of Loan” shall mean a Notice of Loan in the form of the attached
Exhibit D.

 

“Obligations” shall mean, collectively, (a) all Indebtedness and other
obligations incurred by Borrower to Agent, the Fronting Lender, the Swing Line
Lender, or any Lender pursuant to this Agreement and includes the principal of
and interest on all Loans and all obligations pursuant to Letters of Credit, (b)
each extension, renewal or refinancing of the foregoing, in whole or in part,
(c) the commitment and other fees and any prepayment fees payable hereunder, and
all fees and charges in connection with Letters of Credit, and (d) all Related
Expenses.

 

“Organizational Documents” shall mean, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, operating
agreement or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.

 

“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise, ad valorem or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, use taxes, value added
taxes, charges or similar taxes or levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

 

“Overall Commitment Percentage” shall mean a Lender’s percentage of the Total
Commitment Amount based upon such Lender’s Maximum Amount of the Total
Commitment Amount.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or its successor.

 

“Pension Plan” shall mean an ERISA Plan that is a “pension plan” (within the
meaning of ERISA Section 3(2)).

 

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“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, unincorporated organization, corporation, limited liability company,
unlimited liability company, institution, trust, estate, government or other
agency or political subdivision thereof or any other entity.

 

“Pledge Agreement” shall mean each of the Pledge Agreements, relating to the
Pledged Securities, executed and delivered by Borrower and each Domestic
Subsidiary in favor of Agent, for the benefit of the Lenders, dated as of the
Closing Date, and any other Pledge Agreement executed by any other Domestic
Subsidiary on or after the Closing Date, as any of the foregoing may from time
to time be amended, restated or otherwise modified.

 

“Pledged Securities” shall mean all of the shares of capital stock or other
equity interest of a Subsidiary of Borrower, whether now owned or hereafter
acquired or created, and all proceeds thereof; provided, however, that Pledged
Securities shall only include up to sixty-five percent (65%) of the shares of
capital stock or other equity interest of any first-tier Foreign Subsidiary.

 

“Prime Rate” shall mean the interest rate established from time to time by Agent
as Agent’s prime rate, whether or not such rate shall be publicly announced; the
Prime Rate may not be the lowest interest rate charged by Agent for commercial
or other extensions of credit. Each change in the Prime Rate shall be effective
immediately from and after such change.

 

“Proceeds” shall mean (a) proceeds as defined in the U.C.C., and any other
proceeds, and (b) whatever is received upon the sale, exchange, collection or
other disposition of Collateral or proceeds, whether cash or non-cash.  Cash
proceeds includes, without limitation, moneys, checks and Deposit Accounts. 
Proceeds includes, without limitation, any Account arising when the right to
payment is earned under a contract right, any insurance payable by reason of
loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance.  Except as expressly authorized in this Agreement,
the right of Agent and the Lenders to Proceeds specifically set forth herein or
indicated in any financing statement shall never constitute an express or
implied authorization on the part of Agent or any Lender to a Company’s sale,
exchange, collection or other disposition of any or all of the Collateral.

 

“Real Property” shall mean the real estate owned by a Credit Party, as set forth
on Schedule 4 hereto, together with all improvements and buildings thereon and
all appurtenances, easements or other rights thereto belonging, and being
defined collectively as the “Property” in each of the Mortgages.

 

“Regularly Scheduled Payment Date” shall mean the last day of each March, June,
September and December of each year.

 

“Related Expenses” shall mean any and all reasonable out-of-pocket costs,
liabilities and expenses (including, without limitation, losses, damages,
penalties, claims, actions, attorneys’ fees, legal expenses, judgments, suits
and disbursements) (a) incurred by Agent, or imposed upon or asserted against
Agent or any Lender in any attempt by Agent and the Lenders to (i) obtain,
preserve, perfect or enforce any Loan Document or any security interest
evidenced by

 

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any Loan Document; (ii) obtain payment, performance or observance of any and all
of the Obligations; or (iii) maintain, insure, audit, collect, preserve,
repossess or dispose of any of the collateral securing the Obligations or any
part thereof, including, without limitation, costs and expenses for appraisals,
assessments and audits of any Company or any such collateral; or (b) incidental
or related to (a) above, including, without limitation, interest thereupon from
the date incurred, imposed or asserted until paid at the Default Rate.

 

“Related Writing” shall mean each Loan Document and any other assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by any Credit
Party, or any of its officers, to Agent or the Lenders pursuant to or otherwise
in connection with this Agreement.

 

“Reportable Event” shall mean a reportable event as that term is defined in
Title IV of ERISA, except actions of general applicability by the Secretary of
Labor under Section 110 of such Act.

 

“Request for Extension” shall mean a notice, substantially in the form of the
attached Exhibit G.

 

“Required Lenders” shall mean the holders of at least fifty-one percent (51%) of
the sum of (a) the principal outstanding under the Term Notes, and (b) (i)
during the Commitment Period, the Revolving Amount, or (ii) after the Commitment
Period, the aggregate amount outstanding under all of the Revolving Credit Notes
(other than the Swing Line Note) and the Letter of Credit Exposure and the Swing
Line Exposure; provided, however, that, if there shall be two or more Lenders,
Required Lenders shall constitute at least two Lenders.

 

“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or
regulation or determination or policy statement or interpretation of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property.

 

“Reserve Percentage” shall mean for any day that percentage (expressed as a
decimal) that is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities.  The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Percentage.

 

“Restricted Payment” shall mean, with respect to any Company, (a) any amount
paid in redemption (including any mandatory redemption or optional redemption),
retirement, repurchase, direct or indirect, of the Convertible Subordinated
Notes or any other Subordinated Indebtedness; or (b) the exercise by such
Company of any right of defeasance or covenant defeasance or similar right with
respect to the Convertible Subordinated Notes or any other Subordinated
Indebtedness.

 

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“Revolving Amount” shall mean the Closing Revolving Amount, as such amount may
be increased up to the Maximum Revolving Amount pursuant to Section 2.10(b)
hereof, or decreased pursuant to Section 2.10(a) hereof.

 

“Revolving Credit Availability” shall mean, at any time, the amount equal to the
Revolving Credit Commitment minus the Revolving Credit Exposure.

 

“Revolving Credit Commitment” shall mean the obligation hereunder, during the
Commitment Period, of (a) each Revolving Lender to make Revolving Loans, (b) the
Fronting Lender to issue and each Revolving Lender to participate in Letters of
Credit pursuant to the Letter of Credit Commitment, and (c) the Swing Line
Lender to make and each Revolving Lender to participate in Swing Loans pursuant
to the Swing Line Commitment; up to an aggregate principal amount outstanding at
any time equal to the Revolving Amount.

 

“Revolving Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, (b) the Swing
Line Exposure, and (c) the Letter of Credit Exposure.

 

“Revolving Credit Note” shall mean a Revolving Credit Note executed and
delivered pursuant to Section 2.5(a) hereof.

 

“Revolving Lender” shall mean a Lender with a percentage of the Revolving Credit
Commitment as set forth on Schedule 1 hereto.

 

“Revolving Loan” shall mean a Loan granted to Borrower by the Revolving Lenders
in accordance with Section 2.2 hereof.

 

“SEC” shall mean the United States Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principle functions.

 

“Secured Obligations” shall mean, collectively, (a) the Obligations, and (b) all
obligations and liabilities now existing or hereafter incurred by a Company
under a Hedge Agreement with a Lender.

 

“Security Agreement” shall mean each Security Agreement, executed and delivered
by a Guarantor of Payment in favor of Agent, for the benefit of the Lenders,
dated as of the Closing Date, and any other Security Agreement executed on or
after the Closing Date, as the same may from time to time be amended, restated
or otherwise modified.

 

“Security Documents” shall mean each Security Agreement, each Pledge Agreement,
each Intellectual Property Collateral Assignment Agreement, each Mortgage, each
Control Agreement, each U.C.C. Financing Statement or similar filing as to a
jurisdiction located outside of the United States of America filed in connection
herewith or perfecting any interest created in any of the foregoing documents,
and any other document pursuant to which any Lien is granted by a Company to
Agent, for the benefit of the Lenders, as security for the Secured Obligations,

 

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or any part thereof, as any of the foregoing may from time to time be amended,
restated or otherwise modified or replaced.

 

“Senior Leverage Ratio” shall mean, at any time, as determined on a Consolidated
basis and in accordance with GAAP, the ratio of (a) Consolidated Senior Funded
Indebtedness (for the most recently completed fiscal quarter of Borrower) to (b)
Consolidated EBITDA (for the most recently completed four fiscal quarters of
Borrower).

 

“Specific Commitment” shall mean the Revolving Credit Commitment or the Term
Loan Commitment.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Group, a division of
McGraw-Hill, Inc., or any successor to such company.

 

“Subordinated” shall mean, as applied to Indebtedness, Indebtedness that shall
have been subordinated (by written terms or written agreement being, in either
case, in form and substance reasonably satisfactory to Agent and the Required
Lenders) in favor of the prior payment in full of the Obligations (other than
contingent indemnity obligations).

 

“Subsidiary” of a Company shall mean (a) a corporation more than fifty percent
(50%) of the Voting Power of which is owned, directly or indirectly, by such
Company or by one or more other subsidiaries of such Company or by such Company
and one or more subsidiaries of such Company, (b) a partnership or limited
liability company of which such Company, one or more other subsidiaries of such
Company or such Company and one or more subsidiaries of such Company, directly
or indirectly, is a general partner or managing member, as the case may be, or
otherwise has an ownership interest greater than fifty percent (50%) of all of
the ownership interests in such partnership or limited liability company, or
(c) any other Person (other than a corporation, partnership or limited liability
company) in which such Company, one or more other subsidiaries of such Company
or such Company and one or more subsidiaries of such Company, directly or
indirectly, has at least a majority interest in the Voting Power or the power to
elect or direct the election of a majority of directors or other governing body
of such Person.

 

“Swing Line Commitment” shall mean the commitment of the Swing Line Lender to
make Swing Loans to Borrower up to the aggregate amount at any time outstanding
of Five Million Dollars ($5,000,000).

 

“Swing Line Exposure” shall mean, at any time, the aggregate principal amount of
all Swing Loans outstanding.

 

“Swing Line Lender” shall mean KeyBank National Association, as holder of the
Swing Line Commitment.

 

“Swing Line Note” shall mean the Swing Line Note executed and delivered pursuant
to Section 2.5(b) hereof.

 

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“Swing Loan” shall mean a loan that shall be denominated in Dollars granted to
Borrower by the Swing Line Lender under the Swing Line Commitment.

 

“Swing Loan Maturity Date” shall mean, with respect to any Swing Loan, the
earlier of (a) thirty (30) days after the date such Swing Loan is made, or
(b) the last day of the Commitment Period.

 

“Taxes” shall mean any and all present or future taxes of any kind, including
but not limited to, levies, imposts, duties, charges, fees, deductions or
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (together with any interest, penalties, additions
to taxes or similar liabilities with respect thereto) other than Excluded Taxes.

 

“Term Lender” shall mean a Lender with a percentage of the Term Loan Commitment
as set forth on Schedule 1 hereto.

 

“Term Loan” shall mean the Loan granted to Borrower by the Term Lenders in
accordance with Section 2.3 hereof.

 

“Term Loan Commitment” shall mean the obligation hereunder of the Term Lenders
to make a Term Loan in the original principal amount of Twenty-Five Million
Dollars ($25,000,000), with each Term Lender’s obligation to participate therein
being in the amount set forth opposite such Term Lender’s name under the column
headed “Term Loan Commitment Amount” as set forth on Schedule 1 hereto.

 

“Term Note” shall mean a Term Note executed and delivered pursuant to
Section 2.5(c) hereof.

 

“Total Commitment Amount” shall mean the Closing Commitment Amount, as such
amount may be increased up to the Maximum Commitment Amount pursuant to
Section 2.10(b) hereof, or decreased pursuant to Section 2.10(a) hereof.

 

“U.C.C.” shall mean the Uniform Commercial Code, as in effect from time to time
in Ohio.

 

“U.C.C. Financing Statement” shall mean a financing statement filed or to be
filed in accordance with the Uniform Commercial Code, as in effect from time to
time, in the relevant state or states.

 

“Voting Power” shall mean, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of members of the
board of directors or other similar governing body of such Person.  The holding
of a designated percentage of Voting Power of a Person means the ownership of
shares of capital stock, partnership interests, membership interests or other
interests of such Person sufficient to control exclusively the election of that
percentage of the members of the board of directors or similar governing body of
such Person.

 

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“Welfare Plan” shall mean an ERISA Plan that is a “welfare plan” within the
meaning of ERISA Section 3(l).

 

“Wholly-Owned Subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company or other entity, all of the securities or
other ownership interest of which having ordinary Voting Power to elect a
majority of the board of directors, or other persons performing similar
functions, are at the time directly or indirectly owned by such Person.

 

Section 1.2.  Accounting Terms.  Any accounting term not specifically defined in
this Article I shall have the meaning ascribed thereto by GAAP.  In the event
that any “Accounting Change” (as defined below) shall occur and such change
results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then Borrower, Agent and the Required
Lenders agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating Borrower’s financial condition
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made.  Until such time as such an amendment shall have been
executed and delivered by Borrower, Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated and construed as if such Accounting Changes had not occurred. 
“Accounting Changes” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC (or successors thereto or agencies with
similar functions).

 

Section 1.3.  Terms Generally.  The foregoing definitions shall be applicable to
the singular and plurals of the foregoing defined terms.  Unless otherwise
defined in this Article I, terms that are defined in the U.C.C. are used herein
as so defined.

 

ARTICLE II.  AMOUNT AND TERMS OF CREDIT

 

Section 2.1.  Amount and Nature of Credit.

 

(a)                                  Subject to the terms and conditions of this
Agreement, the Lenders, during the Commitment Period and to the extent
hereinafter provided, shall make Loans to Borrower, participate in Swing Loans
made by the Swing Line Lender to Borrower, and issue or participate in Letters
of Credit at the request of Borrower, in such aggregate amount as Borrower shall
request pursuant to the Commitment; provided, however, that in no event shall
the aggregate principal amount of all Loans and Letters of Credit outstanding
under this Agreement be in excess of the Total Commitment Amount.

 

(b)                                 Each Lender, for itself and not one for any
other, agrees to make Loans, participate in Swing Loans, and issue or
participate in Letters of Credit, during the Commitment Period, on such basis
that, immediately after the completion of any borrowing by Borrower or the
issuance of a Letter of Credit:

 

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(i)                                     the aggregate outstanding principal
amount of Loans made by such Lender (other than Swing Loans made by the Swing
Line Lender), when combined with such Lender’s pro rata share, if any, of the
Letter of Credit Exposure and the Swing Line Exposure, shall not be in excess of
the Maximum Amount for such Lender; and

 

(ii)                                  with respect to each Specific Commitment,
the aggregate outstanding principal amount of Loans (other than Swing Loans)
made by such Lender with respect to such Specific Commitment shall represent
that percentage of the aggregate principal amount then outstanding on all Loans
(other than Swing Loans) within such Specific Commitment that shall be such
Lender’s Applicable Commitment Percentage.

 

Within each Specific Commitment, each borrowing (other than Swing Loans) from
the Lenders hereunder shall be made pro rata according to the respective
Applicable Commitment Percentages of the Lenders.

 

(c)                                  The Loans may be made as Revolving Loans as
described in Section 2.2(a) hereof, as a Term Loan as described in Section 2.3
hereof, and as Swing Loans as described in Section 2.2(c) hereof, and Letters of
Credit may be issued in accordance with Section 2.2(b) hereof.

 

Section 2.2.  Revolving Credit.

 

(a)                                  Revolving Loans.  Subject to the terms and
conditions of this Agreement, during the Commitment Period, the Revolving
Lenders shall make a Revolving Loan or Revolving Loans to Borrower in such
amount or amounts as Borrower may from time to time request, but not exceeding
in aggregate principal amount at any time outstanding hereunder the Revolving
Credit Commitment, when such Revolving Loans are combined with the Letter of
Credit Exposure and the Swing Line Exposure.  Borrower shall have the option,
subject to the terms and conditions set forth herein, to borrow Revolving Loans,
maturing on the last day of the Commitment Period, by means of any combination
of Base Rate Loans or Eurodollar Loans.  Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.2(a) to borrow funds,
repay the same in whole or in part and re-borrow hereunder at any time and from
time to time during the Commitment Period.

 

(b)                                 Letters of Credit.

 

(i)                                     Generally.  Subject to the terms and
conditions of this Agreement, during the Commitment Period, the Fronting Lender
shall, in its own name, on behalf of the Revolving Lenders, issue such Letters
of Credit for the account of a Credit Party, as Borrower may from time to time
request.  Borrower shall not request any Letter of Credit (and the Fronting
Lender shall not be obligated to issue any Letter of Credit) if, after giving
effect thereto, (A) the Letter of Credit Exposure would exceed the Letter of
Credit Commitment or (B) the Revolving Credit Exposure would exceed the
Revolving Credit Commitment.  The issuance of each Letter of Credit shall confer
upon each Revolving Lender the benefits and liabilities of a participation
consisting of an undivided pro rata

 

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 interest in the Letter of Credit to the extent of such Revolving Lender’s
Applicable Commitment Percentage.

 

(ii)                                  Request for Letter of Credit.  Each
request for a Letter of Credit shall be delivered to Agent (and to the Fronting
Lender, if the Fronting Lender is a Lender other than Agent) by an Authorized
Officer not later than 11:00 A.M. (Eastern time) three Business Days prior to
the day upon which the Letter of Credit is to be issued.  Each such request
shall be in a form reasonably acceptable to Agent (and to the Fronting Lender,
if the Fronting Lender is a Lender other than Agent) and shall specify the face
amount thereof, the account party, the beneficiary, the intended date of
issuance, the expiry date thereof, and the nature of the transaction to be
supported thereby.  Concurrently with each such request, Borrower, and any
Credit Party for whose account the Letter of Credit is to be issued, shall
execute and deliver to the Fronting Lender an appropriate application and
agreement, being in the standard form of the Fronting Lender for such letters of
credit, as amended to conform to the provisions of this Agreement if required by
Agent.  Agent shall give the Fronting Lender and each Revolving Lender notice of
each such request for a Letter of Credit.

 

(iii)                               Letter of Credit Fees.  With respect to each
Letter of Credit and the drafts thereunder, if any, whether issued for the
account of Borrower or any other Credit Party, Borrower agrees to (A) pay to
Agent, for the pro rata benefit of the Revolving Lenders, a non-refundable
commission based upon the face amount of such Letter of Credit, which shall be
paid quarterly in arrears, on each Regularly Scheduled Payment Date, at the rate
per annum of the Applicable Margin for Eurodollar Loans (in effect on the date
such payment is to be made) multiplied by the face amount of such Letter of
Credit; (B) pay to Agent, for the sole benefit of the Fronting Lender, an
additional Letter of Credit fee, which shall be paid on each date that such
Letter of Credit shall be issued, amended or renewed at the rate of one-eighth
percent (1/8%) of the face amount of such Letter of Credit; and (C) pay to
Agent, for the sole benefit of the Fronting Lender, such other issuance,
amendment, negotiation, draw, acceptance, telex, courier, postage and similar
transactional fees as are generally charged by the Fronting Lender under its fee
schedule as in effect from time to time.

