EXHIBIT 10.01

 

EXECUTION COPY

 

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[GRAPHIC]

 

CREDIT AGREEMENT

 

dated as of

 

December 22, 2003

 

among

 

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

 

The Lenders Party Hereto

 

and

 

JPMORGAN CHASE BANK,

as Administrative Agent

 

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JPMORGAN CHASE BANK,

as Arranger

 

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TABLE OF CONTENTS

 

          Page

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     ARTICLE I           Definitions     

SECTION 1.01.

  

Defined Terms

   1

SECTION 1.02.

  

Classification of Loans and Borrowings

   22

SECTION 1.03.

  

Terms Generally

   22

SECTION 1.04.

  

Accounting Terms; GAAP

   23      ARTICLE II           The Credits     

SECTION 2.01.

  

Commitments

   23

SECTION 2.02.

  

Loans and Borrowings

   23

SECTION 2.03.

  

Requests for Revolving Borrowings

   24

SECTION 2.04.

  

Determination of Dollar Amounts; Required Payments

   25

SECTION 2.05.

  

Reserved

   25

SECTION 2.06.

  

Letters of Credit

   25

SECTION 2.07.

  

Funding of Borrowings

   30

SECTION 2.08.

  

Interest Elections

   30

SECTION 2.09.

  

Termination and Reduction of Commitments

   32

SECTION 2.10.

  

Repayment of Loans; Evidence of Debt

   32

SECTION 2.11.

  

Prepayment of Loans

   33

SECTION 2.12.

  

Fees

   33

SECTION 2.13.

  

Interest

   35

SECTION 2.14.

  

Alternate Rate of Interest

   35

SECTION 2.15.

  

Increased Costs

   36

SECTION 2.16.

  

Break Funding Payments

   37

SECTION 2.17.

  

Taxes

   38

SECTION 2.18.

  

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

   39

SECTION 2.19.

  

Mitigation Obligations; Replacement of Lenders

   41

SECTION 2.20.

  

Changes in Capital Adequacy Regulations

   42

SECTION 2.21.

  

Market Disruption

   42

SECTION 2.22.

  

Judgment Currency

   43

SECTION 2.23.

  

Increase of Commitments

   43      ARTICLE III           Representations and Warranties     

SECTION 3.01.

  

Organization; Powers; Subsidiaries

   46

SECTION 3.02.

  

Authorization; Enforceability

   46

SECTION 3.03.

  

Governmental Approvals; No Conflicts

   47

SECTION 3.04.

  

Financial Condition; No Material Adverse Change

   47

 

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SECTION 3.05.

  

Properties

   47

SECTION 3.06.

  

Litigation, Labor Matters and Environmental Matters

   48

SECTION 3.07.

  

Compliance with Laws and Agreements; No Burdensome Restrictions

   48

SECTION 3.08.

  

Investment and Holding Company Status

   48

SECTION 3.09.

  

Taxes

   49

SECTION 3.10.

  

ERISA

   49

SECTION 3.11.

  

Disclosure

   49

SECTION 3.12.

  

No Default

   49

SECTION 3.13.

  

Liens

   49

SECTION 3.14.

  

Contingent Obligations

   49

SECTION 3.15.

  

Regulation U

   50      ARTICLE IV           Conditions     

SECTION 4.01.

  

Effective Date

   50

SECTION 4.02.

  

Each Credit Event

   51      ARTICLE V           Affirmative Covenants     

SECTION 5.01.

  

Financial Statements and Other Information

   52

SECTION 5.02.

  

Notices of Material Events

   53

SECTION 5.03.

  

Existence; Conduct of Business

   53

SECTION 5.04.

  

Payment of Obligations

   54

SECTION 5.05.

  

Maintenance of Properties; Insurance

   54

SECTION 5.06.

  

Books and Records; Inspection Rights

   54

SECTION 5.07.

  

Compliance with Laws

   54

SECTION 5.08.

  

Use of Proceeds and Letters of Credit

   54

SECTION 5.09.

  

Additional Subsidiary Documentation

   55

SECTION 5.10.

  

Pledge Agreements

   55      ARTICLE VI           Negative Covenants     

SECTION 6.01.

  

Indebtedness

   56

SECTION 6.02.

  

Liens

   57

SECTION 6.03.

  

Fundamental Changes

   58

SECTION 6.04.

  

Investments, Loans, Advances, Guarantees and Acquisitions

   59

SECTION 6.05.

  

Swap Agreements

   60

SECTION 6.06.

  

Restricted Payments

   60

SECTION 6.07.

  

Transactions with Affiliates

   60

SECTION 6.08.

  

Restrictive Agreements

   61

SECTION 6.09.

  

Changes in Fiscal Year

   61

SECTION 6.10.

  

Subordinated Indebtedness

   62

 

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SECTION 6.11.

  

Financial Covenants

   62      ARTICLE VII           Events of Default           ARTICLE VIII       
   The Administrative Agent           ARTICLE IX           Miscellaneous     

SECTION 9.01.

  

Notices

   69

SECTION 9.02.

  

Waivers; Amendments

   70

SECTION 9.03.

  

Expenses; Indemnity; Damage Waiver

   71

SECTION 9.04.

  

Successors and Assigns

   73

SECTION 9.05.

  

Survival

   76

SECTION 9.06.

  

Counterparts; Integration; Effectiveness

   76

SECTION 9.07.

  

Severability

   76

SECTION 9.08.

  

Right of Setoff

   76

SECTION 9.09.

  

Governing Law; Jurisdiction; Consent to Service of Process

   77

SECTION 9.10.

  

WAIVER OF JURY TRIAL

   77

SECTION 9.11.

  

Headings

   77

SECTION 9.12.

  

Confidentiality

   78

SECTION 9.13.

  

Interest Rate Limitation

   79

 

SCHEDULES:

        

Schedule 2.01

  —    Commitments

Schedule 2.06

  —   

Existing Letters of Credit

Schedule 3.01

  —   

Subsidiaries

Schedule 3.06

  —   

Disclosed Matters

Schedule 6.01

  —   

Existing Indebtedness

Schedule 6.02

  —   

Existing Liens

Schedule 6.08

  —   

Existing Restrictions

EXHIBITS:

        

Exhibit A

  —   

Form of Assignment and Assumption

Exhibit B-1

  —   

Form of Opinion of Chief Legal Counsel

Exhibit B-2

  —   

Form of Opinion of Mayer, Brown, Rowe & Maw LLP

Exhibit C

  —   

Form of Subsidiary Guaranty

Exhibit D

  —   

Form of Commitment and Acceptance

 

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CREDIT AGREEMENT dated as of December 22, 2003, among HEIDRICK & STRUGGLES
INTERNATIONAL, INC., the LENDERS party hereto, and JPMORGAN CHASE BANK, as
Administrative Agent.

 

The parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

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

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Acquisition Amount” means $75,000,000; provided that no more than $40,000,000
of such amount shall be payable in cash for any acquisition or series of related
acquisitions.

 

“Adjusted LIBO Rate” means, with respect to any Eurocurrency Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” means JPMorgan Chase Bank, in its capacity as
administrative agent for the Lenders hereunder.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affected Foreign Subsidiary” is defined in the definition of Subsidiary
Guarantor.

 

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

“Agreed Currencies” means (i) Dollars, (ii) the Euro, and (iii) any other
Eligible Currency which the Borrower requests the Administrative Agent to
include as an Agreed Currency hereunder and which is acceptable to all of the
Lenders.

 

“Aggregate Commitment” means the total Commitments for all the Lenders.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1%

 

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and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Base CD Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Base CD Rate
or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Commitment represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

“Applicable Rate” means, for any day, with respect to any ABR Loan or
Eurocurrency Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption “ABR Spread”, “Eurocurrency Spread” or “Facility Fee Rate”, as
the case may be, based upon the Pricing Ratios as reflected in the then most
recently delivered Financials but subject to the following:

 

Financial Test:

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   ABR
Spread

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    Eurocurrency
Spread

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    Facility Fee
Rate

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Category 1:

Leverage Ratio is greater than 1.00:1.00

   0.250 %   1.25 %   0.500 %

Category 2:

Leverage Ratio is greater than 0.50:1.00

but less than 1.00:1.00

   0.125 %   1.125 %   0.375 %

Category 3:

Leverage Ratio is less than or equal to

0.50:1.00 but Category 4 is not

applicable

   0 %   1.000 %   0.250 %

Category 4:

Leverage Ratio is less than or equal to

0.50:1.00 and Fixed Charge Coverage

Ratio is greater than 2.00:1.00

   0 %   0.800 %   0.200 %

 

For purposes of the foregoing,

 

(i) if the Borrower fails to deliver the Financials to the Administrative Agent
at the time required pursuant to Section 5.01, then Category 1 above shall be
deemed to be applicable until the first Business Day of the calendar month
immediately following the date on which such Financials are so received by the
Administrative Agent;

 

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(ii) adjustments, if any, to the Applicable Rate shall be effective on the first
Business Day of the calendar month immediately following the date on which the
Administrative Agent has received the applicable Financials; and

 

(iii) each determination of the Applicable Rate made by the Administrative Agent
in accordance with the foregoing shall be conclusive and binding on the Borrower
and each Lender (absent manifest error).

 

“Approved Fund” has the meaning assigned to such term in Section 9.04.

 

“Approximate Equivalent Amount” of any currency with respect to any amount of
Dollars shall mean the Equivalent Amount of such currency with respect to such
amount of Dollars on or as of such date, rounded up to the nearest amount of
such currency as determined by the Administrative Agent from time to time.

 

“Assessment Rate” means, for any day, the annual assessment rate in effect on
such day that is payable by a member of the Bank Insurance Fund classified as
“well-capitalized” and within supervisory subgroup “B” (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in the relevant currency at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments pursuant to the terms hereof.

 

“Base CD Rate” means the sum of (a) the Three-Month Secondary CD Rate multiplied
by the Statutory Reserve Rate plus (b) the Assessment Rate.

 

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

 

“Borrower” means Heidrick & Struggles International, Inc., a Delaware
corporation.

 

“Borrowing” means Revolving Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurocurrency Loans, in the same Agreed
Currency and as to which a single Interest Period is in effect.

 

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“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurocurrency Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in Dollars and other Agreed Currencies in the London interbank
market (and, if the Borrowings or LC Disbursements which are the subject of a
borrowing, drawing, payment, reimbursement or rate selection are denominated in
Euro, a day upon which such clearing system as is determined by the
Administrative Agent to be suitable for clearing or settlement of Euro is open
for business).

 

“Buying Lender” is defined in Section 2.23(b).

 

“Capital Expenditures” means, without duplication, any expenditures for any
purchase or other acquisition of any asset which would be classified as a fixed
or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP.

 

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

 

“Capital Stock” means (i) in the case of a corporation, corporate stock, (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited) and (iv) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

 

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of Equity
Interests representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any

 

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lending office of such Lender or by such Lender’s or the Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.

 

“Class”, when used in reference to any Loan or Borrowing, refers to such Loan,
or the Loans comprising such Borrowing, as Revolving Loans.

 

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

 

“Collateral” means all pledged Capital Stock in or upon which a security
interest or Lien is from time to time granted to the Administrative Agent, for
the benefit of the Holders of Secured Obligations, whether under the Pledge
Agreements, under any of the other Collateral Documents or under any of the
other Loan Documents.

 

“Collateral Documents” means all agreements, instruments and documents executed
in connection with this Agreement pursuant to which the Administrative Agent is
granted a security interest in Collateral, including, without limitation, the
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 Borrower or any of its Subsidiaries and delivered to the
Administrative Agent or any of the Lenders, together with all agreements and
documents referred to therein or contemplated thereby.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.09, (b) increased from time to
time pursuant to Section 2.23 and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in
the Assignment and Assumption pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders’
Commitments is $60,000,000.

 

“Commitment Increase Notice” is defined in Section 2.23(a).

 

“Computation Date” is defined in Section 2.04.

 

“Consolidated Capital Expenditures” means, with reference to any period, the
Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.

 

“Consolidated EBITDA” means Consolidated Operating Income plus, (i) Consolidated
Interest Income, (ii) depreciation, (iii) amortization and (iv) the Designated
Charges, all calculated for the Borrower and its Subsidiaries in accordance with
GAAP on a consolidated basis.

 

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“Consolidated EBITDAR” means Consolidated Operating Income plus, (i)
Consolidated Interest Income, (ii) depreciation, (iii) amortization, (iv) the
Designated Charges and (v) Consolidated Rental Expense, all calculated for the
Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis.

 

“Consolidated Interest Expense” means, with reference to any period, the
interest expense (including without limitation interest expense under Capital
Lease Obligations that is treated as interest in accordance with GAAP) of the
Borrower and its Subsidiaries calculated on a consolidated basis for such
period.

 

“Consolidated Interest Income” means, with reference to any period, the interest
income of the Borrower and its Subsidiaries calculated in accordance with GAAP
on a consolidated basis.

 

“Consolidated Net Income” means, with reference to any period, the net income of
the Borrower and its Subsidiaries calculated in accordance with GAAP on a
consolidated basis.

 

“Consolidated Net Worth” means at any time the consolidated stockholders’ equity
of the Borrower and its Subsidiaries calculated on a consolidated basis as of
such time.

 

“Consolidated Operating Expense” means, with reference to any period, expenses
related to salaries, employee benefits and general and administrative expenses,
all calculated for the Borrower and its Subsidiaries on a consolidated basis for
such period and otherwise in accordance with GAAP.

 

“Consolidated Operating Income” means, with reference to any period, the gross
revenues less Consolidated Operating Expense, all calculated for the Borrower
and its Subsidiaries on a consolidated basis for such period and as calculated
in the manner disclosed by the Borrower in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.

 

“Consolidated Rental Expense” means, with reference to any period, all payments
under Operating Leases to the extent deducted in computing Consolidated
Operating Income, net of any related income from subleases, in each case
calculated for the Borrower and its Subsidiaries on a consolidated basis for
such period.

 

“Consolidated Rental Payments” means, with reference to any period, all payments
under all Operating Leases (including payments for leases which have been
reserved against), net of any related income from subleases, in each case
calculated for the Borrower and its Subsidiaries on a consolidated basis for
such period.

 

“Consolidated Total Indebtedness” means at any time the aggregate Indebtedness
of the Borrower and its Subsidiaries calculated on a consolidated basis as of
such time.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

 

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“Country Risk Event” means:

 

(i) any law, action or failure to act by any Governmental Authority in the
Borrower’s or Letter of Credit beneficiary’s country which has the effect of:

 

(a) changing the obligations under the relevant Letter of Credit, the Credit
Agreement or any of the other Loan Documents as originally agreed or otherwise
creating any additional liability, cost or expense to the Issuing Bank, the
Lenders or the Administrative Agent,

 

(b) changing the ownership or control by the Borrower or Letter of Credit
beneficiary of its business, or

 

(c) preventing or restricting the conversion into or transfer of the applicable
Agreed Currency;

 

(ii) force majeure; or

 

(iii) any similar event

 

which, in relation to (i), (ii) and (iii), directly or indirectly, prevents or
restricts the payment or transfer of any amounts owing under the relevant Letter
of Credit in the applicable Agreed Currency into an account designated by the
Administrative Agent or the Issuing Bank and freely available to the
Administrative Agent or the Issuing Bank.

 

“Credit Event” means a Borrowing, an LC Disbursement or both.

 

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

“Designated Charges” means, to the extent deducted from gross revenues in
computing Consolidated Operating Income, the aggregate of (i) nonrecurring
compensation charges, (ii) nonrecurring general and administrative charges and
(iii) special charges, all of the foregoing calculated for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP; provided that the
aggregate amount of Designated Charges incurred on and after January 1, 2003
shall not exceed $65,000,000, of which no more than $15,000,000 shall be
incurred at any time on or after January 1, 2004.

 

“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

 

“Dollar Amount” of any currency at any date shall mean (i) the amount of such
currency if such currency is Dollars or (ii) the equivalent in such currency of
such amount of Dollars if such currency is any currency other than Dollars,
calculated on the basis of the arithmetical mean of the buy and sell spot rates
of exchange of the Administrative Agent for such currency on the London market
at 11:00 a.m., London time, on or as of the most recent Computation Date
provided for in Section 2.04.

 

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“Dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means a Subsidiary organized under the laws of a
jurisdiction located in the United States of America.

 

“Effective Commitment Amount” is defined in Section 2.23(a).

 

“Effective Date” means the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02).

