Exhibit 10.2

 

 

CREDIT AGREEMENT

 

dated as of July 13, 2010

 

among

 

WINMARK CORPORATION,

as the Company and a Loan Party,

 

THE SUBSIDIARIES OF THE COMPANY,

as Loan Parties,

 

EACH LENDER PARTY HERETO,

 

and

 

THE PRIVATEBANK AND TRUST COMPANY,

as a Lender and as Administrative Agent for the Lenders

 

 

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TABLE OF CONTENTS

 

SECTION 1

DEFINITIONS

 

1

1.1

Definitions

 

1

1.2

Other Interpretive Provisions

 

17

1.3

Letter of Credit Amounts

 

18

SECTION 2

COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT
PROCEDURES

 

18

2.1

Commitments

 

18

2.2

Loan Procedures

 

19

2.3

Letter of Credit Procedures

 

21

2.4

Certain Conditions

 

25

2.5

Defaulting Lenders

 

25

2.6

Increase in Commitments

 

26

SECTION 3

EVIDENCING OF LOANS

 

28

3.1

Notes

 

28

3.2

Recordkeeping

 

28

SECTION 4

INTEREST

 

28

4.1

Interest Rates

 

28

4.2

Interest Payment Dates

 

28

4.3

Setting and Notice of LIBOR Rates

 

28

4.4

Computation of Interest

 

29

SECTION 5

FEES

 

29

5.1

Letter of Credit Fees

 

29

5.2

Other Fees

 

29

SECTION 6

REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS

 

30

6.1

Prepayments

 

30

6.2

Repayments and Terminations

 

30

6.3

Reduction of Aggregate Commitments

 

30

SECTION 7

MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES

 

31

7.1

Payments Generally; Agent’s Clawback

 

31

7.2

Sharing of Payments

 

32

7.3

Application of Certain Payments

 

33

7.4

Due Date Extension

 

33

7.5

Setoff

 

33

7.6

Taxes

 

34

SECTION 8

INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS

 

34

8.1

Increased Costs

 

34

8.2

Basis for Determining Interest Rate Inadequate or Unfair

 

35

8.3

Changes in Law Rendering LIBOR Loans Unlawful

 

35

8.4

Funding Losses

 

36

8.5

Right of the Lenders to Fund through Other Offices

 

36

8.6

Discretion of the Lenders as to Manner of Funding

 

36

8.7

Mitigation of Circumstances

 

36

8.8

Conclusiveness of Statements; Survival of Provisions

 

37

 

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SECTION 9

REPRESENTATIONS AND WARRANTIES

 

37

9.1

Organization

 

37

9.2

Authorization; No Conflict

 

37

9.3

Validity and Binding Nature

 

37

9.4

Financial Condition

 

37

9.5

No Material Adverse Change

 

38

9.6

Litigation and Contingent Liabilities

 

38

9.7

Ownership of Properties; Liens

 

38

9.8

Equity Ownership; Subsidiaries

 

38

9.9

Pension Plans

 

38

9.10

Investment Company Act

 

39

9.11

Public Utility Holding Company Act

 

39

9.12

Margin Stock

 

39

9.13

Taxes; Tax Shelter Registration

 

39

9.14

Solvency, etc.

 

40

9.15

Environmental Matters

 

40

9.16

Insurance

 

40

9.17

Real Property

 

40

9.18

Information

 

41

9.19

Intellectual Property

 

41

9.20

Burdensome Obligations

 

41

9.21

Labor Matters

 

41

9.22

No Default

 

41

9.23

Accounts

 

41

9.24

Anti-Terrorism Law Compliance

 

41

9.25

Compliance with Laws

 

42

9.26

Hedging Agreements

 

42

9.27

Patriot Act

 

42

SECTION 10

AFFIRMATIVE COVENANTS

 

43

10.1

Reports, Certificates and Other Information

 

43

10.2

Books, Records and Inspections

 

45

10.3

Maintenance of Property; Insurance

 

46

10.4

Compliance with Laws; Payment of Taxes and Liabilities

 

46

10.5

Maintenance of Existence, etc.

 

47

10.6

Use of Proceeds

 

47

10.7

Employee Benefit Plans

 

47

10.8

Environmental Matters

 

47

10.9

Tax Shelter Registration

 

48

10.10

Further Assurances

 

48

10.11

Unsecured Notes

 

48

SECTION 11

NEGATIVE COVENANTS

 

48

11.1

Debt

 

48

11.2

Liens

 

49

11.3

Operating Leases

 

50

11.4

Restricted Payments

 

50

11.5

Mergers, Consolidations, Sales

 

50

 

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11.6

Modification of Organizational Documents

 

52

11.7

Affiliate Transactions

 

52

11.8

Unconditional Purchase Obligations

 

52

11.9

Inconsistent Agreements

 

52

11.10

Business Activities; Issuance of Equity

 

52

11.11

[INTENTIONALLY OMITTED]

 

52

11.12

Subordinated Debt Documents

 

52

11.13

Fiscal Year

 

52

11.14

Control Agreements

 

53

11.15

Tangible Net Worth

 

53

11.16

Debt Service Coverage

 

53

11.17

Maximum Leverage

 

53

11.18

Laws and Regulations

 

53

SECTION 12

EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

 

53

12.1

Initial Credit Extension

 

53

12.2

Conditions

 

55

SECTION 13

EVENTS OF DEFAULT AND THEIR EFFECT

 

55

13.1

Events of Default

 

55

13.2

Effect of Event of Default

 

57

13.3

Application of Funds

 

58

SECTION 14

ADMINISTRATIVE AGENT

 

59

14.1

Appointment and Authorization

 

59

14.2

L/C Issuer

 

59

14.3

Delegation of Duties

 

59

14.4

Exculpation of Administrative Agent

 

59

14.5

Reliance by Administrative Agent

 

60

14.6

Notice of Default

 

60

14.7

Credit Decision

 

61

14.8

Indemnification

 

61

14.9

Administrative Agent in Individual Capacity

 

62

14.10

Successor Administrative Agent

 

62

14.11

Collateral Matters

 

62

14.12

Administrative Agent May File Proofs of Claim

 

63

14.13

Other Agents; Arrangers and Managers

 

63

SECTION 15

THE LOAN PARTIES

 

64

15.1

Appointment of the Company

 

64

15.2

Relationship Among the Loan Parties

 

64

SECTION 16

GENERAL

 

67

16.1

Waiver, Amendments, Etc.

 

67

16.2

Confirmations

 

68

16.3

Notices

 

68

16.4

Computations

 

68

16.5

Expenses, Indemnity, Damage Waiver

 

69

16.6

Payments Set Aside

 

70

16.7

Successors and Assigns

 

71

16.8

Register

 

72

 

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16.9

GOVERNING LAW

 

72

16.10

Confidentiality

 

72

16.11

Severability

 

73

16.12

Nature of Remedies

 

73

16.13

Entire Agreement

 

73

16.14

Counterparts

 

73

16.15

Successors and Assigns

 

74

16.16

Captions

 

74

16.17

Customer Identification - USA Patriot Act Notice

 

74

16.18

Nonliability of Agent and each Lender

 

74

16.19

FORUM SELECTION AND CONSENT TO JURISDICTION

 

75

16.20

WAIVER OF JURY TRIAL

 

75

 

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SCHEDULES

 

SCHEDULE 2.1

 

Commitments

SCHEDULE 9.6

 

Litigation and Contingent Liabilities

SCHEDULE 9.7

 

Ownership of Properties; Liens

SCHEDULE 9.8

 

Subsidiaries

SCHEDULE 9.17

 

Real Property

SCHEDULE 11.7

 

Affiliate Transactions

 

EXHIBITS

 

EXHIBIT A

 

Form of Note

EXHIBIT B

 

Form of Compliance Certificate

EXHIBIT C

 

Form of Borrowing Base Certificate

EXHIBIT D

 

Form of Notice of Borrowing

EXHIBIT E

 

Form of Notice of Conversion/Continuation

 

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CREDIT AGREEMENT

 

Dated as of July 13, 2010

 

WINMARK CORPORATION (the “Company”), the Subsidiaries of the Company that are or
may from time to time become parties hereto (together with the Company and their
respective successors and assigns, the “Loan Parties”), each lender from time to
time party hereto (collectively, the “Lenders” and individually, a “Lender”),
THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as
Administrative Agent for the Lenders:

 

RECITALS

 

WHEREAS, the Lenders have agreed to make available to the Loan Parties a
revolving credit facility (which includes letters of credit) upon the terms and
conditions set forth in this Credit Agreement (this “Agreement”).

 

In consideration of the mutual agreements herein contained, the parties hereto
agree as follows:

 

SECTION 1           DEFINITIONS.

 

1.1           Definitions.  When used herein the following terms shall have the
following meanings:

 

“Account”:  As defined in the UCC.

 

“Account Debtor”:  As defined in the UCC.

 

“Acquisition”:  Any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any business or division of a Person, (b) the acquisition of all or any
portion of the Capital Securities of any Person, (c) a merger or consolidation
or any other combination with another Person (other than a Person that is
already a Subsidiary), or (d) any other Investment in a Person; provided,
however, that an Investment in publicly-traded securities of a Person shall not
constitute an Acquisition so long as such Investment does not result in (i) the
acquisition of all or substantially all of the assets or Capital Securities of
such Person, or (ii) a merger, consolidation or other combination with such
Person.

 

“Administrative Agent” or “Agent”:  PrivateBank in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

 

“Administrative Agent’s Office”:  Agent’s address and, as appropriate, account
as set forth on the signature page or Schedule 2.1 to this Agreement, or such
other address or account as Agent may from time to time notify the Company and
the Lenders in writing (which for purposes of this provision may include a
notice by e-mail).

 

“Affected Loan”:  As defined in Section 8.3.

 

1

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“Affiliate”:  With respect to any Person, (a) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person and (c) with respect to any
Lender, any entity administered or managed by such Lender or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans.  A Person shall be deemed to be
“controlled by” any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.  Unless expressly stated otherwise
herein, no Lender shall be deemed an Affiliate of any Loan Party.

 

“Aggregate Commitments”:  The Commitments of all Lenders, as reduced from time
to time pursuant to Section 6.3.

 

“Agreement”:  As defined in the Recitals.

 

“Applicable Margin”:  For any day, a rate per annum of (i) for LIBOR Loans,
2.75%, (ii) for Base Rate Loans, 0.50% or (iii) for Fixed Rate Loans, 2.75%.

 

“Applicable Percentage”:  With respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time.  If the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 13.2 or if the Aggregate
Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on
Schedule 2.1 of this Agreement or in the Assignment Agreement pursuant to which
such Lender becomes a party hereto, as applicable.

 

“Approved Fund”:  Any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“Asset Disposition”:  The sale, lease, assignment or other transfer for value
(each, a “Disposition”) by any Loan Party to any Person (other than a Loan
Party) of any asset or right of such Loan Party (including, the loss,
destruction or damage of any thereof or any actual or threatened (in writing to
any Loan Party) condemnation, confiscation, requisition, seizure or taking
thereof) other than (a) the Disposition of any asset which is to be replaced,
and is in fact replaced, within 30 days with another asset performing the same
or a similar function and (b) the sale or lease of inventory in the ordinary
course of business.

 

“Assignment Agreement”:  As defined in Section 16.7(a).

 

“Attorney Costs”:  With respect to any Person, all reasonable fees and charges
of any counsel to such Person, the reasonable allocable cost of internal legal
services of such Person, all reasonable disbursements of such internal counsel
and all court costs and similar legal expenses.

 

2

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“Bank Product Agreements”:  Those certain cash management service agreements
entered into from time to time between any Loan Party and any Lender or its
Affiliates in connection with any of the Bank Products.

 

“Bank Product Obligations”:  All obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Loan Parties to the
Lenders or their Affiliates pursuant to or evidenced by the Bank Product
Agreements and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that a Loan Party is obligated
to reimburse to any Lender as a result of such Lender purchasing participations
or executing indemnities or reimbursement obligations with respect to the Bank
Products provided to the Loan Parties pursuant to the Bank Product Agreements.

 

“Bank Products”:  Any service or facility extended to any Loan Party by any
Lender or its Affiliates including, (a) deposit accounts, (b) cash management
services, including, controlled disbursement, lockbox, electronic funds
transfers (including, book transfers, fedwire transfers, ACH transfers), online
reporting and other services relating to accounts maintained with any Lender or
its Affiliates, (c) debit cards and (d) Hedging Agreements.

 

“Base Rate”:  At any time the greater of (a) the Federal Funds Rate plus 0.5%
and (b) the Prime Rate.  The Lenders may lend to their customers at rates that
are at, above, or below the Base Rate.

 

“Base Rate Loan”:  Any Loan which bears interest at or by reference to the Base
Rate.

 

“Borrowing Base”:  As of any month-end, the sum of (a) 90% of the net book value
of the Eligible Leased Assets of the Loan Parties on such month-end, plus (b) an
amount equal to EBITDA of the Company’s franchising and corporate segments for
the twelve consecutive months ended on such month-end times two (2).

 

“Borrowing Base Certificate”:  A certificate substantially in the form of
Exhibit C.

 

“BSA”:  As defined in Section 10.4.

 

“Business Day”:  Any day on which PrivateBank is open for commercial banking
business in Chicago, Illinois and, in the case of a Business Day which relates
to a LIBOR Loan, on which dealings are carried on in the London interbank
eurodollar market.

 

“Capital Expenditures”:  All expenditures which, in accordance with GAAP, would
be required to be capitalized and shown on the consolidated balance sheet of the
Company, including expenditures in respect of Capital Leases, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

 

3

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“Capital Lease”:  With respect to any Person, any lease of (or other agreement
conveying the right to use) any real or personal property by such Person that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of such Person.

 

“Capital Securities”:  With respect to any Person, all shares, interests,
participations or other equivalents (however designated, whether voting or
non-voting) of such Person’s capital, whether now outstanding or issued or
acquired after the Closing Date, including common shares, preferred shares,
membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.

 

“Capitalized Lease Obligations”:  As to any Person, all rental obligations of
such Person, as lessee under a Capital Lease which are or will be required to be
capitalized on the books of such Person.

 

“Cash Collateralize”:  To deliver cash collateral to a L/C Issuer, to be held as
cash collateral for outstanding Letters of Credit, pursuant to documentation
satisfactory to such L/C Issuer and in an amount satisfactory to such L/C Issuer
which amount may exceed the Stated Amount of outstanding Letters of Credit. 
Derivatives of such term have corresponding meanings.

 

“Change of Control”:  The occurrence of any of the following events:  (a) any
Person or two or more Persons acting in concert acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly, of Capital
Securities of the Company representing 50% or more of the combined voting power
of all Capital Securities of the Company entitled to vote in the election of
directors; (b) any Person or two or more Persons acting in concert acquiring by
contract or otherwise, or entering into a contract or arrangement which upon
consummation will result in its or their acquisition of, control over Capital
Securities of the Company representing 50% or more of the combined voting power
of all Capital Securities of the Company entitled to vote in the election of
directors; or (c) the Company shall cease to, directly or indirectly, own and
control 100% of each class of the outstanding Capital Securities of each
Subsidiary.

 

“Closing Date”:  As defined in Section 12.1.

 

“Code”:  The Internal Revenue Code of 1986.

 

“Collateral”:  The property in which a security interest is, or is intended to
be, granted pursuant to this Agreement, the Security Agreement, the Pledge
Agreement, the Control Agreement or any other Loan Document.

 

“Collateral Access Agreement”:  An agreement in form and substance reasonably
satisfactory to Agent pursuant to which a mortgagee or lessor of real property
on which collateral is stored or otherwise located, or a warehouseman, processor
or other bailee of Inventory or other property owned by any Loan Party,
acknowledges the Liens of Agent and waives any Liens held by such Person on such
property, and, in the case of any such agreement with a mortgagee or lessor,
permits Agent reasonable access to and use of such real property following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any collateral stored or otherwise located thereon, or any one
or more of them.

 

4

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“Collateral Documents”:  Collectively, the Security Agreement, the Pledge
Agreement, each Collateral Access Agreement, each UCC-1 financing statement,
each Control Agreement and any other agreement or instrument pursuant to which
the Company, any other Loan Party or any other Person grants or purports to
grant collateral to Agent or otherwise relates to such collateral, as they may
be amended, modified, supplemented, restated or replaced from time to time.

 

“Commitment”:  As to each Lender, its obligation to (a) make Loans to the
Company pursuant to Section 2.1.1, and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 2.1 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

 

“Company”:  As defined in the Preamble.

 

“Compliance Certificate”:  A Compliance Certificate in substantially the form of
Exhibit B.

 

“Contingent Liability”:  With respect to any Person, each obligation and
liability of such Person and all such obligations and liabilities of such Person
incurred pursuant to any agreement, undertaking or arrangement by which such
Person:  (a) guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness, dividend,
obligation or other liability of any other Person in any manner (other than by
endorsement of instruments in the course of collection), including any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (b) guarantees the payment of dividends or other distributions
upon the Capital Securities of any other Person; (c) undertakes or agrees
(whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise
acquire any indebtedness, obligation or liability of any other Person or any or
any property or assets constituting security therefor, (ii) to advance or
provide funds for the payment or discharge of any indebtedness, obligation or
liability of any other Person (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, working capital or other financial condition of any other
Person, or (iii) to make payment to any other Person other than for value
received; (d) agrees to lease property or to purchase securities, property or
services from such other Person with the purpose or intent of assuring the owner
of such indebtedness or obligation of the ability of such other Person to make
payment of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss.  The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.

 

“Control Agreement”:  An account control agreement, in form and substance
satisfactory to Agent, among Agent, the applicable Loan Party and the depository
or securities intermediary for any deposit, checking or brokerage account opened
or maintained by a Loan Party.

 

5

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“Controlled Group”:  All members of a controlled group of corporations, all
members of a controlled group of trades or businesses (whether or not
incorporated) under common control and all members of an affiliated service
group which, together with the Company or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

“Debt”:  With respect to any Person, without duplication, (a) all indebtedness
of such Person, (b) all borrowed money of such Person, whether or not evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, not
including obligations of a Loan Party under non-recourse discounted leases,
(d) all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade accounts payable in the ordinary course of
business), (e) all indebtedness secured by a Lien on the property of such
Person, whether or not such indebtedness shall have been assumed by such Person;
provided that if such Person has not assumed or otherwise become liable for such
indebtedness, such indebtedness shall be measured at the fair market value of
such property securing such indebtedness at the time of determination, (f) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn), bankers’ acceptances and similar
obligations issued for the account of such Person (including the Letters of
Credit), (g) all Hedging Obligations of such Person, (h) all Contingent
Liabilities of such Person and (i) all Debt of any partnership of which such
Person is a general partner.

 

“Default Rate”:  A rate of interest equal to the rate of interest then in effect
with respect to any Loan as of the date of determination (including any
Applicable Margin) plus two percent (2%) (or, in the case of Obligations not
bearing interest, a rate of interest equal to the Base Rate plus two percent
(2%)).

 

“Defaulting Lender”:  Any Lender that (a) has failed to fund any portion of the
Loans or participations in L/C Obligations required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder unless
such failure has been cured, (b) has otherwise failed to pay over to
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute or unless such failure has been cured, (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency proceeding,
(d) has notified Company, the Administrative Agent, any L/C Issuer or any Lender
that it does not intend to comply with any of its funding obligations under this
Agreement or has made a public statement to the effect that it does not intend
to comply with its funding obligations under this Agreement or under other
agreements in which it commits to extend credit or (e) has failed to confirm
within three Business Days of a request by the Administrative Agent that it will
comply with the terms of this Agreement relating to its obligations to fund
prospective Loans or participations in L/C Obligations.

 

“Depreciation”:  The total amounts added to depreciation, amortization,
obsolescence, valuation and other proper reserves, as reflected on the Company’s
financial statements and determined in accordance with GAAP.

 

6

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“Dollar” and the sign “$”:  Lawful money of the United States of America.

 

“EBITDA”:  For any period, the Company’s and the Subsidiaries’ “Income from
Operations” (as set forth on their consolidated income statement) plus leasing
related cash interest expense, plus depreciation, plus amortization, plus
compensation expense related to the granting of stock options.

 

“Eligible Assignee”:  Any of the following: (a) a Lender; (b) an Affiliate of a
Lender; (c) an Approved Fund; and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent and the L/C Issuer, and
(ii) unless an Event of Default has occurred and is continuing, the Company
(each such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the Company
or any of the Company’s Affiliates or Subsidiaries.

 

“Eligible Leased Assets”:  Each Account and all such Accounts (exclusive of
sales, excise or other similar taxes) owing to a Loan Party that arises solely
from the leasing of Equipment by such Loan Party and that meets each of the
following requirements:

 

(a)           it is genuine in all respects and has arisen in the ordinary
course of the Loan Party’s business from the sale or lease of Equipment by such
Loan Party;

 

(b)           it is subject to a perfected, first priority Lien in favor of
Agent and is not subject to any other assignment, claim or Lien;

 

(c)           it is the valid, legally enforceable and unconditional obligation
of the Account Debtor with respect thereto, and is not subject to the
fulfillment of any condition whatsoever or any counterclaim, credit (except as
provided in subsection (h) of this definition), trade or volume discount,
allowance, discount, rebate or adjustment by the Account Debtor with respect
thereto, or to any claim by such Account Debtor denying liability thereunder in
whole or in part and the Account Debtor has not refused to accept and/or has not
returned or offered to return any of the Equipment or services which are the
subject of such Account;

 

(d)           the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States, unless the lease of Equipment
giving rise to such Account is on letter of credit, banker’s acceptance or other
credit support terms reasonably satisfactory to Agent;

 

(e)           it is not an Account with respect to which possession and/or
control of the Equipment leased giving rise thereto is held, maintained or
retained by the Loan Party (or by any agent or custodian of such Loan Party) for
the account of, or subject to, further and/or future direction from the Account
Debtor with respect thereto;

 

(f)            it has not arisen out of contracts with the United States or any
department, agency or instrumentality thereof, unless the Loan Party has
assigned its right to payment of such Account to Agent pursuant to the
Assignment of Claims Act of 1940, and evidence (satisfactory to Agent) of such
assignment has been delivered to Agent, or any

 

7

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state, county, city or other governmental body, or any department, agency or
instrumentality thereof;

 

(g)           if the Loan Party maintains a credit limit for an Account Debtor,
the aggregate dollar amount of Accounts due from such Account Debtor, including
such Account, does not exceed such credit limit;

 

(h)           if the Account is evidenced by chattel paper or an instrument, the
originals of such chattel paper or instrument shall have been endorsed and/or
assigned and delivered to Agent or, in the case of electronic chattel paper,
shall be in the control of Agent, in each case in a manner satisfactory to
Agent;

 

(i)            such Account is evidenced by an invoice delivered to the related
Account Debtor and is not more than ninety (90) days past the due date thereof;

 

(j)            it is not an Account with respect to an Account Debtor that is
located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction must file a notice of business activities report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction’s courts unless (i) such notice of business activities report has
been duly and timely filed or the Loan Party is exempt from filing such report
and has provided Agent with satisfactory evidence of such exemption or (ii) the
failure to make such filings may be cured retroactively by such Loan Party for a
nominal fee;

 

(k)           the Account Debtor with respect thereto is not an Affiliate of the
Loan Party;

 

(l)            such Account does not arise out of a contract or order which, by
its terms, forbids or makes void or unenforceable the assignment thereof by the
Loan Party to Agent and is not unassignable to Agent for any other reason;

 

(m)          there is no bankruptcy, insolvency or liquidation proceeding
pending by or against the Account Debtor with respect thereto, nor has the
Account Debtor suspended business, made a general assignment for the benefit of
creditors or failed to pay its debts generally as they come due, and/or no
condition or event has occurred having a Material Adverse Effect on the Account
Debtor which would require the Accounts of such Account Debtor to be deemed
uncollectible in accordance with GAAP;

 

(n)           it is not owed by an Account Debtor with respect to which twenty
five percent (25.00%) or more of the aggregate amount of outstanding Accounts
owed at such time by such Account Debtor is classified as ineligible under
clause (j) of this definition;

 

(o)           if the aggregate amount of all Accounts owed by the Account Debtor
thereon exceeds twenty five percent (25.00%) of the aggregate amount of all
Accounts at such time, then all Accounts owed by such Account Debtor in excess
of such amount shall be deemed ineligible; and

 

8

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(p)           it does not violate the negative covenants and does satisfy the
affirmative covenants of the Loan Party contained in this Agreement, and it is
otherwise not unacceptable to Agent for any other reason;

 

provided, an Account which is at any time an Eligible Leased Asset, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be an Eligible Leased Asset, until such time that such Account meets
all of the foregoing requirements; provided further, that, with respect to any
Account, if Agent at any time hereafter determines in its discretion that the
prospect of payment or performance by the Account Debtor with respect thereto is
materially impaired for any reason whatsoever, such Account shall cease to be an
Eligible Leased Asset after notice of such determination is given to the
relevant Loan Party; and provided further, that Agent shall, notwithstanding the
foregoing, have the right, in the reasonable exercise of its discretion, to
establish reserves against the aggregate amount of the Eligible Leased Assets.