 

(iv)                              Refunding of Letters of Credit with Revolving
Loans.  Whenever a Letter of Credit shall be drawn, Borrower shall promptly
reimburse the Fronting Lender for the amount drawn.  In the event that the
amount drawn shall not have been reimbursed by Borrower on the date of the
drawing of such Letter of Credit, at the sole option of Agent (and the Fronting
Lender, if the Fronting Lender is a Lender other than Agent), Borrower shall be
deemed to have requested a Revolving Loan, subject to the provisions of
Section 2.2 and 2.6 hereof (other than the requirement set forth in
Section 2.6(d) hereof), in the amount drawn.  Such Revolving Loan shall be
evidenced by the Revolving Credit Notes.  Each Revolving Lender agrees to make a
Revolving Loan on the date of such notice, subject to no conditions precedent
whatsoever.  Each Revolving Lender acknowledges and agrees that its obligation
to make a Revolving Loan pursuant to Section 2.2(a) hereof when required by this
Section 2.2(b) shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever, including,

 

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without limitation, the occurrence and continuance of a Default or Event of
Default, and that its payment to Agent, for the account of the Fronting Lender,
of the proceeds of such Revolving Loan shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not the Revolving Credit Commitment shall have been reduced or
terminated.  Borrower irrevocably authorizes and instructs Agent to apply the
proceeds of any borrowing pursuant to this subsection (iv) to reimburse, in
full, the Fronting Lender for the amount drawn on such Letter of Credit.  Each
such Revolving Loan shall be deemed to be a Base Rate Loan unless otherwise
requested by and available to Borrower hereunder.  Each Revolving Lender is
hereby authorized to record on its records relating to its Revolving Credit Note
such Revolving Lender’s pro rata share of the amounts paid and not reimbursed on
the Letters of Credit.

 

(v)                                 Participation in Letters of Credit.  If, for
any reason, Agent (and the Fronting Lender, if the Fronting Lender is a Lender
other than Agent) shall be unable to or, in the opinion of Agent, it shall be
impracticable to, convert any Letter of Credit to a Revolving Loan pursuant to
the preceding subsection, Agent (and the Fronting Lender, if the Fronting Lender
is a Lender other than Agent) shall have the right to request that each
Revolving Lender purchase a participation in the amount due with respect to such
Letter of Credit, and Agent shall promptly notify each Revolving Lender thereof
(by facsimile or telephone, confirmed in writing).  Upon such notice, but
without further action, the Fronting Lender hereby agrees to grant to each
Revolving Lender, and each Revolving Lender hereby agrees to acquire from the
Fronting Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Revolving Lender’s
Applicable Commitment Percentage of the principal amount due with respect to
such Letter of Credit.  In consideration and in furtherance of the foregoing,
each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt
of notice as provided above, to pay to Agent, for the account of the Fronting
Lender, such Revolving Lender’s ratable share of the amount due with respect to
such Letter of Credit (determined in accordance with such Revolving Lender’s
Applicable Commitment Percentage).  Each Revolving Lender acknowledges and
agrees that its obligation to acquire participations in the amount due under any
Letter of Credit that is drawn but not reimbursed by Borrower pursuant to this
subsection (v) shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not the Revolving Credit Commitment shall
have been reduced or terminated.  Each Revolving Lender shall comply with its
obligation under this subsection (v) by wire transfer of immediately available
funds in the same manner as provided in Section 2.6 hereof with respect to
Revolving Loans.  Each Revolving Lender is hereby authorized to record on its
records such Revolving Lender’s pro rata share of the amounts paid and not
reimbursed on the Letters of Credit.  In addition, each Lender agrees to risk
participate in the Existing Letters of Credit as provided in subsection (vi)
below.

 

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(vi)                              Existing Letters of Credit.  Schedule 2.2
hereto contains a description of all letters of credit outstanding on, and to
continue in effect after, the Closing Date.  Each such letter of credit issued
by a bank that is or becomes a Lender under this Agreement on the Closing Date
(each, an “Existing Letter of Credit”) shall constitute a “Letter of Credit” for
all purposes of this Agreement, issued, for purposes of Section 2.2(a)(v)
hereof, on the Closing Date.  Borrower, Agent and the applicable Lenders hereby
agree that, from and after such date, the terms of this Agreement shall apply to
the Existing Letters of Credit, superseding any other agreement theretofore
applicable to them to the extent inconsistent with the terms hereof. 
Notwithstanding anything to the contrary in any reimbursement agreement
applicable to the Existing Letters of Credit, the fees payable in connection
with each Existing Letter of Credit to be shared with the Lenders shall accrue
from the Closing Date at the rate provided in this Section 2.2.

 

(c)                                  Swing Loans.

 

(i)                                     Generally.  Subject to the terms and
conditions of this Agreement, during the Commitment Period, the Swing Line
Lender shall make a Swing Loan or Swing Loans to Borrower in such amount or
amounts as Borrower, through an Authorized Officer, may from time to time
request; provided that Borrower shall not request any Swing Loan if, after
giving effect thereto, (A) the Revolving Credit Exposure would exceed the
Revolving Credit Commitment, or (B) the Swing Line Exposure would exceed the
Swing Line Commitment.  Each Swing Loan shall be due and payable on the Swing
Loan Maturity Date applicable thereto.

 

(ii)                                  Refunding of Swing Loans.  If the Swing
Line Lender so elects, by giving notice to Borrower and the Revolving Lenders,
Borrower agrees that the Swing Line Lender shall have the right, in its sole
discretion, to require that any Swing Loan be refinanced as a Revolving Loan. 
Such Revolving Loan shall be a Base Rate Loan unless otherwise requested by and
available to Borrower hereunder.  Upon receipt of such notice by Borrower and
the Revolving Lenders, Borrower shall be deemed, on such day, to have requested
a Revolving Loan in the principal amount of the Swing Loan in accordance with
subsection (a) of this Section 2.2 and 2.6 hereof (other than the requirement
set forth in Section 2.6(d) hereof).  Such Revolving Loan shall be evidenced by
the Revolving Credit Notes.  Each Revolving Lender agrees to make a Revolving
Loan on the date of such notice, subject to no conditions precedent whatsoever. 
Each Revolving Lender acknowledges and agrees that such Revolving Lender’s
obligation to make a Revolving Loan pursuant to subsection (a) of this
Section 2.2 hereof when required by this subsection (ii) is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or
Event of Default, and that its payment to Agent, for the account of the Swing
Line Lender, of the proceeds of such Revolving Loan shall be made without any
offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever
and whether or not the Revolving Credit Commitment shall have been reduced or
terminated.  Borrower irrevocably authorizes and instructs Agent to apply the
proceeds of any borrowing pursuant to this subsection (ii) to repay in full such
Swing Loan.  Each

 

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Revolving Lender is hereby authorized to record on its records such Revolving
Lender’s pro rata share of the amounts paid to refund such Swing Loan.

 

(iii)                               Participation in Swing Loans.  If, for any
reason, Agent is unable to or, in the opinion of Agent, it is impracticable to,
convert any Swing Loan to a Revolving Loan pursuant to the preceding
subsection (ii), then on any day that a Swing Loan is outstanding (whether
before or after the maturity thereof), Agent shall have the right to request
that each Revolving Lender purchase a participation in such Swing Loan, and
Agent shall promptly notify each Revolving Lender thereof (by facsimile or
telephone, confirmed in writing).  Upon such notice, but without further action,
the Swing Line Lender hereby agrees to grant to each Revolving Lender, and each
Revolving Lender hereby agrees to acquire from the Swing Line Lender, an
undivided participation interest in such Swing Loan in an amount equal to such
Revolving Lender’s Applicable Commitment Percentage of the principal amount of
such Swing Loan.  In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to Agent, for the benefit of the Swing Line
Lender, such Revolving Lender’s ratable share of such Swing Loan (determined in
accordance with such Revolving Lender’s Applicable Commitment Percentage).  Each
Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swing Loans pursuant to this subsection (iii) is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or an
Event of Default, and that each such payment shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not the Revolving Credit Commitment shall have been reduced or
terminated.  Each Revolving Lender shall comply with its obligation under this
subsection (iii) by wire transfer of immediately available funds, in the same
manner as provided in Section 2.6 hereof with respect to Revolving Loans to be
made by such Revolving Lender.

 

Section 2.3.  Term Loan.

 

Subject to the terms and conditions of this Agreement, the Term Lenders shall
make the Term Loan to Borrower on the Closing Date, in the amount of the Term
Loan Commitment.  The Term Loan shall be payable in fifteen (15) consecutive
quarter annual installments of One Million Five Hundred Sixty-Two Thousand Five
Hundred Dollars ($1,562,500) each, commencing September 30, 2004, and continuing
on each Regularly Scheduled Payment Date thereafter, with the balance thereof
payable in full on June 30, 2008.  Borrower shall notify Agent, in accordance
with the notice provisions of Section 2.6 hereof, whether the Term Loan will be
a Base Rate Loan or Eurodollar Loans.  The Term Loan may be a mixture of a Base
Rate Loan and Eurodollar Loans.

 

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Section 2.4.  Interest.

 

(a)                                  Revolving Loans.

 

(i)                                     Base Rate Loan.  Borrower shall pay
interest on the unpaid principal amount of a Base Rate Loan outstanding from
time to time from the date thereof until paid at the Derived Base Rate from time
to time in effect.  Interest on such Base Rate Loan shall be payable, commencing
September 30, 2004, and on each Regularly Scheduled Payment Date thereafter and
at the maturity thereof.

 

(ii)                                  Eurodollar Loans.  Borrower shall pay
interest on the unpaid principal amount of each Eurodollar Loan outstanding from
time to time, fixed in advance on the first day of the Interest Period
applicable thereto through the last day of the Interest Period applicable
thereto (but subject to changes in the Applicable Margin), at the Derived
Eurodollar Rate.  Interest on such Eurodollar Loan shall be payable on each
Interest Adjustment Date with respect to an Interest Period (provided that if an
Interest Period shall exceed three months, the interest must be paid every three
months, commencing three months from the beginning of such Interest Period).

 

(b)                                 Swing Loans.  Borrower shall pay interest to
Agent, for the sole benefit of the Swing Line Lender (and any Revolving Lender
that shall have purchased a participation in such Swing Loan), on the unpaid
principal amount of each Swing Loan outstanding from time to time from the date
thereof until paid at the Derived Base Rate.  Interest on each Swing Loan shall
be payable on the Swing Loan Maturity Date applicable thereto. Each Swing Loan
shall bear interest for a minimum of one day.

 

(c)                                  Term Loan.

 

(i)                                     Base Rate Loan.  With respect to any
portion of the Term Loan that shall be a Base Rate Loan, Borrower shall pay
interest on the unpaid principal amount thereof outstanding from time to time
from the date thereof until paid, commencing September 30, 2004, and continuing
on each Regularly Scheduled Payment Date thereafter and at the maturity thereof,
at the Derived Base Rate from time to time in effect.

 

(ii)                                  Eurodollar Loans.  With respect to any
portion of the Term Loan that shall be a Eurodollar Loan, Borrower shall pay
interest on the unpaid principal amount of such Eurodollar Loan outstanding from
time to time, fixed in advance on the first day of the Interest Period
applicable thereto through the last day of the Interest Period applicable
thereto (but subject to changes in the Applicable Margin), at the Derived
Eurodollar Rate.  Interest on such Eurodollar Loan shall be payable on each
Interest Adjustment Date with respect to an Interest Period (provided that if an
Interest Period shall exceed three months, the interest must be paid every three
months, commencing three months from the beginning of such Interest Period).

 

(d)                                 Default Rate.  Anything herein to the
contrary notwithstanding, if an Event of Default pursuant to Section 8.1 or 8.11
hereof shall occur and be continuing, upon the election of the Required Lenders
(i) the principal of each Loan and the unpaid interest thereon shall bear
interest, until paid, at the Default Rate, (ii) the fee for the aggregate
undrawn face amount of all issued and outstanding Letters of Credit shall be
increased by two percent (2%) in excess of the rate otherwise applicable
thereto, and (iii) in the case of any other amount due from Borrower

 

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hereunder or under any other Loan Document, such amount shall bear interest at
the Default Rate; provided that, during an Event of Default under Section 8.11
hereof, the applicable Default Rate shall apply without any election or action
on the part of Agent or any Lender.

 

(e)                                  Limitation on Interest.  In no event shall
the rate of interest hereunder exceed the maximum rate allowable by law.   
Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the “Maximum
Rate”).  If Agent or any Lender shall receive interest in an amount that exceeds
the Maximum Rate, the excess interest shall be applied to the principal of the
Loans or, if it exceeds such unpaid principal, refunded to Borrower.  In
determining whether the interest contracted for, charged, or received by Agent
or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted
by applicable law, (i) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.

 

Section 2.5.  Evidence of Indebtedness.

 

(a)                                  Revolving Loans.  The obligation of
Borrower to repay the Revolving Loans made by each Revolving Lender and to pay
interest thereon shall be evidenced by a Revolving Credit Note of Borrower in
the form of the attached Exhibit A, payable to the order of such Revolving
Lender in the principal amount of its Applicable Commitment Percentage of the
Revolving Credit Commitment, or, if less, the aggregate unpaid principal amount
of Revolving Loans made by such Revolving Lender.

 

(b)                                 Swing Loan.  The obligation of Borrower to
repay the Swing Loans and to pay interest thereon shall be evidenced by a Swing
Line Note of Borrower in the form of the attached Exhibit B, and payable to the
order of the Swing Line Lender in the principal amount of the Swing Line
Commitment, or, if less, the aggregate unpaid principal amount of Swing Loans
made by the Swing Line Lender.

 

(c)                                  Term Loan.  The obligation of Borrower to
repay the portion of the Term Loan made by each Term Lender and to pay interest
thereon shall be evidenced by a Term Note of Borrower in the form of the
attached Exhibit C, payable to the order of such Term Lender in the principal
amount of its Commitment Percentage of the Term Loan.

 

Section 2.6.  Notice of Credit Event; Funding of Loans.

 

(a)                                  Notice of Credit Event.  Borrower, through
an Authorized Officer, shall provide to Agent a Notice of Loan prior to
(i) 12:00 noon (Eastern time) on the proposed date of borrowing or conversion of
any Base Rate Loan, (ii) 12:00 noon (Eastern time) three Business Days prior to
the proposed date of borrowing, conversion or continuation of any Eurodollar
Loan, and (iii) 3:00 P.M. (Eastern time) on the proposed date of borrowing of
any Swing Loan.  Borrower shall comply with the notice provisions set forth in
Section 2.2(b) hereof with respect to Letters of Credit.

 

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(b)                                 Funding of Loans.  Agent shall notify each
Revolving Lender of the date, amount and Interest Period (if applicable)
promptly upon the receipt of a Notice of Loan, and, in any event, by 2:00 P.M.
(Eastern time) on the date such notice is received.  On the date that the Credit
Event set forth in such notice is to occur, each such Lender shall provide to
Agent, not later than 3:00 P.M. (Eastern time), the amount in Dollars in federal
or other immediately available funds, required of it.  If Agent shall elect to
advance the proceeds of such Loan prior to receiving funds from such Revolving
Lender, Agent shall have the right, upon prior notice to Borrower, to debit any
account of Borrower or otherwise receive such amount from Borrower, promptly
after demand, in the event that such Revolving Lender shall fail to reimburse
Agent in accordance with this subsection.  Agent shall also have the right to
receive interest from such Revolving Lender at the Federal Funds Effective Rate
in the event that such Revolving Lender shall fail to provide its portion of the
Loan on the date requested and Agent shall elect to provide such funds.

 

(c)                                  Conversion of Loans.  At the request of
Borrower to Agent, subject to the notice and other provisions of this
Section 2.6, the appropriate Lenders shall convert a Base Rate Loan to one or
more Eurodollar Loans at any time and shall convert a Eurodollar Loan to a Base
Rate Loan on any Interest Adjustment Date applicable thereto.  Swing Loans may
be converted by the Swing Line Lender to Revolving Loans in accordance with
Section 2.2(c)(ii) hereof.

 

(d)                                 Minimum Amount.  Each request for:

 

(i)                                     a Base Rate Loan shall be in an amount
of not less than Two Million Dollars ($2,000,000), increased by increments of
One Million Dollars ($1,000,000);

 

(ii)                                  a Eurodollar Loan shall be in an amount of
not less than Two Million Dollars ($2,000,000), increased by increments of One
Million Dollars ($1,000,000); and

 

(iii)                               a Swing Loan shall be in an amount not less
than One Hundred Thousand Dollars ($100,000).

 

(e)                                  Interest Periods.  At no time shall
Borrower request that Eurodollar Loans be outstanding for more than eight
different Interest Periods.

 

Section 2.7.  Payment on Loans and Other Obligations.

 

(a)                                  Payments Generally.  Each payment made
hereunder by Borrower shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever.

 

(b)                                 Payments from Borrower.  All payments
(including prepayments) to Agent of the principal of or interest on any Loan or
other payment, including but not limited to principal, interest, fees or any
other amount owed by Borrower under this Agreement, shall be made in Dollars. 
All payments described in this subsection (b) shall be remitted to Agent, at the
address of Agent for notices referred to in Section 11.4 hereof, for the account
of the Revolving Lenders (or the Fronting Lender or the Swing Line Lender, as
appropriate) not later than 1:00 P.M.

 

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(Eastern time) on the due date thereof in immediately available funds.  Any such
payments received by Agent after 1:00 P.M. (Eastern time) shall be deemed to
have been made and received on the next Business Day.

 

(c)                                  Payments to Lenders.  Upon Agent’s receipt
of payments hereunder, Agent shall immediately distribute to the appropriate
Lenders (except with respect to Swing Loans, which shall be paid to the Swing
Line Lender or, with respect to Letters of Credit, certain of which payments
shall only be paid to the Fronting Lender) their respective ratable shares, if
any, of the amount of principal, interest, and commitment and other fees
received by Agent for the account of such Lender.  Payments received by Agent
shall be delivered to the Lenders in immediately available funds.  Each Lender,
as appropriate, shall record any principal, interest or other payment, the
principal amounts of Base Rate Loans, Eurodollar Loans, Swing Loans and Letters
of Credit, all prepayments and the applicable dates, including Interest Periods,
with respect to the Loans made, and payments received by such Lender, by such
method as such Lender may generally employ; provided, however, that failure to
make any such entry shall in no way detract from the obligations of Borrower
under this Agreement or any Note.  The aggregate unpaid amount of Loans, types
of Loans, Interest Periods and similar information with respect to the Loans and
Letters of Credit set forth on the records of Agent shall be rebuttably
presumptive evidence with respect to such information, including the amounts of
principal and interest owing to each Lender.

 

(d)                                 Timing of Payments.  Whenever any payment to
be made hereunder, including, without limitation, any payment to be made on any
Loan, shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next Business Day and such extension of time shall
in each case be included in the computation of the interest payable on such
Loan; provided, however, that, with respect to any Eurodollar Loan, if the next
Business Day shall fall in the succeeding calendar month, such payment shall be
made on the preceding Business Day and the relevant Interest Period shall be
adjusted accordingly.

 

Section 2.8.  Prepayment.

 

(a)                                  Right to Prepay.  Borrower shall have the
right at any time or from time to time to prepay, on a pro rata basis for all of
the appropriate Lenders (except with respect to Swing Loans, which shall be paid
to the Swing Line Lender), all or any part of the principal amount of the Loans,
as designated by Borrower.  Such payment shall include interest accrued on the
amount so prepaid to the date of such prepayment and any amount payable under
Article III hereof with respect to the amount being prepaid. Prepayments of Base
Rate Loans shall be without any premium or penalty, other than any prepayment
fees, penalties or other charges that may be contained in any Hedge Agreement. 
Each prepayment of the Term Loan shall be applied to the principal installments
thereof on a pro rata basis among the remaining principal installments.

 

(b)                                 Notice of Prepayment.  Borrower shall give
Agent notice of prepayment of a Base Rate Loan or Swing Loan by not later than
11:00 A.M. (Eastern time) on the Business Day on which such prepayment is to be
made and written notice of the prepayment of any Eurodollar

 

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Loan not later than 1:00 P.M. (Eastern time) three Business Days before the
Business Day on which such prepayment is to be made.

 

(c)                                  Minimum Amount.  Each prepayment of a
Eurodollar Loan shall be in the principal amount of not less than Five Hundred
Thousand Dollars ($500,000), increased by increments of Two Hundred Fifty
Thousand Dollars ($250,000), or, with respect to a Swing Loan, the principal
balance of such Swing Loan, except in the case of a mandatory payment pursuant
to Section 2.12 or Article III hereof.