 

“Eligible Currency” means any currency other than Dollars (i) that is readily
available, (ii) that is freely traded, (iii) in which deposits are customarily
offered to banks in the London interbank market, (iv) which is convertible into
Dollars in the international interbank market and (v) as to which an Equivalent
Amount may be readily calculated. If, after the designation by the Lenders of
any currency as an Agreed Currency, (x) currency control or other exchange
regulations are imposed in the country in which such currency is issued with the
result that different types of such currency are introduced, (y) such currency
is, in the commercially reasonable determination of the Administrative Agent, no
longer readily available or freely traded or (z) in the commercially reasonable
determination of the Administrative Agent, an Equivalent Amount of such currency
is not readily calculable, the Administrative Agent shall promptly notify the
Lenders and the Borrower, and such currency shall no longer be an Agreed
Currency until such time as all of the Lenders agree to reinstate such currency
as an Agreed Currency and promptly, but in any event within five (5) Business
Days of receipt of such notice from the Administrative Agent, the Borrower shall
repay all Loans and reimburse all LC Disbursements in such affected currency or
convert such Loans and LC Disbursements into Loans and LC Disbursements in
Dollars or another Agreed Currency, subject to the other terms set forth in
Article II.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

 

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“Equivalent Amount” of any currency with respect to any amount of Dollars at any
date shall mean the equivalent in such currency of such amount of Dollars,
calculated on the basis of the arithmetical mean of the buy and sell spot rates
of exchange of the Administrative Agent for such other currency at 11:00 a.m.,
London time, on the date on or as of which such amount is to be determined.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

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

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

“EU” means the European Union.

 

“Euro” and/or “EUR” means the single currency of the participating member states
of the EU.

 

“Eurocurrency”, when used in reference to a currency means any Agreed Currency
and when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

“Eurocurrency Payment Office” of the Administrative Agent shall mean, for each
of the Agreed Currencies, the office, branch, affiliate or correspondent bank of
the Administrative Agent for such currency as specified from time to time by the
Administrative Agent to the Borrower and each Lender. On the date hereof, the
Eurocurrency Payment Office for each Agreed Currency is 270 Park Avenue, New
York, New York.

 

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

 

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“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).

 

“Existing Credit Agreement” means that certain Credit Agreement dated as of
December 28, 2001 between the Borrower, the lenders party thereto and JPMorgan
Chase Bank as administrative agent, as amended.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

 

“Financials” means the annual or quarterly financial statements of the Borrower
required to be delivered pursuant to Section 5.01 (a) or 5.01 (b).

 

“First Tier Foreign Subsidiary” means each Foreign Subsidiary with respect to
which any one or more of the Borrower and its Domestic Subsidiaries directly
owns or controls more than 50% of such Foreign Subsidiary’s Capital Stock.

 

“Fixed Charge Coverage Ratio” is defined in Section 6.11.1.

 

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

 

“Foreign Subsidiary” means a Subsidiary of the Borrower which is not a Domestic
Subsidiary.

 

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“GAAP” means generally accepted accounting principles in the United States of
America.

 

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

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

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Holders of Secured Obligations” means the holders of the Obligations from time
to time and shall include (i) each Lender and the Issuing Bank in respect of its
Credit Events, (ii) the Administrative Agent and the Lenders in respect of all
other present and future obligations and liabilities of the Borrower and each
Subsidiary of every type and description arising under or in connection with the
Credit Agreement or any other Loan Document, (iii) each Lender and affiliate of
such Lender in respect of Swap Agreements entered into with such Person by the
Borrower or any Subsidiary, (iv) each indemnified party under Section 9.03 in
respect of the obligations and liabilities of the Borrower to such Person
hereunder and under the other Loan Documents, and (v) their respective
successors and (in the case of a Lender, permitted) transferees and assigns.

 

“Hostile Acquisition” means (x) the acquisition of the Equity Interests of a
Person through a tender offer or similar solicitation of the owners of such
Equity Interests which has not been approved (prior to such acquisition) by
resolutions of the Board of Directors of such Person or by similar action if
such Person is not a corporation and (y) any such acquisition as to which such
approval has been withdrawn.

 

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“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind to such Person, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.08.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any
Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurocurrency Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect, provided, that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.

 

“Issuing Bank” means JPMorgan Chase Bank, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i).

 

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The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn Dollar
Amount of all outstanding Letters of Credit at such time plus (b) the aggregate
Dollar Amount of all LC Disbursements that have not yet been reimbursed by or on
behalf of the Borrower at such time. The LC Exposure of any Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.

 

“Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate of
such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender that is a fund which invests
in bank loans and similar extensions of credit or by any other fund that invests
in bank loans and similar extensions of credit and is managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Lender Increase Notice” is defined in Section 2.23(a).

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

 

“Letter of Credit” means any letter of credit issued, or deemed issued, pursuant
to this Agreement.

 

“Leverage Ratio” is defined in Section 6.11.2.

 

“LIBO Rate” means, with respect to any Eurocurrency Borrowing for any Interest
Period, the rate appearing on the appropriate page of the Dow Jones Market
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to deposits in the relevant
Agreed Currency in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for deposits in the relevant Agreed Currency with a maturity
comparable to such Interest Period. In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to such
Eurocurrency Borrowing for such Interest Period shall be the rate at which
deposits in the relevant Agreed Currency of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

 

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

 

“Loan Documents” mean this Agreement, any promissory notes executed and
delivered pursuant to Section 2.10(e), the Subsidiary Guaranty, the Collateral
Documents and any and all other instruments and documents executed and delivered
in connection with any of the foregoing.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

“Material Adverse Change” means any event, development or circumstance that has
or could reasonably be expected to have a Material Adverse Effect.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, property, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Agreement or (c) the
validity or enforceability of any of the Loan Documents or the rights of or
benefits available to the Administrative Agent and the Lenders under this
Agreement and the other Loan Documents.

 

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $3,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date” means December 22, 2006.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

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

 

“Net Cash Proceeds” means cash and cash equivalent proceeds received by or for a
Person’s account with respect to any offering of equity securities of such
Person, net of reasonable legal fees, underwriting discounts or commissions, and
other reasonable and customary fees and expenses incurred as a direct result
thereof.

 

“New Money Credit Event” means with respect to the Issuing Bank, any increase
(directly or indirectly) in the Issuing Bank’s exposure (whether by way of
additional credit or banking facilities or otherwise, including as part of a
restructuring) to the Borrower or any

 

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Governmental Authority in the Borrower’s or any applicable Letter of Credit
beneficiary’s country occurring by reason of (i) any law, action or requirement
of any Governmental Authority in the Borrower’s or such Letter of Credit
beneficiary’s country, or (ii) any request in respect of external indebtedness
of borrowers in the Borrower’s or such Letter of Credit beneficiary’s country
applicable to banks generally which conduct business with such borrowers, or
(iii) any agreement in relation to clause (i) or (ii), in each case to the
extent calculated by reference to the aggregate Revolving Credit Exposures
outstanding prior to such increase.

 

“Obligations” means all Loans, LC Disbursements, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower or any Subsidiary
Guarantor to the Administrative Agent, any Lender, the Issuing Bank, any
Affiliate of the Agent or any Lender, the Issuing Bank, or any indemnified
Person hereunder, of any kind or nature, present or future, arising under this
Agreement, the Subsidiary Guaranty, any Collateral Document or any other Loan
Document, whether or not evidenced by any note, guaranty or other instrument,
whether or not for the payment of money, whether arising by reason of an
extension of credit, loan, guaranty, indemnification, or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, reasonable attorneys’ fees and disbursements, reasonable
paralegals’ fees (in each case whether or not allowed), and any other sum
chargeable to the Borrower or any Subsidiary Guarantor under this Agreement or
any other Loan Document.

 

“Operating Lease” of a Person means any lease of property (other than a capital
lease under GAAP) by such Person as lessee which has an original term (including
any required renewals and any renewals effective at the option of the lessor) of
one year or more.

 

“Operating Lease Obligations” means, as at any date of determination, the amount
obtained by aggregating the present values, determined in the case of each
particular Operating Lease by applying a discount rate (which discount rate
shall equal the discount rate which would be applied under GAAP if such
Operating Lease were a capital lease under GAAP) from the date on which each
fixed lease payment is due under such Operating Lease to such date of
determination, of all fixed lease payments due under all Operating Leases of the
Borrower and its Subsidiaries.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

 

“Participant” has the meaning set forth in Section 9.04.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Percentage” is defined in Section 2.23(b).

 

“Permitted Acquisition” means any acquisition (whether by purchase, merger,
consolidation or otherwise but excluding in any event a Hostile Acquisition) by
the Borrower or

 

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any Subsidiary of all or substantially all the assets of, or all the Equity
Interests in, a Person or division or line of business of a Person if, at the
time of and immediately after giving effect thereto, (a) no Default has occurred
and is continuing or would result therefrom, (b) the principal business of such
Person shall be reasonably related to a business in which the Borrower and the
Subsidiaries were engaged on the Effective Date, (c) each Subsidiary formed for
the purpose of or resulting from such acquisition shall, to the extent required
by the definition of Subsidiary Guarantor (in the case of a Domestic Subsidiary)
or by the definition of Foreign Pledge Event (in the case of a Foreign
Subsidiary) be a Subsidiary Loan Party and all of the Capital Stock of such
Subsidiary Loan Party shall be owned directly by the Borrower or, to the extent
so required by such definitions, a Subsidiary Loan Party, and all actions
required to be taken with respect to such acquired or newly formed Subsidiary
under Sections 5.9 and 5.10 shall have been taken, (d) the Borrower and the
Subsidiaries are in compliance, on a pro forma basis after giving effect to such
acquisition (without giving effect to any cost savings other than those actually
realized as of the date of such acquisition or otherwise approved in writing by
the Administrative Agent), with the covenants contained in Section 6.11
recomputed as of the last day of the most recently ended fiscal quarter of the
Borrower for which financial statements are available, as if such acquisition
(and any related incurrence or repayment of Indebtedness, with any new
Indebtedness being deemed to be amortized over the applicable testing period in
accordance with its terms) had occurred on the first day of each relevant period
for testing such compliance and (e) with respect to an acquisition in respect of
which the sum of all consideration paid or delivered in connection therewith
exceeds $10,000,000, the Borrower has delivered to the Administrative Agent an
officers’ certificate to the effect set forth in clauses (a), (b), (c) and (d)
above, together with all relevant financial information for the Person or assets
to be acquired and reasonably detailed calculations demonstrating satisfaction
of the requirement set forth in clause (d) above.

 

“Permitted Encumbrances” means:

 

(a) Liens imposed by law for taxes that are not yet due or are being contested
in compliance with Section 5.04;

 

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 45 days or are being
contested in compliance with Section 5.04;

 

(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations;

 

(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

 

(e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and

 

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(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary; provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness other than the
Liens permitted under Section 6.02.

 

“Permitted Investments” means:

 

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America, in each case
maturing within one year from the date of acquisition thereof;

 

(b) direct obligations of any agency of the United States of America, in each
case maturing within one year from the date of acquisition thereof;

 

(c) municipal investments and direct obligations of any State of the United
States of America, in each case with a rating of BBB+ or higher and a maximum
maturity of 12 months (for securities where the interest rate is adjusted
periodically (e.g. floating rate securities), the reset date will be used to
determine the maturity date);

 

(d) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, a rating of A-2
from S&P and P-2 from Moody’s;

 

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

 

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

 

(g) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii)
are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at
least $5,000,000,000;

 

(h) in the case of investments of any Foreign Subsidiary or non-domestic branch
of the Borrower, securities issued by any foreign government or any political
subdivision of any foreign government or any public instrumentality thereof
having maturities of not more than one year from the date of acquisition thereof
and, at the time of acquisition thereof and, at the time of acquisition, having
an investment grade credit rating obtainable from S&P, Moody’s, or other
generally recognized rating agency.

 

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(i) investments in auction rate securities with a rating of BBB+ or higher and a
maximum maturity of one year, for which the reset date will be used to determine
the maturity date, all to the extent such investments are made in a manner
consistent with past practice;

 

(j) investments in funds that invest solely in one or more of types of
securities described in clauses (a) through (i) above; and

 

(k) in the case of investments by any Foreign Subsidiary or non-domestic branch
of the Borrower, investments in time deposits maturing within one year from the
date of acquisition thereof issued or guaranteed by or placed with any highly
capitalized commercial bank which is located in the jurisdiction where such
non-domestic branch of the Borrower or such Foreign Subsidiary is located and
which bank has an investment grade credit rating obtainable from S&P, Moody’s or
other generally recognized rating agency.

 

“Permitted Two-Year Investments” means:

 

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America, in each case
maturing within two years from the date of acquisition thereof;

 

(b) direct obligations of any agency of the United States of America, in each
case maturing within two years from the date of acquisition thereof;

 

(c) municipal investments and direct obligations of any State of the United
States of America with a rating of BBB+ or higher and a maximum maturity of two
years (for securities where the interest rate is adjusted periodically (e.g.
floating rate securities), the reset date will be used to determine the maturity
date);

 

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

 

(e) in the case of investments by any Foreign Subsidiary or non-domestic branch
of the Borrower, securities issued by any foreign government or any political
subdivision of any foreign government or any public instrumentality thereof
having maturities of not more than two years from the date of acquisition
thereof and, at the time of acquisition thereof and, at the time of acquisition,
having an investment grade credit rating obtainable from S&P, Moody’s, or other
generally recognized rating agency;

 

(f) investments in auction rate securities with a rating of BBB+ and a maximum
maturity of two years, for which the reset date will be used to determine the
maturity date, all to the extent such investments are made in a manner
consistent with past practice;

 

(g) investments in funds that invest solely in one or more of the types of
securities described in clauses (a) through (f) above; and

 

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(h) in the case of investments by any non-domestic branch of the Borrower or any
Foreign Subsidiary, investments in time deposits maturing within two years from
the date of acquisition thereof issued or guaranteed by or placed with any
highly capitalized commercial bank which is located in the jurisdiction where
such non-domestic branch of the Borrower or such Foreign Subsidiary is located
and which bank has an investment grade credit rating obtainable from S&P,
Moody’s or other generally recognized rating agency.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

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

 

“Pledge Agreements” means the pledge agreements, share mortgages, charges and
comparable instruments and documents from time to time executed pursuant to the
terms of Section 5.10 in favor of the Administrative Agent for the benefit of
the Holders of Secured Obligations as amended, restated, supplemented or
otherwise modified from time to time.

 

“Pledged Subsidiary” means each Foreign Subsidiary a portion of the Capital
Stock of which has been pledged pursuant to a Pledge Agreement in accordance
with Section 5.10.

 

“Pricing Ratios” means, for any period the same is to be determined, the
Leverage Ratio and, in the case of “Category 4” described in the definition of
Applicable Rate, the Fixed Charge Coverage Ratio, in each case as determined as
of the end of each of the Borrower’s fiscal quarters for the applicable
measurement period ending with the end of such fiscal quarter.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.

 

“Proposed New Lender” is defined in Section 2.23(a).

 

“Register” has the meaning set forth in Section 9.04.

 

“Regulation U” means Regulation U of the Board as from time to time in effect
and any successor or other regulation or official interpretation of the Board
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve System.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

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“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing at least 51% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal Dollar Amount of such Lender’s Revolving Loans
and its LC Exposure at such time.

 

“Revolving Loan” means a Loan made pursuant to Section 2.03.

 

“S&P” means Standard & Poor’s.

 

“Secured Obligations” means, collectively, (i) the Obligations and (ii) all
indebtedness, obligations and liabilities under Swap Agreements to any Lender or
any Affiliate of a Lender.

 

“Selling Lender” is defined in Section 2.23(b).

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in the
relevant currency of over $100,000 (or the Approximate Equivalent Amount in the
case of a currency other than Dollars) with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurocurrency Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

 

“Subordinated Indebtedness” of a Person means Indebtedness of such Person the
payment of which is subordinated to the payment of the Indebtedness hereunder to
the reasonable written satisfaction of the Required Lenders.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial

 

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statements if such financial statements were prepared in accordance with GAAP as
of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.

 

“Subsidiary” means any subsidiary of the Borrower.

 

“Subsidiary Guarantor” means each Subsidiary (other than any Foreign Subsidiary
to the extent that designation of such Foreign Subsidiary as a Subsidiary
Guarantor would (a) be prohibited by applicable law or (b) cause, as determined
by the Borrower in its commercially reasonable judgment acting in good faith and
upon the advice of its tax advisors, materially disadvantageous tax implications
for the Borrower or any Domestic Subsidiary under Section 956 of the Code - each
such Foreign Subsidiary, an “Affected Foreign Subsidiary”) (i) the consolidated
gross revenues of which for the most recent fiscal quarter of the Borrower for
which financial statements have been delivered pursuant to Section 5.01 were
greater than five percent (5%) of the Borrower’s consolidated gross revenues for
such fiscal quarter or (ii) the consolidated tangible assets of which as of the
end of such fiscal quarter were greater than five percent (5%) of the Borrower’s
consolidated tangible assets as of such date; provided that, if at any time the
aggregate amount of the consolidated gross revenues or consolidated tangible
assets of all Subsidiaries that are not Subsidiary Guarantors exceeds twenty
percent (20%) of the Borrower’s consolidated gross revenues for any such fiscal
quarter or twenty percent (20%) of the Borrower’s consolidated tangible assets
as of the end of any such fiscal quarter, the Borrower (or, in the event the
Borrower has failed to do so within ten days, the Administrative Agent) shall
designate sufficient Subsidiaries (other than Affected Foreign Subsidiaries) as
“Subsidiary Guarantors” to eliminate such excess, and such designated
Subsidiaries shall for all purposes of this Agreement constitute Subsidiary
Guarantors. The Subsidiary Guarantors on the Effective Date are identified in
Schedule 3.01 hereto.

