EXHIBIT 10.3
 

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SCHAWK, INC.
 
______________________________
 
SECOND AMENDMENT
Dated as of June 11, 2009
 
to
 
NOTE PURCHASE AGREEMENT
Dated as of December 23, 2003
 
______________________________
 
Re: $15,000,000 4.90% Series 2003-A Senior Notes, Tranche A,
Due December 31, 2013
and
$10,000,000 4.98% Series 2003-A Senior Notes, Tranche B,
Due April 30, 2014
of
Schawk, Inc.
 
 
 
 
 
 

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SECOND AMENDMENT TO NOTE AGREEMENT
 
THIS SECOND AMENDMENT dated as of June 11, 2009 (the or this “Second Amendment”)
to the Note Purchase Agreement dated as of December 23, 2003 is between SCHAWK,
INC., a Delaware corporation (the “Company”), and each of the institutions which
is a signatory to this Second Amendment  (collectively, the “Noteholders”).
 
RECITALS:
 
A.           The Company and each of the Noteholders have heretofore entered
into the Note Purchase Agreement dated as of December 23, 2003, as amended,
modified and supplemented by that certain first amendment to Note Agreement
dated January 28, 2005 (the “Note Agreement”).  The Company has heretofore
issued the $15,000,000 4.90% Series 2003-A Senior Notes, Tranche A, Due December
31, 2013 and the $10,000,000 4.98% Series 2003-A Senior Notes, Tranche B, Due
April 30, 2014 (collectively, the “Notes”) pursuant to the Note Agreement.
 
B.           The Subsidiary Guarantors have made that certain Subsidiary
Guaranty Agreement dated as of December 23, 2003 in favor of the holders of the
Notes (as amended prior to the date hereof, the “Guaranty Agreement”).
 
C.           The Company, the Subsidiary Guarantors and the Noteholders now
desire to amend the Note Agreement and Guaranty Agreement in the respects, but
only in the respects, hereinafter set forth.
 
D.           Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Note Agreement unless herein defined or the context
shall otherwise require.
 
E.           All requirements of law have been fully complied with and all other
acts and things necessary to make this Second Amendment  a valid, legal and
binding instrument according to its terms for the purposes herein expressed have
been done or performed.
 
NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this Second Amendment set forth in Section 5.1
hereof, and in consideration of good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:
 
SECTION 1.    AMENDMENTS TO NOTE AGREEMENT.
 
Section 1.1.  Section 1 of the Note Agreement is hereby amended by adding the
heading “Section 1.1 Authorization and Issue of Tranche A Notes and Tranche B
Notes” at the beginning of such section so that the existing text is renumbered
as section 1.1.  Such renumbered section 1.1 of the Note Agreement is hereby
amended by adding the following at the end of such section:
 
“Notwithstanding anything to the contrary contained in this Agreement, any of
the Notes or in any of the other Note Documents, from and after the Amendment
No.
 
 

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2 Effective Date, interest on the outstanding principal balance of the Tranche A
Notes shall accrue at the rate of 8.90% per annum and interest on the
outstanding principal balance of the Tranche B Notes shall accrue at the rate of
8.98% per annum, in each case until the principal of the Tranche A Notes or the
Tranche B Notes, as applicable, shall have become due and payable (provided
that, during any period when an Event of Default shall be in existence, at the
election of the Required Holder(s), the outstanding principal balance of the
Tranche A Notes and the outstanding principal balance of the Tranche B Notes
shall bear interest, respectively, from and after the date of such Event of
Default and until such Event of Default ceases to be in existence at the rate
per annum from time to time equal to the applicable Default Rate for the Tranche
A Notes or Tranche B Notes, as applicable) and interest shall accrue on overdue
payments under the Tranche A Notes at the rate per annum from time to time equal
to the applicable Default Rate for the Tranche A Notes and interest shall accrue
on overdue payments under the Tranche B Notes at the rate per annum from time to
time equal to the applicable Default Rate for the Tranche B Notes.  Each of the
Note Documents, including without limitation, the Notes (and Exhibits 1(a) and
1(b) to the Note Agreement) is hereby amended to the extent necessary to further
evidence the foregoing, and upon any holder’s request, the Company shall issue a
new Note or Notes to such holder reflecting the same in exchange for the Note or
Notes then held by such holder.”
 
Section 1.2.  Section 1 of the Note Agreement is hereby amended by adding the
following thereto as new Sections 1.2 and 1.3:
 
“Section 1.2   Authorization of Issue of Tranche A PIK Notes.  The Company has
authorized the issue of its senior promissory notes in an aggregate initial
principal amount sufficient to evidence the aggregate amount of Make-Whole
Amount that may be required to be paid with respect to the Tranche A Notes upon
the prepayments of the Tranche A Notes required pursuant to Section 8.8 (the
“Tranche A PIK Notes”).  The Company will issue to each holder of Tranche A
Notes on the Amendment No. 2 Effective Date a Tranche A PIK Note in an initial
principal amount equal to the Make-Whole Amount due with respect to the
prepayment of the Tranche A Notes of such holder being made on the Amendment No.
2 Effective Date, each such Tranche A PIK Note to be dated the date of issue
thereof, to mature on the PIK Note Maturity Date, to bear interest on the unpaid
balance thereof from the date thereof until the principal thereof shall have
become due and payable at the rate of 8.90% per annum (provided that, during any
period when an Event of Default shall be in existence, at the election of the
Required Holder(s), the outstanding principal balance of the Tranche A PIK Notes
shall bear interest from and after the date of such Event of Default and until
such Event of Default ceases to be in existence at the rate per annum from time
to time equal to the applicable Default Rate for the Tranche A PIK Notes) and on
overdue payments at the rate per annum from time to time equal to the applicable
Default Rate for the Tranche A PIK Notes, and to be substantially in the form of
Exhibit 1.2 attached hereto.  Interest accrued on the unpaid balance of any
Tranche A PIK Note due before the date such principal is due (whether on the PIK
Note Maturity Date, by acceleration, optional or mandatory prepayment or
otherwise) shall be paid by adding such interest to the principal
 
 
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balance of such Tranche A PIK Note.  Any Make-Whole Amount due and payable with
respect to any prepayment of any Tranche A Note made after the Amendment No. 2
Effective Date pursuant to Section 8.8 shall be paid by adding the amount
thereof to the outstanding amount of the Related PIK Note and the outstanding
amount of such Related PIK Amount shall be deemed automatically increased by the
amount of such Make-Whole Amount on the date such Make-Whole Amount is otherwise
due.  The terms “Tranche A PIK Note” and “Tranche A PIK Notes” as used herein
shall include each Tranche A PIK Note delivered pursuant to any provision of
this Agreement and each Tranche A PIK Note delivered in substitution or exchange
for any other Tranche A PIK Note pursuant to any such provision.
 
Section 1.3     Authorization of Issue of Tranche B PIK Notes.  The Company has
authorized the issue of its senior promissory notes in an aggregate initial
principal amount sufficient to evidence the aggregate amount of Make-Whole
Amount that may be required to be paid with respect to the Tranche B Notes upon
the prepayments of the Tranche A Notes required pursuant to Section 8.8 (the
“Tranche B PIK Notes”).  The Company will issue to each holder of Tranche B
Notes on the Amendment No. 2 Effective Date a Tranche B PIK Note in an initial
principal amount equal to the Make-Whole Amount due with respect to the
prepayment of the Tranche B Notes of such holder being made on the Amendment No.
2 Effective, each such Tranche B PIK Note to be dated the date of issue thereof,
to mature on the PIK Note Maturity Date, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become due
and payable at the rate of 8.98% per annum (provided that, during any period
when an Event of Default shall be in existence, at the election of the Required
Holder(s), the outstanding principal balance of the Tranche B PIK Notes shall
bear interest from and after the date of such Event of Default and until such
Event of Default ceases to be in existence at the rate per annum from time to
time equal to the applicable Default Rate for the Tranche B PIK Notes) and on
overdue payments at the rate per annum from time to time equal to the applicable
Default Rate for the Tranche B PIK Notes, and to be substantially in the form of
Exhibit 1.3 attached hereto.  Interest accrued on the unpaid balance of any
Tranche B PIK Note due before the date such principal is due (whether on the PIK
Note Maturity Date, by acceleration, optional or mandatory prepayment or
otherwise) shall be paid by adding such interest to the principal balance of
such Tranche B PIK Note.  Any Make-Whole Amount due and payable with respect to
any prepayment of any Tranche B Note made after the Amendment No. 2 Effective
Date pursuant to Section 8.8 shall be paid by adding the amount thereof to the
outstanding amount of the Related PIK Note and the outstanding amount of such
Related PIK Amount shall be deemed automatically increased by the amount of such
Make-Whole Amount on the date such Make-Whole Amount is otherwise due.  The
terms “Tranche B PIK Note” and “Tranche B PIK Notes” as used herein shall
include each Tranche B PIK Note delivered pursuant to any provision of this
Agreement and each Tranche B PIK Note delivered in substitution or exchange for
any other Tranche B PIK Note pursuant to any such provision.”
 
Section 1.3.  The second sentence of Section 1.1 is hereby amended and restated
in its entirety as follows:
 
 
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“The Series 2003-A Notes together with any Tranche A PIK Note, any Tranche B PIK
Note and each Series of Additional Notes which may from time to time be issued
pursuant to the provisions of Section 2.2 are collectively referred to as the
“Notes” (such term shall also include any such notes issued in substitution
therefor pursuant to Section 1.3 of this Agreement.)”
 
Section 1.4.  Section 2.2 of the Note Agreement is hereby amended by deleting
the “and” appearing at the end of clause (vi) thereof, by deleting the period
appearing at the end of clause (vii) thereof and inserting “: and” in place
thereof, and by inserting the following new clause (viii): “(viii) no Additional
Notes shall be issued after the Amendment No. 2 Effective Date.”
 
Section 1.5.  The reference to “Section 10.4” set forth in Section 5.15(b) of
the Note Agreement is deleted and replaced with a reference to “Section 10.3”.
 
Section 1.6.  Section 2 of the Note Agreement is hereby amended by adding the
following as a new Section 2.4 thereto:
 
“Section 2.4.  Security.  Pursuant to and in accordance with the terms of the
Collateral Documents and subject to the terms of the Intercreditor Agreement,
the Notes and the other Note Obligations shall be secured by and entitled to the
benefits of a perfected first priority Lien in all of each Grantor’s right,
title and interest in and to the Collateral to secure the prompt and complete
payment and performance of the Note Obligations.”
 
Section 1.7.  Section 5 of the Note Agreement is hereby amended by adding the
following as a new Section 5.20 thereto:
 
“Section 5.20.  Security Interest in Collateral.  The provisions of this
Agreement and the Collateral Documents create legal and valid Liens on all the
Collateral in favor of the Collateral Agent, for the benefit of the holders of
Note Obligations and the other holders of the Secured Obligations, and such
Liens constitute perfected and continuing Liens on the Collateral, securing the
Note Obligations and the other Secured Obligations, enforceable against the
applicable Domestic Note Party and all third parties, and having priority over
all other Liens on the Collateral except in the case of (a) Permitted Existing
Liens, to the extent any such Permitted Existing Liens would have priority over
the Liens in favor of the Collateral Agent pursuant to any applicable law and
(b) Liens perfected only by possession (including possession of any certificate
of title) to the extent the Collateral Agent has not obtained or does not
maintain possession of such Collateral.”
 
Section 1.8.  The reference to “Section 10.1 through Section 10.4 hereof” set
forth in Section 7.2(a) of the Note Agreement is deleted and replaced with a
reference to “Sections 10.1, 10.2, 10.3 and 10.19 hereof”.
 
Section 1.9.  Section 7.3 of the Note Agreement is hereby amended in its
entirety to read as follows:
 
“Section 7.3.  Inspection of Property; Books and Records; Discussions.  The
Company shall permit and cause each of the Company’s Subsidiaries to permit, any
 
 
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authorized representative(s) designated by any holder of the Notes to visit and
inspect any of the properties of the Company or any of its Subsidiaries, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to their respective businesses or the transactions
contemplated hereby (including, without limitation, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers, all upon reasonable notice and at
such reasonable times during normal business hours, as often as may be
reasonably requested.  The Company shall keep and maintain, and cause each of
the Company’s Subsidiaries to keep and maintain, in all material respects,
proper books of record and account in which entries in conformity with the
Agreement Accounting Principles shall be made of all dealings and transactions
in relation to their respective businesses and activities.  If an Event of
Default has occurred and is continuing, the Company, upon the request of any
holder of the Notes, shall provide copies of such records to a representative of
the holders of the Notes.  The Company acknowledges that the Collateral Agent
(or any other Person having inspection rights), after exercising its rights of
inspection, may prepare and distribute to the Bank Lenders and the holders of
the Notes certain Reports pertaining to the Company and its Subsidiaries’ assets
for internal use by the Bank Lenders and the holders of the Notes.  At any time
after the occurrence and during the continuation of an Event of Default, that
the Collateral Agent, any Bank Lender or any holder of the Notes requests, the
Company and the Subsidiaries will provide, at the sole expense of the Company,
each holder of any Notes with appraisals or updates thereof of their inventory
and other assets from an appraiser selected and engaged by the Collateral Agent,
and prepared on a basis satisfactory to the Required Holders, such appraisals
and updates to include, without limitation, information required by applicable
law and regulations.”
 