 

“Environmental Claims”:  All claims, however asserted, by any governmental,
regulatory or judicial authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

 

“Environmental Laws”:  All present or future federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.

 

“ERISA”:  The Employee Retirement Income Security Act of 1974.

 

“Equipment”:  As defined in the UCC.

 

“Event of Default”:  Any of the events described in Section 13.1.

 

“Excluded Taxes”:  With respect to each Lender, taxes based upon, or measured
by, such Lender’s (or a branch of such Lender’s) overall net income, overall net
receipts, or overall net profits (including franchise taxes imposed in lieu of
such taxes), but only to the extent such taxes are imposed by a taxing authority
(a) in a jurisdiction in which such Lender is organized, (b) in a jurisdiction
which such Lender’s principal office is located, or (c) in a jurisdiction in
which such Lender’s lending office (or branch) in respect of which payments
under this Agreement are made is located.

 

“Federal Funds Rate”:  For any day, a fluctuating interest rate equal for each
day during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a

 

9

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Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by Agent.  Agent’s determination of such rate shall be binding and
conclusive absent manifest error.

 

“Fiscal Quarter”:  A fiscal quarter of a Fiscal Year.

 

“Fiscal Year”:  The fiscal year of the Company and its Subsidiaries, which
period shall be the 12-month period ending on the last Saturday of each year. 
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., “Fiscal Year 2009”) refer to the Fiscal Year ending on the last Saturday
of such calendar year.

 

“Fixed Rate Loan”:  A Loan which bears interest at or by reference to the Loan
Index Rate.

 

“FRB”:  The Board of Governors of the Federal Reserve System or any successor
thereto.

 

“Fund”:  Any Person (other than a natural person) that is (or will be) engaged
in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its activities.

 

“GAAP”:  Generally accepted accounting principles set forth from time to time in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. 
accounting profession) and the Securities and Exchange Commission, which are
applicable to the circumstances as of the date of determination.

 

“Hazardous Substances”:  (a) Any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the definition of “hazardous
substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous
substances”, “restricted hazardous waste”, “toxic substances”, “toxic
pollutants”, “contaminants”, “pollutants” or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the exposure to, or release of which is prohibited, limited or regulated by any
governmental authority or for which any duty or standard of care is imposed
pursuant to, any Environmental Law.

 

“Hedging Agreement”:  Any interest rate, currency or commodity swap agreement,
cap agreement or collar agreement, and any other agreement or arrangement
designed to protect a Person against fluctuations in interest rates, currency
exchange rates or commodity prices.

 

“Hedging Obligation”:  With respect to any Person, any liability of such Person
under any Hedging Agreement.  The amount of any Person’s obligation in respect
of any Hedging Obligation shall be deemed to be the incremental obligation that
would be reflected in the financial statements of such Person in accordance with
GAAP.

 

10

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“Interest Period”:  As to any Fixed Rate Loan, the period commencing on the date
such Loan is borrowed or continued as, or converted into, a Fixed Rate Loan and
ending on a date one, two, three or four years thereafter as selected in writing
by the Company.  As to any LIBOR Loan, the period commencing on the date such
Loan is borrowed or continued as, or converted into, a LIBOR Loan and ending on
the date one, two or three months thereafter as selected by the Company pursuant
to Section 2.2.2 or 2.2.3, as the case may be; provided that:

 

(a)           if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;

 

(b)           any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

 

(c)           the Company may not select any Interest Period for a Loan which
would extend beyond the scheduled Termination Date.

 

“Inventory”:  As defined in the UCC.

 

“Investment”:  With respect to any Person, any investment in another Person,
whether by acquisition of any Capital Security, by making any loan or advance,
or by making an Acquisition.

 

“L/C Advance”:  With respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.

 

“L/C Application”:  With respect to any request for the issuance of a Letter of
Credit, a letter of credit application in the form being used by the L/C Issuer
at the time of such request for the type of letter of credit requested.

 

“L/C Borrowing”:  An extension of credit resulting from a drawing under any
Letter of Credit that has not been reimbursed on the date when made or
refinanced as a Base Rate Loan in accordance with Section 2.3.2(a) and
Section 2.3.2(b).

 

“L/C Credit Extension”:  With respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C Fee Rate”:  A rate per annum of 2.75%.

 

“L/C Issuer”:  PrivateBank, in its capacity as the issuer of Letters of Credit
hereunder, or any Affiliate of PrivateBank that may from time to time issue
Letters of Credit, or any other financial institution that PrivateBank may cause
to issue Letters of Credit for the account of Company, and their successors and
assigns in such capacity.

 

“L/C Obligations”:  As at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts,

 

11

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including all Letters of Credit.  For purposes of computing the amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit
shall be determined in accordance with Section 1.3.  For all purposes of this
Agreement, if on any date of determination a Letter of Credit has expired by its
terms but any amount may still be drawn thereunder by reason of the operation of
Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding”
in the amount so remaining available to be drawn.

 

“Lender”:  As defined in the Preamble and including the Loan Index Lender.  In
addition to the foregoing, for the purpose of identifying the Persons entitled
to share in the Collateral and the proceeds thereof under, and in accordance
with the provisions of, this Agreement and the Collateral Documents, the term
“Lender” shall include Affiliates of a Lender providing a Bank Product.

 

“Letter of Credit”:  As defined in Section 2.1.2.

 

“LIBOR Loan”:  Any Loan which bears interest at a rate determined by reference
to the LIBOR Rate.

 

“LIBOR Office”:  The office or offices of any Lender which shall be making or
maintaining the LIBOR Loans.  A LIBOR Office may be, at the option of such
Lender, either a domestic or foreign office.

 

“LIBOR Rate”:  For any Interest Period for a LIBOR Loan, a rate of interest
equal to (a) the per annum rate of interest at which United States dollar
deposits for a period equal to the relevant Interest Period are offered in the
London Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business
Days prior to the commencement of such Interest Period (or three (3) Business
Days prior to the commencement of such Interest Period if banks in London,
England were not open and dealing in offshore United States dollars on such
second preceding Business Day), as displayed in the Bloomberg Financial Markets
system (or other authoritative source selected by the Administrative Agent in
its sole discretion), divided by (b) a number determined by subtracting from
1.00 the then stated maximum reserve percentage for determining reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D), or as LIBOR is otherwise determined by the
Administrative Agent in its sole and absolute discretion.  The Administrative
Agent ‘s determination of the LIBOR Rate shall be conclusive, absent manifest
error and shall remain fixed during such Interest Period.  The Lenders may lend
to their customers at rates that are at, above, or below the LIBOR Rate.

 

“Lien”:  With respect to any Person, any interest in any real or personal
property, asset or other right owned or being purchased or acquired by such
Person (including an interest in respect of a Capital Lease) which secures
payment or performance of any obligation and shall include any mortgage, lien,
encumbrance, title retention lien, charge or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial process or
otherwise.

 

“Loan”:  An extension of credit by a Lender to a Loan Party in the form of a
revolving loan pursuant to Section 2.1.1.

 

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“Loan Availability”:  The lesser of (i) the Aggregate Commitments and (ii) the
Borrowing Base.

 

“Loan Documents”:  This Agreement, the Notes, the Letters of Credit, the Master
Letter of Credit Agreement, the L/C Applications, the Collateral Documents, the
Subordination Agreements and all documents, instruments and agreements delivered
in connection with the foregoing, as they may be amended, modified,
supplemented, restated or replaced from time to time.

 

“Loan Index Lender”:  PrivateBank.

 

“Loan Index Rate”:  The fixed rate per annum provided from time to time by the
Loan Index Lender in its sole discretion based on its internal “loan index” and
made available by the Loan Index Lender at the Company’s request, which rate
shall be fixed for a period equal to the relevant Interest Period; provided that
the Loan Index Rate shall be not less than U.S. Treasury rates fixed for
substantially similar periods.  The Lenders may lend to their customers at rates
that are at, above, or below the Loan Index Rate.

 

“Loan Parties”:  As defined in the Preamble.

 

“Loan or Loans”:  The revolving loan(s) made by the Lenders to the Loan Parties
under this Agreement.

 

“Margin Stock”:  Any “margin stock” as defined in Regulation U.

 

“Master Letter of Credit Agreement”:  At any time, with respect to the issuance
of Letters of Credit, a master letter of credit agreement or reimbursement
agreement in the form, if any, being used by the L/C Issuer at such time.

 

“Material Adverse Effect”:  (a) A material adverse change in, or a material
adverse effect upon, the financial condition, operations, assets, business,
properties or prospects of the Loan Parties taken as a whole, (b) a material
impairment of the ability of any Loan Party to perform any of the Obligations
under any Loan Document or (c) a material adverse effect upon any substantial
portion of the collateral under the Collateral Documents or upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document.

 

“Multiemployer Pension Plan”:  A multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any other member of the
Controlled Group may have any liability.

 

“Net Cash Proceeds”:  With respect to any Asset Disposition, the aggregate cash
proceeds (including cash proceeds received pursuant to policies of insurance or
by way of deferred payment of principal pursuant to a note, installment
receivable or otherwise, but only as and when received) received by any Loan
Party pursuant to such Asset Disposition net of (i) the direct costs relating to
such sale, transfer or other disposition (including sales commissions and legal,
accounting and investment banking fees), (ii) taxes paid or reasonably estimated
by Loan Parties to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and
(iii) amounts required to be applied to the

 

13

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repayment of any Debt secured by a Lien on the asset subject to such Asset
Disposition (other than the Loans).

 

“Note”:  Each promissory note executed by the Loan Parties in favor of a Lender
in connection with this Agreement in the form of Exhibit A, as they may be
amended, modified, supplemented, restated or replaced from time to time, or any
one or more of them.

 

“Notice of Borrowing”:  As defined in Section 2.2.2.

 

“Notice of Conversion/Continuation”:  As defined in Section 2.2.3.

 

“Obligations”:  All obligations (monetary (including post-petition interest,
allowed or not) or otherwise) of any Loan Party under this Agreement and any
other Loan Document including Attorney Costs and any reimbursement obligations
of each Loan Party in respect of Letters of Credit and surety bonds, all Hedging
Obligations permitted hereunder which are owed to any Lender or its Affiliates,
and all Bank Products Obligations, all in each case howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due.

 

“OFAC”:  As defined in Section 9.24.

 

“Operating Lease”:  Any lease of (or other agreement conveying the right to use)
any real or personal property by any Loan Party, as lessee, other than any
Capital Lease.

 

“Outstandings”:  At any time, the sum of (a) the aggregate principal amount of
all outstanding Loans after giving effect to any borrowings and prepayments or
repayments occurring on such date, plus (b) the Stated Amount of all Letters of
Credit.

 

“PBGC”:  The Pension Benefit Guaranty Corporation and any entity succeeding to
any or all of its functions under ERISA.

 

“Pension Plan”:  A “pension plan”, as such term is defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA or the minimum funding standards of
ERISA (other than a Multiemployer Pension Plan), and as to which the Company or
any member of the Controlled Group may have any liability, including any
liability by reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under Section 4069 of ERISA.

 

“Person”:  Any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.

 

“Pledge Agreement”:  Each Pledge Agreement executed and delivered by a Loan
Party to the Agent, as they may be amended, modified, supplemented, restated or
replaced from time to time, or any one or more of them.

 

“Prime Rate”:  For any day, the rate of interest in effect for such day as
publicly announced from time to time by Agent as its prime rate (whether or not
such rate is actually

 

14

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charged by Agent), which is not intended to be Agent’s lowest or most favorable
rate of interest at any one time.  Any change in the Prime Rate announced by
Agent shall take effect at the opening of business on the day specified in the
public announcement of such change; provided that Agent shall not be obligated
to give notice of any change in the Prime Rate.

 

“PrivateBank”:  As defined in the Preamble.

 

“Pro Rata Share”:  With respect to a Lender’s obligation to make Loans,
participate in L/C Obligations, reimburse the L/C Issuer, and receive payments
of principal, interest, fees, costs, and expenses with respect thereto,
(x) prior to the Aggregate Commitments being terminated or reduced to zero, the
percentage obtained by dividing (i) such Lender’s Commitment, by (ii) the
Aggregate Commitments of all Lenders and (y) from and after the time the
Aggregate Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s
Outstandings by (ii) the aggregate unpaid principal amount of all Outstandings.

 

“Regulation D”:  Regulation D of the FRB.

 

“Regulation U”:  Regulation U of the FRB.

 

“Related Parties”:  With respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents, trustees and advisors of such
Person and of such Person’s Affiliates.

 

“Reportable Event”:  A reportable event as defined in Section 4043 of ERISA and
the regulations issued thereunder as to which the PBGC has not waived the
notification requirement of Section 4043(a), or the failure of a Pension Plan to
meet the minimum funding standards of Section 412 of the Code (without regard to
whether the Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or
under Section 302 of ERISA.

 

“Required Lenders”:  Required Lenders shall mean all Lenders; provided that any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.

 

“SEC”:  The Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.

 

“Security Agreement”:  Each Security Agreement executed and delivered by a Loan
Party to the Agent, as they may be amended, modified, supplemented, restated or
replaced from time to time, or any one or more of them.

 

“Senior Debt”:  All Debt of the Company and its Subsidiaries other than
Subordinated Debt.

 

“Senior Officer”:  With respect to any Loan Party, any of the chief executive
officer, the president, the chief operating officer or the treasurer of such
Loan Party.

 

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“Stated Amount”:  With respect to any Letter of Credit at any date of
determination, (a) the maximum aggregate amount available for drawing thereunder
under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.

 

“Subordinated Debt”:  The Unsecured Notes and any other unsecured Debt of the
Company which has subordination terms, covenants, pricing and other terms which
have been approved in writing by the Required Lenders.

 

“Subordinated Debt Documents”:  The Unsecured Note Documents and all other
documents and instruments relating to the Subordinated Debt and all amendments
and modifications thereof approved by the Required Lenders.

 

“Subordination Agreements”:  The provisions of the Unsecured Note Documents in
favor or for the benefit of the “Senior Debt” as defined therein and all other
subordination agreements executed by a holder of Subordinated Debt in favor of
Agent, for the ratable benefit of Agent and the Lenders, from time to time after
the Closing Date.

 

“Subsidiary”:  With respect to any Person, a corporation, partnership, limited
liability company or other entity of which such Person owns, directly or
indirectly, such number of outstanding Capital Securities as have more than 50%
of the ordinary voting power for the election of directors or other managers of
such corporation, partnership, limited liability company or other entity. 
Unless the context otherwise requires, each reference to Subsidiaries herein
shall be a reference to Subsidiaries of the Company.

 

“Tangible Net Worth”:  As of any date of determination, the sum of the amounts
set forth on the balance sheet of the Company and the Subsidiaries as total
shareholder equity of the Company and the Subsidiaries, plus any Subordinated
Debt, minus the book value of all intangible assets of the Company and the
Subsidiaries (including all such items as goodwill, trade names, service marks,
copyrights, patents, licenses, deferred items, unamortized debt discount,
prepaid expenses and any other items deemed intangible by Agent), minus
Investments in non-public companies net of cash dividends received in respect of
such Investments.

 

“Taxes”:  Any and all present and future taxes, duties, levies, imposts,
deductions, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing, but excluding Excluded Taxes.

 

“Termination Date”:  The earlier to occur of (a) July 31, 2014, or (b) such
other date on which the Commitment terminates pursuant to Section 13.

 

“Termination Event”:  With respect to a Pension Plan that is subject to Title IV
of ERISA, (a) a Reportable Event, (b) the withdrawal of Company or any other
member of the Controlled Group from such Pension Plan during a plan year in
which Company or any other member of the Controlled Group was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA, (c) the termination of such Pension Plan, the filing
of a notice of intent to terminate the Pension Plan or the treatment of an
amendment of such Pension Plan as a termination under Section 4041 of ERISA,
(d) the institution by the PBGC of proceedings to terminate such Pension Plan or
(e) any event or

 

16

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condition that might constitute grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Pension Plan.

 

“Total Plan Liability”:  At any time, the present value of all vested and
unvested accrued benefits under all Pension Plans, determined as of the then
most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

“type”:  As defined in Section 2.2.1.

 

“UCC”:  As defined in the Security Agreement.

 

“Unfunded Liability”:  The amount (if any) by which the present value of all
vested and unvested accrued benefits under all Pension Plans exceeds the fair
market value of all assets allocable to those benefits, all determined as of the
then most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

“Unmatured Event of Default”:  Any event that, if it continues uncured, will,
with lapse of time or notice or both, constitute an Event of Default.

 

“Unreimbursed Amount”:  As defined in Section 2.3.2(a).

 

“Unsecured Note Documents”:  The Unsecured Notes, the Unsecured Note
Registration Statement, the Unsecured Note Indenture, the Unsecured Note
Prospectus and each other agreement relating to the Unsecured Notes.

 

“Unsecured Note Indenture”:  That certain Indenture dated June 14, 2006 by and
between the Company, as obligor, and Wells Fargo Bank, National Association, as
trustee.

 

“Unsecured Note Prospectus”:  That certain Prospectus of the Company dated
June 14, 2006 relating to the Unsecured Notes and included as part of the
Unsecured Note Registration Statement.

 

“Unsecured Note Registration Statement”:  The Company’s registration statement
in respect of the Unsecured Notes on Form S-1, declared effective by the
Securities and Exchange Commission on or about June 14, 2006.

 

“Unsecured Notes”:  The renewable unsecured subordinated notes of the Company
issued under the Unsecured Note Indenture pursuant to the Unsecured Note
Registration Statement.

 

“Wholly-Owned Subsidiary”:  As to any Person, a Subsidiary all of the Capital
Securities of which (except directors’ qualifying Capital Securities) are at the
time directly or indirectly owned by such Person and/or another Wholly-Owned
Subsidiary of such Person.

 

1.2           Other Interpretive Provisions.

 

(a)           The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

 

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(b)           Section, Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

 

(c)           The term “including” is not limiting and means “including without
limitation.”

 

(d)           In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words “to”
and “until” each mean “to but excluding”, and the word “through” means “to and
including.”

 

(e)           Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and the other Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, supplements and other modifications thereto, but only to the
extent such amendments, restatements, supplements and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.

 

(f)            This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters.  All such limitations, tests and measurements are cumulative and each
shall be performed in accordance with its terms.

 

(g)           This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to Agent, the Company, each
Lender and the other parties thereto and are the products of all parties. 
Accordingly, they shall not be construed against Agent merely because of Agent’s
involvement in their preparation.

 

1.3           Letter of Credit Amounts.  Unless otherwise specified herein the
amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any L/C
Application or Master Letter of Credit Agreement related thereto, provides for
one or more automatic increases in the stated amount thereof, the amount of such
Letter of Credit shall be deemed to be the maximum stated amount of such Letter
of Credit after giving effect to all such increases, whether or not such maximum
stated amount is in effect at such time.

 

SECTION 2           COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER
OF CREDIT PROCEDURES.

 

2.1           Commitments.  On and subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Loans to, and the L/C Issuer
agrees to issue Letters of Credit for the account of, the Loan Parties, jointly
or severally, as follows:

 

2.1.1             Loan Commitment.  Each Lender severally agrees to make Loans
on a revolving basis from time to time until the Termination Date in the amounts
as the Company may request from the Lender; provided, however, that after giving
effect to any Loan, (i) the Outstandings will not at any time exceed Loan
Availability and (ii) the aggregate Outstandings of any Lender shall not exceed
such Lender’s Commitment.  Within the limits of each Lender’s Commitment, and
subject to the other terms and

 

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conditions hereof, Company may borrow under this Section 2.1.1, prepay under
Section 6.1.1, and reborrow under this Section 2.1.1.

 

2.1.2             L/C Commitment.  Subject to Section 2.3.1, the L/C Issuer, in
reliance on the agreements of the other Lenders set forth herein, agrees to
issue letters of credit, in each case containing such terms and conditions as
are permitted by this Agreement and are reasonably satisfactory to the L/C
Issuer (each, a “Letter of Credit”), at the request of and for the account of
the Company from time to time before the scheduled Termination Date; provided
that (a) the aggregate Stated Amount of all Letters of Credit shall not at any
time exceed $5,000,000 and (b) the Outstandings shall not at any time exceed
Loan Availability.

 

2.2           Loan Procedures.

 

2.2.1             Various Types of Loans.  Each Loan shall be divided into
tranches which are either a Base Rate Loan, a LIBOR Loan or a Fixed Rate Loan
(each, a “type” of Loan), as the Company shall specify in the related Notice of
Borrowing or conversion pursuant to Section 2.2.2 or 2.2.3.  Base Rate Loans,
LIBOR Loans and Fixed Rate Loans may be outstanding at the same time, provided
that (i) no more than eight (8) different LIBOR Loans shall be outstanding at
any one time, and (ii) no more than eight (8) different Fixed Rate Loans shall
be outstanding at any one time.

 

2.2.2             Borrowing Procedures.

 

(a)           The Company shall give written notice (each such written notice, a
“Notice of Borrowing”) substantially in the form of Exhibit D or telephonic
notice (followed immediately by a Notice of Borrowing) to Agent of each proposed
borrowing of a revolving Loan not later than (a) in the case of a Base Rate Loan
or a Fixed Rate Loan, 11:00 A.M., Minneapolis time, on the proposed date of such
borrowing, and (b) in the case of a LIBOR Loan, 11:00 A.M., Minneapolis time, at
least three Business Days prior to the proposed date of such borrowing.  Each
such notice shall be effective upon receipt by Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, (i) in the case of a
LIBOR Loan, the initial Interest Period therefor, and (ii) in the case of a
Fixed Rate Loan, the initial Interest Period therefor as well as an amortization
schedule reflecting equal monthly payments over the life of such Fixed Rate Loan
over the Interest Period therefor commencing on the same date of the next month
following the borrowing (or such other method of amortization approved in
writing by the Agent prior to the commencement of the Interest Period
therefor).  Each Base Rate Loan shall be in an aggregate amount of at least
$100,000 or a higher integral multiple of $100,000.  Each LIBOR Loan shall be in
an aggregate amount of at least $500,000 or a higher integral multiple of
$100,000.  Each Fixed Rate Loan shall be in an aggregate amount of at least
$200,000 or a higher integral multiple of $100,000.

