Exhibit 10.1
CREDIT AGREEMENT
Dated as of July 19, 2006
among
NEW HORIZONS WORLDWIDE, INC.,
as Borrower
THE LENDERS NAMED HEREIN
and
CAMDEN PARTNERS STRATEGIC III, LLC,
as Administrative Agent

 

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TABLE OF CONTENTS

              Page  
Article 1. DEFINITIONS AND ACCOUNTING TERMS
    1  
1.1 Defined Terms
    1  
1.2 Use of Defined Terms
    20  
1.3 Accounting Terms; Covenant Calculations
    20  
1.4 Rounding
    20  
1.5 Exhibits and Schedules
    21  
1.6 References to “Borrower and its Subsidiaries”
    21  
1.7 Miscellaneous Terms
    21  
 
       
Article 2. ADVANCES
    21  
2.1 Advances
    21  
2.2 Collateral
    21  
 
       
Article 3. PAYMENTS AND FEES
    22  
3.1 Principal and Interest
    22  
3.2 [Intentionally Omitted]
    23  
3.3 Late Payments and Default Rate
    23  
3.4 Computation of Interest and Fees
    23  
3.5 Non-Banking Days
    23  
3.6 Manner and Treatment of Payments
    24  
3.7 Failure to Charge Not Subsequent Waiver
    25  
3.8 [Intentionally Omitted]
    25  
3.9 Fee Determination Detail
    25  
 
       
Article 4. REPRESENTATIONS AND WARRANTIES
    25  
4.1 Existence and Qualification; Power; Compliance With Laws
    25  
4.2 Authority; Compliance With Other Agreements and Instruments and Government
Regulations
    26  
4.3 No Governmental Approvals Required
    26  
4.4 Subsidiaries
    26  
4.5 Financial Statements
    28  
4.6 No Other Liabilities; No Material Adverse Changes
    28  
4.7 Title to and Location of Property
    28  
4.8 Intangible Assets
    29  
4.9 Public Utility Holding Company Act
    29  
4.10 Litigation
    29  
4.11 Binding Obligations
    29  
4.12 No Default
    30  
4.13 ERISA
    30  
4.14 Regulation U; Investment Company Act
    30  
4.15 Disclosure
    30  
4.16 Tax Liability
    31  
4.17 Projections
    31  

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              Page  
4.18 Hazardous Materials
    31  
4.19 Security Interests
    31  
4.20 Employee Matters
    32  
4.21 Fiscal Year
    32  
4.22 Solvency
    32  
 
       
Article 5. AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
REQUIREMENTS)
    32  
5.1 Payment of Taxes and Other Potential Liens
    32  
5.2 Preservation of Existence
    33  
5.3 Maintenance of Properties
    33  
5.4 Maintenance of Insurance
    33  
5.5 Compliance With Laws
    34  
5.6 Inspection Rights
    34  
5.7 Keeping of Records and Books of Account
    35  
5.8 Compliance With Agreements
    35  
5.9 Use of Proceeds
    35  
5.10 Hazardous Materials Laws
    35  
5.11 Future Subsidiaries; Additional Security Documentation
    36  
5.12 Intercompany Debt
    36  
5.13 Authorized Shares
    36  
 
       
Article 6. NEGATIVE COVENANTS
    36  
6.1 Prepayment of Indebtedness
    37  
6.2 Prepayment of Subordinated Obligations
    37  
6.3 Merger, Consolidation
    37  
6.4 Dispositions
    37  
6.5 Other Indebtedness
    38  
6.6 Guaranties
    38  
6.7 Loans, Advances, Investments, Acquisitions
    38  
6.8 Distributions
    39  
6.9 Pledge of Assets
    39  
6.10 Hostile Tender Offers
    39  
6.11 ERISA
    39  
6.12 Change in Nature of Business
    39  
6.13 Transactions with Affiliates
    39  
6.14 [Intentionally Omitted]
    40  
6.15 [Intentionally Omitted]
    40  
6.16 Minimum Adjusted EBITDA
    40  
6.17 Cash Balance Account
    40  
6.18 Capital Expenditures
    40  
6.19 Amendments
    40  
6.20 Change in Location of Chief Executive Offices, Jurisdiction of Organization
and Assets
    41  
6.21 Use of Lender’s Name
    41  
6.22 Change of Fiscal Periods
    41  
6.23 Certain Other Restricted Payments
    41  

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              Page  
Article 7. INFORMATION AND REPORTING REQUIREMENTS
    41  
7.1 Financial and Business Information
    41  
7.2 Compliance Certificates
    44  
7.3 Weekly Cash Flow Forecast
    44  
 
       
Article 8. CONDITIONS
    44  
8.1 Closing Date Advances
    44  
 
       
Article 9. EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
    47  
9.1 Events of Default
    47  
9.2 Remedies Upon Event of Default
    50  
 
       
Article 10. THE ADMINISTRATIVE AGENT
    51  
10.1 Appointment and Authorization
    51  
10.2 Administrative Agent and Affiliates
    51  
10.3 Proportionate Interest in any Collateral
    52  
10.4 Lenders’ Credit Decisions
    52  
10.5 Action by Administrative Agent
    53  
10.6 Liability of Administrative Agent
    53  
10.7 Indemnification
    54  
10.8 Successor Administrative Agent
    55  
10.9 No Obligations of Borrower
    56  
 
       
Article 11. MISCELLANEOUS
    56  
11.1 Cumulative Remedies; No Waiver
    56  
11.2 Amendments; Consents
    56  
11.3 Costs, Expenses and Taxes
    57  
11.4 Nature of Lenders’ Obligations
    58  
11.5 Survival of Representations and Warranties
    58  
11.6 Notices
    58  
11.7 Execution of Loan Documents
    59  
11.8 Binding Effect; Assignment
    59  
11.9 Right of Setoff
    62  
11.10 Sharing of Setoffs
    62  
11.11 Indemnity by Borrower
    63  
11.12 Nonliability of the Lenders
    64  
11.13 No Third Parties Benefited
    65  
11.14 Confidentiality
    65  
11.15 Further Assurances
    66  
11.16 Integration
    66  
11.17 Governing Law
    66  
11.18 Severability of Provisions
    67  
11.19 Headings
    67  
11.20 Time of the Essence
    67  
11.21 [Intentionally Omitted]
    67  
11.22 Hazardous Material Indemnity
    67  

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              Page  
11.23 Waiver of Right to Trial by Jury
    68  
11.24 Purported Oral Amendments
    68  
11.25 Specially Designated Nationals and Blocked Persons
    68  

         
Exhibits
       
A
  -   Assignment and Acceptance
B
  -   Compliance Certificate
C
      Note
D
      Series B Certificate of Designation
E-1
      Form of Series A Warrant
E-2
      Form of Series B Warrant

     
Schedules
     
1.1
  Lender Commitments/Pro Rata Shares
1.2A
  Material Contracts
1.2B
  Exclusions From Material Adverse Events
4.1
  Compliance with Law
4.4
  Subsidiaries
4.7A
  Existing Liens, Negative Pledges and Rights of Others
4.7B
  Location of Property
4.8
  Intangible Assets; Restrictions on Use
4.10
  Material Litigation
4.18
  Hazardous Materials Matters
5.9
  Use of Proceeds
6.4
  Company Owned Locations
6.5
  Existing Indebtedness
6.6
  Existing Guaranties
6.7
  Existing Loans, Advances, Investments
6.20
  Locations of Chief Executive Offices and Assets

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CREDIT AGREEMENT
Dated as of July 19, 2006
          This CREDIT AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) is entered into by and among NEW
HORIZONS WORLDWIDE, INC., a Delaware corporation (“Borrower”), each lender whose
name is set forth on the signature pages of this Agreement and each lender that
may hereafter become a party to this Agreement pursuant to Section 11.8 (each a
“Lender” and collectively, “Lenders”), and CAMDEN PARTNERS STRATEGIC III, LLC,
as Administrative Agent.
          In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
Article 1. DEFINITIONS AND ACCOUNTING TERMS
          1.1 Defined Terms.
          As used in this Agreement, the following terms shall have the meanings
set forth below:
     “Acceleration” shall have the meaning provided in Section 11.9.
     “Accounts” means all “accounts,” as such term is defined in the UCC, now
owned or hereafter acquired by any Person, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by “chattel paper,” “documents” or
“instruments” (as such terms are defined in the UCC)), whether arising out of
goods sold or services rendered by it or from any other transaction (including
any such obligations that may be characterized as an account or contract right
under the UCC), (b) all purchase orders or receipts for goods or services,
(c) all rights to any goods represented by any of the foregoing (including
unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all monies
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person) now or hereafter in existence, including the right
to receive the proceeds of said purchase orders and contracts, and (e) all
collateral security and guaranties of any kind, now or hereafter in existence,
given by any Person with respect to any of the foregoing.
     “Acquired Person” means (a) any Person that is the subject of an
Acquisition after the Closing Date and (b) any assets constituting a discrete
business or operation unit that is the subject of an Acquisition after the
Closing Date.
     “Acquisition” means any transaction, or any series of related transactions,
consummated after the Closing Date, by which Borrower or any of its Subsidiaries
directly or indirectly (a) acquires any ongoing business or all or substantially
all of the assets of any firm, partnership, joint venture, limited liability
company, corporation or

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division thereof, whether through purchase of assets, merger or otherwise,
(b) acquires in one transaction or as the most recent transaction in a series of
transactions control of securities of a Person engaged in an ongoing business
representing more than 50% of the ordinary voting power for the election of
directors or other governing position if the business affairs of such Person are
managed by a board of directors or other governing body or (c) acquires control
of more than 50% of the ownership interest in any partnership, joint venture,
limited liability company, business trust or other Person that is not managed by
a board of directors or other governing body.
     “Adjusted EBITDA” means, with respect to any fiscal period, the sum of,
without duplication, (a) EBITDA for such fiscal period, plus (b) to the extent
deducted in determining Net Income for such fiscal period, non-cash charges of
Borrower and its Subsidiaries during such fiscal period relating to Borrower’s
and its Subsidiaries’ compliance with Financial Accounting Standards Board
Statement No. 142, plus (c) to the extent deducted in determining Net Income for
such fiscal period, non-cash charges recorded against earnings in Borrower’s and
its Subsidiaries’ financial statements for such fiscal period with respect to
the write-down of leasehold estates as a result of the sublease of such
leasehold estates, plus (d) non-cash charges associated with stock options.
     “Administrative Agent” means Camden Partners Strategic III, LLC, or any
successor Administrative Agent.
     “Administrative Agent’s Office” means the Administrative Agent’s address as
set forth on the signature pages of this Agreement, or such other address as the
Administrative Agent hereafter may designate by written notice to Borrower and
the Lenders.
     “Advance” means any advance made or to be made by any Lender to Borrower as
provided in Article 2.
     “Affiliate” means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, “control” (and the correlative terms,
“controlled by” and “under common control with”) shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided that, in any event
(x) except as provided in clause (y) hereof, any Person that owns, directly or
indirectly, 10% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation that has more
than 100 record holders of such securities, or 10% or more of the partnership or
other ownership interests of any other Person that has more than 100 record
holders of such interests, will be deemed to be an Affiliate of such
corporation, partnership or other Person, and (y) notwithstanding anything
herein to the contrary, neither Camden Partners nor Camden Partners Strategic
Fund III-A, L.P. shall be deemed to be an Affiliate of Borrower.

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     “Alkhaleej” shall mean Alkhaleej Training and Education Corporation, a
company formed under the laws of the Kingdom of Saudi Arabia.
     “Assignment and Acceptance” means an assignment and acceptance agreement
substantially in the form of Exhibit A.
     “Banking Day” means any Monday, Tuesday, Wednesday, Thursday or Friday,
other than a day on which banks are authorized or required to be closed in
California or New York.
     “Borrowing” means a borrowing consisting of simultaneous Advances.
     “Camden Partners” means Camden Partners Strategic Fund III, L.P., a
Delaware limited partnership, and Camden Partners Strategic Fund III-A, L.P. , a
Delaware limited partnership.
     “Capital Lease” means, as to any Person, a lease of any Property by that
Person as lessee that is, or should be in accordance with GAAP (including
Financial Accounting Standards Board Statement No. 13, as amended or superseded
from time to time), recorded as a “capital lease” on the balance sheet of that
Person prepared in accordance with GAAP.
     “Capital Lease Obligations” means all monetary obligations of a Person
under any Capital Lease.
     “Cash” means, when used in connection with any Person, all monetary and
non-monetary items owned by that Person that are treated as cash in accordance
with GAAP, consistently applied.
     “Cash Balance Account” shall mean a deposit account of Borrower maintained
with a financial institution acceptable to the Administrative Agent and which
shall be subject to a Deposit Account Control Agreement in form and substance
acceptable to the Administrative Agent.
     “Cash Equivalents” means, when used in connection with any Person, that
Person’s Investments in:
          (a) Government Securities due within one year after the date of the
making of the Investment;
          (b) readily marketable direct obligations of any State of the United
States of America or any political subdivision of any such State or any public
agency or instrumentality thereof given on the date of such Investment a credit
rating of at least Aa by Moody’s Investors Service, Inc. or AA by Standard &
Poor’s Rating Group (a division of McGraw-Hill, Inc.), in each case due within
one year from the making of the Investment;

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          (c) certificates of deposit issued by, bank deposits in, eurodollar
deposits through, bankers’ acceptances of, and repurchase agreements covering
Government Securities executed by any Lender or any bank incorporated under the
Laws of the United States of America, any State thereof or the District of
Columbia and having on the date of such Investment combined capital, surplus and
undivided profits of at least $250,000,000, or total assets of at least
$5,000,000,000, in each case due within one year after the date of the making of
the Investment
          (d) certificates of deposit issued by, bank deposits in, eurodollar
deposits through, bankers’ acceptances of, and repurchase agreements covering
Government Securities executed by any Lender or any branch or office located in
the United States of America of a bank incorporated under the Laws of any
jurisdiction outside the United States of America having on the date of such
Investment combined capital, surplus and undivided profits of at least
$500,000,000, or total assets of at least $15,000,000,000, in each case due
within one year after the date of the making of the Investment;
          (e) repurchase agreements covering Government Securities executed by a
broker or dealer registered under Section 15(b) of the Securities Exchange Act
of 1934, as amended, having on the date of the Investment capital of at least
$50,000,000, due within 90 days after the date of the making of the Investment;
provided that the maker of the Investment receives written confirmation of the
transfer to it of record ownership of the Government Securities on the books of
a “primary dealer” in such Government Securities or on the books of such
registered broker or dealer, as soon as practicable after the making of the
Investment;
           (f) readily marketable commercial paper or other debt securities
issued by corporations doing business in and incorporated under the Laws of the
United States of America or any State thereof or of any corporation that is the
holding company for a bank described in clause (c) or (d) above given on the
date of such Investment a credit rating of at least P-1 by Moody’s Investors
Service, Inc. or A-1 by Standard & Poor’s Rating Group (a division of
McGraw-Hill, Inc.), in each case due within one year after the date of the
making of the Investment;
          (g) “money market preferred stock” issued by a corporation
incorporated under the Laws of the United States of America or any State thereof
(i) given on the date of such Investment a credit rating of at least Aa by
Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a
division of McGraw-Hill, Inc.), in each case having an investment period not
exceeding 50 days or (ii) to the extent that investors therein have the benefit
of a standby letter of credit issued by Lender or a bank described in clauses
(c) or (d) above; provided that (y) the amount of all such Investments issued by
the same issuer does not exceed $5,000,000 and (z) the aggregate amount of all
such Investments does not exceed $15,000,000;
          (h) a readily redeemable “money market mutual fund” sponsored by a
bank described in clause (c) or (d) hereof, or a registered broker or dealer
described in clause (e) hereof, that has and maintains an investment policy
limiting its investments

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primarily to instruments of the types described in clauses (a) through (g)
hereof and given on the date of such Investment a credit rating of at least Aa
by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a
division of McGraw-Hill, Inc.); and
          (i) corporate notes or bonds having an original term to maturity of
not more than one year issued by a corporation incorporated under the Laws of
the United States of America, or a participation interest therein; provided that
(i) commercial paper issued by such corporation is given on the date of such
Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. and
AA by Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.), (ii) the
amount of all such Investments issued by the same issuer does not exceed
$5,000,000 and (iii) the aggregate amount of all such Investments does not
exceed $15,000,000.
     “Certificate” means a certificate signed by a Senior Officer or Responsible
Official (as applicable) of the Person providing the certificate.
     “Change in Control” means any of the following events: (a) the sale, lease,
transfer or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the
assets of Borrower and its Subsidiaries taken as a whole to any “person” or
“group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act), (b) Borrower shall fail to own, directly or indirectly 100% of
the outstanding capital stock or other equity interests of any Subsidiary of
Borrower (other than as a result of the Disposition of a Company Owned Location
in a transaction permitted under Section 6.4 hereof) , (c) any Person or two or
more Persons acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, control over, 20% or more of the capital
stock or other equity interests of Borrower, (d) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who at the
beginning of such 24-month period were directors of Borrower (together with any
new director whose election by Borrower’s Board of Directors or whose nomination
for election by Borrower’s shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of Borrower then in office or (e) any transaction or series of related
transactions constituting a “change in control” or similar occurrence under
documentation evidencing or governing Indebtedness of Borrower and/or any of its
Subsidiaries of $100,000 or more, which gives the holder(s) of such Indebtedness
the right to accelerate or otherwise require payment of such Indebtedness prior
to the maturity date thereof. As used herein, “beneficial ownership” shall have
the meaning provided in Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act. Notwithstanding the foregoing, no Change of
Control shall be deemed to have occurred as a result of the consummation of the
transactions which are the subject of the Preferred Stock Exchange Agreement or
the issuance or exercise of the Warrants.

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     “Closing Date” means the time and Banking Day on which the conditions set
forth in Section 8.1 are satisfied or waived. The Administrative Agent shall
notify Borrower and the Lenders of the date that is the Closing Date.
     “Closing Date Lenders” means each of Camden Partners, Alkhaleej and any
other lender party to this Agreement as of the Closing Date.
     “Code” means the Internal Revenue Code of 1986, as amended or replaced and
as in effect from time to time.
     “Collateral” means all of the collateral covered by the Collateral
Documents.
     “Collateral Documents” means, collectively, the Security Agreement, the
Pledge Agreement, and any other security agreement, pledge agreement, deed of
trust, mortgage, notice to or acknowledgment of a registrar or depositary
institution, control agreement or other collateral security agreement executed
and delivered by Borrower, any of its Subsidiaries or any other Person (and
executed by any third party whose signature is necessary) to secure the
Obligations.
     “Commitment” means, with respect to each Closing Date Lender, the
commitment of such Lender to make an Advance to Borrower on the Closing Date.
The amount of each Closing Date Lender’s Commitment is set forth on
Schedule 1.1. The aggregate amount of the Closing Date Lenders’ Commitments is
$4,000,000.
     “Company Owned Locations” means each place of business of Borrower or any
of its Subsidiaries identified in Schedule 6.4 hereto.
     “Compliance Certificate” means a certificate in the form of Exhibit B,
properly completed and signed by the chief financial officer of Borrower.
     “Contractual Obligation” means, as to any Person, any provision of any
outstanding security issued by that Person or of any material agreement,
instrument or undertaking to which that Person is a party or by which it or any
of its Property is bound.
     “Debtor Relief Laws” means the Bankruptcy Code of the United States of
America, as amended from time to time, and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief Laws from time to time in
effect affecting the rights of creditors generally.
     “Default” means any event that, with the giving of any applicable notice or
passage of time specified in Section 9.1, or both, would be an Event of Default.
     “Default Rate” means twelve percent (12%) per annum.
     “Deposit Account Control Agreement” has the meaning set forth in the
Security Agreement.

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     “Detroit Franchisee” means M&J L.L.C., a Michigan limited liability
company.
     “Disposition” means the sale, transfer or other disposition in any single
transaction or series of related transactions of any asset, or group of related
assets, of Borrower or any Subsidiary other than (a) Cash, Cash Equivalents,
Investments (other than Investments in a Subsidiary), Inventory or other assets
sold or otherwise disposed of in the ordinary course of business of Borrower or
any Subsidiary, (b) equipment sold or otherwise disposed of where substantially
similar equipment in replacement thereof has theretofore been acquired, or
thereafter within 90 days is acquired, by Borrower or any Subsidiary, and
(c) obsolete assets no longer useful in the business of Borrower or any
Subsidiary, provided that the aggregate carrying value on the books of Borrower
or such Subsidiary of all such obsolete assets which are sold, transferred or
otherwise disposed of in any Fiscal Year is less than $150,000.
     “Distribution” means, with respect to any equity interest or Security
issued by a Person, or any warrant or right to acquire any equity interest or
Security of a Person, (a) the retirement, redemption, purchase, or other
acquisition for value by such Person of any such equity interest or Security,
(b) the declaration or (without duplication) payment by such person of any
dividend in Cash or in Property (other than in Series A Stock, Series B Stock,
common stock or common member interest, as the case may be, of such Person) on
or with respect to any such equity interest or Security, (c) any Investment by
such Person in the holder of any such equity interest or Security, and (d) any
other payment by such Person constituting a distribution under applicable Laws
with respect to such equity interest or Security.
     “Dollars” or “$” means United States of America dollars.
     “Domestic Subsidiary” means any Subsidiary of Borrower organized under the
laws of the United States of America or any state thereof.
     “Earnout Payment” means any payment which is (a) required to be made by
Borrower or any of its Subsidiaries in respect of any Acquisition and (b) based
on the earnings or revenues of the related Acquired Person.
     “EBITDA” means, with respect to any fiscal period, the sum of (a) Net
Income for that fiscal period, plus (b) any extraordinary or non-operating loss
reflected in such Net Income, minus (c) any extraordinary or non-operating gain
reflected in such Net Income, plus (d) Interest Expense of Borrower and its
Subsidiaries for that fiscal period, plus (e) the aggregate income tax expense
of Borrower and its Subsidiaries for that fiscal period (whether or not payable
during that fiscal period), plus (f) depreciation and amortization expense of
Borrower and its Subsidiaries for that fiscal period, plus (g) all other
non-cash, extraordinary expenses of Borrower and its Subsidiaries for that
fiscal period, in each case as determined in accordance with GAAP, consistently
applied and, in the case of items (d), (e), (f), and (g) only to the extent
reflected in the determination of Net Income for that fiscal period.