Section 1.10.  Clause (c) of Section 8.1 of the Note Agreement is hereby amended
and restated in its entirety as follows:
 
“Notwithstanding anything to the contrary, each scheduled payment and prepayment
required to be made by this Section 8.1 after the Amendment No. 2 Effective Date
shall be reduced to the extent that prepayments are applied to such scheduled
payment or prepayment pursuant to Section 8.3, provided that each scheduled
prepayment required to be made by this Section 8.1 after the Amendment No. 2
Effective Date and prior to the Normalization Date shall be further reduced to
the amount to which such prepayment would have been reduced if the prepayments
made pursuant to Section 8.8 prior to such prepayment date were applied against
each scheduled payment and prepayment required under this Section 8.1 pro rata
in proportion to the respective amounts of such scheduled payments and
prepayments, instead of being applied as provided in Section 8.3, and the amount
by which scheduled prepayments are reduced pursuant to this proviso clause shall
be due instead on the last date on which scheduled payments or prepayments are
otherwise due under this Section 8.1, after giving effect to the application of
prepayments under Section 8.3.”
 
Section 1.11.  The cross reference in Section 8.2 of the Note Agreement to
“Section 10.4” is hereby amended to be a cross reference to Section 8.7.
 
 
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Section 1.12.  Section 8.3 of the Note Agreement is hereby amended and restated
in its entirety as follows:
 
“In the case of each partial prepayment of the Notes, other than any partial
prepayment pursuant to section 8.1, the principal amount so prepaid shall be
applied first to any amounts due on the Tranche B Notes under Section 8.1 on
April 30, 2014, next to any amounts due on the Tranche A Notes under Section 8.1
on December 31, 2013, and thereafter to the scheduled prepayments of the Series
2003-A Notes required under Section 8.1 in inverse order of scheduled date of
prepayment so that the amount prepaid is applied to the last scheduled
prepayment before any earlier scheduled prepayments.  The Company and the
Noteholders recognize that the result of the foregoing application of
prepayments may result in an application of prepayments among the Series 2003-A
Notes that is not pro rata in proportion to their respective principal amounts.”
 
Section 1.13.  The definition of “Remaining Scheduled Payments” in Section 8.6
of the Note Agreement is hereby amended and restated in its entirety as follows:
 
“Remaining Scheduled Payments” means, with respect to the Called Principal of a
Series 2003-A Note of the applicable Tranche, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal were
made prior to its scheduled due date, provided that if such Settlement Date is
not a date on which interest payments are due to be made under the terms of the
Series 2003-A Note, then the amount of the next succeeding scheduled interest
payment will be reduced by the amount of interest accrued to such Settlement
Date and required to be paid on such Settlement Date pursuant to Section 8.2,
8.8 or 12.1, provided that solely for purposes of calculating any Make-Whole
Amount payable upon a prepayment required under Section 8.8, the Remaining
Scheduled Payments shall be calculated as if the interest rate on the Tranche A
Notes were 4.90% per annum and as if the interest rate on the Tranche B Notes
were 4.98% per annum.”
 
Section 1.14.  Section 8.6 of the Note Agreement is hereby further amended by
inserting “or Section 8.8” after each reference to “Section 8.2” appearing in
the respective definitions of “Called Principal” and “Settlement Date” in such
Section 8.6.
 
Section 1.15.  The references to “Section 10.4(2)” set forth in Sections 8.7(a)
and 8.7(c) of the Note Agreement are deleted and replaced with a reference to
“Section 10.2”.
 
Section 1.16.  Section 8 of the Note Agreement is hereby amended by adding the
following as a new Section 8.8 thereto:
 
“Section 8.8.     Pro Rata Prepayments.
 
(a)           At all times on or prior to the earlier of the Normalization Date
and the Pro Rata Termination Time, if the aggregate outstanding principal amount
of the Debt of the Company under the Bank Credit Agreement is reduced at any
time below the Threshold Amount in effect at such time (the amount by which the
principal amount of
 
 
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the Debt of the Company under the Bank Credit Agreement is so reduced below such
Threshold Amount, the “Bank Prepayment Amount”), then, on the date of each such
reduction, the Company shall prepay the principal amount of the Series 2003-A
Notes in an amount equal to (i)  such Bank Prepayment Amount multiplied by (ii)
a fraction, the numerator of which is the Noteholder Current Pro Rata Share and
the denominator of which is the Bank Current Pro Rata Share , together with
interest accrued thereon to the date of such prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount
of each Series 2003-A Note then outstanding that is so prepaid.
 
(b)           At all times on or prior to the earlier of the Normalization Date
and the Pro Rata Termination Time, if the outstanding principal amount of any of
the 2005 Notes (but excluding any 2005 PIK Notes) is paid or prepaid in whole or
in part at any time (but expressly excluding any prepayment of the 2005 Notes
pursuant to Section 8.8 of the 2005 Note Agreement as in effect on the Amendment
No. 2 Effective Date) (the amount of such payment or prepayment made on any
date, the “2005 Note Prepayment Amount”), then, on the date of each such payment
or prepayment, the Company shall prepay the principal amount of the Series
2003-A Notes in an amount equal to (i) such 2005 Note Prepayment Amount
multiplied by (ii) a fraction, the numerator of which is the Noteholder Current
Pro Rata Share and the denominator of which is the 2005 Note Current Pro Rata
Share, together with interest accrued thereon to the date of such prepayment,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount of each Series 2003-A Note then outstanding that is so
prepaid.  In the case of each partial prepayment of the Series 2003-A Notes
pursuant to this Section 8.8, such partial prepayment shall be applied to the
scheduled payments of the Series 2003-A Notes in accordance with Section
8.3.  Notwithstanding anything to the contrary contained in this Agreement, (i)
any Make-Whole Amount due and payable with respect to any prepayment of any
Series 2003-A Note pursuant to this Section 8.8 shall not be paid in cash on the
date such Make-Whole Amount is otherwise due and payable and shall instead be
paid by adding the amount thereof (to the extent not included in the initial
principal amount of the Related PIK Note on the Amendment No. 2 Effective
Date).to the outstanding amount of the Related PIK Note, and (ii) the occurrence
of the Normalization Date or the Pro Rata Termination Date shall not relieve the
Company of any of its obligations that arise under this section 8.8 through the
Normalization Date or the Pro Rata Termination Time.  For the avoidance of
doubt, the reduction of the Debt under the Bank Credit Agreement as a result of
the satisfaction by the Company of the condition precedent to the effectiveness
of Amendment No. 2 to the Bank Credit Agreement set forth in Section 3(a)(i)
thereof is intended to be covered by this Section 8.8.
 
For the purposes of this Section 8.8, the following terms have the respective
meanings set forth below:
 
“Bank Current Pro Rata Share “ means 52.59%.
 
“Normalization Date” as defined in the Intercreditor Agreement.
 
 
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“Noteholder Current Pro Rata Share “ means 12.48%.
 
“Pro Rata Termination Time” means the time upon which (a) the sum of, but
without duplication, (i) the aggregate amount of all Reductions as to which
there is a required pro rata prepayment of the Notes pursuant to Section 8.8 or
resulting from required repayments of the Debt under the Bank Credit Agreement
under Section 2.5(B)(iii) thereof as a result of prepayments of the Notes or the
2005 Notes, (ii) the aggregate amount all payments or prepayments of the 2005
Notes as to which there is a required pro rata prepayment of the Series 2003-A
Notes pursuant to Section 8.8 or made pursuant to Section 8.8 of the 2005 Note
Agreement, and (iii) the aggregate amount of all prepayments of the Series
2003-A Notes pursuant to Section 8.1 or 8.8 of this Agreement, in each case made
at any time on or after the Amendment No. 2 Effective Date (including for the
avoidance of doubt, prepayments made to satisfy the condition precedent to the
effectiveness of Amendment No. 2 to the Bank Credit Agreement set forth in
Section 3(a)(i) thereof and the Reduction resulting therefrom), equals (b)
$20,000,000.
 
“Reduction” means, with respect to any reduction of Debt of the Company under
the Bank Credit Agreement made at any time on or after the Amendment No. 2
Effective Date, an amount equal to, if positive, (a) the Threshold Amount in
effect immediately prior to such reduction minus (b) the aggregate Debt
outstanding under the Bank Credit Agreement after giving effect to such
reduction.
 
“Threshold Amount” means, at the time of any determination thereof, $75,283,750,
less the aggregate amount of all Reductions (without duplication) prior to such
time.
 
“2005 Noteholder Current Pro Rata Share” means 34.93.”
 
Section 1.17.  Section 9.3 of the Note Agreement is hereby amended in its
entirety to read as follows:
 
“Section 9.3.  Maintenance of Property.  The Company shall (i) cause all
property used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times and (ii) with respect to such property, maintain, or cause to be
maintained, with financially sound and reputable insurance companies, insurance
in such amounts and against such risks as are customarily maintained by
companies engaged in the same or similar businesses operating in the same or
similar locations; provided, however, that nothing in this Section 9.3 shall
prevent the Company from discontinuing the operation or maintenance of any of
such property if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
the Company has concluded that such discontinuance could not, individually or in
the aggregate, reasonably be
 
 
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expected to have a Material Adverse Effect.  The Company will furnish to the
Collateral Agent, upon request of the Collateral Agent or any holder of the
Notes, information in reasonable detail as to the insurance so maintained.  The
Company shall deliver to the Collateral Agent endorsements (x) to all “All Risk”
physical damage insurance policies on all of the Domestic Note Parties’ tangible
personal property and assets and business interruption insurance policies naming
the Collateral Agent as lender loss payee, and (y) to all general liability and
other liability policies naming the Collateral Agent an additional insured.  In
the event any Domestic Note Party at any time or times hereafter shall fail to
obtain or maintain any of the policies or insurance required herein or to pay
any premium in whole or in part relating thereto, then the Collateral Agent,
without waiving or releasing any obligations or resulting Event of Default
hereunder, may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which the Collateral Agent deems
advisable.  All sums so disbursed by the Collateral Agent shall constitute part
of the Secured Obligations, payable as provided in the Bank Credit
Agreement.  The Company will furnish to the Collateral Agent and each holder of
the Notes prompt written notice of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or interest
therein under power of eminent domain or by condemnation or similar proceeding.”
 
Section 1.18.  The reference to “Section 10.4” set forth in Section 9.4 of the
Note Agreement is deleted and replaced with a reference to “Section 10.3”.
 
Section 1.19.  The reference to “Sections 10.4 and 10.5” set forth in Section
9.5 of the Note Agreement is deleted and replaced with a reference to “Sections
10.2 and 10.9”.
 
Section 1.20.  Section 9.8 of the Note Agreement is hereby amended in its
entirety to read as follows:
 
“Section 9.8.  Notes to Rank Pari Passu.  The Notes and all other obligations
under this Agreement of the Company are and at all times shall remain direct and
secured obligations of the Company ranking pari passu as against the assets of
the Company with all other Notes from time to time issued and outstanding
hereunder without any preference among themselves and pari passu with all other
present and future secured Debt (actual or contingent) of the Company which is
not expressed to be subordinate or junior in rank to any other secured Debt of
the Company.  Notwithstanding anything to the contrary contained herein or in
any other Note Documents, all references to the Notes herein or in any other
Note Document stating that the Notes are “unsecured” are hereby amended to state
that the Notes are “secured”.”
 
Section 1.21.  Section 9 of the Note Agreement is hereby amended by adding the
following as a new Sections 9.9 and 9.10 thereto:
 
“Section 9.9.     Foreign Pledge Agreements.  If any Foreign Incorporated
Subsidiary is (a) a First Tier Foreign Subsidiary, (b) an Affected Foreign
Subsidiary, (c) a Material Foreign Subsidiary and (d) organized under the laws
of any European nation or
 
 
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any state or other principality or subdivision thereof, the Company shall or
shall cause the applicable parent Domestic Incorporated Subsidiary as promptly
as possible (but in any event within (i) in the case of such Foreign
Incorporated Subsidiaries which are in existence on the date hereof, as promptly
as possible (but in any event within sixty (60) days after the date hereof (or
by such later date as the Required Holders may agree to in their discretion))
and (ii) in the case of such Foreign Incorporated Subsidiaries which are created
or acquired after the date hereof, as promptly as possible (but in any event
within sixty (60) days following the creation or acquisition thereof (or by such
later date as the Required Holders may agree to in their discretion)) to (A)
execute (1) a Foreign Pledge Agreement and (2) such other Collateral Documents
deemed necessary or desirable in the Collateral Agent’s sole discretion with
respect to 65% of the Capital Stock of such Foreign Incorporated Subsidiary, and
(B) deliver and cause each such parent Domestic Incorporated Subsidiary to
deliver such corporate resolutions, opinions of counsel, stock certificates,
stock powers and such other documentation as the Collateral Agent or its counsel
may reasonably request, all in form and substance reasonably satisfactory to the
Collateral Agent and its counsel to effectuate such pledge.  Notwithstanding the
foregoing, no Foreign Pledge Agreement in respect of a Foreign Incorporated
Subsidiary shall be required hereunder to the extent such Foreign Pledge
Agreement is prohibited by applicable law or the Collateral Agent or its counsel
reasonably determines that the pledge of such Foreign Incorporated Subsidiary’s
Capital Stock would not provide material credit support for the benefit of the
holders of the Secured Obligations.
 