 

(b)           Following receipt of a Notice of Borrowing, Agent shall promptly
notify each Lender of the amount of its Applicable Percentage of the applicable
Loans.  Each Lender shall make the amount of its Loan available to Agent in
immediately available funds at Administrative Agent’s Office not later than
1:00 p.m. on the Business Day specified in the applicable Notice of Borrowing. 
Upon satisfaction of the applicable conditions set forth in Section 12, Agent
shall

 

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make all funds so received available to the Company in like funds as received by
Agent either by (i) crediting the account of Company on the books of PrivateBank
with the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to (and reasonably acceptable to) Agent
by the Company; provided, however, that if, on the date the Notice of Borrowing
with respect to such borrowing is given by the Company, there are Unreimbursed
Amounts outstanding, then the proceeds of such borrowing first, shall be
applied, to the payment in full of any such Unreimbursed Amounts, and second,
shall be made available to the Company as provided above.

 

2.2.3             Conversion and Continuation Procedures.

 

(a)           Subject to Section 2.2.1, the Company may, upon irrevocable
written notice to Agent in accordance with clause (b) below:

 

(i)            elect, as of any Business Day, to convert any Loans (or any part
thereof in an aggregate amount not less than $100,000 or a higher integral
multiple of $100,000) into Loans of the other type; or

 

(ii)           elect, as of the last day of the applicable Interest Period, to
continue any LIBOR Loans having Interest Periods expiring on such day (or any
part thereof in an aggregate amount not less than $500,000 or a higher integral
multiple of $100,000) for a new Interest Period;

 

(b)           The Company shall give written notice (each such written notice, a
“Notice of Conversion/Continuation”) substantially in the form of Exhibit E or
telephonic notice (followed immediately by a Notice of Conversion/Continuation)
to Agent of each proposed conversion or continuation not later than (i) in the
case of conversion into Base Rate Loans, 11:00 A.M., Minneapolis time, on the
proposed date of such conversion and (ii) in the case of conversion into or
continuation of LIBOR Loans, 11:00 A.M., Minneapolis time, at least three
Business Days prior to the proposed date of such conversion or continuation,
specifying in each case:

 

(i)            the proposed date of conversion or continuation;

 

(ii)           the aggregate amount of Loans to be converted or continued;

 

(iii)          the type of Loans resulting from the proposed conversion or
continuation; and

 

(iv)          in the case of conversion into, or continuation of, LIBOR Loans,
the duration of the requested Interest Period therefor.

 

(c)           If upon the expiration of any Interest Period applicable to LIBOR
Loans or Fixed Rate Loans, the Company has failed to select timely a new
Interest Period to be applicable to such LIBOR Loans or Agent has failed to
approve a new Interest Period to be applicable to such Fixed Rate Loans, the
Company shall be deemed to have elected to convert such LIBOR Loans or Fixed
Rate Loans, as applicable, into Base Rate Loans effective on the last day of
such Interest Period.

 

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(d)           Any conversion of a LIBOR Loan on a day other than the last date
of an Interest Period therefor shall be subject to Section 8.4 and any
conversion of a Fixed Rate Loan on a day other than the last date of an Interest
Period therefor shall be subject to Section 5.2(b).

 

(e)           Following receipt of a Notice of Conversion/Continuation, Agent
shall promptly notify each Lender of such notice, and if no timely Notice of
Conversion/Continuation is provided by the Company, Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described
in Section 2.2.3(c).  All conversions and continuation of Loans must be made
uniformly and ratably among the Lenders.

 

2.3           Letter of Credit Procedures.

 

2.3.1             L/C Applications.  The Loan Parties shall execute and deliver
to the L/C Issuer the Master Letter of Credit Agreement from time to time in
effect.  The Company shall give notice to the L/C Issuer (with a copy to the
Agent) of the proposed issuance of each Letter of Credit on a Business Day which
is at least three Business Days (or such lesser number of days as the Lender
shall agree in any particular instance in its sole discretion) prior to the
proposed date of issuance of such Letter of Credit.  Each such notice shall be
accompanied by an L/C Application, duly executed by the Company and in all
respects satisfactory to the L/C Issuer, together with such other documentation
as the L/C Issuer may request in support thereof, it being understood that each
L/C Application shall specify, among other things, the date on which the
proposed Letter of Credit is to be issued, the expiration date of such Letter of
Credit (which shall not be later than the earlier of thirty (30) days prior to
(i) one year after the date of issuance thereof and (ii) the scheduled
Termination Date (unless such Letter of Credit is Cash Collateralized);
provided, a Letter of Credit with an expiration date of one year may provide for
renewal thereof in additional one-year periods, subject to the preceding clause
(ii)) and whether such Letter of Credit is to be transferable in whole or in
part.  So long as the L/C Issuer has not received written notice from Agent, any
Lender or any Loan Party that the conditions precedent set forth in Section 12
with respect to the issuance of such Letter of Credit have not been satisfied,
the L/C Issuer shall issue such Letter of Credit on the requested issuance date.
 In the event of any inconsistency between the terms of the Master Letter of
Credit Agreement, any L/C Application and the terms of this Agreement, the terms
of this Agreement shall control.

 

2.3.2             Reimbursement Obligations; Fundings of Participations.

 

(a)           The L/C Issuer shall notify the Company and Agent whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided that the failure of the L/C Issuer to so notify the Company
or Agent shall not affect the rights of the L/C Issuer or the Lenders in any
manner whatsoever.  Not later than 11:00 a.m.  Minneapolis time on the date of
any payment or disbursement by the L/C Issuer under a Letter of Credit (the
“Honor Date”), each Loan Party, jointly and severally, hereby unconditionally
and irrevocably agrees to reimburse the L/C Issuer through Agent for each such
payment or disbursement.  If the Loan Parties fail to so reimburse the L/C
Issuer by such time, Agent shall promptly notify each Lender of the Honor Date,
the amount of the unreimbursed drawing or disbursement (the “Unreimbursed

 

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Amount”), and the amount of the Lender’s Applicable Percentage thereof.  In such
event, the Company shall be deemed to have requested a borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section 2.2 for
the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and satisfaction of the
conditions set forth in Section 12.2.  Any notice given by the L/C Issuer or
Agent pursuant to this Section 2.3.2(a) may be given by telephone if immediately
confirmed in writing; provided that the lack of such immediate confirmation
shall not affect the conclusiveness of binding effect of such notice.

 

(b)           Each Lender shall upon any notice pursuant to
Section 2.3.2(a) make funds available to Agent for the account of the L/C Issuer
at Administrative Agent’s Office in an amount equal to its Applicable Percentage
of the Unreimbursed Amount not later than 1:00 p.m.  on the Business Day
specified in such notice by Agent, whereupon, subject to the provisions of
Section 2.3.2(c), each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan to the Company in such amount.  Agent shall remit the
funds so received to the L/C Issuer.

 

(c)           With respect to any Unreimbursed Amount that is not fully
refinanced by a borrowing of Base Rate Loans because the conditions set forth in
Section 12.2 cannot be satisfied or for any other reason, the Loan Parties shall
be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be
due and payable on demand (together with interest) and shall bear interest at
the Default Rate.  In such event, each Lender’s payment to Agent for the account
of the L/C Issuer pursuant to Section 2.3.2(b) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.3.2.

 

(d)           Until each Lender funds its Loan or L/C Advance pursuant to this
Section 2.3.2 to reimburse the L/C Issuer for any amount drawn under any Letter
of Credit, interest in respect of such Lender’s Applicable Percentage of such
amount shall be solely for the account of the L/C Issuer.

 

(e)           Each Lender’s obligation to make Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.3.2, shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, the Company, any other Loan Party or any other Person
for any reason whatsoever; (B) the occurrence or continuance of an Unmatured
Event of Default or an Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Loans pursuant to this Section 2.3.2 is
subject to the conditions set forth in Section 12.2.  No such making of an L/C
Advance shall relieve or otherwise impair the obligation of the Loan Parties to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.

 

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(f)            If any Lender fails to make available to Agent for the account of
the L/C Issuer any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.3.2 by the time specified in
Section 2.3.2(b), the L/C Issuer shall be entitled to recover from such Lender
(acting through Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C issuer in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the L/C Issuer
in connection with the foregoing.  If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Loan included in the relevant borrowing or L/C Advance in respect of
the relevant L/C Borrowing, as the case may be.  A certificate of the L/C Issuer
submitted to any Lender (through Agent) with respect to any amounts owing under
this clause (f) shall be conclusive absent manifest error.

 

2.3.3             Repayment of Participations.

 

(a)           At any time after the L/C Issuer has made a payment under any
Letter of Credit and has received from any Lender such Lender’s L/C Advance in
respect of such payment in accordance with Section 2.3.2, if Agent receives for
the account of the L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from any Loan Party or otherwise,
including proceeds of Cash Collateral applied thereto by Agent), Agent will
distribute to such Lender its Applicable Percentage thereof in the same funds as
those received by Agent.

 

(b)           If any payment received by Agent for the account of the L/C Issuer
pursuant to Section 2.3.2(a) is required to be returned under any of the
circumstances described in Section 16.6 (including pursuant to any settlement
entered into by the L/C Issuer in its discretion), each Lender shall pay to
Agent for the account of the L/C Issuer its Applicable Percentage thereof on
demand of Agent, plus interest thereon from the date of such demand to the date
such amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect.  The obligations of the Lenders under
this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

2.3.4             Obligations Absolute.  The Loan Parties’ reimbursement
obligations hereunder shall be irrevocable and unconditional under all
circumstances, including (i) any lack of validity or enforceability of any
Letter of Credit, this Agreement or any other Loan Document, (ii) the existence
of any claim, set-off, defense or other right which any Loan Party may have at
any time against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such transferee may be acting),
the L/C Issuer, Agent, any Lender or any other Person, whether in connection
with any Letter of Credit, this Agreement, any other Loan Document, the
transactions contemplated herein or any unrelated transactions (including any
underlying transaction between any Loan Party and the beneficiary named in any
Letter of Credit), (iii) the validity, sufficiency or genuineness of any
document which the L/C Issuer has determined complies on its face with the terms
of the applicable Letter of Credit, even if such document should later prove to
have been forged, fraudulent, invalid or insufficient in any respect or any
statement therein shall have been untrue or inaccurate in any

 

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respect, or (iv) the surrender or impairment of any security for the performance
or observance of any of the terms hereof.

 

2.3.5             Role of L/C Issuer.  Each Lender and each Loan Party agree
that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.  None of the
L/C Issuer, Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
L/C Issuer document.  The Company and each other Loan Party hereby assumes all
risks of the acts or omissions of any beneficiary or transferee with respect to
its use of any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Company’s (or any Loan Party) pursuing
such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement.  None of the L/C Issuer, Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of the
L/C Issuer, shall be liable or responsible for any of the matters described in
clauses (i) through (iv) of Section 2.3.4; provided, however, that anything in
such clauses to the contrary notwithstanding, the Company may have a claim
against the L/C Issuer, and the L/C Issuer may be liable to the Company, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Company which the Company proves were caused
by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit.  In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.

 

2.3.6             Cash Collateral.  Upon the request of Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the
L/C Expiration Date, any L/C Obligation for any reason remains outstanding, the
Company shall, in each case, immediately Cash Collateralize the then outstanding
amount of all L/C Obligations (including any fees then due and owing).  Sections
2.3.1, 6.1.2 and 13.2 set forth certain additional requirements to deliver Cash
Collateral hereunder.  The Company and each Loan Party hereby grants to Agent,
for the benefit of the L/C Issuer and the Lenders, a security interest in all
such cash, deposit accounts and all balances therein and all

 

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proceeds of the foregoing.  Cash Collateral shall be maintained in blocked,
non-interest bearing deposit accounts at PrivateBank.

 

2.3.7             Applicability of ISP and UCP.  Unless otherwise expressly
agreed by the L/C Issuer and the Company when a Letter of Credit is issued,
(i) the rules of the ISP shall apply to each standby Letter of Credit, and
(ii) the rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce (the “ICC”) at
the time of issuance shall apply to each commercial Letter of Credit.

 

2.4           Certain Conditions.  Notwithstanding any other provision of this
Agreement, neither Agent nor any Lender or the L/C Issuer shall have an
obligation to make any Loan, or to permit the continuation of or any conversion
into any LIBOR Loan, or to issue any Letter of Credit, if an Event of Default or
Unmatured Event of Default exists.

 

2.5           Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

 

2.5.1             if any L/C Obligations are outstanding at the time a Lender
becomes a Defaulting Lender then:

 

(a)           all or any part of the Defaulting Lender’s obligation to
participate in L/C Obligations shall be reallocated among the non-Defaulting
Lenders in accordance with their respective Pro Rata Shares as determined
pursuant to the definition of “Pro Rata Share” but only to the extent (x) the
sum of all non-Defaulting Lenders’ Outstandings plus such Defaulting Lender’s
obligation to participate in L/C Obligations does not exceed the total of all
non-Defaulting Lenders’ Commitments and (y) the conditions set forth in
Section 12.2 are satisfied at such time; and

 

(b)           if the obligation to participate in L/C Obligations of the
non-Defaulting Lenders is reallocated pursuant to Section 2.5.1, then the fees
payable to the Lenders pursuant to Section 5.1 shall be adjusted in accordance
with such non-Defaulting Lenders’ Pro Rata Shares (as determined pursuant to the
definition of “Pro Rata Share”); or

 

(c)           if any Defaulting Lender’s obligation to participate in L/C
Obligations is not reallocated pursuant to Section 2.5.1, then, without
prejudice to any rights or remedies of any L/C Issuer or any Lender hereunder,
all letter of credit fees payable under Section 5.1 with respect to such
Defaulting Lender’s obligation to participate in L/C Obligations shall be
payable to the applicable L/C Issuer until such obligation to participate in L/C
Obligations is reallocated; and

 

2.5.2             So long as any Lender is a Defaulting Lender, no L/C Issuer
shall be required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders in accordance with Section 2.5.1, and participating
interests in any such newly issued or increased Letter of Credit shall be
allocated among non-Defaulting Lenders in a

 

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manner consistent with Section 2.5.1(a) (and Defaulting Lenders shall not
participate therein).

 

2.5.3             In the event that the Administrative Agent and the Company
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the obligations to
participate in L/C Obligations of the Lenders shall be readjusted to reflect the
inclusion of such Lender’s Commitment and on such date such Lender shall
purchase at par such of the Loans of the other Lenders as the Administrative
Agent shall determine may be necessary in order for such Lender to hold such
Loans in accordance with its Pro Rata Share (as determined pursuant to the
definition of “Pro Rata Share”).

 

2.5.4             Any amount payable to a Defaulting Lender hereunder (whether
on account of principal, interest, fees or otherwise) shall, in lieu of being
distributed to such Defaulting Lender, be retained by the Administrative Agent
in a segregated account and, subject to any applicable requirements of law, be
applied at such time or times as may be determined by the Administrative Agent
(i) first, to the payment of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder, (ii) second, pro rata, to the payment of any
amounts owing by such Defaulting Lender to the L/C Issuer(s) hereunder,
(iii) third, if so determined by the Administrative Agent and the Company, held
in such account as cash collateral for future funding obligations of the
Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment of
any amounts owing to the Company or the Lenders as a result of any judgment of a
court of competent jurisdiction obtained by the Company or any Lender against
such Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement, and (v) fifth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided, that if such
payment is (x) a prepayment of the principal amount of any Loans or
reimbursement obligations in respect of draws under Letters of Credit with
respect to which the L/C Issuer has funded its participation obligations and
(y) made at a time when the conditions set forth in Section 12.2 are satisfied,
such payment shall be applied solely to prepay the Loans of, and reimbursement
obligations owed to, all Lenders that are not Defaulting Lenders pro rata prior
to being applied to the prepayment of any Loans, or reimbursement obligations
owed to, any Defaulting Lender.

 

To the extent of any conflicts between this Section 2.5 and Section 7.2, the
provisions of this Section 2.5 shall control.

 

2.6           Increase in Commitments.

 

2.6.1             Request for Increase.  Provided that there exists no Unmatured
Event of Default or Event of Default, upon notice to the Administrative Agent
(which shall promptly notify the Lenders), the Company may from time to time,
request an increase in the Aggregate Commitments by an amount (for all such
requests) not exceeding $10,000,000; provided that any such request for an
increase shall be in a minimum amount of $2,500,000.  At the time of sending
such notice, the Company (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is

 

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requested to respond (which shall in no event be less than fifteen Business Days
from the date of delivery of such notice to the Lenders).

 

2.6.2             Lender Elections to Increase.  Each Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Commitment and, if so, whether by an amount equal to, greater than,
or less than its Applicable Percentage of such requested increase.  Any Lender
not responding within such time period shall be deemed to have declined to
increase its Commitment.

 

2.6.3             Notification by Administrative Agent; Additional Lenders.  The
Administrative Agent shall notify the Company and each Lender of the Lenders’
responses to each request made hereunder.  To achieve the full amount of a
requested increase and subject to the approval of the Administrative Agent and
the L/C Issuer (which approvals shall not be unreasonably withheld), the Company
may also invite additional Eligible Assignees to become Lenders pursuant to a
joinder agreement in form and substance satisfactory to the Administrative Agent
and its counsel.

 

2.6.4             Effective Date and Allocations.  If the Aggregate Commitments
are increased in accordance with this Section, the Administrative Agent and the
Company shall determine the effective date (the “Increase Effective Date”) and
the final allocation of such increase.  The Administrative Agent shall promptly
notify the Company and the Lenders of the final allocation of such increase and
the Increase Effective Date, and the Lenders shall make such transfers and take
such further action to the extent necessary to keep the outstanding Loans
ratable with any revised Applicable Percentages arising from any nonratable
increase in the Commitments under this Section 2.6.  For the avoidance of doubt,
any Loans made and Letters of Credit issued following the Increase Effective
Date and utilizing any increase in the Aggregate Commitments shall constitute
Obligations for all purposes of the Loan Documents.

 

2.6.5             Conditions to Effectiveness of Increase.  As a condition
precedent to such increase, the Company shall deliver to the Administrative
Agent a certificate of each Loan Party dated as of the Increase Effective Date
(in sufficient copies for each Lender) signed by a Senior Officer of such Loan
Party (i) certifying and attaching the resolutions adopted by such Loan Party
approving or consenting to such increase, and (ii) in the case of the Company,
certifying that, before and after giving effect to such increase, (A) the
representations and warranties contained in Section 9 and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Section 2.6, the representations and
warranties contained in Sections 9.4 and 9.5 shall be deemed to refer to the
most recent statements furnished pursuant to Section 10.1, and (B) no Unmatured
Event of Default or Event of Default exists.

 

2.6.6             Conflicting Provisions.  To the extent of any conflicts
between this Section 2.6 and Section 16.1, the provisions of this Section 2.6
shall control.

 

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SECTION 3           EVIDENCING OF LOANS.

 

3.1           Notes.  The Loans made by each Lender shall be evidenced by a
Note, with appropriate insertions, payable to the order of each Lender in a face
principal amount equal to its Commitment.

 

3.2           Recordkeeping.  Each Lender shall record in its records, the date
and amount of each Loan made by such Lender, each repayment or conversion
thereof, the purchases and sales by such Lender of participations in Letters of
Credit and, in the case of each LIBOR Loan and each Fixed Rate Loan, the dates
on which each Interest Period for such Loan shall begin and end.  The aggregate
unpaid principal amount so recorded shall be rebuttably presumptive evidence of
the principal amount of the Loans owing and unpaid to such Lender.  The failure
to so record any such amount or any error in so recording any such amount shall
not, however, limit or otherwise affect the Obligations of the Loan Parties
hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.

 

SECTION 4           INTEREST.

 

4.1           Interest Rates.  The Loan Parties, jointly and severally, promise
to pay interest on the unpaid principal amount of each Loan for the period
commencing on the date of such Loan until such Loan is paid in full as follows:

 

(a)           at all times while such Loan is a Base Rate Loan, at a rate per
annum equal to the sum of the Base Rate from time to time in effect plus the
Applicable Margin; and

 

(b)           at all times while such Loan is a LIBOR Loan, at a rate per annum
equal to the sum of the LIBOR Rate applicable to each Interest Period for such
Loan plus the Applicable Margin;

 

(c)           at all times while such Loan is a Fixed Rate Loan, at a rate per
annum equal to the sum of the Loan Index Rate applicable to each Interest Period
for such Loan plus the Applicable Margin;

 

provided that at any time an Event of Default exists, unless the Required
Lenders otherwise consent, the interest rate applicable to each Loan shall be
the Default Rate, provided further that such increase may thereafter be
rescinded by the Required Lenders.  Notwithstanding the foregoing, upon the
occurrence of an Event of Default under Section 13.1.1 or 13.1.4, such increase
shall occur automatically.

 

4.2           Interest Payment Dates.  Accrued interest on each Base Rate Loan
shall be payable in arrears on the first day of each calendar month and at
maturity.  Accrued interest on each LIBOR Loan shall be payable on the last day
of each Interest Period relating to such Loan, upon a prepayment of such Loan,
and at maturity.  Accrued interest on each Fixed Rate Loan shall be payable on
the same date as payments are made on the principal in accordance with the
amortization schedule delivered pursuant to Section 2.2.2(a), upon a prepayment
of such Loan, and at maturity.  After maturity, and at any time an Event of
Default exists, accrued interest on all Loans shall be payable on demand.

 

4.3           Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for
each Interest Period shall be determined by Agent, and notice thereof shall be
given by Agent promptly to the

 

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Company and the Lenders.  Each determination of the applicable LIBOR Rate by
Agent shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error.  Agent shall, upon written request of the Company, deliver
to the Company a statement showing the computations used by Agent in determining
any applicable LIBOR Rate hereunder.

 

4.4           Computation of Interest.  Interest for LIBOR Loans and for Fixed
Rate Loans shall be computed for the actual number of days elapsed on the basis
of a year of 360 days.  Interest for Base Rate Loans shall be computed for the
actual number of days elapsed in the applicable year.  The applicable interest
rate for each Base Rate Loan shall change simultaneously with each change in the
Base Rate.

 

SECTION 5           FEES.

 

5.1           Letter of Credit Fees.

 

(a)           The Loan Parties, jointly and severally, agree to pay to the L/C
Issuer a letter of credit fee for each Letter of Credit equal to the L/C Fee
Rate of the Stated Amount of such Letter of Credit (computed for the actual
number of days elapsed on the basis of a year of 360 days); provided that,
unless the L/C Issuer otherwise consents, the rate applicable to each Letter of
Credit shall be increased by 2% at any time that an Event of Default exists. 
Such letter of credit fee shall be payable in arrears on the first day of each
calendar month and on the Termination Date (or such later date on which such
Letter of Credit expires or is terminated) for the period from the date of the
issuance of each Letter of Credit (or the last day on which the letter of credit
fee was paid with respect thereto) to the date such payment is due or, if
earlier, the date on which such Letter of Credit expired or was terminated.

 

(b)           In addition, with respect to each Letter of Credit, the Company
agrees to pay to the L/C Issuer such fees and expenses as the L/C Issuer
customarily requires in connection with the issuance, negotiation, processing
and/or administration of letters of credit in similar situations, including a
letter of credit fronting fee in the amount and at the times agreed to by the
Company and the L/C Issuer.