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     “Eligible Assignee” means (a) another Lender, (b) with respect to any
Lender, any Affiliate of that Lender, (c) any commercial bank having total
assets of $250,000,000 or more, (d) any (i) savings bank, savings and loan
association or similar financial institution or (ii) insurance company engaged
in the business of writing insurance which, in either case (A) has total assets
of $250,000,000 or more, (B) is engaged in the business of lending money and
extending credit under credit facilities similar to the Facility and (C) is
operationally and procedurally able to meet the obligations of a Lender
hereunder to the same degree as a commercial bank and (e) any other financial
institution (including a mutual fund or other fund) having total assets of
$250,000,000 or more which meets the requirements set forth in subclauses (B)
and (C) of clause (d) above; provided that each Eligible Assignee (other than an
Affiliate of any Lender) must be organized under the Laws of the United States
of America, any State thereof or the District of Columbia.
     “ERISA” means the Employee Retirement Income Security Act of 1974, and any
regulations issued pursuant thereto, as amended or replaced and as in effect
from time to time.
     “ERISA Affiliate” means, with respect to any Person, any Person (or any
trade or business, whether or not incorporated) that is under common control
with that Person within the meaning of Section 414 of the Code.
     “Event of Default” shall have the meaning provided in Section 9.1.
     “Facility” means the loan facility provided hereunder in respect of the
aggregate Advances.
     “Fiscal Quarter” means the fiscal quarter of Borrower and its Subsidiaries
ending on each March 31, June 30, September 30 and December 31.
     “Fiscal Year” means the fiscal year of Borrower and its Subsidiaries ending
on each December 31.
     “Foreign Subsidiary” means any Subsidiary of Borrower that is not a US
Subsidiary.
     “Funded Debt” means, as of any date of determination, without duplication,
the sum of (a) all principal Indebtedness of Borrower and its Subsidiaries for
borrowed money (including Subordinated Obligations and any other subordinated
indebtedness, debt Securities issued by Borrower or any of its Subsidiaries, and
the aggregate principal Indebtedness outstanding under the Notes on that date)
plus (b) the aggregate amount of the principal portion of all Capital Lease
Obligations of Borrower and its Subsidiaries on that date plus (c) any Guaranty
Obligations of Borrower and its Subsidiaries with respect to the Indebtedness of
others of the types referred to in clauses (a) and (b) above on that date.
     “GAAP” means, as of any date of determination, accounting principles
(a) set forth as generally accepted in then currently effective Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (b) set forth

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as generally accepted in then currently effective Statements of the Financial
Accounting Standards Board or (c) that are then approved by such other entity as
may be approved by a significant segment of the accounting profession in the
United States of America. The term “consistently applied,” as used in connection
therewith, means that the accounting principles applied are consistent in all
material respects with those applied at prior dates or for prior periods.
     “Governmental Agency” means (a) any international, foreign, federal, state,
county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body or (c) any court or administrative
tribunal of competent jurisdiction.
     “Government Securities” means readily marketable (a) direct full faith and
credit obligations of the United States of America or obligations guaranteed by
the full faith and credit of the United States of America and (b) obligations of
an agency or instrumentality of, or corporation owned, controlled or sponsored
by, the United States of America that are generally considered in the securities
industry to be implicit obligations of the United States of America.
     “Guarantors” means, collectively, each Domestic Subsidiary of Borrower.
     “Guaranty Obligation” means, as to any Person, any (a) guarantee by that
Person of Indebtedness of, or other obligation performable by, any other Person
or (b) assurance given by that Person to an obligee of any other Person with
respect to the performance of an obligation by, or the financial condition of,
such other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
“keep-well” or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation in respect of Indebtedness shall be deemed to be an amount equal to
the stated or determinable amount of the related Indebtedness (unless the
Guaranty Obligation is limited by its terms to a lesser amount, in which case to
the extent of such amount) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the Person
in good faith. The amount of any other Guaranty Obligation shall be deemed to be
zero unless and until the amount thereof has been (or in accordance with
Financial Accounting Standards Board Statement No. 5 should be) quantified and
reflected or disclosed in the consolidated financial statements (or notes
thereto) of Borrower and its Subsidiaries.
     “Hazardous Materials” means oil or petrochemical products, poly-chlorinated
biphenyls, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, hazardous wastes, toxic substances or related materials, including
any substances

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considered “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“infectious wastes”, “pollutant substances”, “solid waste” or “toxic substances”
under any Hazardous Materials Laws.
     “Hazardous Materials Laws” means all Laws pertaining to the treatment,
transportation or disposal of Hazardous Materials on or about any Real Property
owned or leased by Borrower or any Subsidiary thereof, or any portion thereof,
including without limitation the following: the Federal Water Pollution Control
Act (33 U.S.C. § 1251, et seq.), the Federal Resource Conservation and Recovery
Act of 1976 (42 U.S.C. § 6901, et seq.), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601,
et seq.) and the Superfund Amendments and Reauthorization Act of 1986, the
Hazardous Materials Transportation Act, as amended (44 U.S.C. § 1801, et seq.),
the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the California
Health and Safety Code (Section 25100, et seq.), the California Water Code and
the California Administrative Code, in each case as such Laws are amended from
time to time.
     “Indebtedness” means, as to any Person (without duplication),
(a) indebtedness of such Person for borrowed money or for the deferred purchase
price of Property (excluding trade and other accounts payable in the ordinary
course of business in accordance with ordinary trade terms, and excluding
deferred revenue and accrued liabilities), including any Guaranty Obligation for
any such indebtedness, (b) indebtedness of such Person of the nature described
in clause (a) that is non-recourse to the credit of such Person but is secured
by assets of such Person, to the extent of the fair market value of such assets
as determined in good faith by such Person, (c) Capital Lease Obligations of
such Person, (d) indebtedness of such Person arising under bankers’ acceptance
facilities or under facilities for the discount of accounts receivable of such
Person, (e) any direct or contingent obligations of such Person under letters of
credit issued for the account of such Person and (f) any net obligations of such
Person under Interest Rate Protection Agreements.
     “Intangible Assets” means assets that are considered intangible assets
under GAAP, including customer lists, goodwill, covenants not to compete,
copyrights, trade names, trademarks and patents.
     “Intercompany Notes” means, collectively, the intercompany promissory notes
described in Section 5.12.
     “Interest Expense” means, with respect to any Person and as of the last day
of any fiscal period, the sum of (a) all interest, fees, charges and related
expenses (in each case as such expenses are calculated according to GAAP) paid
or payable (without duplication) for that fiscal period by that Person to a
lender in connection with borrowed money (including any obligations for fees,
charges and related expenses payable to the issuer of any letter of credit) or
the deferred purchase price of assets that are considered “interest expense”
under GAAP plus (b) the portion of rent paid or payable (without duplication)
for that fiscal period by that Person under Capital Lease Obligations that

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should be treated as interest in accordance with Financial Accounting Standards
Board Statement No. 13.
     “Interest Rate Protection Agreement” means a written agreement between
Borrower and one or more financial institutions providing for “swap”, “cap”,
“collar” or other interest rate protection with respect to any Indebtedness.
     “Inventory” means all “inventory,” as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including all
goods, merchandise and other personal property held for sale or lease by any
such Person, or which is furnished by such Person under any contract of service
or is held by such Person as raw materials, work or goods in process, materials
and supplies of every nature used or consumed or to be used or consumed by such
Person in the ordinary course of its business, whether now owned or hereafter
acquired by such Person.
     “Investment” means, when used in connection with any Person, any investment
by or of that Person, whether by means of purchase or other acquisition of stock
or other Securities of any other Person or by means of a loan, advance creating
a debt, capital contribution, guaranty or other debt or equity participation or
interest in any other Person, including any partnership, limited liability
company and joint venture interests of such Person. The amount of any Investment
shall be the amount actually invested (minus any return of capital with respect
to such Investment which has actually been received in Cash or has been
converted into Cash), without adjustment for subsequent increases or decreases
in the value of such Investment.
     “Laws” means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
     “Lender” means each Closing Date Lender and each lender that may hereafter
become a party to this Agreement pursuant to Section 11.8.
     “Lender’s Office” means, with respect to any Lender, such Lender’s address
as set forth on the signature pages of this Agreement, or such other address as
such Lender hereafter may designate by written notice to Borrower and the
Administrative Agent.
     “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment
for security, security interest, encumbrance or lien of any kind, whether
voluntarily incurred or arising by operation of Law or otherwise, affecting any
Property, including any conditional sale or other title retention agreement, any
lease in the nature of a security interest, and/or the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable Law of any jurisdiction with respect to any Property.
     “Loan Documents” means, collectively, this Agreement, the Notes, the
Subsidiary Guaranty, the Collateral Documents, the Stockholders’ Agreement, any
Compliance Certificate and any other agreements of any type or nature hereafter
executed and delivered by Borrower or any Subsidiary to the Administrative Agent
or to any Lender in

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any way relating to or in furtherance of this Agreement, in each case either as
originally executed or as the same may from time to time be supplemented,
modified, amended, restated, extended or supplanted.
     “Margin Stock” means “margin stock” as such term is defined in
Regulation U.
     “Material Adverse Effect” means (a) any material adverse effect whatsoever
upon the validity or enforceability of any Loan Document, (b) a material and
adverse effect on the business or condition (financial or otherwise) of Borrower
and its Subsidiaries, taken as a whole, (c) a material impairment of the ability
of Borrower to perform the Obligations, or (d) a material impairment of the
ability of the Obligors, taken as a whole, to perform their collective
Obligations under the Loan Documents.
     “Material Adverse Event” means any event or set of circumstances which has
had or would reasonably be expected to have any Material Adverse Effect.
Notwithstanding the foregoing, none of the matters described in Schedule 1.2B
hereof shall be deemed be a Material Adverse Event.
     “Material Contracts” means, collectively (a) the agreements identified on
Schedule 1.2 attached hereto and (b) any other agreement that would, if
terminated, materially adversely affect the condition, financial or otherwise of
Borrower and its Subsidiaries, taken as a whole.
     “Maturity Date” means July 19, 2009.
     “Multiemployer Plan” means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA to which Borrower or any of its ERISA Affiliates
contributes or is obligated to contribute.
     “Net Cash Issuance Proceeds” means, with respect to the issuance of any
equity Security by Borrower or any Subsidiary of Borrower, the Cash proceeds
received by or for the account of Borrower or such Subsidiary in consideration
of such issuance net of (a) underwriting discounts and commissions actually paid
to any Person not an Affiliate of Borrower and (b) professional fees and
disbursements actually paid in connection therewith. Notwithstanding the
foregoing, Net Cash Issuance Proceeds shall not include any Cash proceeds
received from any Lender in connection with the private placement of any equity
Security by Borrower or any Subsidiary of Borrower (including, without
limitation, any Cash proceeds received from the issuance of shares of Borrower’s
common stock as a result of the exercise of the Warrants).
     “Net Cash Sales Proceeds” means, with respect to any Disposition, the sum
of (a) the Cash proceeds received by or for the account of Borrower and its
Subsidiaries from such Disposition plus (b) the amount of Cash received by or
for the account of Borrower and its Subsidiaries upon the sale, collection or
other liquidation of any proceeds that are not Cash from such Disposition, in
each case net of (i) any amount required to be paid to any Person owning an
interest in the assets disposed of, (ii) any amount applied to the repayment of
Indebtedness secured by a Lien permitted under Section 6.9 on the asset disposed
of, (iii) any transfer, income or other taxes payable as a result of such

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Disposition, (iv) professional fees and expenses, fees due to any Governmental
Agency, broker’s commissions and other out-of-pocket costs of sale actually paid
to any Person that is not an Affiliate of Borrower attributable to such
Disposition, and (v) any reserves established in accordance with GAAP in
connection with such Disposition.
     “Net Income” means, with respect to any fiscal period, the consolidated net
income of Borrower and its Subsidiaries for that period, determined in
accordance with GAAP, consistently applied.
     “Nonmaterial Subsidiary” means any Subsidiary (a) the net book value of
whose assets is less than $500,000, and (b) which had gross revenues of less
than $500,000 for the immediately preceding Fiscal Year (or determined on an
annualized basis for the current Fiscal Year if such Subsidiary has not operated
for an entire Fiscal Year).
     “Note” means any of the promissory notes made by Borrower to a Lender
evidencing Advances by that Lender, substantially in the form of Exhibit C,
either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated, renewed, extended or supplanted.
     “Obligations” means all present and future obligations of every kind or
nature of any Obligor at any time and from time to time owed to the Lenders and
the Administrative Agent, under any one or more of the Loan Documents, whether
due or to become due, matured or unmatured, liquidated or unliquidated, or
contingent or noncontingent, including obligations of performance as well as
obligations of payment, and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or against any
Obligor.
     “Obligors” means, collectively, Borrower and its Subsidiaries and, in each
case where any of the foregoing is a partnership, each general partner thereof.
     “Opinions of Counsel” means the favorable written legal opinions of Calfee,
Halter & Griswold, LLP, and Call, Jensen & Ferrell, special counsel to some or
all of the Obligors, in form and substance satisfactory to Administrative Agent.
     “Party” means any Person other than Lenders and/or Administrative Agent,
which now or hereafter is a party to any of the Loan Documents.
     “PBGC” means the Pension Benefit Guaranty Corporation or any successor
thereof established under ERISA.
     “Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, which is
subject to Title IV of ERISA and is maintained by Borrower or to which Borrower
contributes or has an obligation to contribute.
     “Permitted Encumbrances” means:

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          (a) Inchoate Liens incident to construction on or maintenance of
Property; or Liens incident to construction on or maintenance of Property now or
hereafter filed of record for which adequate reserves have been set aside (or
deposits made pursuant to applicable Law) and which are being contested in good
faith by appropriate proceedings and have not proceeded to judgment, provided
that, by reason of nonpayment of the obligations secured by such Liens, no such
Property is subject to an impending risk of loss or forfeiture;
          (b) Liens for taxes and assessments on Property which are not yet past
due; or Liens for taxes and assessments on Property for which adequate reserves
have been set aside and are being contested in good faith by appropriate
proceedings and have not proceeded to judgment, provided that, by reason of
nonpayment of the obligations secured by such Liens, no such Property is subject
to an impending risk of loss or forfeiture;
          (c) defects and irregularities in title to any Property which in the
aggregate do not materially impair the fair market value or use of the Property
for the purposes for which it is or may reasonably be expected to be held;
          (d) easements, exceptions, reservations, or other agreements for the
purpose of pipelines, conduits, cables, wire communication lines, power lines
and substations, streets, trails, walkways, drainage, irrigation, water, and
sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or
other minerals, and other like purposes affecting Property which in the
aggregate do not materially burden or impair the fair market value or use of
such Property for the purposes for which it is or may reasonably be expected to
be held;
          (e) easements, exceptions, reservations, or other agreements for the
purpose of facilitating the joint or common use of Property in or adjacent to a
shopping center or similar project affecting Property which in the aggregate do
not materially burden or impair the fair market value or use of such Property
for the purposes for which it is or may reasonably be expected to be held;
          (f) rights reserved to or vested in any Governmental Agency to control
or regulate, or obligations or duties to any Governmental Agency with respect
to, the use of any Property;
          (g) rights reserved to or vested in any Governmental Agency to control
or regulate, or obligations or duties to any Governmental Agency with respect
to, any right, power, franchise, grant, license, or permit;
          (h) present or future zoning laws and ordinances or other laws and
ordinances restricting the occupancy, use, or enjoyment of Property;
          (i) statutory Liens, other than those described in clauses (a) or
(b) above, arising in the ordinary course of business with respect to
obligations which are not delinquent or are being contested in good faith,
provided that, if delinquent, adequate

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reserves have been set aside with respect thereto and, by reason of nonpayment,
no Property is subject to an impending risk of loss or forfeiture;
          (j) covenants, conditions, and restrictions affecting the use of
Property which in the aggregate do not materially impair the fair market value
or use of the Property for the purposes for which it is or may reasonably be
expected to be held;
          (k) rights of tenants under leases and rental agreements covering
Property entered into in the ordinary course of business of the Person owning
such Property;
          (1) Liens consisting of pledges or deposits to secure obligations
under workers’ compensation laws or similar legislation, including Liens of
judgments thereunder which are not currently dischargeable;
          (m) Liens consisting of pledges or deposits of Property to secure
performance in connection with operating leases made in the ordinary course of
business, provided the aggregate value of all such pledges and deposits in
connection with any such lease does not at any time exceed 10% of the annual
fixed rentals payable under such lease;
          (n) Liens consisting of deposits of Property to secure bids made with
respect to, or performance of, contracts (other than contracts creating or
evidencing an extension of credit to the depositor);
          (o) Liens consisting of any right of offset, or statutory bankers’
lien, on bank deposit accounts maintained in the ordinary course of business so
long as such bank deposit accounts are not established or maintained for the
purpose of providing such right of offset or bankers’ lien;
          (p) Liens consisting of deposits of Property to secure statutory
obligations of Borrower;
          (q) Liens consisting of deposits of Property to secure (or in lieu of)
surety, appeal or customs bonds;
          (r) Liens created by or resulting from any litigation or legal
proceeding in the ordinary course of business which is currently being contested
in good faith by appropriate proceedings, provided that, adequate reserves have
been set aside and no material Property is subject to an impending risk of loss
or forfeiture; and
          (s) Permitted Purchase Money Liens.
     “Permitted Purchase Money Liens” means purchase money Liens upon or in real
property or equipment acquired or held by Borrower or any of its Subsidiaries in
the ordinary course of business to secure the purchase price of such property or
equipment or to secure Indebtedness incurred solely for the purpose of financing
the acquisition of any such property or equipment to be subject to such Liens,
or Liens existing on any such

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property or equipment at the time of acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the purchase
price), or extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall extend to or
cover any property other than the property or equipment being acquired, and no
such extension, renewal or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or replaced; and
provided further that the aggregate principal amount of the outstanding
Indebtedness secured by Permitted Purchase Money Liens, together with the amount
of outstanding Indebtedness incurred with respect to Capital Lease Obligations,
shall not at any time exceed the amount permitted under Section 6.5(e).
     “Permitted Rights of Others” means a Right of Others consisting of (a) an
interest (other than a legal or equitable co-ownership interest, an option or
right to acquire a legal or equitable co-ownership interest and any interest of
a ground lessor under a ground lease), that does not materially impair the fair
market value or use of Property for the purposes for which it is or may
reasonably be expected to be held, (b) an option or right to acquire a Lien that
would be a Permitted Encumbrance or other encumbrance permitted pursuant to
Section 6.9, (c) the subordination of a lease or sublease in favor of a
financing entity and (d) a license, or similar right, of or to Intangible Assets
granted in the ordinary course of business.
     “Person” means any individual or entity, including a trustee, corporation,
limited liability company, general partnership, limited partnership, joint stock
company, trust, estate, unincorporated organization, business association, firm,
joint venture, Governmental Agency, or other entity.
     “Pledge Agreement” means the pledge agreement to be executed and delivered
pursuant to Article 8 by the Pledgors, either as originally executed or as it
may from time to time be supplemented, modified, amended, restated, extended or
supplanted.
     “Pledged Collateral” means the certificates evidencing (a) all of the
equity interests now or hereafter held by Borrower and its Domestic Subsidiaries
in all Subsidiaries of Borrower and (b) the Intercompany Notes; provided,
however, that the Pledged Collateral shall not include (x) more than 66% of the
equity interests of any Foreign Subsidiary, or (y) any Intercompany Note payable
to a Foreign Subsidiary.
     “Pledgors” means, collectively, Borrower and all of its Domestic
Subsidiaries that have any ownership interest in any other Subsidiary or are the
payee of an Intercompany Note.
     “Preferred Stock Exchange Agreement” means that certain Preferred Stock
Exchange Agreement dated as of July 19, 2006, by and among Borrower and each of
Camden Partners.
     “Projections” means the projections of Borrower and its Subsidiaries
delivered to Administrative Agent pursuant to Section 8.1(a)(12) hereof.

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     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
     “Pro Rata Share” of any amount means, with respect to any Lender at any
time, the product of a fraction the numerator of which is the outstanding amount
of such Lender’s Advances under the Facility, and the denominator of which is
the aggregate Advances outstanding under the Facility at such time.
     “Quarterly Payment Date” means each March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 2006.
     “Real Property” means, as of any date of determination, all real property
then or theretofore owned, leased or occupied by Borrower or any Subsidiary.
     “Regulation D” means Regulation D, as at any time amended, of the Board of
Governors of the Federal Reserve System, or any other regulation in substance
substituted therefor.
     “Regulation U” means Regulation U, as at any time amended, of the Board of
Governors of the Federal Reserve System, or any other regulation in substance
substituted therefor.
     “Requirement of Law” means, as to any Person, the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any Law, or judgment, award, decree, writ or determination of a
Governmental Agency, in each case applicable to or binding upon such Person or
any of its Property or to which such Person or any of its Property is subject.
     “Requisite Lenders” means at any time Lenders owed or holding in the
aggregate more than 50% of the then aggregate unpaid principal amount of the
Advances; provided, however, that for purposes of declaring (a) the existence of
an Event of Default and (b) all or any part of the amounts payable under the
Loan Documents to be due and payable following an Event of Default, “Requisite
Lenders” shall mean at any time Lenders owed or holding in the aggregate more
than 80% of the then aggregate unpaid principal amount of the Advances.
     “Responsible Official” means, as to any Person, (a) any Senior Officer of
such Person and (b) any other responsible official of such Person so designated
in a written notice thereof from a Senior Officer of such Person to the
Administrative Agent, on behalf of the Lenders. The Lenders shall be entitled to
conclusively rely upon any document or certificate that is signed or executed by
a Responsible Official of Borrower or any Subsidiary as having been authorized
by all necessary corporate, partnership, limited liability company and/or other
action on the part of Borrower or such Subsidiary.
     “Rich” means George S. Rich.
     “Right of Others” means, as to any Property in which a Person has an
interest, any legal or equitable right, title or other interest (other than a
Lien) held by any other Person

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in that Property, and any option or right held by any other Person to acquire
any such right, title or other interest in that Property, including any option
or right to acquire a Lien; provided, however, that (a) no covenant restricting
the use or disposition of Property of such Person contained in any Contractual
Obligation of such Person and (b) no provision contained in a contract creating
a right of payment or performance in favor of a Person that conditions, limits,
restricts, diminishes, transfers or terminates such right shall be deemed to
constitute a Right of Others.
     “Rolling Period” means any period of four consecutive Fiscal Quarters of
Borrower and its Subsidiaries.
     “Security” means any capital stock, share, voting trust certificate, bond,
debenture, note or other evidence of Indebtedness, limited partnership interest,
member interest, or any warrant, option or other right to purchase or acquire
any of the foregoing.
     “Security Agreement” means the security agreement to be executed and
delivered pursuant to Article 8 by the Borrower and its Subsidiaries, either as
originally executed or as it may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
     “Senior Officer” means (a) the chief executive officer, (b) the president,
(c) any executive vice president, (d) the chief financial officer or (e) the
treasurer, in each case of any Person.
     “Series A Stock” means 1,638,398 shares of Borrower’s Series A Convertible
Preferred Stock issued pursuant to the terms of that certain Series A Stock
Purchase Agreement.
     “Series A Stock Purchase Agreement” means that certain Series A Stock
Purchase Agreement dated as of February 7, 2005, by and among Borrower and each
of the “Investors” referred to therein.
     “Series A Warrants” means warrants to purchase in the aggregate 2,000,000
shares of Borrower’s common stock, each of which shall be in the form of
Exhibit E-1 attached hereto and incorporated herein.
     “Series B Certificate of Designation” means the Certificate of Designation,
Preferences and Rights of Series B Convertible Preferred Stock of New Horizons
Worldwide, Inc. dated July 19, 2006, a copy of which is attached hereto as
Exhibit D and incorporated herein.
     “Series B Stock” means 174,693 shares of Borrower’s Series B Convertible
Preferred Stock issued pursuant to the Preferred Stock Exchange Agreement, the
terms of which are further described in the Series B Certificate of Designation.
     “Series B Warrants” means warrants to purchase in the aggregate 666,667
shares of Borrower’s common stock, each of which shall be in the form of
Exhibit E-2 attached hereto and incorporated herein.