Section 9.10.  Security Agreement; Additional Collateral; Further Assurances.
 
(a)           The Company will cause, and will cause each other Domestic
Incorporated Subsidiary to cause, all of its owned personal property (whether
tangible, intangible, or mixed) to be subject at all times to first priority,
perfected Liens in favor of the Collateral Agent for the benefit of the holders
of the Secured Obligations to secure the Secured Obligations in accordance with
the terms and conditions of the Collateral Documents, subject in any case to
Liens permitted by Section 10.3.  Without limiting the generality of the
foregoing, the Company (i) will cause the issued and outstanding Capital Stock
of each Domestic Incorporated Subsidiary directly owned by the Company or any
other Domestic Incorporated Subsidiary to be subject at all times to a first
priority, perfected Lien in favor of the Collateral Agent to secure the Secured
Obligations in accordance with the terms and conditions of the Collateral
Documents.
 
(b)           Without limiting the foregoing, the Company will, and will cause
each Domestic Incorporated Subsidiary to, execute and deliver, or cause to be
executed and delivered, to the Collateral Agent such documents, agreements and
instruments, and will take or cause to be taken such further actions, which may
be required by law or which the Collateral Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Note Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all at the
expense of the Company.
 
(c)           If any personal property is acquired by a Domestic Note Party
after the Amendment No. 2 Effective Date (other than assets constituting
Collateral under a
 
 
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Collateral Document that automatically become subject to the Lien under such
Collateral Document upon acquisition thereof), the Company will notify the
Collateral Agent thereof, and, if requested by the Collateral Agent, the Company
will cause such personal property to be subjected to a Lien securing the Secured
Obligations and will take, and cause the other Domestic Note Parties to take,
such actions as shall be necessary or reasonably requested by the Collateral
Agent to grant and perfect such Liens, including actions described in paragraph
(c) of this Section, all at the expense of the Company.”
 
Section 1.22.  Section 10.1 of the Note Agreement is hereby amended in its
entirety to read as follows:
 
 “SECTION 10.  NEGATIVE COVENANTS.
 
The Company covenants that so long as any of the Notes are outstanding:
 
Section 10.1.   Debt.  Neither the Company nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Debt, except:
 
(a)           the Secured Obligations;
 
(b)           Permitted Existing Debt and Permitted Refinancing Debt;
 
(c)           Debt in respect of obligations secured by Customary Permitted
Liens;
 
(d)           Debt constituting Contingent Obligations permitted by Section
10.5;
 
(e)           Debt arising from intercompany loans and advances (a) from any
Subsidiary to the Company or any wholly-owned Subsidiary or (b) from the Company
to any wholly-owned Domestic Incorporated Subsidiary or (c) from the Company to
any wholly-owned Foreign Incorporated Subsidiary; provided, that if the Company
is the obligor on such Debt, such Debt shall be expressly subordinate to the
payment in full in cash of the Secured Obligations; provided, further, that the
aggregate of all Foreign Subsidiary Investments does not exceed the Permitted
Foreign Subsidiary Investment Amount at any time;
 
(f)           Debt in respect of Hedging Obligations permitted under Section
10.15;
 
(g)           secured or unsecured purchase money Debt (including Capital
Leases) incurred by the Company or any of its Subsidiaries after the date hereof
to finance the acquisition of fixed assets or in conjunction with a Permitted
Acquisition, if (1) at the time of such incurrence, no Event of Default or
Default has occurred and is continuing or would result from such incurrence, (2)
such Debt has a scheduled maturity and is not due on demand, (3) such Debt does
not exceed the lower of the fair market value or the cost of the applicable
fixed assets on the date acquired, (4) such Debt does not exceed $30,000,000 in
the aggregate outstanding at any time, and (5) any Lien securing such Debt is
permitted under Section 10.3 (such Debt being referred to herein as “Permitted
Purchase Money Debt”);
 
 
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(h)           Debt with respect to surety, appeal and performance bonds obtained
by the Company or any of its Subsidiaries in the ordinary course of business;
 
(i)           Debt incurred by the Company to the seller in any Permitted
Acquisition as part of the consideration therefor, provided that such Debt is
unsecured and, if in excess of $15,000,000 in the aggregate, is subordinated to
the Secured Obligations, on terms reasonably acceptable to the Required Holders;
 
(j)           Debt incurred by the Company pursuant to this Agreement and the
Notes; and
 
(k)           additional unsecured Debt in an aggregate amount at any time
outstanding not exceeding $25,000,000.
 
Section 10.2.   Sales of Assets.  Neither the Company nor any of its
Subsidiaries shall consummate any Asset Sale, except:
 
(a)           licenses or sublicenses by the Company or its Subsidiaries of
software, customer lists, trademarks, service marks, patents, trade names and
copyrights and other intellectual property in the ordinary course of business;
provided, that such licenses or sublicenses shall not interfere with the
business of the Company or any such Subsidiary;
 
(b)           transfers of assets between the Company and any wholly-owned
Subsidiary of the Company or between wholly-owned Subsidiaries of the Company
not otherwise prohibited by this Agreement; provided, that the aggregate of all
Foreign Subsidiary Investments does not exceed the Permitted Foreign Subsidiary
Investment Amount at any time; and
 
(c)           sales, assignments, transfers leases, conveyances or other
dispositions of other assets if such transaction (a) is for not less than fair
market value (as determined in good faith by the Company’s board of directors),
and (b) when combined with all such other transactions (each such transaction
being valued at book value) (i) during the immediately preceding twelve-month
period, represents the disposition of not greater than fifteen percent (15%) of
the Company’s Consolidated Tangible Assets at the end of the fiscal year
immediately preceding that in which such transaction is proposed to be entered
into, and (ii) during the period from the date hereof to the date of such
proposed transaction, represents the disposition of not greater than twenty-five
percent (25%) of the Company’s Consolidated Tangible Assets at the end of the
fiscal year immediately preceding that in which such transaction is proposed to
be entered into; and
 
(d)           sales in connection with the reorganization, restructuring and
rationalization of the Company and its Subsidiaries; provided that the
non-recurring expenses arising from such reorganization, restructuring and
rationalization which are charged to operating expenses are charged during the
first three (3) fiscal years following any Permitted Acquisition and do not
exceed $5,000,000, on a pre-tax basis, with respect to any Permitted
Acquisition, or $10,000,000, on a pre-tax basis, in the aggregate.
 
 
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An amount equal to the Net Proceeds received from any Asset Sale shall be used
to prepay or retire Senior Debt of the Company and/or its Restricted
Subsidiaries, provided that the Company shall comply with the provisions of
Section 8.7 hereof.
 
Section 10.3.   Liens.  Neither the Company nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective property or assets except:
 
(a)           Liens securing the Secured Obligations to the extent permitted
under the Intercreditor Agreement;
 
(b)           Permitted Existing Liens;
 
(c)           Customary Permitted Liens;
 
(d)           purchase money Liens (including the interest of a lessor under a
Capital Lease and Liens to which any property is subject at the time of the
Company’s acquisition thereof) securing Permitted Purchase Money Debt; provided
that such Liens shall not apply to any property of the Company or its
Subsidiaries other than that purchased or subject to such Capital Lease.
 
(e)           Liens with respect to property acquired by the Company or any of
its Subsidiaries after the date hereof (and not created in contemplation of such
acquisition) pursuant to a Permitted Acquisition; provided, that such Liens
shall extend only to the property so acquired; and
 
(f)           other Liens securing Debt not to exceed $5,000,000 in the
aggregate.
 
In addition, neither the Company nor any of its Subsidiaries shall become a
party to any agreement, note, indenture or other instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of the Collateral Agent for the benefit of itself and the
holders of Secured Obligations, as collateral for the Secured Obligations;
provided that any agreement, note, indenture or other instrument in connection
with Permitted Purchase Money Debt (including Capital Leases) may prohibit the
creation of a Lien in favor of the Collateral Agent for the benefit of itself
and the Holders of Secured Obligations on the items of property obtained with
the proceeds of such Permitted Purchase Money Debt.
 
Notwithstanding the foregoing, other than Liens created under the Collateral
Documents and Customary Permitted Liens, the Company will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
the real property of the Company and any Subsidiary.
 
Section 10.4.   Investments.  Except to the extent permitted pursuant to Section
10.7 below, neither the Company nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except:
 
(a)           Investments in cash and Cash Equivalents;
 
 
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(b)           Permitted Existing Investments in an amount not greater than the
amount thereof on the date hereof;
 
(c)           Investments in trade receivables or received in connection with
the bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
 
(d)           Investments consisting of deposit accounts maintained by the
Company;
 
(e)           Investments consisting of non-cash consideration from a sale,
assignment, transfer, lease, conveyance or other disposition of property
permitted by Section 10.2;
 
(f)           Investments consisting of (a) intercompany loans from any
Subsidiary of the Company to the Company or any other Subsidiary permitted by
Section 10.1(e) and (b) intercompany loans from the Company to its Subsidiaries;
provided, that the aggregate of all Foreign Subsidiary Investments shall not
exceed the Permitted Foreign Subsidiary Investment Amount;
 
(g)           Investments constituting Permitted Acquisitions;
 
(h)           Investments constituting Debt permitted by Section 10.1 or
Contingent Obligations permitted by Section 10.5 or Restricted Payments
permitted by Section 10.6 or Capital Expenditures permitted by Section 10.19(d);
 
(i)           Investments consisting of loans or advances made by any party to
this Agreement and the Subsidiary Guaranties to employees and officers of the
Company or any of the Company’s wholly-owned Domestic Incorporated Subsidiaries
for travel, entertainment and relocation expenses in the ordinary course of
business in an aggregate principal amount outstanding at any one time not to
exceed $2,000,000;
 
(j)           Investments consisting of any right of the Company or its
wholly-owned Domestic Incorporated Subsidiaries to payment for goods sold or for
services rendered, whether or not it has been earned by performance; and
 
(k)           Investments in addition to those referred to elsewhere in this
Section 10.4 in an amount not to exceed $15,000,000 in the aggregate at any time
outstanding;
 
provided, however, that the Investments described in clause (vii) above shall
not be permitted to be made at a time when either an Event of Default or a
Default which is not in the process of being cured shall have occurred and be
continuing or would result therefrom.
 
Section 10.5.  Contingent Obligations.  Neither the Company nor any of its
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, except: (a) recourse obligations resulting
from endorsement of negotiable instruments for collection in the ordinary course
of business; (b) Permitted Existing Contingent Obligations; (c) obligations,
warranties, guaranties and indemnities,
 
 
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not relating to Debt of any Person, which have been or are undertaken or made in
the ordinary course of business and not for the benefit of or in favor of an
Affiliate of the Company or such Subsidiary; (d) Contingent Obligations with
respect to surety, appeal and performance bonds obtained by the Company or any
Subsidiary in the ordinary course of business; (e) Contingent Obligations of the
Subsidiaries of the Company under the Subsidiary Guaranty to which they are a
party; (f) obligations arising under or related to this Agreement or the Notes,
(g) Contingent Obligations in respect to earn-outs or other similar forms of
contingent purchase price payable in respect of Permitted Acquisitions; (h)
Contingent Obligations in respect of representations and warranties customarily
given in respect of Asset Sales otherwise permitted hereunder and (i) Contingent
Obligations consisting of guaranties by Subsidiary Guarantors of Debt of the
Company, which Debt when incurred by the Company did not result in a violation
of Section 10.1.
 
Section 10.6.   Restricted Payments.  The Company shall not declare or make any
Restricted Payment, except Restricted Payments constituting dividends in an
amount not to exceed $300,000 in the aggregate during any fiscal quarter of the
Company and except Restricted Payments by a Subsidiary to the Company or another
Subsidiary; provided, however, that in no event shall any Restricted Payments
(other than Restricted Payments to the Company) be declared or made if either a
Default or an Event of Default shall have occurred and be continuing at the date
of declaration or payment thereof or would result therefrom.
 