 

5.2           Other Fees.

 

(a)           Non-Utilization Fee.  The Loan Parties, jointly and severally,
agree to pay to each Lender a non-utilization fee equal to 0.25% of the total of
(i) such Lender’s Commitment, minus (ii) the daily average of the aggregate
principal amount of the Outstandings attributable to such Lender, which
non-utilization fee shall be (X) calculated on the basis of a year consisting of
360 days, (Y) paid for the actual number of days elapsed, and (Z) payable
quarterly in arrears on the last day of each calendar quarter and on the
Termination Date.

 

(b)           Fixed Rate Loan Prepayment Fee.  The Loan Parties, jointly and
severally, agree to pay to the Agent (for the ratable benefit of the Lenders in
accordance with their respective Pro Rata Shares), with respect to any
prepayment made on a Fixed Rate Loan that is not in accordance with the
applicable amortization schedule for such Fixed Rate Loan provided to and
approved by Agent pursuant to Section 2.2.2 (other than partial prepayments
permitted pursuant to Section 6.1.3), a prepayment fee equal to 1.0% of the
aggregate outstanding principal balance of the Fixed Rate Loan to which such
prepayment is applied.

 

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(c)           Origination Fee.  The Loan Parties, jointly and severally, agree
to pay to PrivateBank an origination fee equal to 0.30% of $30,000,000.  Such
fee shall be due and payable upon the execution of this Agreement and shall be
fully earned when paid and shall not be refundable for any reason whatsoever.

 

(d)           Lender’s Fees.  The Loan Parties, jointly and severally, agree to
pay to each Lender such other reasonable fees and expenses as are mutually
agreed to from time to time by the Company and such Lender, including the fees
required to be paid in accordance with Section 16.5(a).

 

SECTION 6           REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT;
PREPAYMENTS.

 

6.1           Prepayments.

 

6.1.1             Voluntary Prepayments.  The Loan Parties may from time to time
prepay the Loans in whole or in part; provided that the Company shall give Agent
and each Lender notice thereof not later than 11:00 A.M., Minneapolis time, on
the day of such prepayment (which shall be a Business Day), specifying the Loans
to be prepaid and the date and amount of prepayment.

 

6.1.2             Mandatory Prepayments.  If on any day the Outstandings exceed
the Borrowing Base, the Loan Parties shall immediately prepay the Loans and/or
Cash Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.  The Loan Parties
shall make an immediate prepayment of the Loans upon the receipt by any Loan
Party of any Net Cash Proceeds from any Asset Disposition, in an amount equal to
100% of such Net Cash Proceeds; provided that no prepayment shall be required
under this sentence with respect to the first $4,000,000 of Net Cash Proceeds
received by the Loan Parties in any Fiscal Year.

 

6.1.3             Manner of Prepayments.  Each voluntary partial prepayment
shall be in a principal amount of $25,000 or a higher integral multiple of
$5,000.  Any prepayment of a LIBOR Loan on a day other than the last day of an
Interest Period therefor shall include interest on the principal amount being
repaid and shall be subject to Section 8.4.  Any prepayment of a Fixed Rate Loan
on a day other than the last day of an Interest Period therefor shall include
interest on the principal amount being repaid and, if such prepayment is not a
partial prepayment permitted pursuant to Section 2.2.2(a), shall be subject to
Section 5.2(b).  Except as otherwise provided by this Agreement, all principal
payments in respect of the Loans shall be applied first to repay outstanding
Base Rate Loans, then to repay outstanding Fixed Rate Loans in direct order of
Interest Period maturities and then to repay outstanding LIBOR Loans in direct
order of Interest Period maturities.

 

6.2           Repayments and Terminations.  The Loans shall be irrevocably paid
in full in cash, and the Commitment shall terminate, on the Termination Date.

 

6.3           Reduction of Aggregate Commitments.  The Loan Parties may, at any
time, upon not less than 30 days’ prior written notice from the Company to Agent
and each Lender, reduce

 

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the amount of the Aggregate Commitments, with any such reduction in a minimum
amount of $1,000,000, or, if more, in an integral multiple of $500,000 and on a
pro rata basis for each Commitment; provided, however, that the Loan Parties may
not at any time reduce the amount of Aggregate Commitments below the
Outstandings.

 

SECTION 7           MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

 

7.1           Payments Generally; Agent’s Clawback.

 

7.1.1             General.  All payments to be made by the Loan Parties
hereunder or any Loan Document shall be made without condition or deduction for
any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly
provided herein, all payments by the Loan Parties hereunder shall be made to
Agent, for the account of the respective Lenders to which such payment is owed,
at Administrative Agent’s Office in Dollars and in immediately available funds
not later than 12:00 noon on the date specified herein.  Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s lending office.  All payments received by Agent after 12:00
noon shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.  If any payment to be made
by any Loan Party shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

 

7.1.2             Fundings by Lenders; Payments by Loan Parties.

 

(a)           Unless Agent shall have received notice from a Lender prior to the
proposed date of any borrowing of LIBOR Loans or Fixed Rate Loans (or, in the
case of any borrowing of Base Rate Loans, prior to 12:00 noon on the date of
such borrowing) that such Lender will not make available to Agent such Lender’s
share of such borrowing, Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.2.2 (or, in the case of a
borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by Section 2.2.2) and may, in reliance
upon such assumption, make available to the Company a corresponding amount.  In
such event, if a Lender has not in fact made its share of the applicable
borrowing available to Agent, then the applicable Lender and the Loan Parties
severally agree to pay to Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the Company to but excluding
the date of payment to Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by Agent in
connection with the foregoing and (B) in the case of a payment to be made by the
Loan Parties, the interest rate applicable to Base Rate Loans.  If the Loan
Parties and such Lender shall pay such interest to Agent for the same or an
overlapping period, Agent shall promptly remit to the Company the amount of such
interest paid by the Loan Parties for such period.  If such Lender pays its
share of the applicable borrowing to Agent, then the amount so paid shall
constitute such Lender’s Loan included in such borrowing.  Any payment by the
Loan Parties shall be without prejudice to any

 

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claim the Loan Parties may have against a Lender that shall have failed to make
such payment to Agent.

 

(b)           Unless Agent shall have received notice from the Company prior to
the date on which any payment is due to Agent for the account of the Lenders or
the L/C Issuer hereunder that a Loan Party will not make such payment, Agent may
assume that a Loan Party has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the L/C Issuer, as the case may be, the amount due.  In such event, if a Loan
Party has not in fact made such payment, then each of the Lenders or the L/C
Issuer, as the case may be, severally agrees to repay to Agent forthwith on
demand the amount so distributed to such Lender or the L/C Issuer, in
immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to Agent, at the greater of the Federal Funds Rate and a rate determined
by Agent in accordance with banking industry rules on interbank compensation.  A
notice of Agent to any Lender or the Company with respect to any amount owing
under this subsection (b) shall be conclusive, absent manifest error.

 

7.1.3             Failure to Satisfy Conditions Precedent.  If any Lender makes
available to Agent funds for any Loan to be made by such Lender as provided in
the foregoing provisions of this Section 7.1, and such funds are not made
available to the Company by Agent because the conditions to the applicable Loan
set forth in Section 12 are not satisfied or waived in accordance with the terms
hereof, Agent shall promptly and in any event within one Business Day return
such funds (in like funds as received from such Lender) to such Lender, with
interest at the Federal Funds Rate.

 

7.1.4             Obligations of Lenders Several.  The obligations of the
Lenders hereunder to make Loans, to fund participations in Letters of Credit and
to make payments under Section 16.5(c) are several and not joint.  The failure
of any Lender to make any Loan, to fund any such participation or to make any
payment under Section 16.5(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan, purchase its participation or to make its payment under Section 16.5(c).

 

7.2           Sharing of Payments.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it, or the participations
in L/C Obligations held by it resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Loans or participations and accrued
interest thereon greater than its pro rata share thereof as provided herein,
then the Lender receiving such greater proportion shall (a) notify Agent of such
fact, and (b) purchase (for cash at face value) participations in the Loans and
subparticipations in L/C Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and other amounts
owing them, provided that:

 

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

 

(ii)           the provisions of this Section shall not be construed to apply to
(x) any payment made by a Loan Party pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or subparticipations in L/C Obligations to any assignee or participant,
other than to a Loan Party or any Subsidiary thereof (as to which the provisions
of this Section shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

 

To the extent of any conflicts between this Section 7.2 and Section 2.5, the
provisions of Section 2.5 shall control.

 

7.3           Application of Certain Payments.  So long as no Unmatured Event of
Default or Event of Default has occurred and is continuing, (a) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments and (b) voluntary and mandatory prepayments shall be applied
as set forth in Section 6.1.  After the occurrence and during the continuance of
an Unmatured Event of Default or Event of Default, all amounts collected or
received by the Administrative Agent as proceeds from the sale of, or other
realization upon, all or any part of the collateral shall be applied in
accordance with the provisions of Section 13.3.

 

7.4           Due Date Extension.  If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.

 

7.5           Setoff.  Each Loan Party agrees that Agent, the L/C Issuer and
each Lender has all rights of set-off and bankers’ lien provided by applicable
law, and in addition thereto, each Loan Party agrees that at any time any Event
of Default exists, Agent, the L/C Issuer or any Lender may apply to the payment
of any Obligations of the Loan Parties hereunder, whether or not then due, any
and all balances, credits, deposits, accounts or moneys of any Loan Party then
or thereafter with Agent, the L/C Issuer or any Lender, as applicable.

 

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7.6           Taxes.

 

(a)           To the extent permitted by applicable law, all payments hereunder
or under the Loan Documents (including any payment of principal, interest, or
fees) to, or for the benefit, of any person shall be made by the Loan Parties
free and clear of and without deduction or withholding for, or account of, any
Taxes now or hereinafter imposed by any taxing authority.

 

(b)           If a Loan Party makes any payment hereunder or under any Loan
Document in respect of which it is required by applicable law to deduct or
withhold any Taxes, such Loan Party shall increase the payment hereunder or
under any such Loan Document such that after the reduction for the amount of
Taxes withheld (and any taxes withheld or imposed with respect to the additional
payments required under this Section 7.6(b)), the amount paid to the Lender
equals the amount that was payable hereunder or under any such Loan Document
without regard to this Section 7.6(b).  To the extent a Loan Party withholds any
Taxes on payments hereunder or under any Loan Document, such Loan Party shall
pay the full amount deducted to the relevant taxing authority within the time
allowed for payment under applicable law and shall deliver to the affected
Lender (with a copy to Agent) within 30 days after it has made payment to such
authority a receipt issued by such authority (or other evidence satisfactory to
the Lender) evidencing the payment of all amounts so required to be deducted or
withheld from such payment.

 

(c)           If any Lender is required by law to make any payments of any Taxes
on or in relation to any amounts received or receivable hereunder or under any
other Loan Document, or any Tax is assessed against any Lender with respect to
amounts received or receivable hereunder or under any other Loan Document, the
Loan Parties, jointly and severally, will indemnify such person against (i) such
Tax (and any reasonable counsel fees and expenses associated with such Tax) and
(ii) any taxes imposed as a result of the receipt of the payment under this
Section 7.6(c).  A certificate prepared in good faith as to the amount of such
payment by the Lender shall, absent manifest error, be final, conclusive, and
binding on all parties.

 

SECTION 8           INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

 

8.1           Increased Costs.

 

(a)           If, after the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the interpretation or
administration of any applicable law, rule or regulation by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:  (i) shall impose, modify or deem applicable
any reserve (including any reserve imposed by the FRB, but excluding any reserve
included in the determination of the LIBOR Rate pursuant to Section 4), special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by such Lender; or (ii) shall impose on such
Lender any other condition affecting its LIBOR Loans, its Note or its obligation
to make LIBOR Loans; and the result of anything described in clauses (i) and
(ii) above is to increase the cost to (or to impose a cost on) such Lender (or
any LIBOR Office of such Lender) of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by such Lender (or its LIBOR
Office) under this Agreement or under its Note with respect thereto, then upon
demand by such Lender (which demand shall be accompanied by a statement setting

 

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forth the basis for such demand and a calculation of the amount thereof in
reasonable detail), the Loan Parties shall pay to such Lender such additional
amount as will compensate such Lender for such increased cost or such reduction,
so long as such amounts have accrued on or after the day which is 180 days prior
to the date on which such Lender first made demand therefor.

 

(b)           If any Lender shall reasonably determine that any change in, or
the adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy of such Lender, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by such Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy of such Lender (whether or not having
the force of law) by any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender’s or such
controlling Person’s capital as a consequence of such Lender’s obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such controlling Person could have achieved but for such change, adoption,
phase-in or compliance (taking into consideration such Lender’s or such
controlling Person’s policies with respect to capital adequacy of such Lender)
by an amount deemed by such Lender or such controlling Person to be material,
then from time to time, upon demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail), the Loan Parties shall
pay to such Lender such additional amount as will compensate such Lender or such
controlling Person for such reduction so long as such amounts have accrued on or
after the day which is 180 days prior to the date on which such Lender first
made demand therefor.

 

8.2           Basis for Determining Interest Rate Inadequate or Unfair.  If:

 

(a)           any Lender reasonably determines (which determination shall be
binding and conclusive on the Loan Parties) that by reason of circumstances
affecting the interbank LIBOR market adequate and reasonable means do not exist
for ascertaining the applicable LIBOR Rate; or

 

(b)           any Lender reasonably determines that the LIBOR Rate will not
adequately and fairly reflect the cost to such Lender of maintaining or funding
LIBOR Loans for such Interest Period (taking into account any amount to which
such Lender may be entitled under Section 8.1) or that the making or funding of
LIBOR Loans has become impracticable as a result of an event occurring after the
date of this Agreement which in the opinion of such Lender materially affects
such Loans;

 

then such Lender shall promptly notify the Company thereof and, so long as such
circumstances shall continue, (i) such Lender shall be under no obligation to
make or convert any Base Rate Loans into LIBOR Loans and (ii) on the last day of
the current Interest Period for each LIBOR Loan, such Loan shall, unless then
repaid in full, automatically convert to a Base Rate Loan.

 

8.3           Changes in Law Rendering LIBOR Loans Unlawful.  If any change in,
or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or other
regulatory body charged with the administration thereof, should make it (or in
the good faith judgment of any Lender cause a substantial question

 

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as to whether it is) unlawful for any Lender to make, maintain or fund LIBOR
Loans, then such Lender shall promptly notify the Company and, so long as such
circumstances shall continue, (a) such Lender shall have no obligation to make
or convert any Base Rate Loan into a LIBOR Loan and (b) on the last day of the
current Interest Period for each LIBOR Loan of such Lender (or, in any event, on
such earlier date as may be required by the relevant law, regulation or
interpretation), such LIBOR Loan shall, unless then repaid in full,
automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender
which, but for the circumstances described in the foregoing sentence, would be a
LIBOR Loan (an “Affected Loan”) shall remain outstanding for the period which
would be applicable to such Affected Loan absent such circumstances.

 

8.4           Funding Losses.  The Loan Parties hereby agree that upon demand by
any Lender (which demand shall be accompanied by a statement setting forth the
basis for the amount being claimed), the Loan Parties will indemnify such Lender
against any net loss or expense which such Lender may sustain or incur
(including any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan), as reasonably determined by such Lender, as a result
of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender on
a date other than the last day of an Interest Period for such Loan (including
any conversion pursuant to Section 8.3) or (b) any failure of the Company or
another Loan Party to borrow, convert or continue any Loan on a date specified
therefor in a notice of borrowing, conversion or continuation pursuant to this
Agreement.  For this purpose, all such notices to any Lender pursuant to this
Agreement shall be deemed to be irrevocable.

 

8.5           Right of the Lenders to Fund through Other Offices.  Each Lender
may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a
foreign branch or Affiliate of such Lender to make such Loan; provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Lender and the obligation of the Company to repay such Loan
shall nevertheless be to such Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or Affiliate.

 

8.6           Discretion of the Lenders as to Manner of Funding. 
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Lender had actually funded and maintained each LIBOR Loan during each Interest
Period for such Loan through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
LIBOR Rate for such Interest Period.

 

8.7           Mitigation of Circumstances.  Each Lender shall promptly notify
the Company of any event of which it has knowledge which will result in, and
will use reasonable commercial efforts available to it (and not, in such
Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or
avoid, (i) any obligation by the Loan Parties to pay any amount pursuant to
Section 7.6 or 8.1 or (ii) the occurrence of any circumstances described in
Section 8.2 or 8.3 (and, if such Lender has given notice of any such event
described in clause (i) or (ii) above and thereafter such event ceases to exist,
such Lender shall promptly so notify the Company).  Without limiting the
foregoing, each Lender will designate a different funding office

 

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if such designation will avoid (or reduce the cost to the Loan Parties of) any
event described in clause (i) or (ii) above and such designation will not, in
such Lender’s sole judgment, be otherwise disadvantageous to such Lender.

 

8.8           Conclusiveness of Statements; Survival of Provisions. 
Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error.  Each Lender may use
reasonable averaging and attribution methods in determining compensation under
Sections 8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Obligations, cancellation of the Note, expiration or
termination of the Letters of Credit and termination of this Agreement.

 

SECTION 9           REPRESENTATIONS AND WARRANTIES.

 

To induce the Lenders to enter into this Agreement and to induce the Lenders to
make Loans and/or issue Letters of Credit hereunder, each Loan Party represents
and warrants to the Lenders that:

 

9.1           Organization.  Each Loan Party is validly existing and in good
standing under the laws of its jurisdiction of organization; and each Loan Party
is duly qualified to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification is required, except
for such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect.

 

9.2           Authorization; No Conflict.  Each Loan Party is duly authorized to
execute and deliver each Loan Document to which it is a party, is duly
authorized to borrow monies hereunder and is duly authorized to perform its
Obligations under each Loan Document to which it is a party.  The execution,
delivery and performance by each Loan Party of each Loan Document to which it is
a party, and the borrowings by the Loan Parties hereunder, do not and will not
(a) require any consent or approval of any governmental agency or authority
(other than any consent or approval which has been obtained and is in full force
and effect), (b) conflict with (i) any provision of law, (ii) the charter,
by-laws or other organizational documents of any Loan Party or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon any Loan Party or any of their respective
properties or (c) require, or result in, the creation or imposition of any Lien
on any asset of any Loan Party (other than Liens in favor of Agent, for the
ratable benefit of Agent and the Lenders, created pursuant to the Collateral
Documents).

 

9.3           Validity and Binding Nature.  Each of this Agreement and each
other Loan Document to which any Loan Party is a party is the legal, valid and
binding obligation of such Person, enforceable against such Person in accordance
with its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity.

 

9.4           Financial Condition.  The audited consolidated financial
statements of the Company and its Subsidiaries as at December 26, 2009 and the
unaudited consolidated financial statements of the Company and the Subsidiaries
as at May 29, 2010, copies of each of which have been delivered to Agent and
each Lender, were prepared in accordance with GAAP

 

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(subject, in the case of such unaudited statements, to the absence of footnotes
and to normal year-end adjustments) and present fairly the consolidated
financial condition of the Company and its Subsidiaries as at such dates and the
results of their operations for the periods then ended.

 

9.5           No Material Adverse Change.  Since December 26, 2009, there has
been no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Loan Parties taken as a whole.

 

9.6           Litigation and Contingent Liabilities.  No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the knowledge of any Loan Party, threatened against
any Loan Party which might reasonably be expected to have a Material Adverse
Effect, except as set forth in Schedule 9.6.  Other than any liability incident
to such litigation or proceedings, no Loan Party has any material contingent
liabilities not listed on Schedule 9.6 or permitted by Section 11.1.

 

9.7           Ownership of Properties; Liens.  Each Loan Party owns good and, in
the case of real property, marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like) except as permitted
by Section 11.2 and listed in Schedule 9.7.

 

9.8           Equity Ownership; Subsidiaries.  All issued and outstanding
Capital Securities of each Loan Party are duly authorized and validly issued,
fully paid, non-assessable, and free and clear of all Liens other than those in
favor of Agent, for the ratable benefit of Agent and the Lenders, and such
securities were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.  As of the Closing Date, the Company has
no Subsidiaries other than those specifically disclosed in part (a) of Schedule
9.8 and no Loan Party has material Investments in any other corporation or
entity other than those specifically disclosed in part (b) of Schedule 9.8.  As
of the Closing Date, each Subsidiary is a Wholly-Owned Subsidiary and all of the
issued and outstanding Capital Securities of each Wholly-Owned Subsidiary is,
directly or indirectly, owned by the Company.

 

9.9           Pension Plans.

 

(a)           The Unfunded Liability of all Pension Plans does not in the
aggregate exceed twenty percent of the Total Plan Liability for all such Pension
Plans.  Each Pension Plan complies in all material respects with all applicable
requirements of law and regulations.  No contribution failure under Section 412
of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred
with respect to any Pension Plan, sufficient to give rise to a Lien under
Section 302(f) of ERISA, or otherwise to have a Material Adverse Effect.  There
are no pending or, to the knowledge of any Loan Party, threatened, claims,
actions, investigations or lawsuits against any Pension Plan, any fiduciary of
any Pension Plan, or the Company or any other member of the Controlled Group
with respect to a Pension Plan or a Multiemployer Pension Plan which could
reasonably be expected to have a Material Adverse Effect.  Neither the Company
nor any other member of the Controlled Group has engaged in any prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in
connection with

 

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any Pension Plan or Multiemployer Pension Plan which would subject that Person
to any material liability.  Within the past five years, neither the Company nor
any other member of the Controlled Group has engaged in a transaction which
resulted in a Pension Plan with an Unfunded Liability being transferred out of
the Controlled Group, which could reasonably be expected to have a Material
Adverse Effect.  No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan, which could reasonably be expected to
have a Material Adverse Effect.

 

(b)                                 All contributions (if any) have been made to
any Multiemployer Pension Plan that are required to be made by the Company or
any other member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable law; neither the Company nor
any other member of the Controlled Group has withdrawn or partially withdrawn
from any Multiemployer Pension Plan, incurred any withdrawal liability with
respect to any such plan or received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, could result in a withdrawal or
partial withdrawal from any such plan; and neither the Company nor any other
member of the Controlled Group has received any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of any excise tax, that
any such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or that any
such plan is or may become insolvent.

 

9.10                        Investment Company Act.  No Loan Party is an
“investment company” or a company “controlled” by an “investment company” or a
“subsidiary” of an “investment company,” within the meaning of the Investment
Company Act of 1940.

 

9.11                        Public Utility Holding Company Act.  No Loan Party
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 2005.

 

9.12                        Margin Stock.  No Loan Party is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.

 

9.13                        Taxes; Tax Shelter Registration.

 

(a)                                 Each Loan Party has timely filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges due and payable with respect to such return,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.  The Loan Parties have made
adequate reserves on their books and records in accordance with GAAP for all
taxes that have accrued but which are not yet due and payable.  No Loan Party
has participated in any transaction that relates to a year of the taxpayer
(which is still open under the applicable statute of limitations) which is a
“reportable transaction” within the meaning of Treasury Regulation section
1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).

 

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(b)                                 No Loan Party intends to treat any of the
transactions contemplated by any Loan Document as being a “reportable
transaction” within the meaning of Treasury Regulation Section 1.6011-4.