 

Section 2.9.  Commitment and Other Fees.

 

(a)                                  Commitment Fee.  Borrower shall pay to
Agent, for the ratable account of the Revolving Lenders, as a consideration for
the Revolving Credit Commitment, a commitment fee from the Closing Date to and
including the last day of the Commitment Period, payable quarterly, at a rate
per annum equal to (i) the Applicable Commitment Fee Rate in effect on the
payment date, times (ii) (A) the average daily Revolving Amount in effect during
such quarter, minus (B) the average daily Revolving Credit Exposure (exclusive
of the Swing Line Exposure) during such quarter.  The commitment fee shall be
payable in arrears, on September 30, 2004 and on each Regularly Scheduled
Payment Date thereafter, and on the last day of the Commitment Period.

 

(b)                                 Agent Fee.  Borrower shall pay to Agent, for
its sole benefit, the fees set forth in the Agent Fee Letter.

 

Section 2.10.  Modifications of Commitment.

 

(a)                                  Optional Reduction of Commitment.  Borrower
may at any time and from time to time permanently reduce in whole or ratably in
part the Revolving Credit Commitment to an amount not less than the then
existing Revolving Credit Exposure, by giving Agent not fewer than three
Business Days’ written notice of such reduction, provided that any such partial
reduction shall be in an aggregate amount, for all of the Revolving Lenders, of
not less than Five Million Dollars ($5,000,000).  Agent shall promptly notify
each Revolving Lender of the date of each such reduction and such Revolving
Lender’s proportionate share thereof.  After each such reduction, the commitment
fees payable hereunder shall be calculated upon the Revolving Amount as so
reduced.  If Borrower reduces in whole the Revolving Credit Commitment, on the
effective date of such reduction (Borrower having prepaid in full the unpaid
principal balance, if any, of the Loans, together with all interest and
commitment and other fees accrued and unpaid, and provided that no Letter of
Credit Exposure or Swing Line Exposure shall exist), all of the Notes shall be
delivered to Agent marked “Canceled” and Agent shall redeliver such Notes to
Borrower.  Any partial reduction in the Revolving Amount shall be effective
during the remainder of the Commitment Period.

 

(b)                                 Increase in Commitment.  At any time during
the Commitment Increase Period, Borrower may request that Agent increase the
Revolving Amount from the Closing Revolving Amount up to the Maximum Revolving
Amount by either (i) proportionally increasing, for one or more Revolving
Lenders, with their prior written consent, their respective Applicable

 

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Commitment Percentage of the Revolving Credit Commitment, or (ii) including one
or more Additional Lenders, each with a new commitment under the Revolving
Credit Commitment, as a party to this Agreement (collectively, the “Additional
Commitment”).  During the Commitment Increase Period, the Lenders agree that
Agent shall permit one or more Additional Commitments upon satisfaction of the
following requirements: (A) each Additional Lender, if any, shall execute an
Additional Lender Assumption Agreement, (B) Agent shall provide to Borrower and
each Revolving Lender a revised Schedule 1 to this Agreement, including revised
Applicable Commitment Percentages for each of the Revolving Lenders with respect
to the Revolving Credit Commitment (revised so that each Revolving Lender will
have a new Applicable Commitment Percentage for the Revolving Credit
Commitment), at least three Business Days prior to the date of the effectiveness
of such Additional Commitments (each an “Additional Lender Assumption Effective
Date”), (C) Borrower shall execute and deliver to Agent and the Revolving
Lenders such replacement or additional Revolving Credit Notes as shall be
required by Agent, and (D) Borrower shall, on the Additional Lender Assumption
Effective Date, deliver to Agent, for the benefit of the Lenders, (1) written
confirmation (in form and substance reasonably satisfactory to Agent) that
Borrower shall have given written notice to each Convertible Subordinated
Noteholder that the Obligations incurred pursuant to the Additional Commitments
are being designated as Senior Indebtedness (as defined in the Convertible
Subordinated Notes), and (2) a certificate and any other reasonable evidence
required by Agent or the Required Lenders demonstrating that all terms and
conditions for designating Senior Indebtedness (as defined in the Convertible
Subordinated Notes) under the Convertible Subordinated Notes are being met.  The
Revolving Lenders hereby authorize Agent to execute each Additional Lender
Assumption Agreement on behalf of the Revolving Lenders.  On each Additional
Lender Assumption Effective Date, the Revolving Lenders shall make adjustments
among themselves with respect to the Revolving Loans then outstanding and
amounts of principal, interest, commitment fees and other amounts paid or
payable with respect thereto as shall be necessary, in the opinion of Agent, in
order to reallocate among such Revolving Lenders such outstanding amounts, based
on the revised Applicable Commitment Percentages and to otherwise carry out
fully the intent and terms of this subsection (b).  In connection therewith, it
is understood and agreed that the Maximum Amount of any Revolving Lender will
not be increased (or decreased except pursuant to Section 2.10(a) hereof)
without the prior written consent of such Revolving Lender.  Borrower shall not
request any increase in the Total Commitment Amount (or the Revolving Amount)
pursuant to this subsection (b) if a Default or an Event of Default shall then
exist, or immediately after giving effect to any such increase would exist. 
Upon the increase of the Revolving Amount, the Total Commitment Amount shall be
proportionally increased from the Closing Commitment Amount to the Maximum
Commitment Amount.

 

Section 2.11.  Computation of Interest and Fees.  With the exception of Base
Rate Loans, interest on Loans, Related Expenses and commitment and other fees
and charges hereunder shall be computed on the basis of a year having three
hundred sixty (360) days and calculated for the actual number of days elapsed. 
With respect to Base Rate Loans, interest shall be computed on the basis of a
year having three hundred sixty-five (365) days or three hundred sixty-six (366)
days, as the case may be, and calculated for the actual number of days elapsed.

 

Section 2.12.  Mandatory Payment.

 

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(a)                                  Revolving Credit Exposure.  If, at any
time, the Revolving Credit Exposure shall exceed the Revolving Credit
Commitment, Borrower shall, as promptly as practicable, but in no event later
than the next Business Day, prepay an aggregate principal amount of the
Revolving Loans sufficient to bring the Revolving Credit Exposure within the
Revolving Credit Commitment.

 

(b)                                 Swing Line Exposure.  If, at any time, the
Swing Line Exposure shall exceed the Swing Line Commitment, Borrower shall, as
promptly as practicable, but in no event later than the next Business Day,
prepay an aggregate principal amount of the Swing Loans sufficient to bring the
Swing Line Exposure within the Swing Line Commitment.

 

(c)                                  Mandatory Payments Generally.  Unless
otherwise designated by Borrower, each prepayment pursuant to
subsection (a) hereof shall be applied in the following order (i) first, to the
outstanding Base Rate Loans, and (ii) second, to the outstanding Eurodollar
Loans, provided that if the outstanding principal amount of any Eurodollar Loan
shall be reduced to an amount less than the minimum amount set forth in
Section 2.6 hereof as a result of such prepayment, then such Eurodollar Loan
shall be converted into a Base Rate Loan on the date of such prepayment.  Any
prepayment of a Eurodollar Loan or Swing Loan pursuant to this Section 2.12
shall be subject to the prepayment provisions set forth in Article III hereof.

 

Section 2.13.  Extension of Commitment.  Contemporaneously with the delivery of
the financial statements required pursuant to Section 5.3(b) hereof (beginning
with the financial statements for the fiscal year of Borrower ending
December 31, 2004, Borrower may deliver a Request for Extension, requesting that
the Revolving Lenders extend the maturity of the Revolving Credit Commitment for
an additional year.  Each such extension shall require the unanimous written
consent of all of the Revolving Lenders and shall be upon such terms and
conditions as may be agreed to by Agent, Borrower and the Revolving Lenders. 
Borrower shall pay any attorneys’ fees or other expenses of Agent in connection
with the documentation of any such extension, as well as such other fees as may
be agreed upon between Borrower and Agent.

 

ARTICLE III.  ADDITIONAL PROVISIONS RELATING TO
EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

 

Section 3.1.  Requirements of Law.

 

(a)                                  If, after the Closing Date (i) the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof or (ii) the compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority:

 

(A)                              shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Taxes and Excluded Taxes which are
governed by Section 3.2 hereof);

 

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(B)                                shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination of the
Eurodollar Rate; or

 

(C)                                shall impose on such Lender any other
condition;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, Borrower shall pay to such
Lender, promptly after receipt of a written request (or, if required by
Borrower, a certificate of such Lender specifying the basis for such request)
therefor, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable.  If any Lender becomes entitled to
claim any additional amounts pursuant to this subsection (a), such Lender shall
promptly notify Borrower (with a copy to Agent) of the event by reason of which
it has become so entitled.

 

(b)                                 If any Lender shall have determined that,
after the Closing Date, the adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority shall have the effect of reducing the
rate of return on such Lender’s or such corporation’s capital as a consequence
of its obligations hereunder, or under or in respect of any Letter of Credit, to
a level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration the policies
of such Lender or corporation with respect to capital adequacy), then from time
to time, upon submission by such Lender to Borrower (with a copy to Agent) of a
written request therefor (which shall include the method for calculating such
amount in reasonable detail), Borrower shall promptly pay or cause to be paid to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction.

 

(c)                                  A certificate as to any additional amounts
payable pursuant to this Section 3.1 submitted by any Lender to Borrower (with a
copy to Agent) shall be conclusive absent manifest error.  In determining any
such additional amounts, such Lender may use any method of averaging and
attribution that it (in its sole discretion) shall deem applicable.  The
obligations of Borrower pursuant to this Section 3.1 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

 

(d)                                 Notwithstanding the foregoing, no Lender
shall be entitled to any indemnification or reimbursement pursuant to this
Section 3.1 to the extent such Lender has not made demand therefore (as set
forth above) within two hundred seventy (270) days after the occurrence of the
event giving rise to such entitlement or, if later, such Lender having knowledge
of such event.

 

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Section 3.2.  Taxes.

 

(a)                                  All payments made by any Credit Party under
any Loan Document shall be made free and clear of, and without deduction or
withholding for or on account of any Taxes or Other Taxes.  If any Taxes or
Other Taxes are required to be deducted or withheld from any amounts payable to
Agent or any Lender hereunder, the amounts so payable to Agent or such Lender
shall be increased to the extent necessary to yield to Agent or such Lender
(after deducting, withholding and payment of all Taxes and Other Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in the Loan Documents.

 

(b)                                 In addition, the Credit Parties shall pay
Taxes and Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

 

(c)                                  Whenever any Taxes or Other Taxes are
required to be withheld and paid by a Credit Party, such Credit Party shall
timely withhold and pay such taxes to the relevant Governmental Authorities.  As
promptly as possible thereafter, such Credit Party shall send to Agent for its
own account or for the account of the relevant Lender, as the case may be, a
certified copy of an original official receipt received by such Credit Party
showing payment thereof or other evidence of payment reasonably acceptable to
Agent or such Lender.  If such Credit Party shall fail to pay any Taxes or Other
Taxes when due to the appropriate Governmental Authority or fails to remit to
Agent the required receipts or other required documentary evidence, such Credit
Party shall indemnify Agent and the Lenders on demand for any incremental taxes,
interest or penalties that may become payable by Agent or any Lender as a result
of any such failure.

 

(d)                                 If any Lender shall be so indemnified by a
Credit Party, such Lender shall use reasonable efforts to obtain the benefits of
any refund, deduction or credit for any taxes or other amounts with respect to
the amount paid by such Credit Party and shall reimburse such Credit Party to
the extent, but only to the extent, that such Lender shall receive a refund with
respect to the amount paid by such Credit Party or an effective net reduction in
taxes or other governmental charges (including any taxes imposed on or measured
by the total net income of such Lender) of the United States or any state or
subdivision or any other Governmental Authority thereof by virtue of any such
deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Lender.  If, at the time any audit of such
Lender’s income tax return is completed, such Lender determines, based on such
audit, that it shall not have been entitled to the full amount of any refund
reimbursed to such Credit Party as aforesaid or that its net income taxes shall
not have been reduced by a credit or deduction for the full amount reimbursed to
such Credit Party as aforesaid, such Credit Party, upon request of such Lender,
shall promptly pay to such Lender the amount so refunded to which such Lender
shall not have been so entitled, or the amount by which the net income taxes of
such Lender shall not have been so reduced, as the case may be.

 

(e)                                  Each Lender that is not (i) a citizen or
resident of the United States of America, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States of
America (or any jurisdiction thereof), or (iii) an estate or trust that is
subject to federal income taxation regardless of the source of its income (any
such Person, a “Non-U.S.

 

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Lender”) shall deliver to Borrower and Agent two copies of either U.S. Internal
Revenue Service Form W-8BEN, W-8IMY or Form W-8ECI, or, 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 Code with respect to payments of “portfolio
interest”, a certification with respect to such interest and two copies of Form
W-8BEN, or any subsequent versions thereof or successors thereto, properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by
Credit Parties under this Agreement and the other Loan Documents.  Such forms
shall be delivered by each Non-U.S. Lender on or before the date it becomes a
party to this Agreement or such other Loan Document.  In addition, each Non-U.S.
Lender shall deliver such forms or appropriate replacements promptly upon the
expiration, obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify Borrower at any
time it determines that such Lender is no longer in a position to provide any
previously delivered certificate to Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any
other provision of this subsection (e), a Non-U.S. Lender shall not be required
to deliver any form pursuant to this subsection (e) that such Non-U.S. Lender is
not legally able to deliver.

 

(f)                                    The agreements in this Section 3.2 shall
survive the termination of the Loan Documents and the payment of the Loans and
all other amounts payable hereunder.

 

(g)                                 For any period with respect to which a
Non-U.S. Lender has failed to provide Borrower with the appropriate form,
statement or other document described in subsection (e) above (other than if
such failure is due to a change in law, or in the interpretation or application
thereof, occurring subsequent to the date on which the form otherwise is not
required under subsection (e) above), such Non-U.S. Lender shall not be entitled
to indemnification under Section 3.2(a), (b) or (c) with respect to any
additional Taxes imposed by the United States solely by reason of such failure.

 

(h)                                 If any Lender is entitled to a reduction in
(and not a complete exemption from) the applicable withholding tax and the
Company shall have previously paid in full such withholding tax prior to such
reduction, the Company may withhold from any interest payment to such Lender an
amount equivalent to the reduction in the applicable withholding tax.

 

Section 3.3.  Funding Losses.  Borrower agrees to indemnify each Lender,
promptly after receipt of a written, reasonably detailed certification and
request therefor, and to hold each Lender harmless from, any loss or expense
that such Lender may sustain or incur as a consequence of (a) default by
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after Borrower has given a notice requesting the same in accordance with
the provisions of this Agreement, (b) default by Borrower in making any
prepayment of or conversion from Eurodollar Loans after Borrower has given a
notice thereof in accordance with the provisions of this Agreement, (c) the
making of a prepayment of a Eurodollar Loan on a day that is not the last day of
an Interest Period applicable thereto, or (d) any conversion of a Eurodollar
Loan to a Base Rate Loan pursuant to Section 2.6 hereof on a day that is not the
last day of an Interest Period applicable thereto.  Such indemnification shall
be in an amount equal to the excess, if any, of (i) the amount of interest that
would have accrued on

 

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the amounts so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (ii) the amount of interest (as reasonably determined by such
Lender) that would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the appropriate
London interbank market, along with any administration fee charged by such
Lender.  A certificate as to any amounts payable pursuant to this Section 3.3
submitted to Borrower (with a copy to Agent) by any Lender shall be conclusive
absent manifest error.  The obligations of Borrower pursuant to this Section 3.3
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.  Notwithstanding the foregoing, no Lender
shall be entitled to any indemnification or reimbursement pursuant to this
Section 3.3 to the extent such Lender has not made demand therefore (as set
forth above) within two hundred seventy (270) days after the occurrence of the
event giving rise to such entitlement or, if later, such Lender having knowledge
of such event.

 

Section 3.4.  Change of Lending Office.  Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.1 or 3.2(a)
hereof with respect to such Lender, it will, if requested by Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office (or an affiliate of such Lender, if practical
for such Lender) for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its
lending office(s) to suffer no economic, legal or regulatory disadvantage; and
provided, further, that nothing in this Section shall affect or postpone any of
the obligations of Borrower or the rights of any Lender pursuant to Section 3.1
or 3.2(a) hereof.

 

Section 3.5.  Eurodollar Rate Lending Unlawful; Inability to Determine Rate.

 

(a)                                  If any Lender shall reasonably determine
(which determination shall, upon notice thereof to Borrower and Agent, be
conclusive and binding on Borrower) that, after the Closing Date, (i) the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or (ii) any Governmental Authority asserts that it is unlawful, for
such Lender to make or continue any Loan as, or to convert (if permitted
pursuant to this Agreement) any Loan into, a Eurodollar Loan, the obligations of
such Lender to make, continue or convert any such Eurodollar Loan shall, upon
such determination, be suspended until such Lender shall notify Agent that the
circumstances causing such suspension no longer exist, and all outstanding
Eurodollar Loans payable to such Lender shall automatically convert (if
conversion is permitted under this Agreement) into a Base Rate Loan, or be
repaid (if no conversion is permitted) at the end of the then current Interest
Periods with respect thereto or sooner, if required by law or such assertion.

 

(b)                                 If Agent or the Required Lenders reasonably
determine that for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Loan, or that the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Loan does not adequately

 

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and fairly reflect the cost to the Lenders of funding such Loan, Agent will
promptly so notify Borrower and each Lender.  Thereafter, the obligation of the
Lenders to make or maintain such Eurodollar Loan shall be suspended until Agent
(upon the instruction of the Required Lenders) revokes such notice.  Upon
receipt of such notice, Borrower may revoke any pending request for a borrowing
of, conversion to or continuation of such Eurodollar Loan or, failing that, will
be deemed to have converted such request into a request for a borrowing of a
Base Rate Loan in the amount specified therein.

 

Section 3.6.  Replacement of Lenders.  Borrower shall be permitted to replace
any Lender that requests reimbursement for amounts owing pursuant to Section 3.1
or 3.2(a) hereof, or asserts its inability to make a LIBOR Fixed Rate Loan
pursuant to Section 3.5 hereof; provided that (a) such replacement does not
conflict with any Requirement of Law, (b) no Default or Event of Default shall
have occurred and be continuing at the time of such replacement, (c) prior to
any such replacement, such Lender shall have taken no action under Section 3.4
hereof so as to eliminate the continued need for payment of amounts owing
pursuant to Section 3.1 or 3.2(a) hereof or, if it has taken any action, such
request has still been made, (d) the replacement financial institution shall
purchase, at par, all Loans and other amounts owing to such replaced Lender on
or prior to the date of replacement and assume all commitments and obligations
of such replaced Lender, (e) Borrower shall be liable to such replaced Lender
under Section 3.3 hereof if any Alternate Currency Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (f) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to Agent, (g) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of
Section 10.10 hereof (provided that Borrower (or the succeeding Lender, if such
Lender is willing) shall be obligated to pay the assignment fee referred to
therein), and (h) until such time as such replacement shall be consummated,
Borrower shall pay all additional amounts (if any) required pursuant to
Section 3.1 or 3.2(a) hereof, as the case may be.

 

ARTICLE IV.  CONDITIONS PRECEDENT

 

Section 4.1.  Conditions to Each Credit Event.  The obligation of the Lenders,
the Fronting Lender and the Swing Line Lender to participate in any Credit Event
shall be conditioned, in the case of each Credit Event, upon the following:

 

(a)                                  all conditions precedent as listed in
Section 4.2 hereof required to be satisfied prior to the first Credit Event
shall have been satisfied prior to or as of the first Credit Event;

 

(b)                                 Borrower shall have submitted a Notice of
Loan (or with respect to a Letter of Credit, complied with the provisions of
Section 2.2(b) hereof) and otherwise complied with Section 2.6 hereof;

 

(c)                                  no Default or Event of Default shall then
exist or immediately after such Credit Event would exist;

 

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(d)                                 no condition or event shall have occurred
that Agent or the Required Lenders determine has or is reasonably likely to have
a Material Adverse Effect; and

 

(e)                                  each of the representations and warranties
contained in Article VI hereof shall be true in all material respects as if made
on and as of the date of such Credit Event, except to the extent that any
thereof expressly relate to an earlier date.