Section 10.7.   Conduct of Business; Subsidiaries; Acquisitions.  Neither the
Company nor any of its Subsidiaries shall engage in any business other than the
businesses engaged in by the Company on the date hereof and any business or
activities which are substantially similar, related or incidental thereto or
logical extensions thereof.  The Company shall not create, acquire or capitalize
any Subsidiary after the date hereof unless (i) no Event of Default or Default
which is not being cured shall have occurred and be continuing or would result
therefor; (ii) after such creation, acquisition or capitalization, all of the
representations and warranties contained herein shall be true and correct in all
material respects (unless such representation and warranty is made as of a
specific date, in which case, such representation or warranty shall be true in
all material respects as of such date); and (iii) after such creation,
acquisition or capitalization the Company shall be in compliance with the terms
of Sections 10.6 and 10.9 hereof.  The Company shall not make any Acquisitions,
other than Acquisitions meeting the following requirements or otherwise approved
by the Required Holders (each such Acquisition constituting a “Permitted
Acquisition”):
 
(a)           no Default or Event of Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of any Debt
in connection therewith;
 
(b)           after giving effect to such transaction, the aggregate of all
Foreign Subsidiary Investments would not exceed the Permitted Foreign Subsidiary
Investment Amount;
 
 
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(c)           in the case of an Acquisition of Capital Stock of an entity, the
Acquisition shall be of at least fifty-one percent (51%) of the Capital Stock of
such entity, and such acquired entity shall be (i) merged with and into the
Company immediately following such Acquisition, with the Company being the
surviving corporation following such merger or (ii) the results of operations of
such entity shall be reported on a consolidated basis with the Company and its
consolidated Subsidiaries;
 
(d)           the purchase is consummated pursuant to a negotiated acquisition
agreement on a non-hostile basis;
 
(e)           the Company shall deliver to the holders of the Notes a
certificate from one of the Authorized Officers, demonstrating to the
satisfaction of the Required Holders that after giving effect to such
Acquisition and the incurrence of any Debt permitted by Section 10.1 in
connection therewith, on a pro forma basis using historical audited or reviewed
unaudited financial statements obtained from the seller(s) in respect of each
such Acquisition as if the Acquisition and such incurrence of Debt had occurred
on the first day of the twelve-month period ending on the last day of the
Company’s most recently completed fiscal quarter, the Company would have been in
compliance with the financial covenants in Section 10.19 and that an Event of
Default has not otherwise occurred;
 
(f)           the purchase price for the Acquisition shall not exceed, without
the prior written consent of the Required Holders, for any rolling period of
twelve consecutive months, $75,000,000 (including the incurrence or assumption
of any Debt in connection therewith);
 
(g)           the businesses being acquired shall be substantially similar,
related or incidental to, or a logical extension of, the businesses or
activities engaged in by the Company on the date hereof; and
 
(h)           such Acquisition is approved in writing by the Required Holders.
 
Section 10.8.   Transactions with Shareholders and Affiliates.  Neither the
Company nor any of its Subsidiaries shall directly or indirectly (a) 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 holder or holders of any of the Capital Stock of the Company, or with any
Affiliate of the Company which is not its Subsidiary, on terms that are less
favorable to the Company or any of its Subsidiaries, as applicable, than those
that might be obtained in an arm’s length transaction at the time from Persons
who are not such a holder or Affiliate, except for Restricted Payments permitted
by Section 10.6 and Investments permitted by Section 10.4 or (b) enter into or
permit to exist any such non-arm’s length transaction between either the Company
or any Domestic Incorporated Subsidiary, on the one hand, and any Foreign
Incorporated Subsidiary, on the other hand, if as a result thereof the aggregate
of all Foreign Subsidiary Investments would at any time exceed the Permitted
Foreign Subsidiary Investment Amount.  The holders of the Notes acknowledge and
consent to the
 
 
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transactions between the Company and its Affiliates described in the Company’s
public filings as of the date hereof.
 
Section 10.9.   Restriction on Fundamental Changes.  Neither the Company nor any
of its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution); or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Company’s consolidated business or
property, whether now or hereafter acquired, except (a) transactions permitted
under Sections 10.2, 10.4 or 10.7, (b) a Subsidiary of the Company may be merged
into or consolidated with the Company (in which case the Company shall be the
surviving corporation) or any wholly-owned Subsidiary of the Company, and (c)
any liquidation of any Subsidiary of the Company into the Company or another
Subsidiary of the Company, as applicable.
 
Section 10.10.  Sales and Leasebacks.  Neither the Company nor any of its
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an operating lease or a Capital
Lease, of any property (whether real or personal or mixed), (a) which it or one
of its Subsidiaries sold or transferred or is to sell or transfer to any other
Person, or (b) which it or one of its Subsidiaries intends to use for
substantially the same purposes as any other property which has been or is to be
sold or transferred by it or one of its Subsidiaries to any other Person in
connection with such lease, unless in either case the sale involved is not
prohibited under Section 10.2 and the lease involved is not prohibited under
Section 10.1 and any related Investment is not prohibited under Section 10.4.
 
Section 10.11.  ERISA.  The Company shall not
 
(a)           engage, or permit any of its Subsidiaries to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
for which a statutory or class exemption is not available or a private exemption
has not been previously obtained from the United States Department of Labor and
any Person succeeding to the functions thereof;
 
(b)           permit to exist any material accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Code), with respect to any
Benefit Plan, whether or not waived;
 
(c)           fail, or permit any ERISA Affiliate to fail, to pay timely
required material contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
 
(d)           terminate, or permit any ERISA Affiliate to terminate, any Benefit
Plan which would result in any material liability of the Company or any ERISA
Affiliate under Title IV of ERISA;
 
(e)           fail to make any material contribution or payment to any
Multiemployer Plan which the Company or any ERISA Affiliate may be required to
make under any agreement relating to such Multiemployer Plan, of any law
pertaining thereto;
 
 
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(f)           fail, or permit any ERISA Affiliate to fail, to pay any required
material installment or any other payment required under Section 412 of the Code
on or before the due date for such installment or other payment; or
 
(g)           amend, or permit any ERISA Affiliate to amend, a Plan resulting in
a material increase in current liability for the plan year such that the Company
or any ERISA Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the Code.
 
For purposes of this Section 10.11, “material” means any noncompliance or basis
for liability which could reasonably be likely to subject the Company or any of
its Subsidiaries to liability, individually or in the aggregate, in excess of
$5,000,000.
 
Section 10.12.  Corporate Documents.  Neither the Company nor any of its
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective constituent documents as in effect on the
date hereof in any manner materially adverse to the interests of the holders of
the Notes, without the prior written consent of the Required Holders, except in
connection with a Permitted Acquisition.
 
Section 10.13.  Fiscal Year.  Neither the Company nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on the last day of December of
each year, except as required by Agreement Accounting Principles or by law and
disclosed to the holders of the Notes.
 
Section 10.14.  Subsidiary Covenants.  The Company will not, and will not permit
any Subsidiary to, create or otherwise cause to become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to pay
dividends or make any other distribution on its stock, or make any other
Restricted Payment, pay any Debt or other obligation owed to the Company or any
other Subsidiary, make loans or advances or other Investments in the Company or
any other Subsidiary or sell, transfer or otherwise convey any of its property
to the Company or any other Subsidiary.
 
Section 10.15.  Hedging Obligations.  The Company shall not and shall not permit
any of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar, agreements entered into by the Company pursuant to
which the Company has hedged its actual interest rate, foreign currency or
commodity exposure.
 
Section 10.16.  Issuance of Disqualified Stock.  From and after the date hereof,
neither the Company, nor any of its Subsidiaries shall issue any Disqualified
Stock.  All issued and outstanding Disqualified Stock shall be treated as Debt
for all purposes of this Agreement, and the amount of such deemed Debt shall be
the aggregate amount of the liquidation preference of such Disqualified Stock.
 
 
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Section 10.17.  Amendment to Bank Credit Agreement and 2005 Note Agreement; Most
Favored Lender.  The Company will not, nor will it permit any Subsidiary to,
enter into (i) any amendment, restatement, supplement, waiver or modification to
the Bank Credit Agreement (or the documents related to any extension,
refinancing, refunding or renewal thereof) or (ii) any document related to any
extension, refinancing, refunding or renewal thereof if, in any case, the effect
thereof is that the Bank Credit Agreement (or such other documents relating to
any extension, refinancing, refunding or renewal thereof) would not constitute
an Acceptable Bank Credit Agreement.  In addition, if the Company, or any of its
Subsidiaries, enters into (i) any amendment, restatement, supplement, waiver or
modification to the Bank Credit Agreement (or the documents related to any
extension, refinancing, refunding or renewal thereof) or the 2005 Note Agreement
that amends, restates, supplements or modifies any of the covenants, events of
default or related definitions used in the Bank Credit Agreement (or the
documents related to any extension, refinancing, refunding or renewal thereof)
or in the 2005 Note Agreement or (ii) any document related to any extension,
refinancing, refunding or renewal thereof that includes covenants, events of
default or related definitions, such that , in any case, any of such covenants,
events of default or related definitions are more restrictive than, or in
addition to (the “More Restrictive Provisions”), the covenants, events of
default or related definitions contained in this Agreement, then (a) the Company
will give the holders of the Notes prior written notice thereof, (b) this
Agreement shall be deemed to be automatically amended to add the More
Restrictive Provisions hereto and otherwise afford the holders of the Notes with
the benefit thereof without any action by the Company or any holder of any Note,
provided that the Required Holders may elect in writing not to have any one or
more More Restrictive Provisions added to this Agreement, and (c) the Company
shall, upon the request of the holders of the Notes (i) enter into an amendment
to this Agreement, in form and substance satisfactory to the holders of the
Notes, to evidence the addition of such More Restrictive Provisions (other than
any More Restrictive Provisions that the Required Holders elect in writing to
exclude) to this Agreement for the benefit of holders of the Notes, and (ii)
agree to satisfy any conditions precedent to the effectiveness of such
amendment.
 
Section 10.18.  Prepayments of 2005 PIK Notes.  The Company shall not make any
prepayments in respect of the 2005 PIK Notes unless the Company concurrently
prepays a proportionate amount of the Tranche A PIK Notes and Tranche B PIK
Notes.
 
Section 10.19  Financial Covenants.
 
(a)           Minimum Fixed Charge Coverage Ratio.  The Company and its
consolidated Subsidiaries shall maintain a ratio (“Fixed Charge Coverage Ratio”)
of:
 
(i)           the sum of (a) EBITDA during such period minus (b) Capital
Expenditures during such period, to
 
(ii)           the sum of the amounts, without duplication, of (a) Interest
Expense during such period (net of interest income) plus (b) scheduled principal
payments of Debt (which shall not be deemed to include
 
 
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payments pursuant to Section 8.8 of this Agreement, Section 8.8 of the 2005 Note
Agreement or Section  2.5.B of the Current Bank Credit Agreement), plus (c)
dividend payments on Company’s common and preferred stock plus (or minus with
respect to tax benefits) (d) Company’s income tax provision calculated in
accordance with GAAP for such period plus (e) Capital Lease Obligations during
such period,
 
which shall not be less than the applicable ratio set forth below for each
corresponding four (4) fiscal quarter period beginning with the four (4) fiscal
quarter period ending with the end of the applicable fiscal quarter of the
Company set forth below.  In each case, the Fixed Charge Coverage Ratio shall be
determined as of the last day of each fiscal quarter for the four (4) fiscal
quarter period ending on such day (the “Last Twelve-Month Period”), provided,
that the Fixed Charge Coverage Ratio shall be calculated, with respect to
Permitted Acquisitions, on a pro forma basis using historical audited and
reviewed unaudited financial statements obtained from the seller(s) in such
Permitted Acquisition, broken down by fiscal quarter as if such Permitted
Acquisition (including the uses and applications of proceeds in respect thereof
and the Debt incurred in conjunction therewith) had occurred on the first day of
the Last Twelve-Month Period (the “Measurement Period”) (excluding cost
savings), provided such pro forma statements shall be substantiated by
supporting information reasonably acceptable to the Required Holders.  Interest
Expense shall be calculated for the purpose of clause (ii) by excluding the
effect of amortization of deferred financing fees, to the extent it is an
Interest Expense.
 