 

“Subsidiary Guaranty” means that certain Guaranty (and any and all supplements
thereto) executed by each Subsidiary Guarantor, in substantially the form of
Exhibit C attached hereto, as amended, restated, supplemented or otherwise
modified from time to time.

 

“Subsidiary Loan Party” means a Subsidiary Guarantor or a Pledged Subsidiary.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.

 

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

 

“Three-Month Secondary CD Rate” means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or, if such day is not a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.

 

“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement and by the Subsidiary Guarantors of the Subsidiary Guaranty, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“Unpledged Subsidiary” means each Foreign Subsidiary which is not a Pledged
Subsidiary.

 

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

 

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurocurrency Loan”) or by Class and Type (e.g., a
“Eurocurrency Revolving Loan”). Borrowings also may be classified and referred
to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurocurrency
Borrowing”) or by Class and Type (e.g., a “Eurocurrency Revolving Borrowing”).

 

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to

 

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include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

 

ARTICLE II

 

The Credits

 

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Revolving Loans to the Borrower in Agreed Currencies
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender’s Revolving Credit Exposure
exceeding the Dollar Amount of such Lender’s Commitment or (b) the Dollar Amount
of the sum of the total Revolving Credit Exposures exceeding the Aggregate
Commitment. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02. Loans and Borrowings.

 

(a) Each Revolving Loan shall be made as part of a Borrowing consisting of
Revolving Loans made by the Lenders ratably in accordance with their respective
Applicable Percentages. The failure of any Lender to make any Loan required to
be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in
accordance herewith. Each ABR Loan shall only be made in Dollars. Each Lender at
its option may make any Eurocurrency Loan by causing any domestic or foreign
branch or Affiliate of such Lender to

 

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make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

 

(c) At the commencement of each Interest Period for any Eurocurrency Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $250,000 and not less than $1,000,000 (or the Approximate Equivalent
Amount of each such amount if such Borrowing is denominated in an Agreed
Currency other than Dollars). At the time that each ABR Revolving Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $250,000 and not less than $1,000,000; provided that an ABR
Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.06(e).
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of five
Eurocurrency Revolving Borrowings outstanding.

 

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

 

SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurocurrency Borrowing, not later than 11:00
a.m., New York City time, three Business Days (in the case of a Eurocurrency
Borrowing denominated in Dollars) or four Business Days (in the case of a
Eurocurrency Borrowing denominated in an Agreed Currency other than Dollars)
before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the date of the
proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.06(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:

 

(i) the aggregate amount of the requested Borrowing;

 

(ii) the date of such Borrowing, which shall be a Business Day;

 

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency
Borrowing;

 

(iv) in the case of a Eurocurrency Borrowing, the Agreed Currency and initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term “Interest Period”; and

 

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.07.

 

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If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurocurrency Revolving Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender’s Loan to be made as
part of the requested Borrowing.

 

SECTION 2.04. Determination of Dollar Amounts; Required Payments. The
Administrative Agent will determine the Dollar Amount of:

 

(a) each Eurocurrency Borrowing as of the date three Business Days prior to the
date of such Borrowing or, if applicable, date of conversion/continuation of any
Advance as a Eurocurrency Advance, and

 

(b) all outstanding Credit Events on and as of the last Business Day of each
quarter and on any other Business Day elected by the Administrative Agent in its
discretion or upon instruction by the Required Lenders.

 

Each day upon or as of which the Administrative Agent determines Dollar Amounts
as described in the preceding clauses (a) and (b) is herein described as a
“Computation Date” with respect to each Credit Event for which a Dollar Amount
is determined on or as of such day. If at any time the Dollar Amount of the sum
of the aggregate principal amount of all outstanding Credit Events (calculated,
with respect to those Credit Events denominated in Agreed Currencies other than
Dollars, as of the most recent Computation Date with respect to each such Credit
Event) exceeds the Aggregate Commitment, the Borrower shall immediately repay
Borrowings and cash collateralize LC Disbursements in an aggregate principal
amount sufficient to eliminate any such excess.

 

SECTION 2.05. Reserved.

 

SECTION 2.06. Letters of Credit.

 

(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance of Letters of Credit denominated in an Agreed Currency
for its own account, in a form reasonably acceptable to the Administrative Agent
and the Issuing Bank, at any time and from time to time during the Availability
Period. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control; provided, however, if the
Issuing Bank is requested to issue Letters of Credit with respect to a
jurisdiction the Issuing Bank deems, in its sole discretion, may at any time
subject it to a New Money Credit Event or a Country Risk Event, the Borrower
shall, at the request of the Issuing Bank, guaranty and indemnify the Issuing
Bank against any and all costs, liabilities and losses resulting from such New
Money Credit Event or Country Risk Event, in each case in a form and substance
satisfactory to the Issuing Bank. Schedule 2.06 contains a schedule of certain
letters of credit issued by JPMorgan Chase

 

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Bank under the Existing Credit Agreement. Upon the effectiveness of this
Agreement, from and after the Effective Date, such letters of credit shall be
deemed to be Letters of Credit issued pursuant to this Section 2.06.

 

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the Dollar Amount of
such Letter of Credit, the Agreed Currency applicable thereto, the name and
address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the
Dollar Amount of the sum of the LC Exposure shall not exceed $20,000,000 and
(ii) the total Revolving Credit Exposures shall not exceed the Aggregate
Commitment.

 

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.

 

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate Dollar Amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

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(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 12:00 noon, New York City time, on the date that such LC Disbursement
is made, if the Borrower shall have received notice of such LC Disbursement
prior to 10:00 a.m., New York City time, on such date, or, if such notice has
not been received by the Borrower prior to such time on such date, then not
later than 12:00 noon, New York City time, on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
New York City time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 or 2.05 that such payment be financed with an ABR
Revolving Borrowing in the Dollar Amount of such LC Disbursement and, to the
extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.
Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.07 with respect to Loans
made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly
pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Revolving Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

(f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of

 

(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein,

 

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

 

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

 

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(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder.

 

None of the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

 

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and/or the Lenders with respect to any such LC Disbursement.

 

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full as required by
paragraph (e) above, the unpaid amount thereof shall bear interest, for each day
from and including the date such LC Disbursement is due and payable to but
excluding the date that the Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans (or in the case such LC
Disbursement is denominated in an Agreed Currency other than Dollars, at the
rate determined in good faith by the Issuing Bank to represent the Issuing
Bank’s cost of overnight or short-term funds in the applicable Agreed Currency
plus the then effective Applicable Rate with respect to Eurocurrency Revolving
Loans); provided that, if the Borrower fails to reimburse such LC Disbursement
when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank,

 

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except that interest accrued on and after the date of payment by any Lender
pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be
for the account of such Lender to the extent of such payment.

 

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

 

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing at least 51% of the
total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent in interest-bearing accounts selected at the option and
sole discretion of the Administrative Agent and at the Borrower’s risk and
expense as collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Lenders with LC Exposure representing at least 51% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.

 

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SECTION 2.07. Funding of Borrowings.

 

(a) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds (i) in the case of
each Loan denominated in Dollars, by 12:00 noon, New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders and (ii) in the case of each Loan denominated
in an Agreed Currency other than Dollars, by 12:00 noon, local time, in the city
of the Administrative Agent’s Eurocurrency Payment Office for such currency and
at such Eurocurrency Payment Office for such currency. The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the amounts
so received, in like funds, to an account of the Borrower maintained with the
Administrative Agent in New York City and designated by the Borrower in the
applicable Borrowing Request; provided that ABR Revolving Loans made to finance
the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be
remitted by the Administrative Agent to the Issuing Bank.

 

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender’s Loan included in such
Borrowing.

 

SECTION 2.08. Interest Elections.

 

(a) Each Revolving Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurocurrency Revolving
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurocurrency
Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.

 

(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by

 

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hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.

 

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

 

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

 

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

 

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing; and

 

(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Agreed Currency
and Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the term
“Interest Period”.

 

If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

 

(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period (i) in the case of a Borrowing
denominated in Dollars, such Borrowing shall be converted to an ABR Borrowing
and (ii) in the case of a Borrowing denominated in an Agreed Currency other than
Dollars, such Borrowing shall automatically continue as a Eurocurrency Borrowing
in the same Agreed Currency with an Interest Period of one month unless (x) such
Eurocurrency Borrowing is or was repaid in accordance with Section 2.7 or (y)
the Borrower shall have given the Administrative Agent an Interest Election
Request requesting that, at the end of such Interest Period, such Eurocurrency
Borrowing continue as a Eurocurrency Borrowing for the same or another Interest
Period. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Revolving Borrowing may be converted to
or continued as a Eurocurrency Borrowing and (ii) unless repaid, each
Eurocurrency Revolving Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.

 

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SECTION 2.09. Termination and Reduction of Commitments.

 

(a) Unless previously terminated, the Commitments shall terminate on the
Maturity Date.

 

(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $1,000,000 and not less than $5,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans and reimbursement of LC
Disbursements in accordance with Section 2.11, the Dollar Amount of the sum of
the Revolving Credit Exposures would exceed the Aggregate Commitment.

 

(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their Applicable Percentages.

 

SECTION 2.10. Repayment of Loans; Evidence of Debt.

 

(a) The Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan on the Maturity Date.

 

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

 

(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class, Agreed Currency and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.

 

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be conclusive evidence (absent manifest error) of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner

 

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affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.

 

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

 

SECTION 2.11. Prepayment of Loans.

 

(a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to (i) prior notice in
accordance with paragraph (b) of this Section, (ii) the payment of the funding
compensation required by Section 2.16 and (iii) such prepayment being in an
amount that is not less than $1,000,000.

 

(b) The Borrower shall notify the Administrative Agent by telephone (confirmed
by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurocurrency Revolving Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

 

SECTION 2.12. Fees.

 

(a) (i) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a facility fee, which shall accrue at the Applicable Rate on the
daily amount of the Commitment of such Lender (whether used or unused) during
the period from and including the date hereof but excluding the date on which
such Commitment terminates; provided that, if such Lender continues to have any
Revolving Credit Exposure after its Commitment terminates, then such facility
fee shall continue to accrue on the daily amount of such Lender’s Revolving
Credit Exposure from and including the date on which its Commitment terminates
to but excluding the date on which such Lender ceases to have any Revolving
Credit Exposure. Accrued facility fees shall be payable in arrears on the last
day of March, June,

 

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September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

 

(ii) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a utilization fee, which shall accrue at the rate of 0.125% on the
average daily Revolving Credit Exposures (including any Revolving Credit
Exposure for such Lender after the termination of such Lender’s Commitment) for
such Lender during each fiscal quarter in which the total Revolving Credit
Exposures for all the Lenders at any time exceeds 50% of the Aggregate
Commitment. Accrued utilization fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date
hereof; provided that any utilization fee accruing after the date on which the
Commitments terminate shall be payable on demand. All utilization fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account
of each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurocurrency Revolving Loans on the average daily
amount of such Lender’s LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the
rate of 0.125% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

 

(c) The Borrower agrees to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

 

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable

 

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to it) for distribution, in the case of facility fees and participation fees, to
the Lenders. Fees (other than fees calculated in error) paid shall not be
refundable under any circumstances.

 

SECTION 2.13. Interest.

 

(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate
Base Rate plus the Applicable Rate.

 

(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

 

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section, (ii) in the case of any fee payable pursuant to Section
2.12(b)(i), 2% plus the rate otherwise applicable to such fee as provided in
such Section or (iii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and, in the case of Revolving Loans, upon termination
of the Commitments; provided that (i) interest accrued pursuant to paragraph (c)
of this Section shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurocurrency
Revolving Loan prior to the end of the current Interest Period therefor, accrued
interest on such Loan shall be payable on the effective date of such conversion.

 

(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest (i) computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year) and (ii) for
Borrowings denominated in British Pounds Sterling shall be computed on the basis
of a year of 365 days, and in each case shall be payable for the actual number
of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

 

SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurocurrency Borrowing:

 

(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

 

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(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurocurrency Borrowing shall be
ineffective, (ii) if any Borrowing Request requests a Eurocurrency Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if
the circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

 

SECTION 2.15. Increased Costs.

 

(a) If any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or

 

(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurocurrency Loans made by such
Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan or of maintaining its
obligation to make any such Loan (including, without limitation, pursuant to any
conversion of any Borrowing denominated in an Agreed Currency other than Euro
into a Borrowing denominated in Euro) or to increase the cost to such Lender or
the Issuing Bank of participating in, issuing or maintaining any Letter of
Credit (including, without limitation, pursuant to any conversion of any
Borrowing denominated in an Agreed Currency other than Euro into a Borrowing
denominated in Euro) or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder, whether of principal, interest or
otherwise (including, without limitation, pursuant to any conversion of any
Borrowing denominated in an Agreed Currency other than Euro into a Borrowing
denominated in Euro), then the Borrower will pay to such Lender or the Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.

 

(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Bank’s capital or on the capital of
such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the

 

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Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender’s or the Issuing Bank’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s or the Issuing
Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

 

(c) A certificate of a Lender or the Issuing Bank setting forth in reasonable
detail the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

SECTION 2.16. Break Funding Payments. In the event of

 

(a) the payment of any principal of any Eurocurrency Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event
of Default),

 

(b) the conversion of any Eurocurrency Loan other than on the last day of the
Interest Period applicable thereto,

 

(c) the failure to borrow, convert, continue or prepay any Revolving Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.11(b) and is revoked in accordance
therewith), or

 

(d) the assignment of any Eurocurrency Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.19, then, in any such event, the Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of

 

(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of

 

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the then current Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over

 

(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for deposits in the relevant currency of a
comparable amount and period from other banks in the eurocurrency market. A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

SECTION 2.17. Taxes.

 

(a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then

 

(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made,

 

(ii) the Borrower shall make such deductions and

 

(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

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

 

(c) The Borrower shall indemnify the Administrative Agent, each Lender and the
Issuing Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate in reasonable detail as to
the amount of such payment or liability delivered to the Borrower by a Lender or
the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf
of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

 

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the

 

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Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

 

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to (i)
in the case of payments denominated in Dollars, 12:00 noon, New York City time
and (ii) in the case of payments denominated in an Agreed Currency other than
Dollars, 12:00 noon, local time, in the city of the Administrative Agent’s
Eurocurrency Payment Office for such currency, in each case on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made (i) in the same currency in which the applicable Credit Event was
made (or where such currency has been converted to the Euro, in the Euro) and
(ii) to the Administrative Agent at its offices at 1111 Fannin, 10th Floor,
Houston, Texas 77002 or, in the case of a Borrowing denominated in an Agreed
Currency other than Dollars, the Administrative Agent’s Eurocurrency Payment
Office, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17
and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments denominated in the same
currency received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Credit Event in any currency other than Dollars, currency control or
exchange regulations are imposed in the country which issues such currency with
the result that the type of currency in which the Credit Event was made (the
“Original Currency”) no longer exists or the Borrower is not able to make
payment to the Administrative Agent for the account of the Lenders in such
Original Currency, then all payments to be made by the Borrower hereunder in
such currency shall instead be made when due in Dollars in an amount equal to
the Dollar Amount (as of the date of repayment) of such payment due, it being
the intention of the parties hereto that the Borrower takes all risks of the
imposition of any such currency control or exchange regulations.

 

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(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied

 

(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and

 

(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Revolving Loans or participations in LC Disbursements or resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans and participations in LC Disbursements and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans and participations in LC Disbursements of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with their respective
Applicable Percentages; provided that

 

(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and

 

(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Bank hereunder that the Borrower will
not make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may
be, the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so

 

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distributed to such Lender or Issuing Bank with interest thereon, for each day
from and including the date such amount is distributed to it to but excluding
the date of payment to the Administrative Agent, at the greater of the Federal
Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.

 

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b) or 2.18(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid.

 

SECTION 2.19. Mitigation Obligations; Replacement of Lenders.

