Exhibit 10.1

EXECUTION COPY

LOAN AGREEMENT

By and Among

MANUFACTURERS AND TRADERS TRUST COMPANY,

As Administrative Agent and Letter of Credit Issuer,

THE LENDERS PARTY HERETO

and

COMPUTER TASK GROUP, INCORPORATED

As of May 1, 2014

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TABLE OF CONTENTS

 

         Page  

1.      DEFINITIONS

     1   

1.1

  Definitions      1   

1.2

  Construction      14   

1.3

  Accounting Terms      14   

2.      THE DEMAND LINE OF CREDIT FACILITY

     15   

2.1

  Discretionary Advances      15   

2.2

  Promissory Notes      16   

2.3

  Interest and Interest Payments      16   

2.4

  Principal Payments      18   

2.5

  Default Rate      18   

2.6

  Maximum Allowable Interest Rate      18   

2.7

  Payments      18   

2.8

  Use of Proceeds      19   

2.9

  Fees      19   

2.10

  Late Fees      19   

2.11

  Prepayment      19   

2.12

  [Intentionally Omitted]      19   

2.13

  Change in Circumstances      20   

2.14

  Letters of Credit      22   

2.15

  Sharing in Set-Offs, Etc      26   

2.16

  Settlement between Administrative Agent and Lenders      27   

3.      GUARANTIES

     27   

3.1

  Subsidiary Guaranties      27   

4.      REPRESENTATIONS AND WARRANTIES

     28   

4.1

 

OrganizationalStatus

     28   

4.2

  Power and Authorization      28   

4.3

  Execution and Binding Effect      28   

4.4

  Compliance with Laws; Governmental Approvals and Filings      28   

4.5

  Absence of Conflicts      29   

4.6

  Labor Matters      29   

4.7

  Absence of Undisclosed Liabilities      30   

4.8

  Accurate and Complete Disclosure      30   

4.9

  [Intentionally Omitted]      30   

4.10

  Margin Regulations      30   

4.11

  [Intentionally Omitted]      31   

 

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4.12

  [Intentionally Omitted]      31   

4.13

  No Defaults on Other Agreements; Adverse Contracts      31   

4.14

  Litigation      31   

4.15

  Absence of Events of Default      31   

4.16

  Insurance      31   

4.17

  Title to Property      31   

4.18

  Intellectual and Other Property      31   

4.19

  Taxes      32   

4.20

  Employee Benefits      32   

4.21

  Environmental Matters      32   

4.22

  [Intentionally Omitted      33   

4.23

  Potential Conflicts of Interest      33   

4.24

  [Intentionally Omitted]      33   

4.25

  Trade Relations      33   

4.26

  Financial Information      33   

4.27

  Investment Company Act      33   

4.28

  No Material Adverse Change      33   

4.29

  Survival of Representations and Warranties      33   

5.      CONDITIONS OF LENDING

     33   

5.1

  Conditions of Agreement      33   

5.2

  Conditions of Each Advance Under Demand Line of Credit Loan      35   

6.      AFFIRMATIVE COVENANTS

     37   

6.1

  Payment      37   

6.2

  Basic Reporting Requirements      37   

6.3

  Insurance      39   

6.4

  Payment of Taxes and Other Potential Charges and Priority Claims      39   

6.5

  Preservation of Status      39   

6.6

  Conduct of Business      39   

6.7

  [Intentionally Omitted]      39   

6.8

  [Intentionally Omitted]      40   

6.9

  Maintenance of Financial Records; Fiscal Year      40   

6.10

  Maintenance of Properties      40   

6.11

  Further Assurances      40   

7.      NEGATIVE COVENANTS

     40   

7.1

  Liens      40   

7.2

  [Intentionally Omitted]      41   

7.3

  Sale or Transfer of Assets; Suspension of Business Operations      41   

7.4

  [Intentionally Omitted]      41   

7.5

  Limitation on Other Restrictions on Liens      41   

7.6

  Limitation on Other Restrictions on Amendment of the Loan Documents, etc     
41   

 

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7.7

  [Intentionally Omitted]      41   

7.8

  Special Restrictions on Inactive Subsidiaries      42   

7.9

  [Intentionally Omitted]      42   

7.10

  Subsidiaries      42   

7.11

  [Intentionally Omitted      42   

7.12

  [Intentionally Omitted      42   

7.13

  Merger, Consolidation      42   

7.14

  Accounting      43   

7.15

  Governing Documents      43   

7.16

  Hazardous Materials      43   

7.17

  [Intentionally Omitted]      43   

7.18

  [Intentionally Omitted      43   

8.      EVENTS OF DEFAULT

     43   

8.1

  Nonpayment      43   

8.2

  Insolvency; Receivership      43   

8.3

  Breach of Representation      44   

8.4

  [Intentionally Omitted]      44   

8.5

  Default      44   

8.6

  Events of Default Under Other Agreements      44   

8.7

  Plan Events      44   

8.8

  Environmental Lien      45   

8.9

  [Intentionally Omitted]      46   

8.10

  Failure of Loan Document      46   

8.11

  [Intentionally Omitted]      46   

8.12

  [Intentionally Omitted]      46   

8.13

  Material Adverse Change      46   

8.14

  Certain Actions      46   

8.15

  Governing Documents      46   

9.      DEMAND OBLIGATIONS; RIGHTS ON DEFAULT

     46   

9.1

  Demand Obligations; Rights and Remedies      46   

9.2

  Certain Events of Default      47   

9.3

  Non-Exclusivity      47   

10.    INDEMNIFICATION

     47   

11.    EXPENSES

     48   

12.    AGENCY

     48   

12.1

  Appointment, Powers and Immunities      48   

12.2

  Reliance by Administrative Agent      49   

12.3

  Defaults      49   

 

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12.4

  Rights as a Lender      50   

12.5

  Indemnification      50   

12.6

  Non-Reliance on Administrative Agent and Other Lenders      50   

12.7

  Failure to Act      51   

12.8

  Resignation of Administrative Agent      51   

12.9

  Consents under Loan Documents      51   

13.    MISCELLANEOUS

     52   

13.1 

  Entire Agreement; Binding Effect      52   

13.2

  Amendments; Waivers      52   

13.3

  Notices      52   

13.4

  Assignment      52   

13.5

  Participation and/or Assignment      53   

13.6

  Governing Law      53   

13.7

  Enforceability of Obligations      54   

13.8

  WAIVER OF JURY TRIAL      54   

13.9

  Jurisdiction and Venue      54   

13.10

  Survival      55   

13.11

  Severability      55   

13.12

  Headings      55   

13.13

  Counterparts      55   

13.14

  Further Assurances      55   

EXHIBITS A   Form of Demand Line of Credit Note

                    B   Form of Assignment and Assumption Agreement

SCHEDULES  A   Lenders

                           7.1   Permitted Liens

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT is made as of the 1st day of May, 2014, by and among
COMPUTER TASK GROUP, INCORPORATED, a New York corporation (“Borrower”), the
LENDERS party hereto from time to time (the “Lenders” as defined further below),
and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation,
having an office and place of business at One Fountain Plaza, Buffalo, New York
14203, as issuer of letters of credit (“Bank”) and as agent for the Lenders and
Bank (in such capacity, together with its successors in such capacity, the
“Administrative Agent”). This Loan Agreement amends, restates, replaces and
substitutes for that certain Loan Agreement dated as of April 21, 2005 among
Borrower, Lenders, Bank and Administrative Agent (the “Original Agreement”).

W I T N E S S E T H:

WHEREAS, the parties hereto wish to arrange for a discretionary demand line of
credit facility to be made available by Lenders to Borrower in the maximum
principal amount of Forty Million Dollars ($40,000,000) including a sub limit of
Ten Million Dollars ($10,000,000) thereunder for letters of credit to be issued
by Bank in its discretion, all on the terms and conditions set forth herein;

NOW, THEREFORE, for due consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree that the Original Agreement is
hereby amended and restated as follows:

1. DEFINITIONS.

1.1 Definitions. The following terms shall have the following meanings in this
Agreement, except where otherwise specifically indicated:

“Adjusted Base Rate” shall mean the greater of (a) the Federal Funds Rate plus
 1⁄2% and (b) the Prime Rate, each as the same may change from time to time. Any
changes in the Adjusted Base Rate resulting from a change in the Federal Funds
Rate or the Prime Rate shall be effective from and including the effective date
of such change in the Federal Funds Rate or Prime Rate without notice or demand
of any kind.

“Administrative Agent” shall have the meaning given such term in the Preamble to
this Agreement.

“Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director, officer, general partner, member or manager
of such Person or, with respect to an individual, has a relationship with such
individual by blood, adoption or marriage not more remote than first cousin. For
purposes of this definition, the term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) of a Person
shall mean the possession, direct or indirect, of the power to vote 10% or more
of the Voting Interests in such Person or to direct or cause the direction of

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the management and policies of such Person, whether through the ownership of
Voting Interests, by virtue of being a general partner or managing member, by
contract or otherwise.

“Agreement” shall mean this Loan Agreement, as the same may be amended, modified
or supplemented from time to time in accordance with its terms.

“Applicable Margin” shall mean the interest spread of 150 basis points to be
added to the LIBOR Rate and 0 basis points to be added to the Adjusted Base
Rate, as applicable.

“Approved Balance” shall mean, at the time of determination, (a) the Demand Line
of Credit Facility, minus (b) the outstanding principal balance under the Demand
Line of Credit Notes, minus (c) the L/C Amount.

“Approved Principal Amount” shall mean, at any time, for each Lender, the amount
set forth opposite the name of such Lender on Schedule A hereto under the
caption “Approved Principal Amount.” The aggregate principal amount of all
Approved Principal Amounts is the Demand Line of Credit Facility.

“Assignment and Assumption Agreement” shall mean an Assignment and Assumption
Agreement in the form of Exhibit B hereto.

“Authorized Representative” shall mean Borrower’s Chief Executive Officer,
President, Chief Financial Officer, Treasurer, Controller or Senior Accountant,
including anyone serving as any of the foregoing in an interim capacity.

“Automatic Continuation Option” shall, with respect to any LIBOR Loan, mean the
option to have the then-current Interest Period duration, as previously selected
by Borrower, remain the same for the succeeding Interest Period.

“Bank” shall have the meaning given such term in the Preamble to this Agreement.

“Base Rate” shall mean (a) the Adjusted Base Rate, as the same may change from
time to time, plus (b) the Applicable Margin.

“Base Rate Loan” shall mean any Demand Line of Credit Loan then bearing interest
at the Base Rate.

“Borrower” shall have the meaning given such term in the Preamble to this
Agreement.

“Business Day” shall mean (a) any day other than (i) a Saturday or Sunday or
(ii) any other day on which commercial banks in Buffalo, New York are authorized
or required by law to close and, (b) if the applicable day relates to a LIBOR
Loan or an advance requested as a LIBOR Loan, or a notice with respect to the
same or an Interest Period with respect thereto, a day on which dealings in

 

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Dollar deposits are also carried on in the London interbank market and banks are
open for business in London.

“Capitalized Lease” shall mean at any time any lease which is, or is required
under GAAP to be, capitalized on the balance sheet of the lessee at such time,
and “Capitalized Lease Obligation” of any Person at any time shall mean the
aggregate amount which is, or is required under GAAP to be, reported as a
liability on the balance sheet of such Person at such time with respect to
Capitalized Leases.

“CERCLA” shall have the meaning given such term in the definition of “Hazardous
Material”.

“Closing” shall mean the closing of the transactions contemplated by the Loan
Documents on the Closing Date.

“Closing Date” shall mean the date of execution and delivery by Borrower,
Administrative Agent, Lenders and Bank of this Agreement and the execution,
where applicable, and delivery by Borrower of the other requirements of
Section 5.1.

“Code” shall mean the United States Internal Revenue Code, and any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.

“Continuing Obligations” shall mean contingent Obligations, including
indemnification obligations under Section 10, that have not arisen at the time
of termination of this Loan Agreement but that survive such termination.

“Controlled Group Member” shall mean each trade or business (whether or not
incorporated) which together with any Loan Party is treated as a single employer
under Section 4001(a)(14) or 4001(b)(1) of ERISA or Section 414(b), (c), (m) or
(o) of the Code.

“Copyrights” shall mean all copyrights, whether statutory or common law, owned
by or acquired by any Loan Party, any renewals and extensions thereof and
foreign copyrights corresponding thereto throughout the world.

“CTG Europe” means Computer Task Group Europe, B.V., an entity organized under
the laws of the Netherlands.

“Default Interest Rate” shall mean a rate of interest which is two percent
(2%) per annum in excess of the rate otherwise applicable to the relevant
Obligation or, if no rate is applicable to such Obligation, two percent (2%) in
excess of the Base Rate, which shall change simultaneously with each change in
the Adjusted Base Rate.

 

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“Demand Line of Credit Facility” shall mean, at any time, the aggregate Approved
Principal Amounts of all of the Lenders at such time. The aggregate amount of
the Demand Line of Credit Facility on the date of this Agreement is Forty
Million Dollars ($40,000,000).

“Demand Line of Credit Loan” shall have the meaning set forth in Section 2.1(a).

“Demand Line of Credit Notes” shall have the meaning set forth in
Section 2.2(a).

“Dollar” and the symbol “$” shall mean lawful money of the United States of
America.

“Domestic Loan Parties” shall mean Borrower and each of its Domestic
Subsidiaries and “Domestic Loan Party” shall mean any of them.

“Domestic Subsidiaries” shall mean each of Borrower’s direct and indirect
Subsidiaries, other than Inactive Subsidiaries, which is incorporated or formed
in a state of the United States and “Domestic Subsidiary” shall mean any of
them.

“Environment” shall mean all air, surface water, groundwater, land, including
land surface and subsurface, and includes all fish, wildlife, biota, flora,
fauna and all natural resources.

“Environmental Affiliate” shall mean, with respect to any Person, any other
Person whose liability (contingent or otherwise) for any Environmental Claim
such Person has retained, assumed or otherwise is liable for (by Law, agreement
or otherwise).

“Environmental Approvals” shall mean any Governmental Action pursuant to or
required under any Environmental Law.

“Environmental Claim” shall mean, with respect to any Person, any action, suit,
proceeding, investigation, notice, claim, complaint, demand, request for
information or other communication (written or oral) by any other Person
(including, but not limited to, any Governmental Authority, citizens’ group or
present or former employee of such Person) alleging, asserting or claiming any
actual or potential (a) violation of any Environmental Law, (b) liability under
any Environmental Law or (c) liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
the presence, or release into the Environment, of any Environmental Concern
Materials at any location, whether or not owned by such Person.

“Environmental Cleanup Site” shall mean any location which is listed or proposed
for listing on the National Priorities List, on CERCLIS or on any similar state
list of sites requiring investigation or cleanup, or which is the subject of any
pending or threatened action, suit, proceeding or investigation related to or
arising from any alleged violation of any Environmental Law.

“Environmental Concern Materials” shall mean (a) any flammable substance,
explosive, radioactive material, Hazardous Material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any

 

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substance specified in or regulated or otherwise affected by any Environmental
Law (including, but not limited to, any “hazardous substance” as defined in
CERCLA or any similar state Law), (b) any toxic chemical or other substance from
or related to industrial, commercial or institutional activities, and
(c) asbestos, gasoline, diesel fuel, motor oil, waste and used oil, heating oil
and other petroleum products or compounds, polychlorinated biphenyls, radon and
urea formaldehyde.

“Environmental Law” shall mean any Law, whether now existing or subsequently
enacted or amended, relating to (a) pollution or protection of the Environment,
including natural resources, (b) exposure of Persons, including, but not limited
to, employees, to Environmental Concern Materials, (c) protection of the public
health or welfare from the effects of products, by-products, wastes, emissions,
discharges or releases of Environmental Concern Materials or (d) regulation of
the manufacture, use or introduction into commerce of Environmental Concern
Materials including their manufacture, formulation, packaging, labeling,
distribution, transportation, handling, storage or disposal. Without limitation,
“Environmental Law” shall also include any Environmental Approval and the terms
and conditions thereof.

“Environmental Lien” shall mean a Lien in favor of the United States government,
or any state, or political subdivision, or any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government for (a) any liability under federal or state environmental laws or
regulations, or (b) for damages arising from or costs incurred by such
governmental entity in response to a release of a hazardous or toxic waste
substance or constituent, or other substance into the Environment.