 

Each request by Borrower for a Credit Event shall be deemed to be a
representation and warranty by Borrower as of the date of such request as to the
satisfaction of the conditions precedent specified in subsections (c), (d) and
(e) above.

 

Section 4.2.  Conditions to the First Credit Event.  The obligation of the
Lenders, the Fronting Lender and the Swing Line Lender to participate in the
first Credit Event is subject to Borrower satisfying each of the following
conditions prior to or concurrently with such Credit Event (unless waived in
writing by Agent):

 

(a)                                  Notes.  Borrower shall have executed and
delivered to (i) each Revolving Lender its Revolving Credit Note, (ii) each Term
Lender its Term Note, and (iii) the Swing Line Lender the Swing Line Note.

 

(b)                                 Guaranties of Payment.  Each Guarantor of
Payment shall have executed and delivered to Agent a Guaranty of Payment.

 

(c)                                  Security Agreements.  Each Guarantor of
Payment shall have executed and delivered to Agent, for the benefit of the
Lenders, a Security Agreement and such other documents or instruments, as may be
reasonably required by Agent to create the Liens of Agent, for the benefit of
the Lenders, in the assets of such Guarantor of Payment, all to be in form and
substance reasonably satisfactory to Agent and the Lenders.

 

(d)                                 Pledge Agreement.  Each Company that has a
Subsidiary shall have executed and delivered to Agent, for the benefit of the
Lenders, a Pledge Agreement, in form and substance reasonably satisfactory to
Agent, that provides, among other things, for a pledge of all of the capital
stock of each Subsidiary.

 

(e)                                  Intellectual Property Collateral Assignment
Agreement.  Borrower shall have executed and delivered to Agent, for the benefit
of the Lenders, an Intellectual Property Collateral Assignment Agreement, in
form and substance reasonably satisfactory to Agent.

 

(f)                                    Officer’s Certificate, Resolutions,
Organizational Documents.  Each Credit Party shall have delivered to Agent an
officer’s certificate (or comparable domestic or foreign documents) certifying
the names of the officers of such Credit Party authorized to sign the Loan
Documents, together with the true signatures of such officers and certified
copies of (i) the resolutions of the board of directors (or comparable domestic
or foreign documents) of such Credit Party evidencing approval of the execution
and delivery of the Loan Documents and the execution of other Related Writings
to which such Credit Party is a party, and (ii) the Organizational Documents of
such Credit Party.

 

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(g)                                 Good Standing and Full Force and Effect
Certificates.  Borrower shall have delivered to Agent a good standing
certificate or full force and effect certificate, as the case may be, for each
Credit Party, issued on or about the Closing Date by the Secretary of State in
the state or states where such Credit Party is incorporated or formed or
qualified as a foreign entity.

 

(h)                                 Legal Opinion.  Borrower shall have
delivered to Agent an opinion of counsel for each Credit Party, in form and
substance reasonably satisfactory to Agent and the Lenders.

 

(i)                                     Legal Fees; Agent Fee Letter.  Borrower
shall have (i) executed and delivered to Agent, the Agent Fee Letter and paid to
Agent, for its sole account, the fees stated therein, and (ii) paid all legal
fees and expenses of Agent in connection with the preparation and negotiation of
the Loan Documents.

 

(j)                                     Lien Searches.  With respect to the
property owned or leased by Borrower and each Guarantor of Payment and any other
property securing the Obligations, Borrower, shall have caused to be delivered
to Agent (i) the results of Uniform Commercial Code lien searches, satisfactory
to Agent and the Lenders, (ii) the results of federal and state tax lien and
judicial lien searches, satisfactory to Agent and the Lenders, and (iii) Uniform
Commercial Code termination statements reflecting termination of all financing
statements previously filed by any Person and not expressly permitted pursuant
to Section 5.9 hereof.

 

(k)                                  Existing Credit Agreement.  Borrower shall
have terminated the Credit Agreement between Borrower and LaSalle Bank National
Association, as agent, dated as of January 30, 2004, as amended, which
termination shall be deemed to have occurred upon payment in full of all of the
Indebtedness outstanding thereunder and termination of the commitments
established therein.

 

(l)                                     Closing Certificate.  Borrower shall
have delivered to Agent and the Lenders an officer’s certificate certifying
that, as of the Closing Date, (i) all conditions precedent set forth in this
Article IV have been satisfied, (ii) no Default or Event of Default exists nor
immediately after the making of the first Loan or the issuance of the first
Letter of Credit will exist, and (iii) each of the representations and
warranties contained in Article VI hereof are true and correct in all material
respects as of the Closing Date.

 

(m)                               Letter of Direction.  Borrower shall have
delivered to Agent a letter of direction authorizing Agent, on behalf of the
Lenders, to disburse the proceeds of the Loans, which includes the transfer of
funds under this Agreement and wire instructions setting forth the locations to
which such funds shall be sent.

 

(n)                                 Designation of Senior Indebtedness. 
Borrower shall, on the Closing Date, deliver to Agent, for the benefit of the
Lenders, written confirmation (in form and substance reasonably satisfactory to
Agent) that Borrower shall have given written notice to each Convertible
Subordinated Noteholder that the Secured Obligations are being designated as
Senior Indebtedness (as defined in the Convertible Subordinated Notes).

 

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(o)                                 Miscellaneous.  Borrower shall have provided
to Agent and the Lenders such other items and shall have satisfied such other
conditions as may be reasonably required by Agent or the Lenders.

 

Section 4.3.  Post-Closing Conditions.  On or before each of the dates specified
in this Section 4.3, Borrower shall satisfy each of the items specified in the
subsections below:

 

(a)                                  Control Agreement.  No later than thirty
(30) days after the Closing Date (unless a longer period is agreed to by Agent),
Borrower shall have delivered to Agent an executed copy of a Control Agreement,
in form and substance reasonably satisfactory to Agent, for each deposit account
maintained by a Company, unless otherwise agreed by Agent; provided, that in the
event Borrower is not able to deliver such Control Agreements, Borrower shall
use its best efforts to move such accounts to a depository institution that can
provide such Control Agreements as soon as practicable.

 

(b)                                 Real Estate Matters.  No later than
forty-five (45) days after the Closing Date (unless a longer period is agreed to
by Agent), with respect to each parcel of the Real Property, Borrower shall have
provided to Lender:

 

(i)                                     an updated Loan Policy of title
insurance, ALTA 1970 Form B (amended 10/17/70 and 10/17/84) issued to Lender by
a title company acceptable to Lender (the “Title Company”), in an amount equal
to the appraised value of the Real Property insuring the Mortgage to be a valid,
first-priority lien in the Real Property, free and clear of all defects and
encumbrances except such matters of record as accepted by Lender, in its sole
discretion, and shown as Permitted Encumbrances in “Exhibit B” to the Mortgage,
with such endorsements and affirmative insurance as Lender may require,
including without limitation:

 

(A)                              the deletion of all so-called “standard
exceptions” from such policy;

 

(B)                                a so-called “comprehensive” endorsement in
form and substance acceptable to Lender;

 

(C)                                affirmative insurance coverage regarding
access, compliance with respect to restrictive covenants and any other matters
to which Lender may have objection or require affirmative insurance coverage;
and

 

(D)                               the results of a federal tax lien search in
the county wherein the Real Property is located and such Credit Party has its
principal place of business;

 

(ii)                                  evidence to Lender’s satisfaction in its
sole discretion that no portion of the Real Property is located in a Special
Flood Hazard Area or is otherwise classified as Class A or Class BX on the Flood
Maps maintained by the Federal Emergency Management Agency; and

 

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(iii)                               two fully executed originals of the
Mortgage.

 

ARTICLE V.  COVENANTS

 

Section 5.1.  Insurance.  Each Company shall (a) maintain insurance to such
extent and against such hazards and liabilities as should be maintained in
accordance with its reasonable business judgment; and (b) within ten days of any
Lender’s written request, furnish to such Lender such information about such
Company’s insurance as that Lender may from time to time reasonably request,
which information shall be prepared in form and detail reasonably satisfactory
to such Lender.

 

Section 5.2.  Money Obligations.  Each Company shall pay in full (a) prior in
each case to the date when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long as and to the extent
that the same shall be contested in good faith by appropriate and timely
proceedings and for which adequate provisions have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its wage obligations
to its employees in compliance with the Fair Labor Standards Act (29 U.S.C.
§§ 206-207) or any comparable provisions; and (c) all of its other obligations
calling for the payment of money (except only those so long as and to the extent
that the same shall be contested in good faith and for which adequate provisions
have been established in accordance with GAAP) before such payment becomes
overdue; except in the case of (a), (b) or (c), as would not reasonably be
expected to have a Material Adverse Effect.

 

Section 5.3.  Financial Statements and Information.

 

(a)                                  Quarterly Financials.  Borrower shall
deliver to Agent, within forty-five (45) days after the end of each of the first
three quarter-annual periods of each fiscal year of Borrower, balance sheets of
the Companies as of the end of such period and statements of income (loss),
stockholders’ equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and
certified by a Financial Officer of Borrower.

 

(b)                                 Annual Audit Report.  Borrower shall deliver
to Agent, within ninety (90) days after the end of each fiscal year of Borrower,
an annual audit report of the Companies for that year prepared on a Consolidated
basis, in accordance with GAAP, and certified by an independent nationally
recognized public accountant, which report shall include balance sheets and
statements of income (loss), stockholders’ equity and cash-flow for that period.

 

(c)                                  Compliance Certificate.  Borrower shall
deliver to Agent, concurrently with the delivery of the financial statements set
forth in subsections (a) and (b) above, a Compliance Certificate.

 

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(d)                                 Annual Budget.  Borrower shall deliver to
Agent, within thirty (30) days after the end of each fiscal year of Borrower, an
annual budget for the current fiscal year, to be in a form reasonably acceptable
to Lender.

 

(e)                                  Management Report.  Borrower shall deliver
to Agent, concurrently with the delivery of the quarterly and annual financial
statements set forth in subsection (a) and (b) above, a copy of any management
report, letter or similar writing furnished to the Companies by the accountants
in respect of the Companies’ systems, operations, financial condition or
properties.

 

(f)                                    Shareholder and SEC Documents.  Borrower
shall deliver to Agent, as soon as available, copies of all material notices,
reports, definitive proxy or other statements and other documents sent by
Borrower to its shareholders generally, to the holders of any of its debentures
or bonds generally or the trustee of any indenture securing the same or pursuant
to which they are issued, or sent by Borrower (in final form) to any securities
exchange or over the counter authority or system, or to the SEC or any similar
federal agency having regulatory jurisdiction over the issuance of Borrower’s
securities.

 

(g)                                 Financial Information of Companies. 
Borrower shall use commercially reasonable efforts to deliver to Agent, within
ten days of the written request of Agent or any Lender, such other information
about the financial condition, properties and operations of any Company as Agent
or such Lender may from time to time reasonably request, which information shall
be submitted in form and detail reasonably satisfactory to Agent or such Lender.

 

Section 5.4.  Financial Records.  Each Company shall at all times maintain
records and books of account which are true and correct in all material
respects, including, without limiting the generality of the foregoing,
appropriate provisions for possible losses and liabilities, all in accordance
with GAAP, and at all reasonable times (during normal business hours and upon
reasonable notice to such Company) permit Agent, or any representative of Agent,
to examine such Company’s books and records and to make excerpts therefrom and
transcripts thereof; provided, however, that, except during the continuance of
an Event of Default, such examinations shall be limited to one per year.

 

Section 5.5.  Franchises; Change in Business.

 

(a)                                  Except as otherwise permitted pursuant to
Section 5.12 hereof, each Company (other than a Dormant Subsidiary) shall
preserve and maintain at all times its existence, rights and franchises.

 

(b)                                 No Company shall engage in any business if,
as a result thereof, the general nature of the business of the Companies taken
as a whole would be substantially changed from the general nature of the
business the Companies are engaged in on the Closing Date.

 

Section 5.6.  ERISA Compliance.  Except to the extent a failure to comply would
reasonably be expected to result in a Material Adverse Effect, no Company shall
incur any accumulated funding deficiency within the meaning of ERISA, or any
liability to the PBGC, established thereunder in connection with any ERISA
Plan.  Borrower shall furnish to the

 

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Lenders (a) as soon as possible and in any event within thirty (30) days after
any Company knows or has reason to know that any Reportable Event with respect
to any ERISA Plan has occurred, a statement of a Financial Officer of such
Company, setting forth details as to such Reportable Event and the action that
such Company proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event given to the PBGC if a copy of such notice is
available to such Company, and (b) promptly after receipt thereof a copy of any
notice such Company, or any member of the Controlled Group may receive from the
PBGC or the Internal Revenue Service with respect to any ERISA Plan administered
by such Company; provided, that this latter clause shall not apply to notices of
general application promulgated by the PBGC or the Internal Revenue Service. 
Borrower shall promptly notify the Lenders of any material taxes assessed,
proposed to be assessed or that Borrower has reason to believe may be assessed
against a Company by the Internal Revenue Service with respect to any ERISA
Plan.  As used in this Section 5.6, “material” means the measure of a matter of
significance that shall be determined as being an amount equal to five percent
(5%) of Consolidated Net Worth.  As soon as practicable, and in any event within
twenty (20) days, after any Company shall become aware that an ERISA Event shall
have occurred that could reasonably be expected to result in a Material Adverse
Effect, such Company shall provide Agent with notice of such ERISA Event with a
certificate by a Financial Officer of such Company setting forth the details of
the event and the action such Company or another Controlled Group member
proposes to take with respect thereto.  Borrower shall, at the reasonable
request of Agent, deliver or cause to be delivered to Agent true and correct
copies of any documents relating to the ERISA Plan of any Company.

 

Section 5.7.  Financial Covenants.

 

(a)                                  Leverage Ratio.  The Companies shall not
suffer or permit at any time the Leverage Ratio to exceed 3.00 to 1.00.

 

(b)                                 Senior Leverage Ratio.  The Companies shall
not suffer or permit at any time the Senior Leverage Ratio to exceed 1.50 to
1.00.

 

(c)                                  Fixed Charge Coverage Ratio.  The Companies
shall not suffer or permit at any time the Fixed Charge Coverage Ratio to be
less than (i) 1.10 to 1.00 on the Closing Date through March 30, 2006, (ii) 1.15
to 1.00 on March 31, 2006 through March 30, 2007, and (iii) 1.25 to 1.00 on
March 31, 2007 and thereafter; provided that, for purposes of calculating
Consolidated Fixed Charges, the Company shall be deemed to have made principal
payments on Consolidated Funded Indebtedness totaling One Million Five Hundred
Sixty-Two Thousand Five Hundred Dollars ($1,562,500) during the fiscal quarter
of Borrower ended June 30, 2004.

 

(d)                                 Current Ratio.  The Companies shall not
suffer or permit at any time the Current Ratio to be less than 1.50 to 1.00.

 

Section 5.8.  Borrowing.  No Company shall create, incur or have outstanding any
Indebtedness of any kind; provided, that this Section 5.8 shall not apply to the
following:

 

(a)                                  the Loans, the Letters of Credit or any
other Indebtedness under this Agreement;

 

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(b)                                 any loans granted to or capital leases
entered into by any Company for the purchase or lease of fixed assets (and
refinancings of such loans or capital leases), which loans and capital leases
shall only be secured by the fixed assets being purchased, so long as the
aggregate principal amount of all such loans and leases for all Companies shall
not exceed Five Million Dollars ($5,000,000) at any time outstanding;

 

(c)                                  the Indebtedness existing on the Closing
Date, in addition to the other Indebtedness permitted to be incurred pursuant to
this Section 5.8, as set forth in Schedule 5.8 hereto (and any extension,
renewal or refinancing thereof so long as the principal amount thereof shall not
be increased after the Closing Date);

 

(d)                                 loans to a Company from a Company so long as
each such Company is a Credit Party;

 

(e)                                  Indebtedness under any Hedge Agreement, so
long as such Hedge Agreement shall have been entered into in the ordinary course
of business and not for speculative purposes;

 

(f)                                    other Subordinated Indebtedness, in
additional to Subordinated Indebtedness existing as of the Closing Date and
referenced on Schedule 5.8 hereto, up to an aggregate principal amount for all
Companies not to exceed Ten Million Dollars ($10,000,000) at any time
outstanding, so long as such Subordinated Indebtedness is permitted under the
Note Agreement and the Convertible Subordinated Notes; and

 

(g)                                 other Indebtedness, in addition to the
Indebtedness listed above, in an aggregate principal amount for all Companies
not to exceed Two Million Dollars ($2,000,000) at any time outstanding, so long
as such Indebtedness is permitted under the Note Agreement and the Convertible
Subordinated Notes.

 

Section 5.9.  Liens.  No Company shall create, assume or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter
acquired; provided that this Section 5.9 shall not apply to the following:

 

(a)                                  Liens for taxes not yet due or that are
being actively contested in good faith by appropriate proceedings and for which
adequate reserves shall have been established in accordance with GAAP;

 

(b)                                 other statutory or common law incidental to
the conduct of its business or the ownership of its property and assets that (i)
were incurred in the ordinary course of business, (ii) were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and (iii) do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of the
business of any Company;

 

(c)                                  Liens on property or assets of a Subsidiary
to secure obligations of such Subsidiary to a Credit Party;

 

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(d)                                 purchase money Liens on fixed assets
securing the loans and capitalized leases pursuant to Section 5.8(b) hereof,
provided that such Lien is limited to the purchase price (including shipping
costs and taxes) and only attaches to the property being acquired;

 

(e)                                  any Lien granted to Agent, for the benefit
of the Lenders;

 

(f)                                    the Liens existing on the Closing Date as
set forth in Schedule 5.9 hereto and replacements, extensions, renewals,
refundings or refinancings thereof, but only to the extent that the amount of
debt secured thereby shall not be increased;

 

(g)                                 easements or other minor defects or
irregularities in title of real property not interfering in any material respect
with the use of such property in the business of any Company;

 

(h)                                 attachment, appeal bonds, judgments and
other similar Liens to the extent such judgments and Liens do not, in the
aggregate for all Companies, exceed Five Hundred Thousand Dollars ($500,000) at
any time;

 

(i)                                     Liens of a broker or depository
institution encumbering deposit, margin, commodity trading or brokerage accounts
held by such broker or depository institution incurred in the ordinary course of
business; or

 

(j)                                     other Liens, in addition to the Liens
listed above, securing amounts, in the aggregate for all Companies, not to
exceed Five Hundred Thousand Dollars ($500,000).

 

No Company shall enter into any contract or agreement (other than a contract or
agreement entered into in connection with the purchase or lease of fixed assets
that prohibits Liens on such fixed assets or intellectual property licensing
agreements) that would prohibit Agent or the Lenders from acquiring a security
interest, mortgage or other Lien on, or a collateral assignment of, any of the
property or assets of such Company.

 

Section 5.10.  Regulations T, U and X.  No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations T, U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.