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     “Solvent” means, as of any date of determination, and as to any Person,
that on such date: (a) such Person does not intend to, and does not believe that
it will, incur debts beyond such Person’s ability to pay as such debts mature;
and (b) such Person is generally paying its debts as they become due. For
purposes of the foregoing, the term “debts” includes any legal liability whether
matured or unmatured, liquidated or unliquidated, absolute, fixed, or
contingent.
     “Stockholders’ Agreement” shall mean that certain Stockholders’ Agreement
dated February 7, 2005, by and among Borrower and the stockholders listed on
Exhibit B thereto, either as originally executed or as it may from time to time
be supplemented, modified, amended, restated, extended or supplanted.
     “Subordinated Obligations” means, as of any date of determination (without
duplication), any Indebtedness of Borrower or any Subsidiary on that date which
has been subordinated in right of payment to the Obligations in a manner
reasonably satisfactory to the Administrative Agent and the Requisite Lenders
and contains such other protective terms with respect to senior debt (such as
payment blockage) as the Administrative Agent and the Requisite Lenders may
reasonably require.
     “Subsidiary” means, as of any date of determination and with respect to any
Person, any corporation, limited liability company or partnership (whether or
not, in any case, characterized as such or as a “joint venture”), whether now
existing or hereafter organized or acquired: (a) in the case of a corporation or
limited liability company, of which a majority of the securities having ordinary
voting power for the election of directors or other governing body (other than
securities having such power only by reason of the happening of a contingency)
are at the time beneficially owned by such Person and/or one or more
Subsidiaries of such Person, or (b) in the case of a partnership, of which a
majority of the partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its Subsidiaries. Any
reference to a “Subsidiary” or “Subsidiaries” shall, unless otherwise provided,
be deemed to be a reference to a Subsidiary (or Subsidiaries, as the case may
be) of Borrower.
     “Subsidiary Guaranty” means the continuing guaranty of the Obligations to
be executed and delivered pursuant to Article 8 by the Guarantors, either as
originally executed or as it may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
     “Termination Date” means the date on which the Advances and all other
Obligations under this Agreement and the other Loan Documents are indefeasibly
paid in full, in Cash, and Borrower shall have no further right to borrow any
moneys or obtain other credit extensions or financial accommodations under this
Agreement or any of the other Loan Documents.
     “to the best knowledge of” means, when modifying a representation, warranty
or other statement of any Person, that the fact or situation described therein
is known by the Person (or, in the case of a Person other than a natural Person,
known by a Responsible Official of that Person) making the representation,
warranty or other statement, or with

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the exercise of reasonable due diligence under the circumstances (in accordance
with the standard of what a reasonable Person in similar circumstances would
have done) would have been known by the Person (or, in the case of a Person
other than a natural Person, would have been known by a Responsible Official of
that Person).
     “UCC” means the Uniform Commercial Code as the same may from time to time
be enacted and in effect in the State of California; provided that, in the event
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Administrative Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of California, the term “UCC” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
     “Warrants” means, collectively, the Series A Warrants and the Series B
Warrants.
     “Warrant Shares” means shares of Borrower’s common stock purchased pursuant
to the terms of the Warrants.
          1.2 Use of Defined Terms.
          Any defined term used in the plural shall refer to all members of the
relevant class, and any defined term used in the singular shall refer to any one
or more of the members of the relevant class.
          1.3 Accounting Terms; Covenant Calculations.
          All accounting terms not specifically defined in this Agreement shall
be construed in conformity with, and all financial data required to be submitted
by this Agreement shall be prepared in conformity with, GAAP applied on a
consistent basis, except as otherwise specifically prescribed herein. In the
event that GAAP changes during the term of this Agreement such that the covenant
contained in Section 6.16 would then be calculated in a different manner or with
different components, (i) Borrower and the Lenders agree to amend this Agreement
in such respects as are necessary to conform those covenants as criteria for
evaluating Borrower’s financial condition to substantially the same criteria as
were effective prior to such change in GAAP and (ii) Borrower shall be deemed to
be in compliance with the covenants contained in the aforesaid Sections if and
to the extent that Borrower would have been in compliance therewith under GAAP
as in effect immediately prior to such change, but shall have the obligation to
deliver each of the materials described in Article 7 to the Administrative Agent
and the Lenders, on the dates therein specified, with financial data presented
in a manner which conforms with GAAP as in effect immediately prior to such
change.
          1.4 Rounding.
          Any financial ratios required to be maintained by Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places
by which such ratio is expressed in this Agreement and rounding the result up or
down to the nearest number (with a round-up if

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there is no nearest number) to the number of places by which such ratio is
expressed in this Agreement.
          1.5 Exhibits and Schedules.
          All Exhibits and Schedules to this Agreement, either as originally
existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference. A matter disclosed on any
Schedule shall be deemed disclosed on all Schedules.
          1.6 References to “Borrower and its Subsidiaries”.
          Any reference herein to “Borrower and its Subsidiaries” or the like
shall refer solely to Borrower during such times, if any, as Borrower shall have
no Subsidiaries.
          1.7 Miscellaneous Terms.
          The term “or” is disjunctive; the term “and” is conjunctive. The term
“shall” is mandatory; the term “may” is permissive. Masculine terms also apply
to females; feminine terms also apply to males. The term “including” is by way
of example and not limitation.
Article 2. ADVANCES
          2.1 Advances.
          (a) Subject to the terms and conditions set forth in this Agreement,
on the Closing Date each Closing Date Lender severally agrees to make a single
Advance to Borrower under the Facility in the amount of such Lender’s
Commitment. Advances which are prepaid may not be reborrowed.
          (b) The Advance made by each Lender under its Commitment shall be
evidenced by that Lender’s Note.
          (c) The Administrative Agent, on behalf of the Lenders, is hereby
authorized to make Borrowings available to Borrower upon fulfillment of the
applicable conditions set forth in Article 8. Upon fulfillment of such
applicable conditions, the proceeds of Borrowings shall either be sent by wire
transfer to a designated deposit account of Borrower or remitted directly to one
or more third parties, as directed by Borrower and approved by the
Administrative Agent.
          2.2 Collateral.
          Except as otherwise provided in this Section 2.2, the Obligations
shall be secured by a first priority (subject to Liens permitted by Section 6.9)
perfected Lien on the Collateral pursuant to the Collateral Documents, which
Collateral shall consist of substantially all of Borrower’s and its Domestic
Subsidiaries’ property including Accounts, documents, general intangibles,
instruments, chattel paper, deposit accounts, equipment, inventory, investment
property (including, without limitation, equity interests in Subsidiaries of
Borrower), letter-of-

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credit rights, commercial tort claims and proceeds of all of the foregoing, as
further set forth in the Collateral Documents. Notwithstanding the foregoing,
the Collateral shall not include any of the properties or assets of any Foreign
Subsidiary, or more than 66% of the issued and outstanding equity interests of
any Foreign Subsidiary.
Article 3. PAYMENTS AND FEES
          3.1 Principal and Interest.
          (a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date thereof until payment in full is
made and shall accrue and be payable at the rates set forth or provided for
herein before and after Default, before and after maturity, before and after
judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law, with interest on overdue interest at the Default Rate to the
fullest extent permitted by applicable Laws as provided in Section 3.3.
          (b) Interest accrued on each Advance shall be due and payable on each
Quarterly Payment Date. Except as otherwise provided in Section 3.3, the unpaid
principal amount of any Advance shall bear interest at the rate of ten percent
(10%) per annum.
          (c) If not sooner paid, the principal Indebtedness evidenced by the
Notes shall be payable on the Maturity Date.
          (d) The principal Indebtedness evidenced by the Notes shall be prepaid
on or before the third Banking Day following the receipt by Borrower or any
Subsidiary of: (i) 100% of Net Cash Sales Proceeds, to the extent thereof; and
(ii) 50% of Net Cash Issuance Proceeds, to the extent thereof; provided,
however, that no such prepayment under clause (i) above shall be required with
respect to the Disposition of any Company Owned Location which is permissible
under Section 6.4 hereof.
          (e) The principal Indebtedness evidenced by the Notes may, at any time
and from time to time, voluntarily be paid or prepaid in whole or in part
without premium or penalty, except that with respect to any voluntary prepayment
under this subsection, (i) any partial prepayment shall be not less than
$100,000 and shall be an integral multiple of $100,000, and (ii) the
Administrative Agent and the Lenders shall have received written notice of any
prepayment by 10:00 a.m. California time on the date that is the not less than
three (3) Banking Days prior to the date of prepayment, which notice shall
identify the date and amount of the prepayment.

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          3.2 [Intentionally Omitted]
          3.3 Late Payments and Default Rate.
          Subject to the last sentence of this Section 3.3, if any installment
of principal or interest or any fee or cost or other amount payable under any
Loan Document to the Administrative Agent or any Lender is not paid when due, it
shall thereafter bear interest at the Default Rate, to the fullest extent
permitted by Law. While any Event of Default exists or after acceleration, at
the option of the Requisite Lenders and subject to the last sentence of this
Section 3.3, Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by Law) on the principal amount of all
outstanding Obligations, at the Default Rate, to the fullest extent permitted by
Law. Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable Laws. Administrative Agent
shall provide notice to Borrower of the imposition of the Default Rate pursuant
to this Agreement, provided that imposition of the Default Rate in each case
shall be effective as of the date of the Event of Default or other event giving
rise to such imposition, unless otherwise indicated in such notice.
          3.4 Computation of Interest and Fees.
          Computation of interest and fees under this Agreement shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed. Interest shall accrue on each Advance for the day on which the Advance
is made; interest shall not accrue on an Advance, or any portion thereof, for
the day on which the Advance or such portion is paid. Any Advance that is repaid
on the same day on which it is made shall bear interest for one day.
Notwithstanding anything to the contrary contained herein or in the Notes, the
total liability for payments in the nature of interest shall not exceed the
limits imposed by applicable laws, if any, relating to limitations upon
interest. If any payments in the nature of interest made under this Agreement or
the Notes would exceed the limits imposed by such laws, then it is agreed that
any such excess shall be deemed payment of principal and the indebtedness
evidenced hereby and thereby shall be reduced by such amount so that the total
liability for payments in the nature of interest, shall not exceed the limits
imposed by such laws. In determining whether or not payments in the nature of
interest exceed the limits imposed by applicable laws, Borrower agrees that
Administrative Agent may, to the maximum extent permitted under applicable law:
(i) re-characterize non-principal payments as sums that are not considered
interest for the purposes of such laws, including without limitation,
reimbursement of expenses, late charges, and default interest; and (ii) spread
or re-allocate the total amount of payments in the nature of interest due
hereunder and/or under the Notes, including those previously made and those
thereafter due, over the entire term of the obligation so that the interest rate
is deemed to have been uniform throughout the entire term.
          3.5 Non-Banking Days.
          If any payment to be made by Borrower or any other Party under any
Loan Document shall come due on a day other than a Banking Day, payment shall
instead be

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considered due on the next succeeding Banking Day and the extension of time
shall be reflected in computing interest and fees.
          3.6 Manner and Treatment of Payments.
          (a) Each payment hereunder or on the Notes or under any other Loan
Document shall be made, as applicable, to the Administrative Agent at the
Administrative Agent’s Office or to the applicable Lender at such Lender’s
Office, in immediately available funds not later than 11:00 a.m. California
time, on the day of payment (which must be a Banking Day). All payments received
after such time, on any Banking Day, shall be deemed received on the next
succeeding Banking Day. All payments shall be made in lawful money of the United
States of America.
          (b) Except as otherwise provided in Section 11.10(b) hereof, each
payment or prepayment on account of the Advances, regardless of when and how
made, shall be made pro rata to each Lender according to the outstanding amount
of Advances made by such Lender.
          (c) Each Lender shall use its best efforts to keep a record (in
writing or by an electronic data entry system) of Advances made by it and
payments received by it with respect to its Note and, subject to
Section 10.6(g), such record shall, as against Borrower, be presumptive evidence
of the amounts owing. Notwithstanding the foregoing sentence, the failure by any
Lender to keep such a record shall not affect Borrower’s obligation to pay the
Obligations.
          (d) Each payment of any amount payable by Borrower or any other Party
to the Administrative Agent or any Lender under this Agreement or any other Loan
Document shall be made free and clear of, and without reduction by reason of,
any taxes, assessments or other charges imposed by any Governmental Agency,
central bank or comparable authority, excluding (i) taxes imposed on or measured
in whole or in part by its overall net income and franchise taxes imposed in
lieu of net income taxes by (A) any jurisdiction (or political subdivision
thereof) in which it is organized or maintains its principal office or (B) any
jurisdiction (or political subdivision thereof) in which it is “doing business”
(all such non-excluded taxes, assessments or other charges being hereinafter
referred to as “Taxes”). To the extent that Borrower is obligated by applicable
Laws to make any deduction or withholding on account of Taxes from any amount
payable to any Lender under this Agreement, Borrower shall (1) make such
deduction or withholding and pay the same to the relevant Governmental Agency
and (2) pay such additional amount to that Lender as is necessary to result in
that Lender’s receiving a net after-Tax amount equal to the amount to which that
Lender would have been entitled under this Agreement absent such deduction or
withholding. If and when receipt of such payment results in an excess payment or
credit to that Lender on account of such Taxes, that Lender shall promptly
refund such excess to Borrower.
          (e) Each Lender agrees to promptly notify the Administrative Agent in
writing if any payment to which it is entitled hereunder, under its Note or
under any other Loan Document has not been made when due.

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          3.7 Failure to Charge Not Subsequent Waiver.
          Any decision by the Administrative Agent or any Lender not to require
payment of any interest (including interest arising under Section 3.3), fee,
cost or other amount payable under any Loan Document, or to calculate any amount
payable by a particular method, on any occasion shall in no way limit or be
deemed a waiver of the Administrative Agent’s or such Lender’s right to require
full payment of any interest (including interest arising under Section 3.3),
fee, cost or other amount payable under any Loan Document, or to calculate an
amount payable by another method that is not inconsistent with this Agreement,
on any other or subsequent occasion.
          3.8 [Intentionally Omitted]
          3.9 Fee Determination Detail.
          The Administrative Agent, and any Lender, shall provide reasonable
detail to Borrower regarding the manner in which the amount of any payment to
the Administrative Agent and the Lenders, or that Lender, under Article 3 has
been determined, concurrently with demand for such payment.
Article 4. REPRESENTATIONS AND WARRANTIES
          Borrower represents and warrants to the Administrative Agent and each
of the Lenders that:
          4.1 Existence and Qualification; Power; Compliance With Laws.
          Borrower is a corporation duly formed, validly existing and in good
standing under the Laws of the State of Delaware. Borrower is duly qualified or
registered to transact business and is in good standing in the State of
California, and each other jurisdiction in which the conduct of its business or
the ownership or leasing of its Properties makes such qualification or
registration necessary, except where the failure so to qualify or register and
to be in good standing would not constitute a Material Adverse Event. Borrower,
has all requisite power and authority to conduct its business, to own and lease
its Properties and to execute and deliver each Loan Document to which it is a
Party and to perform its Obligations. The chief executive offices of Borrower
are located in Anaheim, California. All outstanding capital stock of Borrower is
duly authorized, validly issued, fully paid and non-assessable, and no holder
thereof has any enforceable right of rescission under any applicable state or
federal securities or other Laws. Except as disclosed in Schedule 4.1 attached
hereto and incorporated herein, Borrower is in compliance with all Laws and
other legal requirements applicable to its business, has obtained all
authorizations, consents, approvals, orders, licenses and permits from, and has
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of its business, except where the failure so to
comply with Laws and other legal requirements applicable to its business, obtain
authorizations, etc., file, register, qualify or obtain exemptions does not
constitute a Material Adverse Event.

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          4.2 Authority; Compliance With Other Agreements and Instruments and
Government Regulations.
          The execution, delivery and performance by Borrower and the other
Obligors of the Loan Documents to which it is a Party have been duly authorized
by all necessary corporate or company action, as applicable, and do not and will
not:
          (a) Require any consent or approval not heretofore obtained of any
partner, director, stockholder, member, security holder or creditor of such
Party;
          (b) Violate or conflict with any provision of such Party’s charter,
articles of incorporation, bylaws, articles or certificate of organization,
operating agreement, or other organizational documents, as applicable;
          (c) Result in or require the creation or imposition of any Lien (other
than pursuant to the Loan Documents) or Right of Others upon or with respect to
any Property now owned or leased or hereafter acquired by such Party;
          (d) Violate any Requirement of Law applicable to such Party;
          (e) Result in a breach of or constitute a default under, or cause or
permit the acceleration of any obligation owed under, any indenture or loan or
credit agreement or any other Contractual Obligation to which such Party is a
party or by which such Party or any of its Property is bound or affected;
and, except as disclosed in Schedule 4.1 attached hereto and incorporated
herein, such Party is not in violation of, or default under, any Requirement of
Law or Contractual Obligation, or any indenture, loan or credit agreement
described in Section 4.2(e), in any respect that constitutes a Material Adverse
Event.
          4.3 No Governmental Approvals Required.
          Except as previously obtained or made, no authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is or will be required to authorize
or permit under applicable Laws the execution, delivery and performance by
Borrower or any other Obligor of the Loan Documents to which it is a Party.
          4.4 Subsidiaries.
          (a) Schedule 4.4 hereto correctly sets forth, as of the Closing Date,
the names, form of legal entity, number of shares of capital stock or membership
or other equity interests, as applicable, issued and outstanding, and number of
shares of capital stock or membership or other equity interests, as applicable,
owned by Borrower or any Subsidiary of Borrower (specifying such owner) and
jurisdictions of organization of all Subsidiaries of Borrower. Except as
described in Schedule 4.4, Borrower does not own, as of the Closing Date, any
capital stock, membership interest, other equity interest or debt security which
is convertible, or exchangeable, for capital stock, membership interests or
other equity interests in any Person. As of the Closing Date, unless otherwise

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indicated in Schedule 4.4, all of the outstanding shares of capital stock, all
of the outstanding membership interests or all of the units of other equity
interest, as the case may be, of each Subsidiary are owned of record and
beneficially by Borrower, there are no outstanding options, warrants or other
rights to purchase capital stock of any such Subsidiary, and all such shares,
membership interests or other equity interests so owned are duly authorized,
validly issued, fully paid and non-assessable, and were issued in compliance
with all applicable state and federal securities and other Laws, and are free
and clear of all Liens, except for Permitted Encumbrances and other encumbrances
permitted pursuant to Section 6.9.
          (b) Each Subsidiary is a legal entity of the type described in
Schedule 4.4 duly formed, validly existing and, if such concept is legally
recognized in such Subsidiary’s jurisdiction of organization, in “good standing”
under the Laws of its jurisdiction of organization, is duly qualified to do
business as a foreign organization and, if such concept is legally recognized in
any applicable jurisdiction, is in “good standing” as such in each jurisdiction
in which the conduct of its business or the ownership or leasing of its
Properties makes such qualification necessary (except where the failure to be so
duly qualified and in good standing does not constitute a Material Adverse
Event), and has all requisite power and authority to conduct its business and to
own and lease its Properties.
          (c) Each Subsidiary is in compliance with all Laws and other
requirements applicable to its business and has obtained all authorizations,
consents, approvals, orders, licenses, and permits from, and each such
Subsidiary has accomplished all filings, registrations, and qualifications with,
or obtained exemptions from any of the foregoing from, any Governmental Agency
that are necessary for the transaction of its business, except where the failure
to be in such compliance, obtain such authorizations, consents, approvals,
orders, licenses, and permits, accomplish such filings, registrations, and
qualifications, or obtain such exemptions, does not constitute a Material
Adverse Event.

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          4.5 Financial Statements. To the best knowledge and belief of the
Senior Officers of Borrower, the draft financial statements of Borrower and its
Subsidiaries for the Fiscal Years ending December 31, 2004 (dated June 1, 2006,
together with additional net income adjustment information provided July 5,
2006), and December 31, 2005 (dated June 1, 2006), and for the five months
ending May 31, 2006 (provided July 5, 2006), copies of which have heretofore
been provided to Administrative Agent and the Lenders, are true and complete,
fairly present the financial condition of Borrower and its Subsidiaries as at
such dates and the results of their operations for the periods then ended and
were prepared in accordance with GAAP; provided, however, that the balance sheet
as of December 31, 2004 and the above-referenced draft financial statements of
Borrower and its Subsidiaries for the Fiscal Year ending December 31, 2005, and
for the five months ending May 31, 2006, shall be subject to audit adjustments
which individually or in the aggregate could be material.
          4.6 No Other Liabilities; No Material Adverse Changes.
          Borrower and its Subsidiaries do not have any material liability or
material contingent liability required under GAAP to be reflected or disclosed,
and not reflected or disclosed, in the balance sheet included in the financial
statements described in Section 4.5(b), other than liabilities and contingent
liabilities arising in the ordinary course of business since the date of such
balance sheet. Except as disclosed to Administrative Agent prior to the Closing
Date, no circumstance or event has occurred, as of the Closing Date, that
constitutes a Material Adverse Event since April 30, 2006.
          4.7 Title to and Location of Property.
          Borrower and its Subsidiaries have valid title to the Property (other
than assets which are the subject of a Capital Lease Obligation) reflected in
the balance sheet included in the financial statements described in
Section 4.5(b), other than items of Property or exceptions to title which are in
each case immaterial and Property subsequently sold or disposed of in the
ordinary course of business (or otherwise disposed of in a manner permitted by
this Agreement). Such Property is free and clear of all Liens and Rights of
Others, other than Liens or Rights of Others described in Schedule 4.7A and
Permitted Encumbrances, other encumbrances permitted pursuant to Section 6.9,
and Permitted Rights of Others. All Property of Borrower and its Subsidiaries is
located at one of the locations described in Schedule 4.7B or at such other
locations within the United States of America as Borrower and/or its
Subsidiaries, subsequent to the Closing Date, shall move such Property (other
than deposit (whether a demand, time, savings, passbook or similar account) and
investment accounts) and shall have notified Administrative Agent in writing
prior to any such move. Schedule 4.7B sets forth (a) all office, warehouse and
manufacturing and other space of Borrower and its Subsidiaries where any
Property of Borrower or any of its Subsidiaries is located and (b) all deposit
(whether a demand, time, savings, passbook or similar account) and investment
accounts of Borrower and its Subsidiaries, identifying such account by account
number, type, location of depositary institution and applicable owner thereof.