“Equity Interests” shall mean, with respect to any Person, the shares of capital
stock of (or other ownership, partnership, membership or profit interests in)
such Person, the warrants, options or other rights for the purchase or other
acquisition from such Person of shares of capital stock of (or other ownership,
partnership, membership or profit interests in) such Person, all of the
securities convertible into or exchangeable for shares of capital stock of (or
other ownership, partnership, membership or profit interests in) such Person or
warrants, rights or options for the purchase or other acquisition from such
Person of such shares (or such other interests), and the other ownership,
partnership, membership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
authorized or otherwise existing on any date of determination.

“Equity Rights” shall mean, with respect to any Person, any subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including any stockholders’ or voting trust agreements) for the issuance or
sale of, or securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import and regulations thereunder,
as in effect from time to time. References to sections of ERISA shall be
construed also to refer to any successor sections.

“Event of Default” shall have the meaning given such term in Section 8.

 

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“Facility Documents” shall have the same meaning as the term “Loan Documents.”

“Federal Funds Rate” shall mean the rate per annum equal for each day to the
weighted average of the rates (rounded upward, if necessary, to the nearest
whole multiple of 1/16 of 1% per annum) 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
immediately preceding Business Day) by the Federal Reserve Bank of New York or,
if such rate is not so published for any day that is a Business Day, the average
of the quotations for such day for such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it, such rate to change automatically effective as of the
effectiveness of each change in the Federal Funds Rate.

“Foreign Exchange Obligations” shall mean all obligations of the Borrower or its
Subsidiaries pursuant to and under any and all foreign exchange contracts and
agreements to which Borrower or any Subsidiary is a party as of any date of
computation as if such foreign exchange agreement were to be terminated or
declared to be in default on such date (after giving effect to any netting
provisions).

“Foreign Subsidiaries” shall mean, collectively (a) Computer Task Group of
Canada, Inc., a corporation organized under the laws of the Province of Ontario,
(b) Computer Task Group Europe, B.V., an entity organized under the laws of the
Netherlands, (c) Computer Task Group (U.K.), Ltd., a corporation organized under
the laws of the United Kingdom, (d) Computer Task Group Belgium N.V., an entity
organized under the laws of Belgium, (e) Computer Task Group Luxembourg, S.A.,
an entity organized under the laws of Luxembourg and (f) such other
corporations, partnerships or limited liability companies organized under the
laws of any jurisdiction other than the United States, as may become
Subsidiaries of the Borrower from time to time, other than Inactive
Subsidiaries.

“GAAP” shall have the meaning set forth in Section 1.3.

“Governmental Action” shall have the meaning set forth in Section 4.4.

“Governmental Authority” shall mean any government or political subdivision or
any agency, authority, branch, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or public or
private mediator or arbitrator, in each case whether foreign or domestic and
whether federal, state, local or otherwise.

“Governing Documents” of a Person shall mean each of the following, as
applicable, such Person’s certificate of limited partnership, limited
partnership agreement, certificate or articles of incorporation, by-laws,
limited liability company agreement, operating agreement, certificate of
formation or organization, articles of formation or organization or other
organizational or governing documents.

“Guaranties” by any Person shall mean all obligations (other than endorsements
in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other

 

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Person (the “primary obligor”) in any manner, whether directly or indirectly,
including all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or obligation, or
(ii) to maintain working capital or other balance sheet condition or otherwise
to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (c) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (d) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder), as
determined by such Person in good faith.

“Hazardous Material” shall include any flammable or ignitable (as such term is
used under the statutes, codes, laws, ordinances, rules and regulations
described in this paragraph) materials, explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, pollutant,
hazardous or toxic pollutant, polychlorinated biphenyls (PCBs), solid waste,
petroleum, petroleum product, pesticide, asbestos or any other material as
defined and/or subject to regulation by: (a) any Federal, state or local
environmental health or safety statutes, code, law, ordinance, rule, or
regulation including the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) (“CERCLA”),
the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801,
et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 9601, et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251, et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Section 2601, et seq.), and statutes codified in the New York
Environmental Conservation Law, as amended, and the New York Navigation Law, as
amended and in the rules and regulations adopted pursuant to each of the
foregoing, or (b) any Governmental Authority having or claiming jurisdiction
over the property or assets of any Loan Party. The term “Hazardous Material”
shall include any constituent and degradation product of a Hazardous Material.

“Inactive Subsidiaries” means (a) Computer Task Group of Delaware, Inc., a
Delaware corporation, (b) Computer Task Group of Kansas, Inc., a Missouri
corporation and (c) Computer Task Group (Holdings) Ltd., a United Kingdom
corporation.

“Indebtedness” of a Person shall mean:

(a) All obligations on account of money borrowed by, or credit extended to or on
behalf of, or for or on account of deposits with or advances to, such Person;

 

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(b) All obligations of such Person evidenced by bonds, debentures, notes or
similar instruments;

(c) All obligations of such Person for the deferred purchase price of property
or services;

(d) All obligations secured by a Lien on property owned by such Person (whether
or not assumed); and all Capitalized Lease Obligations of such Person (without
regard to any limitation of the rights and remedies of the holder of such Lien
or the lessor under any such Capitalized Lease to, repossession or sale of such
property);

(e) The face amount of all letters of credit issued for the account of such
Person and, without duplication, the Reimbursement Obligation or other
unreimbursed amount of all drafts drawn thereunder and any reimbursed amount
under any letter of credit which reimbursed amount may be subject to avoidance,
rescission or other return in any ongoing bankruptcy action, and all other
obligations of such Person associated with such letters of credit or draws
thereon; provided, however, any such letter of credit shall not be included in
this definition of Indebtedness if the debt such letter of credit secures has
already been included in this definition.

(f) All obligations of such Person in respect of acceptances or similar
obligations issued for the account of such Person;

(g) All obligations of such Person under a product financing or similar
arrangement described in paragraph 8 of FASB Statement of Accounting Standards
No. 49 or any similar requirement of GAAP;

(h) All obligations of such Person under any interest rate or currency
protection agreement, interest rate or currency future, interest rate or
currency option, interest rate or currency swap or cap or other interest rate or
currency hedge agreement, including any Interest Rate Protection Agreement; and

(i) All Guaranties of obligations of others.

“Interest Period” shall mean, with respect to any LIBOR Loan, any period
commencing on the date such LIBOR Loan is made or the date of a subsequent
interest rate selection, as the case may be, and ending seven (7) days, one
(1) month, two (2) months, three (3) months or six (6) months later, as Borrower
may request, provided that any Interest Period which would otherwise end on a
day which is not a Business Day shall end on the next preceding or succeeding
Business Day as is the custom in the London interbank market to which such
advance relates.

“Interest Rate” shall mean either the Base Rate or the LIBOR Based Rate option
as elected by Borrower in accordance with the provisions of Section 2.3.

 

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“Interest Rate Protection Agreement” shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate insurance, interest rate protection agreement or any other agreement or
arrangement designed to provide protection against fluctuations in interest
rates, together with all extensions, renewals, amendments, substitutions and
replacements to and of any of the foregoing.

“Law” shall mean any law (including common law), constitution, statute, treaty,
convention, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Governmental Authority.

“L/C Amount” shall mean the sum of (a) the aggregate face amount of any issued
and outstanding Letters of Credit and (b) the aggregate amount of all unpaid
Reimbursement Obligations.

“L/C Application” shall mean, collectively, an application and agreement for
letters of credit, including a letter of credit reimbursement agreement, all in
a form acceptable to Bank.

“Lenders” shall mean, collectively, the Persons listed on Schedule A hereto and
any other Person that shall have become a party hereto pursuant to an Assignment
and Assumption Agreement, other than any such Person that has ceased to be a
party hereto pursuant to an Assignment and Assumption Agreement showing a Lender
which is a Lender on the date thereof as assignor. “Lender” shall mean any of
the Lenders.

“Letter of Credit” shall have the meaning given such term in Section 2.14(a).

“Letter of Credit Advance” shall mean a Demand Line of Credit Loan made or
purchased by the Bank or any of the Lenders pursuant to Section 2.14(b)(ii),
2.14(d) or 2.14(e)(i).

“Letter of Credit Sublimit” shall mean $10,000,000.

“LIBOR Based Rate” shall mean the LIBOR Rate plus the Applicable Margin.

“LIBOR Loan” shall mean any Demand Line of Credit Loan then bearing interest at
a LIBOR Based Rate.

“LIBOR Rate” shall mean the rate per annum at which Dollar deposits
approximately equal in principal amount to the amount of the applicable advance
on which Borrower chooses to have interest accrue at a LIBOR Based Rate and for
a maturity equal to the applicable Interest Period are offered in immediately
available funds to the Administrative Agent, by leading banks in the London
Interbank Eurodollar Market, at approximately 11:00 a.m., London time (or as
soon thereafter as practicable), two (2) Business Days prior to the commencement
of such Interest Period; provided, however, if the rate described above does not
appear on page 3750 of the Dow Jones Markets Screen on any applicable interest
determination date, the LIBOR Rate shall be the rate (rounded upward, if
necessary, to the nearest one hundred-thousandth of a percentage point)
determined on the basis of the offered rates for deposits in U.S. Dollars for a
period of time comparable to such Interest Period which are offered by four
major banks in the London interbank market at approximately 11:00 a.m. London

 

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time on the day that is two (2) Business Days preceding the first day of such
Interest Period. Such banks shall be selected by the Administrative Agent. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. Dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. Dollars to leading European banks for a period of time comparable to
such Interest Period offered by major banks in New York City at approximately
11:00 a.m. Buffalo, New York time, on the day that is two (2) Business Days
preceding the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided above,
it will be deemed that the LIBOR Rate cannot be determined and the requested
borrowing shall bear interest at the Base Rate.

In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of the Administrative
Agent then for any Interest Period during which such Reserve Percentage shall
apply, LIBOR shall be equal to the amount determined above divided by an amount
equal to 1 minus the Reserve Percentage.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien, charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
any kind or nature, including any conditional sale or other title retention
agreement and the filing of, or agreement to give, any financing statement under
the Uniform Commercial Code as adopted in any jurisdiction.

“Loan Documents” shall mean this Agreement, the Demand Line of Credit Notes, the
Subsidiary Guaranties, any Interest Rate Protection Agreement with
Administrative Agent, Lender, or any Affiliate of any of them with respect to
any Demand Line of Credit Loan(s), any L/C Application, any Letter of Credit,
and the Borrower certifications delivered by the Borrower to Administrative
Agent on or about the Closing Date and from time to time hereafter, and all
other agreements and instruments extending, renewing, refinancing, refunding or
reaffirming any Indebtedness, obligation or liability arising under any of the
foregoing, in each case as the same may be amended, modified or supplemented
from time to time hereafter in accordance with their respective terms.

“Loan Parties” shall mean Borrower and each of its Subsidiaries and “Loan Party”
shall mean any of them.

“Material Adverse Effect” shall mean: (a) a material adverse effect on the
business, operations, results of operations, prospects, assets, liabilities or
financial condition of the Loan Parties, taken as a whole, (b) a material
adverse effect on the ability of any Loan Party to perform or comply with any of
the terms and conditions of any Loan Document to which it is a party or by which
it or its assets are bound or on the ability of Borrower to cause any Subsidiary
to comply with the covenants applicable to such Subsidiary and contained in any
Loan Document, or (c) a material adverse effect on (i) the legality, validity,
binding effect, enforceability or admissibility into evidence of any Loan
Document, or (ii) the ability of the Administrative Agent to enforce any right,
or remedy under or in connection with any Loan Document.

 

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“Multiemployer Plan” shall mean any employee benefit plan (a) which is a pension
benefit plan, (b) is a “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA and (c) to which any Loan Party or any Controlled
Group Member has an obligation to contribute.

“Obligations” shall mean all Indebtedness, obligations and liabilities of any
Loan Party to Administrative Agent, Bank or any Lender or any of their
respective successors or assigns from time to time arising under or in
connection with or related to or evidenced by or secured by this Agreement, the
Demand Line of Credit Notes or any other Loan Document, and all extensions,
renewals or refinancings thereof, whether such Indebtedness, obligations or
liabilities are direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising. Such Indebtedness, obligations
and liabilities include all obligations under any interest rate or currency
protection agreement, interest rate or currency future, interest rate or
currency option, interest rate or currency swap or cap or other interest rate or
currency hedge agreement relating to any Loan, including any Interest Rate
Protection Agreement, with Administrative Agent, Bank or any Lender relating to
the Demand Line of Credit Loan, any Reimbursement Obligations, the principal
amount of the Demand Line of Credit Loans, interest, overdrafts, Foreign
Exchange Obligations, cash management services, fees, indemnities or expenses
under or in connection with this Agreement or any other Loan Document, and all
extensions, renewals and refinancings thereof, whether or not such Demand Line
of Credit Loans were made or other transactions were entered into in compliance
with the terms and conditions of this Agreement.

“Patents” shall mean all patents issued or assigned to and all patent
applications made, acquired or owned by any Loan Party and all reissues,
divisions, continuations, extensions and continuations-in-part thereof.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established under
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to the functions of said corporation.

“Pension-Related Event” shall mean any of the following events or conditions:

(a) Any action is taken by any Person (i) to terminate, or which would result in
the termination of, a Plan, either pursuant to its terms or by operation of law
(including any amendment of a Plan which would result in a termination under
Section 4041(e) of ERISA) other than in compliance with Section 4041(b) of
ERISA, or (ii) to have a trustee appointed for a Plan pursuant to Section 4042
of ERISA;

(b) PBGC notifies any Person of its determination that an event described in
Section 4042 of ERISA has occurred with respect to a Plan, that a Plan should be
terminated, or that a trustee should be appointed for a Plan;

(c) Any Reportable Event occurs with respect to a Plan;

(d) Any action occurs, or is taken by Borrower, which could result in any Loan
Party or any Controlled Group Member becoming subject to liability for a

 

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complete or partial withdrawal by any Person from a Multiemployer Plan
(including seller liability incurred under Section 4204(a)(2) of ERISA), or any
Loan Party or any Controlled Group Member receives from any Person a notice or
demand for payment on account of any such alleged or asserted liability; or

(e) (i) There occurs any failure to meet the minimum funding standard under
Section 302 of ERISA or Section 412 of the Code with respect to a Plan, or any
tax return is filed by Borrower or any Controlled Group Member showing any tax
payable under Section 4971(a) of the Code with respect to any such failure, or
Borrower or any Controlled Group Member receives a notice of deficiency from the
Internal Revenue Service with respect to any alleged or asserted such failure,
(ii) any request is made by any Person for a variance from the minimum funding
standard, or an extension of the period for amortizing unfunded liabilities,
with respect to a Plan, or (iii) Borrower or any Controlled Group Member is
required to provide security to a defined benefit Plan in accordance with Code
Section 401(a)(29).

“Permitted Liens” shall have the meaning given such term in Section 7.1.

“Person” shall mean an individual, corporation, partnership, limited liability
company, trust, unincorporated association, joint venture, joint-stock company,
Governmental Authority or any other entity.

“Plan” shall mean any employee pension benefit plan subject to Title IV of ERISA
(other than a Multiemployer Plan) as defined in Section 3(2) of ERISA maintained
for employees of Borrower, any of Borrower’s Subsidiaries or any Controlled
Group Member or to which Borrower or any Controlled Group Member makes or is
required to make contributions.

“Potential Default” shall mean any event or condition which with notice, passage
of time, or both, would constitute an Event of Default.

“Prime Rate” shall mean the per annum rate of interest announced by the
Administrative Agent, from time to time, as its prime rate (which is not
necessarily the best or lowest rate of interest charged borrowers), such rate to
change automatically effective as of the effectiveness of each announced change
in such prime rate.

“Pro Rata Share” of any amount shall mean, with respect to any of the Lenders at
any time, the product of (a) such amount multiplied by (b) a fraction the
numerator of which is such Lender’s Approved Principal Amount(s) at such time
(or, if the Demand Line of Credit Facility shall have been terminated at or
prior to such time, such Lender’s Approved Principal Amount(s) as in effect
immediately prior to such termination) and the denominator of which is the
aggregate amount of Approved Principal Amounts at such time (or, if the Demand
Line of Credit Facility shall have been terminated at or prior to such time, the
Approved Principal Amounts as in effect immediately prior to such termination).

“Regular Payment Date” shall mean the first day of each calendar month.

 

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“Reimbursement Obligations” shall have the meaning given such term in
Section 2.14(b).

“Reportable Event” shall mean (a) a reportable event described in Section 4043
of ERISA and regulations thereunder; or (b) a withdrawal by a substantial
employer from a single-employer plan which has two or more contributing
sponsors, at least two of which are not under common control, as referred to in
Section 4063(b) of ERISA.