 

Section 5.11.  Investments and Loans.  No Company shall (a) create, acquire or
hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership, (d) make or keep outstanding any advance or loan to any Person
(other than accounts receivable incurred in the ordinary course of business), or
(e) be or become a Guarantor of any kind; provided that this Section 5.11 shall
not apply to the following:

 

(i)                                     any endorsement of a check or other
medium of payment for deposit or collection through normal banking channels or
similar transaction in the normal course of business;

 

(ii)                                  investments of the Companies in Cash
Equivalents;

 

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(iii)                               loans to and guaranties of the Indebtedness
(permitted under Section 5.8 hereof) of, a Company from or by a Company so long
as each such Company is a Credit Party;

 

(iv)                              the holding of each of the Subsidiaries listed
on Schedule 6.1 hereto, and the creation, acquisition and holding of any new
Subsidiary after the Closing Date so long as such new Subsidiary shall have been
created, acquired or held in accordance with the terms and conditions of this
Agreement;

 

(v)                                 the purchase or holding of any stock or
other equity interest that has been acquired pursuant to an Acquisition
permitted by Section 5.13 hereof;

 

(vi)                              any advance or loan to an officer or employee
of a Company made in the ordinary course of such Company’s business, so long as
all such advances and loans from all Companies aggregate not more than the
maximum principal sum of One Hundred Thousand Dollars ($100,000) at any time
outstanding;

 

(vii)                           any securities (whether debt or equity) received
by a Company in the ordinary course of business in connection with the
bankruptcy or reorganization of any customer or supplier of such Company;

 

(viii)                        any investment received in connection with
Dispositions permitted pursuant to Section 5.12 hereof, so long as any such
investments that shall be securities are promptly pledged to Agent, for the
benefit of the Lenders;

 

(ix)                                to the extent permitted by applicable law,
notes from officers and employees in exchange for capital stock of a Company
purchased by such officers or employees pursuant to a stock ownership or
purchase plan or compensation plan; and

 

(x)                                   other Investments not specifically listed
above in an aggregate amount, for all Companies, not to exceed Two Million
Dollars ($2,000,000) at any time.

 

For purposes of this Section 5.11, the amount of any investment in equity
interests shall be based upon the initial amount invested and shall not include
any appreciation in value or return on such investment.

 

Section 5.12.  Merger and Sale of Assets.  No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:

 

(a)                                  any Subsidiary (other than Borrower) may
merge with (i) Borrower (provided that Borrower shall be the continuing or
surviving Person) or (ii) any one or more Guarantors of Payment;

 

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(b)                                 any Company may sell, lease, transfer or
otherwise dispose of any of its assets to (i) Borrower or (ii) any Guarantor of
Payment;

 

(c)                                  any Company may sell, lease, transfer or
otherwise dispose of any assets that are obsolete or no longer used in such
Company’s business for fair market value, as determined by the board of
directors of Borrower;

 

(d)                                 any sale or other Disposition (including
cancellation of Indebtedness) of Cash Equivalents or non-core assets acquired
pursuant to Acquisitions) in the ordinary course of business for fair market
value, as determined by the board of directors of Borrower; or

 

(e)                                  Acquisitions may be effected in accordance
with the provisions of Section 5.13 hereof.

 

Section 5.13.  Acquisitions.  No Company shall effect an Acquisition; provided,
however, that a Credit Party may effect an Acquisition with the prior written
consent of the Required Lenders or so long as:

 

(a)                                  in the case of a merger, amalgamation or
other combination including Borrower, Borrower shall be the surviving entity;

 

(b)                                 in the case of a merger, amalgamation or
other combination including a Credit Party (other than Borrower), a Credit Party
shall be the surviving entity;

 

(c)                                  the business to be acquired shall be
reasonably similar to that of the Credit Parties or a reasonable extension
thereof;

 

(d)                                 Borrower shall have provided to Agent and
the Lenders, at least ten (10) Business Days prior to such Acquisition,
historical financial statements of the target entity and a pro forma financial
statement of the Companies accompanied by a certificate of a Financial Officer
of Borrower showing (i) pro forma compliance with Section 5.7 hereof, both
before and after the proposed Acquisition, (it being understood that, in the
calculation of Fixed Charge Coverage Ratio, (A) the EBITDA of the business to be
acquired shall be included in Consolidated EBITDA as if the Acquisition had been
completed on the first day of the measurement period, (B) Consolidated Interest
Expense shall be recalculated as if any debt incurred or assumed as a result of
the Acquisition had been in place for the entire measurement period, and (C)
aside from the adjustment in subparts (A) and (B) above, the fixed charges of
the business to be acquired shall not be included in the calculation of Fixed
Charge Coverage Ratio, and (ii) positive EBITDA for the acquired entity during
the most recently completed four fiscal quarters of such entity;

 

(e)                                  no Default or Event of Default shall exist
prior to or after giving effect to such Acquisition;

 

(f)                                    such Acquisition is not actively opposed
by the board of directors (or similar governing body) of the selling Persons or
the Persons whose equity interests are to be acquired;

 

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(g)                                 Borrower shall have Liquidity of no less
than Ten Million Dollars ($10,000,000) after giving effect to such Acquisition;

 

(h)                                 the aggregate amount of Consideration paid
for any such Acquisition (or related series of Acquisitions) would not exceed
Sixty-Five Million Dollars ($65,000,000);

 

(i)                                     the aggregate Consideration (exclusive
of the issuance of equity) paid for all Acquisitions for all Companies, during
the Commitment Period, would not exceed Seventy-Five Million Dollars
($75,000,000); and

 

(j)                                     the aggregate Consideration paid for all
Acquisitions for all Companies, during the Commitment Period, would not exceed
One Hundred Fifty Million Dollars ($150,000,000).

 

Section 5.14.  Notice.

 

(a)                                  Borrower shall cause a Financial Officer of
Borrower to promptly notify Agent and the Lenders in writing whenever any
Default or Event of Default may occur hereunder or any representation or
warranty made in Article VI hereof or elsewhere in this Agreement or in any
Related Writing may for any reason cease in any material respect to be true and
complete.

 

(b)                                 Borrower shall provide written notice to
Agent and the Lenders contemporaneously with any notice provided to the
Convertible Subordinated Noteholders under any of the Convertible Subordinated
Documents.

 

Section 5.15.  Capital Distributions; Restricted Payments.

 

(a)                                  So long as no Default or Event of Default
shall then exist or immediately thereafter shall begin to exist, any Company may
make Capital Distributions.

 

(b)                                 No Company shall make or commit itself to
make any Restricted Payment at any time, except that, so long as no Default or
Event of Default shall then exist or immediately thereafter shall begin to
exist, Borrower may:

 

(i)                                     make regularly scheduled payments of
interest on the Convertible Subordinated Notes;

 

(ii)                                  convert the Convertible Subordinated Notes
into equity of Borrower; and

 

(iii)                               if the Available Liquidity is equal to or
greater than an amount equal to one hundred percent (100%) of the outstanding
principal amount of the Convertible Subordinated Notes, prepay any amount of
principal of the Convertible Subordinated Notes.

 

Section 5.16.  Environmental Compliance.  Each Company shall comply in all
material respects with any and all material Environmental Laws including,
without limitation, all

 

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Environmental Laws in jurisdictions in which such Company owns or operates a
facility or site, arranges for disposal or treatment of hazardous substances,
solid waste or other wastes, accepts for transport any hazardous substances,
solid waste or other wastes or holds any interest in real property or
otherwise.  Borrower shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority, private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company.  No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in material violation of any
material Environmental Law.  As used in this Section, “litigation or proceeding”
means any demand, claim, notice, suit, suit in equity action, administrative
action, investigation or inquiry whether brought by any Governmental Authority,
private Person or otherwise.  Borrower shall defend, indemnify and hold Agent
and the Lenders harmless against all costs, expenses, claims, damages, penalties
and liabilities of every kind or nature whatsoever (including attorneys’ fees)
arising out of or resulting from the noncompliance of any Company with any
Environmental Law.  Such indemnification shall survive any termination of this
Agreement.

 

Section 5.17.  Affiliate Transactions.  No Company shall, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate (other than a Company that is a
Credit Party) on terms that shall be less favorable to such Company than those
that might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit (a) the payment of
customary and reasonable directors’ fees, (b) the payment of reasonable
compensation and expense reimbursement to officers and employees for service
actually rendered to any such Company, (c) indemnities and reimbursement paid to
directors, (d) stock option and compensation plans of the Companies, (e)
employment contracts with officers and management of the Companies, (f)
transactions among Companies, (g) the repurchase of equity interests from former
officers, directors and employees to the extent permitted by this Agreement, (h)
advances and loans to officers and employees of the Companies to the extent
permitted by this Agreement, and (i) other transactions specifically permitted
under this Agreement.

 

Section 5.18.  Use of Proceeds.  Borrower’s use of the proceeds of the Notes
shall be solely for working capital and other general corporate purposes of the
Companies and for the refinancing of existing Indebtedness.

 

Section 5.19.  Corporate Names.  No Company shall change its corporate name,
unless, in each case, such Company shall provide Agent and the Lenders with at
least thirty (30) days prior written notice thereof.  Borrower shall also
promptly notify Agent and the Lenders of (a) any material change in any location
where any Company’s Inventory or Equipment is maintained, and any new locations
where any material amount of a Company’s Inventory or Equipment is to be
maintained; (b) any change in the location of the office where any Company’s
records pertaining to its Accounts are kept; (c) the location of any new places
of business and the changing or closing of any of its existing places of
business; and (d) any change

 

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in the location of any Company’s chief executive office.  In the event of any of
the foregoing or if otherwise deemed appropriate by Agent, Agent is hereby
authorized to file new U.C.C. Financing Statements describing the Collateral and
otherwise in form and substance sufficient for recordation wherever necessary or
appropriate, as determined in Agent’s sole discretion, to perfect or continue
perfected the security interest of Agent, for the benefit of the Lenders, in the
Collateral.  Borrower shall pay all filing and recording fees and taxes in
connection with the filing or recordation of such U.C.C. Financing Statements
and shall promptly reimburse Agent therefore if Agent pays the same.  Such
amounts shall be Related Expenses hereunder.

 

Section 5.20.  Subsidiary Guaranties, Security Documents.  Each Domestic
Subsidiary of a Company (that is not a Dormant Subsidiary) created, acquired or
held subsequent to the Closing Date, shall promptly execute and deliver to
Agent, for the benefit of the Lenders, a Guaranty of Payment of all of the
Obligations and a Security Agreement, such agreements to be in form and
substance reasonably acceptable to Agent, along with any such other supporting
documentation, Security Documents, corporate governance and authorization
documents, and an opinion of counsel as may be deemed necessary or advisable by
Agent.  At such time that a Subsidiary (that has been classified as a Dormant
Subsidiary) no longer meets the requirements of a Dormant Subsidiary, Borrower
shall provide to Agent prompt written notice thereof, and shall provide, with
respect to such Subsidiary, all of the documents referenced in the foregoing
sentence.  In addition, each Subsidiary that acquires a Subsidiary after the
Closing Date, shall execute and deliver to Agent, for the benefit of the
Lenders, a Pledge Agreement and deliver all of the share certificates (or other
evidence of equity) owned by such Subsidiary; provided, however, that no Company
shall be required to pledge more than sixty-five percent (65%) of the
outstanding shares or other ownership interest of any direct Foreign Subsidiary
and shall not be required to pledge any ownership interest in any indirect
Foreign Subsidiary.

 

Section 5.21.  Restrictive Agreements.  Except as set forth in this Agreement,
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) make,
directly or indirectly, any Capital Distribution to Borrower, (b) make, directly
or indirectly, loans or advances or capital contributions to Borrower or
(c) transfer, directly or indirectly, any of the properties or assets of such
Subsidiary to Borrower; except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) non-assignment provisions in
leases or other agreements entered in the ordinary course of business, or
(iii) customary restrictions in security agreements or mortgages securing
Indebtedness or capital leases, of a Company to the extent such restrictions
shall only restrict the transfer of the property subject to such security
agreement, mortgage or lease.

 

Section 5.22.  Other Covenants.  In the event that any Company shall enter into,
or shall have entered into, the Note Agreement (or the Convertible Subordinated
Documents), or any agreement evidencing Indebtedness of any Company or the
Companies in excess of the amount of Ten Million Dollars ($10,000,000), wherein
the covenants contained therein shall be more restrictive than the covenants set
forth herein, then the Companies shall be bound hereunder by such more
restrictive covenants with the same force and effect as if such covenants were
written herein.

 

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Section 5.23.  Note Agreement.

 

(a)                                  Modifications.  Borrower shall not, without
the prior written consent of Agent and the Required Lenders, amend, restate,
supplement or otherwise modify any of the Convertible Subordinated Documents to
(i) increase the principal amount outstanding thereunder, or (ii) change the
date of any principal or interest payment to an earlier date.

 

(b)                                 No Default.  No “Default” or “Event of
Default”, as each term is defined in the Convertible Subordinated Documents, (i)
shall exist, or (ii) shall exist immediately after the granting or continuation
of any Loan.

 

(c)                                  Senior Indebtedness.  The Secured
Obligations shall at all times constitute indebtedness permitted under the terms
of the Convertible Subordinated Documents and “Senior Indebtedness”, as defined
in the Convertible Subordinated Documents, and permitted to be secured under the
Convertible Subordinated Documents.

 

(d)                                 Subordinated Indebtedness.  The Secured
Obligations constitute shall at all times constitute senior indebtedness which
is entitled to the benefits of the subordination provisions of all outstanding
Subordinated Indebtedness, including, but not limited to, the Convertible
Subordinated Indebtedness.

 

Section 5.24.  Amendment of Organizational Documents.  No Company shall amend
its Organizational Documents to change its state of organization, or otherwise
amend its Organizational Documents in any manner adverse to Lenders, without the
prior written consent of Agent.

 

Section 5.25.  Collateral.  Borrower shall:

 

(a)                                  at all reasonable times and after
reasonable prior notice, allow Agent or any Lender by or through any of its
officers, agents, employees, attorneys, or accountants to (i) examine, inspect,
and make extracts from Borrower’s books and other records, including, without
limitation, the tax returns of Borrower; (ii) arrange for verification of
Borrower’s Accounts, under reasonable procedures; and (iii) examine and inspect
Borrower’s Inventory and Equipment, wherever located, under reasonable
procedures; provided that any such examination or verification shall be limited,
except during the continuance of an Event of Default, to one visit per year;

 

(b)                                 use commercial reasonable efforts to
promptly furnish to Agent or any Lender upon reasonable request (i) additional
statements and information with respect to the Collateral, and all writings and
information relating to or evidencing any of Borrower’s Accounts (including,
without limitation, computer printouts or typewritten reports listing the
mailing addresses of all present Account Debtors), and (ii) any other writings
and information as Agent or such Lender may reasonably request;

 

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(c)                                  notify Agent in writing immediately upon
the creation by any Company of a Deposit Account not listed on Schedule 6.18
hereto and provide for the execution of a Control Agreement with respect
thereto, if required by Agent or the Required Lenders;

 

(d)                                 maintain Borrower’s Equipment (that is
necessary in the business of the Companies) in good operating condition and
repair, ordinary wear and tear and casualty loss excepted, making all necessary
replacements thereof in its reasonable business judgment so that the value and
operating efficiency thereof shall at all times be maintained and preserved;

 

(e)                                  deliver to Agent to hold as security for
the Secured Obligations, within ten Business Days upon the written request of
Agent, all certificated Investment Property owned by a Credit Party, in suitable
form for transfer by delivery, or accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to Agent, or in the event such Investment Property is in the
possession of a securities intermediary or credited to a securities account,
execute with the related securities intermediary an investment property control
agreement over such securities account in favor of Agent, for the benefit of the
Lenders, in form and substance reasonably satisfactory to Agent; and

 

(f)                                    upon the reasonable request of Agent,
promptly take such action and promptly make, execute, and deliver all such
additional and further items, deeds, assurances, instruments and any other
writings as Agent may from time to time reasonably deem necessary, including,
without limitation, chattel paper, to carry into effect the intention of this
Agreement or so as to completely vest in and ensure to Agent and the Lenders
their respective rights hereunder and in or to the Collateral or the Real
Property.

 

Borrower hereby authorizes Agent, on behalf of the Lenders, to file U.C.C.
Financing Statements with respect to the Collateral. All Related Expenses are
payable to Agent within thirty (30) days after demand therefor; after the
occurrence of an Event of Default, Agent may, at its option, debit Related
Expenses directly to any deposit account of a Company located at Agent or the
Revolving Credit Notes.

 

Section 5.26.  Property Acquired Subsequent to the Closing Date and Right to
Take Additional Collateral.  Borrower shall provide Agent with prompt written
notice with respect to any real property acquired by any Company subsequent to
the Closing Date with an individual value in excess of One Million Dollars
($1,000,000).  In addition to any other right Agent and the Lenders may have
pursuant to this Agreement or otherwise, upon written request of Agent, whenever
made, Borrower shall grant to Agent as additional security for the Secured
Obligations, a security interest in or Lien on such real property of Borrower. 
Borrower agrees, promptly after the date of such written request, to secure all
of such Indebtedness by delivering to Agent security agreements, mortgages (or
deeds of trust, if applicable) or other documents, instruments or agreements or
such thereof as Agent may require.  In addition, if any Subsidiary acquires any
federally registered intellectual property (including, without limitation, any
patents, patent applications, trademarks, service marks, copyrights, licenses,
and rights with respect to the foregoing) subsequent to the Closing Date,
Borrower shall promptly provide written notice to Agent and such Subsidiary
shall promptly execute and deliver an Intellectual Property Collateral

 

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Assignment Agreement with respect to such federally registered intellectual
property.  Borrower shall pay all recordation, legal and other expenses in
connection with the foregoing.

 

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

 

Section 6.1.  Corporate Existence; Subsidiaries; Foreign Qualification.  Each
Company is duly organized, validly existing, and in good standing under the laws
of its state or jurisdiction of incorporation or organization, and is duly
qualified and authorized to do business and is in good standing as a foreign
entity in the jurisdictions set forth opposite its name on Schedule 6.1 hereto,
which are all of the states or jurisdictions where the character of its property
or its business activities makes such qualification necessary, except where a
failure to qualify or be in good standing would not reasonably be expected to
result in a Material Adverse Effect.  Schedule 6.1 hereto sets forth, as of the
Closing Date, each Subsidiary of Borrower (and whether such Subsidiary is a
Dormant Subsidiary), its state of formation, its relationship to Borrower,
including the percentage of each class of stock or membership interests owned by
a Company, the location of its chief executive office and its principal place of
business.  Borrower owns all of the equity interests of each of its
Subsidiaries.

 

Section 6.2.  Corporate Authority.  Each Credit Party has the right and power
and is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents.  The Loan Documents to which each Credit Party is a party
have been duly authorized and approved by such Credit Party’s board of directors
or other governing body, as applicable, and are the valid and binding
obligations of such Credit Party, enforceable against such Credit Party in
accordance with their respective terms, except as enforceability thereof may be
limited by bankruptcy, insolvency, moratorium and similar laws and by equitable
principles, whether considered at law or in equity.    The execution, delivery
and performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 hereof)
upon any assets or property of any Company under the provisions of, such
Company’s Organizational Documents or any material agreement.

 

Section 6.3.  Compliance with Laws and Contracts.  Except as would not
reasonably be expected to result in a Material Adverse Effect, each Company:

 

(a)                                  holds permits, certificates, licenses,
orders, registrations, franchises, authorizations, and other approvals from any
Governmental Authority necessary for the conduct of its business and is in
compliance with all applicable laws relating thereto;

 

(b)                                 is in compliance with all federal, state,
local, or foreign applicable statutes, rules, regulations, and orders including,
without limitation, those relating to occupational safety and health and equal
employment practices; and

 

(c)                                  is not in violation of or in default under
any agreement to which it is a party or by which its assets are subject or
bound.

 

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Section 6.4.  Litigation and Administrative Proceedings.  Except as disclosed on
Schedule 6.4 hereto and would not reasonably be expected to result in a Material
Adverse Effect, as of the Closing Date, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or, to the knowledge of each
Company, threatened against any Company, or in respect of which any Company may
have any liability, in any court or before any Governmental Authority,
arbitration board, or other tribunal, (b) no orders, writs, injunctions,
judgments, or decrees of any court or government agency or instrumentality to
which any Company is a party or by which the property or assets of any Company
are bound, or (c) no grievances, disputes, or controversies outstanding with any
union or other organization of the employees of any Company, or threats of work
stoppage, strike, or pending demands for collective bargaining.