 

(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
reasonable judgment of such Lender, such designation or assignment

 

(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17,
as the case may be, in the future and

 

(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

 

(b) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that

 

(i) the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld,

 

(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and

 

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(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.15 or payments required to be made pursuant to Section 2.17,
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

SECTION 2.20. Changes in Capital Adequacy Regulations. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
relevant office, branch, subsidiary or affiliate of such Lender or any
corporation controlling such Lender is increased as a result of a Change, then,
within 15 days of demand by such Lender (accompanied by a certificate setting
forth in reasonable detail a calculation of the amount so demanded), the
Borrower shall pay such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Lender determines is attributable to this Agreement, its Loans or its
Commitment to make Loans hereunder (after taking into account such Lender’s
policies as to capital adequacy). “Change” means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. “Risk-Based Capital Guidelines” means
(i) the risk-based capital guidelines in effect in the United States on the date
of this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the United
States implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled “International Convergence of
Capital Measurements and Capital Standards,” including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.

 

SECTION 2.21. Market Disruption. Notwithstanding the satisfaction of all
conditions referred to in Article II and Article IV with respect to any Credit
Event to be effected in any Agreed Currency other than Dollars, if (i) there
shall occur on or prior to the date of such Credit Event any change in national
or international financial, political or economic conditions or currency
exchange rates or exchange controls which would in the reasonable opinion of the
Administrative Agent, the Issuing Bank (if such Credit Event is a Letter of
Credit) or the Required Lenders make it impracticable for the Eurocurrency
Borrowings or Letters of Credit comprising such Credit Event to be denominated
in the Agreed Currency specified by the Borrower, (ii) such currency is no
longer an Eligible Currency or (iii) an Equivalent Amount of such currency is
not readily calculable, then the Administrative Agent shall forthwith give
notice thereof to the Borrower, the Lenders and, if such Credit Event is a
Letter of Credit, the Issuing Bank, and such Credit Events shall not be
denominated in such Agreed Currency but shall, except as otherwise set forth in
Section 2.07, be made on the date of such Credit Event in Dollars, (a) if such
Credit Event is a Borrowing, in an aggregate principal amount equal to the
Dollar Amount of the aggregate principal amount specified in the related Credit
Event Request or Interest Election Request, as the case may be, as ABR Loans,
unless the Borrower notifies the Administrative Agent at least one Business Day
before such date that (i) it elects not to borrow on such date or (ii) it elects
to borrow on such date in a different Agreed Currency, as the case

 

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may be, in which the denomination of such Loans would in the reasonable opinion
of the Administrative Agent and the Required Lenders be practicable and in an
aggregate principal amount equal to the Dollar Amount of the aggregate principal
amount specified in the related Credit Event Request or Interest Election
Request, as the case may be or (b) if such Credit Event is a Letter of Credit,
in a face amount equal to the Dollar Amount of the face amount specified in the
related request or application for such Letter of Credit, unless the Borrower
notifies the Administrative Agent at least one Business Day before such date
that (i) it elects not to request the issuance of such Letter of Credit on such
date or (ii) it elects to have such Letter of Credit issued on such date in a
different Agreed Currency, as the case may be, in which the denomination of such
Letter of Credit would in the reasonable opinion of the Issuing Bank, the
Administrative Agent and the Required Lenders be practicable and in face amount
equal to the Dollar Amount of the face amount specified in the related request
or application for such Letter of Credit, as the case may be.

 

SECTION 2.22. Judgment Currency. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due from the Borrower hereunder in
the currency expressed to be payable herein (the “specified currency”) into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the specified currency with such other currency at the Administrative
Agent’s main New York City office on the Business Day preceding that on which
final, non-appealable judgment is given. The obligations of the Borrower in
respect of any sum due to any Lender or the Administrative Agent hereunder
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or the Administrative Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Lender or the
Administrative Agent (as the case may be) may in accordance with normal,
reasonable banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Lender or the Administrative Agent, as the case may
be, in the specified currency, the Borrower agrees, to the fullest extent that
it may effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Administrative Agent, as the case may
be, against such loss, and if the amount of the specified currency so purchased
exceeds (a) the sum originally due to any Lender or the Administrative Agent, as
the case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate payment
to such Lender under Section 2.18, such Lender or the Administrative Agent, as
the case may be, agrees to remit such excess to the Borrower.

 

SECTION 2.23. Increase of Commitments.

 

(a) At any time, the Borrower may request that the Aggregate Commitment be
increased; provided that, without the prior written consent of all of the
Lenders, (i) the Aggregate Commitment shall at no time exceed $80,000,000 minus
the aggregate amount of all reductions in the Aggregate Commitment previously
made pursuant to Section 2.09; (ii) the Borrower shall not make any such request
during the six month period following any reduction in the Aggregate Commitment
previously made pursuant to Section 2.09; (iii) the Borrower shall not be
entitled to make any such request more frequently than once in each 12-month
period; and (iv) each such

 

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request shall be in a minimum amount of at least $5,000,000 and increments of
$5,000,000 in excess thereof. Such request shall be made in a written notice
given to the Administrative Agent and the Lenders by the Borrower not less than
twenty (20) Business Days prior to the proposed effective date of such increase,
which notice (a “Commitment Increase Notice”) shall specify the amount of the
proposed increase in the Aggregate Commitment and the proposed effective date of
such increase. In the event of such a Commitment Increase Notice, each of the
Lenders shall be given the opportunity to participate in the requested increase
ratably in proportions that their respective Commitments bear to the Aggregate
Commitment. No Lender shall have any obligation to increase its Commitment
pursuant to a Commitment Increase Notice. On or prior to the date that is ten
(10) Business Days after receipt of the Commitment Increase Notice, each Lender
shall submit to the Administrative Agent a notice indicating the maximum amount
by which it is willing to increase its Commitment in connection with such
Commitment Increase Notice (any such notice to the Administrative Agent being
herein a “Lender Increase Notice”). Any Lender which does not submit a Lender
Increase Notice to the Administrative Agent prior to the expiration of such ten
(10) Business Day period shall be deemed to have denied any increase in its
Commitment. In the event that the increases of Commitments set forth in the
Lender Increase Notices exceed the amount requested by the Borrower in the
Commitment Increase Notice, the Administrative Agent shall have the right, in
consultation with the Borrower, to allocate the amount of increases necessary to
meet the Borrower’s Commitment Increase Notice. In the event that the Lender
Increase Notices are less than the amount requested by the Borrower, not later
than three (3) Business Days prior to the proposed effective date the Borrower
may notify the Administrative Agent of any financial institution that shall have
agreed to become a “Lender” party hereto (a “Proposed New Lender”) in connection
with the Commitment Increase Notice. Any Proposed New Lender shall be consented
to by the Administrative Agent (which consent shall not be unreasonably
withheld). If the Borrower shall not have arranged any Proposed New Lender(s) to
commit to the shortfall from the Lender Increase Notices, then the Borrower
shall be deemed to have reduced the amount of its Commitment Increase Notice to
the aggregate amount set forth in the Lender Increase Notices. Based upon the
Lender Increase Notices, any allocations made in connection therewith and any
notice regarding any Proposed New Lender, if applicable, the Administrative
Agent shall notify the Borrower and the Lenders on or before the Business Day
immediately prior to the proposed effective date of the amount of each Lender’s
and Proposed New Lenders’ Commitment (the “Effective Commitment Amount”) and the
amount of the Aggregate Commitment, which amount shall be effective on the
following Business Day. Any increase in the Aggregate Commitment shall be
subject to the following conditions precedent: (A) the Borrower shall have
obtained the consent thereto of each Subsidiary Guarantor and its reaffirmation
of the Loan Document(s) executed by it, which consent and reaffirmation shall be
in writing and in form and substance reasonably satisfactory to the
Administrative Agent, (B) as of the date of the Commitment Increase Notice and
as of the proposed effective date of the increase in the Aggregate Commitment,
all representations and warranties shall be true and correct in all material
respects as though made on such date and no event shall have occurred and then
be continuing which constitutes a Default or Event of Default, (C) the Borrower,
the Administrative Agent and each Proposed New Lender or Lender that shall have
agreed to provide a “Commitment” in support of such increase in the Aggregate
Commitment shall have executed and delivered a “Commitment and Acceptance”
substantially in the form of Exhibit D hereto, (D) counsel for the Borrower and
for the Guarantors shall have provided to the Administrative

 

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Agent supplemental opinions in form and substance reasonably satisfactory to the
Administrative Agent and (E) the Borrower and each Proposed New Lender shall
otherwise have executed and delivered such other instruments and documents as
may be required under Article IV or that the Administrative Agent shall have
reasonably requested in connection with such increase. If any fee shall be
charged by the Lenders in connection with any such increase, such fee shall be
in accordance with then prevailing market conditions, which market conditions
shall have been reasonably documented by the Administrative Agent to the
Borrower. Upon satisfaction of the conditions precedent to any increase in the
Aggregate Commitment, the Administrative Agent shall promptly advise the
Borrower and each Lender of the effective date of such increase. Upon the
effective date of any increase in the Aggregate Commitment that is supported by
a Proposed New Lender, such Proposed New Lender shall be a party to this
Agreement as a Lender and shall have the rights and obligations of a Lender
hereunder. Nothing contained herein shall constitute, or otherwise be deemed to
be, a commitment on the part of any Lender to increase its Commitment at any
time.

 

(b) For purposes of this clause (b), (A) the term “Buying Lender(s)” shall mean
(1) each Lender the Effective Commitment Amount of which is greater than its
Commitment prior to the effective date of any increase in the Aggregate
Commitment, and (2) each Proposed New Lender that is allocated an Effective
Commitment Amount in connection with any Commitment Increase Notice, (B) the
term “Selling Lender(s)” shall mean each Lender whose Commitment is not being
increased from that in effect prior to such increase in the Aggregate Commitment
and (C) the term “Percentage” shall mean with respect to any Lender, the
percentage obtained by dividing (w) such Lender’s Commitment at such time (as
adjusted from time to time in accordance herewith) by (x) the total Commitments
at such time (as adjusted from time to time in accordance herewith); provided,
if all of the Commitments are terminated pursuant hereto, then “Percentage”
means the percentage obtained by dividing (y) such Lender’s Revolving Credit
Exposures by (z) the total Revolving Credit Exposures of all the Lenders.
Effective on the effective date of any increase in the Aggregate Commitment
pursuant to clause (a) above, each Selling Lender hereby sells, grants, assigns
and conveys to each Buying Lender, without recourse, warranty, or representation
of any kind, except as specifically provided herein, an undivided percentage in
such Selling Lender’s right, title and interest in and to its Revolving Credit
Exposure in the respective Dollar Amounts and percentages necessary so that,
from and after such sale, each such Selling Lender’s Revolving Credit Exposure
shall equal such Selling Lender’s Percentage (calculated based upon the
Effective Commitment Amounts) of the aggregate Revolving Credit Exposures.
Effective on the effective date of the increase in the Aggregate Commitment
pursuant to clause (a) above, each Buying Lender hereby purchases and accepts
such grant, assignment and conveyance from the Selling Lenders. Each Buying
Lender hereby agrees that its respective purchase price for the portion of the
Revolving Credit Exposure purchased hereby shall equal the respective Dollar
Amount necessary so that, from and after such payments, each Buying Lender’s
Revolving Credit Exposure shall equal such Buying Lender’s Percentage
(calculated based upon the Effective Commitment Amounts) of the aggregate
Revolving Credit Exposures. Such amount shall be payable on the effective date
of the increase in the Aggregate Commitment by wire transfer of immediately
available funds to the Administrative Agent. Each Selling Lender hereby
represents and warrants to each Buying Lender that such Selling Lender owns the
Revolving Credit Exposure being sold and assigned hereby for its own account and
has not sold, transferred or encumbered any or all of its interest in such
Loans, except for participations which will be extinguished upon payment to
Selling Lender

 

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of an amount equal to the portion of the Revolving Credit Exposure being sold by
such Selling Lender. Each Buying Lender hereby acknowledges and agrees that,
except for each Selling Lender’s representations and warranties contained in the
foregoing sentence, each such Buying Lender has entered into its Commitment and
Acceptance with respect to such increase on the basis of its own independent
investigation and has not relied upon, and will not rely upon, any explicit or
implicit written or oral representation, warranty or other statement of the
Lenders or the Agent concerning the authorization, execution, legality,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents. The Borrower hereby agrees to compensate
each Selling Lender for all losses, expenses and liabilities incurred by each
Lender in connection with the sale and assignment of any Eurocurrency Loan
hereunder on the terms and in the manner as set forth in Section 2.16 hereof.

 

ARTICLE III

 

Representations and Warranties

 

The Borrower represents and warrants to the Lenders that:

 

SECTION 3.01. Organization; Powers; Subsidiaries. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required. Schedule 3.01 hereto identifies each Subsidiary, the jurisdiction of
its incorporation or organization, as the case may be, the percentage of issued
and outstanding shares of each class of its capital stock or other Equity
Interests owned by the Borrower and the other Subsidiaries and, if such
percentage is not 100% (excluding directors’ qualifying shares as required by
law), a description of each class issued and outstanding. All of the outstanding
shares of capital stock and other Equity Interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 3.01 as owned by the
Borrower or another Subsidiary are owned, beneficially and of record, by the
Borrower or such Subsidiary free and clear of all Liens, other than Liens
created by the Collateral Documents and inchoate tax and ERISA Liens. There are
no outstanding commitments or other obligations of any Subsidiary to issue, and
no options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock or other equity interests of any Subsidiary.

 

SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrower’s corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

 

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SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions

 

(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect,

 

(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority binding upon the Borrower or such
Subsidiary,

 

(c) will not violate or result in a default under any indenture, agreement or
other instrument binding upon the Borrower or any of its Subsidiaries or its
assets, or give rise to a right thereunder to require any payment to be made by
the Borrower or any of its Subsidiaries, and

 

(d) will not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries, other than Liens created pursuant to
the Loan Documents.

 

SECTION 3.04. Financial Condition; No Material Adverse Change.

 

(a) The Borrower has heretofore furnished to the Lenders (or made available to
the Lenders on the Securities and Exchange Commission’s EDGAR web page) its
consolidated balance sheet and statements of income, stockholders equity and
cash flows

 

(i) as of and for the fiscal year ended December 31, 2002, reported on by KPMG
LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the fiscal year ended September 30, 2003, certified by its
chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.

 

(b) Since September 30, 2003, except as otherwise disclosed by the Borrower in
its Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission for the fiscal quarter ended September 30, 2003, there has been no
Material Adverse Change.

 

SECTION 3.05. Properties.

 

(a) Each of the Borrower and its Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

 

(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.06. Litigation, Labor Matters and Environmental Matters.

 

(a) There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries (i) as
to which there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

 

(b) There are no labor controversies pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) which could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, or (ii) that involve this
Agreement or the Transactions.

 

(c) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries

 

(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law,

 

(ii) has become subject to any Environmental Liability,

 

(iii) has received notice of any claim with respect to any Environmental
Liability or

 

(iv) knows of any basis for any Environmental Liability.

 

(d) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.07. Compliance with Laws and Agreements; No Burdensome Restrictions.
Each of the Borrower and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Neither the Borrower nor any Subsidiary is party or subject to any law,
regulation, rule or order, or any obligation under any agreement or instrument,
that has a Material Adverse Effect.

 

SECTION 3.08. Investment and Holding Company Status. Neither the Borrower nor
any of its Subsidiaries is (a) an “investment company” as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.

 

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SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Federal, state and other material Tax returns and
reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except

 

(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the Borrower or such Subsidiary, as applicable, has set aside on its
books adequate reserves or

 

(b) to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.

 

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $3,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $3,000,000 the fair
market value of the assets of all such underfunded Plans.

 

SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contained, when furnished, any untrue statement of a
fact or omitted to state any material fact necessary to make the statements
contained therein, in the light of the circumstances under which they were made,
not materially misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time of such
preparation.

 

SECTION 3.12. No Default. No Default has occurred and is continuing.

 

SECTION 3.13. Liens. There are no Liens on any of the real or personal
properties of the Borrower or any Subsidiary except for Liens created by the
Collateral Documents and except as otherwise permitted by Section 6.02.

 

SECTION 3.14. Contingent Obligations. Other than any liability incident to any
litigation, arbitration or proceeding which could not reasonably be expected to
have a Material Adverse Effect, the Borrower has no material contingent
obligations not provided for or disclosed in the financial statements referred
to in Section 3.04.

 

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SECTION 3.15. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a) The Administrative Agent (or its counsel) shall have received from (i) each
party hereto either (A) a counterpart of this Agreement signed on behalf of such
party or (B) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement and (ii) each
Subsidiary Guarantor either (A) a counterpart of the Subsidiary Guaranty signed
on behalf of such party or (B) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of the Subsidiary Guaranty) that such party has signed a
counterpart of the Subsidiary Guaranty.