 

9.14                        Solvency, etc.  On the Closing Date, and immediately
prior to and after giving effect to the issuance of each Letter of Credit and
each borrowing hereunder and the use of the proceeds thereof, with respect to
each Loan Party, individually, (a) the fair value of its assets is greater than
the amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated, (b) the
present fair saleable value of its assets is not less than the amount that will
be required to pay the probable liability on its debts as they become absolute
and matured, (c) it is able to realize upon its assets and pay its debts and
other liabilities (including disputed, contingent and unliquidated liabilities)
as they mature in the normal course of business, (d) it does not intend to, and
does not believe that it will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (e) it is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

 

9.15                        Environmental Matters.  The on-going operations of
each Loan Party comply in all respects with all Environmental Laws, except such
non-compliance which could not (if enforced in accordance with applicable law)
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect.  Each Loan Party has obtained, and maintained in good
standing, all licenses, permits, authorizations, registrations and other
approvals required under any Environmental Law and required for their respective
ordinary course operations, and for their reasonably anticipated future
operations, and each Loan Party is in compliance with all terms and conditions
thereof, except where the failure to do so could not reasonably be expected to
result in material liability to any Loan Party and could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.  No Loan Party or any of its properties or operations is subject
to, or reasonably anticipates the issuance of, any written order from or
agreement with any Federal, state or local governmental authority, nor subject
to any judicial or docketed administrative or other proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Substance.  There are no
Hazardous Substances or other conditions or circumstances existing with respect
to any property, arising from operations prior to the Closing Date, or relating
to any waste disposal, of any Loan Party that would reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect. 
No Loan Party has any underground storage tanks that are not properly registered
or permitted under applicable Environmental Laws or that at any time have
released, leaked, disposed of or otherwise discharged Hazardous Substances.

 

9.16                        Insurance. Each Loan Party and its properties are
insured with financially sound and reputable insurance companies which are not
Affiliates of the Loan Parties, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where such Loan Parties
operate.

 

9.17                        Real Property.  Set forth on Schedule 9.17 is a
complete and accurate list, as of the Closing Date, of the address of all real
property owned or leased by any Loan Party, together with, in the case of leased
property, the name and mailing address of the lessor of such property.

 

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9.18                        Information.  All information heretofore or
contemporaneously herewith furnished in writing by any Loan Party to Agent or
any Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of any Loan Party to Agent or any Lender pursuant
hereto or in connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or certified, and none
of such information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by Agent and the Lenders
that any projections and forecasts provided by any Loan Party are based on good
faith estimates and assumptions believed by such Loan Party to be reasonable as
of the date of the applicable projections or assumptions and that actual results
during the period or periods covered by any such projections and forecasts may
differ from projected or forecasted results).

 

9.19                        Intellectual Property.  Each Loan Party owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as are necessary for the conduct of the
businesses of the Loan Parties, without any infringement upon rights of others
which could reasonably be expected to have a Material Adverse Effect.

 

9.20                        Burdensome Obligations.  No Loan Party is a party to
any agreement or contract or subject to any restriction contained in its
organizational documents which could reasonably be expected to have a Material
Adverse Effect.

 

9.21                        Labor Matters.  No Loan Party is subject to any
labor or collective bargaining agreement.  There are no existing or threatened
strikes, lockouts or other labor disputes involving any Loan Party that singly
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.  Hours worked by and payment made to employees of the Loan Parties are
not in violation of the Fair Labor Standards Act or any other applicable law,
rule or regulation dealing with such matters.

 

9.22                        No Default.  No Event of Default or Unmatured Event
of Default exists or would result from the incurrence by any Loan Party of any
Debt hereunder or under any other Loan Document.

 

9.23                        Accounts.  No Loan Party maintains any deposit,
checking, brokerage or similar account with any bank, savings association,
financial institution or similar financial intermediary, other than those
identified in writing to the Agent.

 

9.24                        Anti-Terrorism Law Compliance.  None of the Loan
Parties is subject to or in violation of any law, regulation or list of any
government agency including, without limitation, the U.S.  Office of Foreign
Asset Control (“OFAC”) list, Executive Order 13224 or the USA Patriot Act) that
prohibits or limits the conduct of business with or receiving of funds, goods or
services to or for the benefit of certain Persons specified therein or that
prohibits or limits any Lender from making any Loan or extension of credit to
any Loan Party or from otherwise conducting business with any Loan Party. 
Without in any way limiting the generality of the foregoing, (a) no Loan Party
(and, to the knowledge of each Loan Party, no joint venture thereof) is in
violation in any material respects of any United States Requirements of Law
relating to

 

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terrorism, sanctions or money laundering (the “Anti-Terrorism Laws”), including
the United States Executive Order No. 13224 on Terrorist Financing (the
“Anti-Terrorism Order”) and the Patriot Act; (b) no Loan Party (and, to the
knowledge of each Loan Party, no joint venture thereof) (i) is listed in the
annex to, or is otherwise subject to the provisions of, the Anti-Terrorism
Order, (ii) is owned or controlled by, or acting for or on behalf of, any person
listed in the annex to, or is otherwise subject to the provisions of, the
Anti-Terrorism Order, (iii) commits, threatens or conspires to commit or
supports “terrorism” as defined in the Anti-Terrorism Order or (iv) is named as
a “specially designated national and blocked person” in the most current list
published by OFAC; (c) no Loan Party (and, to the knowledge of each Loan Party,
no joint venture or Affiliate thereof) (i) conducts any business or engages in
making or receiving any contribution of funds, goods or services to or for the
benefit of any person described in clauses (b)(i) through (b)(iv) above,
(ii) deals in, or otherwise engages in any transactions relating to, any
property or interests in property blocked pursuant to the Anti-Terrorism Order
or (iii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law; and (d) each Loan Party
is and will remain in compliance in all material respects with all U.S. economic
sanctions laws, Executive Orders and implementing regulations as promulgated by
the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and
all applicable anti-money laundering and counter-terrorism financing provisions
of the Bank Secrecy Act and all regulations issued pursuant to it.  Neither any
Loan Party or Affiliate of any Loan Party (i) 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, (ii) 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 (iii) is controlled 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 or entity on the SDN List or a foreign government that is the target of
U.S. economic sanctions prohibitions such that the entry into, or performance
under, this Agreement or any other Loan Document would be prohibited under U.S.
law.

 

9.25                        Compliance with Laws.  Each Loan Party is in
compliance in all material respects with the requirements of all laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

9.26                        Hedging Agreements.  No Loan Party is a party to,
nor will it be a party to, any Hedging Agreement other than a bona fide (not
speculative) Hedging Agreement, in form and substance reasonably acceptable to
the Administrative Agent, to protect the Loan Parties against fluctuations in
interest rates and/or foreign currencies.

 

9.27                        Patriot Act.  The Loan Parties and each of their
Affiliates are in compliance with (a) the Trading with the Enemy Act, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, (b) the Patriot Act and
(c) other federal or state laws relating to “know your customer” and anti-money
laundering rules and regulations. 

 

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No part of the proceeds of any Loan will be used directly or indirectly for any
payments to any government official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977.

 

SECTION 10                        AFFIRMATIVE COVENANTS.

 

Until the expiration or termination of the Commitment and thereafter until all
Obligations hereunder and under the other Loan Documents are irrevocably paid in
full in cash and all Letters of Credit have been terminated, each Loan Party
agrees that, unless at any time the Required Lenders shall otherwise expressly
consent in writing, it will:

 

10.1                        Reports, Certificates and Other Information. 
Furnish to Agent:

 

10.1.1                              Annual Report.  Promptly when available and
in any event within ninety (90) days after the end of each Fiscal Year (a) a
copy of the annual audit report of the Company and its Subsidiaries for such
Fiscal Year, including therein consolidated balance sheets and consolidated
statements of income or operations, shareholder’s equity and cash flows of the
Company and its Subsidiaries as at the end of such Fiscal Year, together with a
written opinion from independent auditors of national standing selected by the
Company and reasonably acceptable to Agent and each Lender that (A) such
consolidated financial statements present fairly, in all material respects, the
financial position for the periods indicated in conformity with GAAP and (B) in
making the examination necessary for the signing of such annual audit report,
nothing came to the attention of such auditors that caused them to believe that
the Company was not in compliance with any provision of Sections 11.1, 11.3,
11.4, 11.11, 11.15, 11.16 or 11.17 of this Agreement; and (b) a comparison with
the budget for such Fiscal Year and a comparison with the previous Fiscal Year,
certified by a Senior Officer of the Company, all in reasonable detail and scope
satisfactory to Agent and each Lender and certified by a Senior Officer of the
Company.

 

10.1.2                              Monthly Reports.  Promptly when available
and in any event within thirty (30) days after the end of each fiscal month,
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such month, together with consolidated statements of income or operations for
such month, together with a comparison with the corresponding period of the
previous Fiscal Year and for the statements of income a comparison with the
budget for such period of the current Fiscal Year, certified by a Senior Officer
of the Company.

 

10.1.3                              Quarterly Reports.  Promptly when available
and in any event within forty-five (45) days after the end of each Fiscal
Quarter, consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Quarter, together with consolidated statements of income
or operations for such Fiscal Quarter, and a consolidated statement of cash
flows for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year and for the statements of

 

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income a comparison with the budget for such period of the current Fiscal Year,
certified by a Senior Officer of the Company.

 

10.1.4                              Compliance Certificates.  Contemporaneously
with the furnishing of a copy of each set of monthly statements pursuant to
Section 10.1.2, a duly completed compliance certificate in the form of
Exhibit B, with appropriate insertions, dated the date of such annual report or
such monthly statements and signed by a Senior Officer of the Company,
containing (i) a computation of each of the financial ratio and/or amount
contemplated by Sections 11.15, 11.16 and 11.17 and to the effect that such
officer has not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it and (ii) at any time
when the Company is not an SEC reporting company, a written statement of the
Company’s management setting forth a discussion of the Loan Parties’ financial
condition, changes in financial condition and results of operations.

 

10.1.5                              Consolidated Operating Budget.  Promptly
when available and in any event within thirty (30) days after the end of each
Fiscal Year, a copy of the consolidated operating budget for the following
Fiscal Year, certified by a Senior Officer of the Company.

 

10.1.6                              Reports to the SEC and to Shareholders. 
Promptly upon the filing or sending thereof, copies of all regular, periodic or
special reports of any Loan Party filed with the SEC; copies of all registration
statements of any Loan Party filed with the SEC (other than on Form S-8); and
copies of all proxy statements or other communications made to security holders
generally.

 

10.1.7                              Notice of Default, Litigation and ERISA
Matters.  Promptly upon becoming aware of any of the following, written notice
describing the same and the steps being taken by the Company or the Subsidiary
affected thereby with respect thereto:

 

(a)                                 the occurrence of an Event of Default or an
Unmatured Event of Default;

 

(b)                                 any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to Agent and
the Lenders which has been instituted or, to the knowledge of any Loan Party, is
threatened against any Loan Party or to which any of the properties of any
thereof is subject which might reasonably be expected to have a Material Adverse
Effect;

 

(c)                                  the institution of any steps by any member
of the Controlled Group or any other Person to terminate any Pension Plan, or
the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or
the taking of any action with respect to a Pension Plan which could result in
the requirement that the Company furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan or Multiemployer Pension Plan which could result in the incurrence by any
member of the Controlled Group of any material liability, fine or penalty

 

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(including any claim or demand for withdrawal liability or partial withdrawal
from any Multiemployer Pension Plan), or any material increase in the contingent
liability of the Company with respect to any post-retirement welfare benefit
plan or other employee benefit plan of the Company or another member of the
Controlled Group, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent;

 

(d)                                 any cancellation or material change in any
insurance maintained by any Loan Party; or

 

(e)                                  any other event (including (i) any
violation of any Environmental Law or the assertion of any Environmental Claim
or (ii) the enactment or effectiveness of any law, rule or regulation) which
might reasonably be expected to have a Material Adverse Effect.

 

10.1.8                              Borrowing Base Certificates.  Within thirty
(30) days of the end of each month, a Borrowing Base Certificate dated as of the
end of such month and executed by a Senior Officer of the Company on behalf of
the Company together with a lease receivable aging (provided that (a) the
Company may deliver a Borrowing Base Certificate more frequently if it chooses
and (b) at any time an Event of Default exists, Agent or any Lender may require
the Company to deliver Borrowing Base Certificates more frequently).

 

10.1.9                              Management Reports.  Promptly upon receipt
thereof, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.

 

10.1.10                       Subordinated Debt Notices.  Promptly following
receipt, copies of any notices (including notices of default or acceleration)
received from any holder or trustee of, under or with respect to any
Subordinated Debt.

 

10.1.11                       Other Information.  Promptly from time to time,
such other information concerning the Loan Parties as Agent or any Lender may
reasonably request.

 

10.2                        Books, Records and Inspections.  Keep, and cause
each other Loan Party to keep, its books and records in accordance with sound
business practices sufficient to allow the preparation of financial statements
in accordance with GAAP; implement and maintain a cash management system
reasonably acceptable to Agent; permit, and cause each other Loan Party to
permit, Agent or any representative thereof to inspect the properties and
operations of the Loan Parties; and permit, and cause each other Loan Party to
permit, at any reasonable time and with reasonable notice (or at any time
without notice if an Event of Default exists), Agent or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with
Agent or any representative thereof), and to examine (and, at the expense of the
Loan Parties, photocopy extracts from) any of its books or

 

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other records; and permit, and cause each other Loan Party to permit, Agent and
its representatives to inspect the Inventory and other tangible assets of the
Loan Parties, to perform appraisals of the equipment of the Loan Parties, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts and any other collateral.  All such
inspections or audits by Agent shall be at the Company’s expense, provided that
(i) so long as no Event of Default or Unmatured Event of Default exists, the
Company shall not be required to reimburse Agent for inspections or audits more
frequently than once each Fiscal Year, and (ii) without limiting Agent’s rights
under clause (i) of this Section 10.2, Agent may at the Company’s expense not
later than October 31, 2010 conduct such audit or inspection in respect of the
Company’s (and the applicable Loan Party’s) leasing portfolio and reasonably
related operations.

 

10.3                        Maintenance of Property; Insurance.

 

(a)                                 Keep, and cause each other Loan Party to
keep, all property useful and necessary in the business of the Loan Parties in
good working order and condition, ordinary wear and tear excepted.

 

(b)                                 Maintain, and cause each other Loan Party to
maintain, with responsible insurance companies, such insurance coverage as may
be required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated; and, upon request of Agent, furnish to Agent a certificate setting
forth in reasonable detail the nature and extent of all insurance maintained by
the Loan Parties.  The Company shall cause each issuer of an insurance policy to
provide Agent with an endorsement (i) showing Agent as lender loss payee with
respect to each policy of property or casualty insurance and naming Agent as an
additional insured with respect to each policy of liability insurance,
(ii) providing that 30 days’ notice will be given to Agent prior to any
cancellation of, material reduction or change in coverage provided by or other
material modification to such policy and (iii) reasonably acceptable in all
other respects to Agent.

 

10.4                        Compliance with Laws; Payment of Taxes and
Liabilities.  (a) Comply, and cause each other Loan Party to comply, in all
material respects with all applicable laws, rules, regulations, decrees, orders,
judgments, licenses and permits, except where failure to comply could not
reasonably be expected to have a Material Adverse Effect; (b) without limiting
clause (a) above, ensure, and cause each other Loan Party to ensure, that no
person who owns a controlling interest in or otherwise controls a Loan Party is
or shall be (i) listed on the Specially Designated Nationals and Blocked Person
List maintained by the OFAC, Department of the Treasury, and/or any other
similar lists maintained by OFAC pursuant to any authorizing statute, Executive
Order or regulation or (ii) a person designated under Section 1(b), (c) or
(d) of Executive Order No. 13224 (September 23, 2001), any related enabling
legislation or any other similar Executive Orders, (c) without limiting clause
(a) above, comply, and cause each other Loan Party to comply, with all
applicable Bank Secrecy Act (“BSA”) and anti-money laundering laws and
regulations and (d) pay, and cause each other Loan Party to pay, prior to
delinquency, all taxes and other governmental charges against it or any
collateral, as well as claims of any kind which, if unpaid, could become a Lien
on any of its property; provided that the foregoing

 

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shall not require any Loan Party to pay any such tax or charge so long as it
shall contest the validity thereof in good faith by appropriate proceedings and
shall set aside on its books adequate reserves with respect thereto in
accordance with GAAP and, in the case of a claim which could become a Lien on
any collateral, such contest proceedings shall stay the foreclosure of such Lien
or the sale of any portion of the collateral to satisfy such claim.

 

10.5                        Maintenance of Existence, etc.  Maintain and
preserve, and (subject to Section 11.5) cause each other Loan Party to maintain
and preserve, (a) its existence and good standing in the jurisdiction of its
organization and (b) its qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification necessary
(other than such jurisdictions in which the failure to be qualified or in good
standing could not reasonably be expected to have a Material Adverse Effect).

 

10.6                        Use of Proceeds.  Use the proceeds of the Loans and
the Letters of Credit solely for repayment of the Unsecured Notes and the Loan
Parties’ existing Debt to Bank of America, N.A., for working capital purposes,
for Acquisitions permitted by Section 11.5, for Capital Expenditures, for stock
repurchases, for dividends and distributions and for other general business
purposes; and not use or permit any proceeds of any Loan to be used, either
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of “purchasing or carrying” any Margin Stock.

 

10.7                        Employee Benefit Plans.

 

(a)                                 Maintain, and cause each other member of the
Controlled Group to maintain, each Pension Plan in substantial compliance with
all applicable requirements of law and regulations.

 

(b)                                 Make, and cause each other member of the
Controlled Group to make, on a timely basis, all required contributions to any
Multiemployer Pension Plan.

 

(c)                                  Not, and not permit any other member of the
Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA,
(ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan
or (iii) take any other action with respect to any Pension Plan that would
reasonably be expected to entitle the PBGC to terminate, impose liability in
respect of, or cause a trustee to be appointed to administer, any Pension Plan,
unless the actions or events described in clauses (i), (ii) and
(iii) individually or in the aggregate would not have a Material Adverse Effect.

 

10.8                        Environmental Matters.  If any release or threatened
release or other disposal of Hazardous Substances shall occur or shall have
occurred on any real property or any other assets of any Loan Party, the Company
or the applicable Loan Party shall cause the prompt containment and removal of
such Hazardous Substances and the remediation of such real property or other
assets as necessary to comply with all Environmental Laws and to preserve the
value of such real property or other assets.  Without limiting the generality of
the foregoing, each Loan Party shall comply with any Federal or state judicial
or administrative order requiring the performance at any real property of any
Loan Party of activities in response to the release or threatened release of a
Hazardous Substance.  To the extent that the transportation of Hazardous
Substances is permitted by this Agreement, the Company shall, and shall cause
its Subsidiaries

 

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to, dispose of such Hazardous Substances, or of any other wastes, only at
licensed disposal facilities operating in compliance with Environmental Laws.

 

10.9                        Tax Shelter Registration.  Notify Agent of any
action (or the intention to take an action) inconsistent with the representation
in Section 9.13(b).  If the Company so notifies Agent, the Company acknowledges
and agrees that Agent may treat the transactions contemplated hereby (or any
single transaction contemplated hereby) as part of a transaction that is subject
to Treasury Regulation Section 301.6112-1, and Agent, as applicable, may
maintain the lists and other regulations required by such Treasury Regulation. 
To the extent Agent determines to maintain such list, each Loan Party shall
cooperate with Agent in obtaining the information required under such Treasury
Regulation.  Within 10 days after notifying Agent under this Section 10.9, the
Company shall deliver to Agent a duly completed copy of IRS Form 8886 or any
successor form.

 

10.10                 Further Assurances.  Take such actions as are necessary or
as Agent or any Lender may reasonably request from time to time to ensure that
the Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of the Loan Parties (including, upon the
acquisition or creation thereof, any Subsidiary acquired or created after the
Closing Date), in each case as Agent may determine, including the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages, deeds
of trust, financing statements and other documents, and the filing or recording
of any of the foregoing and the delivery of certificated securities and other
collateral with respect to which perfection is obtained by possession.

 

10.11                 Unsecured Notes.  By August 31, 2010, pay the Unsecured
Notes in full.

 

SECTION 11                        NEGATIVE COVENANTS

 

Until the expiration or termination of the Commitment and thereafter until all
Obligations hereunder and under the other Loan Documents are irrevocably paid in
full in cash and all Letters of Credit have been terminated, each Loan Party
agrees that, unless at any time the Required Lenders shall otherwise expressly
consent in writing, it will:

 

11.1                        Debt.  Not, and not permit any other Loan Party to,
incur, assume or suffer to exist any Debt, except:

 

(a)                                 Obligations under this Agreement and the
other Loan Documents;

 

(b)                                 Debt secured by Liens permitted by
Section 11.2(d), and extensions, renewals and refinancings thereof; provided
that such Debt shall not exceed the cost of the applicable property being leased
or acquired and that the aggregate amount of all such Debt at any time
outstanding shall not exceed $500,000;

 

(c)                                  Debt of the Company to any domestic
Wholly-Owned Subsidiary or Debt of any domestic Wholly-Owned Subsidiary to the
Company or another domestic Wholly-Owned Subsidiary; provided that such Debt
shall be subordinated to the Obligations of the Loan Parties hereunder in a
manner reasonably satisfactory to Agent and the Required Lenders;

 

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(d)                                 Subordinated Debt;

 

(e)                                  Hedging Obligations incurred in favor of
any Lender or an Affiliate thereof for bona fide hedging purposes and not for
speculation;

 

(f)                                    Contingent Liabilities arising with
respect to customary indemnification obligations in favor of sellers in
connection with Acquisitions permitted under Section 11.5 and purchasers in
connection with dispositions permitted under Section 11.5;

 

(g)                                 other unsecured Debt, in addition to the
Debt listed above, in an aggregate outstanding amount not at any time exceeding
$250,000;

 

(h)                                 Accounts payable and trade debt arising in
the ordinary course of the Loan Parties’ business; and

 

(i)                                     Any non-recourse obligation of a Loan
Party arising from a discounting transaction in the ordinary course of business.

 

11.2                           Liens.  Not, and not permit any other Loan Party
to, create or permit to exist any Lien on any of its real or personal
properties, assets or rights of whatsoever nature (whether now owned or
hereafter acquired), except:

 

(a)                                  Liens for taxes or other governmental
charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and, in each case, for
which it maintains adequate reserves;

 

(b)                                 Liens arising in the ordinary course of
business such as (i) Liens of carriers, warehousemen, mechanics and materialmen
and other similar Liens imposed by law, (ii) Liens in the form of deposits or
pledges incurred in connection with worker’s compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA), and (iii) Liens created in the ordinary course of business arising from
non-recourse discounting transactions including (without limitation) liens
against (A) the particular lease, (B) all equipment subject to such lease,
(C) all lease collateral for such lease, (D) all warranty and other rights a
Loan Party may have with respect to such lease and the related equipment against
the manufacturers of such equipment and against the sellers and assignors from
whom such Loan Party may have acquired such lease and such equipment,
(E) proceeds from any and all of the foregoing.  Upon the written request of the
Company, each Lender agrees to execute a subordination agreement in form and
substance satisfactory to such Lender in connection with liens pursuant to
Section 11.2(b)(iii);

 

(c)                                  Liens arising in the ordinary course of
business in an amount of not more than $25,000;

 

(d)                                 subject to the limitation set forth in
Section 11.1(b), (i) Liens arising in connection with Capital Leases (and
attaching only to the property being leased), (ii) Liens existing on property at
the time of the acquisition thereof by any Loan Party (and not created in
contemplation of such acquisition) and (iii) Liens that constitute purchase
money security interests on any property securing debt incurred for the purpose
of financing all or any part of the

 

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cost of acquiring such property, provided that any such Lien attaches to such
property within 60 days of the acquisition thereof and attaches solely to the
property so acquired;

 

(e)                                  attachments, appeal bonds, judgments and
other similar Liens, for sums not exceeding $250,000 arising in connection with
court proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;

 

(f)                                    easements, rights of way, restrictions,
minor defects or irregularities in title and other similar Liens not interfering
in any material respect with the ordinary conduct of the business of any Loan
Party; and

 

(g)                                 Liens arising under the Loan Documents.