Last Twelve Month Period Ending
Minimum Fixed Charge Coverage Ratio
March 31, 2009
1.35 to 1.00
June 30, 2009
1.35 to 1.00
September 30, 2009
1.35 to 1.00
December 31, 2009 and the last day of each fiscal quarter thereafter ending
1.25 to 1.00

 
 
(b)           Maximum Cash Flow Leverage Ratio.  The Company and its
consolidated Subsidiaries shall not permit the ratio (the “Cash Flow Leverage
Ratio”) of (i) Total Funded Debt (excluding the PIK Notes and the 2005 PIK
Notes) to (ii) EBITDA to be greater than the applicable ratio set forth below
for each corresponding four (4) fiscal quarter period ending with the end of the
applicable fiscal quarter of the Company set forth below.  The Cash Flow
Leverage Ratio shall be calculated, in each case, determined as of the last day
of each fiscal quarter based upon (a) for Debt, Debt as of the last day of each
such fiscal quarter; and (b) for EBITDA, the actual amount for Last Twelve-Month
Period, provided, that the Cash Flow Leverage Ratio shall be calculated, with
respect to Permitted Acquisitions, on a pro forma basis using historical audited
and reviewed unaudited financial statements obtained from the seller(s) in such
Permitted Acquisition, broken down by fiscal quarter in the Company’s reasonable
judgment as if such
 
 
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Permitted Acquisition (including the uses and applications of proceeds in
respect thereof and the Debt incurred in conjunction therewith) had occurred on
the first day of the Measurement Period (excluding cost savings), provided such
pro forma statements shall be substantiated by supporting information reasonably
acceptable to the Required Holders.
 
Last Twelve-Month Period Ending
Maximum Cash Flow Leverage Ratio
March 31, 2009
5.00 to 1.00
June 30, 2009
4.80 to 1.00
September 30, 2009
4.20 to 1.00
December 31, 2009 and each
fiscal quarter thereafter
3.00 to 1.00

 
(c)           Minimum Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than the sum of (a) an amount
equal to ninety percent (90%) of Consolidated Net Worth as of March 31, 2009 (as
reported in the Company’s financial statements contained in its publicly filed
Form 10-Q for the period ending March 31, 2009) plus (b) fifty percent (50%) of
Net Income (if positive) calculated separately for each fiscal quarter
commencing with the fiscal quarter ending on June 30, 2009, plus (c) one hundred
percent (100%) of the net cash proceeds resulting from the issuance by the
Company of any Capital Stock other than shares of Capital Stock issued pursuant
to employee stock option or ownership plans commencing with the fiscal quarter
ending on June 30, 2009.
 
(d)           Maximum Capital Expenditures.  The Company will not, nor will it
permit any Subsidiary to, expend, or be committed to expend, in excess of an
aggregate of $17,500,000, for Capital Expenditures of the Company and is
Subsidiaries during any fiscal year of the Company.”
 
Section 1.23.  The reference to “Section 10.1 through Section 10.5, inclusive,”
set forth in Section 11(c) of the Note Agreement is deleted and replaced with a
reference to “Section 10.1 through Section 10.19, inclusive,”.
 
Section 1.24.  Section 11 of the Note Agreement shall be and is hereby amended
by (i) deleting the word “or” at the end of clause (j), (ii) deleting the “.” at
the end of clause (k) and replacing it with “; or” and (iii) adding the
following new clause (l) after clause (k):
 
“(l)           any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any portion of the
Collateral purported to be covered thereby, except as permitted by the terms of
any Note Document.”
 
Section 1.25.  Section 12.2 of the Note Agreement shall be and is hereby amended
in its entirety to read as follows:
 
 
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“Section 12.2.  Other Remedies.  If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, (a) subject to the
terms of the Intercreditor Agreement, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise
and (b) the Collateral Agent may, in accordance with the terms of the
Intercreditor Agreement, exercise any rights and remedies provided to the
Collateral Agent under the Note Documents or at law or equity, including all
remedies provided under the UCC.”
 
Section 1.26.  Section 15.1 of the Note Agreement shall be and is hereby amended
by adding the following new sentence at the end thereof:
 
“Expenses being reimbursed by the Company under this Section include, without
limiting the generality of the foregoing, costs and expenses incurred in
connection with (x) appraisals (subject to the limitations contained in Section
7.3) and insurance reviews and (y) field examinations and the preparation of
Reports based on the fees charged by a third party retained by the Collateral
Agent or the internally allocated fees for each Person employed by the
Collateral Agent with respect to each field examination; provided that so long
as no Event of Default has occurred and is continuing, the Company shall not be
required to reimburse the Collateral Agent for the costs of more than one field
exam and consequent preparation of Reports per fiscal year.”
 
Section 1.27.  Section 22 of the Note Agreement shall be and is hereby amended
by adding the following as a new Sections 22.7, 22.8 and 22.9 thereto:
 
“Section 22.7  Appointment for Perfection.  Each holder of the Notes hereby
appoints each other holder of the Notes as its agent for the purpose of
perfecting Liens, for the benefit of the Collateral Agent and the holders of
Secured Obligations, in assets which, in accordance with Article 9 of the UCC or
any other applicable law can be perfected only by possession.  Should any holder
of any Notes obtain possession of any such Collateral, such holder shall notify
the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request
therefor shall deliver such Collateral to the Collateral Agent or otherwise deal
with such Collateral in accordance with the Collateral Agent’s instructions.
 
Section 22.8  Payment of Fees.  If at any time after the Amendment No. 2
Effective Date, the Company or any of its Subsidiaries agrees to pay the
Administrative Agent, the Bank Lenders or any holder of the 2005 Notes, any fee,
compensation or any other payment in connection with the Bank Credit Agreement
or the 2005 Note Agreement, including but not limited to any termination, exit
or amendment fees, the Company shall notify the holders of the Notes in writing
and make an equal payment to
 
 
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the holders the Notes to be distributed pro-rata to such holders based upon the
principal amount of the Notes then outstanding.”
 
Section 22.9  Interpretation of “Debt”.  Notwithstanding any provision of this
Agreement providing for any amount to be determined in accordance with Agreement
Accounting Principles, for all purposes of this Agreement the outstanding
principal amount of any Debt of the Company or any of its Subsidiaries (other
than, to the extent such obligations are included in the definition of “Debt”,
Hedging Obligations) shall be equal to the actual outstanding principal amount
thereof irrespective of the amount that might otherwise be accounted for under
Agreement Accounting Principles as the amount of the liability of the Company or
any of its Subsidiaries with respect thereto, and any determination of the net
income (or net loss), equity or assets of the Company or any of its Subsidiaries
shall not take into account any effect of marking any such outstanding Debt of
the Company or any of its Subsidiaries to market value.”
 
Section 1.28.  The following Defined Terms in Schedule B to the Note Agreement
shall be and are hereby amended as follows:
 
“Bank Credit Agreement” means the Credit Agreement dated as of January 28, 2005
by and among the Company, certain Subsidiaries of the Company named therein,
JPMorgan Chase Bank, N.A., as agent and collateral agent, and the other
financial institutions party thereto, as amended, restated, joined, supplemented
or otherwise modified from time to time, and any renewals, extensions or
replacements thereof, in each case (x) in accordance with the terms of Section
10.17 of this Agreement and (y) which constitute the primary bank credit
facility of the Company and its Subsidiaries.
 
“Collateral Agent” shall have the meaning set forth in the Pledge and Security
Agreement.
 
“Consolidated Net Worth” means, at a particular date, all amounts which would be
included under shareholders' equity on the consolidated balance sheet for the
Company and its consolidated Subsidiaries determined in accordance with
Agreement Accounting Principles.
 
“Debt” of a person means, without duplication, such person’s (a) obligations for
borrowed money, including, without limitation, subordinated indebtedness, (b)
obligations representing the deferred purchase price of property or services
(other than accounts payable arising in the ordinary course of such person’s
business payable on terms customary in the trade and other than earn-outs or
other similar forms of contingent purchase prices), (c) obligations, whether or
not assumed, secured by liens on or payable out of the proceeds or production
from property now or hereafter owned or acquired by such person, (d) obligations
which are evidenced by notes, acceptances, or other instruments, (e) Capital
Lease Obligations, (f) outstanding principal balances (representing securitized
but unliquidated assets) under asset securitization agreements (including,
without limitation, the outstanding principal balance of accounts receivable
under receivables transactions) and (g) the implied debt component of synthetic
leases of which such person is lessee or any other off-balance sheet financing
arrangements
 
 
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(including, without limitation, any such arrangements giving rise to any
Off-Balance Sheet Liabilities).
 
“Default Rate” means (i) with respect to the Tranche A Notes and the Tranche A
PIK Notes that per annum rate of interest that is the greater of (i) 10.90% and
(ii) 2.00% over the rate of interest publicly announced by The Bank of New York
from time to time in New York City as its Prime Rate, and (ii) with respect to
the Tranche B Notes and the Tranche B PIK Notes that per annum rate of interest
that is the greater of (i) 10.98% and (ii) 2.00% over the rate of interest
publicly announced by The Bank of New York from time to time in New York City as
its Prime Rate.
 
“Foreign Incorporated Subsidiary” means a Subsidiary of the Company which is not
a Domestic Incorporated Subsidiary.
 
“GAAP” means Agreement Accounting Principles.
 
“Intercreditor Agreement” means the Amended and Restated Intercreditor Agreement
dated as of Amendment No. 2 Effective Date among the Administrative Agent, the
Collateral Agent and the holders of the Notes and the holders of the 2003 Notes,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
 
“Investments” means, with respect to any Person, (a) any purchase or other
acquisition by that Person of any Debt, Capital Stock or other securities, or of
a beneficial interest in any Debt, Capital Stock or other securities, issued by
any other Person, (b) any purchase by that Person of all or substantially all of
the assets of a business (whether of a division, branch, unit operation, or
otherwise) conducted by another Person, and (c) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable, advances to employees and similar items made or
incurred in the ordinary course of business) or capital contribution by that
Person to any other Person, including all Debt to such Person arising from a
sale of property by such Person other than in the ordinary course of its
business.
 
“Restricted Payment” means (a) any dividend or other distribution, direct or
indirect, on account of any Capital Stock of the Company now or hereafter
outstanding, except a dividend payable solely in the Company’s Capital Stock
(other than Disqualified Stock) or in options, warrants or other rights to
purchase such Capital Stock, (b) any redemption, retirement, purchase or other
acquisition for value, direct or indirect, of any Capital Stock of the Company
or any of its Subsidiaries now or hereafter outstanding, other than in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of the Company) of other Capital Stock of the Company (other than
Disqualified Stock) or any transaction that has a substantially similar effect,
(c) any redemption, purchase, retirement, defeasance, prepayment or other
acquisition for value, direct or indirect, of any Debt subordinated to the
Secured Obligations or any transaction that has a substantially similar effect,
and (d) any payment of a claim for the rescission of the purchase or sale of, or
for material damages arising from the purchase or sale of, any Debt (other than
the Secured Obligations) or any Capital Stock of the
 
 
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Company, or any of its Subsidiaries, or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission.
 
“Subsidiary Guarantor” means each Subsidiary (other than any Foreign
Incorporated Subsidiary to the extent that the designation of such Foreign
Incorporated Subsidiary as a Subsidiary Guarantor would (a) be prohibited by
applicable law or (b) cause such Foreign Incorporated Subsidiary’s accumulated
earnings and profits to be repatriated to the Company or such Foreign
Incorporated Subsidiary’s parent Domestic Incorporated Subsidiary, in each case
under Section 956 of the Code (each such Foreign Incorporated Subsidiary, an
“Affected Foreign Subsidiary”)).
 
“2005 Note Agreement” means the Note Purchase and Private Shelf Agreement dated
as of January 28, 2005 between the Company and the Initial Purchasers named
therein, as amended through the Amendment No. 2 Effective Date and as further
amended from time to time.
 
“2005 Notes” means the Notes, as that term is defined in the First Amendment to
the 2005 Note Agreement dated as of the Amendment No. 2 Effective Date, as such
notes may be further amended from time to time.”
 
Section 1.29.  The following shall be added as new definitions in alphabetical
order to the Defined Terms in Schedule B to the Note Agreement:
 
“Acceptable Bank Credit Agreement” shall mean:
 
(a)           Prior to the Normalization Date, the Bank Credit Agreement which
is in effect on the Amendment No. 2 Effective Date (the “Existing Bank Credit
Agreement”); and
 
(b)           at any time on and after the Normalization Date, a Replacement
Credit Agreement (as defined in the Intercreditor Agreement) that goes into
effect on the Normalization Date and meets the conditions set forth in the
definition of “Normalization Date” in the Intercreditor Agreement;
 
(c)           at any time after the Normalization Date, any loan or credit
agreement which refinances in whole the Debt under the Acceptable Bank Credit
Agreement in effect immediately prior to such refinancing, but only if (i) such
loan or credit agreement meets the conditions set forth in the definition of
“Normalization Date” set forth in the Intercreditor Agreement, except for (x)
the requirement that the term end not earlier than January 28, 2011 and (y) the
requirement in clause (h) of the definition of “Normalization” set forth in the
Intercreditor Agreement, and (ii) the scheduled final maturity date thereof is
not earlier than 364 days after the date of the initial closing under such loan
or credit agreement.
 
“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Company or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any
 
 
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firm, corporation or division thereof, whether through purchase of assets,
merger or otherwise or (b) directly or indirectly acquires (in one transaction
or as the most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a corporation which have
ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage of voting power) of the outstanding Capital Stock of
another Person.
 