“Required Lenders” shall mean, at any time, Lenders having Approved Principal
Amounts representing at least 50% of the total Approved Principal Amounts at
such time but at least two Lenders if there is more than one Lender.

“Requirement of Law” shall mean, as to any Person, the Governing Documents of
such Person and any Law, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable or binding upon such Person or any of its property (now
owned or hereafter acquired) or to which such Person or any of its property is
subject or pertaining to any or all of the transactions contemplated or referred
to herein.

“Reserve Percentage” shall mean the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against “Euro-currency
Liabilities” as defined in Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.

“Solvent” shall mean, with respect to any Person at any time, that at such time
(a) the sum of the debts and liabilities (whether or not reflected on a balance
sheet prepared in accordance with GAAP, including contingent liabilities) of
such Person are not greater than all of the assets of such Person at a fair
valuation, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such Person
has not incurred, does not intend to incur, and does not believe that it will
incur, debts or liabilities (including contingent liabilities) beyond such
person’s ability to pay such debts and liabilities as they mature, and (d) such
Person is not otherwise insolvent as defined in, or otherwise in a condition
which could in any circumstances then or subsequently render any transfer,
conveyance, obligation or act then made, incurred or performed by it avoidable
or fraudulent pursuant to, any Law that may be applicable to such Person
pertaining to bankruptcy, insolvency or creditors’ rights (including, but not
limited to, the Bankruptcy Code of 1978, as amended, and, to the extent
applicable to such Person, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act, or any other applicable Law pertaining to fraudulent
conveyances or fraudulent transfers or preferences).

“Special Account” shall mean a specified cash collateral account maintained by
Bank in connection with Letters of Credit as contemplated by Section 2.14(a)(v).

“Subsidiary” of a Person at any time shall mean any Person of which a majority
(by number of shares, Equity Interests or number of votes) of any class of
outstanding capital stock or

 

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Equity Interest (determined by value) is at such time owned directly or
indirectly, beneficially or of record, by such Person or one or more
Subsidiaries of such Person, and any trust or other Person of which a majority
of any class of outstanding Equity Interest is at such time owned directly or
indirectly, beneficially or of record, by such Person or one or more
Subsidiaries of such Person.

“Subsidiary Guaranty” and “Subsidiary Guaranties” shall have the meanings given
such terms in Section 3.1.

“Taxes” shall have the meaning set forth in Section 4.19.

“Trademarks” shall mean all federal and state trademark and servicemark
registrations and applications made, acquired or owned by any Loan Party.

“Voting Interests” shall mean shares of capital stock issued by a corporation,
or equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right to so vote has been suspended by the happening of such a contingency.

1.2 Construction. Unless the context of this Agreement otherwise clearly
requires or unless otherwise defined in this Agreement, references to the plural
include the singular and the singular the plural; “or” has the inclusive meaning
represented by the phrase “and/or”; and “property” includes all properties and
assets of any kind or nature, tangible or intangible, real, personal or mixed.
References in this Agreement to “determination” (and similar terms) by the
Administrative Agent or the Required Lenders include good faith estimates by
such party (in the case of quantitative determinations) and good faith beliefs
by such party (in the case of qualitative determinations). The words “hereof,”
“herein,” “hereunder” and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
terms “include” and “including” mean “including without limitation.” The Section
and other headings contained in this Agreement and the Table of Contents
preceding this Agreement are for reference purposes only and shall not control
or affect the construction of this Agreement or the interpretation thereof in
any respect. Section, subsection, exhibit and schedule references are to this
Agreement unless otherwise specified.

1.3 Accounting Terms.

(a) All accounting terms not specifically defined in this Agreement shall be
construed in accordance with generally accepted accounting principles in the
United States (“GAAP”) which shall be applied on a basis consistent with the
principles used in preparing the most recent annual financial statements of
Borrower furnished to Administrative Agent hereunder.

(b) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters shall be made, and all
financial statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP (including principles of consolidation), and
all accounting or financial terms shall have the meanings ascribed to such terms
by GAAP; provided that in making determinations of the aggregate Indebtedness of
a Person and its Subsidiaries, any Indebtedness of such Person or any such
Subsidiary described in

 

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clause (i) of the definition of Indebtedness herein shall be treated as if such
Person or such Subsidiary were an obligor with respect to such Indebtedness.

2. THE DEMAND LINE OF CREDIT FACILITY.

2.1 Discretionary Advances. Subject to all of the terms and conditions of this
Agreement and relying on the representations and warranties herein set forth,

(a) Demand Line of Credit. Each Lender may make advances to Borrower from time
to time under the Demand Line of Credit in its sole discretion, provided that no
such advance shall be made unless approved by the Required Lenders in their sole
discretion and funded by them in accordance with their Pro Rata Shares
(collectively, the “Demand Line of Credit Loan” or “Demand Line of Credit
Loans”, and each a “Demand Line of Credit Loan”) in a maximum aggregate
principal amount up to, but not exceeding, the Approved Principal Amount of such
Lender, subject to Section 2.1(b). Bank may issue Letters of Credit, in its sole
discretion, for the account of Borrower in accordance with Section 2.14 hereof,
each in an amount not to exceed the Approved Balance and in an aggregate maximum
principal amount not to exceed the Letter of Credit sublimit. The decision to
continue to make the Demand Line of Credit Facility available to the Borrower
and the decision whether to make any Demand Line of Credit Loan shall be in the
sole discretion of the Lenders. The decision to issue any Letter of Credit shall
be in the sole discretion of the Bank. The Demand Line of Credit Facility is
available subject to the Lenders’ continuing review and right of modification,
restriction, suspension or termination at any time for any reason in the sole
discretion of the Lenders. No modification, restriction, suspension or
termination of the Demand Line of Credit Facility shall affect the Borrower’s
obligation to repay the principal amount of each Demand Line of Credit Loan, its
obligation to pay interest on the outstanding principal amount of each Demand
Line of Credit Loan or any other Obligation of Borrower to the Lenders or to
Bank.

(b) Advances. Under the Demand Line of Credit Facility, Borrower may request
advances, repay and re-request from time to time (subject to the Lenders’
discretion with respect to any advance and subject to limitations on timing of
repayment of advances then bearing interest at a LIBOR Based Rate) up to the
Approved Balance. An advance under the Demand Line of Credit Facility shall be
requested by telephone, with subsequent fax confirmation, or by fax, on behalf
of Borrower by its Authorized Representative providing to the Administrative
Agent (i) in the case of an advance bearing interest at a LIBOR Based Rate, not
less than two (2) Business Days’ advance written notice of a request for such
advance, which advance shall be in an amount of at least $500,000 and in
$100,000 increments if in excess thereof, and shall be requested no later than
12:00 noon on the day which is two days prior to the date the advance is
requested to be made and (ii) in the case of an advance bearing interest at the
Base Rate, written notice no later than 3:00 p.m., Buffalo, New York time of a
request for such advance on the same Business Day that such advance is requested
to be made, which advance need not be in any minimum amount. Each request for an
advance hereunder shall (i) specify the date of such advance, whether such
advance shall bear interest at a LIBOR Based Rate or the Base Rate, and, if such
advance is a LIBOR Loan, the duration of the Interest Period applicable thereto
and whether Borrower is electing the Automatic Continuation Option for such
LIBOR Loan and (ii) be signed by an Authorized Representative; provided,
however, that there shall

 

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be no more than six (6) LIBOR Loans outstanding under the Demand Line of Credit
Facility at any time. Each request for advance shall be made to the
Administrative Agent at the following address and fax number:

Manufacturers and Traders Trust Company,

        As Administrative Agent

One Fountain Plaza

Buffalo, New York 14202

Attn: Valerie Eckridge Loan Operations

Phone: (716) 848-7258

Fax: (716) 848-7881

(c) Treatment of Overadvances. If at any time the Administrative Agent
determines that the total principal sum outstanding under the Demand Line of
Credit Notes plus the L/C Amount exceeds the Demand Line of Credit Facility,
then, immediately upon demand therefor by the Administrative Agent, Borrower
shall make payments to the Administrative Agent, for the accounts of the
applicable Lenders, in an amount sufficient to reduce the sum of the L/C Amount
and the principal amount outstanding under the Demand Line of Credit Notes to
the Demand Line of Credit Facility.

(d) Funding. Each Lender shall credit an account of Borrower maintained with
Bank with the proceeds of each discretionary advance made by such Lender on the
Demand Line of Credit Facility on the date thereof.

2.2 Promissory Notes.

(a) Demand Line of Credit Note. The obligation to repay all amounts outstanding
from time to time under the Demand Line of Credit Facility shall be evidenced by
one or more promissory notes in the form of Exhibit A hereto in the aggregate
principal amount of up to the Demand Line of Credit Facility (each, as the same
may be amended, modified or supplemented from time to time in accordance with
its terms, a “Demand Line of Credit Note” and, collectively the “Demand Line of
Credit Note”).

(b) Notes Generally. Each Lender is hereby authorized to record the date, amount
and type of each Demand Line of Credit Loan made by such Lender, the date and
amount of each payment or prepayment of principal thereof, the LIBOR Rate or
Adjusted Base Rate and Applicable Margin applicable thereto and, in the case of
LIBOR Loans, the length of each Interest Period with respect thereto, on its
internal books and records and/or on any schedule annexed to and constituting a
part of any Demand Line of Credit Note, and any such recordation on such
schedule, or any such entries made on such Lender’s books and records, shall
constitute presumptive evidence of the accuracy of the information so recorded;
provided that the failure by any Lender to make any such recordation, or any
error therein, shall not limit or in any manner affect the Obligations of the
Borrower.

2.3 Interest and Interest Payments.

 

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(a) Applicable Rate.

(i) Demand Line of Credit Facility. Each advance under the Demand Line of Credit
Facility shall bear interest, calculated daily at the per annum Interest Rate
and, in the case of a LIBOR Loan, for the Interest Period, selected by Borrower,
in the case of the initial Interest Rate, in a letter delivered to the
Administrative Agent at least two (2) Business Days prior to the Closing Date,
and, thereafter, communicated to the Administrative Agent at the times and in
the manner set forth in Section 2.1(b) for advances which times and manner shall
likewise apply to subsequent interest rate changes, in each case from the
following two options (A) the applicable Base Rate or (B) the applicable LIBOR
Based Rate.

(ii) Computation. All computations of LIBOR Based Rate interest shall be made on
the basis of a three hundred sixty (360) day year and the actual number of days
elapsed. All computations of Base Rate interest shall be made on the basis of a
three hundred sixty-five (365) or three hundred sixty-six (366) day year, as the
case may be, and the actual number of days elapsed. Interest shall be calculated
from and including the date of the applicable Loan or advance to, but excluding,
the date the outstanding principal balance thereof, with all accrued interest,
is paid in full.

(b) Interest Rate Elections. Borrower shall give the Administrative Agent, in
accordance with Section 2.3(a) hereof, notice of its elected rate option with
respect to the applicable portion of the Demand Line of Credit Loans. If
Borrower does not elect a new Interest Period prior to the expiration of any
Interest Period, the interest rate for the relevant advance(s) may be set by the
Administrative Agent at the applicable Base Rate or at the applicable seven day
LIBOR Based Rate at the Administrative Agent’s discretion. Borrower will have
the right to change from a Base Rate to a LIBOR Based Rate at any time with
respect to any advance but may change from a LIBOR Based Rate to a Base Rate
only at the end of the applicable Interest Period for such advance.

(c) Interest Payments. Borrower shall make payments of interest to the
Administrative Agent for the account of the applicable Lenders, on the
outstanding balance of the Demand Line of Credit Loans at the Interest Rate
calculated from time to time in accordance with Section 2.3 hereof, (i) with
respect to Demand Line of Credit Loans bearing interest at the Base Rate, on
each Regular Payment Date, beginning with the first such date occurring after
the Closing Date and (ii) with respect to Demand Line of Credit Loans bearing
interest at the LIBOR Based Rate, on the last day of each Interest Period unless
the applicable Interest Period is ninety (90) days or longer, in which case
interest shall be payable every ninety (90) days and on the last day of the
applicable Interest Period, in each case beginning with the first such date
occurring after the Closing Date.

(d) Conversion Upon Default. Unless the Administrative Agent shall otherwise
consent in writing, if a Potential Default or Event of Default has occurred and
is continuing, Borrower may not elect to have any advance converted or continued
as a LIBOR Loan or obtain any advance which bears interest at a LIBOR Based
Rate. Further, the Administrative Agent, in its sole discretion, may (i) permit
any outstanding LIBOR Loans to continue until the last day of the applicable
Interest Period at which time such Loan shall automatically be converted into a
Base Rate Loan or (ii) convert any outstanding LIBOR Loans into a Base Rate Loan
before the end of the applicable Interest Period

 

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applicable to such LIBOR Loan. Nothing herein shall be construed to be a waiver
by Administrative Agent to have any Loan accrue interest at the Default Interest
Rate or the right of the Administrative Agent to the amounts set forth in
Section 2.13(d) of this Agreement.

2.4 Principal Payments. The Demand Line of Credit Facility shall terminate, and
the outstanding principal balance of the Demand Line of Credit Loan, together
with any accrued and unpaid or demand interest and any other amount due under
this Agreement or the Loan Documents shall be due and payable by Borrower to the
Administrative Agent, for the accounts of the applicable Lenders, upon demand by
the Administrative Agent at the direction of the Required Lenders.

2.5 Default Rate. After (a) the earlier to occur of (i) demand for repayment of
the Obligations and (ii) the occurrence of any Event of Default and (b) written
notice thereof from the Administrative Agent to Borrower with the concurrence of
the Required Lenders, the interest rate on the Demand Line of Credit Notes shall
change to the Default Interest Rate and Borrower shall pay interest on Demand
Line of Credit Notes to the Administrative Agent, for the benefit of the
Lenders, at the Default Interest Rate.

2.6 Maximum Allowable Interest Rate. It is the intent of all parties hereto that
in no event shall interest be payable hereunder at a rate in excess of the
maximum rate permitted by applicable law (the “Maximum Legal Rate”). If at any
time the rate of interest on any Demand Line of Credit Loan would exceed the
Maximum Legal Rate, the interest payable on the Demand Line of Credit Loan shall
be limited to the Maximum Legal Rate. Any interest received by the
Administrative Agent or any Lender in excess of the Maximum Legal Rate shall be
applied to the outstanding principal balance of the Demand Line of Credit Loan
or, if required by law, returned to the Borrower.

2.7 Payments.

(a) Except as otherwise provided herein with respect to amounts under
Section 2.13, the Borrower shall, at the time of making each payment under this
Agreement or any Demand Line of Credit Note, specify the Demand Line of Credit
Loan, Reimbursement Obligation or other amounts payable by the Borrower to which
such payment is to be applied, provided, that if the Borrower fails to so
specify the Administrative Agent may apply such payment in such manner as it may
determine to be appropriate.

(b) Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement with
respect to the Demand Line of Credit Loan and Demand Line of Credit Notes, and,
except to the extent otherwise provided therein, all payments to be made by the
Borrower under any other Loan Document, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the
Administrative Agent, for the account of the applicable Lenders, at any banking
office of the Administrative Agent, not later than (i) 12:00 noon Buffalo, New
York time in the case of LIBOR Loans or (ii) 3:00 p.m. Buffalo, New York time in
the case of Base Rate Loans, in each case on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day).

 

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(c) The Borrower hereby irrevocably authorizes the Administrative Agent (but the
Administrative Agent shall not be obligated) to charge, when due, the amount of
any principal, interest or other amount payable by the Borrower hereunder
against funds in any deposit account of the Borrower with the Administrative
Agent, without the requirement of prior notice to the Borrower.

(d) If the due date of any payment under this Agreement or any Demand Line of
Credit Note would otherwise fall on a day that is not a Business Day, such due
date shall be extended to the next succeeding Business Day, and interest shall
be payable on any principal so extended for the period of such extension.

2.8 Use of Proceeds. The proceeds of the Demand Line of Credit Loans and of each
Letter of Credit issued hereunder shall be used by Borrower to refinance
existing Indebtedness of the Borrower and for working capital and general
corporate purposes.

2.9 Fees.

(a) Letter of Credit Fees. The Borrower agrees to pay letter of credit fees as
set forth in Section 2.14 hereof.

(b) Other Fees. The Borrower agrees to pay to the Administrative Agent (for its
own account) such fees payable in such amounts and at such times as separately
agreed in writing between the Borrower and the Administrative Agent.

2.10 Late Fees. Any payment due will be a late payment if it is not made on or
before the tenth (10th) Business Day of the month in which it is due. Any late
payment on the Demand Line of Credit Loan will be assessed an additional charge
of two percent (2%) of the overdue payment which shall be payable to the
Administrative Agent immediately, for the account of the applicable Lenders
(according to each Lender’s Pro Rata Share).