 

(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of (A) the Chief Legal Officer of the Borrower and the Subsidiary
Guarantors, substantially in the form of Exhibit B-1 and (B) Mayer, Brown, Rowe
& Maw LLP, special counsel for the Borrower and the Subsidiary Guarantors,
substantially in the form of Exhibit B-2, in each case covering such other
matters relating to the Borrower and the Subsidiary Guarantors, this Agreement,
the Subsidiary Guaranty or the Transactions as the Required Lenders shall
reasonably request.

 

(c) Except as expressly permitted otherwise under Section 5.09, the
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower and the Subsidiary
Guarantors, the authorization of the Transactions and any other legal matters
relating to the Borrower, the Subsidiary Guarantors, this Agreement, the
Subsidiary Guaranty or the Transactions, all in form and substance satisfactory
to the Administrative Agent and its counsel.

 

(d) All governmental and third-party approvals necessary in connection with the
Transactions and the continuing operations of the Borrower and its Subsidiaries
shall have been obtained and continuing in full force and effect.

 

(e) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the Chief Executive Officer or a Financial Officer
of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

 

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(f) The Administrative Agent shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, (i) closing fees for
the account of each Lender in an amount equal to 0.10% of such Lender’s
Commitment and (ii) to the extent invoiced in reasonable detail and presented to
the Borrower no less than two (2) Business Days prior to the Effective Date,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.

 

(g) The Administrative Agent shall have received evidence reasonably
satisfactory to it that the Existing Credit Agreement has been terminated and
cancelled and all Indebtedness outstanding thereunder (other than letters of
credit thereunder being converted into Letters of Credit hereunder) has been
fully repaid or will be fully repaid with the initial extension of credit
hereunder.

 

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 4:00 p.m., New York City time, on the date hereof (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).

 

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

 

(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Borrowing or
the date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable.

 

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section; provided that the foregoing shall not prohibit the
conversion of a Eurocurrency Revolving Borrowing into an ABR Borrowing pursuant
to Section 2.08(e) or the conversion of an ABR Borrowing to a Eurocurrency
Revolving Borrowing or the continuation of a Eurocurrency Revolving Borrowing if
no Event of Default exists.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters

 

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of Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent:

 

(a) as soon as practicable, and in any event no later than the earlier to occur
of (x) the one-hundredth (100th) day after the end of each fiscal year of the
Borrower, and (y) the fifth (5th) day after the date on which any of the
following items are required to be delivered to the Securities and Exchange
Commission, its audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by KPMG LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries for such fiscal
year on a consolidated basis in accordance with GAAP consistently applied;

 

(b) as soon as practicable, and in any event no later than the earlier to occur
of (x) the fiftieth (50th) day after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, and (y) the fifth (5th) day after
the date on which any of the following items are required to be delivered to the
Securities and Exchange Commission, its consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries for such period
or periods on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;

 

(c) concurrently with any delivery of financial statements under clause (a)
above, a reasonably detailed business plan and forecast (including a projected
consolidated balance sheet, income statement and statement of cash flows) of the
Borrower for such fiscal year;

 

(d) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations computing the
Pricing Ratios and demonstrating compliance with Sections 6.01 (e), 6.01 (f),
6.01 (h), 6.01 (i), 6.01 (j), 6.01 (k), 6.04, 6.06 and 6.11 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

 

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(e) concurrently with any delivery of financial statements under clause (a)
above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);

 

(f) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and

 

(g) promptly following any reasonable request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.

 

The statements and reports required to be furnished by the Borrower pursuant to
clauses (a), (b) and (f) above shall be deemed furnished for such purpose upon
delivery to the Administrative Agent for distribution to the Lenders through
IntraLinks or other comparable electronic medium utilized by the Administrative
Agent in connection with the credit facility evidenced hereby.

 

SECTION 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent prompt written notice of the following:

 

(a) the occurrence of any Default;

 

(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;

 

(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$2,500,000, and

 

(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

 

SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and
business operations and the rights, licenses, permits, privileges and franchises
material to the conduct of the business of the

 

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Borrower and its Subsidiaries taken as a whole; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.

 

SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay its obligations, including Tax liabilities, that, if
not paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole in good working order and condition, ordinary wear and tear excepted, and
(b) maintain, 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.

 

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.

 

SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders
(including, without limitation, Environmental Laws) of any Governmental
Authority applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only for refinancing the Indebtedness under the Existing Credit
Agreement and for other general corporate purposes of the Borrower and its
Subsidiaries in the ordinary course of business. No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the Regulations of the Board, including Regulations T, U
and X. Letters of Credit will be issued (i) to support or provide security for
tenant lease obligations, (ii) to support worker’s compensation obligations to
the extent that the Dollar Amount of the sum of the LC Exposure thereof does not
exceed $5,000,000, (iii) for general corporate purposes of the Borrower and its
Subsidiaries in the ordinary course of business to the extent that the Dollar
Amount of the sum of the LC Exposure thereof does not exceed $5,000,000 and (iv)
for such other general corporate purposes of the Borrower and its Subsidiaries
in the ordinary course of business as are approved in writing by the
Administrative Agent in its sole discretion.

 

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SECTION 5.09. Additional Subsidiary Documentation. As promptly as possible but
in any event within thirty (30) days after any Person becomes a Subsidiary or
any Subsidiary qualifies independently as, or is designated by the Borrower as,
a Subsidiary Guarantor pursuant to the definition of “Subsidiary Guarantor”),
the Borrower shall provide the Administrative Agent with written notice thereof
setting forth information in reasonable detail describing the material assets of
such Person and (a) shall cause each such Subsidiary which also qualifies or is
designated by the Borrower as a Subsidiary Guarantor to deliver to the
Administrative Agent a duly executed supplement to the Subsidiary Guaranty
pursuant to which such Subsidiary agrees to be bound by the terms and provisions
of the Subsidiary Guaranty, such supplement to be accompanied by appropriate
corporate resolutions and legal opinions in form and substance reasonably
satisfactory to the Administrative Agent or (b) shall cause the pledge of such
Subsidiary’s Capital Stock pursuant to Section 5.10 to the extent such
Subsidiary, but for its status as an Affected Foreign Subsidiary, would
otherwise qualify or be designated by the Borrower as a Subsidiary Guarantor.
The parties hereto acknowledge and agree that, notwithstanding the foregoing,
such corporate resolutions and legal opinions in respect of Heidrick &
Struggles, Inc., Heidrick & Struggles Unternehmensberatung GmbH & Co. KG,
Heidrick & Struggles Asia-Pacific, Ltd., Heidrick & Struggles Latin America,
Inc. and Heidrick & Struggles Espana, Inc. need not be delivered on the
Effective Date but must be delivered by no later than thirty (30) days after the
Effective Date (it being understood and agreed that the failure to deliver such
instruments and documents by such date shall constitute an Event of Default
under clause (d) of Article VII).

 

SECTION 5.10. Pledge Agreements. The Borrower shall execute or cause to be
executed, by no later than thirty days after the date on which any First Tier
Foreign Subsidiary would, but for its status as an Affected Foreign Subsidiary,
qualify or be designated by the Borrower as a Subsidiary Guarantor, a Pledge
Agreement in favor of the Administrative Agent for the benefit of the Holders of
Secured Obligations with respect to 65% of all of the outstanding Capital Stock
of such First Tier Foreign Subsidiary; provided that no such pledge of the
Capital Stock of a First Tier Foreign Subsidiary shall be required hereunder to
the extent such pledge is prohibited by applicable law or the Administrative
Agent and its counsel reasonably determine that such pledge would not provide
material Collateral for the benefit of the Holders of Secured Obligations
pursuant to legally binding, valid and enforceable Pledge Agreements. The
Borrower further agrees to deliver to the Administrative Agent all such Pledge
Agreements and other Collateral Documents, together with appropriate corporate
resolutions and other documentation (including legal opinions, the stock
certificates representing the Capital Stock subject to such pledge, stock powers
with respect thereto executed in blank, and such other documents as shall be
reasonably requested to perfect the Lien of such pledge) in each case in form
and substance reasonably satisfactory to the Administrative Agent, and in a
manner that the Administrative Agent shall be reasonably satisfied that it has a
first priority perfected pledge of or charge over the Collateral related
thereto.

 

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ARTICLE VI

 

Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

 

(a) Indebtedness created hereunder and under the other Loan Documents;

 

(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
extensions, renewals, refinancings and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;

 

(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or any other Subsidiary;

 

(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary;

 

(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals, refinancings and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that (i) such Indebtedness is incurred prior
to or within 180 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate outstanding principal amount
of Indebtedness permitted by this clause (e) shall not exceed $3,000,000 at any
time outstanding;

 

(f) Indebtedness of any Person that becomes a Subsidiary, or merges into the
Borrower or a Subsidiary after the date hereof; provided that (i) such
Indebtedness exists at the time such Person becomes a Subsidiary, or merges into
the Borrower or a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary, or merging into the Borrower
or a Subsidiary and (ii) the aggregate outstanding principal amount of
Indebtedness permitted by this clause (f) shall not exceed $3,000,000 at any
time outstanding;

 

(g) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit;

 

(h) Indebtedness of the Borrower or any Subsidiary in respect of workers’
compensation claims, self-insurance obligations, performance bonds, surety,
appeal or similar bonds and completion guarantees provided by the Borrower and
the Subsidiaries in the ordinary course of business, provided that upon the
incurrence of Indebtedness with respect to reimbursement type obligations
regarding workers’ compensation claims, such obligations are reimbursed within
30 days following such drawing or incurrence;

 

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(i) Guarantees in the ordinary course of business by the Borrower or any
Subsidiary of Indebtedness incurred by employees or prospective employees;
provided that the aggregate principal amount of such Guarantees permitted by
this clause (i) shall not exceed $3,000,000 at any one time outstanding;

 

(j) Indebtedness under Swap Contracts entered into in the ordinary course of
business for non-speculative purposes in order to hedge bona fide business risks
associated with fluctuations in interest rates or currency exchange rates; and

 

(k) Other unsecured Indebtedness in an aggregate principal amount not exceeding
$10,000,000 at any time outstanding.

 

SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

 

(a) Permitted Encumbrances;

 

(b) any Lien on any property or asset of the Borrower or any Subsidiary existing
on the date hereof and set forth in Schedule 6.02; provided that

 

(i) such Lien shall not apply to any other property or asset of the Borrower or
any Subsidiary and

 

(ii) such Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;

 

(c) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary, or merges into the Borrower or a Subsidiary
after the date hereof prior to the time such Person becomes a Subsidiary, or
merges into the Borrower or a Subsidiary; provided that

 

(i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming, or merging into, a Subsidiary, as the case
may be,

 

(ii) such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary and

 

(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes, or merges into, a
Subsidiary, as the case may be and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

 

(d) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Subsidiary; provided that

 

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(i) such security interests secure Indebtedness permitted by clause (e) of
Section 6.01,

 

(ii) such security interests and the Indebtedness secured thereby are incurred
prior to or within 180 days after such acquisition or the completion of such
construction or improvement,

 

(iii) the Indebtedness secured thereby does not exceed 100% of the cost of
acquiring, constructing or improving such fixed or capital assets and

 

(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary.

 

(e) Liens created by the Collateral Documents.

 

In addition, neither the Borrower 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 Administrative Agent for the benefit of itself and
the Holders of Secured Obligations, as additional collateral for the Secured
Obligations.

 

SECTION 6.03. Fundamental Changes.

 

(a) The Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or any substantial part of its
assets, or all or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing

 

(i) any Subsidiary may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation,

 

(ii) any Subsidiary, or branch of the Borrower or a Subsidiary, may merge into
any Subsidiary in a transaction in which the surviving entity is a Subsidiary,

 

(iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Subsidiary and

 

(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders; provided that any
merger involving a Person that is not a Subsidiary immediately prior to such
merger shall not be permitted unless also permitted by Section 6.04.

 

(b) The Borrower will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the

 

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Borrower and its Subsidiaries on the date of execution of this Agreement and
businesses reasonably related thereto.

 

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:

 

(a) (i) Permitted Investments and (ii) so long as the aggregate outstanding
amount thereof does not exceed $20,000,000 at any time during the term of this
Agreement, Permitted Two-Year Investments;

 

(b) investments existing on the date hereof and listed on Schedule 6.04;

 

(c) loans, advances or capital contributions made by the Borrower to any
Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary
(provided that not more than $15,000,000 in loans, advances or capital
contributions may be made and remain outstanding, during the term of this
Agreement, by the Borrower or any Subsidiary Loan Party to a Person which is not
a Subsidiary Loan Party);

 

(d) Guarantees constituting Indebtedness permitted by Section 6.01;

 

(e) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;

 

(f) Permitted Acquisitions, provided that the sum of all consideration paid or
otherwise delivered in connection with Permitted Acquisitions (including the
principal amount of any Indebtedness issued as deferred purchase price and fair
market value of any other non-cash consideration) plus the aggregate principal
amount of all Indebtedness otherwise incurred or assumed in connection with, or
resulting from, Permitted Acquisitions (including Indebtedness of any acquired
Persons outstanding at the time of the applicable Permitted Acquisition) shall
not exceed, during the term of this Agreement, the Acquisition Amount;

 

(g) Guarantees by the Borrower and any Subsidiary of leases entered into in the
ordinary course of business by any Subsidiary as lessee;

 

(h) extensions of credit in the nature of accounts receivable or notes
receivable in the ordinary course of business;

 

(i) investments in payroll, travel, relocation and similar advances to employees
and prospective employees to cover matters that are expected at the time of such

 

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advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;

 

(j) investments in or acquisitions of stock, obligations or securities received
in settlement of debts created in the ordinary course of business and owing to
the Borrower or any Subsidiary or in satisfaction of judgments;

 

(k) investments in equity securities and rights to acquire equity securities
acquired as part of fees charged to clients or otherwise in connection with the
performance of services by the Borrower and its Subsidiaries in the ordinary
course of business;

 

(l) warrants, options and Equity Interests received by the Borrower or any
Subsidiary as full or partial compensation for services rendered by the Borrower
or any Subsidiary, all in the ordinary course of business consistent with past
practice;

 

(m) deposit accounts maintained in the ordinary course of business; and

 

(n) other investments by the Borrower in a cumulative aggregate amount not
exceeding $10,000,000 during the term of this Agreement.

 

SECTION 6.05. Swap Agreements. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary
has actual exposure (other than those in respect of Equity Interests or
Subordinated Indebtedness of the Borrower or any of its Subsidiaries), and (b)
Swap Agreements entered into with respect to foreign currency transactions or in
order to effectively cap, collar or exchange rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of the Borrower or any
Subsidiary.

 

SECTION 6.06. Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except

 

(a) the Borrower may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its common stock,

 

(b) Subsidiaries may declare and pay dividends ratably with respect to their
Equity Interests, and

 

(c) so long as no Event of Default has then occurred or is continuing, or would
arise after giving effect thereto, the Borrower may make Restricted Payments.

 

SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except

 

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(a) in the ordinary course of business at prices and on terms and conditions not
materially less favorable to the Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties,

 

(b) transactions between or among the Borrower and Subsidiary Loan Parties not
involving any other Affiliate,

 

(c) any transfer or other disposition permitted by Section 6.03 and

 

(d) any Restricted Payment permitted by Section 6.06.

 

SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon

 

(a) the ability of the Borrower or any Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or

 

(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that

 

(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by this Agreement,

 

(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition),

 

(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary or an asset pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary or the asset that is to be sold and such sale is permitted hereunder,

 

(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and

 

(v) clause (a) of the foregoing shall not apply to customary provisions in
leases restricting the assignment thereof.

 

SECTION 6.09. Changes in Fiscal Year. The Borrower shall not, nor shall it
permit any Subsidiary to, change its fiscal year from its present basis;
provided that any Subsidiary acquired after the Effective Date pursuant to a
Permitted Acquisition may change its fiscal year to the fiscal year basis
employed by the Borrower within one (1) year following such

 

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Permitted Acquisition so long as the Borrower delivers thirty (30) days’ prior
written notice of such change to the Administrative Agent.

 

SECTION 6.10. Subordinated Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, make any Prohibited Amendment to any indenture, note
or other agreement evidencing or governing any Subordinated Indebtedness, or
directly or indirectly voluntarily prepay, decrease or in substance decrease,
purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness. As
used herein, “Prohibited Amendment” means any amendment or modification the
effect of which is to: (a) increase the interest rate on such Subordinated
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on such Subordinated Indebtedness other than to extend such dates; (c)
change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Subordinated Indebtedness; (d) change the redemption or prepayment
provisions of such Subordinated Indebtedness other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Indebtedness;
or (f) change or amend any other term if such change or amendment would
materially increase the obligations of the Borrower or applicable Subsidiary
thereunder or confer additional material rights on the holder of such
Subordinated Indebtedness in a manner adverse to the Borrower, any Subsidiary,
the Administrative Agent or any Lender.