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          4.8 Intangible Assets.
          Borrower and its Subsidiaries own, or possess the right to use to the
extent necessary in their respective businesses, all material trademarks, trade
names, copyrights, patents, patent rights, computer software, licenses and other
Intangible Assets that are used in the conduct of their businesses as now
operated, and no such Intangible Asset, to the best knowledge of Borrower,
conflicts with the valid trademark, trade name, copyright, patent, patent right
or Intangible Asset of any other Person to the extent that such conflict
constitutes a Material Adverse Event. Except as described in Schedule 4.8, in
the enforcement of its rights as a secured creditor, the Administrative Agent
(or any applicable Lender) will not be required to own or otherwise possess the
right to use any patent, trademark or other intellectual property, or any
license to use the same, in order to sell any Inventory of Borrower or any of
its Subsidiaries after the occurrence of an Event of Default. Schedule 4.8 sets
forth all patents, patent applications, trademarks, trade names and trade styles
used by Borrower or any of its Subsidiaries at any time within the five (5) year
period ending on the Closing Date.
          4.9 Public Utility Holding Company Act.
          None of Borrower or any of the other Obligors is a “holding company”,
or a “subsidiary company” of a “holding company”, or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company”, within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or,
as the case may be, the Public Utility Holding Company Act of 2005, enacted as
part of the Energy Policy Act of 2005, Pub. L. No. 109-58 as codified at §§ 1261
et seq., as amended.
          4.10 Litigation.
          Except for (a) any matter fully covered as to subject matter and
amount (subject to applicable deductibles and retentions) by insurance for which
the insurance carrier has not asserted lack of subject matter coverage or
reserved its right to do so, (b) any matter, or series of related matters,
involving a claim against Borrower or any of its Subsidiaries which could not
reasonably be expected to have a Material Adverse Effect, (c) matters of an
administrative nature not involving a claim or charge against Borrower or any
Subsidiary of Borrower and (d) matters set forth in Schedule 4.10, there are no
actions, suits, proceedings or investigations pending as to which Borrower or
any of its Subsidiaries have been served or have received notice or, to the best
knowledge of Borrower, threatened against or affecting Borrower or any of its
Subsidiaries or any Property of any of them before any Governmental Agency. None
of Borrower, its Subsidiaries, or, to the best knowledge of Borrower, any
executive officer of any such Persons has been indicted or convicted in
connection with or is engaging in any criminal conduct which constitutes a
felony, or is currently subject to any lawsuit or proceeding or, to the best of
Borrower’s knowledge, under investigation in connection with any
anti-racketeering or criminal conduct or activity which constitutes a felony.
          4.11 Binding Obligations.
          Each of the Loan Documents to which Borrower and any of the other
Obligors is a Party will, when executed and delivered by such Party, constitute
the legal, valid and binding

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obligation of such Party, enforceable against such Party in accordance with its
terms, except as enforcement may be limited by Debtor Relief Laws or equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion.
          4.12 No Default.
          No event has occurred and is continuing that is a Default or Event of
Default.
          4.13 ERISA.
          (a) With respect to each Pension Plan:
               (i) such Pension Plan complies in all material respects with
ERISA and any other applicable Laws to the extent that noncompliance could
reasonably be expected to have a Material Adverse Effect;
               (ii) such Pension Plan has not incurred any “accumulated funding
deficiency” (as defined in Section 302 of ERISA) that could reasonably be
expected to have a Material Adverse Effect;
               (iii) no “reportable event” (as defined in Section 4043 of ERISA,
but excluding such events as to which the PBGC has by regulation waived the
requirement therein contained that it be notified within thirty days of the
occurrence of such event) has occurred that could reasonably be expected to have
a Material Adverse Effect; and
               (iv) neither Borrower nor any of the other Obligors has engaged
in any non-exempt “prohibited transaction” (as defined in Section 4975 of the
Code) that could reasonably be expected to have a Material Adverse Effect.
          (b) Neither Borrower nor any of the other Obligors have incurred or
expects to incur any withdrawal liability to any Multiemployer Plan that could
reasonably be expected to have a Material Adverse Effect.
          4.14 Regulation U; Investment Company Act.
          No part of the proceeds of any Advance hereunder will be used to
purchase or carry, or to extend credit to others for the purpose of purchasing
or carrying, any Margin Stock in violation of Regulation U. Neither Borrower nor
any of the other Obligors is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.
          4.15 Disclosure.
          No written statement made by a Senior Officer of Borrower to the
Administrative Agent or any Lender pursuant to this Agreement, or in connection
with any Advance, as of the date thereof contained any untrue statement of a
material fact or omitted a material fact necessary to make the statement made
not misleading in light of all the circumstances existing at the date the
statement was made.

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          4.16 Tax Liability.
          Borrower and the other Obligors have filed all tax returns which are
required to be filed (other than such tax returns as pertain to immaterial taxes
and with respect to which (a) Borrower and/or the other Obligors have
inadvertently neglected to file such returns and (b) no material Property of
Borrower or any Subsidiary is at impending risk of being seized, levied upon or
forfeited), and have paid, or made provision for the payment of, all taxes with
respect to the periods, Property or transactions covered by said returns, or
pursuant to any assessment received by Borrower or any of its Subsidiaries,
except (a) such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been established
and maintained and (b) immaterial taxes so long as no material Property of
Borrower or any Subsidiary is at impending risk of being seized, levied upon or
forfeited.
          4.17 Projections.
          To the best knowledge of the Senior Officers of Borrower (a) as of the
date of the preparation of the Projections, the assumptions set forth therein
were reasonable and consistent with each other and with all facts known to
Borrower, and the Projections were reasonably based on such assumptions, and
(b) nothing has occurred since the date the Projections were prepared which
would make the representations and warranties made in clause (a) hereof untrue
in any material respect if made as of the Closing Date and with the assumption
that such Projections were prepared on such date. Nothing in this Section 4.17
shall be construed as a representation or covenant that the Projections in fact
will be achieved.
          4.18 Hazardous Materials.
          Except as described in Schedule 4.18, (a) neither Borrower nor any of
the other Obligors at any time has disposed of, discharged, released or
threatened the release of any Hazardous Materials on, from or under the Real
Property in violation of any Hazardous Materials Law that would individually or
in the aggregate constitute a Material Adverse Event, (b) no condition exists
that violates any Hazardous Material Law affecting any Real Property except for
such violations that would not individually or in the aggregate constitute a
Material Adverse Event, (c) no Real Property or any portion thereof is or has
been utilized by Borrower or any Subsidiary as a site for the manufacture of any
Hazardous Materials except any such usage that would not individually or in the
aggregate constitute a Material Adverse Event and (d) to the extent that any
Hazardous Materials are used, generated or stored by Borrower or any Subsidiary
on any Real Property, or transported to or from such Real Property by Borrower,
or any Subsidiary, such use, generation, storage and transportation are in
compliance in all material respects with all Hazardous Materials Laws.
          4.19 Security Interests.
          Upon the execution and delivery of the Security Agreement, the
Security Agreement will create a valid security interest in the Collateral
described therein securing the Obligations (subject only to Permitted
Encumbrances, Permitted Rights of Others and other matters permitted by
Section 6.9 and to such qualifications and exceptions as are contained in the
UCC with respect to the priority of security interests perfected by means other
than the filing of a

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financing statement or with respect to the creation of security interests in
Property to which Division 9 of the UCC does not apply) and all actions
necessary to perfect the security interests so created, other than filing of the
UCC-1 financing statements delivered to the Administrative Agent pursuant to
Section 8.1 with the appropriate Governmental Agency, have been taken and
completed. Upon the execution and delivery of any Deposit Account Control
Agreement by the depositary institution party thereto and the Borrower or any
applicable Subsidiary, such Deposit Account Control Agreement will create a
valid security interest in the Collateral described therein (subject only to
Liens permitted by the terms of such Deposit Account Control Agreement and Liens
permitted by Section 6.9) securing the Obligations and all actions necessary to
perfect the security interests so created will have been taken and completed.
Upon the execution and delivery of the Pledge Agreement, the Pledge Agreement
will create a valid security interest in the Pledged Collateral described
therein and all action necessary to perfect the security interest so created as
a first priority security interest will have been taken and completed.
          4.20 Employee Matters.
          There is no strike, work stoppage or labor dispute with any union or
group of employees pending or, to the best knowledge of Borrower overtly
threatened involving Borrower or any Subsidiary that would constitute a Material
Adverse Event.
          4.21 Fiscal Year.
          Borrower and its Subsidiaries each operate on a fiscal year ending on
December 31.
          4.22 Solvency.
          After giving effect to this Agreement and the other Loan Documents
(including after giving effect to Advances under this Agreement as of the
Closing Date), Borrower and its Subsidiaries, taken as a whole, shall be
Solvent.
Article 5. AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
REQUIREMENTS)
          So long as any portion of any Advance remains unpaid, or any other
Obligation remains unpaid, Borrower shall, and shall cause each of its
Subsidiaries to, unless the Administrative Agent (with the written approval of
the Requisite Lenders) otherwise consents:
          5.1 Payment of Taxes and Other Potential Liens.
          Pay and discharge promptly all taxes, assessments and governmental
charges or levies imposed upon any of them, upon their respective Property or
any part thereof and upon their respective income or profits or any part
thereof, except that Borrower and its Subsidiaries shall not be required to pay
or cause to be paid (a) any tax, assessment, charge or levy that is not yet past
due, or is being contested in good faith by appropriate proceedings so long as
the relevant entity has established and maintains adequate reserves for the
payment of the same or

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(b) any immaterial tax so long as no material Property of Borrower or any
Subsidiary thereof is at impending risk of being seized, levied upon or
forfeited.
          5.2 Preservation of Existence.
          Preserve and maintain their respective existences (except as permitted
by this Section 5.2 or Section 6.3 hereof) in the jurisdiction of their
formation and all material authorizations, rights, franchises, privileges,
consents, approvals, orders, licenses, permits, or registrations from any
Governmental Agency that are necessary for the transaction of their respective
business and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective business or the ownership or leasing of their respective Properties
except where the failure to so qualify or remain qualified would not constitute
a Material Adverse Event. Notwithstanding the foregoing, any Subsidiary of
Borrower whose only assets were at a Company Owned Location which was the
subject of a Disposition and which has no remaining assets, liabilities or
continuing operations may liquidate, dissolve or merge into Borrower or another
of Borrower’s Subsidiaries; provided, however, that no Domestic Subsidiary may
dissolve or merge into a Foreign Subsidiary.
          5.3 Maintenance of Properties.
          Maintain, preserve and protect all of their respective Properties in
good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of their respective Properties, except
(i) that the failure to maintain, preserve and protect a particular item of
Property that is at the end of its useful life or that is not of significant
value, either intrinsically or to the operations of Borrower or any of its
Subsidiaries, shall not constitute a violation of this covenant, and (ii) this
covenant shall not be construed to prohibit any Disposition of assets otherwise
permitted pursuant to Section 6.4.
          5.4 Maintenance of Insurance.
          (a) Maintain insurance on all insurable tangible Property against
fire, casualty and such other hazards (including extended coverage and workmen’s
compensation) in such amounts, with such deductibles and with such insurers
(rated “B” or better by “A.M. Best’s Insurance Reports”) as are customarily used
by companies operating in the same industry as Borrower and its Subsidiaries and
reasonably acceptable to the Administrative Agent. Borrower shall furnish the
Administrative Agent with a schedule of all such insurance prepared by their
insurance broker, and certificates of insurance with respect thereto (including
the text of the lender’s loss payable clause in favor of the Administrative
Agent required below), or such other evidence of insurance as the Administrative
Agent may require within thirty (30) days after the Closing Date. Borrower shall
furnish the Administrative Agent with a copy of each applicable policy within
thirty (30) days after the Closing Date. In the event Borrower fails to procure
or cause to be procured any such insurance or to timely pay or cause to be paid
the premium(s) on any such insurance, the Administrative Agent may do so for
Borrower but Borrower shall continue to be liable for the same. All casualty
insurance policies shall contain standard lender’s loss payable clauses issued
in favor of the Administrative Agent (on behalf of the Lenders) indicating that
the Administrative Agent is sole lender loss

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payee, under which all losses thereunder shall be paid to the Administrative
Agent (on behalf of the Lenders) as the Administrative Agent’s interest may
appear. Such policies shall expressly provide that the requisite insurance
cannot be altered or canceled without thirty (30) days prior written notice to
the Administrative Agent and shall insure the Administrative Agent
notwithstanding the act or neglect of Borrower or any of its Subsidiaries.
Borrower hereby appoints the Administrative Agent as its attorney-in-fact,
exercisable at the Administrative Agent’s option only during the occurrence and
continuance of a Default or an Event of Default, and only to the extent the
Obligations are outstanding, to endorse any check which may be payable to
Borrower and to file proofs of loss with respect to any insurance claims, in
order to collect the proceeds of such insurance and any amount or amounts
collected by the Administrative Agent pursuant to the provisions of this
paragraph may be applied by the Administrative Agent to the Obligations.
Borrower further covenants that all insurance premiums due and owing under its
current casualty policies have been paid. Borrower also agrees to notify the
Administrative Agent, promptly, upon any receipt of a notice of termination,
cancellation, or non-renewal from its insurance company of any such policy.
          (b) Maintain, and deliver to the Administrative Agent upon the
Administrative Agent’s request evidence of, public liability, products liability
and business interruption insurance in such amounts as are reasonably acceptable
to the Administrative Agent, but in any event not more than are customary for
companies in the same or similar businesses located in the same or similar area.
The Administrative Agent (on behalf of the Lenders) shall be named as additional
insured with respect to all such liability insurance. The foregoing insurance
shall be obtained from such insurers (rated “A” or better by “A.M. Best’s
Insurance Reports”) as are customarily used by companies operating in the same
industry as Borrower and its Subsidiaries and reasonably acceptable to the
Administrative Agent.
          5.5 Compliance With Laws.
          Comply with all Requirements of Law noncompliance with which
constitutes a Material Adverse Event, except for matters disclosed in
Schedule 4.1 attached hereto and incorporated herein, and except that that
Borrower and its Subsidiaries need not comply with a Requirement of Law then
being contested by any of them in good faith by appropriate proceedings.
          5.6 Inspection Rights.
          Upon reasonable notice, at any time during regular business hours and,
as requested by the Administrative Agent (but not so as to materially interfere
with the business of Borrower or any of its Subsidiaries) permit the
Administrative Agent, or any Lender, or any authorized employee, agent or
representative thereof, to examine, audit and make copies and abstracts from the
records and books of account of Borrower and its Subsidiaries (including any
software or CD Rom programs relating thereto), and to visit and inspect the
Properties of Borrower and its Subsidiaries and to discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with any of their officers, key
employees or accountants and, upon request, furnish promptly to the
Administrative Agent or any Lender true copies of all financial

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information made available to the board of directors or audit committee of the
board of directors of Borrower. If any of the Properties, books or records of
Borrower or any of its Subsidiaries are in the possession of a third party,
Borrower authorizes that third party to permit the Administrative Agent or any
Lender or any agents thereof to have access to perform inspections or audits and
to respond to the Administrative Agent’s or any Lender’s request for information
concerning such Properties, books and records. Notwithstanding the foregoing, no
prior notice of any such examination, audit, visit, inspection or discussion
shall be required if an Event of Default has occurred and remains in effect or
if the Administrative Agent has reason to believe that a Default or Event of
Default then exists.
          5.7 Keeping of Records and Books of Account.
          Keep adequate records and books of account reflecting all financial
transactions in conformity with GAAP, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over Borrowers and its Subsidiaries.
          5.8 Compliance With Agreements.
          Promptly and fully comply with all Contractual Obligations to which
any one or more of them is a party, except for any such Contractual Obligations
(a) the performance of which would cause a Default or (b) then being contested
by any of them in good faith by appropriate proceedings or (c) if the failure to
comply does not constitute a Material Adverse Event.
          5.9 Use of Proceeds.
          Use the proceeds of the Advances in accordance with the provisions of
the Schedule 5.9.
          5.10 Hazardous Materials Laws.
          Keep and maintain all Real Property and each portion thereof in
compliance in all respects with all applicable Hazardous Materials Laws (except
such noncompliance that would not individually or in the aggregate constitute a
Material Adverse Event) and promptly notify the Administrative Agent in writing
(attaching a copy of any pertinent written material) of (a) any and all material
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened in writing by a Governmental Agency pursuant
to any applicable Hazardous Materials Laws, (b) any and all material claims made
or threatened in writing by any Person against Borrower or any Subsidiary
relating to damage, contribution, cost recovery, compensation, loss or injury
resulting from any Hazardous Materials and (c) discovery by any Senior Officer
of Borrower of any material occurrence or condition on any real property
adjoining or in the vicinity of such Real Property that could reasonably be
expected to cause such Real Property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such Real
Property under any applicable Hazardous Materials Laws.

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          5.11 Future Subsidiaries; Additional Security Documentation.
          (a) Cause each Domestic Subsidiary formed or acquired by Borrower or
any Domestic Subsidiary of Borrower after the Closing Date to execute and
deliver to the Administrative Agent (i) an appropriate joinder to the Subsidiary
Guaranty, the Security Agreement and/or the Pledge Agreement, (ii) such
landlord/mortgagee waivers as the Administrative Agent shall reasonably request
and (iii) such other agreements, financing statements and other documents
(including those of the type described in Section 8.1(a)(9), together with an
opinion of counsel from counsel and in form and substance reasonably acceptable
to the Administrative Agent, and
          (b) pledge to the Administrative Agent pursuant to the Pledge
Agreement all of the capital stock or other equity interests of any Subsidiary
formed or acquired after the Closing Date; provided, however, that not more than
66% of the capital stock or other equity interests of any Foreign Subsidiary
shall be required to be pledged pursuant to the provisions hereof. In addition
to the foregoing, Borrower and its Subsidiaries shall cause such documents and
instruments as may be reasonably requested by the Administrative Agent from time
to time to be executed and delivered and do such further acts and things as
reasonably may be required in order for the Administrative Agent to obtain a
fully perfected first priority Lien on all Collateral, subject to Permitted
Encumbrances, Permitted Rights of Others and other matters permitted by
Section 6.9.
          5.12 Intercompany Debt.
          Maintain accurate and complete records regarding the Indebtedness of
Borrower’s Subsidiaries and Affiliates to Borrower (or to any Subsidiary of
Borrower), cause each Subsidiary and Affiliate of Borrower to deliver promptly
to Administrative Agent each promissory note now existing or hereafter created
which evidences any Indebtedness of such Subsidiary or Affiliate to Borrower (or
to any Subsidiary of Borrower), and cause each payee of each such promissory
note which is a Domestic Subsidiary to deliver the same to the Administrative
Agent, with an endorsement in blank, as Pledged Collateral.
          5.13 Authorized Shares.
          At all times maintain such authorized but unissued shares of
Borrower’s common stock as may be necessary to permit the Closing Date Lenders
to acquire all of the Warrant Shares.
Article 6. NEGATIVE COVENANTS
          So long as any portion of any Advance remains unpaid, or any other
Obligation remains unpaid, Borrower shall not, and shall not permit any of its
Subsidiaries to, unless the Administrative Agent (with the written approval of
the Requisite Lenders or, if required by Section 11.2, all of the Lenders)
otherwise consents:

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          6.1 Prepayment of Indebtedness.
          Prepay any principal or interest on any Indebtedness of Borrower or
any Subsidiary prior to the date when due, or make any payment or deposit with
any Person that has the effect of providing for the satisfaction of any
Indebtedness of Borrower or any Subsidiary prior to the date when due, except
(a) Indebtedness to the Administrative Agent and the Lenders under this
Agreement and the other Loan Documents, and (b) Indebtedness to other Persons
the prepayment of which is approved in advance by the Requisite Lenders in
writing.
          6.2 Prepayment of Subordinated Obligations.
          Pay any (a) principal (including sinking fund payments) or any other
amount (other than scheduled interest payments) with respect to any Subordinated
Obligation, or purchase or redeem any Subordinated Obligation or deposit any
monies, securities or other Property with any trustee or other Person to provide
assurance that the principal or any portion thereof of any Subordinated
Obligation will be paid when due or otherwise to provide for the defeasance of
any Subordinated Obligation or (b) scheduled interest on any Subordinated
Obligation if the payment thereof is then prohibited under the terms of the
subordination provisions governing such Subordinated Obligation.
          6.3 Merger, Consolidation.
          Merge into or consolidate with any other entity, nor acquire all or
substantially all of the assets of any other entity, except mergers and
consolidations of a Subsidiary of Borrower into Borrower (with Borrower as the
surviving entity), or of domestic wholly-owned Subsidiaries with each other,
provided that (a) no Default or Event of Default then exists or would result
therefrom and (b) any such “surviving” entity shall have executed such
amendments to the Loan Documents, if any, as the Administrative Agent may
reasonably determine are appropriate as a result of such merger.
          6.4 Dispositions.
          Make any Disposition of its Property, whether now owned or hereafter
acquired, except for (a) Dispositions of Company Owned Locations, and (b) other
Dispositions (i) during the period from the Closing Date through December 31,
2006, in an aggregate amount not to exceed $250,000, (ii) during any Fiscal Year
commencing after the Closing Date in an aggregate amount not to exceed $500,000,
or (iii) which are made with the approval of the Board of Directors of Borrower;
provided that in each case (x) at the time of any such Disposition, no Default
or Event of Default shall exist or shall result from such Disposition, and
(y) Borrower shall comply with Section 3.1(d) in connection with any such
Disposition; provided further that if any Property consisting of computers,
desks, chairs or other tangible office equipment is lost or destroyed or taken
by condemnation such event shall not qualify as a “Disposition” for purposes of
the dollar limit set forth in this Section 6.4 and Borrower shall be not be
required to comply with Section 3.1(d) with respect to any such event if (1) no
Event of Default has occurred and is continuing, (2) the proceeds received by
Borrower and/or its applicable Subsidiaries with respect to such any such item
of Property shall be in an amount sufficient to purchase another asset
performing the same or similar function of substantially similar quality,

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and (3) any such item is replaced within 90 days from such disposition with
another asset performing the same or a similar function and of substantially
similar quality.
          6.5 Other Indebtedness.
          Create, incur, assume or permit to exist any Indebtedness resulting
from borrowings, loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except (a) the
Obligations, (b) Indebtedness owed to Borrower or any of its Subsidiaries,
subject to the limitations on such Indebtedness set forth in Section 6.7(b), (c)
Indebtedness existing on the Closing Date and disclosed in Schedule 6.5, and
refinancings, renewals, extensions or amendments that do not increase the amount
thereof, (d) Indebtedness which arises from Earnout Payments provided such
Earnout Payments are treated as Subordinated Obligations, and (e) Indebtedness
secured by Permitted Purchase Money Liens and/or Indebtedness incurred with
respect to Capital Lease Obligations (as determined by GAAP) in an aggregate
amount not to exceed $250,000 at any time outstanding.
          6.6 Guaranties.
          Guarantee or become liable in any way as surety, endorser (other than
as endorser of negotiable instruments for deposit or collection in the ordinary
course of business), accommodation endorser or otherwise for, nor pledge or
hypothecate any assets of Borrower or any of its Subsidiaries as security for,
any liabilities or obligations of any other Person, except (a) any of the
foregoing existing on the Closing Date and disclosed on Schedule 6.6, (b) any of
the foregoing in favor of the Administrative Agent (on behalf of the Lenders),
(c) endorsements for collection or deposit in the ordinary course of business,
(d) under surety bonds for an amount not in excess of $300,000 per surety bond,
(e) Interest Rate Protection Agreements approved by the Administrative Agent,
and (f) contingent obligations with respect to the minimum aggregate license
fees to the extent of $15,000,000 as payable pursuant to Exhibit C of the
Content License and Distribution Agreement between New Horizons Computer
Learning Centers, Inc. and Element K LLC.
          6.7 Loans, Advances, Investments, Acquisitions.
          Make any loans or advances to or Investments in any Person, or any
Acquisitions, except (a) any of the foregoing existing as of the Closing Date
and disclosed on Schedule 6.7, (b) extensions of credit by Borrower or New
Horizons Education Corporation, a Delaware corporation, to Subsidiaries of
Borrower, provided that the provisions of Section 5.12 are complied with respect
to each such extension of credit, (c) Investments in Cash Equivalents,
(d) Investments consisting of advances to officers, directors and employees of
Borrower and its Subsidiaries for travel, entertainment, relocation, anticipated
bonus and analogous ordinary business purposes provided that the aggregate
amount of such Investments does not exceed $500,000 at any time outstanding.
Without limitation of the foregoing, in no event shall the aggregate amount of
all loans and advances made by Borrower or any of its Subsidiaries to, plus the
amount of any other Investments made by Borrower and its Subsidiaries in,
Foreign Subsidiaries at any time exceed $200,000.