“Affected Foreign Subsidiary” is defined in the definition of “Subsidiary
Guarantor”.
 
“Agreement Accounting Principles” means, with respect to the calculation of
financial ratios and other financial tests required by this Agreement, generally
accepted accounting principles as in effect in the United States as of January
28, 2005, applied in a manner consistent with that used in preparing the
financial statements of the Company referred to in Section 6.4(B) of the Bank
Credit Agreement; provided, further, however, all pro forma financial statements
reflecting Acquisitions shall be prepared in accordance with the requirements
established by the Commission for acquisition accounting for reporting
acquisitions by public companies (whether or not such Acquisitions are required
to be publicly reported); provided, further, that no change in accounting
principles shall be made from those used in preparing the financial statements
referred to in Section 6.4(B) of the Bank Credit Agreement, including, without
limitation, with respect to the nature or classification of accounts, closing
proceedings, levels of reserves, or levels of accruals other than as a result of
objective changes in the underlying business; provided, further, that for
purposes of the preceding clauses, “changes in accounting principles” or
“changes in Agreement Accounting Principles” includes all changes in accounting
principles, policies, practices, procedures, or methodologies with respect to
financial statements, their classification, or their display, as well as all
changes in practices, methods, conventions, or assumptions used in making
accounting estimates.
 
“Amendment No. 2” shall mean that certain Second Amendment to Note Purchase
Agreement dated as of June 11, 2009 by and among the Company, each of the
holders of the Notes and the other parties a signatory thereto.
 
“Amendment No. 2 Effective Date” shall have the meaning set forth in Section 5
of Amendment No. 2.
 
“Asset Sale” means, with respect to any Person, the sale, lease, conveyance,
disposition or other transfer by such Person of any of its assets (including by
way of a sale-leaseback transaction, and including the sale or other transfer of
any of the Capital Stock of any Subsidiary of such Person) to any Person other
than the Company or any of its wholly-owned Subsidiaries other than (a) the sale
of Inventory in the ordinary course of business, (b) the sale or other
disposition of any obsolete, redundant, excess, damaged or worn-out Equipment
disposed of in the ordinary course of business and (c) leases of personal
property (including leases or licenses of intellectual property) and leases of
surplus or redundant real property.
 
 
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“Benefit Plan” means a defined benefit plan as defined in Section 3(35) of ERISA
(other than a Multiemployer Plan) in respect of which the Company or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
“employer” as defined in Section 3(5) of ERISA.
 
“Capital Expenditures” means, for any period, the aggregate of all expenditures
(whether or not paid in cash and including Capital Leases and purchase money
indebtedness) by the Company and its consolidated Subsidiaries during that
period that, in conformity with Agreement Accounting Principles, are required to
be included in or reflected by the property, plant, equipment or similar fixed
asset accounts reflected in the consolidated balance sheet of the Company and
its Subsidiaries; provided, however, that the term “Capital Expenditures” shall
not include (a) expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent financed from insurance
proceeds paid on account of the loss of or damage to the assets being replaced
or restored or (ii) with awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced; (b) the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the equipment
being traded in at such time; (c) the purchase of plant, property or equipment
made within one year of the sale of any asset to the extent purchased with the
proceeds of such sale; (d) the portion of the purchase price in connection with
any acquisition that would otherwise be included as additions to property, plant
or equipment; and (e) expenditures made in connection with any acquisition.
 
“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the governments of the United States and backed by
the full faith and credit of the United States government; (b) domestic and
Eurocurrency certificates of deposit and time deposits, bankers’ acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations for any such deposits with a term of more than ninety (90)
days); (c) shares of money market, mutual or similar funds having assets in
excess of $100,000,000 and the investments of which are limited to investment
grade securities (i.e., securities rated at least Baa by Moody’s Investors
Service, Inc. or at least BBB by Standard & Poor’s Ratings Group, a division of
The McGraw-Hill Companies, Inc.); and (d) commercial paper of United States and
foreign banks and bank holding companies and their subsidiaries and United
States and foreign finance, commercial industrial or utility companies which, at
the time of acquisition, are rated A-1 (or better) by Standard & Poor’s Ratings
Group, a division of The McGraw-Hill Companies, Inc., or P-1 (or better) by
Moody’s Investors Services, Inc.; provided that the maturities of such Cash
Equivalents shall not exceed three hundred sixty-five (365) days from the date
of acquisition thereof.
 
“Cash Flow Leverage Ratio” is defined in Section 10.19.
 
 
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“Collateral” means all pledged Capital Stock, and any and all owned or leased
personal property, in or upon which a security interest or Lien is from time to
time granted to the Collateral Agent, for the benefit of the holders of the
Secured Obligations, whether under the Foreign Pledge Agreements, under the
Pledge and Security Agreement, under any of the other Collateral Documents or
under any of the other Note Documents.
 
“Collateral Documents” means all agreements, instruments and documents executed
in connection with this Agreement pursuant to which the Collateral Agent is
granted a security interest in Collateral, including, without limitation, the
Pledge and Security Agreement, the Foreign Pledge Agreements and all other
security agreements, loan agreements, notes, guarantees, subordination
agreements, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Company or
any of its Subsidiaries and delivered to the Collateral Agent, any of the Bank
Lenders or any of the holders of the Notes, together with all agreements and
documents referred to therein or contemplated thereby.
 
“Commission” means the Securities and Exchange Commission of the United States
of America and any Person succeeding to the functions thereof.
 
“Consolidated Tangible Assets” means the total assets of the Company and its
Subsidiaries on a consolidated basis (determined in accordance with Agreement
Accounting Principles), but excluding therefrom all items that are treated as
intangibles under Agreement Accounting Principles.
 
“Contingent Obligation”, as applied to any Person, means any Contractual
Obligation, contingent or otherwise, of that Person with respect to any Debt of
another or other obligation or liability of another, including, without
limitation, any such Debt, obligation or liability of another directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable, including Contractual Obligations (contingent or otherwise)
arising through any agreement to purchase, repurchase, or otherwise acquire such
Debt, obligation or liability or any security therefor, or to provide funds for
the payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make payment other than for
value received.  The amount of any Contingent Obligation shall be equal to the
present value of the portion of the obligation so guaranteed or otherwise
supported, in the case of known recurring obligations, and the maximum
reasonably anticipated liability in respect of the portion of the obligation so
guaranteed or otherwise supported assuming such Person is required to perform
thereunder, in all other cases.
 
“Contractual Obligation”, as applied to any Person, means any provision of any
equity or debt securities issued by that Person or any indenture, mortgage, deed
of trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or
 
 
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instrument, in any case in writing, to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
 
“Customary Permitted Liens” means:
 
(a)           Liens (other than Environmental Liens and Liens in favor of the
Internal Revenue Service or the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are not yet due or (if
foreclosure, distrait, sale or other similar proceedings shall not have been
commenced or any such proceeding after being commenced is stayed) which are
being contested in good faith by appropriate proceedings properly instituted and
diligently conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with Agreement
Accounting Principles;
 
(b)           statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens imposed
by law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
 
(c)           Liens (other than Environmental Liens and Liens in favor of the
Internal Revenue Service or the PBGC) incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, contracts (other than for the repayment of
borrowed money), surety, appeal and performance bonds; provided that (i) all
such Liens do not in the aggregate materially detract from the value of the
Company’s or such Subsidiary’s assets or property taken as a whole or materially
impair the use thereof in the operation of the businesses taken as a whole, and
(ii) all Liens securing bonds to stay judgments or in connection with appeals do
not secure at any time an aggregate amount exceeding $10,000,000;
 
(d)           Liens arising with respect to zoning restrictions, easements,
encroachments, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges, restrictions or
encumbrances on the use of real property which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary use or occupancy of the real property or with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
 
(e)           Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against the Company or any of its
Subsidiaries which do not constitute an Event of Default under Section 11(j)
hereof; and
 
(f)           any interest or title of the lessor in the property subject to any
operating lease entered into by the Company or any of its Subsidiaries in the
ordinary course of business.
 
 
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“Dollar Amount” of any currency at any date shall mean (a) the amount of such
currency if such currency is Dollars or (b) the Equivalent Amount of Dollars if
such currency is any currency other than Dollars.
 
“Dollar” and “$” means dollars in the lawful currency of the United States.
 
“Domestic Incorporated Subsidiary” means a Subsidiary of the Company organized
under the laws of a jurisdiction located in the United States of America.
 
“Domestic Note Parties” means the Company and the Domestic Incorporated
Subsidiaries.
 
“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder thereof, in whole or in part, on or prior to the date that is
ninety-one (91) days after the latest maturity date of the Notes.
 
“EBITDA” means, for any period, on a consolidated basis for the Company and its
Subsidiaries, the sum of the amounts for such period, without duplication, of
(a) Net Income, plus (b) Interest Expense to the extent deducted in computing
Net Income, plus (c) charges against income for foreign, federal, state and
local taxes to the extent deducted in computing Net Income, plus (d)
depreciation expense to the extent deducted in computing Net Income, plus (e)
amortization expense, including, without limitation, amortization of goodwill
and other intangible assets to the extent deducted in computing Net Income, plus
(f) acquisition, integration and restructuring charges incurred in the Company’s
2009 fiscal year and in an aggregate amount not to exceed $3,000,000, all in
accordance with Agreement Accounting Principles to the extent deducted in
computing Net Income, plus (g) other extraordinary non-cash charges to the
extent deducted in computing Net Income, minus (h) other extraordinary non-cash
credits to the extent added in computing Net Income, plus (i) non-cash expenses
related to stock based compensation to the extent deducted in computing Net
Income, plus (j) charges incurred as a result of impairment of fixed assets,
intangible assets and goodwill, all to the extent deducted in computing Net
Income.  EBITDA shall be calculated on a pro forma basis giving effect to
acquisitions and Asset Sales on a last twelve (12) months’
basis.  Notwithstanding the foregoing, EBITDA shall be deemed to be (1)
$13,900,000 for the Company’s fiscal quarter ended on or about June 30, 2008,
(2) $13,800,000 for the Company’s fiscal quarter ended on or about September 30,
2008 and (3) $2,243,000 for the Company’s fiscal quarter ended on or about
December 31, 2008.
 
“Environmental Lien” means a lien in favor of any Governmental Authority for (a)
any liability under Environmental Laws, or (b) damages arising from, or costs
incurred by such Governmental Authority in response to, a Release (as defined in
the Bank Credit Agreement) or threatened Release of a Contaminant (as defined in
the Bank Credit Agreement) into the environment.
 
 
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“Equipment” shall have the meaning set forth in the Bank Credit Agreement.
 
“Equivalent Amount” shall have the meaning set forth in the Bank Credit
Agreement.
 
“First Tier Foreign Subsidiary” means each Foreign Incorporated Subsidiary with
respect to which any one or more of the Company and its Domestic Incorporated
Subsidiaries directly owns or controls more than 50% of such Foreign
Incorporated Subsidiary’s Capital Stock.
 
“Fixed Charge Coverage Ratio” is defined in Section 10.19.
 
“Foreign Pledge Agreement” means a pledge agreement in form and substance
satisfactory to the Required Holders and their counsel, duly executed and
delivered by the Company and/or any applicable Subsidiary of the Company to and
in favor of the Collateral Agent (for the benefit of itself and the other
holders of the Secured Obligations), as it may from time to time be amended,
restated, supplemented or otherwise modified, with respect to 65% of the
outstanding Capital Stock of the relevant Foreign Incorporated Subsidiary in
accordance with Section 9.9 hereof.
 
 “Foreign Subsidiary Investment” means the sum of (a) all intercompany loans
made on or after the date hereof from either the Company or any Domestic
Incorporated Subsidiary to any Foreign Incorporated Subsidiary; (b) all
Investments made on or after the date hereof by either the Company or any
Domestic Incorporated Subsidiary in any Foreign Incorporated Subsidiary; and (c)
an amount equal to the net benefit derived by the Foreign Incorporated
Subsidiaries resulting from any non-arms length transactions, or any other
transfer of assets conducted other than in the ordinary course of business,
between the Company and/or any Domestic Incorporated Subsidiary, on the one
hand, and such Foreign Incorporated Subsidiaries, on the other hand.
 
“Grantor” shall have the meaning set forth in the Pledge and Security Agreement.
 
“Hedging Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party’s assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
 
“Interest Expense” means, for any period, the total interest expense of the
Company and its consolidated Subsidiaries, whether paid or accrued (including
the interest component of Capital Leases, commitment fees and fees for stand-by
letters of credit, the discount with respect to asset securitization agreements
and the implied
 
 
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interest component of synthetic leases), all as determined in conformity with
Agreement Accounting Principles.  Interest Expense shall not include any
interest which in accordance with Agreement Accounting Principals has been
capitalized.
 
“Inventory” shall have the meaning set forth in the Bank Credit Agreement.
 
“Last Twelve-Month Period” is defined in Section 10.19.
 