2.11 Prepayment.

(a) Voluntary Prepayment of Base Rate Loans. Borrower may, at any time, prepay
all or part of the outstanding principal amount of the Demand Line of Credit
Loan then bearing interest at the Base Rate without premium or penalty.

(b) Voluntary Prepayment of LIBOR Loans. Borrower shall not make any principal
payment on any LIBOR Loan prior to the end of the applicable Interest Period
and, if Borrower makes any such payment, Borrower shall pay to the
Administrative Agent, for the account of the applicable Lenders, the amounts
described in Section 2.13(d) hereof. Any principal payment on any LIBOR Loan
made at the end of the applicable Interest Period may be made without premium or
penalty.

2.12 [Intentionally Omitted].

 

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2.13 Change in Circumstances. (a) If at any time the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that,
by reason of circumstances affecting the relevant market generally, deposits in
Dollars (in the applicable amounts) are not being offered in the relevant market
for such Interest Period, then the Administrative Agent shall forthwith give
notice thereof to Borrower, whereupon until the Administrative Agent notifies
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligation of the Lenders to make the LIBOR Based Rate option available to
Borrower shall be suspended for future advances and all amounts made available
to Borrower by the Lenders hereunder to which such LIBOR Based Rate option then
applies shall bear interest at the LIBOR Based Rate option for the remainder of
the then applicable Interest Period and thereafter at the Base Rate option. Upon
notification from the Administrative Agent to Borrower that the circumstances
giving rise to the suspension no longer exist, the LIBOR Based Rate option shall
again be available to Borrower in accordance with the terms of this Agreement.

(b) If, after the Closing Date, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof or compliance by a Lender with any request or directive
(whether or not having the force of law) of any such authority shall make it
unlawful or impossible for such Lender to make available to Borrower the LIBOR
Based Rate option, such Lender shall forthwith give notice thereof to the
Administrative Agent who shall forthwith transmit the same to Borrower. Upon
receipt of such notice, all amounts owed by Borrower to such Lender then bearing
interest at the LIBOR Based Rate option shall bear interest at the LIBOR Based
Rate option for the remainder of the then applicable Interest Period and
thereafter at the Base Rate option.

(c)(i) If after the Closing Date, the adoption of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by a Lender
with any request or directive (whether or not having the force of law) made by
any such authority, central bank or comparable agency after the Closing Date
(each, a “Regulatory Change”):

(A) shall subject such Lender, to any tax, duty or other charge with respect to
any portion of the Demand Line of Credit Loan then bearing interest at the LIBOR
Based Rate option, or shall change the basis of taxation of payments to such
Lender of the principal of or interest on any portion of the Demand Line of
Credit Loan bearing interest at the LIBOR Based Rate option (except for changes
in the rate of tax on the overall net income of such Lender); or

(B) shall impose, modify or deem applicable any reserve (including any imposed
by the Board of Governors of the Federal Reserve System), Reserve Percentage,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, such Lender, or shall impose on such
Lender or on the United States market for certificates of deposit

 

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or the London interbank market any other condition affecting any portion of the
Demand Line of Credit Loan bearing interest at the LIBOR Based Rate option;

and the result of any of the foregoing is to increase the cost to such Lender of
making available to Borrower the LIBOR Based Rate option with respect to any
portion of the Demand Line of Credit Loan or to reduce the amount of any sum
received or receivable by such Lender under this Loan Agreement or any Demand
Line of Credit Note, by an amount deemed by such Lender to be material, then,
upon demand by such Lender, through the Administrative Agent, Borrower agrees to
pay to the Administrative Agent, for the account of such Lender within thirty
(30) days of demand such additional amount or amounts as will compensate such
Lender for such increased cost or reduction.

(ii) If after the Closing Date, a Lender shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy, reserve
requirements, taxes (except for changes in the rate of tax on the overall net
income of such Lender) or other charges, or any change therein, 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 compliance by such Lender with any request or
directive regarding capital adequacy, reserve requirements, taxes (except for
changes in the rate of tax on the overall net income of such Lender) or other
charges (whether or not having the force of law) of any such authority, central
bank or comparable agency (each, an “Other Change”), has or would have the
effect of reducing the rate of return on such Lender’s capital as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender’s policies with respect to capital adequacy, reserve requirements,
taxes and other charges) by an amount deemed by such Lender to be material, then
from time to time, within thirty (30) days after demand by such Lender, through
the Administrative Agent, Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reductions.

(iii) Each Lender shall promptly notify the Administrative Agent, which shall
promptly notify Borrower, of any event of which it has knowledge which will
entitle such Lender to compensation pursuant to this Section 2.13(c). A
certificate of such Lender setting forth the basis for determining such
additional amount or amounts necessary to reasonably compensate such Lender
shall be conclusive in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
Notwithstanding the foregoing, no amount shall be payable by Borrower under this
Section 2.13(c) with respect to any period in excess of 270 days prior to the
date of any demand by the Administrative Agent unless the effect of a Regulatory
Change or Other Change is retroactive by its terms to a period prior to the date
of the implementation of such Regulatory Change or Other Change, in which case
any additional amount or amount shall be payable for the retroactive period but
only if the Administrative Agent provides its written demand not later than 270
days after the implementation of such Regulatory Change or Other Change.

(d) Borrower shall pay to the Administrative Agent for the account of each
applicable Lender, promptly upon the request by such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient to
compensate such Lender for any loss, cost or expense which such Lender
determines is attributable to (x) the payment or prepayment of all or any
portion of

 

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the Demand Line of Credit Loan to which the LIBOR Based Rate option applies on a
date other than the last day of the applicable Interest Period or (y) Borrower’s
failure to draw down, in whole or in part, a LIBOR Loan requested under
Section 2.1(b) or Borrower’s attempt to revoke a LIBOR Loan or (z) the
conversion of the rate of interest on the Demand Line of Credit Loan or any
portion thereof from the LIBOR Based Rate to the Base Rate in accordance with
Section 2.3(d) hereof. Without limiting the foregoing, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or prepaid
for the period from the date of such payment or prepayment to the last day of
the applicable Interest Period at the applicable rate of interest for the Demand
Line of Credit Loan or portion thereof over (ii) the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in each case, in amounts comparable to such principal
amount and with maturities comparable to such period, as determined by such
Lender. The determination by the Administrative Agent of the foregoing amount
shall, in the absence of manifest error, be conclusive and binding upon
Borrower.

2.14 Letters of Credit.

(a) Letters of Credit.

(i) Issuance. Bank may, on the terms and subject to the conditions herein set
forth, issue, from the Closing Date to the earliest to occur of (x) an Event of
Default, and (y) demand on the Demand Line of Credit, one or more irrevocable
standby or commercial or documentary letters of credit (each, a “Letter of
Credit”) for the Borrower’s account. The Bank shall have no obligation to issue,
amend, renew or extend any Letter of Credit at any time, including, without
limit, if the face amount of the Letter of Credit to be issued would (and upon
issuance, amendment, renewal or extension of each Letter of Credit, the Borrower
shall be deemed to represent and warrant that the face amount of such Letter of
Credit will not) exceed the lesser of:

(A) The Letter of Credit Sublimit less the L/C Amount, or

(B) The Approved Balance.

(ii) L/C Application. Each Letter of Credit, if any, shall be issued pursuant to
a separate L/C Application entered into between the Borrower and the Bank,
completed in a manner satisfactory to the Bank. The terms and conditions set
forth in each such L/C Application shall supplement the terms and conditions
hereof, but (i) if the terms of any such L/C Application and the terms of this
Agreement are inconsistent, the terms hereof shall control, (ii) the term “Event
of Default” in any such L/C Application shall be deemed to have the meaning
given such term in this Agreement, (iii) any interest on any Demand Line of
Credit Loan shall be as set forth in this Agreement and, without double
counting, any interest applicable to any Reimbursement Obligation shall be as
set forth in the L/C Application, and (iv) any provision in the L/C Application
indicating that the L/C Application, with or without other documents, represents
the entire agreement among the parties with respect to the applicable Letter of
Credit shall be deemed amended to provide that the L/C Application together with
this Agreement and any other documents referenced in such provision,

 

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represents the entire agreement among the parties with respect to the applicable
Letter of Credit. Each Letter of Credit issued by Bank upon the application of
Borrower or any Subsidiary prior to the date of this Agreement and remaining
outstanding on the date hereof shall, upon execution of this Agreement, be
deemed to have been issued pursuant to this Agreement and the applicable L/C
Application.

(iii) [Intentionally Omitted].

(iv) Representation. Any request for Bank to issue a Letter of Credit shall be
deemed to be a representation by the Borrower that the conditions set forth in
Section 5.2 have been satisfied as of the date of the request.

(v) Special Account. If demand is made under the Demand Line of Credit Loan
while the L/C Amount exceeds zero, the Borrower shall thereupon pay the Bank in
immediately available funds for deposit in the Special Account an amount equal
to the L/C Amount. The Special Account shall be an interest bearing account
maintained at the Bank. Any interest earned on amounts deposited in the Special
Account shall be credited to the Special Account. Bank may apply amounts on
deposit in the Special Account at any time or from time to time to the
Obligations in the Bank’s sole discretion. The Borrower may not withdraw any
amounts on deposit in the Special Account as long as the L/C Amount exceeds
zero.

(b) Payment of Amounts Drawn Under Letters of Credit; Reimbursement Obligations.
The Borrower shall pay to the Bank any and all amounts required to be paid under
the applicable L/C Application, when and as required to be paid thereby, and the
amounts designated below, when and as designated.

(i) Reimbursement Obligations. The Borrower shall pay to the Bank on the day a
draft is honored under any Letter of Credit the amount provided for in the
applicable L/C Application relative to such draw, in accordance with such L/C
Application, plus interest on all such amounts, charges and expenses as set
forth below (the Borrower’s obligation to pay all such amounts is herein
referred to as the “Reimbursement Obligation”).

(ii) Demand Line of Credit Advance. Whenever a draft is honored under a Letter
of Credit, the Bank shall be deemed to have made a Base Rate advance under the
Demand Line of Credit Loan in the amount of the Reimbursement Obligation, the
proceeds of which advance shall be deemed to have been applied to pay the
Reimbursement Obligation. Such advance shall be repayable in accordance with and
be treated in all other respects as a Demand Line of Credit Loan.

(iii) Demand Obligation. If a draft is submitted under a Letter of Credit when
the Borrower is unable, due to an Event of Default or for any other reason, to
obtain an advance under the Demand Line of Credit Loan to pay the Reimbursement
Obligation, such advance shall nonetheless be deemed to have been made pursuant
to Section 2.14(b)(ii) and the Borrower shall pay to the Bank on demand and in
immediately available funds, the amount of the deemed Base Rate advance under
the Demand Line of Credit Loan together with interest thereon, accrued from the
date of the draft until payment in full at the Default Rate applicable to the
Demand Line of Credit Loan.

 

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(iv) Demand Line of Credit Notes. The Borrower’s obligation to pay any advance
made under this Section 2.14, shall be evidenced by the Demand Line of Credit
Notes and shall bear interest as provided in Section 2.3.

(c) Obligations Absolute. The Borrower’s obligations arising under this
Section 2.14 shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Section 2.14, under all
circumstances whatsoever, including the following circumstances, provided,
however, that Borrower’s performance of its absolute obligations hereunder shall
not constitute a waiver by Borrower of any remedy it may otherwise have against
Bank:

(i) Related Documents. Any lack of validity or enforceability of any Letter of
Credit or any other agreement or instrument relating to any Letter of Credit
(collectively the “Related Documents”);

(ii) Amendment; Waiver. Any amendment or waiver of or any consent to departure
from all or any of the Related Documents;

(iii) Claims. The existence of any claim, setoff, defense or other right which
the Borrower may have at any time, against any beneficiary or any transferee of
any Letter of Credit (or any persons or entities for whom any such beneficiary
or any such transferee may be acting), or other person or entity, whether in
connection with this Agreement, the transactions contemplated herein or in the
Related Documents or any unrelated transactions;

(iv) Insufficiency. Any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect
whatsoever;

(v) Noncompliance. Payment by or on behalf of the Bank under any Letter of
Credit against presentation of a draft or certificate which does not strictly
comply with the terms of such Letter of Credit; or

(vi) Other Circumstances. Any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.

(d) Letter of Credit Fees. The Borrower agrees to pay, on demand, with respect
to Letters of Credit issued hereunder, the following fees: (i) to the
Administrative Agent for the benefit of the Lenders (according to each Lender’s
Pro Rata Share), a letter of credit fee in respect of each Letter of Credit
issued hereunder which accrues at a per annum rate equal to (x) the face amount
of such Letter of Credit multiplied by (y) the Applicable Margin for LIBOR
Loans, as the same may change from time to time, such fees to be calculated on
the basis of a 360 day year for the number of days from issuance of such Letter
of Credit to its expiration date and to be paid by the Borrower in advance upon
issuance, and any renewal or extension, thereof, and (ii) to the Bank, for its
own account, the documentation and administrative fees and other charges charged
by the Bank in connection with the issuance of any Letter of Credit, honoring of
drafts thereunder, amendments thereto, transfers thereof and all other activity
with respect to the Letters of Credit. The

 

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Administrative Agent is authorized to make a Demand Line of Credit Loan to the
Borrower for the amount of any fee described in this paragraph.

(e) Letter of Credit Advances. (i) Upon demand by the Bank, each of the Lenders
shall purchase from the Bank, and the Bank shall sell and assign to each of the
Lenders, such Lender’s Pro Rata Share of each of the outstanding Letter of
Credit Advances arising under this Section 2.14 and owing to the Bank as of the
date of such demand, by making available to the Administrative Agent for the
account of the Bank, in same day funds, an amount equal to its Pro Rata Share of
each such outstanding Letter of Credit Advance. Promptly after receipt of such
funds, the Administrative Agent shall transfer such funds to the Bank. Each of
the Lenders hereby agrees to purchase its Pro Rata Share of each outstanding
Letter of Credit Advance owing to the Bank for which a demand for the purchase
thereof has been made on (A) the Business Day on which demand therefor is made
by the Bank so long as notice of such demand is given not later than 1:00 P.M.
(Buffalo, New York time) on such Business Day or (B) the first Business Day next
succeeding such demand if notice of such demand is given after such time. The
Borrower hereby agrees to each such sale and assignment. Upon any such
assignment by the Bank to any of the Lenders of a portion of a Letter of Credit
Advance owing to the Bank, the Bank represents and warrants to such Lender that
the Bank is the legal and beneficial owner of such interest being assigned by
it, free and clear of any adverse claim, but makes no other representation or
warranty and assumes no responsibility with respect to such Letter of Credit
Advance, any of the Loan Documents or any of the Loan Parties. If and to the
extent that any of the Lenders shall not have so made its Pro Rata Share of any
applicable Letter of Credit Advance available to the Administrative Agent in
accordance with the foregoing provisions of this Section 2.14(e)(i), such Lender
hereby agrees to pay to the Administrative Agent forthwith on demand the amount
of its Pro Rata Share of such Letter of Credit Advance, together with all
accrued and unpaid interest thereon, for each day from the date of demand
therefor by the Bank until the date on which such amount is paid to the
Administrative Agent, at the Base Rate. If any of the Lenders shall pay to the
Administrative Agent the amount of its Pro Rata Share of any applicable Letter
of Credit Advance for the account of the Bank on any Business Day, such amount
so paid in respect of principal shall constitute a Letter of Credit Advance made
by such Lender on such Business Day for all purposes of this Agreement, and the
outstanding principal amount of the applicable Letter of Credit Advance made by
the Bank shall be reduced by such amount on such Business Day.

(ii) The obligation of each of the Lenders to purchase its Pro Rata Share of
each outstanding Letter of Credit Advance owing to the Bank upon demand for the
purchase thereof pursuant to clause (i) of this Section 2.14(e) shall be
absolute, unconditional and irrevocable, and shall be made strictly in
accordance with the terms thereof under all circumstances, including the
following circumstances:

(A) any lack of validity or enforceability of any of the Loan Documents, any L/C
Application, any of the Letters of Credit or any of the other agreements or
instruments relating thereto;

(B) the existence of any claim, set-off, defense or other right that such Lender
or any other Person may have at any time against any beneficiary or any
transferee of a Letter of

 

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Credit (or any Persons for whom any such beneficiary or any such transferee may
be acting), the Bank, the Borrower, any of the other Loan Parties or any other
Person, whether in connection with the transactions contemplated by the Loan
Documents or any unrelated transaction;

(C) the validity, sufficiency or genuineness of any documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged or any of the statements
made therein shall prove to be in any or all respects incorrect;

(D) payment by the Bank against presentation of any documents that do not
strictly comply with the terms of a Letter of Credit, including the failure of
any documents to bear any reference or adequate reference to the Letter of
Credit;

(E) the occurrence and continuance of any Potential Default or Event of Default;
or

(F) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.