 

11.3                           Operating Leases.  Not permit the aggregate
amount of all rental payments under Operating Leases made (or scheduled to be
made) by the Loan Parties (on a consolidated basis) to exceed $1,000,000 in any
Fiscal Year.

 

11.4                           Restricted Payments.  Not, and not permit any
other Loan Party to, (a) make any distribution to any holders of its Capital
Securities, (b) purchase or redeem any of its Capital Securities, (c) pay any
management fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance, repurchase or any
other payment in respect of any Subordinated Debt other than regular payments of
principal and interest as and when due under the Unsecured Notes subject to the
terms of the Subordination Agreement related thereto, or (e) set aside funds for
any of the foregoing.  Notwithstanding the foregoing, so long as no Unmatured
Event of Default or Event of Default has occurred and is continuing or would
occur as a result of any of the following, (i) any Subsidiary may pay dividends
or make other distributions to the Company or to a domestic Wholly-Owned
Subsidiary; (ii) the Company may purchase or redeem any of its Capital
Securities so long as after giving effect to such purchase or redemption the
Company will remain in compliance with all the financial ratios and restrictions
set forth in Sections 11.15, 11.16 and 11.17, as certified by the Company in
form and substance satisfactory to Agent and the Required Lenders; (iii) the
Company may make payments in respect of Subordinated Debt to the extent
permitted under the applicable Subordination Agreement, and (iv) the Company may
grant stock options pursuant to a plan approved by the Shareholders of the
Company.

 

11.5                           Mergers, Consolidations, Sales.  Not, and not
permit any other Loan Party to, (a) be a party to any merger or consolidation,
or purchase or otherwise acquire all or substantially all of the assets or any
Capital Securities of any class of, or any partnership or joint venture interest
in, any other Person, (b) sell, transfer, convey or lease all or any substantial
part of its assets or Capital Securities (including the sale of Capital
Securities of any Subsidiary) except for sales and leases of inventory in the
ordinary course of business, or (c) sell or assign with or without recourse any
receivables, except for (i) any such merger, consolidation, sale, transfer,
conveyance, lease or assignment of or by any Wholly-Owned Subsidiary into the
Company or into any other domestic Wholly-Owned Subsidiary; (ii) any such
purchase or other acquisition by the Company or any domestic Wholly-Owned
Subsidiary of the assets or Capital Securities of any Wholly-Owned Subsidiary;
(iii) sales and dispositions of assets for at least fair market value

 

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(as determined by the Board of Directors of the Company) so long as the net book
value of all assets sold or otherwise disposed of in any Fiscal Year does not
exceed 10% of the net book value of the consolidated assets of the Loan Parties
as of the last day of the preceding Fiscal Year; (iv) the discounting of
non-recourse leases in the ordinary course of business; and (v) any Acquisition
by the Company or any domestic Wholly-Owned Subsidiary where:

 

(A)  the business or division acquired are for use, or the Person acquired or
invested in is engaged, in a business engaged in by a Loan Party on the Closing
Date;

 

(B)  immediately before and after giving effect to such Acquisition, no Event of
Default or Unmatured Event of Default shall exist;

 

(C)  the aggregate consideration to be paid by the Loan Parties (including any
Debt assumed or issued in connection therewith, the amount thereof to be
calculated in accordance with GAAP) in connection with such Acquisition (or any
series of related Acquisitions) is less than $10,000,000 individually and the
aggregate consideration for all Acquisitions by the Loan Parties since the
Closing Date does not exceed $10,000,000;

 

(D)  immediately after giving effect to such Acquisition, (i) the Company is in
pro forma compliance with all the financial ratios and restrictions set forth in
Sections 11.15, 11.16 and 11.17 and (ii) Loan Availability minus Outstandings is
greater than or equal to $5,000,000;

 

(E)  in the case of the Acquisition of any Person, the Board of Directors of
such Person has approved such Acquisition;

 

(F)  reasonably prior to such Acquisition, Agent and each Lender shall have
received complete executed or conformed copies of each material document,
instrument and agreement to be executed in connection with such Acquisition
together with all lien search reports and lien release letters and other
documents as Agent or such Lender may require to evidence the termination of
Liens on the assets or business to be acquired if applicable;

 

(G)  not less than ten (10) Business Days prior to such Acquisition, Agent and
each Lender shall have received an acquisition summary with respect to the
Person and/or business or division to be acquired or invested in, such summary
to include a reasonably detailed description thereof (including financial
information) and operating results (including financial statements for the most
recent 12 month period for which they are available and as otherwise available),
the terms and conditions, including economic terms, of the proposed Acquisition,
and the Company’s calculation of pro forma EBITDA relating thereto;

 

(H)  consents have been obtained in favor of Agent and each Lender to the
collateral assignment of rights and indemnities under the related acquisition
documents and opinions of counsel for the Loan Parties and (if delivered to the
Loan Party) the selling party in favor of Agent and each Lender have been
delivered; and

 

(I)  the provisions of Section 10.10 have been satisfied.

 

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11.6                           Modification of Organizational Documents.  Not
permit the charter, by-laws or other organizational documents of any Loan Party
to be amended or modified in any way which could reasonably be expected to
materially adversely affect the interests of any Lender.

 

11.7                           Affiliate Transactions.  Not, and not permit any
other Loan Party to, enter into, or cause, suffer or permit to exist any
transaction, arrangement or contract with any of its other Affiliates (other
than the Loan Parties) which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliate, except for those
listed on Schedule 11.7.

 

11.8                           Unconditional Purchase Obligations.  Not, and not
permit any other Loan Party to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services if such contract
requires that payment be made by it regardless of whether delivery is ever made
of such materials, supplies or other property or services.

 

11.9                           Inconsistent Agreements.  Not, and not permit any
other Loan Party to, enter into any agreement containing any provision which
would (a) be violated or breached by any borrowing by a Loan Party hereunder or
by the performance by any Loan Party of any of its Obligations hereunder or
under any other Loan Document, (b) prohibit any Loan Party from granting to
Agent, for the ratable benefit of Agent and the Lenders, a Lien on any of its
assets or (c) create or permit to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make other
distributions to the Company or any other Subsidiary, or pay any Debt owed to
the Company or any other Subsidiary, (ii) make loans or advances to any Loan
Party or (iii) transfer any of its assets or properties to any Loan Party, other
than (A) customary restrictions and conditions contained in agreements relating
to the sale of all or a substantial part of the assets of any Subsidiary pending
such sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and
(C) customary provisions in leases and other contracts restricting the
assignment thereof.

 

11.10                     Business Activities.  Not, and not permit any other
Loan Party to, engage in any line of business other than the businesses engaged
in and businesses reasonably related thereto.

 

11.11                     [INTENTIONALLY OMITTED].

 

11.12                     Subordinated Debt Documents.  Not amend, modify or
supplement any Subordinated Debt Document in any manner that could affect or
impair the rights of the Lenders contemplated in the Subordination Agreements or
amend, modify or supplement the Subordination Agreements in any respect, in each
case without the prior written consent of the Required Lenders; provided that
the Company may pay the Unsecured Notes on or before August 31, 2010.

 

11.13                     Fiscal Year.  Not change its Fiscal Year.

 

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11.14                     Control Agreements.  Not fail to deliver to Agent
within thirty (30) days after Agent’s request, a Control Agreement for any
deposit, checking or brokerage account opened or maintained by a Loan Party.

 

11.15                     Tangible Net Worth.  Not permit the Tangible Net Worth
of the Company and the Subsidiaries to be:

 

(a)                                  as of July 31, 2010, less than Two Million
Dollars ($2,000,000); and

 

(b)                                 as of the last Business Day of each fiscal
month following July 31, 2010, the sum of the minimum Tangible Net Worth from
the immediately preceding fiscal month plus fifty percent (50%) of the net
income of the fiscal month then ended, if positive.

 

11.16                     Debt Service Coverage.  As of the end of each fiscal
month and on a trailing twelve month basis, not fail to maintain a ratio of
(i) the sum of (a) EBITDA of the Loan Parties, minus (b) capital expenditures of
the Loan Parties, minus (c) cash taxes of the Loan Parties, and minus
(d) dividends and other distributions of the Company, divided by (ii) the sum of
(x) scheduled principal payments of Debt of the Loan Parties paid or due and
payable on or before the last day of such period (other than Fixed Rate Loans),
plus (y) total cash interest expense (including leasing related cash interest
expense) on Debt of the Loan Parties, of not less than (A) 2.00 from the Closing
Date through fiscal May 2012, (B) 2.25 from fiscal June 2012 through fiscal
May 2013 and (C) 2.50 from fiscal June 2013 and thereafter.

 

11.17                     Maximum Leverage.  As of the end of each month and on
a trailing twelve month basis, not fail to maintain a ratio of (i) Debt of the
Loan Parties minus consolidated Subordinated Debt minus non-recourse Debt of the
Loan Parties in connection with discounting activities of the Loan Parties
divided by (ii) EBITDA of the Loan Parties, that shall not exceed (A) 2.50 from
the Closing Date through fiscal May 2012 and (B) 2.25 from fiscal June 2012 and
thereafter.

 

11.18                     Laws and Regulations.  Not to fail to comply with the
laws, regulations and executive orders referred to in Sections 9.24 and 9.27.

 

SECTION 12                             EFFECTIVENESS; CONDITIONS OF
LENDING, ETC.

 

The obligation of each Lender to make the Loans and/or to issue Letters of
Credit is subject to the following conditions precedent:

 

12.1                           Initial Credit Extension.  The obligation of each
Lender to make the initial Loans and the obligation of the L/C Issuer to issue
the initial Letter of Credit (whichever first occurs) is, in addition to the
conditions precedent specified in Section 12.2, subject to the condition
precedent that Agent shall have received all of the following, each duly
executed and dated the Closing Date (or such earlier date as shall be
satisfactory to Agent), in form and substance satisfactory to Agent and each
Lender (and the date on which all such conditions precedent have been satisfied
or waived in writing by Agent is called the “Closing Date”):

 

12.1.1                                  Notes.  A Note, duly executed by the
Loan Parties, in favor of each Lender.

 

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12.1.2                                  Authorization Documents.  For each Loan
Party, such Person’s (a) charter (or similar formation document), certified by
the appropriate governmental authority; (b) good standing certificates in its
state of incorporation (or formation) and in each other state requested by
Agent; (c) bylaws (or similar governing document); (d) resolutions of its board
of directors (or similar governing body) approving and authorizing such Person’s
execution, delivery and performance of the Loan Documents to which it is party
and the transactions contemplated thereby; and (e) signature and incumbency
certificates of its officers executing any of the Loan Documents (it being
understood that the Lenders may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein), all certified by
its secretary or an assistant secretary (or similar officer) as being in full
force and effect without modification.

 

12.1.3                                  Consents, etc.  Certified copies of all
documents evidencing any necessary corporate or partnership action, consents and
governmental approvals (if any) required for the execution, delivery and
performance by the Loan Parties of the documents referred to in this Section 12.

 

12.1.4                                  Security Documents.  A Security
Agreement executed by each Loan Party, a Pledge Agreement executed by the
Company, and a Control Agreement for each account identified by Agent, executed
by the applicable Loan Party and the depository or financial intermediary, in
each case together with all instruments, transfer powers and other items
required to be delivered in connection therewith.

 

12.1.5                                  Financing Statements.  UCC-1 financing
statements relating to the Collateral (as defined in the Security Agreement) and
the Capital Securities pledged pursuant to the Pledge Agreement, completed and,
if required, executed by each Loan Party, for filing in each jurisdiction
reasonably requested by Agent.

 

12.1.6                                  Opinions of Counsel.  Opinions of
counsel for each Loan Party, including local counsel reasonably requested by
Agent.

 

12.1.7                                  Insurance.  Evidence of the existence of
insurance required to be maintained pursuant to Section 10.3(b), together with
evidence that Agent has been named as a lender loss payee and an additional
insured on all related insurance policies.

 

12.1.8                                  Payment of Fees.  Evidence of payment by
the Company of all accrued and unpaid fees, costs and expenses to the extent
then due and payable on the Closing Date, together with all Attorney Costs of
Agent to the extent invoiced prior to the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute Agent’s reasonable estimate of
Attorney Costs incurred or to be incurred by Agent through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and Agent).

 

12.1.9                                  Search Results; Lien Terminations. 
Certified copies of Uniform Commercial Code search reports and pending suit
judgments and tax lien search reports dated a date reasonably near to the
Closing Date, listing all effective financing

 

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statements, suits, judgments or tax liens which name any Loan Party (under their
present names and any previous names) as debtors, together with copies of any
such financing statements, suits, judgments and tax liens.

 

12.1.10                            Filings, Registrations and Recordings.  Agent
shall have received each document (including Uniform Commercial Code financing
statements) required by the Collateral Documents or under law or reasonably
requested by any Lender to be filed, registered or recorded in order to create
in favor of Agent, for the ratable benefit of Agent and the Lenders, a perfected
Lien on the collateral described therein, prior to any other Liens (subject only
to Liens permitted pursuant to Section 11.2), in proper form for filing,
registration or recording.

 

12.1.11                            Other Documents.  Such other documents as
Agent or any Lender may reasonably request.

 

12.2                           Conditions.  The obligation (a) of each Lender to
make each Loan and (b) of the L/C Issuer to issue each Letter of Credit is
subject to the following further conditions precedent that:

 

12.2.1                                  Compliance with Warranties, No
Default, etc.  Both before and after giving effect to any borrowing and the
issuance of any Letter of Credit, the following statements shall be true and
correct:

 

(a)                                  the representations and warranties of each
Loan Party set forth in this Agreement and the other Loan Documents shall be
true and correct in all respects with the same effect as if then made (except to
the extent stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date); and

 

(b)                                 no Event of Default or Unmatured Event of
Default shall have then occurred and be continuing.

 

12.2.2                                  Confirmatory Certificate.  If requested
by any Lender or the L/C Issuer, as applicable, such Lender or L/C Issuer shall
have received a certificate dated the date of such requested Loan or Letter of
Credit and signed by a duly authorized representative of the Company as to the
matters set out in Section 12.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Company that the
conditions precedent set forth in Section 12.2.1 will be satisfied at the time
of the making of such Loan or the issuance of such Letter of Credit), together
with such other documents as such Lender or L/C Issuer may reasonably request in
support thereof.

 

SECTION 13                             EVENTS OF DEFAULT AND THEIR EFFECT.

 

13.1                           Events of Default.  Each of the following shall
constitute an Event of Default under this Agreement:

 

13.1.1                                  Non-Payment of the Loans, etc.  Default
in the payment when due of the principal of any Loan; or default, and
continuance thereof for five days, in the

 

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payment when due of any interest, fee, reimbursement obligation with respect to
any Letter of Credit or other amount payable by the Loan Parties hereunder or
under any other Loan Document.

 

13.1.2                                  Non-Payment of Other Debt.  Any default
shall occur under the terms applicable to any Debt of any Loan Party in an
aggregate amount (for all such Debt so affected and including undrawn committed
or available amounts and amounts owing to all creditors under any combined or
syndicated credit arrangement) exceeding $250,000 and such default shall
(a) consist of the failure to pay such Debt when due, whether by acceleration or
otherwise, or (b) accelerate the maturity of such Debt or permit the holder or
holders thereof, or any trustee or agent for such holder or holders, to cause
such Debt to become due and payable (or require any Loan Party to purchase or
redeem such Debt or post cash collateral in respect thereof) prior to its
expressed maturity.

 

13.1.3                                  Other Material Obligations.  Default in
the payment when due, or in the performance or observance of, any material
obligation of, or condition agreed to by, any Loan Party with respect to any
material purchase or lease of goods or services where such default, singly or in
the aggregate with all other such defaults, might reasonably be expected to have
a Material Adverse Effect.

 

13.1.4                                  Bankruptcy, Insolvency, etc.  Any Loan
Party becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or any Loan Party applies
for, consents to, or acquiesces in the appointment of a trustee, receiver or
other custodian for such Loan Party or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed for
any Loan Party or for a substantial part of the property of any thereof and is
not discharged within 60 days; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding, is commenced in respect of any
Loan Party, and if such case or proceeding is not commenced by such Loan Party,
it is consented to or acquiesced in by such Loan Party, or remains for 60 days
undismissed; or any Loan Party takes any action to authorize, or in furtherance
of, any of the foregoing.

 

13.1.5                                  Non-Compliance with Loan Documents. 
(a) Failure by any Loan Party to comply with or to perform any covenant set
forth in Section 10.1.5, 10.3(b), 10.5 or 10.9 or Section 11; or (b) failure by
any Loan Party to comply with or to perform any other provision of this
Agreement or any other Loan Document (and not constituting an Event of Default
under any other provision of this Section 13) and continuance of such failure
described in this clause (b) for 30 days.

 

13.1.6                                  Representations; Warranties.  Any
representation or warranty made by any Loan Party herein or any other Loan
Document is breached or is false or misleading in any material respect, or any
schedule, certificate, financial statement, report, notice or other writing
furnished by any Loan Party to Agent or any Lender in connection herewith is
false or misleading in any material respect on the date as of which the facts
therein set forth are stated or certified.

 

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13.1.7                                  Pension Plans.  (a) Any Person
institutes steps to terminate a Pension Plan if as a result of such termination
the Company or any member of the Controlled Group could be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of $250,000; (b) a contribution failure occurs with
respect to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA; (c) the Unfunded Liability exceeds twenty percent of
the Total Plan Liability; or (d) there shall occur any withdrawal or partial
withdrawal from a Multiemployer Pension Plan and the withdrawal liability
(without unaccrued interest) to Multiemployer Pension Plans as a result of such
withdrawal (including any outstanding withdrawal liability that the Company or
any member of the Controlled Group have incurred on the date of such withdrawal)
exceeds $250,000.

 

13.1.8                                  Judgments.  Final judgments which exceed
an aggregate of $250,000 shall be rendered against any Loan Party and shall not
have been paid, discharged or vacated or had execution thereof stayed pending
appeal within 30 days after entry or filing of such judgments.

 

13.1.9                                  Invalidity of Collateral
Documents, etc.  Any Collateral Document shall cease to be in full force and
effect; or any Loan Party (or any Person by, through or on behalf of any Loan
Party) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.

 

13.1.10                            Invalidity of Subordination Provisions, etc. 
Any subordination provision in any document or instrument governing Subordinated
Debt, or any subordination provision in any guaranty by any Subsidiary of any
Subordinated Debt, shall cease to be in full force and effect, or any Loan Party
or any other Person (including the holder of any applicable Subordinated Debt)
shall contest in any manner the validity, binding nature or enforceability of
any such provision.

 

13.1.11                            Change of Control.  A Change of Control shall
occur.

 

13.1.12                            Material Adverse Effect.  The occurrence of
any event having a Material Adverse Effect.

 

13.2                           Effect of Event of Default.  If any Event of
Default occurs and is continuing, Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following actions:

 

(a)                                  declare the Commitment of each Lender to
make Loans and any obligation of the L/C Issuer to issue Letters of Credit to be
terminated, whereupon such commitments and obligation shall be terminated;

 

(b)                                 declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company;

 

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(c)                                  require that the Company Cash Collateralize
the L/C Obligations (in an amount equal to the Stated Amount thereof); and

 

(d)                                 exercise on behalf of itself, the Lenders
and the L/C Issuer all rights and remedies available to it, the Lenders and the
L/C Issuer under the Loan Documents and/or under any applicable law;

 

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Company under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Company to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case without further act of Agent
or any Lender.

 

13.3                           Application of Funds.  After the exercise of
remedies provided for in Section 13.2 (or after the Loans have automatically
become immediately due and payable and the L/C Obligations have automatically
been required to be Cash Collateralized as set forth in the proviso to
Section 13.2), any amounts received on account of the Obligations shall be
applied by Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to Agent (including fees and time charges for attorneys
who may be employees of Agent) and amounts payable under Section 7.6 or
Section 8) payable to Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit fees) payable to Lenders and the L/C Issuer (including fees, charges and
disbursements of counsel to the respective Lenders and the L/C Issuer (including
fees and time charges for attorneys who may be employees of any Lender or the
L/C Issuer) and amounts payable under Section 7.6 or Section 8), ratably among
them in proportion to the respective amounts described in this clause Second
payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit fees and interest on the Loans, L/C Borrowings and other
Obligations, ratably among Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among Lenders and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them;

 

Fifth, to Agent for the account of the L/C Issuer, to Cash Collateralize that
portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit; and

 

Last, the balance, if any, after all of the Obligations have been irrevocably
paid in full in cash, to Company or as otherwise required by law.

 

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Subject to Section 2.3.2, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

SECTION 14                             ADMINISTRATIVE AGENT.

 

14.1                           Appointment and Authorization.  Each Lender
hereby irrevocably (subject to Section 14.10) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.  Without limiting the
generality of the foregoing sentence, the use of the term “agent” herein and in
other Loan Documents with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law.  Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

 

14.2                           L/C Issuer.  The L/C Issuer shall act on behalf
of the Lenders (according to their Pro Rata Shares) with respect to any Letters
of Credit issued by it and the documents associated therewith.  The L/C Issuer
shall have all of the benefits and immunities (a) provided to the Administrative
Agent in this Section 14 with respect to any acts taken or omissions suffered by
the L/C Issuer in connection with Letters of Credit issued by it or proposed to
be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent”, as used in this Section 14, included the L/C Issuer with respect to such
acts or omissions and (b) as additionally provided in this Agreement with
respect to the L/C Issuer.

 

14.3                           Delegation of Duties.  The Administrative Agent
may execute any of its duties under this Agreement or any other Loan Document by
or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel and other consultants or experts concerning all matters
pertaining to such duties.  The Administrative Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects in the absence of gross negligence or willful misconduct.

 

14.4                           Exculpation of Administrative Agent.  None of the
Administrative Agent nor any of its directors, officers, employees or agents
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except to the extent resulting from its own

 

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gross negligence or willful misconduct in connection with its duties expressly
set forth herein as determined by a final, nonappealable judgment by a court of
competent jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or Affiliate of any Loan Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of any Loan Party or any other party to any Loan Document to perform its
Obligations hereunder or thereunder.  The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any of the Loan Parties’ Affiliates.

 

14.5                           Reliance by Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, electronic mail message, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Loan Parties), independent accountants
and other experts selected by the Administrative Agent.  The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, confirmation from the Lenders of their obligation to indemnify the
Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
each Lender.  For purposes of determining compliance with the conditions
specified in Section 12, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received written notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

 

14.6                           Notice of Default.  The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any Event
of Default or Unmatured Event of Default except with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or any Loan Party
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a “notice of default”.  The
Administrative Agent will notify the Lenders of its receipt of any such notice. 
The Administrative Agent shall take such action with respect to such Event of
Default or Unmatured Event of Default as may be requested by the Required
Lenders in accordance with Section 13; provided that unless and until the
Administrative Agent has received any such

 

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request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default or Unmatured Event of Default as it shall deem advisable or in the best
interest of the Lenders.

 

14.7                           Credit Decision.  Each Lender acknowledges that
the Administrative Agent has not made any representation or warranty to it, and
that no act by the Administrative Agent hereafter taken, including any consent
and acceptance of any assignment or review of the affairs of the Loan Parties,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender as to any matter, including whether the
Administrative Agent has disclosed material information in its possession.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties, and made its own
decision to enter into this Agreement and to extend credit to the Company
hereunder.  Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Loan Parties. 
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, property,
financial or other condition or creditworthiness of Loan Parties which may come
into the possession of the Administrative Agent.