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          6.8 Distributions.
          Declare or pay or make any Distribution, whether from capital, income
or otherwise, and whether in Cash or other Property; provided, however, that so
long as no Default or Event of Default shall have occurred and be continuing,
Borrower shall be permitted to make Distributions payable pursuant to Section 3
of the Series B Certificate of Designation, subject to legal limitations, if
any.
          6.9 Pledge of Assets.
          Mortgage, pledge, grant or permit to exist a Lien upon all or any
portion of Borrower’s or any of its Subsidiaries’ assets now owned or hereafter
acquired, except (a) any of the foregoing in favor of the Administrative Agent
(on behalf of the Lenders), (b) any of the foregoing which is existing as of the
Closing Date and which is disclosed on Schedule 4.7A and any renewals/extensions
or amendments thereof, provided that the obligations secured or benefited
thereby are not increased, and (c) Permitted Encumbrances.
          6.10 Hostile Tender Offers.
          Make any offer to purchase or acquire, or consummate a purchase or
acquisition of, five percent (5%) or more of the voting interest in any
corporation or other business entity if the board of directors or management of
such corporation or business entity has notified Borrower that it opposes such
offer or purchase and such notice has not been withdrawn or superseded.
          6.11 ERISA.
          (a) At any time, permit any Pension Plan to: (i) engage in any
non-exempt “prohibited transaction” (as defined in Section 4975 of the Code);
(ii) fail to comply with ERISA or any other applicable Laws; (iii) incur any
material “accumulated funding deficiency” (as defined in Section 302 of ERISA);
or (iv) terminate in any manner, which, with respect to each event listed above,
could reasonably be expected to have a Material Adverse Effect, or
          (b) withdraw, completely or partially, from any Multiemployer Plan if
to do so could reasonably be expected to have a Material Adverse Effect.
          6.12 Change in Nature of Business.
          Make any change in the nature of the business of Borrower and the
other Obligors as at present conducted.
          6.13 Transactions with Affiliates.
          Enter into any transaction of any kind with any Affiliate of Borrower
other than (without duplication): (a) salary, bonus, employee stock option and
other compensation arrangements with directors or officers in the ordinary
course of business, and (b) transactions on overall terms at least as favorable
to Borrower or its Subsidiaries as would be the case in an

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arm’s-length transaction between unrelated parties of equal bargaining power.
For purposes of this Section 6.13, Domestic Subsidiaries of Borrower shall not
be deemed to be Affiliates of Borrower.
          6.14 [Intentionally Omitted]
          6.15 [Intentionally Omitted]
          6.16 Minimum Adjusted EBITDA.
          Permit Adjusted EBITDA, as of the last day of the fiscal periods set
forth below, to be less than the amount set forth opposite such fiscal period
during:

          Fiscal Period   Minimum Amount
January 1, 2007, through June 30, 2007
  $ 500,000  
July 1, 2007, through December 31, 2007
  $ 1,000,000  
For each Fiscal Quarter thereafter
  $ 750,000  

          6.17 Cash Balance Account.
          Fail at any time to maintain (a) the Cash Balance Account, (b) a
Deposit Account Control Agreement with respect thereto, or (c) a cash balance
therein of at least Two Hundred Fifty Thousand Dollars ($250,000).
          6.18 Capital Expenditures.
          Make any investment in fixed assets in any Fiscal Year in excess of an
aggregate of $1,000,000 per Fiscal Year; provided that the following shall be
excluded for purposes of compliance with this Section 6.18: expenditures which
are made in connection with the replacement or restoration of assets to the
extent financed (to the extent such financing is permitted hereunder) either (a)
from insurance proceeds paid on account of the loss of or damage to the assets
being replaced or restored, or (b) with proceeds from the sale or other
disposition of an asset which is replaced within 90 days from such sale or other
disposition with another asset performing the same or a similar function.
          6.19 Amendments.
          Amend or modify any term or provision of (a) any indenture, agreement
or instrument evidencing or governing any Subordinated Obligation or (b) any
material provision of any Material Contract, if in any such case such amendment
or modification in any respect will or may adversely affect the interest of the
Lenders in any material respect.

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          6.20 Change in Location of Chief Executive Offices, Jurisdiction of
Organization and Assets.
          Relocate the chief executive office, or change the jurisdiction of
organization, of Borrower or any of its Subsidiaries without first giving the
Administrative Agent thirty (30) days’ prior written notice of any relocation or
change. Borrower shall not move, nor shall it permit any Subsidiary to move, any
of its respective Property to a jurisdiction other than any one of the
jurisdictions identified in Schedule 6.20 without first giving the
Administrative Agent ten (10) calendar days prior written notice of any such
proposed relocation, other than to the extent that any such Property has been
sold pursuant to a sale in the ordinary course of business permitted hereunder.
          6.21 Use of Lender’s Name.
          Use any Lender’s name (or the name of any of any Lender’s Affiliates)
in connection with any of their business operations except to identify the
existence of the Facility and the names of the Lenders in the ordinary course of
Borrower’s business. Nothing contained in this Agreement is intended to permit
or authorize Borrower to make any commitment or contract on behalf of any Lender
or the Administrative Agent.
          6.22 Change of Fiscal Periods.
          Change its Fiscal Year or any other fiscal period with respect to
which it reports financial results hereunder or otherwise.
          6.23 Certain Other Restricted Payments.
          Pay or otherwise incur management, consulting or other similar fees to
any Affiliate of Borrower.
          Article 7. INFORMATION AND REPORTING REQUIREMENTS
          7.1 Financial and Business Information.
          So long as any portion of any Advance remains unpaid, or any other
Obligation remains unpaid, Borrower shall, unless the Administrative Agent (with
the written approval of the Requisite Lenders) otherwise consents, at Borrower’s
sole expense, deliver to the Administrative Agent and the Lenders copies of the
following:
          (a) Within thirty (30) days after the end of each calendar month
commencing with the calendar month ending June 30, 2006 (other than the calendar
months ending each Fiscal Quarter, for which the period shall be forty-five
(45) days, and excluding the Fiscal Quarter ending December 31, for which the
period shall be sixty (60) days), the consolidated balance sheet of Borrower and
its Subsidiaries as at the end of such calendar month and the consolidated
statements of income, operations and cash flows for such calendar month, and the
portion of the Fiscal Year ended with such

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calendar month, all in reasonable detail. Such financial statements shall be
certified by the president or chief financial officer of Borrower as fairly
presenting the financial condition, results of operations and cash flows of
Borrower and its Subsidiaries in accordance with GAAP (other than footnote
disclosures), consistently applied, as at such date and for such periods,
subject only to normal year-end accruals and audit adjustments.
          (b) Within ninety (90) days after the end of each Fiscal Year
commencing with the Fiscal Year ending December 31, 2006, the consolidated
balance sheet of Borrower and its Subsidiaries as at the end of such Fiscal Year
and the consolidated statements of income, operations, stockholders’ equity and
cash flows, in each case of Borrower and its Subsidiaries for such Fiscal Year,
all in reasonable detail. Such financial statements shall be prepared in
accordance with GAAP, consistently applied, and such consolidated financial
statements shall be accompanied by a report of independent public accountants of
recognized standing selected by Borrower and reasonably satisfactory to the
Requisite Lenders, which report shall be prepared in accordance with generally
accepted auditing standards as at such date, and shall not be subject to any
qualifications or exceptions other than qualifications, exceptions or
disclaimers relating to internal controls.
          (c) Prior to the commencement of each Fiscal Year, a budget and
projection of Borrower and its Subsidiaries by Fiscal Quarter for the four
(4) Fiscal Quarters of that Fiscal Year, in reasonable detail;
          (d) Within five (5) Banking Days after distribution to Borrower’s
shareholders, copies of all financial statements and reports that Borrower sends
to its shareholders generally;
          (e) Promptly after request by the Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to Borrower by independent accountants in connection with the accounts
or books of Borrower, or any of its Subsidiaries, or any audit of any of them;
          (f) Within five (5) Banking Days after filing with the Securities and
Exchange Commission, copies of each annual report, proxy or financial statement
or other report or communication sent to the stockholders of Borrower or any of
its Subsidiaries, and copies of all annual, regular, periodic and special
reports and registration statements which Borrower or any of its Subsidiaries
may file or be required to file with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
and not otherwise required to be delivered to the Lenders pursuant to other
provisions of this Section 7.1;
          (g) Promptly after request by Lender, copies of any other report or
other document that was filed by Borrower with any Governmental Agency;
          (h) Promptly upon a Senior Officer of Borrower becoming aware, and in
any event within five (5) Banking Days after becoming aware, of the occurrence
of any

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(i) “reportable event” (as such term is defined in Section 4043 of ERISA, but
excluding such events as to which the PBGC has by regulation waived the
requirement therein contained that it be notified within thirty days of the
occurrence of such event) or (ii) non-exempt “prohibited transaction” (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Pension Plan or any trust created thereunder, telephonic notice specifying
the nature thereof, and, no more than two (2) Banking Days after such telephonic
notice, written notice again specifying the nature thereof and specifying what
action Borrower is taking or proposes to take with respect thereto, and, when
known, any action taken by the Internal Revenue Service with respect thereto;
          (i) Within two (2) Banking Days after a Senior Officer of Borrower
becomes aware of the existence of any condition or event which constitutes a
Default or Event of Default (or, in the case of the covenant contained in
Section 6.16, will constitute an Event of Default on the date of measurement of
such covenant), telephonic notice specifying the nature and period of existence
thereof, and, no more than two (2) Banking Days after such telephonic notice,
written notice again specifying the nature and period of existence thereof and
specifying what action Borrower is taking or proposes to take with respect
thereto;
          (j) Promptly upon a Senior Officer of Borrower becoming aware that
(i) any Person has commenced a legal proceeding with respect to a claim against
Borrower or any of its Subsidiaries that is $100,000 or more in excess of the
amount thereof that is fully covered by insurance, (ii) any creditor under a
credit agreement involving Indebtedness of $100,000 or more or any lessor under
a lease involving aggregate rent of $100,000 or more has asserted a default
thereunder on the part of Borrower or any of its Subsidiaries or, (iii) any
Person has commenced a legal proceeding with respect to a claim against Borrower
or any of its Subsidiaries under a contract that is not a credit agreement or
material lease with respect to a claim of in excess of $100,000 or which
otherwise may reasonably be expected to have a Material Adverse Effect, a
written notice describing the pertinent facts relating thereto and what action
Borrower and its Subsidiaries are taking or propose to take with respect
thereto;
          (k) Promptly following receipt thereof, copies of any notice or report
received by Borrower or any of its Subsidiaries from any Governmental Agency
which could reasonably be expected to have a Material Adverse Effect including,
without limitation, copies of all Revenue Agent Reports (Internal Revenue
Service Form 886), or other written proposals of the Internal Revenue Service,
that propose, determine or otherwise set forth positive adjustments to the
federal income tax liability of the affiliated group (within the meaning of
Section 1504(a)(1) of the Internal Revenue Code) of which Borrower is a member;
and
          (l) Such other data and information as from time to time may be
reasonably requested by the Administrative Agent or the Requisite Lenders.

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          7.2 Compliance Certificates.
          So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, Borrower shall, at Borrower’s sole expense, deliver to
the Administrative Agent and the Lenders concurrently with the financial
statements required pursuant to (a) Section 7.1(a) for the last calendar month
of each Fiscal Quarter and (b) Section 7.1(b), a Compliance Certificate signed
by the president or chief financial officer of Borrower.
          7.3 Weekly Cash Flow Forecast.
          So long as any Advance remains unpaid, or any other Obligation remains
unpaid, Borrower shall, unless Administrative Agent (with the approval of the
Requisite Lenders) otherwise consents, at Borrower’s sole expense, deliver to
the Administrative Agent and the Lenders, within ten (10) days after the end of
each calendar month commencing with the calendar month ending June 30, 2006, a
13-week cash flow forecast with respect to Borrower and its Subsidiaries on a
consolidated basis, in form and substance acceptable to the Administrative Agent
in the exercise of its reasonable discretion.
Article 8. CONDITIONS
          8.1 Closing Date Advances.
          The obligation of each Closing Date Lender to make the Advance to be
made by it on the Closing Date is subject to the following conditions precedent,
each of which shall be satisfied prior to the making of such Advance (unless all
of the Closing Date Lenders, in their sole and absolute discretion, shall agree
otherwise):
          (a) The Administrative Agent shall have received all of the following,
each of which shall be originals unless otherwise specified, each properly
executed by a Responsible Official of each party thereto, each dated as of the
Closing Date and each in form and substance satisfactory to the Administrative
Agent and its legal counsel (unless otherwise specified or, in the case of the
date of any of the following, unless the Administrative Agent otherwise agrees
or directs):
          (1) at least one (1) executed counterpart of this Agreement, together
with arrangements satisfactory to the Administrative Agent for additional
executed counterparts, sufficient in number for distribution to the Closing Date
Lenders and Borrower;
          (2) a Note executed by Borrower in favor of each Closing Date Lender
in a principal amount equal to such Lender’s Commitment;
          (3) the Subsidiary Guaranty executed by the Guarantors;
          (4) the Pledge Agreement executed by the Pledgors;

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          (5) the Pledged Collateral, together with executed undated stock
powers (or the equivalent) relating thereto and any and all Intercompany Notes,
endorsed in blank;
          (6) the Security Agreement executed by Borrower and its Subsidiaries;
          (7) such financing statements on Form UCC-1 with respect to the
Collateral Documents as the Administrative Agent may request;
          (8) The Deposit Account Control Agreement with respect to the Cash
Balance Account executed by Borrower, the “Bank” as therein defined and the
Administrative Agent.
          (9) with respect to Borrower and its Subsidiaries, such documentation
as the Administrative Agent may reasonably require to establish the due
organization, valid existence and good standing of each such Person, their
qualification to engage in business in each material jurisdiction in which they
are engaged in business or required to be so qualified, their authority to
execute, deliver and perform the Loan Documents to which it is a Party (if any),
the identity, authority and capacity of each Responsible Official thereof
authorized to act on its behalf, including certified copies of articles of
incorporation and amendments thereto, articles of organization and amendments
thereto, operating agreements and amendments thereto, bylaws and amendments
thereto (or updates to such organizational documents, as agreed to by the
Administrative Agent), certificates of good standing and/or qualification to
engage in business, tax clearance certificates, certificates of corporate
resolutions or limited liability company resolutions or other applicable
authorization documents, incumbency certificates, Certificates of Responsible
Officials, and the like. Without limitation of the foregoing, Borrower shall
have taken such action as is necessary and appropriate to establish that the
size of its Board of Directors shall not exceed nine (9) members;
          (10) the Opinions of Counsel;
          (11) a Certificate signed by a Senior Officer of Borrower certifying
that the conditions specified in Sections 8.1(k) and 8.1(l) have been satisfied;
          (12) Projections of the Borrower and its Subsidiaries (including
monthly Net Income and monthly EBITDA projections) for each month from the month
after the Closing Date through (and including) December, 2006; and
          (13) such other assurances, certificates, documents, consents or
opinions as the Administrative Agent and/or any Closing Date Lender reasonably
may require.

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          (b) The Stockholders’ Agreement shall have been amended and restated
in a manner acceptable to the Administrative Agent and the Closing Date Lenders
pursuant to which, among other things (i) Alkhaleej and Rich shall be added as
parties thereto, (ii) each of Camden Partners and Rich shall agree that so long
as any portion of the Advances is outstanding or Alkhaleej shall beneficially
hold not less than 75% of the Series A Warrants issued to it on the Closing Date
or 75% of the shares of Borrower’s common stock issued pursuant to exercise of
such Warrants, each of Camden Partners and Rich will vote its shares to elect
Alwaleed Aldryann as a Preferred Director of Borrower, (iii) each of Camden
Partners and Rich shall agree to vote its shares for the remaining directors in
accordance with the slate proposed by the Governance Committee of Borrower’s
Board of Directors, and (iv) within eighteen (18) months after the Closing Date,
Borrower shall cause a new independent member of Borrower’s Board of Directors
who is acceptable to the holders of the Series B Stock to have been elected to
replace one of Stuart Smith, David Goldfinger, Bill Heller or Richard Osborne.
          (c) Borrower shall have exchanged all of the issued and outstanding
shares of Series A Stock for Series B Stock pursuant to the Preferred Stock
Exchange Agreement, and each of Camden Partners shall have provided to Borrower
a full release of any claims that it may have arising out of the execution,
delivery and performance of the Series A Stock Purchase Agreement.
          (d) Each of the Closing Date Lenders shall have received its Pro Rata
Share of the Warrants. The parties hereto agree that the aggregate value of the
Warrants as of the Closing Date is $25,000.00.
          (e) Alkhaleej shall have received from Borrower an exclusive
contingent license, in form and substance acceptable to Alkhaleej, to continue
to use Borrower’s name in each geographic location where Alkhaleej is then
operating a Borrower franchise, exercisable in the event Borrower shall be
dissolved or liquidated.
          (f) Each of the Closing Date Lenders shall have concurrently funded
its full Commitment amount.
          (g) The Administrative Agent shall be reasonably satisfied that, upon
the filing of the financing statements described in Section 8.1(a)(7) with the
appropriate Governmental Agencies, the Administrative Agent (on behalf of the
Lenders) will hold a first priority perfected Lien in the Collateral described
respectively therein subject only to Permitted Encumbrances and other
encumbrances permitted pursuant to Section 6.9.
          (h) The Administrative Agent shall have completed and received all
audits, inspections and examinations as deemed necessary in the Administrative
Agent’s reasonable opinion with respect to the Collateral, the books and records
of Borrower and its Subsidiaries, the financial and business condition and
operations of Borrower and its Subsidiaries and the transactions contemplated
hereby.
          (i) The corporate structure of Borrower and its Subsidiaries shall be
reasonably satisfactory to the Closing Date Lenders.

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          (j) The reasonable costs and expenses of the Administrative Agent and
the Closing Date Lenders in connection with the preparation of the Loan
Documents payable pursuant to Section 11.3, and invoiced to Borrower prior to
the Closing Date, shall have been paid.
          (k) The representations and warranties of Borrower contained in
Article 4 shall be true and correct in all material respects.
          (l) Borrower and any other Parties shall be in compliance with all the
terms and provisions of the Loan Documents, and giving effect to the Advances,
no Default or Event of Default shall have occurred and be continuing.
          (m) All legal matters relating to the Loan Documents shall be
reasonably satisfactory to Hogan & Hartson LLP, special counsel to the
Administrative Agent.
Article 9.
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
          9.1 Events of Default.
          The existence or occurrence of any one or more of the following
events, whatever the reason therefor and under any circumstances whatsoever,
shall constitute an Event of Default:
          (a) Borrower fails to pay any principal on any of the Notes, or any
portion thereof, on the date when due; or
          (b) Borrower fails to pay any interest on any of the Notes, or any
portion thereof, within two (2) Banking Days after the date when due; or fails
to pay any other fee or amount payable to any of the Lenders or the
Administrative Agent under any Loan Document, or any portion thereof, within two
(2) Banking Days after demand therefor; or
          (c) Borrower fails to comply with, or causes or permits any of its
Subsidiaries to fail to comply with, any of the covenants contained in
Article 6; or
          (d) (i) Borrower fails to comply with Section 7.1(i) in the manner
stated therein or (ii) Borrower fails to perform any other reporting requirement
set forth in Article 7 within five (5) Banking Days of the date specified for
performance therein; or
          (e) Borrower or any other Party fails to perform or observe any other
covenant or agreement (not specified in clause (a), (b), (c) or (d) above)
contained in any Loan Document on its part to be performed or observed within
twenty (20) Banking Days after the giving of notice by the Administrative Agent
on behalf of the Requisite Lenders of such Default; or

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          (f) Any representation or warranty of Borrower or any other Party made
in any Loan Document, or in any certificate or other writing delivered by
Borrower or such other Party pursuant to any Loan Document, proves to have been
incorrect when made or reaffirmed in any respect that is materially adverse to
the interests of the Lenders; or
          (g) to the extent not otherwise addressed in this Section 9.1,
Borrower or any of its Subsidiaries (i) fails to pay the principal, or any
principal installment, of any present or future Indebtedness of $100,000 or
more, or any guaranty of present or future Indebtedness of $100,000 or more, on
its part to be paid, when due (or within any stated grace period), whether at
the stated maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fails to perform or observe any other term, covenant or
agreement on its part to be performed or observed, or suffers any event of
default to occur, in connection with any present or future Indebtedness of
$100,000 or more, or any guaranty of present or future Indebtedness of $100,000
or more, if as a result of such failure or sufferance any holder or holders
thereof (or an agent or trustee on its or their behalf) has the right to declare
such Indebtedness due before the date on which it otherwise would become due or
the right to require Borrower or any such Subsidiary to redeem or purchase, or
offer to redeem or purchase, all or any portion of such Indebtedness; or
          (h) Any Loan Document, at any time after its execution and delivery
and for any reason other than the agreement or action (or omission to act) of
the Administrative Agent or satisfaction in full of all the Obligations, ceases
to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any respect which
is materially adverse to the interests of the Lenders; or any Collateral
Document ceases (other than by action or inaction of the Administrative Agent)
to create a valid and effective Lien in any material portion of the Collateral;
or any Party thereto denies in writing that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
same; or
          (i) A final judgment against Borrower or any of its Subsidiaries is
entered for the payment of money in excess of $100,000 (not covered by insurance
or for which an insurer has reserved its rights) and, absent procurement of a
stay of execution, such judgment remains unsatisfied for thirty (30) calendar
days after the date of entry of judgment, or in any event later than five
(5) days prior to the date of any proposed sale thereunder; or any writ or
warrant of attachment or execution or similar process is issued or levied
against all or any material part of the Property of Borrower or any of its
Subsidiaries and is not released, vacated or fully bonded within thirty
(30) calendar days after its issue or levy; or
          (j) Borrower or any of its Subsidiaries institutes or consents to the
institution of any proceeding under a Debtor Relief Law relating to it or to all
or any material part of its Property, or is unable or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator,

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rehabilitator or similar officer for it or for all or any material part of its
Property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of that Person and the appointment continues undischarged or unstayed for sixty
(60) calendar days; or any proceeding under a Debtor Relief Law relating to any
such Person or to all or any part of its Property is instituted without the
consent of that Person and continues undismissed or unstayed for sixty
(60) calendar days; provided, however, that the institution by or against any
Nonmaterial Subsidiary of any proceeding under a Debtor Relief Law relating to
it or to all or any material part of its Property shall not be an Event of
Default hereunder if a voluntary filing has been made (or a determination not to
contest an involuntary filing has been made) with the approval of the Board of
Directors of Borrower; or
          (k) A Change in Control occurs; or
          (l) To the extent not permitted by Section 6.3, the dissolution or
liquidation of Borrower or any of its Subsidiaries, or Borrower or any such
Subsidiary, any of their partners, members, directors or stockholders, as the
case may be, shall take action seeking to effect the dissolution or liquidation
of Borrower or such Subsidiary; or
          (m) The occurrence of an Event of Default (as such term is or may
hereafter be specifically defined in any other Loan Document) under any other
Loan Document; or
          (n) Any Pension Plan maintained by Borrower is finally determined by
the PBGC to have a material “accumulated funding deficiency” as that term is
defined in Section 302 of ERISA in excess of an amount equal to 5% of the
consolidated total assets of Borrower as of the most-recently ended Fiscal
Quarter; or
          (o) Any holder of a Subordinated Obligation asserts in writing that
such Subordinated Obligation is not subordinated to the Obligations in
accordance with its terms and Borrower does not promptly deny in writing such
assertion and contest any attempt by such holder to take action based on such
assertion;
          (p) Any event occurs which gives the holder or holders of any
Subordinated Obligation (or an agent or trustee on its or their behalf) the
right to declare such Subordinated Obligation due before the date on which it
otherwise would become due, or the right (other than by reason of a Change in
Control) to require the issuer thereof, to redeem or purchase, or offer to
redeem or purchase, all or any portion of any Subordinated Obligation, or a
final judgment is entered by a court of competent jurisdiction that any
Subordinated Obligation is not subordinated in accordance with its terms to the
Obligations; or
          (q) In the good faith judgment of the Administrative Agent, any
Material Adverse Event shall have occurred.