(f) Failure to Make Letter of Credit Advances. The failure of any of the Lenders
to purchase its Pro Rata Share of any outstanding Letter of Credit Advance owing
to the Bank for which a demand for the purchase thereof has been made pursuant
to Section 2.14(e)(i) shall not relieve any of the other Lenders of its
obligation to purchase its Pro Rata Share of such outstanding Letter of Credit
Advance on the date of demand therefor, but none of the Lenders shall be
responsible for the failure of any of the other Lenders to purchase its Pro Rata
Share of such outstanding Letter of Credit Advance on the date of demand
therefor.

2.15 Sharing in Set-Offs, Etc. (a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, banker’s lien or counterclaim a
Lender may otherwise have, each Lender shall be entitled, at its option, to set
off against the amounts owing under the Demand Line of Credit Notes any property
held in a deposit or other account with such Lender or any of its Affiliates or
otherwise owing by such Lender or any of its Affiliates in any capacity to
Borrower or any guarantor or endorser of any Obligation. Such set off shall be
deemed to have been exercised immediately at the time such Lender or such
Affiliate elects to do so. In the event of any such set off, such Lender shall
promptly notify the Borrower and the Administrative Agent thereof, provided that
such Lender’s failure to give such notice shall not affect the validity thereof.

(b) If any Lender to whom any Obligations are owed shall obtain from any Loan
Party payment of any amount under this Agreement or any other Loan Document
through the exercise of any right of set-off, banker’s lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent), and, as a
result of such payment, such Lender shall have received a greater percentage of
its Pro Rata Share of the Obligations than the percentage received by any other
Lender, it shall promptly purchase from such other Lenders participation in (or,
if and to the extent specified by such Lender, direct interests in) the Demand
Line of Credit Loans or such other amounts, respectively, owing to such other
Lenders (or in interest due thereon, as the case may be) in such amounts, and/or

 

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make such other adjustments from time to time as shall be equitable, so that all
the Lenders shall share the benefit of such excess payment (net of any expenses
that may be incurred by such Lender in obtaining or preserving such excess
payment) in accordance with their Pro Rata Shares. All Lenders agree to make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing such a participation (or direct
interest) may exercise all rights of set-off, banker’s lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Demand Line of Credit Loans or other amounts (as the
case may be) owing to such Lender in the amount of such participation. Any
amount referenced in this Section 2.15(b) which is in excess of the outstanding
Obligations shall be promptly remitted to the Administrative Agent for
appropriate distribution.

(c) Nothing contained herein shall require any Lender to exercise any of its
rights under this Section 2.15 or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other Indebtedness or obligation of the Borrower to such Lender. If, under
any applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a set-off to which this Section 2.15 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 2.15 to share in the benefits of any recovery on such secured
claim.

2.16 Settlement between Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall settle on an aggregated and netted basis (the
“Settlement Amount”) on a weekly basis or with such greater frequency as the
Administrative Agent may determine (each such date on which such a settlement
occurs being a “Settlement Date”) for all amounts which shall have become due to
and due from the Administrative Agent and the Lenders since the immediately
preceding Settlement Date with respect to any Obligations, other than the
Settlement Amount which became due on the immediately preceding Settlement Date.
The Administrative Agent shall notify the Lenders by 11:00 A.M. on each
Settlement Date of the Settlement Amount which is payable by the Administrative
Agent or the Lenders, and the Administrative Agent or the Lenders, as the case
may be, shall make payment of the Settlement Amount by an electronic funds
transfer not later than 5:00 P.M. on the Settlement Date. Nothing in this
Section 2.16 or the settlement procedures made pursuant to this Section 2.16
shall be deemed to change, as between the Borrower and the Lenders, the amount
of the Demand Line of Credit Loans which are outstanding under the Demand Line
of Credit Notes to each of the Lenders or the accrual of interest due to each of
the Lenders on such Demand Line of Credit Loans.

3. GUARANTIES. The Obligations of Borrower under this Agreement and the Loan
Documents shall be subject to guarantees granted to the Administrative Agent for
the benefit of itself, the Lenders and Bank and set forth in the following
documents:

3.1 Subsidiary Guaranties. Each of Borrower’s direct and indirect Domestic
Subsidiaries shall have guaranteed payment and performance of the Obligations
pursuant to one or more Guaranties delivered to the Administrative Agent by such
Domestic Subsidiaries and in form and substance

 

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satisfactory to the Administrative Agent (each, as the same may be amended,
modified or supplemented from time to time in accordance with its terms, a
“Subsidiary Guaranty” and, collectively, the “Subsidiary Guaranties”).

4. REPRESENTATIONS AND WARRANTIES. Borrower makes the following representations
and warranties which shall be deemed to be continuing representations and
warranties so long as any Obligations, other than Continuing Obligations, remain
unpaid:

4.1 Organizational Status. Borrower is a New York corporation. Each Loan Party
is an entity which is duly organized, validly existing and in good standing
under the laws of its jurisdiction of formation or incorporation and has the
power and authority to own its assets and to transact the business in which it
is now engaged or presently proposes to be engaged. Each Loan Party is duly
qualified to do business as a foreign corporation or other entity and is in good
standing in all jurisdictions in which the ownership of its properties or the
nature of its activities or both makes such qualification necessary or
advisable, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

4.2 Power and Authorization. Each Loan Party has the power and authority to
execute, deliver, perform, and take all actions contemplated by, each Loan
Document to which it is a party, and all such action has been duly and validly
authorized by all necessary proceedings on its part, including all necessary
proceedings on the part of its shareholders, partners or members, as the case
may be. Without limitation of the foregoing, Borrower has the corporate,
partnership or limited liability company power and authority to request the
Demand Line of Credit Loans in accordance with the Loan Documents to the fullest
extent permitted hereby and thereby from time to time, and has taken all
necessary action to authorize such requests and the borrowings contemplated
hereby and thereby.

4.3 Execution and Binding Effect. This Agreement and each other Loan Document to
which any Loan Party is a party has been duly and validly executed and delivered
by such Loan Party. This Agreement and each other Loan Document constitutes the
legal, valid and binding obligation of each Loan Party executing the same,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors’ rights.

4.4 Compliance with Laws; Governmental Approvals and Filings. The Borrower is in
compliance with all Laws of all Governmental Authorities relating to its
business operations and assets, except for Laws the violation of which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No approval, order, consent, authorization, certificate,
license, permit or validation of or from, or exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental Authority
(collectively, “Governmental Action”) is or will be necessary in connection with
the execution or delivery of any Loan Document by any Loan Party, the
consummation by any Loan Party of the transactions herein or therein
contemplated or the performance of or compliance with the terms and conditions
hereof or thereof by any Loan Party. No Loan Party has made any application to
any Governmental Authority requesting, or in connection with, any Governmental
Action which application, when taken together with all amendments, supplements

 

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and modifications thereto, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained therein not misleading.

4.5 Absence of Conflicts. Neither the execution and delivery of any Loan
Document by any Loan Party, nor the consummation by any Loan Party of the
transactions herein or therein contemplated, nor performance of or compliance
with the terms and conditions hereof or thereof by any Loan Party, as the case
may be, does or will

(a) violate or conflict with any Requirement of Law, or

(b) violate, conflict with or result in a breach of any term or condition of, or
constitute a default under, or result in (or give rise to any right, contingent
or otherwise, of any Person to cause) any termination, cancellation, prepayment
or acceleration of performance of, or result in the creation or imposition of
(or give rise to any obligation, contingent or otherwise, to create or impose)
any Lien upon the assets of any Loan Party pursuant to, or otherwise result in
(or give rise to any right, contingent or otherwise, of any Person to cause) any
change in any right, power, privilege, duty or obligation of any Loan Party
under or in connection with,

(i) the Governing Documents of any Loan Party or any general partner or managing
member of any Loan Party, if applicable,

(ii) any contractual obligations creating, evidencing or securing any
Indebtedness to which any Loan Party is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound, or

(iii) any other contractual obligation of any Loan Party, where the violation,
conflict, breach or default, or result, is, has or would be reasonably likely to
be or have a Material Adverse Effect, or

(c) require the consent of, or notice to, any Person pursuant to any of the
items referenced in clauses (i), (ii) or (iii) of Section 4.5(b) above, which
consent has not been obtained or which notice has not been given.

4.6 Labor Matters

(a) No employee of any Loan Party is represented by a labor union, no labor
union has been certified or recognized as a representative of any such employee,
and no Loan Party has any obligation under any collective bargaining agreement
or other agreement with any labor union or any obligation to recognize or deal
with any labor union, and there are no such contracts or other agreements
pertaining to or which determine the terms or conditions of employment of any
employee of any Loan Party; (ii) Borrower has no knowledge of any pending or
threatened representation campaigns, elections or proceedings; (iii) Borrower
has no knowledge of any strikes, slowdowns or work stoppages of any kind, or
threats thereof, and no such activities occurred during the 24-month period
preceding the Closing Date; (iv) no Loan Party has engaged in, admitted
committing or been held to have committed any material unfair labor practice;
and (v) there are no controversies or

 

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grievances between any Loan Party and any of its employees or representatives
thereof, except, in the case of this clause (v), for any such controversies or
grievances which, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

(b) Each Loan Party has at all times complied in all material respects, and is
in material compliance with, all applicable laws, rules and regulations
respecting employment, wages, hours, compensation, benefits, and payment and
withholding of taxes in connection with employment.

(c) The Loan Parties have at all times complied in all material respects with,
and are in material compliance with, all applicable laws, rules and regulations
respecting occupational health and safety, whether now existing or subsequently
amended or enacted, including the Occupational Safety & Health Act of 1970, 29
U.S.C. Section 651 et seq. analogous state laws, rules and regulations, all as
amended or superseded from time to time, and any common law doctrine relating to
worker health and safety.

4.7 Absence of Undisclosed Liabilities. Except as referred to or provided for in
the most recent financial statements delivered pursuant to Section 6.2, no Loan
Party has any liability or obligation of any nature whatever (whether absolute,
accrued, contingent or otherwise, whether or not due), except liabilities or
obligations that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

4.8 Accurate and Complete Disclosure. No representation or warranty made at any
time by any Loan Party pursuant to or in connection with this Agreement or the
other Loan Documents, and no statement made at any time by any Loan Party in any
financial statement, certificate, report, exhibit or document furnished by it or
on its behalf to Administrative Agent or any Lender pursuant to or in connection
with this Agreement or the other Loan Documents, was false or misleading in any
material respect (including by omission of material information necessary to
make such representation, warranty or statement not misleading) at the time made
or deemed made. There is no fact known to the Borrower which materially
adversely affects, or which could reasonably be expected to materially adversely
affect, the business, assets, results of operations, financial condition or
prospects of the Borrower and its Subsidiaries taken as a whole, exclusive of
effects resulting from changes in general economic conditions.

4.9 [Intentionally Omitted].

4.10 Margin Regulations. No part of the proceeds of the Demand Line of Credit
Loans will be used for the purpose of buying or carrying any “margin stock,” as
such term is used in Regulations G and U of the Board of Governors of the
Federal Reserve System, as amended from time-to-time, or to extend credit to
others for the purpose of buying or carrying any “margin stock.” No Loan Party
is engaged in the business of extending credit to others for the purpose of
buying or carrying margin stock. No Loan Party owns directly or indirectly any
“margin stock” (as defined in Regulation U of the Board of Governors of the
Federal Reserve System, as supplemented from time to time). Neither the making
of the Demand Line of Credit Loans nor any use of proceeds of the Demand Line of
Credit Loans will violate or conflict with the provisions of Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System as amended from
time to time.

 

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4.11 [Intentionally Omitted].

4.12 [Intentionally Omitted].

4.13 No Defaults on Other Agreements; Adverse Contracts. No Loan Party is in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party. No Loan Party is a
party to or subject to any long term lease, forward purchase contract or futures
contract, covenant not to compete, or other agreement, or subject to any charter
or corporate restriction which, in each case, materially adversely restricts its
ability to conduct its business, or has or could reasonably be expected to have
a Material Adverse Effect.

4.14 Litigation. There is no pending or, to Borrower’s knowledge, threatened
action, suit, claim, proceeding or investigation by or before any Governmental
Authority against or affecting any Loan Party as to which, individually or in
the aggregate, a ruling adverse to a Loan Party could reasonably be expected to
have a Material Adverse Effect.

4.15 Absence of Events of Default. No event has occurred and is continuing and
no condition exists which constitutes an Event of Default or a Potential
Default.

4.16 Insurance. Each Loan Party maintains with reputable insurers the insurance
required by this Agreement.

4.17 Title to Property. Each Loan Party has good title to all property of
whatever nature owned or purported to be owned by it (except for minor defects
in title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes),
in each case free and clear of all Liens, other than Permitted Liens.

4.18 Intellectual and Other Property. Each Loan Party owns, or is licensed or
otherwise has the right to use, all the patents, trademarks, service marks,
franchises, names (trade, service, fictitious or otherwise), copyrights,
technology (including, but not limited to, all equipment, and computer programs
and software), processes, databases and other rights, necessary to own and
operate its properties and to carry on its business as presently conducted and
presently planned to be conducted without conflict with the rights of others
except for any such violations that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. To the Borrower’s
knowledge, no such license, patent, trademark or right has been declared
invalid, been limited by any court or by any agreement to which any Loan Party
is a party or is the subject of any infringement, interference or other
proceeding or challenge which could reasonably be expected to have a Material
Adverse Effect. The Borrower has taken commercially reasonable steps to protect
its Patents, Trademarks and registered Copyrights that have been registered in,
filed in or issued by the United States Patent and Trademark Office or the
United States Register of Copyrights and to maintain the confidentiality of all
intellectual property material to the business of the Borrower and its
Subsidiaries that is not generally in the public domain.

 

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4.19 Taxes. All tax and information returns required to be filed by or on behalf
of any Loan Party have been properly prepared, executed and filed or appropriate
extensions have been properly obtained and remain in effect. All taxes,
assessments, fees and other governmental charges upon any Loan Party or upon any
of its properties, incomes, sales, use or franchises (collectively, “Taxes”)
which are due and payable have been paid other than those not yet delinquent and
payable without premium or penalty, and except for those not material in amount
which are being diligently contested in good faith by appropriate proceedings,
and in each case adequate reserves and provisions for taxes have been made on
the books of such Loan Party. The reserves and provisions for taxes on the books
of each Loan Party are adequate for all open years and for its current fiscal
period. Borrower does not know of any proposed additional assessment or basis
for any material assessment for additional taxes against any Loan Party (whether
or not reserved against) which could reasonably be expected to have a Material
Adverse Effect.

4.20 Employee Benefits. No Loan Party or Controlled Group Member has any
liability (contingent or otherwise) for or in connection with, and none of their
respective properties is subject to a Lien in connection with, any
Pension-Related Event.

4.21 Environmental Matters.

(a) Each Loan Party and, to Borrower’s knowledge, each of its Environmental
Affiliates, is and has been in compliance with all applicable Environmental
Laws, except for Environmental Laws the violation of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(b) All material Environmental Approvals necessary for the ownership and
operation of Borrower’s business, and the facilities and businesses of the Loan
Parties as presently owned and operated and as presently proposed to be owned
and operated have been duly obtained and are in full force and effect.

(c) There is no material Environmental Claim pending or, to Borrower’s
knowledge, threatened, and, to Borrower’s knowledge, there are no present acts,
omissions, events or circumstances and, to Borrower’s knowledge, no past acts,
omissions, events or circumstances, including, but not limited to, any dumping,
leaching, deposition, removal, abandonment, escape, emission, discharge or
release of any Environmental Concern Material at, on or under any facility or
property now or previously owned, operated or leased by any Loan Party or, to
Borrower’s knowledge, any of their respective Environmental Affiliates, that
could form the basis of any material Environmental Claim against any Loan Party
or any of their respective Environmental Affiliates.

(d) To Borrower’s knowledge, no real estate at any time owned or leased by any
Loan Party is located, in whole or in part, on an Environmental Cleanup Site.
Neither any Loan Party nor, to Borrower’s knowledge, any of its Environmental
Affiliates, has directly transported or directly arranged for the transportation
of any material quantities of Environmental Concern Materials to any
Environmental Cleanup Site. No Lien exists and, to Borrower’s knowledge, no
condition exists which could reasonably be expected to result in the filing of a
Lien against any property of any Loan Party or any of their respective
Environmental Affiliates under any Environmental Law.