 

14.8                           Indemnification.  Whether or not the transactions
contemplated hereby are consummated, each Lender shall indemnify upon demand the
Administrative Agent and its directors, officers, employees and agents (to the
extent not reimbursed by or on behalf of the Loan Parties and without limiting
the obligation of the Loan Parties to do so), according to its applicable Pro
Rata Share, from and against any and all indemnified liabilities contemplated by
Section 16.5(b); provided that no Lender shall be liable for any payment to any
such Person of any portion of the indemnified liabilities contemplated by
Section 16.5(b) to the extent determined by a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from the applicable Person’s
own gross negligence or willful misconduct.  No action taken in accordance with
the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section.  Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs and Taxes) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Loan Parties. 
The undertaking in this Section shall survive repayment of the Loans,
cancellation of the Note, expiration or termination of the Letters of Credit,
any foreclosure under, or modification,

 

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release or discharge of, any or all of the Collateral Documents, termination of
this Agreement and the resignation or replacement of the Administrative Agent.

 

14.9                           Administrative Agent in Individual Capacity. 
PrivateBank and its Affiliates may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Loan Parties and Affiliates as though PrivateBank were not the
Administrative Agent hereunder and without notice to or consent of any Lender. 
Each Lender acknowledges that, pursuant to such activities, PrivateBank or its
Affiliates may receive information regarding the Loan Parties or their
Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Parties or such Affiliate) and acknowledge
that the Administrative Agent shall be under no obligation to provide such
information to them.  With respect to their Loans (if any),  PrivateBank and its
Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though PrivateBank were not the
Administrative Agent, and the terms “Lender” and “Lenders” include PrivateBank
and its Affiliates, to the extent applicable, in their individual capacities.

 

14.10                     Successor Administrative Agent.  The Administrative
Agent may resign as Administrative Agent upon 30 days’ notice to the Lenders. 
If the Administrative Agent resigns under this Agreement, the Required Lenders
shall, with (so long as no Event of Default exists) the consent of the Loan
Parties (which shall not be unreasonably withheld or delayed), appoint from
among the Lenders a successor agent for the Lenders.  If no successor 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 the Loan Parties, a successor agent from among the Lenders.  Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring
Administrative Agent and the term “Administrative Agent” shall mean such
successor 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 Section 14 and Section 16.5 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.  If no successor agent has accepted appointment as
Administrative Agent by the date which is 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 Required Lenders appoint a successor agent as
provided for above.

 

14.11                     Collateral Matters.  The Lenders irrevocably authorize
the Administrative Agent, at its option and in its discretion, (a) to release
any Lien granted to or held by the Administrative Agent under any Collateral
Document (i) upon termination of the Commitments and irrevocable payment in full
in cash of all Loans and all other obligations of the Loan Parties hereunder and
the expiration or termination of all Letters of Credit; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder (including the release of any guarantor); or
(iii) subject to Section 16.1, if approved, authorized or ratified in writing by
the Required Lenders; or (b) to subordinate its interest in any Collateral to
any holder of a Lien on such Collateral which is permitted by
Section 11.2(d)(i) or (d)(iii)  (it being

 

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understood that the Administrative Agent may conclusively rely on a certificate
from any Loan Party in determining whether the Debt secured by any such Lien is
permitted by Section 11.1(b)).  Upon request by the Administrative Agent at any
time, the Lenders will confirm in writing the Administrative Agent’s authority
to release, or subordinate its interest in, particular types or items of
Collateral pursuant to this Section 14.11.  Each Lender hereby authorizes the
Administrative Agent to give blockage notices in connection with any
Subordinated Debt at the direction of Required Lenders and agrees that it will
not act unilaterally to deliver such notices.

 

14.12                     Administrative Agent May File Proofs of Claim.  In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Loan Parties) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans,
and all other Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Sections 5 and 16.5)
allowed in such judicial proceedings; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5 and 16.5.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

 

14.13                     Other Agents; Arrangers and Managers.  None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a “syndication agent,” “co-agent,” “book manager,” “lead
manager,” “arranger,” “lead arranger” or “co-arranger”, if any, shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than, in the case of such Lenders, those applicable to all Lenders as
such.  Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have

 

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any fiduciary relationship with any Lender.  Each Lender acknowledges that it
has not relied, and will not rely, on any of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

 

SECTION 15                             THE LOAN PARTIES.

 

15.1                           Appointment of the Company.  Each Loan Party
hereby appoints and authorizes the Company to take such action as its agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Company by the terms thereof, together with such power that are
reasonably incidental thereto, and the Company hereby accepts such appointment.

 

15.2                           Relationship Among the Loan Parties.

 

(a)                                  JOINT AND SEVERAL LIABILITY.  EACH LOAN
PARTY AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH EACH OTHER LOAN
PARTY, FOR THE PAYMENT OF ALL OBLIGATIONS OF THE LOAN PARTIES UNDER THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT, AND THAT AGENT AND ANY LENDER CAN
ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL LOAN PARTIES, IN AGENT’S OR SUCH
LENDER’S SOLE AND UNLIMITED DISCRETION.

 

(b)                                 Waivers of Defenses.  The obligations of the
Loan Parties hereunder shall not be released, in whole or in part, by any action
or thing which might, but for this provision of this Agreement, be deemed a
legal or equitable discharge of a surety or guarantor, other than irrevocable
payment in full in cash and performance in full of the Obligations (except for
contingent indemnity and other contingent Obligations not yet due and payable)
at a time after any obligation of any Lender hereunder to make the Loans and to
issue Letters of Credit shall have expired or been terminated and all
outstanding Letters of Credit shall have expired or the liability of such Lender
thereon shall have otherwise been discharged.  The purpose and intent of this
Agreement is that the Obligations constitute the direct and primary obligations
of each Loan Party and that the covenants, agreements and all obligations of
each Loan Party hereunder be absolute, unconditional and irrevocable.  Each Loan
Party shall be and remain liable for any deficiency remaining after foreclosure
of any mortgage, deed of trust or security agreement securing all or any part of
the Obligations, whether or not the liability of any other Person for such
deficiency is discharged pursuant to statute, judicial decision or otherwise.

 

(c)                                  Other Transactions.  Each of Agent and each
Lender is expressly authorized to exchange, surrender or release with or without
consideration any or all collateral and security which may at any time be placed
with it by the Loan Parties or by any other Person on behalf of the Loan
Parties, or to forward or deliver any or all such collateral and security
directly to the Loan Parties for collection and remittance or for credit.  No
invalidity, irregularity or unenforceability of any security for the Obligations
or other recourse with respect thereto shall affect, impair or be a defense to
the Loan Parties’ obligations under this Agreement or any other Loan Document. 
The liabilities of each Loan Party hereunder shall not be affected or impaired
by any failure, delay, neglect or omission on the part of Agent or any Lender to
realize upon any of the Obligations of any other Loan Party to Agent or such
Lender, or upon any collateral or security for any or all of the Obligations,
nor by the taking by Agent or such Lender of (or the failure to take) any
guaranty or guaranties to secure the Obligations, nor by the taking by Agent

 

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or such Lender of (or the failure to take or the failure to perfect its security
interest in or other lien on) collateral or security of any kind.  No act or
omission of Agent or any Lender, whether or not such action or failure to act
varies or increases the risk of, or affects the rights or remedies of a Loan
Party, shall affect or impair the obligations of the Loan Parties hereunder.

 

(d)                                 Actions Not Required.  Each Loan Party, to
the extent permitted by applicable law, hereby waives any and all right to cause
a marshaling of the assets of any other Loan Party or any other action by any
court or other governmental body with respect thereto or to cause Agent or any
Lender to proceed against any security for the Obligations or any other recourse
which Agent or such Lender may have with respect thereto and further waives any
and all requirements that Agent or any Lender institute any action or proceeding
at law or in equity, or obtain any judgment, against any other Loan Party or any
other Person, or with respect to any collateral security for the Obligations, as
a condition precedent to making demand on or bringing an action or obtaining
and/or enforcing a judgment against, such Loan Party under this Agreement or any
other Loan Document.

 

(e)                                  No Subrogation.  Notwithstanding any
payment or payments made by any Loan Party hereunder or any setoff or
application of funds of any Loan Party by Agent or any Lender, such Loan Party
shall not be entitled to be subrogated to any of the rights of Agent or such
Lender against any other Loan Party or any other guarantor or any collateral
security or guaranty or right of offset held by Agent or such Lender for the
payment of the Obligations, nor shall such Loan Party seek or be entitled to
seek any contribution or reimbursement from any other Loan Party or any other
guarantor in respect of payments made by such Loan Party hereunder, until all
amounts owing to each Lender by the Loan Parties on account of the Obligations
are irrevocably paid in full in cash.  If any amount shall be paid to a Loan
Party on account of such subrogation rights at any time when all of the
Obligations shall not have been irrevocably paid in full in cash, such amount
shall be held by that Loan Party in trust for Agent or such Lender, segregated
from other funds of that Loan Party, and shall, forthwith upon receipt by the
Loan Party, be turned over to Agent or such Lender in the exact form received by
the Loan Party (duly indorsed by the Loan Party to Agent or such Lender, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as Agent or such Lender may determine.

 

(f)                                    Application of Payments.  Any and all
payments upon the Obligations made by the Loan Parties or by any other Person,
and/or the proceeds of any or all collateral or security for any of the
Obligations, may be applied by Agent or any Lender on such items of the
Obligations as Agent or any Lender may elect.

 

(g)                                 Recovery of Payment.  If any payment
received by Agent or any Lender and applied to the Obligations is subsequently
set aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
a Loan Party or any other obligor), the Obligations to which such payment was
applied shall, to the extent permitted by applicable law, be deemed to have
continued in existence, notwithstanding such application, and each Loan Party
shall be jointly and severally liable for such Obligations as fully as if such
application had never been made.  References in this Agreement to amounts
“irrevocably paid” or to “irrevocable payment” refer to payments that cannot be
set aside, recovered, rescinded or required to be returned for any reason.

 

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(h)                                 Loan Parties’ Financial Condition.  Each
Loan Party is familiar with the financial condition of the other Loan Parties,
and each Loan Party has executed and delivered this Agreement based on that Loan
Party’s own judgment and not in reliance upon any statement or representation of
Agent or any Lender.  Neither Agent nor any Lender shall have any obligation to
provide any Loan Party with any advice whatsoever or to inform any Loan Party at
any time of Agent’s or such Lender’s actions, evaluations or conclusions on the
financial condition or any other matter concerning the Loan Parties.

 

(i)                                     Bankruptcy of the Loan Parties.  Each
Loan Party expressly agrees that, to the extent permitted by applicable law, the
liabilities and obligations of that Loan Party under this Agreement shall not in
any way be impaired or otherwise affected by the institution by or against any
other Loan Party or any other Person of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or any other similar
proceedings for relief under any bankruptcy law or similar law for the relief of
debtors and that any discharge of any of the Obligations pursuant to any such
bankruptcy or similar law or other law shall not diminish, discharge or
otherwise affect in any way the obligations of that Loan Party under this
Agreement or any other Loan Document, and that upon the institution of any of
the above actions, such obligations shall be enforceable against that Loan
Party.

 

(j)                                     Limitation; Insolvency Laws.  As used in
this Section 15.2(j):  (a) the term “Applicable Insolvency Laws” means the laws
of the United States of America or of any State, province, nation or other
governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
transfers or conveyances or other similar laws (including, without limitation,
11 U.S.C. §547, §548, §550 and other “avoidance” provisions of Title 11 of the
United Stated Code) as applicable in any proceeding in which the validity and/or
enforceability of this Agreement against any Loan Party, or any Specified Lien
is in issue; and (b) “Specified Lien” means any security interest, mortgage,
lien or encumbrance granted by any Loan Party securing the Obligations, in whole
or in part.  Notwithstanding any other provision of this Agreement, if, in any
proceeding, a court of competent jurisdiction determines that with respect to
any Loan Party, this Agreement or any other Loan Document or any Specified Lien
would, but for the operation of this Section, be subject to avoidance and/or
recovery or be unenforceable by reason of Applicable Insolvency Laws, this
Agreement and each such Specified Lien shall be valid and enforceable against
such Loan Party, only to the maximum extent that would not cause this Agreement,
such other Loan Document or such Specified Lien to be subject to avoidance,
recovery or unenforceability.  To the extent that any payment to, or realization
by, Agent or any Lender on the Obligations exceeds the limitations of this
Section and is otherwise subject to avoidance and recovery in any such
proceeding, the amount subject to avoidance shall in all events be limited to
the amount by which such actual payment or realization exceeds such limitation,
and this Agreement and such other Loan Document as limited shall in all events
remain in full force and effect and be fully enforceable against such Loan
Party.  This Section is intended solely to reserve the rights of Agent and each
Lender hereunder against each Loan Party, in such proceeding to the maximum
extent permitted by Applicable Insolvency Laws and neither the Loan Parties, any
guarantor of the Obligations nor any other Person shall have any right, claim or
defense under this Section that would not otherwise be available under
Applicable Insolvency Laws in such proceeding.

 

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SECTION 16                             GENERAL.

 

16.1                           Waiver, Amendments, Etc.  No amendment or waiver
of any provision of this Agreement or any other Loan Document, and no consent to
any departure by the Company or any other Loan Party therefrom, shall be
effective unless in writing signed by the Required Lenders and the Company or
the applicable Loan Party, as the case may be, and acknowledged by Agent, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall:

 

(a)                                  waive any condition set forth in Section 12
without the written consent of each Lender; provided, however, in the sole
discretion of Agent, only a waiver by Agent shall be required with respect to
immaterial matters or items with respect to which the Company has given
assurances satisfactory to Agent that such items shall be delivered promptly
following the Closing Date;

 

(b)                                 extend or increase the Commitment of any
Lender without the written consent of such Lender;

 

(c)                                  postpone any date fixed by this Agreement
or any other Loan Document for any payment (excluding mandatory prepayments) of
principal, interest, fees or other amounts due to Lenders (or any of them)
hereunder or under any other Loan Document without the written consent of each
Lender directly affected thereby;

 

(d)                                 reduce the principal of, or the rate of
interest specified herein on, any Loan or Letter of Credit, or any fees or other
amounts payable hereunder or under any other Loan Document, without the written
consent of each Lender directly affected thereby;

 

(e)                                  change any provision of this Agreement in a
manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender;

 

(f)                                    change any provision of this Section or
the definition of “Required Lenders” or any other provision hereof specifying
the number or percentage of Lenders required to amend, waive or otherwise modify
any rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender; or

 

(g)                                 release the Liens on all or substantially
all of the Collateral in any transaction or series of related transactions
except in accordance with the terms of any Loan Document, without the written
consent of each Lender;

 

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; and
(ii) no amendment, waiver or consent shall, unless in writing and signed by
Agent in addition to the Lenders required above, affect the rights or duties of
Agent under this Agreement or any other Loan Document.  Notwithstanding anything
to the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.  No delay on the part of the Lender in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or

 

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partial exercise by any of them of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy. 
Any such amendment, modification, waiver or consent described in this
Section 16.1 shall be effective only in the specific instance and for the
specific purpose for which given.

 

If, in connection with any proposed amendment, modification, waiver or
termination requiring the consent of the Required Lenders, but the consent of
other Lender(s) whose consent is required is not obtained (any such Lender whose
consent is not obtained being referred to as a “Non-Consenting Lender”), then,
so long as the Administrative Agent is not a Non-Consenting Lender, the
Administrative Agent and/or an Eligible Assignee or Eligible Assignees
designated by the Administrative Agent shall have the right to purchase from
such Non-Consenting Lender(s), and such Non-Consenting Lender(s) agree that they
shall, upon the Administrative Agent’s request, sell and assign to the
Administrative Agent and/or such Eligible Assignee or Eligible Assignees, all of
the Loans, participations in L/C Obligations and Commitments of such
Non-Consenting Lender(s) for an amount equal to the outstanding principal
balance of all Obligations held by such Non-Consenting Lender(s) and all accrued
interest, fees, expenses and other amounts then due with respect thereto through
the date of sale, such purchase and sale to be consummated pursuant to an
executed Assignment Agreement (as defined below).

 

To the extent of any conflicts between Section 16.1 and Section 2.6, the
provisions of Section 2.6 shall control.

 

16.2                           Confirmations.  Each Loan Party and each Lender
agree from time to time, upon written request received by it from the other, to
confirm to the other in writing the aggregate unpaid principal amount of the
Loans then outstanding under the Note.

 

16.3                           Notices.  Except as otherwise provided in
Sections 2.2.2 and 2.2.3 all notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its address
shown on the signature page or at such other address as such party may, by
written notice received by the other parties, have designated as its address for
such purpose.  Notices sent by facsimile transmission shall be deemed to have
been given when sent; notices sent by mail shall be deemed to have been given
three Business Days after the date when sent by registered or certified mail,
postage prepaid; and notices sent by hand delivery or overnight courier service
shall be deemed to have been given when received.  For purposes of Sections
2.2.2 and 2.2.3, Agent shall be entitled to rely on telephonic instructions from
any person that Agent in good faith believes is an authorized officer or
employee of the Company, and the Company shall hold Agent harmless from any
loss, cost or expense resulting from any such reliance.

 

16.4                           Computations.  Where the character or amount of
any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purpose of this Agreement, such determination or calculation
shall, to the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with GAAP, consistently applied; provided that
if the Company notifies Agent that the Company (or any other Loan Party) wishes
to amend any covenant in Section 10 (or any related definition) to eliminate or
to take into account the effect of any change in GAAP on the operation of such
covenant (or if Agent notifies the Company that Agent wishes to amend

 

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Section 10 (or any related definition) for such purpose), then the Loan Parties’
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant (or related definition) is amended in
a manner satisfactory to the Company and Agent.

 

16.5        Expenses, Indemnity, Damage Waiver.

 

(a)           Costs and Expenses.  The Loan Parties shall pay (i) all reasonable
out-of-pocket expenses incurred by Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for Agent), in connection
with the syndication of the credit facilities provided for herein (excluding
syndication to the initial Lender), the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C
Issuer in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer
(including the fees, charges and disbursements of any counsel for Agent, any
Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys
who may be employees of Agent, any Lender or the L/C Issuer, in connection with
the enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this Section,
or (B) in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(b)           Indemnification by the Loan Parties.  The Loan Parties shall
indemnify Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Company or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder, or the consummation of the transactions contemplated hereby or
thereby, or, in the case of Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan Documents,
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by the L/C Issuer to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Loan Parties or any of their
Subsidiaries, or any Environmental Liability related in any way to the Loan
Parties or any of their Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Company or any other Loan Party,

 

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and regardless of whether any Indemnitee is a party thereto IN ALL CASES,
WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are determined
by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Company or any other Loan Party against
an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if the Company or such other Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that the Loan Parties for
any reason fail to irrevocably pay any amount required under subsection (a) or
(b) of this Section to be paid by them to Agent (or any sub-agent thereof), the
L/C Issuer or any Related Party of any of the foregoing, each Lender severally
agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against Agent (or any such sub-agent) or the L/C
Issuer in its capacity as such, or against any Related Party of any of the
foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection
with such capacity.

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by applicable law, the Loan Parties shall not assert, and hereby
waive, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.  No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic
or other information transmission systems in connection with this Agreement or
the other Loan Documents or the transactions contemplated hereby or thereby
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall be payable not
later than ten Business Days after demand therefor.

 

(f)            Survival.  The agreements in this Section shall survive the
resignation of Agent and the L/C Issuer, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

 

16.6        Payments Set Aside.  To the extent that any payment by or on behalf
of the Loan Parties is made to Agent, the L/C Issuer or any Lender, or Agent,
the L/C Issuer or any Lender

 

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exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Applicable Insolvency Laws or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and the L/C Issuer severally agrees to pay to Agent upon demand its applicable
share (without duplication) of any amount so recovered from or repaid by Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Rate from time to time in
effect.  The obligations of the Lenders and the L/C Issuer under clause (b) of
the preceding sentence shall survive the payment in full of the Obligations and
the termination of this Agreement.

 

16.7        Successors and Assigns.

 

(a)           Any Lender may at any time assign to one or more Eligible
Assignees all or any portion of such Lender’s Loans and Commitments, provided,
that such Lender shall consult with the Company prior to such assignment and, so
long as no Event of Default exists, such assignment shall be to a Person
mutually agreed to by the Company (which agreement shall not be unreasonably
withheld) and such Lender, except that the Company’s agreement shall not be
required if an Event of Default exists or for an assignment by a Lender to a
Lender or an Affiliate of a Lender.  Any such assignment shall be in a minimum
aggregate amount equal to $5,000,000 or, if less, the remaining Commitment and
Loans held by such Lender.  The Company and the Administrative Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned to an Eligible Assignee until the Administrative
Agent shall have received and accepted an effective assignment agreement (an
“Assignment Agreement”), in form and substance acceptable to the Administrative
Agent, executed, delivered and fully completed by the applicable parties thereto
and a processing fee of $3,500 paid by the applicable Eligible Assignee or the
assigning Lender.  The Company shall be deemed to have granted its consent to
any assignment requiring its consent hereunder unless the Company has expressly
objected to such assignment within three Business Days after notice thereof.

 

(b)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

 

(c)           Any Lender may at any time sell to one or more Persons
participating interests in its Loans, Commitments or other interests hereunder. 
In the event of a sale by such Lender of a participating interest, (i) such
Lender’s obligations hereunder shall remain unchanged for all purposes, (ii) the
Loan Parties shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations hereunder and (iii) all
amounts payable by the Loan Parties shall be determined as if such Lender had
not sold such participation and shall

 

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be paid directly to such Lender.  No participant shall have any direct or
indirect voting rights hereunder.  The Loan Parties agree that if amounts
outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement; provided that such right of set-off shall be subject to the
obligation of each participant to share with each Lender, and each Lender agrees
to share with each participant.  The Loan Parties also agree that each
participant shall be entitled to the benefits of Section 7.6 or 8 as if it were
a Lender (provided that on the date of the participation no participant shall be
entitled to any greater compensation pursuant to Section 7.6 or 8 than would
have been paid to the Lender on such date if no participation had been sold.

 

16.8        Register.  The Administrative Agent shall maintain a copy of each
Assignment Agreement delivered and accepted by it and register (the “Register”)
for the recordation of names and addresses of the Lenders and the Commitment of
each Lender from time to time and whether such Lender is the original Lender or
the Assignee.  No assignment shall be effective unless and until the Assignment
Agreement is accepted and registered in the Register. All records of transfer of
a Lender’s interest in the Register shall be conclusive, absent manifest error,
as to the ownership of the interests in the Loans. The Administrative Agent
shall not incur any liability of any kind with respect to any Lender with
respect to the maintenance of the Register.

 

16.9        GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

16.10      Confidentiality.  As required by federal law and the Agent’s policies
and practices, the Agent may need to obtain, verify, and record certain customer
identification information and documentation in connection with opening or
maintaining accounts, or establishing or continuing to provide services.  Each
of Agent and each Lender agrees to use commercially reasonable efforts
(equivalent to the efforts each of Agent and each Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all information provided to it by any Loan Party and designated as confidential,
except that Agent and each Lender may disclose such information (a) to Persons
employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitment; (b) to any assignee
or participant or potential assignee or participant that has agreed to comply
with the covenant contained in this Section 16.11 (and any such assignee or
participant or potential assignee or participant may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c) as
required or requested by any federal or state regulatory authority or examiner,
or any insurance industry association, or as reasonably believed by Agent or
such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent’s or such
Lender’s counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any litigation to
which Agent or such Lender is a party; (f) to any nationally recognized rating
agency that requires access to information about Agent or

 

72

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such Lender’s investment portfolio in connection with ratings issued with
respect to the Lender; (g) to any Affiliate of Agent or such Lender who may
provide Bank Products to the Loan Parties; (h) to Lender’s independent auditors
and other professional advisors as to which such information has been identified
as confidential; or (i) that ceases to be confidential through no fault of Agent
or such Lender.  Notwithstanding the foregoing, the Company consents to the
publication by Agent and each Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and each of Agent and each Lender reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.  Notwithstanding anything in this Agreement or any other
Loan Document to the contrary, any information with respect to the “tax
treatment” or “tax structure” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby shall not
be confidential and Agent, each Lender and other parties hereto may disclose
without limitation of any kind any information that is provided to Agent or such
Lender with respect to the “tax treatment” or “tax structure” (in each case,
within the meaning of Treasury Regulation Section 1.6011-4); provided, that to
the extent any Loan Document contains information that relates to the “tax
treatment” or “tax structure” and contains other information, this paragraph
shall only apply to the information regarding the “tax treatment” or “tax
structure.”