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          9.2 Remedies Upon Event of Default.
          Without limiting any other rights or remedies of the Administrative
Agent or the Lenders provided for elsewhere in this Agreement, or the other Loan
Documents, or by applicable Law, or in equity, or otherwise:
          (a) Upon the occurrence, and during the continuance, of any Event of
Default other than an Event of Default described in Section 9.1(j):
          (1) all obligations of the Administrative Agent or the Lenders and all
rights of Borrower and any other Parties under the Loan Documents shall be
suspended without notice to or demand upon Borrower, which are expressly waived
by Borrower, except that all of the Lenders or the Requisite Lenders (as the
case may be, in accordance with Section 11.2) may waive an Event of Default or,
without waiving, determine, upon terms and conditions satisfactory to the
Lenders or Requisite Lenders, as the case may be, to reinstate such obligations
and rights, which waiver or determination shall apply equally to, and shall be
binding upon, all the Lenders; and
          (2) the Requisite Lenders may request the Administrative Agent to, and
the Administrative Agent thereupon shall, declare all or any part of the unpaid
principal of all Notes, all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents to be forthwith due and payable,
whereupon the same shall become and be forthwith due and payable, without
protest, presentment, notice of dishonor, demand or further notice of any kind,
all of which are expressly waived by Borrower.
          (b) Upon the occurrence of any Event of Default described in
Section 9.1(j), the unpaid principal of all Notes, all interest accrued and
unpaid thereon and all other amounts payable under the Loan Documents shall be
forthwith due and payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are expressly waived by
Borrower.
          (c) Upon the occurrence of any Event of Default, the Lenders and the
Administrative Agent, or any of them, without notice to (except as expressly
provided for in any Loan Document) or demand upon Borrower, which are expressly
waived by Borrower (except as to notices expressly provided for in any Loan
Document), may proceed (but only with the consent of the Requisite Lenders) to
protect, exercise and enforce their rights and remedies under the Loan Documents
against Borrower and any other Party and such other rights and remedies as are
provided by Law or equity.
          (d) The order and manner in which the Lenders’ rights and remedies are
to be exercised shall be determined by the Requisite Lenders in their sole
discretion, and all payments received by the Administrative Agent and the
Lenders, or any of them, shall be applied first to the costs and expenses
(including reasonable attorneys’ fees and disbursements and the reasonably
allocated costs of attorneys employed by the Administrative Agent or by any
Lender) of the Administrative Agent and of the Lenders,

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and thereafter paid pro rata to the Lenders in the same proportions that the
aggregate Obligations owed to each Lender under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders. Regardless of how each Lender may
treat payments for the purpose of its own accounting, for the purpose of
computing Borrower’s Obligations hereunder and under the Notes, payments shall
be applied first, to the costs and expenses of the Administrative Agent and the
Lenders, as set forth above, second, to the payment of accrued and unpaid
interest due under any Loan Documents to and including the date of such
application (ratably, and without duplication, according to the accrued and
unpaid interest due under each of the Loan Documents), and third, to the payment
of all other amounts (including principal and fees) then owing to the
Administrative Agent or the Lenders under the Loan Documents. No application of
payments will cure any Event of Default, or prevent acceleration, or continued
acceleration, of amounts payable under the Loan Documents, or prevent the
exercise, or continued exercise, of rights or remedies of the Lenders hereunder
or thereunder or at Law or in equity.
Article 10.
THE ADMINISTRATIVE AGENT
          10.1 Appointment and Authorization.
          Subject to Section 10.8, each Lender hereby irrevocably appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof or are reasonably incidental, as
determined by the Administrative Agent, thereto. This appointment and
authorization is intended solely for the purpose of facilitating the servicing
of the Facility and does not constitute appointment of the Administrative Agent
as trustee for any Lender or as representative of any Lender for any other
purpose and, except as specifically set forth in the Loan Documents to the
contrary, the Administrative Agent shall take such action and exercise such
powers only in an administrative and ministerial capacity.
          10.2 Administrative Agent and Affiliates.
          Each Administrative Agent which is at any time also a Lender hereunder
has the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not the Administrative Agent, and the
term “Lender” or “Lenders” includes such Administrative Agent in its individual
capacity. Each Administrative Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust or other
business with Borrower, any Subsidiary thereof, or any Affiliate of Borrower or
any Subsidiary thereof, as if it were not the Administrative Agent and without
any duty to account therefor to the Lenders. The Administrative Agent need not
account to any other Lender for any monies received by it for reimbursement of
its costs and expenses as Administrative Agent hereunder, or (subject to
Section 11.10) for any monies received by it in its capacity as a Lender
hereunder. The Administrative Agent shall not be deemed to hold a fiduciary
relationship with any Lender and no implied covenants, functions,
responsibilities,

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duties, obligations or liabilities shall be read into this Agreement or
otherwise exist against the Administrative Agent.
          10.3 Proportionate Interest in any Collateral.
          The Administrative Agent, on behalf of all the Lenders, shall hold in
accordance with the Loan Documents all items of any collateral or interests
therein received or held by the Administrative Agent. Subject to the
Administrative Agent’s and the Lenders’ rights to reimbursement for their costs
and expenses hereunder (including reasonable attorneys’ fees and disbursements
and other professional services and the reasonably allocated costs of attorneys
employed by the Administrative Agent or a Lender) and subject to the application
of payments in accordance with Section 9.2(d), each Lender shall have an
interest in the Lenders’ interest in such collateral or interests therein in the
same proportions that the aggregate Obligations owed such Lender under the Loan
Documents bear to the aggregate Obligations owed under the Loan Documents to all
the Lenders, without priority or preference among the Lenders.
          10.4 Lenders’ Credit Decisions.
          (a) Each Lender agrees that it has, independently and without reliance
upon the Administrative Agent, any other Lender or the directors, officers,
agents, employees or attorneys of the Administrative Agent or of any other
Lender, and instead in reliance upon information supplied to it by or on behalf
of Borrower and upon such other information as it has deemed appropriate, made
its own independent credit analysis and decision to enter into this Agreement.
Each Lender also agrees that it shall, independently and without reliance upon
the Administrative Agent, any other Lender or the directors, officers, agents,
employees or attorneys of the Administrative Agent or of any other Lender,
continue to make its own independent credit analyses and decisions in acting or
not acting under the Loan Documents.
          (b) Without limitation of the foregoing, each Lender severally
represents and warrants to Borrower and the Administrative Agent (i) that such
Lender has been furnished with all information that it has requested for the
purpose of evaluating its proposed acquisition of the Note and Warrants to be
issued to it pursuant hereto, (ii) that it is acquiring such Note and Warrants
for its own account for investment and not for distribution in any manner that
would violate applicable securities laws, but without prejudice to its rights to
dispose of such Note and Warrants or a portion thereof to a transferee or
transferees in accordance with such laws and the terms hereof if at some future
time such Lender deems it advisable to do so, (iii) that it is an “accredited
investor” as such term is defined in Regulation D of the Securities Exchange
Commission under the Securities Act of 1933, as amended, and (iv) the such
Lender is not subject to ERISA nor are any of the funds used to acquire the Note
and Warrants derived from an employee benefit plan subject to ERISA. Each Lender
understands that such Note and Warrants are being issued to it in a transaction
which is exempt from the registration requirements of the Securities Act of
1933, as amended, and that Borrower is relying upon Lender’s representations and
warranties in connection therewith.

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          10.5 Action by Administrative Agent.
          (a) The Administrative Agent may assume that no Default has occurred
and is continuing, unless the Administrative Agent (or the Lender that is then
the Administrative Agent) has received notice from Borrower stating the nature
of the Default or has received notice from a Lender stating the nature of the
Default and that such Lender considers the Default to have occurred and to be
continuing.
          (b) The Administrative Agent has only those obligations under the Loan
Documents as are expressly set forth therein.
          (c) Except for any obligation expressly set forth in the Loan
Documents and as long as the Administrative Agent may assume that no Event of
Default has occurred and is continuing, the Administrative Agent may, but shall
not be required to, exercise its discretion to act or not act, except that the
Administrative Agent shall be required to act or not act upon the instructions
of the Requisite Lenders (or of all the Lenders, to the extent required by
Section 11.2) and those instructions shall be binding upon the Administrative
Agent and all the Lenders, provided that the Administrative Agent shall not be
required to act or not act if to do so would be contrary to any Loan Document or
to applicable Law or would result, in the reasonable judgment of the
Administrative Agent, in substantial risk of liability to the Administrative
Agent.
          (d) If the Administrative Agent has received a notice specified in
clause (a), the Administrative Agent shall immediately give notice thereof to
the Lenders and shall act or not act upon the instructions of the Requisite
Lenders (or of all the Lenders, to the extent required by Section 11.2),
provided that the Administrative Agent shall not be required to act or not act
if to do so would be contrary to any Loan Document or to applicable Law or would
result, in the reasonable judgment of the Administrative Agent, in substantial
risk of liability to the Administrative Agent, and except that if the Requisite
Lenders (or all the Lenders, if required under Section 11.2) fail, for five (5)
Banking Days after the receipt of notice from the Administrative Agent, to
instruct the Administrative Agent, then the Administrative Agent, in its sole
discretion, may act or not act as it deems advisable for the protection of the
interests of the Lenders.
          (e) The Administrative Agent shall have no liability to any Lender for
acting, or not acting, as instructed by the Requisite Lenders (or all the
Lenders, if required under Section 11.2), notwithstanding any other provision
hereof.
          10.6 Liability of Administrative Agent.
          Neither the Administrative Agent nor any of its directors, officers,
agents, employees or attorneys shall be liable for any action taken or not taken
by them under or in connection with the Loan Documents, except for their own
gross negligence or willful misconduct. Without limitation on the foregoing, the
Administrative Agent and its directors, officers, agents, employees and
attorneys:
          (a) May treat the payee of any Note as the holder thereof until the
Administrative Agent receives notice of the assignment or transfer thereof, in
form

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satisfactory to the Administrative Agent, signed by the payee, and may treat
each Lender as the owner of that Lender’s interest in the Obligations for all
purposes of this Agreement until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the Administrative
Agent, signed by that Lender;
          (b) May consult with legal counsel (including in-house legal counsel),
accountants (including in-house accountants) and other professionals or experts
selected by it, or with legal counsel, accountants or other professionals or
experts for Borrower or any other Obligor and/or any of their Affiliates or the
Lenders, and shall not be liable for any action taken or not taken by it in good
faith in accordance with any advice of such legal counsel, accountants or other
professionals or experts;
          (c) Shall not be responsible to any Lender for any statement, warranty
or representation made in any of the Loan Documents or in any notice,
certificate, report, request or other statement (written or oral) given or made
in connection with any of the Loan Documents;
          (d) Except to the extent expressly set forth in the Loan Documents,
shall have no duty to ask or inquire as to the performance or observance by
Borrower or any other Obligor of any of the terms, conditions or covenants of
any of the Loan Documents or to inspect any Collateral or any Property, books or
records of Borrower or any other Obligor;
          (e) Will not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, effectiveness, sufficiency or
value of any Loan Document, any other instrument or writing furnished pursuant
thereto or in connection therewith, or any Collateral;
          (f) Will not incur any liability by acting or not acting in reliance
upon any Loan Document, notice, consent, certificate, statement, request or
other instrument or writing believed in good faith by it to be genuine and
signed or sent by the proper party or parties; and
          (g) Will not incur any liability for any arithmetical error in
computing any amount paid or payable by Borrower or any other Obligor or paid or
payable to or received or receivable from any Lender under any Loan Document,
including principal, interest, Advances and other amounts; provided that,
promptly upon discovery of such an error in computation, the Administrative
Agent, the Lenders and (to the extent applicable) Borrower and/or any other
applicable Obligor shall make such adjustments as are necessary to correct such
error and to restore the parties to the position that they would have occupied
had the error not occurred.
          10.7 Indemnification.
          Each Lender shall, ratably in accordance with its proportion of the
aggregate Indebtedness then evidenced by the Notes, indemnify and hold the
Administrative Agent and its directors, officers, agents, employees and
attorneys harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or

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disbursements of any kind or nature whatsoever (including reasonable attorneys’
fees and disbursements and allocated costs of attorneys employed by the
Administrative Agent) that may be imposed on, incurred by or asserted against it
or them in any way relating to or arising out of the Loan Documents (other than
losses incurred by reason of the failure of Borrower to pay the Indebtedness
represented by the Notes) or any action taken or not taken by it as
Administrative Agent thereunder, except such as result from its own gross
negligence or willful misconduct. Without limitation on the foregoing, each
Lender shall reimburse the Administrative Agent upon demand for that Lender’s
Pro Rata Share of any out-of-pocket cost or expense incurred by the
Administrative Agent in connection with the negotiation, preparation, execution,
delivery, amendment, waiver, restructuring, reorganization (including a
bankruptcy reorganization), enforcement or attempted enforcement of the Loan
Documents, to the extent that Borrower or any other Party are required by
Section 11.3 to pay that cost or expense but fails to do so upon demand. Nothing
in this Section 10.7 shall entitle the Administrative Agent or any indemnitee
referred to above to recover any amount from the Lenders if and to the extent
that such amount has theretofore been recovered from Borrower or any of the
other Obligors. To the extent that the Administrative Agent or any indemnitee
referred to above is later reimbursed such amount by Borrower or any of the
other Obligors, it shall return the amounts paid to it by the Lenders in respect
of such amount.
          10.8 Successor Administrative Agent.
          The Administrative Agent may, and at the request of the Requisite
Lenders shall, resign as Administrative Agent upon reasonable notice to the
Lenders and Borrower effective upon acceptance of appointment by a successor
Administrative Agent. If the Administrative Agent shall resign as Administrative
Agent under this Agreement, the Requisite Lenders shall appoint from among the
Lenders a successor Administrative Agent for the Lenders, which successor
Administrative Agent shall be approved by Borrower (and such approval shall not
be unreasonably withheld or delayed). If no successor Administrative Agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and Borrower, a successor Administrative Agent from among the Lenders. Upon the
acceptance of its appointment as successor Administrative Agent hereunder, such
successor Administrative Agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term “Administrative Agent”
shall mean such successor Administrative Agent and the retiring Administrative
Agent’s appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article 10, and Sections 11.3 and
11.11, shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. Notwithstanding
the foregoing, if no successor Administrative Agent has accepted appointment as
Administrative Agent by the date which is thirty (30) days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor
Administrative Agent as provided for above.

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          10.9 No Obligations of Borrower.
          Nothing contained in this Article 10 shall be deemed to impose upon
Borrower any obligation in respect of the due and punctual performance by the
Administrative Agent of its obligations to the Lenders under any provision of
this Agreement, and Borrower shall have no liability to the Administrative Agent
or any of the Lenders in respect of any failure by the Administrative Agent or
any Lender to perform any of its obligations to the Administrative Agent or the
Lenders under this Agreement. Without limiting the generality of the foregoing,
where any provision of this Agreement relating to the payment of any amounts due
and owing under the Loan Documents provides that such payments shall be made by
Borrower to the Administrative Agent for the account of the Lenders, Borrower’s
obligations to the Lenders in respect of such payments shall be deemed to be
satisfied upon the making of such payments to the Administrative Agent in the
manner provided by this Agreement. In addition, Borrower may rely on a written
statement by the Administrative Agent to the effect that it has obtained the
written consent of the Requisite Lenders or all of the Lenders, as applicable
under Section 11.2, in connection with a waiver, amendment, consent, approval or
other action by the Lenders hereunder, and shall have no obligation to verify or
confirm the same.
Article 11.
MISCELLANEOUS
          11.1 Cumulative Remedies; No Waiver.
          The rights, powers, privileges and remedies of the Administrative
Agent and the Lenders provided herein or in any Note or other Loan Document are
cumulative and not exclusive of any right, power, privilege or remedy provided
by Law or equity. No failure or delay on the part of the Administrative Agent or
any Lender in exercising any right, power, privilege or remedy may be, or may be
deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, privilege or remedy preclude any other or further exercise of the
same or any other right, power, privilege or remedy. The terms and conditions of
Article 8 hereof are inserted for the sole benefit of the Administrative Agent
and the Lenders; the same may be waived in whole or in part, with or without
terms or conditions, in respect of any Borrowing without prejudicing the
Administrative Agent’s or the Lenders’ rights to assert them in whole or in part
in respect of any other Borrowing.
          11.2 Amendments; Consents.
          No amendment, modification, supplement, extension, termination or
waiver of any provision of this Agreement or any other Loan Document, no
approval or consent thereunder, and no consent to any departure by Borrower or
any other Party therefrom, may in any event be effective unless in writing
signed by the Administrative Agent with the written approval of the Requisite
Lenders (and, in the case of any amendment, modification or supplement of or to
any Loan Document to which Borrower is a Party, signed by Borrower, and, in the
case of any amendment, modification or supplement to Article 10, signed by the
Administrative Agent), and then only in the specific instance and for the
specific purpose given;

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and, without the approval in writing of all the Lenders, no amendment,
modification, supplement, termination, waiver or consent may be effective:
          (a) To amend or modify the principal of, or the amount of principal,
principal prepayments or the rate of interest payable on, any Note, or the
amount of the Facility or the Pro Rata Share of the Facility of any Lender or
the amount of any commitment fee payable to any Lender, or any other fee or
amount payable to any Lender (in its capacity as a Lender) under the Loan
Documents or to waive an Event of Default consisting of the failure of Borrower
to pay when due principal, interest or any fee;
          (b) To postpone any date fixed for any payment of principal of,
prepayment of principal of or any installment of interest on, any Note or any
installment of any fee, or to extend the term of the Facility;
          (c) To amend the provisions of the definition of “Requisite Lenders”
or “Maturity Date”;
          (d) To release any Guarantor from its Guaranty or to release any
Collateral from the Lien of the Collateral Documents with a book value (as
determined in accordance with GAAP) in excess of $50,000 except if such release
of Collateral occurs in connection with a Disposition of assets permitted under
Section 6.4 or other action permitted under the Loan Documents, in which case
such release shall not require the consent of any of the Lenders; or
          (e) To amend or waive Article 8 or this Section 11.2; or
          (f) To amend any provision of this Agreement that expressly requires
the consent or approval of all the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Administrative Agent.
          11.3 Costs, Expenses and Taxes.
          Borrower shall pay within five (5) Banking Days after demand,
accompanied by an invoice therefor, the reasonable costs and expenses of the
Administrative Agent and the Closing Date Lenders in connection with the
negotiation, preparation, syndication, execution and delivery of the Loan
Documents and any amendment thereto or waiver thereof; provided, however, that
the fees and expenses of legal counsel to the Administrative Agent and the
Closing Date Lenders in connection with the negotiation, preparation,
syndication, execution and delivery of the Loan Documents executed on or before
the Closing Date shall be payable on the Closing Date and the amount of such
legal fees shall not exceed $200,000. Borrower shall also pay on demand,
accompanied by an invoice therefor, the reasonable costs and expenses of the
Administrative Agent and the Lenders in connection with the refinancing,
restructuring, reorganization (including a bankruptcy reorganization) and
enforcement or attempted enforcement of the Loan Documents, and any matter
related thereto. The foregoing costs and expenses shall include filing fees,
recording fees, title insurance fees, appraisal fees, search fees,

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and other out-of-pocket expenses and the reasonable fees and out-of-pocket
expenses of any legal counsel (including reasonably allocated costs of legal
counsel employed by the Administrative Agent or any Lender), independent public
accountants and other outside experts retained by the Administrative Agent or
any Lender, whether or not such costs and expenses are incurred or suffered by
the Administrative Agent or any Lender in connection with or during the course
of any bankruptcy or insolvency proceedings of any Borrower, any other Obligor
or any Subsidiary thereof Borrower shall pay any and all documentary and other
taxes, excluding (i) taxes imposed on or measured in whole or in part by a
Lender’s overall net income imposed on it by (A) any jurisdiction (or political
subdivision thereof) in which it is organized or maintains its principal office
or (B) any jurisdiction (or political subdivision thereof) in which it is “doing
business”, and all costs, expenses, fees and charges payable or determined to be
payable in connection with the filing or recording of this Agreement, any other
Loan Document or any other instrument or writing to be delivered hereunder or
thereunder, or in connection with any transaction pursuant hereto or thereto,
and shall reimburse, hold harmless and indemnify on the terms set forth in
Section 11.11 the Administrative Agent and the Lenders from and against any and
all loss, liability or legal or other expense with respect to or resulting from
any delay in paying or failure to pay any such tax, cost, expense, fee or charge
or that any of them may suffer or incur by reason of the failure of any Obligor
(or any Subsidiary thereof) to perform any of its Obligations. Any amount
payable to the Administrative Agent or any Lender under this Section 11.3 shall
bear interest from the fifth Banking Day following the date of demand for
payment at the Default Rate.
          11.4 Nature of Lenders’ Obligations.
          The obligations of the Lenders hereunder are several and not joint or
joint and several. Nothing contained in this Agreement or any other Loan
Document and no action taken by the Administrative Agent or the Lenders or any
of them pursuant hereto or thereto may, or may be deemed to, make the Lenders a
partnership, an association, a joint venture or other entity, either among
themselves or with Borrower, any other Obligor or any Affiliate of any Obligor.
A default by any Lender will not increase the Commitment of any other Lender or
the Pro Rata Share of the Facility attributable to any other Lender. Any Lender
not in default may, if it desires, assume (in such proportion as the
nondefaulting Lenders agree) the obligations of any Lender in default, but no
Lender is obligated to do so.
          11.5 Survival of Representations and Warranties.
          All representations and warranties contained herein or in any other
Loan Document, or in any certificate or other writing delivered by or on behalf
of any one or more of the Parties to any Loan Document, will survive the making
of the Advances hereunder and the execution and delivery of the Notes, and have
been or will be relied upon by the Administrative Agent and Lenders,
notwithstanding any investigation made by the Administrative Agent or any Lender
or on their behalf.
          11.6 Notices.
          Except as otherwise expressly provided in the Loan Documents, all
notices, requests, demands, directions and other communications provided for
hereunder or under any

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other Loan Document must be in writing and must be mailed, telegraphed,
telecopied, dispatched by commercial courier or delivered to the appropriate
party at the address set forth on the signature pages of this Agreement or other
applicable Loan Document or, as to any party to any Loan Document, at any other
address as may be designated by it in a written notice sent to all other parties
to such Loan Document in accordance with this Section. Except as otherwise
expressly provided in any Loan Document, if any notice, request, demand,
direction or other communication required or permitted by any Loan Document is
given by mail it will be effective on the earlier of receipt or the fourth
Banking Day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telecopier, when sent; if dispatched
by commercial courier, on the scheduled delivery date; or if given by personal
delivery, when delivered.
          11.7 Execution of Loan Documents.
          Unless the Administrative Agent otherwise specifies with respect to
any Loan Document, (a) this Agreement and any other Loan Document may be
executed in any number of counterparts and any party hereto or thereto may
execute any counterpart, each of which when executed and delivered will be
deemed to be an original and all of which counterparts of this Agreement or any
other Loan Document, as the case may be, when taken together will be deemed to
be but one and the same instrument and (b) execution of any such counterpart may
be evidenced by a telecopier transmission of the signature of such party. The
execution of this Agreement or any other Loan Document by any party hereto or
thereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto.
          11.8 Binding Effect; Assignment.
          (a) This Agreement and the other Loan Documents to which Borrower is a
Party will be binding upon and inure to the benefit of Borrower, the
Administrative Agent, each of the Lenders, and their respective successors and
assigns, except that Borrower may not assign its rights hereunder or thereunder
or any interest herein or therein without the prior written consent of all the
Lenders. Each Lender represents that it is not acquiring its Note with a view to
the distribution thereof within the meaning of the Securities Act of 1933, as
amended (subject to any requirement that disposition of such Note must be within
the control of such Lender). Any Lender may at any time pledge its Note or any
other instrument evidencing its rights as a Lender under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Lender from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Lender hereunder absent foreclosure of such pledge.
          (b) From time to time following the Closing Date, each Lender may
assign to one or more Eligible Assignees all or any portion of its rights and
obligations under this Agreement (including all or a portion of the Advances
owing to it and the Note held by it); provided that, subject to subsection (f)
below, (i) such Eligible Assignee, if not then a Lender or an Affiliate of the
assigning Lender, shall be approved by the Administrative Agent and Borrower
(neither of which approvals shall be unreasonably