 

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4.22 [Intentionally Omitted].

4.23 Potential Conflicts of Interest. No Loan Party or Affiliate of a Loan Party
has any material contract, agreement or arrangement with any Loan Party (the
“Contracting Party”) that is not an arm’s length agreement on terms
substantially equivalent to those terms contained in similar agreements or
arrangements between such Contracting Party and unrelated third parties.

4.24 [Intentionally Omitted].

4.25 Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between any Loan Party and any customer or any group of customers
whose purchases of goods or services individually or in the aggregate are
material to the business of such Loan Party, or with any material supplier, and
there exists no present condition or state of facts or circumstances which would
materially adversely affect any Loan Party or prevent such Loan Party from
conducting its businesses after the consummation of the transactions
contemplated by this Agreement in substantially the same manner in which such
businesses heretofore have been conducted.

4.26 Financial Information. The Borrower has delivered to the Administrative
Agent consolidated balance sheets, statements of income, comprehensive income,
changes in shareholders’ equity and cash flows of the Borrower for its fiscal
years ending December 31, 2013 and December 31, 2012, audited by KPMG LLP,
certified public accountants. Such financial statements fairly present the
consolidated results of operations and financial condition of the Borrower for
the periods indicated.

4.27 Investment Company Act. None of the Loan Parties is an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for, or a
company “controlled” by, an investment company, each within the meaning of the
Investment Company Act of 1940, as amended.

4.28 No Material Adverse Change. Since the date of the most recent audited
financial statements delivered pursuant to Section 6.2 hereof, there has been no
material adverse change in the business, assets, operations or condition
(financial or otherwise) of any Loan Party (other than Inactive Subsidiaries).

4.29 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents shall
survive the execution and delivery of this Agreement.

5. CONDITIONS OF LENDING.

5.1 Conditions of Agreement. The execution and delivery by Administrative Agent
and Lenders of this Agreement shall be conditioned upon satisfaction of each of
the following conditions on or before the Closing Date (in the case of
documentation, each such document to be in form and substance satisfactory to
the Administrative Agent):

 

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(a) Agreement, Demand Line of Credit Notes, Loan Documents. The Administrative
Agent shall have received an executed counterpart of this Agreement, duly
executed by Borrower, Demand Line of Credit Notes duly executed by Borrower and
conforming to the requirements hereof and all of the other Loan Documents, duly
executed on behalf of each Loan Party intended to be a party thereto.

(b) Corporate, Partnership and/or Limited Liability Company Proceedings. The
Administrative Agent shall have received certificates of the Secretary, or other
officer acceptable to the Administrative Agent, of each Loan Party, other than
the Inactive Subsidiaries, and of its general partner, manager or managing
member, here applicable, dated as of the Closing Date as to (i) true, correct
and complete copies of the Governing Documents of such Loan Party and of each
general partner, manager or managing member of such Loan Party, in each case in
effect on such date, (ii) true copies of all corporate, partnership and limited
liability company action taken by such Loan Party, and its general partner or
managing member, if applicable, relative to this Agreement and the other Loan
Documents and (iii) the incumbency and signature of the respective officers of
such Loan Party (or its general partner or managing member on its behalf)
executing this Agreement and the other Loan Documents, together with evidence
satisfactory to the Administrative Agent of the incumbency of such Secretary, or
other officer acceptable to the Administrative Agent.

(c) Legal Opinion. The Administrative Agent shall have received an opinion
addressed to it, dated the Closing Date, of in-house counsel to Borrower as to
such matters as may be requested by the Administrative Agent.

(d) Material Adverse Change. There shall have been no material adverse change in
the business, operations or condition (financial or otherwise) of any Loan Party
or any material adverse change in United States financial markets which, in the
judgment of the Administrative Agent, could reasonably be expected to adversely
affect the ability of the Administrative Agent to enforce any right or remedy
under or in connection with any Loan Document, or prevent the realization of the
intended rights and benefits of Administrative Agent under such Loan Document.

(e) Payment of Fees. Borrower shall have paid or provided for payment of all of
the fees and expenses owed by Borrower to the Administrative Agent.

(f) Legal Fees. Borrower shall have paid the reasonable legal fees, expenses and
disbursements of counsel to the Administrative Agent in connection with this
Agreement, the other Loan Documents and the Demand Line of Credit Loans.

(g) Representations and Warranties. The representations and warranties set forth
in this Agreement and in the Loan Documents shall be true, correct and complete
on the Closing Date.

(h) No Event of Default. No Event of Default or Potential Default shall have
occurred and be continuing on the Closing Date.

(i) Officer’s Certificate. The Administrative Agent shall have received a
certificate of a senior officer of Borrower, dated the date hereof, to the
effect that (i) no Event of

 

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Default or Potential Default has occurred and is continuing; (ii) Borrower is in
compliance with each of the covenants herein and in the Loan Documents; and
(iii) the representations and warranties made by Borrower in Section 4 of this
Agreement, and in the Loan Documents, are true on and as of the date hereof with
the same force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

(j) No Orders or Decrees. No Governmental Authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of any Loan
Party under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of any Loan Party or for any
substantial part of the property of any Loan Party or ordering the winding up or
liquidation of the affairs of any thereof.

(k) No Material Litigation. There shall exist no action, suit, investigation,
litigation, arbitration or proceeding pending or, to the Borrower’s knowledge,
threatened against or affecting any of the Loan Parties or any of their
respective property or assets in any court or before any arbitrator or by or
before any Governmental Authority of any kind that (i) either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect or
(ii) purports to affect any aspect of the transactions contemplated hereby, any
of the Loan Documents or the transactions contemplated thereby.

(l) Contingent Liabilities. The Administrative Agent shall be reasonably
satisfied with the amount and nature of all tax, ERISA, employee retirement
benefit and other contingent liabilities to which any Loan Party may be subject.

(m) Proceedings Generally; Details, Proceedings and Documents. The
Administrative Agent shall have received such other certificates, opinions,
documents and instruments as may be reasonably requested by the Administrative
Agent. All corporate and other proceedings, and all documents, instruments,
reports, agreements and other matters required by this Section 5.1 or otherwise
delivered in connection with the Closing in respect of transactions contemplated
by this Agreement and the other Loan Documents shall be reasonably satisfactory
in form and substance to the Administrative Agent. All legal details and
proceedings in connection with the transactions contemplated by this Agreement
and the other Loan Documents shall be reasonably satisfactory to the
Administrative Agent and its counsel, and the Administrative Agent shall have
received all such counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in form and
substance reasonably satisfactory to the Administrative Agent, as the
Administrative Agent may from time to time request.

5.2 Conditions of Each Advance Under Demand Line of Credit Loan. Subject to the
Lenders’ sole discretion with respect to any Demand Line of Credit Loan and the
Bank’s sole discretion with respect to the issuance, amendment, renewal or
extension of any Letter of Credit, the Lenders or the Bank, as applicable may
condition any such Demand Line of Credit Loan or Letter of Credit issuance,
amendment, renewal or extension upon, without limitation, satisfaction of each
of the following conditions:

 

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(a) No Event of Default. No Event of Default or Potential Default shall have
occurred and be continuing.

(b) No Orders or Decrees. At the time of such advance, issuance, amendment,
renewal or extension, no Governmental Authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of any Loan
Party under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of any Loan Party or for any
substantial part of the property of any Loan Party or ordering the winding up or
liquidation of the affairs of any thereof.

(c) No Excess Borrowing. At the time of, and immediately following such advance,
the total principal sum outstanding under the Demand Line of Credit Notes plus
the L/C Amount does not exceed the Demand Line of Credit Facility.

(d) Request for Advance. The Administrative Agent shall have received a request
for advance in accordance with Section 2.1(b) hereof.

(e) Material Adverse Change. There shall have been no material adverse change in
the business, operations or condition (financial or otherwise) of any Loan Party
or any material adverse change in United States financial markets which could,
in the judgment of the Administrative Agent, adversely affect the ability of the
Administrative Agent to enforce any right or remedy under or in connection with
any Loan Document, or prevent the realization of the intended rights and
benefits of Administrative Agent under such Loan Document.

(f) Representations and Warranties. The representations and warranties set forth
in this Agreement and in the Loan Documents shall be true, correct and complete
as of the date of such requested advance and the same shall be deemed remade by
the Borrower as of such specific date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such
specific date).

(g) Proceedings Generally; Details, Proceedings and Documents. All corporate and
other proceedings, and all documents, instruments, reports, agreements and other
matters required by this Section 5.2 or otherwise delivered in connection with
the requested advance shall be reasonably satisfactory in form and substance to
the Administrative Agent. All legal details and proceedings in connection with
the requested advance shall be reasonably satisfactory to the Administrative
Agent and its counsel and the Administrative Agent shall have received all such
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative Agent
may from time to time request.

 

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6. AFFIRMATIVE COVENANTS. During the term of this Agreement and so long as any
of the Obligations, other than Continuing Obligations, remain unpaid or any
Letter of Credit remains outstanding:

6.1 Payment. Borrower will duly and punctually make payments of principal and
interest on all Indebtedness incurred by it pursuant to this Agreement,
including the Demand Line of Credit Loans and Reimbursement Obligations and all
fees, disbursements, expenses and other amounts required to be paid by it
pursuant to the Loan Documents in the manner set forth in the Loan Documents.

6.2 Basic Reporting Requirements.

(a) Annual Audit Reports. As soon as practicable, and in any event within ninety
(90) days after the close of each fiscal year of Borrower, Borrower shall
deliver to the Administrative Agent the annual report of Borrower on Form 10-K
as filed with the Securities and Exchange Commission for the preceding fiscal
year. Such annual report shall be accompanied by an unqualified opinion of
independent certified public accountants of recognized national standing
selected by Borrower. Such opinion shall be free of exceptions other than
exceptions for accounting changes or for matters relating solely to internal
controls. Such opinion in any event shall contain a written statement of such
accountants substantially to the effect that (i) such accountants examined such
financial statements in accordance with generally accepted auditing standards
and accordingly made such tests of accounting records and such other auditing
procedures as such accountants considered necessary in the circumstances and
(ii) in the opinion of such accountants such financial statements present fairly
in all material respects the financial position of Borrower and its consolidated
subsidiaries as of the end of such fiscal year and the results of operations and
cash flows and changes in stockholders’ equity for such fiscal year, in
conformity with GAAP.

(b) Quarterly Reports. As soon as practicable, and in any event within
forty-five (45) days after the close of each of the first three calendar
quarters of each fiscal year of Borrower, Borrower shall deliver to
Administrative Agent the periodic report of Borrower on Form 10-Q as filed with
the Securities and Exchange Commission for such calendar quarter.

(c) Other Information. Borrower shall deliver to Administrative Agent, with
reasonable promptness, such other financial and other information respecting the
financial condition, business or operations of any Loan Party as Administrative
Agent may from time to time reasonably request.

(d) Notice of Certain Events. Promptly upon becoming aware of any of the
following, Borrower shall give Administrative Agent notice thereof, together
with a written statement of an Authorized Representative of Borrower setting
forth the details thereof and any action with respect thereto taken or proposed
to be taken by Borrower:

(i) Any Event of Default or Potential Default.

 

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(ii) Any change in the business, operations or condition (financial or
otherwise) or prospects of any Loan Party that could reasonably be expected to
have a Material Adverse Effect.

(iii) Any pending or threatened action, suit, proceeding or investigation by or
before any Governmental Authority against or affecting any Loan Party
(collectively, “Actions”) (i) seeking a recovery against the Borrower in excess
of $5,000,000 or (ii) which, if adversely determined, could, when aggregated
with all other Actions, reasonably be expected to have a Material Adverse
Effect.

(iv) Any violation, breach or default by any Loan Party of or under any
agreement or instrument to which such Loan Party is a party that could
reasonably be expected to have a Material Adverse Effect.

(v) Any Material Adverse Effect resulting from a Pension-Related Event, which
notice shall be accompanied by a copy of any notice, request, return, petition
or other document received by any Loan Party or any Controlled Group Member from
any Person, or which has been or is to be filed with or provided to any Person
(including the Internal Revenue Service, PBGC or any Plan participant,
beneficiary, alternate payee or employer representative), in connection with
such Pension-Related Event.

(vi) Any Environmental Claim pending or threatened against any Loan Party or any
of its Environmental Affiliates, or any past or present acts, omissions, events
or circumstances (including, but not limited to, any dumping, leaching,
deposition, removal, abandonment, escape, emission, discharge or release of any
Environmental Concern Material at, on or under any facility or property now or
previously owned, operated or leased by any Loan Party or any of its
Environmental Affiliates) that could form the basis of such Environmental Claim,
which Environmental Claim, if adversely resolved, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

(e) Visitation; Verification. Upon reasonable prior notice, Borrower shall, and
shall cause each Subsidiary to, permit Administrative Agent and/or its
accountants, attorneys or other agents to visit its offices, to examine its
books and records and take copies and extracts therefrom and to discuss its
affairs with each Loan Party (and the officers and directors thereof) and its
independent accountants at such times as Administrative Agent may request.
Borrower hereby irrevocably authorizes such officers and directors and
independent accountants to discuss with Administrative Agent the affairs of each
Loan Party. Administrative Agent shall have the right to examine and verify
accounts, equipment, inventory and other properties and liabilities of each Loan
Party from time to time, and Borrower shall cooperate with Administrative Agent
in such verification. Borrower shall pay, on demand, Administrative Agent’s
reasonable fees and expenses in connection with such inspection and examination;
provided, however, that unless an Event of Default or Potential Default then
exists, the Borrower shall not be obligated to reimburse Administrative Agent
for inspections and examinations occurring more than once per fiscal year.

 

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6.3 Insurance. Borrower shall, and shall cause each of its Domestic Subsidiaries
to obtain and at all times maintain insurance with responsible insurance
carriers in such manner and to the extent that like properties are usually
insured by other companies engaged in business of a similar character in the
same general localities. Without limiting the generality of the foregoing,
Borrower shall and shall cause each of its Domestic Subsidiaries to maintain
insurance (a) against fire, theft, collision and other hazards on all of its
property so insurable, including business interruption insurance, including
coverage for force majeure and (b) against liability on account of damage to
persons or property and under all applicable workers’ compensation laws.
Borrower shall deliver promptly to Administrative Agent upon request,
certificates of insurance evidencing those insurance policies required to be
carried by the Borrower and its Subsidiaries pursuant hereto.

6.4 Payment of Taxes and Other Potential Charges and Priority Claims. Borrower
shall, and shall cause each Subsidiary to, pay or discharge:

(a) on or prior to the date on which penalties attach thereto, all Taxes;

(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, could result in the creation of a Lien upon any asset of Borrower other
than a Permitted Lien; and

(c) on or prior to the date when due, all other lawful claims which, if unpaid,
could result in the creation of a Lien upon any asset of Borrower other than a
Permitted Lien or which, if unpaid, could give rise to a claim entitled to
priority over general creditors of Borrower or such Loan Party in a case under
Title 11 (Bankruptcy) of the United States Code, as amended;

provided that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, Borrower need not pay or discharge any
such tax, assessment, charge or claim so long as (x) the validity thereof is
contested in good faith and by appropriate proceedings diligently conducted and
(y) such reserves or other appropriate provisions as may be required by GAAP
shall have been made therefor.

6.5 Preservation of Status. Except as may be permitted herein, Borrower shall,
and shall cause each Subsidiary to, maintain its status, as the case may be, as
a corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation, and, unless failure to do so could not reasonably be
expected to have a Material Adverse Effect, be duly qualified to do business as
a foreign corporation, partnership or limited liability company as the case may
be, and in good standing in all jurisdictions in which the ownership of its
properties or the nature of its business or both make such qualification
necessary or advisable.

6.6 Conduct of Business. Borrower shall continue, and cause each of its Domestic
and Foreign Subsidiaries to continue, to engage in an efficient and economical
manner in a business of the same general type as conducted by it on the date of
this Agreement.

6.7 [Intentionally Omitted].

 

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6.8 [Intentionally Omitted].

6.9 Maintenance of Financial Records; Fiscal Year. Borrower shall keep, and
cause each of its Subsidiaries to keep, adequate records and books of account,
in which complete entries will be made in accordance with GAAP, reflecting all
financial transactions of the Borrower and its Subsidiaries.

6.10 Maintenance of Properties. Borrower shall maintain, keep and preserve, and
cause each of its Subsidiaries to maintain, keep and preserve, all of its
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.