 

Section 6.5.  Title to Assets.  Each Company has good title to and ownership of
all property it purports to own, which property is free and clear of all Liens,
except those permitted under Section 5.9 hereof.

 

Section 6.6.  Liens and Security Interests.  On and after the Closing Date,
except for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will
be no U.C.C. Financing Statement or similar notice of Lien outstanding covering
any personal property of any Company, other than a U.C.C. Financing Statement in
favor of Agent for the benefit of the Lenders; (b) there is and will be no
mortgage outstanding covering any real property of any Company, other than a
mortgage in favor of Agent for the benefit of the Lenders; and (c) no real or
personal property of any Company is subject to any security interest or Lien of
any kind, other than any security interest or Lien that may be granted to Agent,
for the benefit of the Lenders.  No Company has entered into any contract or
agreement (other than a contract or agreement entered into in connection with
the purchase or lease of fixed assets or an intellectual property licensing
agreement that prohibits Liens on such assets) that exists on or after the
Closing Date that would prohibit Agent or the Lenders from acquiring a Lien on,
or a collateral assignment of, any of the property or assets of any Company.

 

Section 6.7.  Tax Returns.  All federal and all material state and local tax
returns and other reports required by law to be filed in respect of the income,
business, properties and employees of each Company have been filed and all
taxes, assessments, fees and other governmental charges that are due and payable
have been paid, except as otherwise permitted herein.  The provision for taxes
on the books of each Company is adequate for all years not closed by applicable
statutes and for the current fiscal year.

 

Section 6.8.  Environmental Laws.  Each Company is in material compliance with
all material Environmental Laws, including, without limitation, all
Environmental Laws in all jurisdictions in which any Company owns or operates,
or has owned or operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise. 
No material litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or, to the best knowledge of any officer
of any Company, threatened, against any Company, any real property in which any
Company holds or has held an interest or any past or present operation of

 

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any Company.  No release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring, or has occurred (other than those that
are currently being cleaned up in accordance with Environmental Laws), on, under
or to any real property in which any Company holds any interest or performs any
of its operations, in material violation of any material Environmental Law.  As
used in this Section 6.8, “litigation or proceeding” means any demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any Governmental Authority or private Person, or
otherwise.

 

Section 6.9.  Locations.  As of the Closing Date, the Companies have places of
business or maintain their Accounts, Inventory and Equipment at the locations
set forth on Schedule 6.9 hereto.  Each Company’s chief executive office is set
forth on Schedule 6.9 hereto.  Schedule 6.9 further specifies whether each
location, as of the Closing Date, (a) is owned by the Companies, or (b) is
leased by a Company from a third party.  Schedule 6.9 correctly identifies the
name and address of each third party location where assets of the Companies with
a value in excess of One Million Dollars ($1,000,000) are located.

 

Section 6.10.  Employee Benefits Plans.  Schedule 6.10 hereto identifies each
ERISA Plan as of the Closing Date.  Except as would not reasonably be expected
to result in a Material Adverse Effect:

 

(a)                                  no ERISA Event has occurred or is expected
to occur with respect to an ERISA Plan;

 

(b)                                 full payment has been made of all amounts
that a Controlled Group member is required, under applicable law or under the
governing documents, to have paid as a contribution to or a benefit under each
ERISA Plan;

 

(c)                                  the liability of each Controlled Group
member with respect to each ERISA Plan has been fully funded based upon
reasonable and proper actuarial assumptions, has been fully insured, or has been
fully reserved for on its financial statements in accordance with GAAP;

 

(d)                                 no changes have occurred or are expected to
occur that would cause a material increase in the cost of providing benefits
under the ERISA Plan;

 

(e)                                  with respect to each ERISA Plan that is
intended to be qualified under Code Section 401(a), (i) the ERISA Plan and any
associated trust operationally comply with the applicable requirements of Code
Section 401(a); (ii)  the ERISA Plan and any associated trust have been amended
to comply with all such requirements as currently in effect, other than those
requirements for which a retroactive amendment can be made within the “remedial
amendment period” available under Code Section 401(b) (as extended under
Treasury Regulations and other Treasury pronouncements upon which taxpayers may
rely); (iii) the ERISA Plan and any associated trust have received a favorable
determination letter from the Internal Revenue Service stating that the ERISA
Plan qualifies under Code Section 401(a), that the associated trust qualifies
under Code Section 501(a) and, if applicable, that any cash or deferred
arrangement under the ERISA Plan qualifies under Code Section 401(k), unless the
ERISA Plan was first adopted at a time for which the above-described “remedial
amendment period” has not yet

 

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expired; (iv) the ERISA Plan currently satisfies the requirements of Code
Section 410(b), without regard to any retroactive amendment that may be made
within the above-described “remedial amendment period”; and (v) no contribution
made to the ERISA Plan is subject to an excise tax under Code Section 4972; and

 

(f)                                    with respect to any Pension Plan, the
“accumulated benefit obligation” of Controlled Group members with respect to the
Pension Plan (as determined in accordance with Statement of Accounting Standards
No. 87, “Employers’ Accounting for Pensions”) does not exceed the fair market
value of Pension Plan assets.

 

Section 6.11.  Consents or Approvals.  No material consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person is required to be obtained or
completed by any Company in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed.

 

Section 6.12.  Solvency.  Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to Agent and the Lenders.  Borrower is not insolvent as defined in any
applicable state, federal or relevant foreign statute, nor will Borrower be
rendered insolvent by the execution and delivery of the Loan Documents to Agent
and the Lenders.  Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it are or will be an unreasonably
small amount of capital, taking into consideration the obligations to Agent and
the Lenders incurred hereunder.  Borrower does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay such debts as they
mature.

 

Section 6.13.  Financial Statements.  The Consolidated financial statements of
Borrower for the fiscal year ended December 31, 2003 and the quarter ended
March 31, 2004, furnished to Agent and the Lenders, are true and complete in all
material respects, have been prepared in accordance with GAAP, and fairly
present in all material respects the financial condition of the Companies as of
the dates of such financial statements and the results of their operations for
the periods then ending.  As of the Closing Date, since the dates of such
statements, there has been no material adverse change in any Company’s financial
condition, properties or business or any change in any Company’s accounting
procedures.

 

Section 6.14.  Regulations.  No Company is engaged principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any “margin stock” (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States of
America).  Neither the granting of any Loan (or any conversion thereof) or
Letter of Credit nor the use of the proceeds of any Loan or Letter of Credit
will violate, or be inconsistent with, the provisions of Regulation T, U or X or
any other Regulation of such Board of Governors.

 

Section 6.15.  Material Agreements.  Except as disclosed on Schedule 6.15
hereto, on the Closing Date, no Company is a party to any (a) debt instrument
(excluding the Loan Documents); (b) real estate lease, whether as lessee or
lessor thereunder; (c) contract, commitment, agreement, or other arrangement
with any of its “Affiliates” (as such term is

 

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defined in the Securities Exchange Act of 1934, as amended) other than a
Company; (d) management or employment contract or contract for personal services
with any of its Affiliates that is not otherwise terminable at will or on less
than ninety (90) days’ notice without liability; or (e) collective bargaining
agreement.

 

Section 6.16.  Intellectual Property.  Each Company owns or has the right to use
all of its material patents, patent applications, industrial designs,
trademarks, service marks, copyrights and licenses, and rights with respect to
the foregoing necessary for the conduct of its business, without any known
significant conflict with the rights of others.  As of the Closing Date, no
Subsidiary owns any federally registered intellectual property, including,
without limitation, any patents, patent applications, trademarks, service marks,
copyrights, licenses, and rights with respect to the foregoing.

 

Section 6.17.  Insurance.  Each Company maintains with financially sound and
reputable insurers insurance with coverage and limits as required by law and as
is customary with Persons engaged in the same businesses as the Companies. 
Schedule 6.17 hereto sets forth all insurance carried by the Companies on the
Closing Date, setting forth in detail the amount and type of such insurance.

 

Section 6.18.  Deposit Accounts.  Schedule 6.18 hereto lists all banks (other
than payroll, tax withholding or trust accounts) and other financial
institutions at which any Company maintains deposit or other accounts as of the
Closing Date, and Schedule 6.18 hereto correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.

 

Section 6.19.  Accurate and Complete Statements.  Neither the Loan Documents nor
any written statement made by any Company in connection with any of the Loan
Documents (excluding budgets and projections), contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained therein or in the Loan Documents not materially misleading.  On the
Closing Date, after due inquiry by Borrower, there is no known fact that any
Company has not disclosed to Agent and the Lenders that has or is likely to have
a Material Adverse Effect.

 

Section 6.20.  Note Agreement.  No Event of Default (as defined in the Note
Agreement) or Default (as defined in the Note Agreement) exists, nor will any
such Event of Default or Default exist immediately after the granting of any
Loan or the issuance of any Letter of Credit under this Agreement.

 

Section 6.21.  Investment Company; Holding Company.  No Company is (a) an
“investment company” or a company “controlled” by an “investment company”
required to be registered as such within the meaning of the Investment Company
Act of 1940, as amended, or (b) subject to regulation under the Public Utility
Holding Company Act of 1935 or the Federal Power Act, each as amended, or any
foreign, federal, state or local statute or regulation limiting its ability to
incur Indebtedness.

 

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Section 6.22.  Defaults.  No Default or Event of Default exists hereunder, nor
will any begin to exist immediately after the execution and delivery hereof.

 

ARTICLE VII. SECURITY

 

Section 7.1.  Security Interest in Collateral.  In consideration of and as
security for the full and complete payment of all of the Secured Obligations,
Borrower hereby grants to Agent for the benefit of the Lenders a security
interest in the Collateral.

 

Section 7.2.  Collections and Receipt of Proceeds by Borrower.

 

(a)                                  Upon written notice to Borrower from Agent,
at the election of the Required Lenders, after the occurrence and during the
continuance of an Event of Default, a Cash Collateral Account shall be opened by
Borrower at the main office of Agent (or such other office as shall be
designated by Agent) and all such lawful collections of Borrower’s Accounts and
such Proceeds of Borrower’s Accounts and Inventory shall be remitted daily by
Borrower to Agent in the form in which they are received by Borrower, either by
mailing or by delivering such collections and Proceeds to Agent, appropriately
endorsed for deposit in the Cash Collateral Account.  In the event that such
notice is given to Borrower from Agent, Borrower shall not commingle such
collections or Proceeds with any of Borrower’s other funds or property, but
shall hold such collections and Proceeds separate and apart therefrom upon an
express trust for Agent, for the benefit of the Lenders.  In such case, Agent
may, in its sole discretion, and shall, at the request of the Required Lenders,
at any time and from time to time after the occurrence and during the
continuance of an Event of Default, apply all or any portion of the account
balance in the Cash Collateral Account as a credit against (i) the outstanding
principal or interest of the Loans, or (ii) any other Secured Obligations.  If
any remittance shall be dishonored, or if, upon final payment, any claim with
respect thereto shall be made against Agent on its warranties of collection,
Agent may charge the amount of such item against the Cash Collateral Account or
any other Deposit Account (other than a trust, tax withholding or payroll
account) maintained by Borrower with Agent or with any other Lender, and, in any
event, retain the same and Borrower’s interest therein as additional security
for the Secured Obligations.  Agent may, in its sole discretion, at any time and
from time to time, release funds from the Cash Collateral Account to Borrower
for use in Borrower’s business.  The balance in the Cash Collateral Account may
be withdrawn by Borrower upon termination of this Agreement and payment in full
of all of the Secured Obligations (other than contingent indemnity obligations).

 

(b)                                 At Agent’s request after the occurrence and
during the continuance of an Event of Default, Borrower shall cause all
remittances representing collections and Proceeds of Collateral to be mailed to
a lock box at a location acceptable to Agent, to which Agent shall have access
for the processing of such items in accordance with the provisions, terms and
conditions of the customary lock box agreement of Agent.

 

(c)                                  Agent, or Agent’s designated agent, is
hereby constituted and appointed Borrower’s attorney-in-fact with authority and
power to endorse, after the occurrence and during the continuance of an Event of
Default, any and all instruments, documents, and chattel paper

 

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upon Borrower’s failure to do so.  Such authority and power, being coupled with
an interest, shall be (i) irrevocable until all of the Secured Obligations
(other than contingent indemnity obligations) are paid, (ii) exercisable by
Agent at any time and without any request upon Borrower by Agent to so endorse,
and (iii) exercisable in Agent’s name or Borrower’s name.  Borrower hereby
waives presentment, demand, notice of dishonor, protest, notice of protest, and
any and all other similar notices with respect thereto, regardless of the form
of any endorsement thereof.  Agent and the Lenders shall not be bound or
obligated to take any action to preserve any rights therein against prior
parties thereto.

 

Section 7.3.  Collections and Receipt of Proceeds by Agent.  Borrower hereby
constitutes and appoints Agent, or Agent’s designated agent, as Borrower’s
attorney-in-fact to exercise, at any time after the occurrence and during the
continuance of an Event of Default, all or any of the following powers which,
being coupled with an interest, shall be irrevocable until the complete and full
payment of all of the Secured Obligations (other than contingent indemnity
obligations):

 

(a)                                  to receive, retain, acquire, take, endorse,
assign, deliver, accept, and deposit, in the name of Agent or Borrower, any and
all of Borrower’s cash, instruments, chattel paper, documents, Proceeds of
Accounts, Proceeds of Inventory, collection of Accounts, and any other writings
relating to any of the Collateral;

 

(b)                                 to transmit to Account Debtors, on any or
all of Borrower’s Accounts, notice of assignment to Agent, for the benefit of
the Lenders, security interest therein of Agent, for the benefit of the Lenders,
and to request from such Account Debtors at any time, in the name of Agent or
Borrower, information concerning Borrower’s Accounts and the amounts owing
thereon;

 

(c)                                  to transmit to purchasers of any or all of
Borrower’s Inventory, notice of Agent’s security interest therein, and to
request from such purchasers at any time, in the name of Agent or Borrower,
information concerning Borrower’s Inventory and the amounts owing thereon by
such purchasers;

 

(d)                                 to notify and require Account Debtors on
Borrower’s Accounts and purchasers of Borrower’s Inventory to make payment of
their indebtedness directly to Agent;

 

(e)                                  to take or bring, in the name of Agent or
Borrower, all steps, actions, suits, or proceedings deemed by Agent necessary or
desirable to effect the receipt, enforcement, and collection of the Collateral;
and

 

(f)                                    to accept all collections in any form
relating to the Collateral, including remittances that may reflect deductions,
and to deposit the same, into Borrower’s Cash Collateral Account or, at the
option of Agent, to apply them as a payment against the Loans or any other
Secured Obligations in accordance with this Agreement.

 

Section 7.4.  Use of Inventory and Equipment.  Until the exercise by Agent and
the Required Lenders of their rights under Article IX hereof, Borrower may (a)
retain possession of and use its Inventory and Equipment in any lawful manner
not inconsistent with this Agreement

 

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or with the terms, conditions, or provisions of any policy of insurance thereon;
(b) sell or lease its Inventory in the ordinary course of business; provided,
however, that a sale or lease in the ordinary course of business does not
include a transfer in partial or total satisfaction of an Indebtedness; and (c)
use and consume any raw materials or supplies, the use and consumption of which
are necessary in order to carry on Borrower’s business.

 

ARTICLE VIII.  EVENTS OF DEFAULT

 

Each of the following shall constitute an Event of Default hereunder:

 

Section 8.1.  Payments.  If (a) the interest on any Loan, any commitment or
other fee or any other Obligation (other than those specified in subpart (b)
hereof) shall not be paid in full when due and payable or within three Business
Days thereafter, or (b) the principal of any Loan, or any reimbursement
obligation under any Letter of Credit that has been drawn, shall not be paid in
full when due and payable.

 

Section 8.2.  Special Covenants.  If any Company shall fail or omit to perform
and observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.15, 5.22 or 5.23(b), (c)
or (d) hereof.

 

Section 8.3.  Other Covenants.  If any Company shall fail or omit to perform and
observe any agreement or other provision (other than those referred to in
Section 8.1 or 8.2 hereof) contained or referred to in this Agreement or any
Related Writing that is on such Company’s part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
earlier of (a) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (b) the giving of written notice thereof to Borrower by
Agent or the Required Lenders that the specified Default is to be remedied.

 

Section 8.4.  Representations and Warranties.  If any representation or warranty
made in any Loan Document shall be false or misleading in any material respect.

 

Section 8.5.  Cross Default.

 

(a)                                  Convertible Subordinated Indebtedness.  If
(i) any event of default (as each term or similar term is defined in any
Convertible Subordinated Document) shall occur under any Convertible
Subordinated Document or any agreement executed in connection therewith, or
(ii) the Indebtedness incurred in connection with any Convertible Subordinated
Note shall be accelerated for any reason.

 

(b)                                 Other Cross Defaults.  If any Company shall
default in the payment of principal or interest due and owing (i) in an amount
in excess of One Million Dollars ($1,000,000) beyond any period of grace
provided with respect thereto; or (ii) under any Material Indebtedness Agreement
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created, if the effect of such default
is to allow the acceleration of the maturity

 

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of such Indebtedness or to permit the holder thereof to cause such Indebtedness
to become due prior to its stated maturity.

 

Section 8.6.  ERISA Default.  The occurrence of one or more ERISA Events that
(a) the Required Lenders reasonably determine would have a Material Adverse
Effect, or (b) results in a Lien on assets of the Companies in excess of Two
Million Dollars ($2,000,000).

 

Section 8.7.  Change in Control.  If any Change in Control shall occur.

 

Section 8.8.  Money Judgment.  A final judgment or order for the payment of
money shall be rendered against any Company by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of sixty (60) days
after the date on which the right to appeal has expired; provided that the
aggregate of all such judgments for all such Companies shall exceed One Million
Dollars ($1,000,000) (less (a) any amount that will be covered by the proceeds
of insurance and is not subject to dispute by the insurance provider and (b) any
money judgment to the extent such amounts are provided by funds in a valid
escrow account or similar arrangement).

 

Section 8.9.  Security.  If any Lien granted in this Agreement or any other Loan
Document in favor of Agent, for the benefit of the Lenders, shall be determined
to be (a) void, voidable or invalid, or is subordinated or not otherwise given
the priority contemplated by this Agreement with respect to any material amount
of Collateral and the Credit Parties have failed to promptly execute appropriate
documents to correct such matters, or (b) unperfected as to any material amount
of Collateral (as determined by Agent, in its reasonable discretion).

 

Section 8.10.  Validity of Loan Documents.  (a) Any material provision of any
material Loan Document shall at any time for any reason cease to be valid,
binding and enforceable against any Credit Party; (b) the validity, binding
effect or enforceability of any Loan Document against any Credit Party shall be
contested by any Credit Party; (c) any Credit Party shall deny that it has any
or further liability or obligation under any Loan Document; or (d) any Loan
Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative in any material respect or in any material way cease
to give or provide to Agent and the Lenders the benefits purported to be created
thereby.  In addition to any other material Loan Documents, this Agreement, each
Note and each Guaranty of Payment shall be deemed to be “material”.