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withheld or delayed); provided, however, that any such assignment by Camden
Partners (or either of them) to any Person which is not an Affiliate of the
transferor shall require the approval of Borrower, which may be given or
withheld in Borrower’s sole discretion, (ii) such assignment shall be evidenced
by an Assignment and Acceptance, a copy of which shall be furnished to the
Administrative Agent as hereinbelow provided, (iii) except in the case of an
assignment to an Affiliate of the assigning Lender, to another Lender or of the
entire remaining rights and obligations of the assigning Lender under this
Agreement, the assignment shall not assign a portion of such Advances owing to
such assigning Lender that is equivalent to less than $3,000,000, and (iv) the
effective date of any such assignment shall be as specified in the Assignment
and Acceptance, but not earlier than the date which is five (5) Banking Days
after the date the Administrative Agent has received the Assignment and
Acceptance. Upon the effective date of such Assignment and Acceptance, the
Eligible Assignee named therein shall be a Lender for all purposes of this
Agreement, with the Advances therein set forth and, to the extent of such
Advances, the assigning Lender shall be released from its further obligations
under this Agreement. Borrower agrees that it shall execute and deliver (against
delivery by the assigning Lender to Borrower of such Lender’s Notes) to such
assignee Lender, Notes evidencing that assignee Lender’s Advances, and to the
assigning Lender, Notes evidencing the remaining balance of the Advances
retained by the assigning Lender.
          (c) By executing and delivering an Assignment and Acceptance, the
Eligible Assignee thereunder acknowledges and agrees that: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
rights and obligations hereunder being assigned thereby free and clear of any
adverse claim, the assigning Lender has made no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness or sufficiency of this Agreement
or any other Loan Document; (ii) the assigning Lender has made no representation
or warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance by Borrower of the Obligations;
(iii) it has received a copy of this Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) it
will, independently and without reliance upon the Administrative Agent or any
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) it appoints and authorizes the Administrative
Agent to take such action and to exercise such powers under this Agreement as
are delegated to the Administrative Agent by this Agreement; and (vi) it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
          (d) The Administrative Agent shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Acceptance delivered to it and a
register (the “Register”) of the names and address of each of the Lenders and
the Pro Rata Share of the Commitments held by each Lender, giving effect to each
Assignment and Acceptance. The Register shall be available during normal
business hours for inspection

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by Borrower or any Lender upon reasonable prior notice to the Administrative
Agent. After receipt of a completed Assignment and Acceptance executed by any
Lender and an Eligible Assignee, and receipt of an assignment fee of $3,500 from
such Lender or Eligible Assignee, the Administrative Agent shall, promptly
following the effective date thereof, provide to Borrower and the Lenders a
revised Schedule 1.1 giving effect thereto. Borrower, the Administrative Agent
and the Lenders shall deem and treat the Persons listed as Lenders in the
Register as the holders and owners of the Pro Rata Shares of the Facility listed
therein for all purposes hereof, and no assignment or transfer of any Lender’s
rights and obligations hereunder shall be effective, in each case unless and
until an Assignment and Acceptance effecting the assignment or transfer thereof
shall have been accepted by the Administrative Agent and recorded in the
Register as provided above. Prior to such recordation, all amounts owed with
respect to the applicable Pro Rata Shares of the Facility shall be owed to the
Lender listed in the Register as the owner thereof, and any request, authority
or consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Pro Rata Shares of the Facility.
          (e) Each Lender may from time to time grant participations to one or
more banks or other financial institutions in or to all or a portion of its
rights and/or obligations under this Agreement; provided, however, that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
financial institutions shall not be a Lender hereunder for any purpose except,
if the participation agreement so provides, for the purposes of Section 11.11
but only to the extent that the cost of such benefits to Borrower does not
exceed the cost which Borrower would have incurred in respect of the Lender
granting such participation absent the participation, (iv) Borrower, the
Administrative Agent 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, (v) the participation interest shall be
expressed as a percentage of the granting Lender’s Pro Rata Share of the
Facility as it then exists and shall not restrict an increase in the Facility,
or in the granting Lender’s rights and obligations hereunder, so long as the
amount of the participation interest is not affected thereby and (vi) the
consent of the holder of such participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents other than those which
(A) extend any Maturity Date or any other date upon which any payment of money
is due to the Lenders, (B) reduce the rate of interest on the Notes, any fee or
any other monetary amount payable to the Lenders, (C) reduce the amount of any
installment of principal due under the Notes, or (D) release any Guarantor from
its Guaranty.
          (f) Borrower agrees that upon the occurrence and during the
continuance of any Event of Default, each Lender shall be entitled to assign its
rights hereunder and under the Loan Documents, or grant participation interests
in its rights under this Agreement and the Loan Documents, to any Person, in
whole or in any part thereof, notwithstanding any provisions contained herein
(including those set forth in subsection (b) above) or in any other Loan
Document to the contrary, except that, other

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than (i) assignments by a Lender to an Affiliate of such Lender or to another
Lender or (ii) pledges described in the last sentence of subsection (a) above,
no assignment shall be made without the approval of the Administrative Agent.
          11.9 Right of Setoff.
          If an Event of Default has occurred and is continuing and the
Requisite Lenders have declared all or any part of the unpaid principal balance
of the Notes to be forthwith due and payable (for purposes hereof, an
“Acceleration”), the Administrative Agent or any Lender (but in each case only
with the consent of the Requisite Lenders) may exercise its rights under
Article 9 of the UCC and other applicable Laws and, to the extent permitted by
applicable Laws, apply any funds in any deposit account maintained with it by
Borrower and/or any Property of Borrower in its possession against the
Obligations. Without limitation of the foregoing, the parties hereto agree (and,
by their execution of the Subsidiary Guaranty, each of the Guarantors does also
acknowledge and agree) that following an Acceleration and during the continuance
thereof Alkhaleej shall have the right to offset any or all franchise payments
of any and all types owed by it to any Obligor against delinquent Obligations
owed to it by such Obligor.
          11.10 Sharing of Setoffs.
          (a) Except as otherwise specifically provided in Section 11.10(b),
each Lender severally agrees that if it, through the exercise of any right of
setoff, banker’s lien or counterclaim against Borrower, or otherwise, receives
payment of the Obligations held by it that is ratably more than any other
Lender, through any means, receives in payment of the Obligations held by that
Lender, then, subject to applicable Laws: (a) the Lender exercising the right of
setoff, banker’s lien or counterclaim or otherwise receiving such payment shall
purchase, and shall be deemed to have simultaneously purchased, from each of the
other Lenders a participation in the Obligations held by the other Lenders and
shall pay to the other Lenders a purchase price in an amount so that the share
of the Obligations held by each Lender after the exercise of the right of
setoff, banker’s lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker’s
lien or counterclaim or receipt of payment; and (b) such other adjustments and
purchases of participations shall be made from time to time as shall be
equitable to ensure that all of the Lenders share any payment obtained in
respect of the Obligations ratably in accordance with each Lender’s share of the
Obligations immediately prior to, and without taking into account, the payment;
provided that, if all or any portion of a disproportionate payment obtained as a
result of the exercise of the right of setoff, banker’s lien, counterclaim or
otherwise is thereafter recovered from the purchasing Lender by Borrower or any
Person claiming through or succeeding to the rights of Borrower, the purchase of
a participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Lender that
purchases a participation in the Obligations pursuant to this Section 11.10
shall from and after the purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased. Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an

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Obligation so purchased pursuant to this Section 11.10 may exercise any and all
rights of setoff, banker’s lien or counterclaim with respect to the
participation as fully as if the Lender were the original owner of the
Obligation purchased.
          (b) Notwithstanding the provisions of Section 11.10(a) above, the
parties hereto do acknowledge and agree that Alkhaleej shall have no obligation
to share with any other Lender any amount received or deemed to have been
received by it in connection with the exercise of its right to offset franchise
payments owed by it to any Obligor against delinquent Obligations owed to it by
such Obligor as further described in Section 11.9 above. The amount of any such
offset shall reduce dollar-for-dollar the outstanding amount of the Advances
owed to Alkhaleej.
          11.11 Indemnity by Borrower.
          Borrower agrees to indemnify, save and hold harmless the
Administrative Agent and each Lender and their respective directors, officers,
agents, attorneys and employees (collectively the “Indemnitees”) from and
against: (a) any and all claims, demands, actions or causes of action (except a
claim, demand, action, or cause of action for any amount excluded from the
definition of “Taxes” in Section 3.6(d)) if the claim, demand, action or cause
of action arises out of or relates to any act or omission (or alleged act or
omission) of Borrower, any other Obligor, any Affiliate of any Obligor or any
partner, officer, director, stockholder, or other equity interest holder of any
Obligor relating to the Facility, the use or contemplated use of proceeds of any
Borrowing, or the relationship of Borrower and the Lenders under this Agreement;
(b) any administrative or investigative proceeding by any Governmental Agency
arising out of or related to a claim, demand, action or cause of action
described in clause (a) above; and (c) any and all liabilities, losses,
reasonable costs or expenses (including reasonable attorneys’ fees and the
reasonably allocated costs of attorneys employed by any Indemnitee and
disbursements of such attorneys and other professional services) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action or cause of action; provided that no Indemnitee shall be
entitled to indemnification for any liability, loss, cost or expense caused by
its own gross negligence or willful misconduct or for any liability, loss, cost
or expense asserted against it by another Indemnitee. If any claim, demand,
action or cause of action is asserted against any Indemnitee, such Indemnitee
shall promptly notify Borrower, but the failure to so promptly notify Borrower
shall not affect Borrower’s obligations under this Section unless such failure
materially prejudices Borrower’s right to participate in the contest of such
claim, demand, action or cause of action, as hereinafter provided. Such
Indemnitee may (and shall, if requested by Borrower in writing) contest the
validity, applicability and amount of such claim, demand, action or cause of
action and shall permit Borrower to participate in such contest. Any Indemnitee
that proposes to settle or compromise any claim or proceeding for which Borrower
may be liable for payment of indemnity hereunder shall give Borrower written
notice of the terms of such proposed settlement or compromise reasonably in
advance of settling or compromising such claim or proceeding and shall obtain
Borrower’s prior consent (which shall not be unreasonably withheld or delayed).
In connection with any claim, demand, action or cause of action covered by this
Section 11.11 against more than one Indemnitee, all such Indemnitees shall be
represented by the same legal counsel (which may be a law firm engaged by the
Indemnitees or attorneys employed by an Indemnitee or a combination of the
foregoing) selected by the Indemnitees, provided, that if such legal counsel
determines in good faith that

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representing all such Indemnitees would or could result in a conflict of
interest under Laws or ethical principles applicable to such legal counsel or
that a defense or counterclaim is available to an Indemnitee that is not
available to all such Indemnitees, then to the extent reasonably necessary to
avoid such a conflict of interest or to permit unqualified assertion of such a
defense or counterclaim, each affected Indemnitee shall be entitled to separate
representation by legal counsel selected by that Indemnitee, with all such legal
counsel using reasonable efforts to avoid unnecessary duplication of effort by
counsel for all Indemnitees; and further provided that the Administrative Agent
(as an Indemnitee) shall at all times be entitled to representation by separate
legal counsel (which may be a law firm or attorneys employed by the
Administrative Agent or a combination of the foregoing). Any obligation or
liability of Borrower to any Indemnitee under this Section 11.11 shall survive
the expiration or termination of this Agreement and the repayment of all
Borrowings and the payment and performance of all other Obligations owed to the
Lenders.
          11.12 Nonliability of the Lenders.
          Borrower acknowledges and agrees that:
          (a) Any inspections of any Property of Borrower or any other Obligor
made by or through the Administrative Agent or the Lenders are for purposes of
administration of the Facility only and Borrower is not entitled to rely upon
the same (whether or not such inspections are at the expense of Borrower);
          (b) By accepting or approving anything required to be observed,
performed, fulfilled or given to the Administrative Agent or the Lenders
pursuant to the Loan Documents, neither the Administrative Agent nor the Lenders
shall be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not constitute
a warranty or representation to anyone with respect thereto by the
Administrative Agent or the Lenders;
          (c) The relationship between Borrower and the Administrative Agent and
the Lenders is, and shall at all times remain, solely that of borrower and
lenders; neither the Administrative Agent nor the Lenders shall under any
circumstance be construed to be partners or joint venturers of Borrower, any
other Obligor or any of their respective Affiliates; neither the Administrative
Agent nor the Lenders shall under any circumstance be deemed to be in a
relationship of confidence or trust or a fiduciary relationship with Borrower,
any other Obligor or any of their respective Affiliates, or to owe any fiduciary
duty to Borrower, any other Obligor or any of their respective Affiliates;
neither the Administrative Agent nor the Lenders undertake or assume any
responsibility or duty to Borrower, any other Obligor or any of their respective
Affiliates to select, review, inspect, supervise, pass judgment upon or inform
Borrower, any other Obligor or any of their respective Affiliates of any matter
in connection with their Property or the operations of Borrower, any other
Obligor or any of their respective Affiliates; Borrower, the other Obligors and
their respective Affiliates shall rely entirely upon their own judgment with
respect to such matters; and any review, inspection, supervision, exercise of
judgment or supply of information undertaken or assumed by the

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Administrative Agent or the Lenders in connection with such matters is solely
for the protection of the Administrative Agent and the Lenders and neither
Borrower nor any other Person is entitled to rely thereon; and
          (d) The Administrative Agent and the Lenders shall not be responsible
or liable to any Person for any loss, damage, liability or claim of any kind
relating to injury or death to Persons or damage to Property caused by the
actions, inaction or negligence of Borrower, any other Obligor and/or any of
their respective Affiliates and Borrower hereby indemnifies and holds the
Administrative Agent and the Lenders harmless on the terms set forth in
Section 11.11 from any such loss, damage, liability or claim.
          11.13 No Third Parties Benefited.
          This Agreement is made for the purpose of defining and setting forth
certain obligations, rights and duties of Borrower, the Administrative Agent and
the Lenders in connection with the Facility, and is made for the sole benefit of
Borrower, the Administrative Agent and the Lenders, and the Administrative
Agent’s and the Lenders’ successors and assigns. Except as provided in
Sections 11.8 and 11.11, no other Person shall have any rights of any nature
hereunder or by reason hereof.
          11.14 Confidentiality.
          Each Lender agrees to hold any confidential information that it may
receive from Borrower pursuant to this Agreement in confidence, except for
disclosure: (a) to other Lenders or Affiliates of a Lender; (b) to legal counsel
and accountants for Borrower, any other Obligor or any Lender; (c) to other
professional advisors to Borrower or any other Obligor or any Lender, provided
that the recipient has accepted such information subject to a confidentiality
agreement substantially similar to this Section 11.14; (d) to regulatory
officials having jurisdiction over that Lender; (e) as required by Law or legal
process, provided that each Lender agrees to notify Borrower of any such
disclosures unless prohibited by applicable Laws, or in connection with any
legal proceeding to which that Lender and Borrower or any other Obligor are
adverse parties; and (f) to another financial institution in connection with a
disposition or proposed disposition to that financial institution of all or part
of that Lender’s interests hereunder or a participation interest in its Note(s),
provided that the recipient has accepted such information subject to a
confidentiality agreement substantially similar to this Section 11.14. For
purposes of the foregoing, “confidential information” shall mean any information
respecting Borrower or any other Obligor reasonably considered by Borrower to be
confidential, other than (i) information previously filed with any Governmental
Agency and available to the public, (ii) information previously published in any
public medium from a source other than, directly or indirectly, that Lender, and
(iii) information previously disclosed by Borrower or such other Obligor to any
Person not associated with Borrower or such other Obligor which does not owe a
professional duty of confidentiality to Borrower or such other Obligor or which
has not executed an appropriate confidentiality agreement with Borrower or such
other Obligor. Nothing in this Section shall be construed to create or give rise
to any fiduciary duty on the part of the Administrative Agent or the Lenders to
Borrower or any other Obligor.

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          11.15 Further Assurances.
          Borrower shall, at its expense and without expense to the Lenders or
the Administrative Agent, do, execute and deliver such further acts and
documents as the Requisite Lenders or the Administrative Agent from time to time
reasonably require for the assuring and confirming unto the Lenders or the
Administrative Agent of the rights hereby created or intended now or hereafter
so to be, or for carrying out the intention or facilitating the performance of
the terms of any Loan Document.
          11.16 Integration.
          This Agreement, together with the other Loan Documents and the
Preferred Stock Exchange Agreement, comprises the complete and integrated
agreement of the parties on the subject matter hereof and supersedes all prior
agreements, written or oral, on the subject matter hereof. In the event of any
conflict between the provisions of this Agreement and those of any other Loan
Document or the Preferred Stock Exchange Agreement, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Administrative Agent or the Lenders in any
other Loan Document or in the Preferred Stock Exchange Agreement shall not be
deemed a conflict with this Agreement. Each Loan Document and the Preferred
Stock Exchange Agreement was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.
          11.17 Governing Law.
          EXCEPT TO THE EXTENT OTHERWISE PROVIDED THEREIN, EACH LOAN DOCUMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN A STATE OR
FEDERAL COURT LOCATED IN THE STATE OF CALIFORNIA, OR, AT THE SOLE OPTION OF THE
ADMINISTRATIVE AGENT OR ANY LENDER, IN ANY OTHER COURT IN WHICH THE
ADMINISTRATIVE AGENT AND/OR ANY LENDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. THE PARTIES EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN ANY SUCH COURT, AND THE
PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY ANY SUCH COURT. FURTHERMORE, THE PARTIES
HEREBY WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT THEY MAY
HAVE TO ASSERT THE DOCTRINE OF “FORUM NON CONVENIENS” OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.17.

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          11.18 Severability of Provisions.
          Any provision in any Loan Document that is held to be inoperative,
unenforceable or invalid as to any party or in any jurisdiction shall, as to
that party or jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions or the operation, enforceability or validity
of that provision as to any other party or in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
          11.19 Headings.
          Article and Section headings in this Agreement and the other Loan
Documents are included for convenience of reference only and are not part of
this Agreement or the other Loan Documents for any other purpose.
          11.20 Time of the Essence.
          Time is of the essence of the Loan Documents.
          11.21 [Intentionally Omitted].
          11.22 Hazardous Material Indemnity.
          Borrower hereby agrees to indemnify, hold harmless and defend (by
counsel reasonably satisfactory to the Administrative Agent) the Administrative
Agent and each of the Lenders and their respective directors, officers,
employees, agents, successors and assigns from and against any and all claims,
losses, damages, liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all reasonable costs and expenses incurred
in connection therewith (including but not limited to reasonable attorneys’ fees
and the reasonably allocated costs of attorneys employed by the Administrative
Agent or any Lender, and expenses to the extent that the defense of any such
action has not been assumed by Borrower), arising directly or indirectly out of
(a) the presence on, in, under or about any Real Property of any Hazardous
Materials, or any releases or discharges of any Hazardous Materials on, under or
from any Real Property and (b) any activity carried on or undertaken on or off
any Real Property by Borrower, any other Obligor or any of their predecessors in
title, whether prior to or during the term of this Agreement, and whether by
Borrower, any other Obligor or any predecessor in title or any employees,
agents, contractors or subcontractors of Borrower, any other Obligor or any
predecessor in title, or any third persons at any time occupying or present on
any Real Property, in connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous Materials at
any time located or present on, in, under or about any Real Property. The
foregoing indemnity shall further apply to any residual contamination on, in,
under or about any Real Property, or affecting any natural resources, and to any
contamination of any Property or natural resources arising in connection with
the generation, use, handling, storage, transport or disposal of any such
Hazardous Materials, and irrespective of whether any of such activities were or
will be undertaken in accordance with applicable Laws, but the foregoing
indemnity shall not apply to Hazardous Materials on, in, under or about any Real
Property, the presence of which is caused by the Administrative Agent or the
Lenders. Borrower hereby acknowledges and agrees that, notwithstanding any other
provision of this

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Agreement or any of the other Loan Documents to the contrary, the obligations of
Borrower under this Section shall be unlimited obligations of Borrower and shall
not be secured by any Lien on any Real Property. Any obligation or liability of
Borrower to any Indemnitee under this Section 11.22 shall survive the expiration
or termination of this Agreement and the repayment of all Advances and the
payment and performance of all other Obligations owed to the Lenders.
          11.23 Waiver of Right to Trial by Jury.
          EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY
LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
          11.24 Purported Oral Amendments.
          BORROWER EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF
WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION
11.2. BORROWER AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF
PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER THAT DOES NOT COMPLY WITH SECTION 11.2 TO
EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.
          11.25 Specially Designated Nationals and Blocked Persons.
          Each party to this Agreement specifically represents and warrants to
the other parties hereto that neither it nor any of its Affiliates (a) is a
Person designated by the U.S. Government on the list of the Specially Designated
Nationals and Blocked Persons (the “SDN List”) with which a U.S. Person cannot
deal with or otherwise engage in business transactions, (b) is a Person who is
otherwise the target of U.S. economic sanctions laws such that a U.S. Person
cannot deal or otherwise engage in business transactions with such Person; or
(c) is owned or controlled, in whole or in part, by (including without
limitation by virtue of such Person being a director or owning voting shares or
interests), or acts, directly or indirectly, for or on behalf of, any Person on
the SDN Lists or a foreign government that is the target of U.S. economic
sanctions prohibitions such that the entry into this Agreement would be
prohibited under U.S. law. The SDN List is maintained by the U.S. Treasury
Department’s Office of

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Foreign Assets Control (OFAC) and is available at:
http://www.ustreas.gov/offices/enforcement/ofac/sdn/.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                  NEW HORIZONS WORLDWIDE, INC., a Delaware corporation    
 
           
 
  By:   /s/ Thomas J. Bresnan
 
Thomas J. Bresnan, President    

     
 
  Address for notices:
 
   
 
  New Horizons Worldwide, Inc.
 
  1900 S. State College Blvd. Suite 200
 
  Anaheim, California 92806
 
  Attn: Charles M. Caporale, Senior Vice President
 
  and Chief Financial Officer
 
   
 
  Telecopier: (714) 940-8370
 
  Telephone: (714) 940-8060
 
   
 
  With a copy to:
 
   
 
  Calfee, Halter & Griswold LLP
 
  1400 McDonald Investment Center
 
  800 Superior Avenue
 
  Cleveland, Ohio 44114
 
  Attn: Thomas A. Cicarella, Esq.
 