 

SECTION 6.11. Financial Covenants.

 

SECTION 6.11.1. Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio (the “Fixed Charge Coverage Ratio”), determined as of the end of each of
its fiscal quarters ending on and after December 31, 2003 for the period of 4
consecutive fiscal quarters ending with the end of such fiscal quarter, of (i)
Consolidated EBITDAR minus Consolidated Capital Expenditures to (ii)
Consolidated Interest Expense plus Consolidated Rental Payments plus Restricted
Payments (other than those permitted by Section 6.06(a) or (b)), all calculated
for the Borrower and its Subsidiaries on a consolidated basis, to be less than
the applicable ratio set forth below:

 

FISCAL QUARTER

ENDING DURING THE

FOLLOWING PERIODS:

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

  

FIXED CHARGE COVERAGE

RATIO SHALL NOT BE LESS

THAN:

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

Effective Date – June 30, 2004

   1.00:1.00

July 1,2004 – December 31, 2004

   1.10:1.00

January 1, 2005 – September 30, 2005

   1.20:1.00

October 1, 2005 – December 31, 2005

   1.25:1.00

January 1, 2006 – March 31, 2006

   1.30:1.00

April 1, 2006 and thereafter

   1.35:1.00

 

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SECTION 6.11.2. Leverage Ratio. The Borrower will not permit the ratio (the
“Leverage Ratio”), determined as of the end of each of its fiscal quarters
ending on and after December 31, 2003, of (i) Consolidated Total Indebtedness to
(ii) Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending
with the end of such fiscal quarter, to be greater than 1.50 to 1.0.

 

SECTION 6.11.3. Current Ratio. The Borrower will not permit the ratio,
determined as of the end of each of its fiscal quarters ending on and after
December 31, 2003, of (i) the sum of (without duplication) current assets of the
Borrower and its Subsidiaries on a consolidated basis to (ii) current
liabilities of the Borrower and its Subsidiaries on a consolidated basis, in
each case in accordance with GAAP, to be less than 1.30 to 1.0.

 

SECTION 6.11.4. Minimum Net Worth. The Borrower will at all times maintain
Consolidated Net Worth of not less than the sum of (i) $145,000,000, plus (ii)
50% of Consolidated Net Income earned in each fiscal quarter beginning with the
fiscal quarter ending on March 31, 2004 (without deduction for losses), plus 75%
of Net Cash Proceeds received by the Borrower or any Subsidiary.

 

ARTICLE VII

 

Events of Default

 

If any of the following events (“Events of Default”) shall occur:

 

(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

 

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(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three Business Days;

 

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement, the
Subsidiary Guaranty, any other Loan Document or any amendment or modification
thereof or waiver hereunder, or in any report, certificate, financial statement
or other document furnished pursuant to or in connection with this Agreement,
the Subsidiary Guaranty or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed made;

 

(d) (i) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Sections 5.01, 5.02, 5.03 (with respect to the Borrower’s
existence), 5.08, 5.09 or 5.10 or in Article VI, or (ii) any Loan Document shall
for any reason not be or shall cease to be in full force and effect or is
declared to be null and void, or the Borrower or any Subsidiary takes any action
for the purpose of terminating, repudiating or rescinding any Loan Document or
any of its obligations thereunder;

 

(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrower (which notice will be given at the request of any Lender);

 

(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable;

 

(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

 

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Subsidiary or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the

 

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appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;

 

(i) the Borrower or any Subsidiary shall

 

(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,

 

(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article,

 

(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Subsidiary
or for a substantial part of its assets,

 

(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding,

 

(v) make a general assignment for the benefit of creditors or

 

(vi) take any action for the purpose of effecting any of the foregoing;

 

(j) the Borrower or any Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;

 

(k) one or more judgments for the payment of money in an aggregate amount (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) in excess of $5,000,000 shall be rendered
against the Borrower, any Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;

 

(l) an ERIS A Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or

 

(m) a Change in Control shall occur;

 

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times:

 

(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and

 

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(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder and
the other Loan Documents, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.

 

ARTICLE VIII

 

The Administrative Agent

 

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and on the behalf of the Holders of Secured
Obligations and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.

 

The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

 

The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,

 

(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,

 

(b) the Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Administrative Agent is required
to exercise in writing as directed by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and

 

(c) except as expressly set forth herein, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information

 

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relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into

 

(i) any statement, warranty or representation made in or in connection with this
Agreement,

 

(ii) the contents of any certificate, report or other document delivered
hereunder or in connection herewith,

 

(iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein,

 

(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement or any other agreement, instrument or document,

 

(v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent, or

 

(vi) the perfection or priority of any of the Liens on any of the Collateral.

 

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent may perform any and all of its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

 

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Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the written consent
of the Borrower so long as no Event of Default exists (which consent shall not
be unreasonably withheld or delayed), to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as (and without duplication of) those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.

 

Each Lender authorizes the Administrative Agent to enter into each of the
Collateral Documents to which the Administrative Agent is from time to time a
party and to take all action contemplated by such documents. Each Lender agrees
that no Holder of Secured Obligations (other than the Administrative Agent)
shall have the right individually to seek to realize upon the security granted
by any Collateral Document, it being understood and agreed that such rights and
remedies may be exercised solely by the Administrative Agent for the benefit of
the Holders of Secured Obligations upon the terms of the Collateral Documents.

 

In the event that any Collateral is hereafter pledged by any Person as
collateral security for the Obligations, the Administrative Agent is hereby
authorized, and granted a power of attorney, to execute and deliver on behalf of
the Holders of Secured Obligations any Loan Documents necessary or appropriate
to grant and perfect a Lien on such Collateral in favor of the Administrative
Agent on behalf of the Holders of Secured Obligations.

 

The Lenders hereby authorize the Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative Agent
upon any Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or in respect
of this Agreement or the Loan Documents or

 

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the transactions contemplated hereby or thereby; (ii) as permitted by, but only
in accordance with, the terms of the applicable Loan Document; or (iii) if
approved, authorized or ratified in writing by the Required Lenders, unless such
release is required to be approved by all of the Lenders hereunder. In addition,
the Administrative Agent shall, and the Lenders hereby authorize the
Administrative Agent, to promptly release any Subsidiary Guarantor which becomes
an Affected Foreign Subsidiary from the Subsidiary Guaranty; provided that (i)
nothing contained in this sentence shall relieve the Borrower or any Subsidiary
from its obligations under Sections 5.09 or 5.10 and (ii) the Borrower and each
applicable Subsidiary shall comply with Section 5.10. Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent’s authority to release particular types or items of
Collateral pursuant to this Article VIII.

 

Upon any sale or transfer of assets constituting Collateral which is expressly
permitted pursuant to the terms of any Loan Document, or consented to in writing
by the Required Lenders or all of the Lenders, as applicable, and upon at least
five (5) Business Days’ prior written request by the Borrower, the
Administrative Agent shall (and is hereby irrevocably authorized by the Lenders
to) execute such documents as may be necessary to evidence the release of the
Liens granted to the Administrative Agent for the benefit of the Holders of
Secured Obligations herein or pursuant hereto upon the Collateral that was sold
or transferred; provided, however, that (i) the Administrative Agent shall not
be required to execute any such document on terms which, in the Administrative
Agent’s opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Secured Obligations or any Liens upon (or
obligations of the Borrower or any Subsidiary in respect of) all interests
retained by the Borrower or any Subsidiary, including (without limitation) the
proceeds of the sale, all of which shall continue to constitute part of the
Collateral.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

 

(i) if to the Borrower, to it at Sears Tower – Suite 4200, 233 South Wacker
Drive, Chicago, Illinois 60606, Attention of the Treasurer (Telecopy No. (312)
496-1686, Email address: kashley@heidrick.com);

 

(ii) if to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency
Services, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention of Debbie
Meche (Telecopy No. (713) 750-2938; Email address: Debbie.Meche@jpmorgan.com),
with copies to (a) JPMorgan Chase Bank, 1411 Broadway, New York, New York 10018,

 

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Attention of Beth Grossman (Telecopy No. (212) 391-6251, Email address:
Beth.Grossman@jpmorgan.com) and (b) J.P. Morgan Chase & Co., Chicago Office, 227
West Monroe Street, Chicago, Illinois 60606, Attention of Lindsey J. Whyte
(Telecopy No. (312) 541-3451, Email address: Lindsey.J.Whyte@jpmorgan.com);

 

(iii) if to the Issuing Bank, to it at SBLC Department, 10420 Highland Manor
Drive, Tampa, Florida 33610, Attention of Joseph M. Borello (Telecopy No. (813)
432-5161, Email address: Joseph.M.Borello@chase.com); and

 

(iv) if to any other Lender, to it at its address (or telecopy number or Email
address) set forth on its signature page hereto or the applicable Assignment and
Assumption.

 

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise set forth therein or agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

 

SECTION 9.02. Waivers; Amendments.

 

(a) No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

 

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall

 

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(i) increase the Commitment of any Lender without the written consent of such
Lender,

 

(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby,

 

(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby,

 

(iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender,

 

(v) change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or the Issuing
Bank hereunder without the prior written consent of the Administrative Agent or
the Issuing Bank, as the case may be, or

 

(vi) other than pursuant to a transaction permitted by the terms of this
Agreement or any other Loan Document, release all or substantially all of the
Collateral which is subject to the Loan Documents.

 

SECTION 9.03. Expenses; Indemnity; Damage Waiver.

 

(a) The Borrower shall pay

 

(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
this Agreement or any amendments, modifications or waivers of the provisions
hereof (whether or not the transactions contemplated hereby or thereby shall be
consummated),

 

(ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and

 

(iii) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, the Issuing Bank
or any Lender, (x) in connection with the enforcement or protection of its
rights in connection with this Agreement, including its rights under this
Section, or (y) in connection with the

 

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Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of

 

(i) the execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby,

 

(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit),

 

(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries,
or any Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or

 

(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses resulted from
the gross negligence or willful misconduct of such Indemnitee.

 

(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent, the Issuing Bank under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative
Agent, the Issuing Bank, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
Issuing Bank in its capacity as such.

 

(d) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

 

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(e) All amounts due under this Section shall be payable promptly not later than
fifteen days after written demand therefor.

 

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

 

(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default under clause (a), (b), (h) or (i) of Article VII has occurred
and is continuing, any other assignee; and

 

(B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of any Commitment to an assignee that
is a Lender with a Commitment immediately prior to giving effect to such
assignment.

 

(ii) Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans of any Class, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default under clause
(a), (b), (h) or (i) of Article VII has occurred and is continuing;

 

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(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

 

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

 

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(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

 

(c)(i) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.15,2.16 and 2.17 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.

 

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.17 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.

 

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

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SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.

 

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SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.

 

(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

 

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.

 

(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph (b)
of this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

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SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed

 

(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential),

 

(b) to the extent requested by any regulatory authority,

 

(c) to the extent required by applicable laws or regulations or by any subpoena
or similar legal process,

 

(d) to any other party to this Agreement,

 

(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder,

 

(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations,

 

(g) with the written consent of the Borrower, or

 

(h) to the extent such Information

 

(i) becomes publicly available other than as a result of a breach of this
Section or

 

(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a nonconfidential basis from a source other than the Borrower.

 

For the purposes of this Section, “Information” means all information received
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower;
provided that, (x) in the case of information received from the Borrower after
the date hereof, such information is clearly identified at the time of delivery
as confidential and (y) notwithstanding anything herein to the contrary,
“Information” shall not include, and the Administrative Agent and each Lender
may disclose to any and all Persons, without limitation of any kind, any
information with respect to the U.S. federal income tax treatment and U.S.
federal income tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Administrative Agent or such Lender relating to such tax
treatment and tax structure.

 

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Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

 

[Signature Pages Follow]

 

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

 

HEIDRICK & STRUGGLES

INTERNATIONAL, INC.

By   /s/    KENNETH J. ASHLEY            

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

Name:

  Kenneth J. Ashley

Title:

  Treasurer

 

JPMORGAN CHASE BANK, individually and as

Administrative Agent,

By   /s/    BETH GROSSMAN            

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

Name:

  Beth Grossman

Title:

  Vice President

 

- 80 -

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

LASALLE BANK NATIONAL ASSOCIATION By   /s/    MARY LOU BARTLETT             

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

Name:

  Mary Lou Bartlett

Title:

  Senior Vice President and Division Head

Address:

135 South LaSalle St., Ste. 829

Chicago, IL 60603

Telephone: (312) 904-0433

Facsimile:    (312) 904-9046

Email:

mary.lou.bartlett@abnamro.com.

 

- 81 -

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

BANK OF AMERICA, N.A.

By   /s/    CRAIG W. MCGUIRE            

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

Name:

  Craig W. McGuire

Title:

  Vice President Address: Bank of America IL1-231-06-40 231 South LaSalle Street
Chicago, IL 60697-0001 Telephone: (312) 828-1320 Facsimile:    (312) 974-0333
Email: craig.w.mcguire@bankofamerica.com

 

- 82 -

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

SCHEDULE 2.01

 

COMMITMENTS

 

LENDER

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

   COMMITMENT

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

JPMORGAN CHASE BANK

   $ 20,000,000

LASALLE BANK NATIONAL ASSOCIATION

   $ 20,000,000

BANK OF AMERICA, N.A.

   $ 20,000,000

AGGREGATE COMMITMENTS

   $ 60,000,000

 

- 1 -

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

EXHIBIT A

 

[FORM OF]

 

ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Credit Agreement dated as of December 22, 2003 (as
amended and in effect on the date hereof, the “Credit Agreement”), among
Heidrick & Struggles International, Inc., the Lenders named therein and JPMorgan
Chase Bank, as Administrative Agent for the Lenders. Terms defined in the Credit
Agreement are used herein with the same meanings.

 

The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the “Assigned Interest”) in the Assignor’s rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Revolving Loans owing to the Assignor which are
outstanding on the Assignment Date, together with the participations in Letters
of Credit and LC Disbursements held by the Assignor on the Assignment Date, but
excluding accrued interest and fees to and excluding the Assignment Date. The
Assignee hereby acknowledges receipt of a copy of the Credit Agreement. From and
after the Assignment Date (i) the Assignee shall be a party to and be bound by
the provisions of the Credit Agreement and, to the extent of the Assigned
Interest, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent of the Assigned Interest, relinquish its rights
and be released from its obligations under the Credit Agreement.

 

This Assignment and Assumption is being delivered to the Administrative Agent
together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.17(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.

 

This Assignment and Assumption shall be governed by and construed in accordance
with the laws of the State of New York.

 

Date of Assignment:

 

Legal Name of Assignor:

 

Legal Name of Assignee:

 

Assignee’s Address for Notices:

 

- 1 -

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

Effective Date of Assignment

(“Assignment Date”):

 

Facility

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

   Principal Amount
Assigned

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

   Percentage Assigned of
Facility/Commitment (set
forth, to at least 8 decimals, as
a percentage of the Facility
and the Aggregate
Commitment of all Lenders
thereunder)

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

Commitment Assigned:

   $      %

Revolving Loans:

           

 

The terms set forth above and on the reverse side hereof are hereby agreed to:

 

[Name of Assignor], as Assignor By:        

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

   

Name:

   

Title:

 

[Name of Assignee], as Assignee By:        

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

   

Name:

   

Title:

 

- 2 -

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

The undersigned hereby consent to the within assignment:1

 

[Heidrick & Struggles International, Inc.]       JPMorgan Chase Bank, as
Administrative Agent, By:           By:        

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

         

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

   

Name:

         

Name:

   

Title:

         

Title:

 

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

1 Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.

 

- 3 -

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

EXHIBIT B-1

 

FORM OF OPINION OF CHIEF LEGAL OFFICER OF THE BORROWER

 

[Effective Date]

 

To the Lenders and the Administrative

Agent Referred to Below

c/o JPMorgan Chase Bank, as

Administrative Agent

1111 Fannin, 10th Floor

Houston, Texas 77002

 

Dear Sirs:

 

[I/We] have acted as counsel for (i) Heidrick & Struggles International, Inc., a
Delaware corporation (the “Borrower”), in connection with the Credit Agreement
dated as of December 22, 2003 (the “Credit Agreement”), among the Borrower, the
banks and other financial institutions identified therein as Lenders, and
JPMorgan Chase Bank, as Administrative Agent and (ii) the Subsidiaries listed on
Annex A hereto (the “Subsidiary Guarantors”; the Borrower and the Subsidiary
Guarantors being hereinafter referred to collectively as the “Loan Parties” and
individually as a “Loan Party”) in connection with the Guaranty dated as of
December 22, 2003 among the Subsidiary Guarantors and the Administrative Agent
(the “Subsidiary Guaranty”; the Credit Agreement and the Subsidiary Guaranty
being hereinafter referred to collectively as the “Loan Documents” and
individually as a “Loan Document”). Terms defined in the Credit Agreement are
used herein with the same meanings.