6.11 Further Assurances. Borrower shall, and shall cause each Subsidiary to,
cooperate with the Administrative Agent and execute and deliver such further
agreements, instruments and documents and take such other action as
Administrative Agent may reasonably request in order to carry out the intent of
this Agreement, such agreements, instruments and documents to be in form
reasonably satisfactory to the Administrative Agent. Borrower will pay for the
filing of all documents which Administrative Agent, or the Required Lenders,
acting through the Administrative Agent, may reasonably request in connection
with this Agreement.

7. NEGATIVE COVENANTS. During the term of this Agreement and so long as any
Obligations, other than Continuing Obligations, remain unpaid or any Letter of
Credit remains outstanding:

7.1 Liens. Borrower shall not, and shall not permit any Domestic Subsidiary to,
at any time, create, incur, assume or suffer to exist any Lien on any of its
assets or agree, become or remain liable (contingently or otherwise) to do any
of the foregoing with respect to any of its assets and neither Borrower nor any
Subsidiary shall create, incur, assume or suffer to exist any Lien on any of the
outstanding Equity Interests or Voting Interests of any Subsidiary of Borrower
or take any action to facilitate the creation of any such Lien, except, in each
case, for the following (“Permitted Liens”):

(a) [Intentionally Omitted];

(b) Liens arising from taxes, assessments, charges or claims described in
Section 6.4 hereof that are (i) not yet due or, (ii) if due, that remain payable
without penalty or are being diligently contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;

(c) Deposits or pledges of cash or securities in the ordinary course of business
to secure (i) workers’ compensation, unemployment insurance or other social
security obligations, (ii) performance of bids, tenders, trade contracts (other
than for payment of money) or leases, (iii) stay, surety or appeal bonds, or
(iv) other obligations of a like nature incurred in the ordinary course of
business;

(d) Liens on fixed or capital assets, other than real property, securing all or
part of the purchase price of, aggregate lease obligations in respect of or
costs of constructing or improving such fixed or capital assets (including but
not limited to Liens in respect of Capitalized Leases);

 

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provided that: (i) such Lien is created before or substantially simultaneously
with, but no later than 90 days after, the purchase, lease, construction or
improvement of such assets by any Loan Party; (ii) such Lien is confined solely
to the assets so purchased, leased, constructed or improved; (iii) the aggregate
amount secured by all such Liens on any particular property at the time
purchased, leased, constructed or improved by such Loan Party shall not exceed
the lesser of (x) the cost of acquiring, constructing or improving such property
and reasonable costs of collection of such Indebtedness and (y) the then fair
market value of such property, without taking into account such Lien; (iv) such
Lien shall not apply to any other property or assets of any Loan Party; and
(v) no Event of Default or Potential Default has occurred and is continuing at
the time of creation of such Lien; and

(e) Liens in existence on the Closing Date and listed on Schedule 7.1 hereto;

provided, however, that no Lien in favor of any Loan Party shall be a Permitted
Lien hereunder.

7.2 [Intentionally Omitted].

7.3 Sale or Transfer of Assets; Suspension of Business Operations. Borrower
shall not, and shall not permit any Subsidiary to, (a) sell (including as part
of a sale-leaseback transaction), convey, assign, lease, transfer, abandon or
otherwise dispose of, voluntarily or involuntarily, (i) the stock or Equity
Interests of any Subsidiary except to Borrower or to another Subsidiary and
except that the stock or Equity Interests of any Domestic Subsidiary may not be
sold to any Foreign Subsidiary or (ii) any of its now owned or hereafter
acquired assets, other than the sale of Inventory in the ordinary course of
business and disposition of obsolete equipment or (b) liquidate, dissolve or
suspend business operations, or agree, become or remain liable (contingently or
otherwise) to do any of the foregoing with respect to any assets, except any
sale, lease, assignment, or other transfer of assets by any Loan Party, provided
that the aggregate value of the assets so disposed of by all Loan Parties while
the Demand Line of Credit Facility is in effect shall not exceed $5,000,000.

7.4 [Intentionally Omitted].

7.5 Limitation on Other Restrictions on Liens. Except for the Loan Documents,
Borrower shall not, and shall not permit any Subsidiary to, enter into, become
or remain subject to any agreement or instrument by which it or any of its
assets may be subject or bound that would prohibit the grant of any Lien upon
any of its assets to the Administrative Agent (provided that this Section shall
not be violated by a provision in any agreement or instrument with or for the
benefit of the party holding a Permitted Lien upon Collateral specifically
described in Section 7.1(d)(iii) and prohibiting any Loan Party from granting a
Lien solely on such specific Collateral).

7.6 Limitation on Other Restrictions on Amendment of the Loan Documents, etc.
Except for the Loan Documents, Borrower shall not and shall not permit any
Subsidiary to, enter into, become or remain subject to any agreement or
instrument by which it or any of its assets may be subject or bound that would
prohibit, or require the consent of any Person to, any amendment, modification
or supplement to any of the Loan Documents.

7.7 [Intentionally Omitted].

 

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7.8 Special Restrictions on Inactive Subsidiaries. Notwithstanding anything
herein to the contrary, Borrower shall not take any of the following actions or
permit any Subsidiary to take any of the following actions with respect to any
Inactive Subsidiary which is incorporated or formed in a state of the United
States until Borrower has delivered to the Administrative Agent a Subsidiary
Guaranty from such Inactive Subsidiary, together with evidence reasonably
satisfactory to the Administrative Agent of the due authorization, execution and
delivery of such Subsidiary Guaranty: (a) make any loan, advance, capital
contribution or investment in an Inactive Subsidiary; (b) transfer, sell, lease,
assign or otherwise dispose of any property to an Inactive Subsidiary; (c) merge
into or consolidate with an Inactive Subsidiary (unless the Borrower or another
Subsidiary is the surviving entity), or purchase or acquire property from an
Inactive Subsidiary; (d) enter into any other transaction directly or indirectly
with or for the benefit of an Inactive Subsidiary; or (e) permit any Inactive
Subsidiary to engage in any business or activity of any kind or own assets
having a total book value in excess of $250,000 in the aggregate (other than
intercompany receivables reflected on the books of such Inactive Subsidiaries as
to which no cash has been or will be paid by the Borrower or any Subsidiary to
such Inactive Subsidiaries).

7.9 [Intentionally Omitted].

7.10 Subsidiaries.

(a) Borrower shall not, and shall not permit any Subsidiary to, sell or
otherwise dispose of any shares of capital stock of any Subsidiary, or permit
any Subsidiary to do so, except in connection with a transaction permitted under
Section 7.13 or permit any such Subsidiary to issue any additional shares of its
capital stock, except (i) directors’ qualifying shares of Foreign Subsidiaries,
and (ii) the issuance of shares by any Subsidiary to any Subsidiary or to
Borrower.

(b) Neither Borrower, nor any Subsidiary, shall create, acquire or suffer to
exist any Domestic Subsidiary other than CTG of Buffalo, Inc., Computer Task
Group International, Inc. and the domestic Inactive Subsidiaries without prompt
delivery to the Administrative Agent of a Subsidiary Guaranty executed by such
new Subsidiary, together with evidence reasonably satisfactory to the
Administrative Agent of the due authorization, execution and delivery of such
Subsidiary Guaranty.

7.11 [Intentionally Omitted].

7.12 [Intentionally Omitted].

7.13 Merger, Consolidation. Borrower shall not, and shall not permit any
Subsidiary to, without the prior written consent of Administrative Agent,
consolidate or merge, or enter into any binding agreement to consolidate with or
merge, into any other Person or permit any other Person to merge into it whereby
such Loan Party assumes or agrees to assume liabilities of such other party or
is not the surviving entity, provided, however, that the consent of the
Administrative Agent to any transaction described above which is solely between
Foreign Subsidiaries or solely between Domestic Loan Parties shall not be
required (so long as Borrower is the surviving corporation of any merger
involving Borrower and so long as any surviving entity incorporated or formed in
a state of the United States has delivered to the Administrative Agent, a
Subsidiary Guaranty executed by it, together with

 

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evidence reasonably satisfactory to the Administrative Agent of the due
authorization, execution and delivery of such Subsidiary Guaranty) but Borrower
shall give Administrative Agent advance notice thereof and shall respond
promptly to Administrative Agent’s request for due diligence with respect to the
proposed transaction, related pro forma financial statements and the like.

7.14 Accounting. The Borrower will not adopt any material change in accounting
principles other than as required by GAAP. Borrower shall not, and shall not
permit any Subsidiary to, adopt, permit or consent to any change in its fiscal
year.

7.15 Governing Documents. The Borrower will not, and will not permit any
Subsidiary to, amend its respective Governing Documents in such a manner so as
to (a) cause a Material Adverse Effect, (b) remove or diminish the
Administrative Agent’s, any Lender’s or the Bank’s rights under this Agreement
or any Loan Document, or (c) substantially impair the ability of the
Administrative Agent to monitor and manage the Obligations, collect payments,
fees, and expenses, or otherwise take action under this Agreement or any Loan
Document.

7.16 Hazardous Materials. Borrower shall not use, generate, treat, store,
dispose of or otherwise introduce, or permit any Subsidiary to use, generate,
treat, store, dispose of or otherwise introduce, any Hazardous Materials into or
on any real property owned or leased by any of them and will not cause, suffer,
allow or permit anyone else to do so, except in compliance with all applicable
Environmental Laws.

7.17 [Intentionally Omitted].

7.18 [Intentionally Omitted].

8. EVENTS OF DEFAULT. Without prejudice to the demand nature of the Obligations,
“Event of Default” shall mean the occurrence or existence of one or more of the
following events or conditions (for any reason, whether voluntary, involuntary
or effected or required by Law):

8.1 Nonpayment. Either (a) the Borrower shall fail to pay any principal of or
interest on any Demand Line of Credit Loan or any fee or, except as provided in
clause (b) other amount due under this Agreement or any Demand Line of Credit
Note within five (5) calendar days after the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof, by
acceleration of such due or payment date, by demand, or otherwise, or (b) the
Borrower shall fail to pay any Reimbursement Obligation in accordance with
Section 2.14(b) when the same shall become due and payable; or

8.2 Insolvency; Receivership. Any Loan Party shall generally not, or be unable
to, or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding shall
be instituted by or against any Loan Party seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, administrator or other similar official for it or for any substantial

 

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part of its property and assets and, in the case of any such proceeding
instituted against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain undismissed
or unstayed for a period of at least thirty (30) days or any of the actions
sought in such proceeding (including the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar official
for, it or any substantial part of its property and assets) shall occur; or a
petition shall be filed by Borrower under the United States Bankruptcy Code
naming the Borrower as debtor; or any event or action analogous to or having a
substantially similar effect to any of the events or actions set forth above in
this Section 8.2 shall occur under the Requirement of Law of any jurisdiction
applicable to any Loan Party; or any Loan Party, including a member, equity
owner(s) or managing member of such Loan Party, shall take any corporate,
partnership, limited liability company, or other similar action to authorize any
of the actions set forth above in this Section 8.2; or

8.3 Breach of Representation. If any certificate, statement, representation,
warranty, financial statement or audit heretofore or hereafter furnished by or
on behalf of any Loan Party to Administrative Agent (including the
representations and warranties contained herein) shall prove to be untrue or
misleading in any material respect or to have omitted any material contingent or
unliquidated liability or claim against any Loan Party as of the date when made,
deemed made or furnished; or

8.4 [Intentionally Omitted].

8.5 Default. Default by any Loan Party in the observance or performance of, or
breach of, (i) any of the covenants applicable to such Loan Party set forth in
Sections 6.2, 6.4, 6.5 or in Article 7, or (ii) any term, covenant or agreement
contained in this Agreement (other than those referred to elsewhere in this
Section 8) or any other Loan Document, and, in the case of this clause (ii),
such failure shall continue for fifteen (15) consecutive days after
Administrative Agent shall have first given Borrower notice of such failure; or

8.6 Events of Default Under Other Agreements. The occurrence of (i) any event of
default under the terms of any loan agreement, note, indenture, mortgage,
security agreement or other agreement evidencing or securing long term debt (as
defined by GAAP) of any Loan Party, which default could reasonably be expected
to result in a liability of over $2,500,000 and which has not been cured within
any applicable grace or notice period, or (ii) if any Loan Party shall commit
any act, or fail to take any action, the occurrence or non-occurrence of which
constitutes an event of default under the terms of any lease, agreement,
contract, indenture, mortgage, deed of trust, security agreement or other
instrument executed or to be executed by it or by which it or its assets is
bound which default could reasonably be expected to result in a liability of
over $2,500,000 and which has not been cured within any applicable grace or
notice period; or

8.7 Plan Events. (a) Borrower or any Controlled Group Member is required to
provide security to a Plan in accordance with Code Section 401(a)(29) provided
that the adverse effect of the same on the Borrower is not cured to the
satisfaction of Administrative Agent within thirty (30) days after Borrower or
any Controlled Group Member receives notice of such requirement, or (b) the
occurrence of any of the following actions or events provided, in the case of
this clause (b), that the Administrative Agent reasonably determines that such
action or event could reasonably be expected to

 

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have a Material Adverse Effect and provided that the adverse effect of such
action or event is not cured to the satisfaction of Administrative Agent within
ten (10) days after notice and demand to cure from the Administrative Agent:

(i) PBGC notifies a Plan by service of a complaint, threat to file a lawsuit, or
otherwise of its determination that an event described in Section 4042(a) of
ERISA has occurred, that the Plan shall be terminated, or that trustees should
be appointed for the Plan; or

(ii) Any action is taken to terminate or reorganize a Plan or Multiemployer
Plan, or the administrator (as defined in Section 3(16)(A) of ERISA) of a Plan
provides to the PBGC or other affected party a notice of intent to terminate a
Plan in accordance with Section 4041 of ERISA; or

(iii) Any action taken by the administrator (as defined in Section 3(16)(A) of
ERISA) of a Plan to have a trustee appointed for the Plan pursuant to
Section 4042 of ERISA; or

(iv) There is an accumulated funding deficiency (as defined in Section 412(a) of
the Code) with respect to a Plan or Multiemployer Plan; or

(v) A Reportable Event or Pension-Related Event occurs with respect to a Plan;
or

(vi) Any action is taken to amend a Plan into a defined contribution plan
described in Section 4021(b)(1) of ERISA causing a termination for the purposes
of Section 4041(e) of ERISA; or

(vii) Borrower or any Controlled Group Member withdraws from any Multiemployer
Plan in a complete or partial withdrawal (within the meaning of Sections 4203
and 4205 of ERISA), or receives a notice of withdrawal liability or demand for
payment of withdrawal liability on account of a complete or partial withdrawal
from a Multiemployer Plan or on account of secondary liability for withdrawal
liability following a sale of assets subject to Section 4204 of ERISA; or

(viii) Any other event or condition occurs which might constitute grounds under
Section 4041(a) or 4042 of ERISA for the termination or the appointment of a
trustee or administrator of any Plan or Multiemployer Plan; or

(ix) Any other event or condition shall occur or exist which could subject the
Borrower or any Controlled Group Member to any material tax, penalty or other
liability with respect to a Plan; or

8.8 Environmental Lien. The continued existence, for a period of forty-five
(45) days, of any Environmental Lien securing an obligation in excess of
$2,500,000 on any assets or properties of any Loan Party; or

 

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8.9 [Intentionally Omitted].

8.10 Failure of Loan Document. Any Loan Document shall at any time or for any
reason cease to be in full force and effect or shall be declared null and void,
or the validity or enforceability thereof shall be contested by Borrower or any
Subsidiary, or Borrower or any Subsidiary shall deny it has any further
liability or obligations thereunder; or

8.11 [Intentionally Omitted].

8.12 [Intentionally Omitted].

8.13 Material Adverse Change. The Required Lenders, acting through the
Administrative Agent, shall have reasonably determined that an event or
condition has occurred which has had, or which could be expected to have, a
Material Adverse Effect; or

8.14 Certain Actions. The Borrower shall liquidate, dissolve, terminate or
suspend its business operations or otherwise fail to operate its business in the
ordinary course, or sell or attempt to sell all or substantially all of its
assets, without the Required Lenders’ prior written consent; or

8.15 Governing Documents. The Borrower will not, and will not permit any
Subsidiary to, amend its respective Governing Documents in such a manner so as
to (a) cause a Material Adverse Effect, (b) remove or diminish the
Administrative Agent’s, any Lender’s or the Bank’s rights under this Agreement
or any Loan Document or (c) substantially impair the ability of the
Administrative Agent to monitor and manage the Obligations, collect payments,
fees, and expenses, or otherwise take action under this Agreement or any Loan
Document.