 

16.11      Severability.  Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.  All obligations of the
Loan Parties and rights of Agent and each Lender expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.

 

16.12      Nature of Remedies.  All Obligations of the Loan Parties and rights
of Agent and each Lender expressed herein or in any other Loan Document shall be
in addition to and not in limitation of those provided by applicable law.  No
failure to exercise and no delay in exercising, on the part of Agent or any
Lender, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

 

16.13      Entire Agreement.  This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof (except as relates to the fees described in Section 5.2) and any prior
arrangements made with respect to the payment by the Loan Parties of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of Agent or any Lender.

 

16.14      Counterparts.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.  Receipt
of an executed signature page to this Agreement by facsimile or other

 

73

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

 

electronic transmission shall constitute effective delivery thereof.  Electronic
records of executed Loan Documents maintained by the Lender shall deemed to be
originals.

 

16.15      Successors and Assigns.  This Agreement shall be binding upon each
Loan Party, Agent, the Lenders and their respective successors and assigns, and
shall inure to the benefit of each Loan Party, Agent, the Lenders and the
successors and assigns of the Lenders.  No other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.  No
Loan Party may assign or transfer any of its rights or Obligations under this
Agreement without the prior written consent of Agent and each Lender.

 

16.16      Captions.  Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

 

16.17      Customer Identification - USA Patriot Act Notice.  Each Lender and
PrivateBank (for itself and not on behalf of any other party) hereby notifies
the Loan Parties that, pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot
Act”), it is required to obtain, verify and record information that identifies
the Loan Parties, which information includes the name and address of the Loan
Parties and other information that will allow such Lender or PrivateBank, as
applicable, to identify the Loan Parties in accordance with the Patriot Act.

 

16.18      Nonliability of Agent and each Lender.  The relationship between the
Loan Parties on the one hand and Agent and each Lender on the other hand shall
be solely that of Loan Parties, agent and lender.  Neither Agent nor any Lender
has a fiduciary relationship with or duty to any Loan Party arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Loan Parties, on the one hand, and the Lenders, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor.  Neither Agent nor any Lender undertakes any responsibility to any
Loan Party to review or inform any Loan Party of any matter in connection with
any phase of any Loan Party’s business or operations.  Each Loan Party agrees,
on behalf of itself and each other Loan Party, that Agent and each Lender shall
have no liability to any Loan Party (whether sounding in tort, contract or
otherwise) for losses suffered by any Loan Party in connection with, arising out
of, or in any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is sought. 
NEITHER AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH
LOAN PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR
THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).  Each Loan Party
acknowledges that it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which it is a
party.  No joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Loan Parties and the Lender.

 

74

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

 

16.19      FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF MINNESOTA OR IN THE UNITED STATES DISTRICT COURT SITTING IN
MINNEAPOLIS, MINNESOTA; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO PRECLUDE AGENT OR ANY LENDER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.  EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF MINNESOTA
AND OF THE UNITED STATES COURT SITTING IN HENNEPIN COUNTY, MINNESOTA FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH LOAN PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF MINNESOTA.  EACH
LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

16.20      WAIVER OF JURY TRIAL.  EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

 

[Signature pages follow.]

 

75

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

 

The parties hereto have caused this Agreement to be duly executed and delivered
by their duly authorized officers as of the date first set forth above.

 

 

 

WINMARK CORPORATION

 

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

President, Finance and Administration

 

 

 

 

 

 

 

WIRTH BUSINESS CREDIT, INC.

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Treasurer

 

 

 

 

 

 

 

WINMARK CAPITAL CORPORATION

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

GROW BIZ GAMES, INC.

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Treasurer

 

Address for Notices:

 

c/o Winmark Corporation

605 Highway 169 North

Suite 400

Minneapolis, MN 55422

Attention:  Chief Financial Officer

Telephone:  (763) 520-8500

Fax:  (763) 520-8469

 

Signature Page to Credit Agreement

 

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

 

 

THE PRIVATEBANK AND TRUST COMPANY, as a Lender and as Administrative Agent for
the Lenders

 

 

 

 

By:

/s/ Peter Pricco

 

Name:

Peter Pricco

 

Title:

Managing Director

 

Address for Notices:

 

The PrivateBank and Trust Company

50 South Sixth Street, Suite 1415

Minneapolis, MN 55402

Attention:  Peter Pricco

Telephone:  (612) 392-2202

Fax:  (612) 605-6193

 

Signature Page to Credit Agreement

 

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

 

SCHEDULE 2.1

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

Lender

 

Commitment

 

Applicable
Percentage

 

 

 

 

 

 

 

The PrivateBank and Trust Company

 

$

30,000,000

 

100.00

%

 

 

 

 

 

 

Total

 

$

30,000,000

 

100.00

 

 

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

 

SCHEDULE 9.6

 

LITIGATION AND CONTINGENT LIABILITIES

 

None.

 

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

 

SCHEDULE 9.7

 

OWNERSHIP OF PROPERTIES; LIENS

 

1.             On August 30, 2000, the Company (f/k/a Grow Biz
International, Inc.) signed a Trademark License Agreement (“Agreement”) with
Hollis Technologies, Inc., a Florida limited liability company (“Hollis”),
granting Hollis the use of the COMPUTER RENAISSANCE AND DESIGN trademarks (U.S.
Reg. No. 1,875,949, Canada TM 474,198 and Japan trademark No. 4,313,894) for
term of twenty (20) years, with automatic successive renewals of ten (10) years
each.  In addition, per the Agreement, Hollis may request, and the Company will
grant to Hollis, a license for the use of the CIRCULAR ARROWS DESIGN trademark
under the same terms and conditions.

 

2.             In 2001 and 2002, the Company entered into Trademark License
Agreements with 14 former ReTool® franchisees and a former employee of Winmark
for the license of the RETOOL (U.S.  Reg.  No. 2,304,808) and RETOOL AND DESIGN
(U.S.  Reg.  No. 2,267,043) trademarks for a period of 10 years with an option
to renew for an additional ten (10) year period.

 

3.             See attached lien summary.

 

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

 

DEBTOR:            WINMARK CORPORATION

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

Minnesota Secretary of State

 

UCC

 

Winmark Corporation

 

US Bancorp

 

File No.: 200515352382
Filed: 2-24-05
Lapse: 2-24-10

 

Leased equipment (informational filing)

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Corporation

 

US Bancorp

 

File No.: 200517859904
Filed: 9-02-05
Lapse: 9-02-10

 

Leased equipment (informational filing)

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Corporation

 

US Bancorp

 

File No.: 200517888515
Filed: 9-07-05
Lapse: 9-07-10

 

Leased equipment (informational filing)

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Corporation

 

US Bancorp

 

File No.: 200519313670
Filed: 12-28-05
Lapse: 12-28-10

 

Leased equipment (informational filing)

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Corporation

 

US Bancorp

 

File No.: 200614556687
Filed: 12-06-06
Lapse: 12-06-11

 

Leased equipment (informational filing)

 

Debtor:                                                     WINMARK CAPITAL
CORPORATION

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

Minnesota Secretary of State

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.: 200518175801

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased

 

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

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200810362801

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200810554528

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200811963536

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200811963574

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of

 

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

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debtor in and to the equipment leased thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200811963613

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200811963651

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance, Inc.

 

File No.:  200811963699

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

Wells Fargo Equipment Finance,

 

File No.:  200813630128

 

A certain Lease Agreement, including all payments, revenues,

 

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

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inc.

 

 

 

insurance, proceeds, all right, title and interest of Debtor in and to the
equipment leased thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

SG Equipment Finance USA Corp.

 

File No.:  200914553972

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

SG Equipment Finance USA Corp.

 

File No.:  200914571677

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

SG Equipment Finance USA Corp.

 

File No.:  200914572911

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

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

 

Jurisdiction

 

Lien
Type

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

UCC

 

Winmark Capital Corporation

 

SG Equipment Finance USA Corp.

 

File No.:  201018636380

 

A certain Lease Agreement, including all payments, revenues, insurance,
proceeds, all right, title and interest of Debtor in and to the equipment leased
thereunder

 

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

 

DEBTOR:             WIRTH BUSINESS CREDIT, INC.

 

None.

 

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

 

DEBTOR:             GROW BIZ GAMES, INC.

 

None.

 

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

 

SCHEDULE 9.8

 

SUBSIDIARIES

 

 

 

Company

 

Percent Ownership

 

 

 

 

 

 

 

(a)

 

Grow Biz Games, Inc.

 

100

%

 

 

Wirth Business Credit, Inc.

 

100

%

 

 

Winmark Capital Corporation

 

100

%

 

 

 

 

 

 

(b)

 

Tomsten, Inc.

 

18.3

%

 

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

 

SCHEDULE 9.17

 

REAL PROPERTY

 

Property Type:

 

Winmark Corporation headquarters

(Leased)

 

 

 

Property Location:

 

605 Highway 169 North, Suite 400

 

 

Minneapolis, MN 55441

 

 

 

Lessor:

 

Utah State Retirement Investment Fund,

 

 

an independent agency of the State of Utah

 

 

c/o CB Richard Ellis

 

 

510 Marquette Ave., Suite 250

 

 

Minneapolis, MN 55435

 

 

 

Property Type:

 

Winmark Capital Corporation Office Space

(Leased)

 

 

 

Property Location:

 

1942 Broadway Suite # 318 & 317

 

 

Boulder, CO 80302

 

 

 

Lessor:

 

Office Partners, Inc. (d/b/a Broadway Suites, Inc.)

 

 

1942 Broadway

 

 

Boulder, CO 80302

 

 

 

Property Type:

 

Winmark Capital Corporation Office Space

(Leased)

 

 

 

Property Location:

 

2 Ravinia Drive, Suite # 500

 

 

Atlanta, GA 30346

 

 

 

Lessor:

 

The Regus Group

 

 

3003 Summit Blvd., Suite 1400

 

 

Atlanta, GA 30319

 

 

 

Property Type:

 

Winmark Capital Corporation Office Space

(Leased)

 

 

 

Property Location:

 

1309 State Street, Suite A

 

 

Santa Barbara, CA 93101

 

 

 

Lessor:

 

State Street GBF, LLC

 

 

116 East Sola Street

 

 

Santa Barbara, CA 93101

 

 

 

Property Type:

 

Winmark Capital Corporation Office Space

(Leased)

 

 

 

Property Location:

 

233 East Carillo Street, Suite C

 

 

Santa Barbara, CA 93101

 

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

 

Lessor:

 

MT-233 Office Building, LLC

 

 

233 East Carillo Street, Suite D

 

 

Santa Barbara, CA 93101

 

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

 

SCHEDULE 11.7

 

AFFILIATE TRANSACTIONS

 

None.

 

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

 

EXHIBIT A

 

FORM OF NOTE

 

 

 

, 20   

$

Minneapolis, Minnesota

 

The undersigned, jointly and severally, for value received, promise to pay to
the order of                                (the “Lender”) at the Administrative
Agent’s Office (as defined in the Credit Agreement), the principal sum of
                                           Dollars
($                            ) or the aggregate unpaid amount of all Loans made
to the undersigned by the Lender pursuant to the Credit Agreement referred to
below (as shown on the schedule attached hereto (and any continuation thereof)
or in the records of the Lender), such principal amount to be payable on the
dates set forth in the Credit Agreement.

 

The undersigned, jointly and severally, further promise to pay interest on the
unpaid principal amount of each Loan from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement.  Payments of both principal and interest are to be made in
lawful money of the United States of America.

 

This Note evidences indebtedness incurred under, and is subject to the terms and
provisions of, the Credit Agreement, dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; terms not otherwise defined herein are used herein as defined in the
Credit Agreement), among the undersigned, The PrivateBank and Trust Company,
certain other lenders party thereto and the Lender, to which Credit Agreement
reference is hereby made for a statement of the terms and provisions under which
this Note may or must be paid prior to its due date or its due date accelerated.

 

The undersigned, jointly and severally, agree to pay all costs of collection,
including attorneys’ fees, in the event this Note is not paid when due.  This
Note is being delivered in, and shall be governed by, the laws of the State of
Minnesota.  Presentment or other demand for payment, notice of dishonor and
protest are expressly waived.

 

WINMARK CORPORATION

 

GROW BIZ GAMES, INC.

 

 

 

 

 

By:

 

 

By:

 

Name: Brett Heffes

 

Name: Brett Heffes

Title: President, Finance and Administration

 

Title: Treasurer

 

 

 

 

 

 

WIRTH BUSINESS CREDIT, INC.

 

WINMARK CAPITAL CORPORATION

 

 

 

 

 

By:

 

 

By:

 

Name: Brett Heffes

 

Name: Brett Heffes

Title: Treasurer

 

Title: Chief Financial Officer and Treasurer

 

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

 

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

To:                             The PrivateBank and Trust Company (the
“Administrative Agent”) and the other Lenders referred to below

 

Please refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its subsidiaries
(together with the Company, the “Loan Parties”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), and THE
PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as Administrative
Agent for the Lenders.  Terms used but not otherwise defined herein are used
herein as defined in the Credit Agreement.

 

I.                                        Reports.  Enclosed herewith is a copy
of the monthly report of the Loan Parties as of                   ,         
(the “Computation Date”), which report fairly presents in all material respects
the financial condition and results of operations of the Loan Parties as of the
Computation Date and has been prepared in accordance with GAAP consistently
applied.

 

II.                                   Tangible Net Worth.  The Company hereby
certifies and warrants to you that the following is a true and correct
computation of the Tangible Net Worth requirement set forth in Section 11.15 of
the Credit Agreement, which is equal to or greater than the sum of the minimum
Tangible Net Worth from the immediately preceding month plus fifty percent (50%)
of the net income of the month then ended, if positive:

 

 

 

 

 

 

A.

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock

$

 

 

 

Other comprehensive income

$

 

 

 

Retained earnings

$

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

$

 

 

 

 

 

 

B.

Subordinated Debt

 

$

 

 

 

 

 

 

C.

Intangible items:

 

 

 

 

 

 

 

 

 

Goodwill

$

 

 

 

Trademarks

$

 

 

 

Trade names

$

 

 

 

Service marks

$

 

 

 

Copyrights

$

 

 

 

Patents

$

 

 

 

Licenses

$

 

 

 

Deferred items

$

 

 

B-1

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

 

 

 

Unamortized Debt discount

$

 

 

 

Prepaid expenses(1)

$

 

 

 

Other intangible items

$

 

 

 

 

 

 

 

 

Total Intangible Items

 

$

 

 

 

 

 

 

D.

Investments:

 

 

 

 

 

 

 

 

 

Investment in Tomsten, Inc.

$

 

 

 

Investment in Bridge Funds Limited

$

 

 

 

Additional Investments

$

 

 

 

 

 

 

 

 

Total Investments

 

$

 

 

 

 

 

 

E.

Actual Tangible Net Worth [(A+B) – (C + D)]

 

$

 

 

 

 

 

 

F.

Minimum Tangible Net Worth from prior month end

$

 

 

 

plus 50% of positive current month end net income

$

 

 

 

Required Minimum Tangible Net Worth

 

$

 

III.                              Debt Service Coverage.  The Company hereby
certifies and warrants to you that the following is a true and correct
computation of the Debt service coverage requirement set forth in Section 11.16
of the Credit Agreement, which is not less than the ratio set forth in
Section 11.16 of the Credit Agreement:

 

 

A.

TTM EBITDA:

 

 

 

 

 

 

 

 

(i)

TTM income from operations

$

 

 

 

(ii)

TTM leasing related cash interest expense

$

 

 

 

(iii)

TTM depreciation

$

 

 

 

(iv)

TTM amortization

$

 

 

 

(v)

TTM compensation related to stock options

$

 

 

 

 

 

 

 

 

TTM EBITDA [(i + ii + iii + iv + v)]

$

 

 

 

 

 

 

 

B.

Cash flow available for Debt service:

 

 

 

 

 

 

 

 

 

(i)

TTM EBITDA

$

 

 

 

(ii)

TTM capital expenditures

$

 

 

 

(iii)

TTM cash taxes

$

 

 

 

(iv)

TTM dividends and distributions

$

 

 

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

(1)  Excludes Income Tax Refund Receivable

 

B-2

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

 

 

 

Cash flow available for Debt service [(i – (ii + iii + iv)]

$

 

C.

Debt service:

 

 

 

 

 

 

 

 

 

(i)

TTM principal payments (excluding principal payments under Fixed Rate Loans)

$

 

 

(ii)

TTM cash interest expense (including leasing related cash interest expense)

$

 

 

 

 

 

 

 

Debt Service [(i + ii)]

$

 

 

 

 

 

Actual Debt service coverage ratio [B/C]:

 

 

Required minimum covenant level

 

 

 

 

 

IV.

Maximum Senior Leverage.  The Company hereby certifies and warrants to you that
the following is a true and correct computation of the total leverage
requirement set forth in Section 11.17 of the Credit Agreement, which is not
greater than the ratio set forth in Section 11.17 of the Credit Agreement:

 

 

 

A.

TTM recourse senior Debt:

$

 

 

 

 

 

 

 

B.

TTM EBITDA:

$

 

 

 

 

Actual total leverage ratio [A/B]:

 

Maximum covenant level

 

The Company further certifies to you that no Event of Default or Unmatured Event
of Default has occurred and is continuing.

 

The Company has caused this Certificate to be executed and delivered by its duly
authorized officer on                                    , 20      .

 

 

 

WINMARK CORPORATION

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

B-3

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

 

EXHIBIT C

 

FORM OF BORROWING BASE CERTIFICATE

 

To:                             The PrivateBank and Trust Company (the
“Administrative Agent”) and the Lenders referred to below

 

Please refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its subsidiaries
(together with the Company, the “Loan Parties”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), THE
PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as Administrative
Agent for the Lenders.  Capitalized terms used but not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.

 

The Company hereby certifies and warrants to the Administrative Agent and the
Lenders that at the close of business on                     ,          (the
“Calculation Date”), the Borrowing Base was $                    , computed as
set forth on the schedule attached hereto.

 

Attached hereto is an aging of the Loan Parties’ lease receivables as of the
date hereof.

 

The Company has caused this Certificate to be executed and delivered by its
officer thereunto duly authorized on                     , 20    .

 

 

WINMARK CORPORATION

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

SCHEDULE TO BORROWING BASE CERTIFICATE

Dated as of [                    ]

 

A.

Availability Created by Eligible Leased Assets

 

 

 

 

 

 

 

Net book value of Eligible Leased Assets

$

 

 

Advance rate

90

%

 

 

 

 

 

Availability created by Eligible Leases

$

 

 

 

 

 

B.

Availability created by EBITDA of franchising and corporate segments

 

 

 

 

 

 

 

TTM EBITDA of franchising segment

$

 

 

TTM EBITDA of corporate segment

$

 

 

Total

$

 

 

Advance rate

200

%

 

Availability created by EBITDA of

 

 

 

franchising and corporate segments

$

 

 

 

 

Total Availability: A+B (not to exceed $30,000,000)

$

 

 

 

 

Less Outstandings:

$

 

 

 

 

Excess Availability

$

 

 

C-2

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

 

EXHIBIT D

 

FORM OF NOTICE OF BORROWING

 

To:          The PrivateBank and Trust Company (the “Administrative Agent”)

 

Please refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its subsidiaries
(together with the Company, the “Loan Parties”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), THE
PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as Administrative
Agent for the Lenders.  Capitalized terms used but not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.

 

The undersigned hereby gives irrevocable notice, pursuant to Section 2.2.2 of
the Credit Agreement, of a request hereby for a borrowing as follows:

 

(i)            The requested borrowing date for the proposed borrowing (which is
a Business Day) is           ,           .

 

(ii)           The aggregate amount of the proposed borrowing is $     .

 

(iii)          The type of Revolving Loans comprising the proposed borrowing are
[Base Rate] [LIBOR] [Fixed Rate] Loans.

 

(iv)          The duration of the Interest Period for each LIBOR Loan made as
part of the proposed borrowing, if applicable, is             month(s) (which
shall be 1, 2 or 3 months).

 

(v)           The duration of the Interest Period for each Fixed Rate Loan made
as part of the proposed borrowing, if applicable, is           year(s) (which
shall be 1, 2, 3 or 4 years).  An amortization schedule reflecting monthly
payments over the life of such Fixed Rate Loan over the Interest Period therefor
commencing on the same date of the next month following the borrowing is
attached hereto.

 

The undersigned hereby certifies that on the date hereof and on the date of
borrowing set forth above, and immediately after giving effect to the borrowing
requested hereby:  (i) there exists and there shall exist no Unmatured Event of
Default or Event of Default under the Credit Agreement; (ii) each of the
representations and warranties contained in the Credit Agreement and the other
Loan Documents is true and correct as of the date hereof, except to the extent
that such representation or warranty expressly relates to another date and
except for changes therein expressly permitted or expressly contemplated by the
Credit Agreement; (iii) no more than eight (8) different LIBOR Loans are/will be
outstanding; and (iv) no more than eight (8) different Fixed Rate Loans are/will
be outstanding.

 

The Company has caused this Notice of Borrowing to be executed and delivered by
its officer thereunto duly authorized on                 ,      .

 

 

WINMARK CORPORATION

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

EXHIBIT E

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

To:          The PrivateBank and Trust Company (the “Administrative Agent”)

 

Please refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its subsidiaries
(together with the Company, the “Loan Parties”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), THE
PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as Administrative
Agent for the Lenders.  Capitalized terms used but not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.

 

The undersigned hereby gives irrevocable notice, pursuant to Section 2.2.3 of
the Credit Agreement, of its request to:

 

(a)           on [date] convert $[                ] of the aggregate outstanding
principal amount of the [         ] Loan, into a(n) [      ] Loan [and, in the
case of a LIBOR Loan, having an Interest Period of [           ] month(s)][and,
in the case of a Fixed Rate Loan, having an Interest Period of [               ]
years(s)];

 

[(b)        on [date] continue $[          ] of the aggregate outstanding
principal amount of the [LIBOR Loan, as a LIBOR Loan having an Interest Period
of [            ]month(s)][Fixed Rate Loan, as a Fixed Rate Loan having an
Interest Period of [       ] year(s)].

 

The undersigned hereby represents and warrants that all of the conditions
contained in Section 12.2 of the Credit Agreement have been satisfied on and as
of the date hereof, and will continue to be satisfied on and as of the date of
the conversion/continuation requested hereby, before and after giving effect
thereto.  The undersigned also represents and warrants that, before and after
giving effect the conversion/continuation requested hereby, (i) no more than
eight (8) different LIBOR Loans are/will be outstanding, and (ii) no more than
eight (8) different Fixed Rate Loans are/will be outstanding.

 

The Company has caused this Notice of Conversion/Continuation to be executed and
delivered by its officer thereunto duly authorized on       ,               .

 

 

WINMARK CORPORATION

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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