 

Section 8.11.  Solvency.  If Borrower, Poorman-Douglas Corporation or any other
Company with assets over Five Million Dollars ($5,000,000) shall (a)  except as
permitted pursuant to Section 5.12 hereof, discontinue business, (b) generally
not pay its debts as such debts become due, (c) make a general assignment for
the benefit of creditors, (d) apply for or consent to the appointment of an
interim receiver, a receiver and manager, an administrator, sequestrator,
monitor, a custodian, a trustee, an interim trustee, liquidator, agent or other
similar official of all or a substantial part of its assets or of such Company,
(e) be adjudicated a debtor or insolvent or have entered against it an order for
relief under Title 11 of the United States Code, or under any other bankruptcy
insolvency, liquidation, winding-up, corporate or similar statute or law,
foreign, federal, state or provincial, in any applicable jurisdiction, now or
hereafter existing, as any of the foregoing the same may be amended from time to
time, or other applicable statute

 

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for jurisdictions outside of the United States, as the case may be, (f) file a
voluntary petition in bankruptcy, or file a proposal or notice of intention to
file a proposal or have an involuntary proceeding filed against it and the same
shall continue undismissed for a period of sixty (60) days from commencement of
such proceeding or case, or file a petition or an answer or an application or a
proposal seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, or admit (by
answer, by default or otherwise) the material allegations of a petition filed
against it in any bankruptcy, reorganization, insolvency or other proceeding
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors, (g) suffer or permit or to continue unstayed and
in effect for sixty (60) consecutive days any judgment, decree or order entered
by a court of competent jurisdiction, that approves a petition or an application
or a proposal seeking its reorganization or appoints an interim receiver, a
receiver and manager, an administrator, custodian, trustee, interim trustee or
liquidator of all or a substantial part of its assets, or of such Company, or
(h) take, or omit to take, any action in order thereby to effect any of the
foregoing.

 

ARTICLE IX.  REMEDIES UPON DEFAULT

 

Notwithstanding any contrary provision or inference herein or elsewhere:

 

Section 9.1.  Optional Defaults.  If any Event of Default referred to in
Section 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, or 8.10 hereof shall occur,
Agent may, with the consent of the Required Lenders, and shall, at the written
request of the Required Lenders, give written notice to Borrower, to:

 

(a)                                  terminate the Commitment, if not previously
terminated, and, immediately upon such election, the obligations of the Lenders,
and each thereof, to make any further Loan and the obligation of the Fronting
Lender to issue any Letter of Credit immediately shall be terminated; and/or

 

(b)                                 accelerate the maturity of all of the
Obligations (if the Obligations are not already due and payable), whereupon all
of the Obligations shall become and thereafter be immediately due and payable in
full without any presentment or demand and without any further or other notice
of any kind, all of which are hereby waived by Borrower.

 

Section 9.2.  Automatic Defaults.  If any Event of Default referred to in
Section 8.11 hereof shall occur:

 

(a)                                  all of the Commitment shall automatically
and immediately terminate, if not previously terminated, and no Lender
thereafter shall be under any obligation to grant any further Loan, nor shall
the Fronting Lender be obligated to issue any Letter of Credit; and

 

(b)                                 the principal of and interest then
outstanding on all of the Loans, and all of the other Obligations, shall
thereupon become and thereafter be immediately due and payable in full

 

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(if the Obligations are not already due and payable), all without any
presentment, demand or notice of any kind, which are hereby waived by Borrower.

 

Section 9.3.  Letters of Credit.  If the maturity of the Obligations shall be
accelerated pursuant to Section 9.1 or 9.2 hereof, Borrower shall immediately
deposit with Agent, as security for the obligations of Borrower and any
Guarantor of Payment to reimburse Agent and the Revolving Lenders for any then
outstanding Letters of Credit, cash equal to the sum of the aggregate undrawn
balance of any then outstanding Letters of Credit.  Agent and the Lenders are
hereby authorized, at their option, to deduct any and all such amounts from any
deposit balances then owing by any Lender (or any affiliate of such Revolving
Lender, wherever located) to or for the credit or account of any Company, as
security for the obligations of Borrower and any Guarantor of Payment to
reimburse Agent and the Revolving Lenders for any then outstanding Letters of
Credit.

 

Section 9.4.  Offsets.  If there shall occur or exist any Event of Default
referred to in Section 8.11 hereof or if the maturity of the Obligations is
accelerated pursuant to Section 9.1 or 9.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all of the Obligations then owing by Borrower to such Lender
(including, without limitation, any participation purchased or to be purchased
pursuant to Section 2.2 or 9.5 hereof), whether or not the same shall then have
matured, any and all deposit (general or special (but excluding trust, tax
withholding and payroll accounts) balances and all other indebtedness then held
or owing by such Lender (including, without limitation, by branches and agencies
or any affiliate of such Lender) to or for the credit or account of Borrower or
any Guarantor of Payment, all without notice to or demand upon Borrower or any
other Person, all such notices and demands being hereby expressly waived by
Borrower.

 

Section 9.5.  Equalization Provision.

 

(a)                                  Equalization Within Commitments Prior to an
Equalization Event.  Each Revolving Lender agrees with the other Revolving
Lenders that if it, at any time, shall obtain any Advantage over the other
Revolving Lenders, or any thereof, in respect of the Applicable Debt (except as
to Swing Loans, Letters of Credit and amounts under Article III hereof), such
Revolving Lender shall purchase from the other Revolving Lenders, for cash and
at par, such additional participation in the Applicable Debt as shall be
necessary to nullify the Advantage.  Each Term Lender agrees with the other Term
Lenders that if it, at any time, shall obtain any Advantage over the other Term
Lenders, or any thereof, in respect of the Applicable Debt (except as to amounts
under Article III hereof), such Term Lender shall purchase from the other Term
Lenders, for cash and at par, such additional participation in the Applicable
Debt as shall be necessary to nullify the Advantage.

 

(b)                                 Equalization Between Commitments After an
Equalization Event.  After the occurrence of an Equalization Event, each Lender
agrees with the other Lenders that if such Lender, at any time, shall obtain any
Advantage over the other Lenders or any thereof determined in respect of the
Obligations (including Swing Loans and Letters of Credit but excluding amounts
under Article III hereof) then outstanding, such Lender shall purchase from the
other Lenders, for cash and at par, such additional participation in the
Obligations as shall be

 

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necessary to nullify the Advantage in respect of the Obligations.  For purposes
of determining whether or not, after the occurrence of an Equalization Event, an
Advantage in respect of the Obligations shall exist, Agent shall, as of the date
that the Equalization Event occurs:

 

(i)                                     add the Revolving Credit Exposure and
the Term Loan Exposure to determine the equalization maximum amount (the
“Equalization Maximum Amount”); and

 

(ii)                                  determine an equalization percentage (the
“Equalization Percentage”) for each Lender by dividing the aggregate amount of
its Lender Credit Exposure by the Equalization Maximum Amount.

 

After the date of an Equalization Event, Agent shall determine whether an
Advantage exists among the Lenders by using the Equalization Percentage.  Such
determination shall be conclusive absent manifest error.

 

(c)                                  Recovery of Amount.  If any such Advantage
resulting in the purchase of an additional participation as set forth in
subsections (a) or (b) hereof shall be recovered in whole or in part from the
Lender receiving the Advantage, each such purchase shall be rescinded, and the
purchase price restored (but without interest unless the Lender receiving the
Advantage is required to pay interest on the Advantage to the Person recovering
the Advantage from such Lender) ratably to the extent of the recovery.

 

(d)                                 Application and Sharing of Set-Off Amounts. 
Each Lender further agrees with the other Lenders that, if it at any time shall
receive any payment for or on behalf of Borrower on any Indebtedness owing by
Borrower to that Lender (whether by voluntary payment, by realization upon
security, by reason of offset of any deposit or other Indebtedness, by
counterclaim or cross action, by enforcement of any right under any Loan
Document, or otherwise), it shall apply such payment first to any and all
Indebtedness owing by Borrower to that Lender pursuant to this Agreement
(including, without limitation, any participation purchased or to be purchased
pursuant to this Section or any other Section of this Agreement).  Each Credit
Party agrees that any Lender so purchasing a participation from the other
Lenders, or any thereof, pursuant to this Section 9.5 may exercise all of its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

 

Section 9.6.  Collateral.  Upon the occurrence and during the continuance of an
Event of Default and at all times thereafter, Agent and the Lenders shall have
the rights and remedies of a secured party under the Ohio Revised Code as in
effect from time to time, in addition to the rights and remedies of a secured
party provided elsewhere within this Agreement, in any other Related Writing
executed by Borrower or otherwise provided in law or equity.  Agent may require
Borrower to assemble the Collateral, which Borrower agrees to do, and make it
available to Agent and the Lenders at a reasonably convenient place to be
designated by Agent. Agent may, with or without notice to or demand upon
Borrower and with or without the aid of legal process, make use of such force as
may be necessary to enter any premises where the Collateral, or any thereof, may
be found and to take possession thereof (including anything found in or on

 

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the Collateral that is not specifically described in this Agreement, each of
which findings shall be considered to be an accession to and a part of the
Collateral) and for that purpose may pursue the Collateral wherever the same may
be found, without liability for trespass or damage caused thereby to Borrower. 
After any delivery or taking of possession of the Collateral, or any thereof,
pursuant to this Agreement, then, with or without resort to Borrower personally
or any other Person or property, all of which Borrower hereby waives, and upon
such terms and in such manner as Agent may deem advisable, Agent, in its
discretion, may sell, assign, transfer and deliver any of the Collateral at any
time, or from time to time.  No prior notice need be given to Borrower or to any
other Person in the case of any sale of Collateral that Agent determines to be
perishable or to be declining speedily in value or that is customarily sold in
any recognized market, but in any other case Agent shall give Borrower not fewer
than ten days prior notice of either the time and place of any public sale of
the Collateral or of the time after which any private sale or other intended
disposition thereof is to be made.  Borrower waives advertisement of any such
sale and (except to the extent specifically required by the preceding sentence)
waives notice of any kind in respect of any such sale.  At any such public sale,
Agent or the Lenders may purchase the Collateral, or any part thereof, free from
any right of redemption, all of which rights Borrower hereby waives and
releases.  After deducting all Related Expenses, and after paying all claims, if
any, secured by Liens having precedence over this Agreement, Agent may apply the
net proceeds of each such sale to or toward the payment of the Secured
Obligations, whether or not then due, in such order and by such division as
Agent, in its sole discretion, may deem advisable. Any excess, to the extent
permitted by law, shall be paid to Borrower, and Borrower shall remain liable
for any deficiency.  In addition, Agent shall at all times have the right to
obtain new appraisals of Borrower or the Collateral, the cost of which shall be
paid by Borrower.

 

Section 9.7.  Other Remedies.  The remedies in this Article IX are in addition
to, not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lenders may be entitled.  Agent
shall exercise the rights under this Article IX and all other collection efforts
on behalf of the Lenders and no Lender shall act independently with respect
thereto, except as otherwise specifically set forth in this Agreement.

 

Section 9.8.  Application of Proceeds.

 

(a)                                  Payments Prior to Exercise of Remedies. 
Prior to the exercise by Agent on behalf of the Lenders of remedies under this
Agreement or the other Loan Documents, all monies received by Agent shall be
applied, unless otherwise required by the terms of the other Loan Documents or
by applicable law, as follows (provided that Agent shall have the right at all
times to apply any payment received from Borrowers first to the payment of all
obligations (to the extent not paid by Borrowers) incurred by Agent pursuant to
Section 11.5 hereof and to the payment of Related Expenses):

 

(i)                                     with respect to payments received in
connection with the Revolving Credit Commitment, to the Revolving Credit Lenders
(or the Swing Line Lender or the Fronting Lender, as appropriate); and

 

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(ii)                                  with respect to payments received in
connection with the Term Loan Commitment, to the Term Lenders.

 

(b)                                 Payments Subsequent to Exercise of
Remedies.  After the exercise by Agent or the Required Lenders of remedies under
this Agreement or the other Loan Documents, all monies received by Agent shall
be applied, unless otherwise required by the terms of the other Loan Documents
or by applicable law, as follows:

 

(i)                                     first, to the payment of all obligations
(to the extent not paid by Borrowers) incurred by Agent pursuant to Section 11.5
hereof and to the payment of Related Expenses;

 

(ii)                                  second, to the payment pro rata of
(A) interest then accrued and payable on the outstanding Loans, (B) any fees
then accrued and payable to Agent, and (C) any fees then accrued and payable to
any Fronting Lender or the holders of the Letter of Credit Commitment in respect
of the Letter of Credit Exposure;

 

(iii)                               third, (A) to the Lenders, on a pro rata
basis, based upon each such Lender’s Overall Commitment Percentage; provided
that the amounts payable in respect of the Letter of Credit Exposure shall be
held and applied by Agent as security for the reimbursement obligations in
respect thereof, and, if any Letter of Credit shall expire without being drawn,
then the amount with respect to such Letter of Credit shall be distributed to
the Lenders, on a pro rata basis in accordance with this subsection (iii), and
(B) the Indebtedness under any Hedge Agreement, such amount to be based upon the
net termination obligation of Borrower under such Hedge Agreement; with such
payment to be pro rata between (A) and (B) hereof; and

 

(iv)                              finally, any remaining surplus after all of
the Secured Obligations have been paid in full, to Borrower or to whomsoever
shall be lawfully entitled thereto.

 

ARTICLE X.  THE AGENT

 

The Lenders authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Lenders in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:

 

Section 10.1.  Appointment and Authorization.  Each Lender hereby irrevocably
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers hereunder as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto.  Neither Agent
nor any of its affiliates, directors, officers, attorneys or employees shall
(a) be liable for any action taken or omitted to be taken by it or them
hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction), or be responsible in any manner to any of the Lenders for the
effectiveness, enforceability, genuineness, validity or due execution

 

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of this Agreement or any other Loan Documents, (b) be under any obligation to
any Lender to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions hereof or thereof on the part of Borrower
or any other Company, or the financial condition of Borrower or any other
Company, or (c) be liable to any of the Companies for consequential damages
resulting from any breach of contract, tort or other wrong in connection with
the negotiation, documentation, administration or collection of the Loans or
Letters of Credit or any of the Loan Documents.

 

Section 10.2.  Note Holders.  Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
Agent, signed by such payee and in form satisfactory to Agent.

 

Section 10.3.  Consultation With Counsel.  Agent may consult with legal counsel
selected by Agent and shall not be liable for any action taken or suffered in
good faith by it in accordance with the opinion of such counsel.

 

Section 10.4.  Documents.  Agent shall not be under any duty to examine into or
pass upon the validity, effectiveness, genuineness or value of any Loan Document
or any other Related Writing furnished pursuant hereto or in connection herewith
or the value of any collateral obtained hereunder, and Agent shall be entitled
to assume that the same are valid, effective and genuine and what they purport
to be.

 

Section 10.5.  Agent and Affiliates.  With respect to the Loans, Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not Agent, and Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any Company or any Affiliate.

 

Section 10.6.  Knowledge of Default.  It is expressly understood and agreed that
Agent shall be entitled to assume that no Default or Event of Default has
occurred, unless Agent has been notified by a Lender in writing that such Lender
believes that a Default or Event of Default has occurred and is continuing and
specifying the nature thereof or has been notified by Borrower pursuant to
Section 5.14 hereof.

 

Section 10.7.  Action by Agent.  Subject to the other terms and conditions
hereof, so long as Agent shall be entitled, pursuant to Section 10.6 hereof, to
assume that no Default or Event of Default shall have occurred and be
continuing, Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in it by,
or with respect to taking or refraining from taking any action or actions that
it may be able to take under or in respect of, this Agreement.  Agent shall
incur no liability under or in respect of this Agreement by acting upon any
notice, certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or with
respect to anything that it may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to it to be necessary or desirable in
the premises.

 

Section 10.8.  Release of Collateral or Guarantor of Payment.  In the event of a
sale of assets permitted by Section 5.12 hereof (or otherwise permitted pursuant
to this Agreement)

 

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where the proceeds of such sale or sales are applied in accordance with the
terms of this Agreement to the extent required to be so applied, Agent, at the
request and expense of Borrower, is hereby authorized by the Lenders to
(a) release such Collateral from this Agreement, (b) release a Guarantor of
Payment in connection with an asset sale permitted hereunder, and (c) duly
assign, transfer and deliver to the affected Company (without recourse and
without any representation or warranty) such Collateral as is then (or has been)
so sold or released and as may be in possession of Agent and has not theretofore
been released pursuant to this Agreement.

 

Section 10.9.  Notice of Default.  In the event that Agent shall have acquired
actual knowledge of any Default or Event of Default, Agent shall promptly notify
the Lenders and shall take such action and assert such rights under this
Agreement as the Required Lenders shall direct and Agent shall inform the other
Lenders in writing of the action taken.  Agent may take such action and assert
such rights as it deems to be advisable, in its discretion, for the protection
of the interests of the holders of the Obligations.

 

Section 10.10.  Indemnification of Agent.  The Lenders agree to indemnify Agent
(to the extent not reimbursed by Borrower) ratably, according to their
respective Overall Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys’ fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
in its capacity as agent in any way relating to or arising out of this Agreement
or any Loan Document or any action taken or omitted by Agent with respect to
this Agreement or any Loan Document, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys’ fees) or
disbursements resulting from Agent’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction, or from any action taken or
omitted by Agent in any capacity other than as agent under this Agreement or any
other Loan Document.

 

Section 10.11.  Successor Agent.  Agent may resign as agent hereunder by giving
not fewer than thirty (30) days prior written notice to Borrower and the
Lenders.  If Agent shall resign under this Agreement, then either (a) the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders (with the consent of Borrower, so long as an Event of Default has not
occurred and is continuing, and which consent shall not be unreasonably
withheld), or (b) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following Agent’s notice to the Lenders of its
resignation, then Agent shall appoint a successor agent that shall serve as
agent until such time as the Required Lenders appoint a successor agent.  Upon
its appointment, such successor agent shall succeed to the rights, powers and
duties as agent, and the term “Agent” shall mean such successor effective upon
its appointment, and the former agent’s rights, powers and duties as agent shall
be terminated without any other or further act or deed on the part of such
former agent or any of the parties to this Agreement.

 

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ARTICLE XI.  MISCELLANEOUS

 

Section 11.1.  Lenders’ Independent Investigation.  Each Lender, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Lender.  Each Lender represents that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Companies in connection with the
extension of credit hereunder, and agrees that Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Lenders
hereunder), whether coming into its possession before the first Credit Event
hereunder or at any time or times thereafter.  Each Lender further represents
that it has reviewed each of the Loan Documents, and has received copies of and
reviewed the Convertible Subordinated Documents, including but not limited to,
the conditions relating to the status of the Obligations as Senior Indebtedness
(as defined in the Convertible Subordinated Notes).

 

Section 11.2.  No Waiver; Cumulative Remedies.  No omission or course of dealing
on the part of Agent, any Lender or the holder of any Note in exercising any
right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents.  The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.

 

Section 11.3.  Amendments, Consents.  No amendment, modification, termination,
or waiver of any provision of any Loan Document nor consent to any variance
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.  Anything
herein to the contrary notwithstanding, unanimous consent of the Lenders shall
be required with respect to (a) any increase in the Commitment hereunder (except
as specified in Section 2.10(b) hereof), (b) the extension of maturity of the
Loans, the payment date of interest or scheduled principal thereunder, or the
payment date of commitment or other fees or amounts payable hereunder, (c) any
reduction in the rate of interest on the Loans (provided that the institution of
the Default Rate and a subsequent removal of the Default Rate shall not
constitute a decrease in interest rate of this Section), or in any amount of
scheduled principal or interest due on any Loan, or the payment of commitment or
other fees hereunder or any change in the manner of pro rata application of any
payments made by Borrower to the Lenders hereunder, (d) any change in any
percentage voting requirement, voting rights, or the Required Lenders definition
in this Agreement, (e) the release of any Guarantor of Payment or material
amount of Collateral securing the Obligations, except as specifically permitted
hereunder, or (f) any amendment to this Section 11.3 or Section 9.5 hereof. 
Notice of amendments or consents ratified by the Lenders hereunder shall be
forwarded by Agent to all of the Lenders.  Each Lender or other holder of a Note
(or interest in any Loan) shall be bound by any amendment, waiver or consent
obtained as authorized by this Section, regardless of its failure to agree
thereto.