   
 
  Telecopier: (216) 241-0816
 
  Telephone: (216) 622-8378

-1-

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

 

                  CAMDEN PARTNERS STRATEGIC III, LLC,
as Administrative Agent    
 
           
 
  By:   /s/ David L. Warnock
 
David L. Warnock, Managing Member    

     
 
  Address for notices and payments:
 
   
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
  Attn: David L. Warnock
 
   
 
  Telecopier: (410) 878-6850
 
  Telephone: (410) 878-6800
 
   
 
  With a copy to:
 
   
 
  Donald Hughes
 
  Camden Partners
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
   
 
  Telecopier: (410) 878-6850
 
  Telephone: (410) 878-6800
 
   
 
  And with a copy to:
 
   
 
  Hogan & Hartson LLP
 
  111 South Calvert Street
 
  Suite 1600
 
  Baltimore, Maryland 21202 44114
 
  Attn: Thene Martin, Esq.
 
   
 
  Telecopier: (410) 539-6981
 
  Telephone: (216) 659-2755

-2-

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                  CAMDEN PARTNERS STRATEGIC FUND III, L.P., as a Lender        
By: CAMDEN PARTNERS STRATEGIC III, LLC, its
General Partner    
 
           
 
  By:   /s/ David L. Warnock
 
David L. Warnock, Managing Member    

     
 
  Address for notices and payments:
 
   
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
  Attn: David L. Warnock
 
   
 
  Telecopier: (410) 878-6850
Telephone: (410) 878-6800
 
   
 
  With a copy to:
 
   
 
  Donald Hughes
 
  Camden Partners
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
   
 
  Telecopier: (410) 878-6850
Telephone: (410) 878-6800
 
   
 
  And with a copy to:
 
   
 
  Hogan & Hartson LLP
 
  111 South Calvert Street
 
  Suite 1600
 
  Baltimore, Maryland 21202 44114
 
  Attn: Thene Martin, Esq.
 
   
 
  Telecopier: (410) 539-6981
Telephone: (216) 659-2755

-3-

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                  CAMDEN PARTNERS STRATEGIC FUND III-A, L.P., as a Lender      
  By: CAMDEN PARTNERS STRATEGIC III,
LLC, its General Partner    
 
           
 
  By:   /s/ David L. Warnock
 
David L. Warnock, Managing Member    

     
 
  Address for notices and payments:
 
   
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
  Attn: David L. Warnock
 
   
 
  Telecopier: (410) 878-6850
Telephone: (410) 878-6800
 
   
 
  With a copy to:
 
   
 
  Donald Hughes
 
  Camden Partners
 
  500 East Pratt Street
 
  Suite 1200
 
  Baltimore, Maryland 21202
 
   
 
  Telecopier: (410) 878-6850
Telephone: (410) 878-6800
 
   
 
  And with a copy to:
 
   
 
  Hogan & Hartson LLP
 
  111 South Calvert Street
 
  Suite 1600
 
  Baltimore, Maryland 21202 44114
 
  Attn: Thene Martin, Esq.
 
   
 
  Telecopier: (410) 539-6981
Telephone: (216) 659-2755

-4-

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                  ALKHALEEJ TRAINING AND EDUCATION CORPORATION, as a Lender    
 
           
 
  By:   /s/ Alwaleed Aldryann
 
Alwaleed Aldryann,    
 
      [Printed Name and Title]    

     
 
  Address for notices and payments:
 
   
 
  Alkhaleej Training and Education Corporation
 
  P.O. Box 295300
 
  Riyadh 11351
 
  Kingdom of Saudi Arabia
 
  Attn: Alwaleed Aldryann
 
   
 
  Telecopier: 9661-4656030
 
   
 
  And with a copy to:
 
   
 
  Fulbright & Jaworski L.L.P.
 
  555 S. Flower Street, 41st Floor
 
  Los Angeles, CA 90071
 
  Attn: Tim C. Bruinsma
 
  Telecopier: (213) 892-9494
 
  Telephone: (213) 892-9333

-5-

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  GEORGE S. RICH, as a Lender    
 
       
 
 
 
George S. Rich    
 
       
 
  Address for notices and payments:    
 
       
 
  904 S Broadway    
 
  Baltimore , Maryland 21231    
 
  Attn: George S. Rich    
 
  Telecopier: (410) 534 8044    
 
  Telephone: (410) 804 5574    
 
       
 
  And with a copy to:    
 
       
 
  Gebhardt & Smith LLP    
 
  The World Trade Center, 9th Floor    
 
  401 East Pratt Street    
 
  Baltimore, Maryland 21202    
 
  Attn: Brian M. Sheahan    
 
  Telecopier: (410) 385-5119    
 
  Telephone: 410) 385-5075    

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EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
          THIS ASSIGNMENT AND ACCEPTANCE (“Agreement”) dated as of ___, ___is
made with reference to that certain Credit Agreement dated as of [___], 2006 (as
amended, extended, renewed, supplemented or otherwise modified from time to
time, the “Credit Agreement”) by and among NEW HORIZONS WORLDWIDE, INC., a
Delaware corporation (the “Borrower”), the lenders from time to time party
thereto (the “Lenders”), and CAMDEN PARTNERS STRATEGIC III, LLC, as
Administrative Agent for the Lenders, and is entered into between the “Assignor”
described below, in its capacity as a Lender under the Credit Agreement, and the
“Assignee” described below.
          Assignor and Assignee hereby represent, warrant and agree as follows:
          1. Definitions. Capitalized terms defined in the Credit Agreement are
used herein with the meanings set forth for such terms in the Credit Agreement.
As used in this Agreement, the following capitalized terms shall have the
meanings set forth below:
          “Assignee” means ___.
          “Aggregate Advances” means the aggregate amount of Lenders’ Advances
under the Credit Agreement as of the date hereof.
          “Assigned Share” means ___% of the Aggregate Advances of the Lenders
under the Credit Agreement which equals [$___].
          “Assignor” means ___.
          “Effective Date” means ___, the effective date of this Agreement
determined in accordance with Section 11.8 of the Credit Agreement.
          2. Representations and Warranties of the Assignor. The Assignor
represents and warrants to the Assignee as follows:
               a. As of the date hereof, the Pro Rata Share of the Assignor of
the Facility is ___% (without giving effect to assignments thereof which have
not yet become effective). The Assignor is the legal and beneficial owner of the
Assigned Pro Rata Share and the Assigned Pro Rata Share is free and clear of any
adverse claim.
               b. As of the date hereof, the outstanding principal balance of
Advances made by the Assignor under the Assignor’s Note is [$___].
               c. The Assignor has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.

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               d. This Agreement constitutes the legal, valid and binding
obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrower or the performance by
Borrower of the Obligations, and the Assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, or
sufficiency of the Credit Agreement or any other Loan Document other than as
expressly set forth above.
          3. Representations and Warranties of the Assignee. The Assignee hereby
represents and warrants to the Assignor as follows:
          (a) The Assignee has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement, and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith;
          (b) This Agreement constitutes the legal, valid and binding obligation
of the Assignee;
          (c) The Assignee has independently and without reliance upon the
Administrative Agent or Assignor and based on such documents and information as
the Assignee has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. The Assignee will, independently and without
reliance upon the Administrative Agent or any Lender, and based upon 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;
          (d) The Assignee has received copies of such of the Loan Documents
delivered pursuant to Section 8.1 of the Credit Agreement as it has requested,
together with copies of the most recent financial statements delivered pursuant
to Section 7.1 of the Credit Agreement;
          (e) The Assignee will perform in accordance with their respective
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and
          (f) The Assignee is an Eligible Assignee.
          4. Assignment. On the terms set forth herein, the Assignor, as of the
Effective Date, hereby irrevocably sells, assigns and transfers to the Assignee
all of the rights and obligations of the Assignor under the Credit Agreement,
the other Loan Documents and the Assignor’s Note to the extent of the Assigned
Share, and the Assignee irrevocably accepts such assignment of rights and
assumes such obligations from the Assignor on such terms and effective as of the
Effective Date. As of the Effective Date, the Assignee shall have the rights and
obligations of a “Lender” under the Loan Documents, except to the extent of any
arrangements

-2-

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with respect to payments referred to in Section 5 hereof. Assignee hereby
appoints and authorizes the Administrative Agent, to take such action and to
exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the Credit Agreement.
          5. Payment. On the Effective Date, the Assignee shall pay to the
Assignor, in immediately available funds, an amount equal to the purchase price
of the Assigned Share, as agreed between the Assignor and the Assignee pursuant
to a letter agreement of even date herewith. Such letter agreement also sets
forth the agreement between the Assignor and the Assignee with respect to the
amount of interest, fees, and other payments with respect to the Assigned Share
which are to be retained by the Assignor. Assignee shall also pay to the
Administrative Agent, as a condition to the effectiveness of this Agreement, an
assignment fee of $3,500 in accordance with Section 11.8(d) of the Credit
Agreement.
          The Assignor and the Assignee hereby agree that if either receives any
payment of interest, principal, fees or any other amount under the Credit
Agreement, its respective Note or any other Loan Documents which is for the
account of the other, it shall hold the same in trust for such party to the
extent of such party’s interest therein and shall promptly pay the same to such
party.
          6. Principal, Interest, Fees, etc. Any principal that would be payable
and any interest, fees and other amounts that would accrue from and after the
Effective Date to or for the account of the Assignor pursuant to the Credit
Agreement and its Note shall be payable to or for the account of the Assignor
and the Assignee, in accordance with their respective interests as adjusted
pursuant to this Agreement.
          7. Notes. The Assignor and the Assignee shall make appropriate
arrangements with the Borrower concurrently with the execution and delivery
hereof so that a replacement Note is issued to the Assignor and a new Note, is
issued to the Assignee in principal amounts reflecting their Pro Rata Shares of
the Facility and their outstanding Advances under the Facility (as adjusted
pursuant to this Agreement).
          8. Further Assurances. Concurrently with the execution of this
Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and the Assignor specifically agrees to cause the delivery of (i) two
original counterparts of this Agreement and (ii) the Request for Registration,
to the Administrative Agent for the purpose of registration of the Assignee as a
“Lender” pursuant to Section 11.8 of the Credit Agreement.
          9. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL
OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. FOR ANY DISPUTE ARISING IN
CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA.

-3-

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          10. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by U.S.
registered mail, postage prepaid, or by telecopy, addressed to the appropriate
party at its address set forth on the signature pages hereof All such
communications and notices shall be effective upon receipt.
          11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
without the prior written consent of the Assignor and any purported assignment,
absent such consent, shall be void. Nothing contained in this Section shall
restrict the assignment by Assignee of its rights under the Loan Documents
following the Effective Date.
          12. Interpretation. The headings of the various sections hereof are
for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.

              “Assignor”
 
             
 
            By:
 
     
 
       
 
       
 
       
 
      [Printed Name and Title]
 
       
 
  Address:    
 
       
 
       
 
       
 
  Telephone:    
 
       
 
  Telecopier:    
 
       

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              “Assignee”
 
             
 
            By:
 
       
 
       
 
       
 
       
 
      [Printed Name and Title]
 
       
 
  Address:    
 
       
 
       
 
       
 
  Telephone:    
 
       
 
  Telecopier:    
 
       

-5-

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Exhibit A to Assignment and Acceptance
REQUEST FOR REGISTRATION

    To: CAMDEN PARTNERS STRATEGIC III, LLC, as Administrative Agent, and the
Borrower (described below).

          THIS REQUEST FOR REGISTRATION is made as of the date of the enclosed
Assignment and Acceptance with reference to that certain Credit Agreement, dated
as of [___], 2006, by and among NEW HORIZONS WORLDWIDE, INC., a Delaware
corporation (the “Borrower”), the lenders from time to time party thereto (the
“Lenders”), and CAMDEN PARTNERS STRATEGIC III, LLC, as Administrative Agent for
the Lenders (as amended as of the date hereof, the “Credit Agreement”).
          The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Credit Agreement effective as of the Effective Date described in the
Assignment and Acceptance. Assignee hereby confirms the representations and
warranties made in Section 3 of the Assignment and Acceptance for the benefit of
Administrative Agent and the Borrower. Concurrently herewith a similar portion
of the interests of Assignor under the other Loan Documents is being assigned to
Assignee.
          Enclosed with this Request are two counterpart originals of the
Assignment and Acceptance as well as the original Note of Borrower in favor of
the Assignor in the principal amount of $___. The Assignor and Assignee hereby
jointly request that Administrative Agent cause Borrower to issue a replacement
Note, dated as of the Effective Date, pursuant to Section 11.8 of the Credit
Agreement in favor of Assignor in the principal amount of the remainder of its
Pro Rata Share of the Facility and a Note in favor of the Assignee in the amount
of the Assigned Share, dated as of the Effective Date, substantially in the form
of Exhibit C to the Credit Agreement.
          IN WITNESS WHEREOF, the Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of this day of

     
“Assignor”
  “Assignee”
 
   
 
   

             
By:
      By:    
 
           
 
           
 
           
 
  [Printed Name and Title]       [Printed Name and Title]

-6-

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CONSENT OF ADMINISTRATIVE AGENT AND BORROWER
[When Required Pursuant to Credit Agreement]

    TO: The Assignor and Assignee referred to in the Request for Registration to
which this Consent is attached

          When countersigned by Administrative Agent and (when applicable)
Borrower below, this document shall certify that:
          [x]      [CHECK HERE IF BORROWER’S SIGNATURE IS REQUIRED PURSUANT TO
SECTION 11.8(b)(i) OF THE CREDIT AGREEMENT:]
          1.     Borrower has consented, pursuant to the terms of the Loan
Documents, to the assignment by the Assignor to the Assignee of the Assigned
Share.
          2.     Administrative Agent has registered the Assignee as a Lender
under the Credit Agreement, effective as of the Effective Date described above,
with a Pro Rata Share of the Facility corresponding to the Assigned Share and
has adjusted the registered Pro Rata Share of the Facility of the Assignor to
reflect the assignment of the Assigned Share.

            Approved:

NEW HORIZONS WORLDWIDE, INC.,
a Delaware corporation
      By:           Name:           Title:        

            CAMDEN PARTNERS STRATEGIC III, LLC,
as Administrative Agent
      By:           David L. Warnock        Managing Member   

-7-

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EXHIBIT B
COMPLIANCE CERTIFICATE
TO:   CAMDEN PARTNERS STRATEGIC III, LLC, as Administrative Agent
          Reference is made to the Credit Agreement dated as of
[                               ], 2006, entered into by and among NEW HORIZONS
WORLDWIDE, INC., a Delaware corporation (“Borrower”), the lenders party thereto
from time to time, and CAMDEN PARTNERS STRATEGIC III, LLC, as Administrative
Agent (the “Agent”)(as amended from time to time, the “Credit Agreement”). Terms
defined in the Credit Agreement and not otherwise defined in this Compliance
Certificate (“Certificate”) shall have the meanings defined for them in the
Credit Agreement. Section references herein relate to the Credit Agreement
unless stated otherwise.
COMPLIANCE WITH FINANCIAL COVENANTS
          This Certificate is delivered in accordance with Section 7.2 of the
Credit Agreement by the president or chief financial officer of Borrower. This
certificate relates to the financial statements of Borrower and its Subsidiaries
delivered concurrently herewith for the fiscal period ended ___, ___(the
“Determination Date”). Computations indicating compliance with respect to the
covenants specified in Sections 6.4, 6.7(d), 6.16 and 6.18 of the Credit
Agreement are as follows. All calculations are as determined in accordance with
GAAP, consistently applied.
     A.     6.4; Dispositions. As of the Determination Date, the aggregate
amount of Dispositions of Property made by Borrower and its Subsidiaries during
the Fiscal Year (or portion thereof) ending on the Determination Date (exclusive
of Dispositions of Company owned Locations) was $___.

         
Maximum Permitted:
  $ 500,000  

     B.      6.5, Other Indebtedness. As of the Determination Date, Indebtedness
secured by Permitted Purchase Money Liens and/or Indebtedness incurred with
respect to Capital Lease Obligations (as determined by GAAP) was $___.

         
Maximum Permitted
  $ 250,000  

     C.      6.7(d); Loans, Advances, Investments, Acquisitions. As of the
Determination Date, the aggregate outstanding amount of Investments consisting
of advances to officers, directors and employees of Borrower and its
Subsidiaries for travel, entertainment, relocation, anticipated bonus and
analogous ordinary business purposes was $___.

         
Maximum Permitted:
  $ 500,000  

     As of the Determination Date, the aggregate outstanding amount of
Investments in Foreign Subsidiaries was $___.

-1-

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Maximum Permitted:
  $ 200,000  

     D.      6.16; Minimum Quarterly Adjusted EBITDA. As of the last day of the
Fiscal Quarter ending on the Determination Date, Adjusted EBITDA for [the Fiscal
Quarter] [the two Fiscal Quarters] then ended was $___

         
 
  Minimum Permitted1    
 
        1.   Adjusted EBITDA Calculation for the Fiscal Quarter ending on the
Determination Date:
 
  (a) EBITDA (item 2 below) for such fiscal period   $                    
 
       
 
  plus (b) to the extent deducted in determining Net    
 
  Income for such fiscal period, non-cash charges of Borrower    
 
  and its Subsidiaries during such fiscal period relating to    
 
  Borrower's and its Subsidiaries' compliance with Financial    
 
  Accounting Standards Board Statement No. 142   $                    
 
       
 
  plus (c) to the extent deducted in determining Net    
 
  Income for such fiscal period, non-cash charges recorded    
 
  against earnings in Borrower's and its Subsidiaries'    
 
  financial statements for such fiscal period with respect to    
 
  the write-down of leasehold estates as a result of the    
 
  sublease of such leasehold estates   $                    
 
       
 
       
 
  plus (d) non-cash charges associated with stock options  
$                    
 
       
 
  equals Adjusted EBITDA [(a)+(b)+(c)+(d)]   $                    
 
        2.   EBITDA Calculation for the Fiscal Quarter ending on the
Determination Date:
 
       
 
  (a) Net Income for such fiscal period   $                    
 
       
 
  plus (b) any extraordinary or non-operating loss reflected in such Net Income
  $                    
 
       
 
  minus (c) any extraordinary or non-operating gain reflected in such Net Income
  $                    
 
       
 
  plus (d) Interest Expense of Borrower and its Subsidiaries for that fiscal
period   $                    
 
       

 

    1 Insert applicable requirement per Section 6.16

-2-

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  plus (e) the aggregate income tax expense of    
 
  Borrower and its Subsidiaries for that fiscal period    
 
  (whether or not payable during that fiscal period)   $                    
 
       
 
  plus (f) depreciation and amortization expense of    
 
  Borrower and its Subsidiaries for that fiscal period   $                    
 
       
 
  plus (g) all other non-cash extraordinary expenses    
 
  of Borrower and its Subsidiaries for that fiscal    
 
  period2   $                    
 
       
 
  equals EBITDA [(a)+(b)-(c)+(d)+(e)+(f)+(g)]   $                    

     E.      6.18; Capital Expenditures. The aggregate amount of investments
made by Borrower and its Subsidiaries in fixed assets during the Fiscal Year (or
portion thereof) ending on the Determination Date was $___.3

         
Maximum Permitted:
  $ 1,000,000  

PERFORMANCE OF OBLIGATIONS
          A review of the activities of Borrower and its Subsidiaries during the
fiscal period covered by the attached financial statements has been made under
the supervision of the undersigned with a view to determining whether during
such fiscal period Borrower and its Subsidiaries performed and observed all of
their Obligations under the Loan Documents. Except as described in an attached
document (which includes the response thereto which Borrower and its
Subsidiaries have taken or propose to take) or in an earlier Compliance
Certificate, to the best knowledge of the undersigned, after the exercise of
reasonable due diligence, as of the date of this Certificate no Default or Event
of Default has occurred and is continuing.
BOOKS AND RECORDS
          The undersigned certifies, on behalf of Borrower, that the
calculations made and the information contained herein are derived from the
books and records of Borrower and its Subsidiaries, as applicable, and that each
and every matter contained herein correctly reflects those books and records.
 

    2      Items (d), (e), (f) and (g) should be added only to the extent
reflected in the determination of Net Income for that fiscal period.      
3      The following shall be excluded for purposes of compliance with
Section 6.18: expenditures which are made in connection with the replacement or
restoration of assets to the extent financed (to the extent such financing is
permitted under the Credit Agreement) either (a) from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored, or
(b) with proceeds from the sale or other disposition of an asset which is
replaced within 90 days from such sale or other disposition with another asset
performing the same or a similar function.

-3-

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NO ADVERSE MATERIAL CHANGE
          To the best knowledge of the undersigned, after the exercise of
reasonable due diligence, except as described in an attached document or in an
earlier Compliance Certificate, no Material Adverse Event has occurred since the
date of the most recent Compliance Certificate delivered to the Agent.

Date:                       ,           

                  By:           Name:           Title:        

-4-

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EXHIBIT C
NOTE
(Secured)

$[___]   July [___], 2006

          FOR VALUE RECEIVED, the undersigned, NEW HORIZONS WORLDWIDE, INC., a
Delaware corporation (“Borrower”), promises to pay to the order of [      ] (the
“Lender”), the principal amount of [      ] DOLLARS ($[___]), payable as
hereinafter set forth. Borrower promises to pay interest on the principal amount
hereof remaining unpaid from time to time from the date hereof until the date of
payment in full, payable as hereinafter set forth.
          Reference is made to the Credit Agreement dated as of July [___],
2006, by and among Borrower, the Lenders that are parties thereto, and Camden
Partners Strategic III, LLC, as Administrative Agent for the Lenders (as the
same may be amended, renewed, extended or otherwise modified from time to time,
the “Credit Agreement”). Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings given those terms in the Credit
Agreement. This is one of the Notes referred to in the Credit Agreement, and any
holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Credit Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events upon the terms and
conditions therein specified.
          The principal indebtedness evidenced by this Note shall be paid and
payable as provided in the Credit Agreement and in any event on the Maturity
Date.
          Interest shall be payable on the outstanding daily unpaid principal
amount of each Advance hereunder from the date thereof until payment in full and
shall accrue and be payable at the rates and on the dates set forth in the
Credit Agreement, both before and after default and before and after maturity
and judgment, with interest on overdue principal and interest to bear interest
at the rate set forth in Section 3.3 of the Credit Agreement, to the fullest
extent permitted by applicable Law.
          The amount of each payment hereunder shall be made to the Lender at
the Lender’s Office in immediately available funds not later than 11:00 a.m.
California time on the day of payment (which must be a Banking Day). All
payments received after 11:00 a.m. California time on any particular Banking Day
shall be deemed received on the next succeeding Banking Day. All payments shall
be made in lawful money of the United States of America.
          The Lender shall use its best efforts to keep a record of payments
received by it with respect to this Note, and such record shall be presumptive
evidence of the principal amount owing under this Note.
          Borrower hereby promises to pay all costs and expenses of any holder
hereof incurred in collecting Borrower’s obligations hereunder or in enforcing
or attempting to enforce

-1-

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any of such holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements (including allocated costs of legal counsel employed by the
Administrative Agent or the holder), whether or not an action is filed in
connection therewith.
          Borrower hereby waives presentment, demand for payment, dishonor,
notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
          THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

            NEW HORIZONS WORLDWIDE, INC.
a Delaware corporation
      By:         Name:         Title:      

-2-

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EXHIBIT D
[Series B Certificate of Designation]

-1-

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EXHIBIT E-1
[Form of Series A Warrant]

-2-

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EXHIBIT E-2
[Form of Series B Warrant]

-3-