“Material Foreign Subsidiary” means any Foreign Incorporated Subsidiary (a)
which, as of the most recent fiscal quarter of the Company for the period of
four consecutive fiscal quarters then ended, contributes greater than five
percent (5%) of EBITDA for such period or (b) the consolidated total assets of
which as of the end of such fiscal quarter were greater than five percent (5%)
of the Company’s Consolidated Tangible Assets as of such date; provided that, if
at any time the aggregate amount of EBITDA contributed by, or consolidated total
assets of, all Foreign Incorporated Subsidiaries that are not Material Foreign
Subsidiaries exceeds ten percent (10%) of EBITDA for any such period or ten
percent (10%) of the Company’s Consolidated Tangible Assets as of the end of any
such fiscal quarter, the Company (or, in the event the Company has failed to do
so within ten days, the Agent) shall designate sufficient Foreign Incorporated
Subsidiaries as “Material Foreign Subsidiaries” to eliminate such excess, and
such designated Foreign Incorporated Subsidiaries shall for all purposes of this
Agreement constitute Material Foreign Subsidiaries.
 
 “Measurement Period” is defined in Section 10.19.
 
“Net Income” means, for any period, the net income (or loss) after taxes of the
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with Agreement Accounting
Principles.
 
“Normalization Date” is defined in Section 8.8.
 
“Note Documents” means this Agreement, the Notes, the Collateral Documents, the
Intercreditor Agreement, the Subsidiary Guaranty and each of the other
agreements, documents and instruments executed in connection herewith and
therewith or pursuant thereto, each as it may from time to time be amended,
modified or supplemented.
 
“Note Obligations” shall have the meaning set forth in the Pledge and Security
Agreement.
 
“Off-Balance Sheet Liabilities” of a Person means (a) any repurchase obligation
or liability of such Person or any of its Subsidiaries with respect to accounts
or notes receivable sold by such Person or any of its Subsidiaries, (b) any
liability of such Person or any of its Subsidiaries under any sale and leaseback
transactions which do not create a liability on the consolidated balance sheet
of such Person, (c) any liability of such Person of any of its Subsidiaries
under any financing lease or so-called “synthetic” lease transaction, or (d) any
obligations of such Person or any of its Subsidiaries arising with respect to
any other transaction which is the functional equivalent of or takes the place
of
 
 
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borrowing but which does not constitute a liability on the consolidated balance
sheets of such Person and its Subsidiaries.
 
“Permitted Acquisition” shall have the meaning set forth in Section 10.7 hereof.
 
“Permitted Existing Contingent Obligations” means the Contingent Obligations of
the Company and its Subsidiaries identified as such on Schedule 10.5 to this
Agreement.
 
“Permitted Existing Debt” means the Debt of the Company and its Subsidiaries
identified as such on Schedule 10.1 to this Agreement.
 
“Permitted Existing Investments” means the Investments of the Company and its
Subsidiaries identified as such on Schedule 10.4 to this Agreement.
 
“Permitted Existing Liens” means the Liens on assets of the Company and its
Subsidiaries identified as such on Schedule 10.3 to this Agreement.
 
“Permitted Foreign Subsidiary Investment Amount” means $120,000,000.
 
“Permitted Purchase Money Debt” shall have the meaning set forth in Section 10.1
hereof.
 
“Permitted Refinancing Debt” means (a) any replacement, renewal, refinancing or
extension of any Debt (other than the Debt evidenced by the Bank Credit
Agreement) permitted by this Agreement that (i) does not exceed the aggregate
principal amount (plus accrued interest and any applicable premium and
associated fees and expenses) of the Debt being replaced, renewed, refinanced or
extended, (ii) does not have a Weighted Average Life to Maturity at the time of
such replacement, renewal, refinancing or extension that is less than the
Weighted Average Life to Maturity of the Debt being replaced, renewed,
refinanced or extended, (iii) does not rank at the time of such replacement,
renewal, refinancing or extension senior to the Debt being replaced, renewed,
refinanced or extended, and (iv) does not contain terms (including, without
limitation, terms relating to security, amortization, interest rate, premiums,
fees, covenants, event of default and remedies) materially less favorable to the
Company or to the holders of the Notes than those applicable to the Debt being
replaced, renewed, refinanced or extended, or (b) any replacement, renewal,
refinancing or extension of the Debt evidenced by the Bank Credit Agreement, so
long as such replaced, renewed, refinanced or extended Debt is evidenced by an
Acceptable Bank Credit Agreement.
 
“PIK Note Maturity Date” means the earlier of the Normalization Date and January
28, 2010.
 
“PIK Notes” means, collectively, the Tranche A PIK Notes and the Tranche B PIK
Notes.
 
“Pledge and Security Agreement” means that certain Pledge and Security Agreement
(including any and all supplements thereto) dated as of the Amendment No. 2
 
 
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Effective Date by and among the Domestic Note Parties and the Collateral Agent,
for the benefit of the Collateral Agent and the other holders of the Secured
Obligations.
 
“Related PIK Notes” means, with respect to any Notes of any Tranche, the PIK
Note of the Tranche with the same alphabetical designation as such Note issued
with respect to such Note.
 
“Report” means reports prepared by the Collateral Agent or another Person
showing the results of appraisals, field examinations or audits pertaining to
the assets of the Company or any Subsidiary from information furnished by or on
behalf of the Company or any of its Subsidiaries, after the Collateral Agent or
any other Person has exercised its rights of inspection pursuant to the Bank
Credit Agreement, this Agreement or any other Note Document, which Reports may
be distributed to holders of the Notes by the Collateral Agent or such other
Person.
 
“Secured Obligations” shall have the meaning set forth in the Pledge and
Security Agreement.
 
“Total Funded Debt” means, at any time, the aggregate Dollar Amount of Debt of
the Company and its Subsidiaries which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
 
“Tranche A PIK Note(s)” shall have the meaning given in Section 1.2 hereof.
 
“Tranche B PIK Note(s)” shall have the meaning given in Section 1.3 hereof.
 
“2005 PIK Notes” shall mean the PIK Notes, as that term is defined in the First
Amendment to the 2005 Note Agreement dated as of the Amendment No. 2 Effective
Date.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Illinois or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
 
“Weighted Average Life to Maturity” means when applied to any Debt at any date,
the number of years obtained by dividing (a) the sum of the products obtained by
multiplying (i the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount of such Debt.
 
Section 1.30.  The following Defined Terms in Schedule B to the Note Agreement
shall be and are hereby deleted in their entirety: “Consolidated Debt”,
“Consolidated EBITDA”, “Consolidated Interest Expense”, “Consolidated Net
Income”, “Consolidated Total Assets”, “Consolidated Total Capitalization”,
“Priority Debt” and “Restricted Investments”.
 
 
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Section 1.31.  The Note Agreement is amended by adding Exhibits 1.2 and 1.3
thereto in the forms of Exhibit 1.2 and 1.3 respectively, attached hereto.
 
SECTION 2.  AMENDMENT TO GUARANTY AGREEMENT.
 
Section 2.1.  The last sentence of recital B to the Guaranty Agreement is
amended and restated in its entirety to read as follows: “The Series 2003-A
Notes and the PIK Notes, together with the Additional Notes, if any, from time
to time outstanding under the Note Purchase Agreement (together with any such
notes issued in substitution therefor pursuant to Section 13 of the Note
Purchase Agreement) are hereinafter collectively referred to as the “Notes”.”
 
SECTION 3.  WAIVERS AND CONSENTS.
 
Section 3.1.  Each of the holders of the Notes hereby (i) waives the Company’s
breaches of the covenants contained in (w) the failure of the Company to comply
with Sections 10.2, 10.3 and 10.4 of the Note Agreement (as in effect prior to
the Amendment No. 2 Effective Date) as of its fiscal year ended December 31,
2008, (x) Section 7.1(a) of the Note Agreement resulting from the Company’s
failure to deliver to holders of the Notes the quarterly reports for the fiscal
quarter ended March 31, 2009 within the time required by said Section 7.1(a) (so
long as such quarterly reports are delivered by July 15, 2009 and (y) Section
7.1(b) of the Note Agreement resulting from the Company’s failure to deliver to
deliver to holders of the Notes the annual reports and related financial
statements required by Section 7.1(b) of the Note Agreement for the fiscal year
ended December 31, 2008 within the time required by said Section 7.1(b) (so long
as such annual reports and related financial statements are so delivered by two
Business Days after the Amendment No. 2 Effective Date), (ii) consents to the
payment by the Company of a Restricted Payment in the form of a dividend on its
Capital Stock made on or prior to April 15, 2009 in an amount in excess of
$810,000 and (iii) subject to the Company’s obligation to make the prepayment of
the Notes required by Section 8.8 of the Note Agreement (as amended by this
Second Amendment) , waives the failure of the Company to offer to prepay the
Notes as required by Section 8.7 of the Note Agreement with respect to the Asset
Sale of the real property commonly known as 114 S. Racine, Chicago, Illinois
within the time period required by said Section 8.7, and agrees that such
actions, subject to the conditions set forth in this Section 3 and in Section 4
of this Second Amendment, do not and will not constitute a Default or an Event
of Default under the Note Agreement, notwithstanding any term or provision
thereof to the contrary.  The foregoing waivers and consents are expressly
subject to the condition that the Company acknowledges, by its execution of this
Second Amendment, that (i) except to the extent specifically set forth in this
Second Amendment, the Note Agreement and the other Note Documents shall be
otherwise unaffected by these waivers and consents and shall remain in full
force and effect, (ii) except to the extent specifically set forth in this
Second Amendment, the holders of the Notes shall be under no obligation to waive
any future breach of any provision of the Note Agreement or any Default or Event
of Default and (iii) no course of dealing or course of performance shall be
deemed to have occurred as a result of these waivers and consents.
 
 
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SECTION 4.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
Section 4.1.  To induce the Noteholders to execute and deliver this Second
Amendment  (which representations shall survive the execution and delivery of
this Second Amendment ), the Company represents and warrants to the Noteholders
that:
 
(a)           this Second Amendment  has been duly authorized, executed and
delivered by it and this Second Amendment  constitutes the legal, valid and
binding obligation, contract and agreement of the Company enforceable against
the Company in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors’ rights generally;
 
(b)           each of the Note Agreement and the Guaranty Agreement, in each
case as amended by this Second Amendment, constitutes the legal, valid and
binding obligation, contract and agreement of the Company and the Subsidiary
Guarantors, respectively, enforceable against it and them, respectively, in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors’ rights generally;
 
(c)           the execution, delivery and performance by the Company of this
Second Amendment  (i) has been duly authorized by all requisite corporate action
and, if required, shareholder action, (ii) does not require the consent or
approval of any governmental or regulatory body or agency, and (iii) will not
(A) violate (1) any provision of law, statute, rule or regulation or its
certificate of incorporation or bylaws, (2) any order of any court or any rule,
regulation or order of any other agency or government binding upon it, or (3)
any provision of any material indenture, agreement or other instrument to which
it is a party or by which its properties or assets are or may be bound, or (B)
result in a breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument referred to
in clause (iii)(A)(3) of this Section 41(c);
 
(d)           as of the date hereof and after giving effect to this Second
Amendment, no Default or Event of Default has occurred which is continuing and
no condition exists which has resulted in, or could reasonably be expected to
have, a Material Adverse Effect;
 
(e)           all the representations and warranties contained in Section 5 of
the Note Agreement and in Section 5 of the Guaranty Agreement are true and
correct in all material respects with the same force and effect as if made by
the Company and the Subsidiary Guarantors, respectively, on and as of the date
hereof;
 
(f)           the Company represents that it does not have any Subsidiaries
(direct or indirect) other than those that have executed and delivered
Subsidiary Guarantees to the holders of the Notes and are listed on the
signature pages to this Second Amendment as Subsidiary Guarantors; and
 
(g)           other than as expressly set forth in the Amendment No. 2 to the
Bank Credit Agreement referred to in Section 5.1(c) of this Second Amendment and
the 2005 Note Agreement Amendment, neither the Company nor any of its
Subsidiaries has paid or agreed to
 
 
36

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

 
pay, nor will the Company or any of its Subsidiaries pay or agree to pay, any
fees or other compensation to the Administrative Agent, any Bank Lender or any
holder of the 2005 Notes for or with respect to such Amendment No. 2 to the Bank
Credit Agreement or such 2005 Note Agreement Amendment (other than for the
reimbursement of out of pocket expenses in connection therewith).
 
SECTION 5.  CONDITIONS TO EFFECTIVENESS OF THIS SECOND AMENDMENT.
 