 

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Section 11.4.  Notices.  All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Borrower, mailed or
delivered to it, addressed to it at the address specified on the signature
pages of this Agreement, if to a Lender, mailed or delivered to it, addressed to
the address of such Lender specified on the signature pages of this Agreement,
or, as to each party, at such other address as shall be designated by such party
in a written notice to each of the other parties.  All notices, statements,
requests, demands and other communications provided for hereunder shall be
deemed to be given or made when delivered or two Business Days after being
deposited in the mails with postage prepaid by registered or certified mail,
addressed as aforesaid, or sent by facsimile with telephonic confirmation of
receipt, except that notices from Borrower to Agent or the Lenders pursuant to
any of the provisions hereof shall not be effective until received by Agent or
the Lenders, as the case may be.

 

Section 11.5.  Costs, Expenses and Taxes.  Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of Agent and all Related Expenses,
including, but not limited to, (a) syndication, administration, travel and
out-of-pocket expenses, including but not limited to attorneys’ fees and
expenses (excluding allocated costs of in-house counsel), of Agent in connection
with the preparation, negotiation and closing of the Loan Documents and the
administration of the Loan Documents, the collection and disbursement of all
funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, and (c) the reasonable fees and out-of-pocket expenses
of special counsel for Agent, with respect to the foregoing, and of local
counsel, if any, who may be retained by said special counsel with respect
thereto.  Borrower also agrees to pay on demand all costs and expenses of Agent
and the Lenders, including reasonable attorneys’ fees and expenses, in
connection with the restructuring or enforcement of the Obligations, this
Agreement or any Related Writing.  In addition, Borrower shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution and delivery of the Loan Documents, and the other instruments
and documents to be delivered hereunder, and agrees to hold Agent and each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or failure to pay such taxes or fees.

 

Section 11.6.  Indemnification.  Borrower agrees to defend, indemnify and hold
harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys’ fees but excluding anticipated profits) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against Agent or any Lender in connection with any investigative,
administrative or judicial proceeding (whether or not such Lender or Agent shall
be designated a party thereto) or any other claim by any Person relating to or
arising out of any Loan Document or any actual or proposed use of proceeds of
the Loans or any of the Obligations, or any activities of any Company or its
Affiliates; provided that no Lender nor Agent shall have the right to be
indemnified under this Section 11.6 for its own gross negligence or willful
misconduct as

 

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determined by a court of competent jurisdiction.  All obligations provided for
in this Section 11.6 shall survive any termination of this Agreement.

 

Section 11.7.  Obligations Several; No Fiduciary Obligations.  The obligations
of the Lenders hereunder are several and not joint.  Nothing contained in this
Agreement and no action taken by Agent or the Lenders pursuant hereto shall be
deemed to constitute Agent or the Lenders a partnership, association, joint
venture or other entity.  No default by any Lender hereunder shall excuse the
other Lenders from any obligation under this Agreement; but no Lender shall have
or acquire any additional obligation of any kind by reason of such default.  The
relationship between Borrower and the Lenders with respect to the Loan Documents
and the Related Writings is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Lender shall have any fiduciary
obligation toward any Credit Party with respect to any such documents or the
transactions contemplated thereby.

 

Section 11.8.  Execution in Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts
and by facsimile signature, each of which counterparts when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.

 

Section 11.9.  Binding Effect; Borrower’s Assignment.  This Agreement shall
become effective when it shall have been executed by Borrower, Agent and each
Lender and thereafter shall be binding upon and inure to the benefit of
Borrower, Agent and each of the Lenders and their respective successors and
permitted assigns, except that Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of
Agent and all of the Lenders.

 

Section 11.10.  Lender Assignments.

 

(a)                                  Assignments of Commitments.  Each Lender
shall have the right at any time or times to assign to an Eligible Transferee
(other than to a Lender that shall not be in compliance with this Agreement),
without recourse, all or a percentage of all of the following: (i) such Lender’s
Commitment, (ii) all Loans made by that Lender, (iii) such Lender’s Notes, and
(iv) such Lender’s interest in any Letter of Credit or Swing Loan, and any
participation purchased pursuant to Section 2.2 or 9.5 hereof.

 

(b)                                 Prior Consent.  No assignment may be
consummated pursuant to this Section 11.10 without the prior written consent of
Borrower and Agent (other than an assignment by any Lender to any affiliate of
such Lender which affiliate is an Eligible Transferee and either wholly-owned by
a Lender or is wholly-owned by a Person that wholly owns, either directly or
indirectly, such Lender), which consent of Borrower and Agent shall not be
unreasonably withheld; provided, however, that Borrower’s consent shall not be
required if, at the time of the proposed assignment, any Default or Event of
Default shall then exist.  Anything herein to the contrary notwithstanding, any
Lender may at any time make a collateral assignment of all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank, and no such
assignment shall release such assigning Lender from its obligations hereunder.

 

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(c)                                  Minimum Amount.  Each such assignment shall
be in a minimum amount of the lesser of Five Million Dollars ($5,000,000) of the
assignor’s Commitment and interest herein or the entire amount of the assignor’s
Commitment and interest herein.

 

(d)                                 Assignment Fee.  Unless the assignment shall
be to an affiliate of the assignor or the assignment shall be due to merger of
the assignor or for regulatory purposes, either the assignor or the assignee
shall remit to Agent, for its own account, an administrative fee of Three
Thousand Five Hundred Dollars ($3,500).

 

(e)                                  Assignment Agreement.  Unless the
assignment shall be due to merger of the assignor or a collateral assignment for
regulatory purposes, the assignor shall (i) cause the assignee to execute and
deliver to Borrower and Agent an Assignment Agreement, and (ii) execute and
deliver, or cause the assignee to execute and deliver, as the case may be, to
Agent such additional amendments, assurances and other writings as Agent may
reasonably require.

 

(f)                                    Non-U.S. Assignee.  If the assignment is
to be made to an assignee that is organized under the laws of any jurisdiction
other than the United States or any state thereof, the assignor Lender shall
cause such assignee, at least five Business Days prior to the effective date of
such assignment, (i) to represent to the assignor Lender (for the benefit of the
assignor Lender, Agent and Borrower) that under applicable law and treaties no
taxes will be required to be withheld by Agent, Borrower or the assignor with
respect to any payments to be made to such assignee in respect of the Loans
hereunder, (ii) to furnish to the assignor Lender (and, in the case of any
assignee registered in the Register (as defined below), Agent and Borrower)
either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue
Service Form W-8BEN, as applicable (wherein such assignee claims entitlement to
complete exemption from U.S. federal withholding tax on all payments hereunder),
and (iii) to agree (for the benefit of the assignor, Agent and Borrower) to
provide to the assignor Lender (and, in the case of any assignee registered in
the Register, to Agent and Borrower) a new Form W-8ECI, Form W-8IMY or Form
W-8BEN, as applicable, upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such assignee, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.

 

(g)                                 Deliveries by Borrower.  Upon satisfaction
of all applicable requirements specified in subsections (a) through (f) above,
Borrower shall execute and deliver (i) to Agent, the assignor and the assignee,
any consent or release (of all or a portion of the obligations of the assignor)
required to be delivered by Borrower in connection with the Assignment
Agreement, and (ii) to the assignee and the assignor, if applicable, an
appropriate Note or Notes.  After delivery of the new Note or Notes, the
assignor’s Note or Notes being replaced shall be returned to Borrower marked
“replaced”.

 

(h)                                 Effect of Assignment.  Upon satisfaction of
all applicable requirements set forth in subsections (a) through (g) above, and
any other condition contained in this Section 11.10, (i) the assignee shall
become and thereafter be deemed to be a “Lender” for the purposes of this
Agreement, (ii) the assignor shall be released from its obligations hereunder to
the extent that its

 

76

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interest has been assigned, (iii) in the event that the assignor’s entire
interest has been assigned, the assignor shall cease to be and thereafter shall
no longer be deemed to be a “Lender” and (iv) the signature pages hereto and
Schedule 1 hereto shall be automatically amended, without further action, to
reflect the result of any such assignment.

 

(i)                                     Agent to Maintain Register.  Agent shall
maintain at the address for notices referred to in Section 11.4 hereof a copy of
each Assignment Agreement delivered to it and a register (the “Register”) for
the recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time.  The
entries in the Register shall be conclusive, in the absence of manifest error,
and Borrower, Agent and the Lenders may treat each Person whose name is recorded
in the Register as the owner of the Loan recorded therein for all purposes of
this Agreement.  The Register shall be available for inspection by Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.

 

Section 11.11.  Sale of Participations.  Any Lender may, in the ordinary course
of its commercial banking business and in accordance with applicable law, at any
time sell participations to one or more Eligible Transferees (each a
“Participant”) in all or a portion of its rights or obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Commitment and the Loans and participations owing to it and the
Note held by it); provided, that:

 

(a)                                  any such Lender’s obligations under this
Agreement and the other Loan Documents shall remain unchanged;

 

(b)                                 such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations;

 

(c)                                  the parties hereto shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and each of the other Loan Documents;

 

(d)                                 such Participant shall be bound by the
provisions of Section 9.5 hereof, and the Lender selling such participation
shall obtain from such Participant a written confirmation of its agreement to be
so bound; and

 

(e)                                  no Participant (unless such Participant is
itself a Lender) shall be entitled to require such Lender to take or refrain
from taking action under this Agreement or under any other Loan Document, except
that such Lender may agree with such Participant that such Lender will not,
without such Participant’s consent, take action of the type described as
follows:

 

(i)                                     increase the portion of the
participation amount of any Participant over the amount thereof then in effect,
or extend the Commitment Period, without the written consent of each Participant
affected thereby; or

 

77

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(ii)                                  reduce the principal amount of or extend
the time for any payment of principal of any Loan, or reduce the rate of
interest or extend the time for payment of interest on any Loan, or reduce the
commitment fee, without the written consent of each Participant affected
thereby.

 

Borrower agrees that any Lender that sells participations pursuant to this
Section shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrower shall not increase as a result of such transfer and Borrower shall have
no obligation to any Participant.

 

Section 11.12.  Severability of Provisions; Captions; Attachments.  Any
provision of this Agreement that shall be 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
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.  The several captions to Sections and
subsections herein are inserted for convenience only and shall be ignored in
interpreting the provisions of this Agreement.  Each schedule or exhibit
attached to this Agreement shall be incorporated herein and shall be deemed to
be a part hereof.

 

Section 11.13.  Investment Purpose.  Each of the Lenders represents and warrants
to Borrower that it is entering into this Agreement with the present intention
of acquiring any Note issued pursuant hereto for investment purposes only and
not for the purpose of distribution or resale, it being understood, however,
that each Lender shall at all times retain full control over the disposition of
its assets.

 

Section 11.14.  Entire Agreement.  This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions mentioned
herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

 

Section 11.15.  Legal Representation of Parties.  The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.

 

Section 11.16.  Governing Law; Submission to Jurisdiction.  This Agreement, each
of the Notes and any Related Writing shall be governed by and construed in
accordance with the laws of the State of Ohio and the respective rights and
obligations of Borrower, Agent, and the Lenders shall be governed by Ohio law,
without regard to principles of conflicts of laws.  Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, the Obligations or any Related Writing, and Borrower
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court. 
Borrower, on behalf of itself and its Subsidiaries, hereby

 

78

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irrevocably waives, to the fullest extent permitted by law, any objection it may
now or hereafter have to the laying of venue in any action or proceeding in any
such court as well as any right it may now or hereafter have to remove such
action or proceeding, once commenced, to another court on the grounds of FORUM
NON CONVENIENS or otherwise.  Borrower agrees that a final, nonappealable
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.

 

[Remainder of page left intentionally blank]

 

79

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JURY TRIAL WAIVER.  TO THE EXTENT PERMITTED BY LAW, BORROWER, AGENT AND EACH
LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE
LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first set forth above.

 

Address:

501 Kansas Avenue 

EPIQ SYSTEMS, INC. 

 

Kansas City, Kansas  66105 

 

 

 

Attn: Elizabeth Braham

By:

   /s/   Elizabeth Braham 

 

 

 

Elizabeth Braham 

 

 

 

Secretary

 

 

 

 

Address:

127 Public Square 

KEYBANK NATIONAL ASSOCIATION,

 

Cleveland, Ohio  44114-1306 

  as Agent and as a Lender 

 

Attn:  Institutional Banking

 

 

 

 

By:

   /s/   Jeff Kalinowski

 

 

Name:

Vice President

 

 

Title:

Jeff Kalinowski

 

1

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SCHEDULE 1

 

LENDERS

 

REVOLVING
CREDIT
COMMITMENT
PERCENTAGE

 

REVOLVING
CREDIT
COMMITMENT
AMOUNT

 

TERM LOAN
COMMITMENT
PERCENTAGE

 

TERM LOAN
COMMITMENT
AMOUNT

 

MAXIMUM
AMOUNT

 

KeyBank National Association

 

100

%

$

50,000,000

 

100

%

$

25,000,000

 

$

75,000,000

 

Total Commitment Amount

 

100

%

$

50,000,000

 

100

%

$

25,000,000

 

$

75,000,000

 

 

S-1

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EXHIBIT A

FORM OF

REVOLVING CREDIT NOTE

 

$                     

 

Cleveland, Ohio

 

 

July 20, 2004

 

FOR VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation
(“Borrower”), promises to pay, on the last day of the Commitment Period, as
defined in the Credit and Security Agreement (as hereinafter defined), to the
order of [                                             ] (“Lender”) at the main
office of KEYBANK NATIONAL ASSOCIATION, as Agent, as hereinafter defined, 127
Public Square, Cleveland, Ohio 44114-1306 the principal sum of

 

                                                                                                                                                                                              

DOLLARS

 

or the aggregate unpaid principal amount of all Revolving Loans, as defined in
the Credit and Security Agreement made by Lender to Borrower pursuant to
Section 2.2 of the Credit and Security Agreement, whichever is less, in lawful
money of the United States of America.

 

As used herein, “Credit and Security Agreement” means the Credit and Security
Agreement dated as of July 20, 2004, among Borrower, the Lenders, as defined
therein, and KeyBank National Association, as lead arranger, sole book runner
and administrative agent for the Lenders (“Agent”), as the same may from time to
time be amended, restated or otherwise modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of each
Revolving Loan from time to time outstanding, from the date of such Revolving
Loan until the payment in full thereof, at the rates per annum that shall be
determined in accordance with the provisions of Section 2.4(a) of the Credit and
Security Agreement.  Such interest shall be payable on each date provided for in
such Section 2.4(a); provided, however, that interest on any principal portion
that is not paid when due shall be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, and payments of principal of any thereof, shall
be shown on the records of Lender by such method as Lender may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from the obligations of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit and Security Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum equal to the Default Rate.  All payments of principal of and interest on
this Note shall be made in immediately available funds.

 

This Note is one of the Revolving Credit Notes referred to in the Credit and
Security Agreement.  Reference is made to the Credit and Security Agreement for
a description of the

 

A-1

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right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.

 

Borrower hereby designates all Indebtedness and other obligations now or
hereafter incurred or otherwise outstanding under this Note, the Credit and
Security Agreement and the other Loan Documents, as defined in the Credit and
Security Agreement, to be “Senior Indebtedness” as defined in the Note
Agreement.

 

Except as expressly provided in the Credit and Security Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.  This Note
shall be governed by and construed in accordance with the laws of the State of
Ohio, without regard to conflicts of laws provisions.

 

JURY TRIAL WAIVER.  BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

EPIQ SYSTEMS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

A-2

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EXHIBIT B

FORM OF

SWING LINE NOTE

 

$5,000,000

 

Cleveland, Ohio

 

 

July 20, 2004

 

FOR VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation
(“Borrower”), promises to pay to the order of KEYBANK NATIONAL ASSOCIATION
(“Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, as
hereinafter defined, 127 Public Square, Cleveland, Ohio 44114-1306 the principal
sum of

 

FIVE MILLION AND
00/100                                                                                                                                             

DOLLARS

 

or the aggregate unpaid principal amount of all Swing Loans, as defined in the
Credit and Security Agreement (as hereinafter defined) made by Lender to
Borrower pursuant to Section 2.2(c) of the Credit and Security Agreement,
whichever is less, in lawful money of the United States of America on the
earlier of the last day of the Commitment Period, as defined in the Credit and
Security Agreement, or, with respect to each Swing Loan, the Swing Loan Maturity
Date applicable thereto.

 

As used herein, “Credit and Security Agreement” means the Credit and Security
Agreement dated as of July 20 2004, among Borrower, the Lenders, as defined
therein, and KeyBank National Association, as lead arranger, sole book runner
and administrative agent for the Lenders (“Agent”), as the same may from time to
time be amended, restated or otherwise modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of each
Swing Loan from time to time outstanding, from the date of such Swing Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(b) of the Credit and Security
Agreement.  Such interest shall be payable on each date provided for in such
Section 2.4(b); provided, however, that interest on any principal portion which
is not paid when due shall be payable on demand.

 

The principal sum hereof from time to time and the payments of principal and
interest thereon, shall be shown on the records of Lender by such method as
Lender may generally employ; provided, however, that failure to make any such
entry shall in no way detract from the obligation of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit and Security Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum equal to the Default Rate.  All payments of principal of and interest on
this Note shall be made in immediately available funds.

 

B-1

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

 

This Note is the Swing Line Note referred to in the Credit and Security
Agreement.  Reference is made to the Credit and Security Agreement for a
description of the right of the undersigned to anticipate payments hereof, the
right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.

 

Borrower hereby designates all Indebtedness and other obligations now or
hereafter incurred or otherwise outstanding under this Note, the Credit and
Security Agreement and the other Loan Documents, as defined in the Credit and
Security Agreement, to be “Senior Indebtedness” as defined in the Note
Agreement.

 

Except as expressly provided in the Credit and Security Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.  This Note
shall be governed by and construed in accordance with the laws of the State of
Ohio, without regard to conflicts of laws provisions.

 

JURY TRIAL WAIVER.  BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY OTHER
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

EPIQ SYSTEMS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

B-2

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

 

EXHIBIT C

FORM OF

TERM NOTE

 

$                          

 

Cleveland, Ohio

 

 

July 20, 2004

 

FOR VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation
(“Borrower”), promises to pay to the order of
[                                                  ] (“Lender”) at the main
office of KEYBANK NATIONAL ASSOCIATION, as Agent, as hereinafter defined, 127
Public Square, Cleveland, Ohio 44114-1306 the principal sum of

 

                                                                                                                                                                                              

DOLLARS

 

in lawful money of the United States of America in consecutive principal
payments as set forth in the Credit and Security Agreement.

 

As used herein, “Credit and Security Agreement” means the Credit and Security
Agreement dated as of July 20, 2004, among Borrower, the Lenders, as defined
therein, and KeyBank National Association, as lead arranger, sole book runner
and administrative agent for the Lenders (“Agent”), as the same may from time to
time be amended, restated or otherwise modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of the
Term Loan from time to time outstanding, from the date of the Term Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(c) of the Credit and Security
Agreement.  Such interest shall be payable on each date provided for in such
Section 2.4(c); provided, however, that interest on any principal portion that
is not paid when due shall be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, and payments of principal of either thereof,
shall be shown on the records of Lender by such method as Lender may generally
employ; provided, however, that failure to make any such entry shall in no way
detract from the obligations of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit and Security Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum equal to the Default Rate.  All payments of principal of and interest on
this Note shall be made in immediately available funds.

 

This Note is one of the Term Notes referred to in the Credit and Security
Agreement.  Reference is made to the Credit and Security Agreement for a
description of the right of the undersigned to anticipate payments hereof, the
right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.

 

C-1

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

 

Borrower hereby designates all Indebtedness and other obligations now or
hereafter incurred or otherwise outstanding under this Note, the Credit and
Security Agreement and the other Loan Documents, as defined in the Credit and
Security Agreement, to be “Senior Indebtedness” as defined in the Note
Agreement.

 

Except as expressly provided in the Credit and Security Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.  This Note
shall be governed by and construed in accordance with the laws of the State of
Ohio, without regard to conflicts of laws provisions.

 

JURY TRIAL WAIVER.  BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY OTHER
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

EPIQ SYSTEMS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

C-2

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