 

[I, or individuals under my direction,/We] have examined originals or copies,
certified or otherwise identified to [my/our] satisfaction, of such documents,
corporate records, certificates of public officials and other instruments and
have conducted such other investigations of fact and law as [I/we] have deemed
necessary or advisable for purposes of this opinion.

 

Upon the basis of the foregoing, [I am/we are] of the opinion that:

 

1. Each Loan Party (a) is [a corporation] duly organized, validly existing and
in good standing under the laws of its organization, (b) has all requisite power
and authority to carry on its business as now conducted and (c) except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

 

2. The Transactions are within each Loan Party’s [corporate] powers and have
been duly authorized by all necessary [corporate] and, if required, stockholder
action. Each Loan Document has been duly executed and delivered by each Loan
Party party thereto.

 

3. The Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except such
as have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any of

 

-1-

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

its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its assets,
or give rise to a right thereunder to require any payment to be made by any Loan
Party or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of any Loan Party or any of its
Subsidiaries.

 

4. There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to [my/our] knowledge, threatened
against or affecting any Loan Party or any of its Subsidiaries (a) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (other than the Disclosed Matters)
or (b) that involve any Loan Document or the Transactions.

 

5. None of the Loan Parties nor any of their Subsidiaries are (a) an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a “holding company” as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.

 

[I am a member/we are members] of the bar of the State of Illinois and the
foregoing opinion is limited to the laws of the State of Illinois, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person (other than your successors and assigns as
Lenders and Persons that acquire participations in your Loans) without our prior
written consent.

 

Very truly yours,

 

-2-

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

EXHIBIT B-2

 

FORM OF OPINION OF MAYER, BROWN, ROWE & MAW LLP

 

See Attached.

 

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

EXHIBIT C

 

FORM OF SUBSIDIARY GUARANTY

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is made as of the 22nd day of December, 2003, by
and among each of the undersigned (the “Initial Guarantors” and along with any
additional Subsidiaries of the Borrower which become parties to this Guaranty by
executing a supplement hereto in the form attached as Annex I, the “Guarantors”)
in favor of the Administrative Agent, for the ratable benefit of the Holders of
Secured Obligations, under the Credit Agreement referred to below.

 

WITNESSETH:

 

WHEREAS, HEIDRICK & STRUGGLES INTERNATIONAL, INC., a Delaware corporation (the
“Borrower”), the institutions from time to time parties hereto as Lenders, and
JPMORGAN CHASE BANK, in its capacity as contractual representative (the
“Administrative Agent”) for itself and the other Lenders, have entered into a
certain Credit Agreement dated as of December 22, 2003 (as the same may be
amended, modified, supplemented and/or restated, and as in effect from time to
time, the “Credit Agreement”), providing, subject to the terms and conditions
thereof, for extensions of credit and other financial accommodations to be made
by the Lenders to the Borrower;

 

WHEREAS, it is a condition precedent to the initial extensions of credit by the
Lenders under the Credit Agreement that each of the Guarantors (constituting all
of the Subsidiaries of the Borrower required to execute this Guaranty pursuant
to Section 5.09 of the Credit Agreement) execute and deliver this Guaranty,
whereby each of the Guarantors shall guarantee the payment when due of all
principal, interest, letter of credit reimbursement obligations, fees, expenses,
indemnities and other obligations and amounts (collectively, the “Obligations”)
that shall be at any time payable by the Borrower under the Credit Agreement,
the other Loan Documents, and any Swap Agreement to which any Lender or
affiliate of any Lender shall be a party (each a “Designated Financial
Contract”); and

 

WHEREAS, in consideration of the direct and indirect financial and other support
that the Borrower has provided, and such direct and indirect financial and other
support as the Borrower may in the future provide, to the Guarantors, and in
order to induce the Lenders and the Administrative Agent to enter into the
Credit Agreement, each of the Guarantors is willing to guarantee the obligations
of the Borrower under the Credit Agreement, any Designated Financial Contract
and the other Loan Documents;

 

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

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

SECTION 1. Definitions. Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein.

 

SECTION 2. Representations, Warranties and Covenants. Each of the Guarantors
represents and warrants (which representations and warranties shall be deemed to
have been renewed at the time of the making of any Loan or issuance of any
Letter of Credit) that:

 

(A) It is a corporation, partnership or limited liability company duly and
properly incorporated or organized, as the case may be, validly existing and (to
the extent such concept applies to such entity) in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except to the extent that the failure to have such authority could
not reasonably be expected to have a Material Adverse Effect.

 

(B) It (to the extent applicable) has the power and authority and legal right to
execute and deliver this Guaranty and to perform its obligations hereunder. The
execution and delivery by each Guarantor of this Guaranty and the performance by
each of its obligations hereunder have been duly authorized by proper
proceedings, and this Guaranty constitutes a legal, valid and binding obligation
of each Guarantor, respectively, enforceable against such Guarantor,
respectively, in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally and subject to general principles of equity whether
considered in a proceeding in equity or at law.

 

(C) Neither the execution and delivery by it of this Guaranty, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof will (i) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on it or its articles or
certificate of incorporation, limited liability company or partnership
agreement, certificate of partnership, articles or certificate of organization,
by-laws, or operating agreement or other management agreement, as the case may
be, or the provisions of any indenture, instrument or agreement to which the
Borrower or any of its Subsidiaries is a party or is subject, or by which it, or
its property, is bound, or (ii) conflict with, or constitute a default under, or
result in, or require, the creation or imposition of any Lien in, of or on its
property pursuant to the terms of, any such indenture, instrument or agreement
(other than any Loan Document). No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
it, is required to be obtained by it in connection with the execution, delivery
and performance by it of, or the legality, validity, binding effect or
enforceability against it of, this Guaranty.

 

In addition to the foregoing, each of the Guarantors covenants that, so long as
any Lender has any Commitment outstanding under the Credit Agreement or any
amount payable under the Credit Agreement or any other Guaranteed Obligations
(other than contingent indemnity obligations) shall remain unpaid, it will, and,
if necessary, will

 

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

enable the Borrower to, fully comply with those covenants and agreements of the
Borrower applicable to such Guarantor set forth in the Credit Agreement.

 

SECTION 3. The Guaranty. Each of the Guarantors hereby unconditionally
guarantees, jointly with the other Guarantors and severally, the full and
punctual payment when due (whether at stated maturity, upon acceleration or
otherwise) of the Obligations, including, without limitation, (i) the principal
of and interest on each Loan made to the Borrower pursuant to the Credit
Agreement, (ii) any obligations of the Borrower to reimburse LC Disbursements
(“Reimbursement Obligations”), (iii) all obligations of the Borrower owing to
any Lender or any affiliate of any Lender under any Designated Financial
Contract, and (iv) all other amounts payable by the Borrower or any of its
Subsidiaries under the Credit Agreement, any Designated Financial Contract and
the other Loan Documents (all of the foregoing being referred to collectively as
the “Guaranteed Obligations”); provided that the liability of any Guarantor
hereunder shall not exceed the maximum amount of the claim which could then be
recovered from such Guarantor under this Guaranty without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law. Upon failure by the Borrower or
any of its Affiliates, as applicable, to pay punctually any such amount, each of
the Guarantors agrees that it shall forthwith on demand pay such amount at the
place and in the manner specified in the Credit Agreement, any Designated
Financial Contract or the relevant Loan Document, as the case may be. Each of
the Guarantors hereby agrees that this Guaranty is an absolute, irrevocable and
unconditional guaranty of payment and is not a guaranty of collection.

 

SECTION 4. Guaranty Unconditional. The obligations of each of the Guarantors
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

 

(A) any extension, renewal, settlement, indulgence, compromise, waiver or
release of or with respect to the Guaranteed Obligations or any part thereof or
any agreement relating thereto, or with respect to any obligation of any other
guarantor of any of the Guaranteed Obligations, whether (in any such case) by
operation of law or otherwise, or any failure or omission to enforce any right,
power or remedy with respect to the Guaranteed Obligations or any part thereof
or any agreement relating thereto, or with respect to any obligation of any
other guarantor of any of the Guaranteed Obligations;

 

(B) any modification or amendment of or supplement to the Credit Agreement, any
Designated Financial Contract or any other Loan Document, including, without
limitation, any such amendment which may increase the amount of, or the interest
rates applicable to, any of the Obligations guaranteed hereby;

 

(C) any release, surrender, compromise, settlement, waiver, subordination or
modification, with or without consideration, of any other guaranties with
respect to the Guaranteed Obligations or any part thereof, or any other
obligation of any person or entity with respect to the Guaranteed Obligations or
any part thereof, or any

 

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

nonperfection or invalidity of any direct or indirect security for the
Guaranteed Obligations;

 

(D) any change in the corporate, partnership or other existence, structure or
ownership of the Borrower or any other guarantor of any of the Guaranteed
Obligations, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower or any other guarantor of the Guaranteed
Obligations, or any of their respective assets or any resulting release or
discharge of any obligation of the Borrower or any other guarantor of any of the
Guaranteed Obligations;

 

(E) the existence of any claim, setoff or other rights which the Guarantors may
have at any time against the Borrower, any other guarantor of any of the
Guaranteed Obligations, the Administrative Agent, any Holder of Secured
Obligations or any other Person, whether in connection herewith or in connection
with any unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;

 

(F) the enforceability or validity of the Guaranteed Obligations or any part
thereof or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral securing the Guaranteed Obligations or
any part thereof, or any other invalidity or unenforceability relating to or
against the Borrower or any other guarantor of any of the Guaranteed
Obligations, for any reason related to the Credit Agreement, any Designated
Financial Contract, any other Loan Document, or any provision of applicable law
or regulation purporting to prohibit the payment by the Borrower or any other
guarantor of the Guaranteed Obligations, of any of the Guaranteed Obligations;

 

(G) the failure of the Administrative Agent to take any steps to perfect and
maintain any security interest in, or to preserve any rights to, any security or
collateral for the Guaranteed Obligations, if any;

 

(H) the election by, or on behalf of, any one or more of the Holders of Secured
Obligations, in any proceeding instituted under Chapter 11 of Title 11 of the
United States Code (11 U.S.C. 101 et seq.) (the “Bankruptcy Code”), of the
application of Section 1111(b)(2) of the Bankruptcy Code;

 

(I) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code;

 

(J) the disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of any of the Holders of Secured Obligations or the
Administrative Agent for repayment of all or any part of the Guaranteed
Obligations;

 

(K) the failure of any other Guarantor to sign or become party to this Guaranty
or any amendment, change, or reaffirmation hereof; or

 

(L) any other act or omission to act or delay of any kind by the Borrower, any
other guarantor of the Guaranteed Obligations, the Administrative Agent, any
Holder of

 

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

Secured Obligations or any other Person or any other circumstance whatsoever
which might, but for the provisions of this Section 4, constitute a legal or
equitable discharge of any Guarantor’s obligations hereunder.

 

SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances. Each of the Guarantors’ obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations (other than contingent
indemnity obligations) shall have been paid in full in cash and the Commitments
and all Letters of Credit issued under the Credit Agreement shall have
terminated or expired. If at any time any payment of the principal of or
interest on any Loan, any Reimbursement Obligation or any other amount payable
by the Borrower or any other party under the Credit Agreement, any Designated
Financial Contract or any other Loan Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, each of the Guarantors’ obligations hereunder with
respect to such payment shall be reinstated as though such payment had been due
but not made at such time. The parties hereto acknowledge and agree that each of
the Guaranteed Obligations shall be due and payable in the same currency as such
Guaranteed Obligation is denominated but if currency control or exchange
regulations are imposed in the country which issues such currency with the
result such currency (the “Original Currency”) no longer exists or the relevant
Guarantor is no able to make payment in such Original Currency, then all
payments to be made by such Guarantor hereunder in such currency shall instead
be made when due in Dollars in an amount equal to the Dollar Amount (as of the
date of payment) of such payment due, it being the intention of the parties
hereto that each Guarantor takes all risks of the imposition of any such
currency control or exchange regulations.

 

SECTION 6. General Waivers. Each of the Guarantors irrevocably waives acceptance
hereof, presentment, demand or action on delinquency, protest, the benefit of
any statutes of limitations and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Borrower, any other guarantor of the
Guaranteed Obligations, or any other Person.

 

SECTION 7. Subordination of Subrogation; Subordination of Intercompany
Indebtedness.

 

(A) Subordination of Subrogation. Until the Guaranteed Obligations (other than
contingent indemnity obligations) have been indefeasibly paid in full in cash,
the Guarantors (i) shall have no right of subrogation with respect to such
Guaranteed Obligations and (ii) waive any right to enforce any remedy which the
Holders of Secured Obligations now have or may hereafter have against the
Borrower, any endorser or any guarantor of all or any part of the Guaranteed
Obligations or any other Person, and the Guarantors waive any benefit of, and
any right to participate in, any security or collateral given to the Holders of
Secured Obligations to secure the payment or performance of all or any part of
the Guaranteed Obligations or any other liability of the Borrower to the Holders
of Secured Obligations. Should any Guarantor have the right, notwithstanding the
foregoing, to exercise its subrogation rights, each Guarantor hereby expressly
and irrevocably (A) subordinates any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or set
off that such Guarantor may have to the indefeasible payment in full in cash of
the Guaranteed Obligations (other

 

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

than contingent indemnity obligations) and (B) waives any and all defenses
available to a surety, guarantor or accommodation co-obligor until the
Guaranteed Obligations (other than contingent indemnity obligations) are
indefeasibly paid in full in cash. Each Guarantor acknowledges and agrees that
this subordination is intended to benefit the Administrative Agent and the other
Holders of Secured Obligations and shall not limit or otherwise affect such
Guarantor’s liability hereunder or the enforceability of this Guaranty, and that
the Administrative Agent, the other Holders of Secured Obligations and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 7(a).

 

(B) Subordination of Intercompany Indebtedness. Each Guarantor agrees that any
and all claims of such Guarantor against the Borrower or any other Guarantor
hereunder (each an “Obligor”) with respect to any “Intercompany Indebtedness”
(as hereinafter defined), any endorser, obligor or any other guarantor of all or
any part of the Guaranteed Obligations, or against any of its properties shall
be subordinate and, during the existence of an Event of Default, subject in
right of payment to the prior payment, in full and in cash, of all Guaranteed
Obligations. Notwithstanding any right of any Guarantor to ask, demand, sue for,
take or receive any payment from any Obligor, all rights, liens and security
interests of such Guarantor, whether now or hereafter arising and howsoever
existing, in any assets of any other Obligor shall be and are subordinated to
the rights of the Holders of Secured Obligations and the Administrative Agent in
those assets. No Guarantor shall have any right to possession of any such asset
or to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the Guaranteed Obligations (other than contingent
indemnity obligations) shall have been fully paid and satisfied (in cash) and
all financing arrangements pursuant to any Loan Document or any Designated
Financial Contract have been terminated. If all or any part of the assets of any
Obligor, or the proceeds thereof, are subject to any distribution, division or
application to the creditors of such Obligor, whether partial or complete,
voluntary or involuntary, and whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event (such events being herein referred to as an “Insolvency Event”), any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Obligor to any Guarantor (“Intercompany Indebtedness”)
shall be paid or delivered directly to the Administrative Agent for application
on any of the Guaranteed Obligations, due or to become due, until such
Guaranteed Obligations (other than contingent indemnity obligations) shall have
first been fully paid and satisfied (in cash). Should any payment, distribution,
security or instrument or proceeds thereof be received by the applicable
Guarantor upon or with respect to the Intercompany Indebtedness after any
Insolvency Event and prior to the satisfaction of all of the Guaranteed
Obligations (other than contingent indemnity obligations) and the termination of
all financing arrangements pursuant to any Loan Document among the Borrower and
the Holders of Secured Obligations, such Guarantor shall receive and hold the
same in trust, as trustee, for the benefit of the Holders of Secured Obligations
and shall forthwith deliver the same to the Administrative Agent, for the
benefit of the Holders of Secured Obligations, in precisely the form received
(except

 

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

for the endorsement or assignment of the Guarantor where necessary), for
application to any of the Guaranteed Obligations, due or not due, and, until so
delivered, the same shall be held in trust by the Guarantor as the property of
the Holders of Secured Obligations. If any such Guarantor fails to make any such
endorsement or assignment to the Administrative Agent, the Administrative Agent
or any of its officers or employees is irrevocably authorized to make the same.
Each Guarantor agrees that until the Guaranteed Obligations (other than the
contingent indemnity obligations) have been paid in full (in cash) and satisfied
and all financing arrangements pursuant to any Loan Document among the Borrower
and the Holders of Secured Obligations have been terminated, no Guarantor will
assign or transfer to any Person (other than the Administrative Agent) any claim
any such Guarantor has or may have against any Obligor.