Section 5.1.  This Second Amendment  shall not become effective until, and shall
become effective when, each and every one of the following conditions shall have
been satisfied:
 
(a)           executed counterparts of this Second Amendment, duly executed by
the Company and the holders of the Notes, shall have been delivered to the
Noteholders;
 
(b)           the Company shall have delivered to each Noteholder the PIK Notes
to be issued to such Noteholder pursuant to the Agreement;
 
(c)           the Company shall have delivered to the Noteholders executed
copies of (i) the Pledge and Security Agreement, (ii) Amendment No. 2 to the
Bank Credit Agreement, (iii) the First Amendment to Note Purchase and Private
Shelf Agreement dated as of the date hereof among the Company and the holders of
the 2005 Notes (the “2005 Note Agreement Amendment”), (iv) the Amended and
Restated Intercreditor Agreement dated as of the date hereof by and among the
holders of the Secured Obligations and acknowledged by the Company and (v) a
joinder to the Subsidiary Guaranty Agreement from Kedzie Aircraft LLC, and all
related agreements, documents and instruments, in each case, in connection
therewith, all of which shall be in form and substance satisfactory to the
Noteholders;
 
(d)           the Company shall have prepaid the principal of the Notes required
to be prepaid pursuant to Section 8.8 of the Note Agreement, as amended hereby,
as a result of repayments of Debt required to satisfy the condition precedent to
the effectiveness of Amendment No. 2 to the Bank Credit Agreement set forth in
Section 3(a)(i) thereof;
 
(e)           for the account of each Noteholder, the Company shall have paid an
amendment fee in an amount equal to 0.50% of the principal amount of the Notes
outstanding as of the Amendment No. 2 Effective Date held by such Noteholders;
 
(f)           the representations and warranties of the Company set forth in
Section 3 hereof are true and correct on and with respect to the date hereof;
 
(g)           the Noteholders shall have received the favorable opinion of
counsel to the Company as to the matters set forth in Sections 4.1(a), 4.1(b)
and 4.1(c) hereof, which opinion shall be in form and substance satisfactory to
the Noteholders; and
 
(h)           the Company agrees to pay upon demand, the reasonable fees and
expenses of Choate, Hall & Stewart, LLP, special counsel to the Noteholders, in
connection with the negotiation, preparation, approval, execution and delivery
of this Second Amendment .
 
 
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Upon receipt of all of the foregoing, this Second Amendment shall become
effective (the “Amendment No. 2 Effective Date”).
 
SECTION 6.  MISCELLANEOUS.
 
Section 6.1.  This Second Amendment  shall be construed in connection with and
as part of the Note Agreement and the Guaranty Agreement, and except as modified
and expressly amended by this Second Amendment, all terms, conditions and
covenants contained in the Note Agreement, the Guaranty Agreement and the Notes
are hereby ratified and shall be and remain in full force and effect.
 
Section 6.2.  Except as modified and expressly amended by this Second Amendment,
the execution, delivery and effectiveness of this Second Amendment shall not (a)
amend the Note Agreement, the Guaranty Agreement or any Note, (b) operate as a
waiver of any right, power or remedy of any Noteholder, or (c) constitute a
waiver of, or consent to any departure from, any provision of the Note
Agreement, the Guaranty Agreement or any Note at any time.  At all times on and
after the Amendment No. 2 Effective Date, each reference to the Note Agreement
or the Guaranty Agreement in any other document, instrument or agreement shall
mean and be a reference to the Note Agreement or the Guaranty Agreement,
respectively, as modified by this Second Amendment.
 
Section 6.3.  Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this Second Amendment
may refer to the Note Agreement or the Guaranty Agreement without making
specific reference to this Second Amendment  but nevertheless all such
references shall include this Second Amendment  unless the context otherwise
requires.
 
Section 6.4.  The descriptive headings of the various Sections or parts of this
Second Amendment  are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
 
Section 6.5.  This Second Amendment shall be governed by and construed in
accordance with the laws of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
 
[Signatures on Following Page]
 
 
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The execution hereof by you shall constitute a contract between us for the uses
and purposes hereinabove set forth, and this Second Amendment  may be executed
in any number of counterparts, each executed counterpart constituting an
original, but all together only one agreement.
 

 
 Very truly yours,
 
   
SCHAWK, INC.
         
 
By:
/s/Timothy J. Cunningham        Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 
Each of the Subsidiary Guarantors hereby (i) consents to the foregoing Second
Amendment and ratifies the amendments contained therein, (ii) ratifies and
reaffirms all of its obligations and liabilities under each Subsidiary Guaranty
(as defined in the Note Agreement referred to in the Second Amendment)
notwithstanding the Second Amendment or otherwise, (iii) confirms that each
Subsidiary Guaranty remains in full force and effect after giving effect to the
Second Amendment, (iv) represents and warrants that there is no defense,
counterclaim or offset of any type or nature under any Subsidiary Guaranty, (v)
agrees that nothing in any Subsidiary Guaranty, the Note Agreement, the Second
Amendment or any other agreement or instrument relating thereto requires the
consent of any Subsidiary Guarantor or shall be deemed to require the consent of
any Subsidiary Guarantor to any future amendment or other modification to the
Note Agreement, (vi) waives acceptance and notice of acceptance hereof, and
(vii) agrees to the amendment to the Guaranty Agreement set forth in Section 2
of the foregoing Second Amendment.
 

 
SCHAWK USA, INC.
         
 
By:
/s/Timothy J. Cunningham        Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 

 
SCHAWK WORLDWIDE HOLDINGS INC.
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 

 
SCHAWK HOLDINGS INC.
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 
 
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SEVEN SEATTLE, INC.
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 

 
SCHAWK LLC
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 

 
MIRAMAR EQUIPMENT, INC.
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 
 

 
SCHAWK DIGITAL SOLUTIONS INC.
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 

 
KEDZIE AIRCRAFT LLC
         
 
By:
/s/Timothy J. Cunningham         Name: Timothy J. Cunningham       Title: Chief
Financial Officer          

 
 
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Accepted as of the date first written above.
 
 

 
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
            By: Babson Capital Management LLC,
as Investment Adviser
         
 
By:
/s/MaryAnn Spencer        Name: MaryAnn Spencer       Title: Managing Director  
       

 
 
 

 
C.M. LIFE INSURANCE COMPANY
            By: Babson Capital Management LLC,
as Investment Adviser
         
 
By:
/s/MaryAnn Spencer        Name: MaryAnn Spencer       Title: Managing Director  
       

 
 
 

 
MASS MUTUAL ASIA LIMITED
            By: Babson Capital Management LLC,
as Investment Adviser
         
 
By:
/s/MaryAnn Spencer        Name: MaryAnn Spencer       Title: Managing Director  
 

 
 
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Exhibit 1.2
 
[FORM OF TRANCHE A PIK NOTE]
 
 
 
SCHAWK, INC.
 
 
 
8.90% TRANCHE A SENIOR PIK NOTE
 
No. _____
[Date]
$________
PPN: _________

 
FOR VALUE RECEIVED, the undersigned, Schawk, Inc., a corporation organized and
existing under the laws of the State of Delaware (herein called the “Company”),
hereby promises to pay to ______________________, or registered assigns, the
principal sum of (i) _______________ DOLLARS, plus (ii) the amount of interest
on this Note added to the principal of this Note pursuant to Section 1.2 of the
Agreement, plus (iii) all Make-Whole Amounts (as defined in the Agreement) added
to the principal of this Note pursuant to the Agreement, on the PIK Note
Maturity Date (as defined in the Agreement), with interest (computed on the
basis of a 360-day year—30-day month) (a) on the unpaid balance thereof at the
rate of 8.90% per annum (or during any period when an Event of Default shall be
in existence, at the election of the Required Holder(s) of the Tranche A PIK
Notes, at the Default Rate (as defined below)) from the date hereof, payable
quarterly on the 28th day of April, July, October and January in each year,
commencing with the April 28, July 28, October 28, or January 28 next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) on any overdue payment (including any overdue prepayment) of principal,
any overdue payment of Make-Whole Amount and, to the extent permitted by
applicable law, any overdue payment of interest, payable quarterly as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the Default Rate.  The “Default Rate” shall
mean a rate per annum from time to time equal to the greater of (i) 10.90% or
(ii) 2.00% over the rate of interest publicly announced by The Bank of New York
from time to time in New York City as its Prime Rate.
 
Except to the extent payment of interest and Make-Whole Amount is payable by
adding such payments to the principal of this Note pursuant to the terms of the
Agreement, payments of principal of, interest on and any Make-Whole Amount
payable with respect to this Note are to be made at the principal office of Banc
of America Securities LLC in New York City or at such other place as the holder
hereof shall designate to the Company in writing, in lawful money of the United
States of America.
 
This Note is one of a series of Tranche A Senior PIK Notes (herein called the
“Notes”) issued pursuant to a Note Purchase Agreement, dated as of December 23,
2003 (as amended through the date hereof and as further amended from time to
time, the “Agreement”), between the Company, on the one hand, and the
Noteholders named in the Purchaser Schedule attached thereto and each affiliate
of any Noteholder which becomes party thereto, on the other hand, and is
entitled to the benefits thereof.
 
 

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

 
This Note is a registered Note and, as provided in the Agreement, upon surrender
of this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
 
This Note is subject to optional prepayment, in whole or from time to time in
part, on the terms specified in the Agreement.
 
The Company and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intent to accelerate, notice of acceleration (except to the extent required in
the Agreement), protest and diligence in collecting in connection with this
Note, whether now or hereafter required by applicable law.
 
In case an Event of Default shall occur and be continuing, the principal of this
Note may be declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.
 
Capitalized terms used herein which are defined in the Agreement and not
otherwise defined herein shall have the meanings as defined in the Agreement.
 
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE (EXCLUDING ANY
CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS NOTE TO BE CONSTRUED OR
ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION).
 

 
SCHAWK, INC.
         
 
By:
     
Title: 
                   

 
 
Exhibit A-1

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Exhibit 1.3
 
[FORM OF TRANCHE B PIK NOTE]
 
 
 
SCHAWK, INC.
 
 
 
8.98% TRANCHE B SENIOR PIK NOTE
 
 
No. _____
[Date]
$________
PPN: _________

 
FOR VALUE RECEIVED, the undersigned, Schawk, Inc., a corporation organized and
existing under the laws of the State of Delaware (herein called the “Company”),
hereby promises to pay to ______________________, or registered assigns, the
principal sum of (i) _______________ DOLLARS, plus (ii) the amount of interest
on this Note added to the principal of this Note pursuant to Section 1.3 of the
Agreement plus (iii) all Make-Whole Amounts (as defined in the Agreement) added
to the principal of this Note pursuant to the Agreement, on the PIK Note
Maturity Date (as defined in the Agreement), with interest (computed on the
basis of a 360-day year—30-day month) (a) on the unpaid balance thereof at the
rate of 8.98% per annum (or during any period when an Event of Default shall be
in existence, at the election of the Required Holder(s) of the Tranche B PIK
Notes, at the Default Rate (as defined below)) from the date hereof, payable
quarterly on the 28th day of April, July, October and January in each year,
commencing with the April 28, July 28, October 28, or January 28 next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) on any overdue payment (including any overdue prepayment) of principal,
any overdue payment of Make-Whole Amount and, to the extent permitted by
applicable law, any overdue payment of interest, payable quarterly as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the Default Rate.  The “Default Rate” shall
mean a rate per annum from time to time equal to the greater of (i) 10.98% or
(ii) 2.00% over the rate of interest publicly announced by The Bank of New York
from time to time in New York City as its Prime Rate.
 
Except to the extent payment of interest and Make-Whole Amount is payable by
adding such payments to the principal of this Note pursuant to the terms of the
Agreement, payments of principal of, interest on and any Make-Whole Amount
payable with respect to this Note are to be made at the principal office of Banc
of America Securities LLC in New York City or at such other place as the holder
hereof shall designate to the Company in writing, in lawful money of the United
States of America.
 
This Note is one of a series of Tranche B Senior PIK Notes (herein called the
“Notes”) issued pursuant to a Note Purchase Agreement, dated as of December 23,
2003 (as amended through the date hereof and as further amended from time to
time, the “Agreement”), between the Company, on the one hand, and the
Noteholders named in the Purchaser Schedule attached thereto and each affiliate
of any Noteholder which becomes party thereto, on the other hand, and is
entitled to the benefits thereof.
 
 

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This Note is a registered Note and, as provided in the Agreement, upon surrender
of this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
 
This Note is subject to optional prepayment, in whole or from time to time in
part, on the terms specified in the Agreement.
 
The Company and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intent to accelerate, notice of acceleration (except to the extent required in
the Agreement), protest and diligence in collecting in connection with this
Note, whether now or hereafter required by applicable law.
 
In case an Event of Default shall occur and be continuing, the principal of this
Note may be declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.
 
Capitalized terms used herein which are defined in the Agreement and not
otherwise defined herein shall have the meanings as defined in the Agreement.
 
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE (EXCLUDING ANY
CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS NOTE TO BE CONSTRUED OR
ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION).
 
 

 
SCHAWK, INC.
         
 
By:
     
Title: 
                   

 
 
Exhibit A-2

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