 

SECTION 8. Contribution with Respect to Guaranteed Obligations.

 

(A) To the extent that any Guarantor shall make a payment under this Guaranty (a
“Guarantor Payment”) which, taking into account all other Guarantor Payments
then previously or concurrently made by any other Guarantor, exceeds the amount
which otherwise would have been paid by or attributable to such Guarantor if
each Guarantor had paid the aggregate Guaranteed Obligations satisfied by such
Guarantor Payment in the same proportion as such Guarantor’s “Allocable Amount”
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Guaranteed Obligations (other than
contingent indemnity obligations) and termination of the Credit Agreement and
the Designated Financial Contracts, such Guarantor shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Guarantor for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

(B) As of any date of determination, the “Allocable Amount” of any Guarantor
shall be equal to the maximum amount of the claim which could then be recovered
from such Guarantor under this Guaranty without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law.

 

(C) This Section 8 is intended only to define the relative rights of the
Guarantors, and nothing set forth in this Section 8 is intended to or shall
impair the obligations of the Guarantors, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Guaranty.

 

(D) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor to which such
contribution and indemnification is owing.

 

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(E) The rights of the indemnifying Guarantors against other Guarantors under
this Section 8 shall be exercisable upon the full and indefeasible payment of
the Guaranteed Obligations (other than contingent indemnity obligations) in cash
and the termination of the Credit Agreement and the Designated Financial
Contracts.

 

SECTION 9. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under the Credit Agreement, any Designated
Financial Contract or any other Loan Document is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of the Credit Agreement, any Designated
Financial Contract or any other Loan Document shall nonetheless be payable by
each of the Guarantors hereunder forthwith on demand by the Administrative
Agent.

 

SECTION 10. Notices. All notices, requests and other communications to any party
hereunder shall be given in the manner prescribed in Article IX of the Credit
Agreement with respect to the Administrative Agent at its notice address therein
and with respect to any Guarantor at the address set forth below or such other
address or telecopy number as such party may hereafter specify for such purpose
by notice to the Administrative Agent in accordance with the provisions of such
Article IX.

 

Notice Address for Guarantors:

 

c/o Heidrick & Struggles International, Inc.

Sears Tower – Suite 4200

233 South Wacker Drive

Chicago, Illinois 60606

Attention: Treasurer

Phone: (312) 496-1383

Fax: (312) 496-1686

 

SECTION 11. No Waivers. No failure or delay by the Administrative Agent or any
other Holder of Secured Obligations in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in this
Guaranty, the Credit Agreement, any Designated Financial Contract and the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

SECTION 12. Successors and Assigns. This Guaranty is for the benefit of the
Administrative Agent and the other Holders of Secured Obligations and their
respective successors and permitted assigns, provided, that no Guarantor shall
have any right to assign its rights or obligations hereunder without the consent
of all of the Lenders, and any such assignment in violation of this Section 12
shall be null and void; and in the event of an assignment of any amounts payable
under the Credit Agreement, any Designated Financial Contract or the other Loan
Documents in accordance with the respective terms thereof, the rights hereunder,
to the extent applicable to the indebtedness so assigned, may be transferred
with such indebtedness. This Guaranty shall be binding upon each of the
Guarantors and their respective successors and assigns.

 

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SECTION 13. Changes in Writing. Other than in connection with the addition of
additional Subsidiaries, which become parties hereto by executing a supplement
hereto in the form attached as Annex I, neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Administrative Agent with the
consent of the Required Lenders under the Credit Agreement.

 

SECTION 14. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 15. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

 

(A) CONSENT TO JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK COUNTY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY AND EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER TO BRING
PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY GUARANTOR AGAINST THE ADMINISTRATIVE AGENT, THE
ISSUING BANK OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT, THE
ISSUING BANK OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK COUNTY OR THE CITY IN
WHICH THE PRINCIPAL OFFICE OF THE ADMINISTRATIVE AGENT, LENDER OR AFFILIATE, AS
THE CASE MAY BE, IS LOCATED.

 

(B) WAIVER OF JURY TRIAL. EACH GUARANTOR (AND, BY ACCEPTING THE BENEFITS HEREOF,
EACH HOLDER OF SECURED OBLIGATIONS) HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.

 

SECTION 16. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Guaranty. In the event an ambiguity or
question of

 

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intent or interpretation arises, this Guaranty shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Guaranty.

 

SECTION 17. Taxes, Expenses of Enforcement, etc.

 

(A) Taxes.

 

(i) All payments by any Guarantor to or for the account of any Lender, the
Issuing Bank, the Administrative Agent or any other Holder of Secured
Obligations hereunder shall be made free and clear of and without deduction for
any and all Taxes. If any Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender, the Issuing Bank,
the Administrative Agent or any other Holder of Secured Obligations, (a) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 17(A)) such Lender, the Issuing Bank, the Administrative Agent or
any other Holder of Secured Obligations (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (b)
such Guarantor shall make such deductions, (c) such Guarantor shall pay the full
amount deducted to the relevant authority in accordance with applicable law and
(d) such Guarantor shall furnish to the Administrative Agent the original copy
of a receipt evidencing payment thereof within thirty (30) days after such
payment is made.

 

(ii) In addition, the Guarantors hereby agree to pay any present or future stamp
or documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution or
delivery of, or otherwise with respect to, this Guaranty or any promissory note
(“Other Taxes”).

 

(iii) The Guarantors hereby agree to indemnify the Administrative Agent, the
Issuing Bank, each Lender and any other Holder of Secured Obligations for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed on amounts payable under this Section 17(A)) paid by the
Administrative Agent, the Issuing Bank, such Lender or such other Holder of
Secured Obligations and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within thirty (30) days of the date the
Administrative Agent, the Issuing Bank, such Lender or such other Holder of
Secured Obligations makes demand therefor.

 

(iv) By accepting the benefits hereof, each Foreign Lender agrees that it will
comply with Section 2.17(e) of the Credit Agreement.

 

(B) Expenses of Enforcement, Etc. Subject to the terms of the Credit Agreement,
after the occurrence of an Event of Default under the Credit Agreement, the
Lenders shall have the right at any time to direct the Administrative Agent to
commence enforcement proceedings with respect to the Guaranteed Obligations. The
Guarantors agree to reimburse the Administrative Agent and the other Holders of
Secured Obligations for any reasonable costs and out-of-pocket expenses
(including reasonable attorneys’ fees and

 

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time charges of attorneys for the Administrative Agent and the other Holders of
Secured Obligations, which attorneys may be employees of the Administrative
Agent or the other Holders of Secured Obligations) paid or incurred by the
Administrative Agent or any other Holders of Obligation in connection with the
collection and enforcement of amounts due under the Loan Documents, including
without limitation this Guaranty. The Administrative Agent agrees to promptly
distribute payments received from any of the Guarantors hereunder to the other
Holders of Secured Obligations on a pro rata basis for application in accordance
with the terms of the Credit Agreement.

 

SECTION 18. Setoff. At any time after all or any part of the Guaranteed
Obligations have become due and payable (by acceleration or otherwise), each
Holder of Secured Obligations (including the Administrative Agent) may, without
notice to any Guarantor and regardless of the acceptance of any security or
collateral for the payment hereof, appropriate and apply in accordance with the
terms of the Credit Agreement toward the payment of all or any part of the
Guaranteed Obligations (i) any indebtedness due or to become due from such
Holder of Secured Obligations or the Administrative Agent to any Guarantor, and
(ii) any moneys, credits or other property belonging to any Guarantor, at any
time held by or coming into the possession of such Holder of Secured Obligations
(including the Administrative Agent) or any of their respective affiliates.

 

SECTION 19. German Guarantors. Each of the Lenders, by its acceptance of the
benefits hereof, agrees to release (or to instruct the Administrative Agent to
release) proceeds from the enforcement of this Guaranty if and to the extent
that the application of proceeds towards the Obligations would otherwise lead to
the situation that, if a Guarantor is organized as a GmbH & Co. KG. (a “German
Guarantor”) under the laws of the Federal Republic of Germany, its general
partner does not have sufficient assets to maintain its stated share capital
(Stammkapital) provided that for the purposes of the calculation of the amount
to be released (if any) the following balance sheet items shall be adjusted as
follows:

 

(A) the amount of any increase of stated share capital after the date hereof
that has been effected without the prior written consent of the Administrative
Agent (acting on behalf of the Lenders) shall be deducted from the stated share
capital; and

 

(B) loans provided to the such German Guarantor by the Borrower or any of its
subsidiaries as far as such loans are subordinated or qualified under § 32a
GmbHG (German Limited Liability Companies Act) shall be disregarded.

 

SECTION 20. Financial Information. Each Guarantor hereby assumes responsibility
for keeping itself informed of the financial condition of the Borrower and any
and all endorsers and/or other Guarantors of all or any part of the Guaranteed
Obligations, and of all other circumstances bearing upon the risk of nonpayment
of the Guaranteed Obligations, or any part thereof, that diligent inquiry would
reveal, and each Guarantor hereby agrees that none of the Holders of Secured
Obligations (including the Administrative Agent) shall have any duty to advise
such Guarantor of information known to any of them regarding such condition or
any such circumstances. In the event any Holder of Secured Obligations
(including the Administrative Agent), in its sole discretion, undertakes at any
time or from time to time to provide any such information to a Guarantor, such
Holder of Secured Obligations (including the

 

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Administrative Agent) shall be under no obligation (i) to undertake any
investigation not a part of its regular business routine, (ii) to disclose any
information which such Holder of Secured Obligations (including the
Administrative Agent), pursuant to accepted or reasonable commercial finance or
banking practices, wishes to maintain confidential or (iii) to make any other or
future disclosures of such information or any other information to such
Guarantor.

 

SECTION 21. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

 

SECTION 22. Merger. This Guaranty represents the final agreement of each of the
Guarantors with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Guarantor and any Holder of Secured Obligations
(including the Administrative Agent).

 

SECTION 23. Headings. Section headings in this Guaranty are for convenience of
reference only and shall not govern the interpretation of any provision of this
Guaranty.

 

SECTION 24. Judgment Currency. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due from any Guarantor hereunder in the
currency expressed to be payable herein (the “specified currency”) into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the specified currency with such other currency at the Administrative
Agent’s main New York City office on the Business Day preceding that on which
final, non-appealable judgment is given. The obligations of each Guarantor in
respect of any sum due hereunder shall, notwithstanding any judgment in a
currency other than the specified currency, be discharged only to the extent
that on the Business Day following receipt by any Holder of Secured Obligations
(including the Administrative Agent), as the case may be, of any sum adjudged to
be so due in such other currency such Holder of Secured Obligations (including
the Administrative Agent), as the case may be, may in accordance with normal,
reasonable banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Holder of Secured Obligations (including the
Administrative Agent), as the case may be, in the specified currency, each
Guarantor agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Holder of Secured Obligations (including the Administrative Agent), as the case
may be, against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Holder of Secured
Obligations (including the Administrative Agent), as the case may be, in the
specified currency and (b) amounts shared with other Holders of Secured
Obligations as a result of allocations of such excess as a disproportionate
payment to such other Holder of Secured Obligations under Section 2.18 of the
Credit Agreement, such Holder of Secured Obligations (including the
Administrative Agent), as the case may be, agrees, by accepting the benefits
hereof, to remit such excess to such Guarantor.

 

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REMAINDER OF PAGE INTENTIONALLY BLANK

 

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IN WITNESS WHEREOF, each of the Initial Guarantors has caused this Guaranty to
be duly executed by its authorized officer as of the day and year first above
written.

 

 

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By:        

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Its:

       

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By:        

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By:        

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SIGNATURE PAGE TO GUARANTY

 

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ANNEX I TO GUARANTY

 

Reference is hereby made to the Guaranty (the “Guaranty”) made as of the 22nd
day of December, 2003, by and among                     , a
                    ,                     , a                      ,
                    , a                      and                      , a
                     (the “Initial Guarantors” and along with any additional
Subsidiaries of Heidrick & Struggles International, Inc., which become parties
thereto and together with the undersigned, the “Guarantors”) in favor of the
Administrative Agent, for the ratable benefit of the Holders of Secured
Obligations, under the Credit Agreement. Capitalized terms used herein and not
defined herein shall have the meanings given to them in the Guaranty. By its
execution below, the undersigned [NAME OF NEW GUARANTOR], a [corporation]
[partnership] [limited liability company], agrees to become, and does hereby
become, a Guarantor under the Guaranty and agrees to be bound by such Guaranty
as if originally a party thereto. By its execution below, the undersigned
represents and warrants as to itself that all of the representations and
warranties contained in Section 2 of the Guaranty are true and correct in all
respects as of the date hereof.

 

IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a [corporation] [partnership]
[limited liability company] has executed and delivered this Annex I counterpart
to the Guaranty as of this                      day of                     ,
        .

 

[NAME OF NEW GUARANTOR] By:        

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Its:

       

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EXHIBIT D

 

FORM OF COMMITMENT AND ACCEPTANCE

 

Dated [                    ]

 

Reference is made to the Credit Agreement dated as of December 22, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) among Heidrick & Struggles International, Inc. (the
“Borrower”), the financial institutions party thereto (the “Lenders”), and
JPMorgan Chase Bank in its capacity as contractual representative for the
Lenders (the “Agent”). Terms defined in the Credit Agreement are used herein
with the same meaning.

 

Pursuant to Section 2.23 of the Credit Agreement, the Borrower has requested an
increase in the Aggregate Commitment from $                     to
$                    . Such increase in the Aggregate Commitment is to become
effective on the date (the “Effective Date”) which is the later of (i)
            ,              and (ii) the date on which the conditions precedent
set forth in Section 2.23 in respect of such increase have been satisfied. In
connection with such requested increase in the Aggregate Commitment, the
Borrower, the Administrative Agent and              (the “Accepting Bank”)
hereby agree as follows:

 

1. Effective as of the Effective Date, [the Accepting Bank shall become a party
to the Credit Agreement as a Lender and shall have all of the rights and
obligations of a Lender thereunder and shall thereupon have a Commitment under
and for purposes of the Credit Agreement in an amount equal to the] [the
Commitment of the Accepting Bank under the Credit Agreement shall be increased
from $                         to the] amount set forth opposite the Accepting
Bank’s name on the signature page hereof.

 

[2. The Accepting Bank hereby (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Commitment and Acceptance
Agreement; (ii) agrees that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Administrative Agent to take such action as contractual
representative on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
and (iv) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender]

 

3. The Borrower hereby represents and warrants that as of the date hereof and as
of the Effective Date, (a) all representations and warranties shall be true and

 

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correct in all material respects as though made on such date and (b) no event
shall have occurred and then be continuing which constitutes a Default or an
Event of Default.

 

4. THIS COMMITMENT AND ACCEPTANCE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

5. This Commitment and Acceptance Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

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

 

        HEIDRICK & STRUGGLES INTERNATIONAL, INC.             By:                
   

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Title:

                   

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JPMORGAN CHASE BANK, as Administrative Agent

            By:                    

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Title:

                   

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COMMITMENT      

ACCEPTING BANK

$       [BANK]             By:                    

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Title:

                   

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Reaffirmations of Subsidiary Guarantors

 

Each of the undersigned hereby acknowledges receipt of the foregoing Commitment
and Acceptance. Capitalized terms used in this Reaffirmation and not defined
herein shall have the meanings given to them in the Credit Agreement referred to
in the foregoing Commitment and Acceptance. Without in any way establishing a
course of dealing by the Administrative Agent or any Lender, the undersigned
reaffirms the terms and conditions of the Guaranty dated as of December 22, 2003
executed by it and acknowledges and agrees that such Guaranty and each and every
other Loan Document executed by the undersigned in connection with the Credit
Agreement remain in full force and effect and are hereby ratified, reaffirmed
and confirmed. All references to the Credit Agreement contained in the
above-referenced documents shall be references to the Credit Agreement as so
amended by the Commitment and Acceptance and as the same may from time to time
hereafter be amended, modified or restated. The failure of any Subsidiary
Guarantor to sign this Reaffirmation shall not release, discharge or otherwise
affect the obligations of any of the other such Subsidiary Guarantors.

 

[SUBSIDIARY GUARANTORS]

By:        

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Its:        

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