9. DEMAND OBLIGATIONS; RIGHTS ON DEFAULT.

9.1 Demand Obligations; Rights and Remedies.

(a) Nothing contained in this Section, or elsewhere in this Agreement or any of
the other Loan Documents shall affect or alter the demand nature of the
Obligations, including, without limitation, Loans made under this Agreement. The
occurrence of an Event of Default shall not be a prerequisite for the Required
Lenders directing the Administrative Agent to make demand or require payment of
such Obligations. The Borrower hereby expressly acknowledges and agrees that the
Events of Default are set forth herein as examples of some, but not necessarily
all, of the events or occurrences that may cause the Required Lenders to direct
the Administrative Agent to make demand under any Obligations; and that the
Events of Default listed in Section 8 shall otherwise constitute Events of
Default applicable to any Obligations that are not by their terms (or that may
be interpreted by a court of competent jurisdiction not to be) demand
obligations. The Administrative Agent, at the direction of the Required Lenders,
may demand payment of the Obligations at any time, whether or not any Potential
Default ore Event of Default then exists and Borrower shall pay the Obligations
immediately upon demand;

 

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(b) If at any time, the Administrative Agent makes demand for payment in full of
the Obligations or, without prejudice to the right of the Administrative Agent
to demand payment of the Obligations at any time at the direction of the
Required Lenders, an Event of Default shall occur, then the Administrative Agent
shall, in each case upon request of the Required Lenders, do any one or more of
the following:

(i) Immediately terminate any obligations of Administrative Agent, Lenders and
Bank under this Agreement by written notice to Borrower, and all Obligations
shall immediately become due and payable, at the option of the Requested Lender,
without presentment, demand, protest or further notice of any kind, all of which
are hereby waived.

(ii) Set off against any amount due or demanded from any Loan Party any amount
which any Loan Party has on deposit or invested with the Administrative Agent
and any amount that the Administrative Agent or any Lender owes to any Loan
Party.

(iii) Make demand upon the Borrower and, forthwith upon such demand, the
Borrower will pay to the Administrative Agent in immediately available funds for
deposit in the Special Account pursuant to Section 2.14 an amount equal to the
L/C Amount.

(iv) Exercise any other rights or remedies available to the Administrative
Agent, the Lenders or the Bank at law or in equity.

9.2 Certain Events of Default. Upon the occurrence of any Event of Default
described in Section 8.2, all Obligations shall immediately become due and
payable, without notice or demand.

9.3 Non-Exclusivity. All of the rights and remedies of the Administrative Agent,
the Lenders and the Bank pursuant to this Agreement or otherwise shall be
cumulative, and no such right or remedy shall be exclusive of any other such
right or remedy or any right or remedy which the Administrative Agent, the
Lenders or the Bank would otherwise have at law. No single or partial exercise
or waiver or delay in exercising any right or remedy shall preclude any other or
further exercise of that or any other right or remedy.

10. INDEMNIFICATION. Borrower shall indemnify and hold harmless the
Administrative Agent, each Lender, the Bank and their respective directors,
officers, employees and agents (each such Person, an “Indemnitee”), to the
maximum extent permitted by Law, from and against any and all losses, claims,
damages, liabilities, costs, expenses, including reasonable counsel and local
counsel fees and disbursements (whether incurred in a third party action or in
an action to enforce this Agreement) (including the reasonable fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto),
obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever, incurred at any time by or asserted at any time
against any of them or any such person arising out of, or in any way connected
with, or as a result of (i) the use of any of the proceeds of any Demand Line of
Credit Loan or Letter of Credit, including any transaction financed in whole or
in part or directly or indirectly with the proceeds of any Demand Line of Credit
Loan, (ii) any of the Loan Documents, (iii) the performance by any Loan Party of
its

 

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obligations hereunder and thereunder, (iv) the breach of any representation or
warranty made by any Loan Party in the Loan Documents, (v) any indemnity given
by Administrative Agent in any power of attorney executed by it in connection
with the execution of any Loan Document, or (vi) any claim, litigation,
investigation or proceedings relating to any of the foregoing; provided,
however, that such indemnity shall not, as to any Indemnitee, apply to any such
losses, claims, damages, liabilities or related expenses to the extent that they
result from the bad faith or willful misconduct of such Indemnitee. All amounts
due under this Section 10 shall be payable promptly after written demand
therefor.

11. EXPENSES. Borrower shall pay or reimburse (i) Administrative Agent and the
Bank promptly for all costs and expenses, including reasonable counsel fees and
disbursements (including, but not limited to, all charges for recording and
filing fees, indebtedness taxes, appraisal fees, environmental inspection and
audit fees and search fees) (collectively, “Expenses”), incurred by the
Administrative Agent and the Bank in connection with (A) the entry into this
Agreement and any Indebtedness created hereunder, including the negotiation,
preparation, execution and delivery of the Loan Documents and (B) the
administration or performance of and under the Loan Documents and any requested
amendments, modifications, supplements, waivers or consents thereunder, which
are not entered into during the continuance of, or in response to, an Event of
Default or Potential Default and (ii) Administrative Agent, the Lenders and the
Bank promptly for all Expenses, incurred by the Administrative Agent, the
Lenders and the Bank in connection with, (A) any requested amendments,
modifications, supplements, waivers or consents under the Loan Documents which
are entered into during the continuance of, or in response to, an Event of
Default or Potential Event of Default, and (B) any Event of Default and any
action taken to collect the Obligations or to enforce the Administrative
Agent’s, the Lenders’ or the Bank’s rights under such Loan Documents, including
the negotiation of any restructuring or “work-out” (whether or not consummated)
of the Obligations or any portion thereof.

12. AGENCY

12.1 Appointment, Powers and Immunities. (a) Each Lender and the Bank hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and of the other Loan Documents, together with such other powers as
are reasonably incidental thereto. The Administrative Agent (which term as used
in this sentence and in Section 12.5 and the first sentence of Section 12.6
hereof shall include reference to its Affiliates and its own and its Affiliates’
officers, directors, employees and agents) (i) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Loan Documents and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Lender; (ii) shall not be responsible to the
Lenders or the Bank for any recitals, statements, representations or warranties
contained in this Agreement or in any of the other Loan Documents, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any of the other Loan Documents, or for the
value, validity, effectiveness, genuineness, enforceability, perfection or
sufficiency of this Agreement, any Demand Line of Credit Note or any of the
other Loan Documents or any other document referred to or provided for herein or
therein or for any failure by

 

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any Loan Party or any other Person to perform any of its obligations hereunder
or thereunder; (iii) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder or under any other Loan Document; and
(iv) shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. In addition, the Administrative
Agent may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, independent public accountants or
experts. The Administrative Agent may deem and treat the payee of any Demand
Line of Credit Note as the holder thereof for all purposes hereof unless and
until a notice of the assignment or transfer thereof shall have been filed with
the Administrative Agent.

(b) The provisions of this Section 12 are solely for the benefit of the
Administrative Agent, the Lenders and the Bank, and no Loan Party shall have any
rights to rely on or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely for itself and as agent of the Lenders and the Bank and does not assume
and shall not be deemed to have assumed any obligations toward or relationship
of agency or trust with or for any Loan Party.

12.2 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication
(including any certification, notice or other communication by telephone,
telecopy, telex, telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Administrative Agent. As to any matters not expressly
provided for by this Agreement or any of the other Loan Documents, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Required Lenders or, if provided herein, in accordance with the
instructions given by all of the Lenders as is required in such circumstance,
and such instructions of such Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders; provided, however, that
the Administrative Agent shall not be required to take any action which shall
expose the Administrative Agent to personal or criminal liability or which is
contrary to this Agreement or applicable law.

12.3 Defaults. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Potential Default or Event of Default (other than
the non-payment of principal of or interest on Loans) unless the Administrative
Agent has received notice from a Lender or a Loan Party specifying such
Potential Default or Event of Default and stating that such notice is a “Notice
of Potential Default” or a “Notice of Event of Default”. In the event that the
Administrative Agent receives such a notice of the occurrence of a Potential
Default or Event of Default, the Administrative Agent shall give prompt notice
thereof to the Lenders (and shall give each Lender prompt notice of each such
non-payment). The Administrative Agent shall (subject to Section 12.7 hereof)
take such

 

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action with respect to such Potential Default or Event of Default as shall be
directed by the Required Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Potential Default or Event of Default
as it shall deem advisable in the best interest of the Lenders except to the
extent that this Agreement expressly requires that such action be taken, or not
be taken, only with the consent or upon the authorization of the Required
Lenders or all of the Lenders.

12.4 Rights as a Lender. Manufacturers and Traders Trust Company (“M&T”) (and
any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term “Lender” or “Lenders” shall include the Administrative Agent
in its individual capacity. M&T (and any successor acting as Administrative
Agent) and its Affiliates may (without having to account therefor to any Lender)
issue Letters of Credit as “Bank” in accordance with this Agreement, accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with any Loan Party(ies) and any of the
Affiliates of any Loan Party(ies) as if it were not acting as the Administrative
Agent, and M&T and its Affiliates may accept fees and other consideration from
the same for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.

12.5 Indemnification. The Lenders agree to indemnify the Administrative Agent
(to the extent not reimbursed by the Loan Parties under Section 10 hereof, but
without limiting the obligations of any Loan Party under said Section 10)
ratably in accordance with the aggregate principal amount of the Loans held by
the Lenders, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent (including by any Lender) arising out of or by
reason of any investigation or in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses that the Loan Parties are obligated to
pay under Section 10 hereof, but excluding, unless an Event of Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they are found in a final
decision by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the party to be indemnified.

12.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Administrative Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Loan Parties and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by any Loan Party of this Agreement or any

 

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of the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of any Loan Party or any
Affiliate thereof. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of any Loan Party or any
Affiliate thereof that may come into the possession of the Administrative Agent
or any of its Affiliates.

12.7 Failure to Act. Except for action expressly required of the Administrative
Agent hereunder and under the other Loan Documents, the Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction
from the Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action.

12.8 Resignation of Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, that shall be a bank which has an office in New York, New
York with a combined capital and surplus of at least Two Hundred Million Dollars
($200,000,000). Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 12 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.

12.9 Consents under Loan Documents. Except as otherwise provided in Section 13.2
hereof with respect to this Agreement, the Administrative Agent may, with the
prior consent of the Required Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Loan Documents, provided
that, without the prior consent of each Lender, the Administrative Agent shall
not (except as provided in this Agreement) consent to any modification,
supplement or waiver under any of the Loan Documents which would (a) increase
the principal amount of the Demand Line of Credit Loan, (b) modify the payment
terms of the Demand Line of Credit Loan, (c) reduce any Applicable Margin with
respect to the Demand Line of Credit Loan or otherwise modify the interest
payment terms relating thereto, (d) reduce the amount of any fees payable by the
Borrower, (e) postpone the scheduled payment of any interest or fees,
(f) release any guarantee of any portion of the Loans, (g) change any of the
provisions of this Section 12.9 or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights

 

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hereunder or under the Loan Documents or to make any determination or grant any
consent hereunder, or (h) modify the definition of Required Lenders.

13. MISCELLANEOUS.

13.1 Entire Agreement; Binding Effect. This Agreement, the other Loan Documents
and any separate letter agreements with respect to fees payable to the
Administrative Agent, for its own account and benefit and/or for the account and
benefit of the Lenders, represents the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, and any course of dealing between the parties
with respect to the subject matter hereof. This Agreement shall be binding upon
Borrower and its successors and assigns, and shall inure to the benefit of, and
be enforceable by, the Administrative Agent, the Lenders, the Bank and their
respective successors and assigns.

13.2 Amendments; Waivers. Except as otherwise expressly provided in this
Agreement, this Agreement cannot be amended, supplemented or modified orally (or
by any course of conduct or usage of trade) but may only be amended,
supplemented or modified by a writing duly executed by Borrower, the
Administrative Agent, the Bank and the Required Lenders and specifically
referring to each provision of this Agreement being modified. Borrower hereby
waives protest, presentment and notice of any kind in connection with the
delivery, acceptance, performance, default or enforcement of any of the Loan
Documents, except as specifically provided for herein. No course of dealing or
performance and no failure or delay on the part of the Administrative Agent, the
Lenders or the Bank in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Administrative
Agent, any Lender or Bank of any right or power hereunder preclude any other or
further exercise thereof or the exercise of any other right or power. No waiver
by the Administrative Agent, any Lender or Bank of any such right or remedy
shall be effective unless made in a writing duly executed by the Required
Lenders and Bank (or by the Administrative Agent with the consent of the
Required Lenders and Bank) and specifically referring to such waiver and each
such waiver shall relate only to the specific transaction referenced therein.

13.3 Notices. Except as set forth in Section 2.1(b), any notice, demand or
communication to be given pursuant to this Agreement or any Loan Document must
be in writing, and shall be delivered by certified mail, return receipt
requested, by reputable overnight courier service with receipt of delivery
acknowledged, or by telecopier. All notices shall be sent to the applicable
party at the address stated on the signature pages hereto or in accordance with
the last unrevoked written direction from such party to the other parties
hereto, in all cases with postage or other charges prepaid. Any demand, notice
or communication hereunder shall be deemed to have been given on the date
received or on the date delivered and refused; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation of such
transmission.

13.4 Assignment. Neither this Agreement nor any of the rights or obligations of
Borrower hereunder may be assigned or transferred by Borrower, by operation of
law or otherwise, without the prior written consent of the Required Lenders,
acting through the Administrative Agent.

 

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13.5 Participation and/or Assignment. (a) The Administrative Agent may, at any
time or from time to time without consent of or notice to the Borrower sell
participations to one or more commercial banks or other Persons (each, a
“Participant”) in a portion of its rights and obligations under this Agreement
and the other Loan Documents (including all or a portion of Demand Line of
Credit Notes held by it). In the event of any such sale by Administrative Agent
of a participating interest to a Participant, the Administrative Agent’s
obligations under this Agreement to the Borrower shall remain unchanged. In such
event, transferor (Administrative Agent) shall remain solely responsible for the
performance hereof and shall remain the holder of any such obligation owing to
it hereunder for all purposes under this Agreement, and Borrower shall continue,
and shall have the right to continue, to deal solely and directly with
Administrative Agent, in connection with the rights and obligations under this
Agreement of the Administrative Agent. Each Loan Party agrees that, while an
Event of Default shall have occurred and be continuing, if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, 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 the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it under this Agreement.

(b) Administrative Agent may, while an Event of Default shall have occurred and
be continuing, assign to any one or more lending institutions (each, an
“Assignee”) all or a part, but no less than Five Million Dollars ($5,000,000) in
principal amount, of its rights and obligations under this Agreement and the
Demand Line of Credit Loans or any portion thereof. Administrative Agent, as the
case may be, as the assigning lender thereunder, shall, to the extent of the
interest assigned be released from its obligations under this Agreement.

(c) Borrower authorizes Administrative Agent to disclose to any Participant, or
Assignee (each, a “Transferee”) and any prospective Transferee (whether or not,
in the case of any Person that is a prospective Transferee, such Person in fact
becomes a Transferee), any and all financial information, operating and other
information in Administrative Agent’s possession concerning Borrower and its
Affiliates which has been delivered to Administrative Agent by or on behalf of
Borrower pursuant to this Agreement or which has been delivered to
Administrative Agent in connection with its credit evaluation of Borrower.
Administrative Agent will use reasonable efforts to have any financial
information and operating information concerning Borrower and its Affiliates to
be treated as confidential; provided, however, that such financial information
may be disclosed (i) as required by Law or pursuant to GAAP, (ii) to officers,
directors, employees, agents, partners, attorneys, accountants, rating agencies,
engineers and other consultants of the Administrative Agent who need to know
such information, (iii) by Administrative Agent to any Transferee, (iv) as
needed to permit Administrative Agent to enforce its rights under the Loan
Documents, or (v) upon the written consent of Borrower, which consent will not
be unreasonably withheld, conditioned or delayed.

13.6 Governing Law. This Agreement, the Loan Documents, any and all other
documents executed in connection with this Agreement, and the acts and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the State of New York (including for such

 

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purposes Sections 5-1401 and 5-1402 of the General Obligations Law of the State
of New York), without regard to its principles of conflict of laws.

13.7 Enforceability of Obligations. The Obligations of Borrower and each Loan
Party pursuant to the Loan Documents and all other instruments, documents and
agreements executed in connection therewith shall not be impaired or avoided for
any reason including the unenforceability of such Obligations against any other
party, including any guarantor, or the incapacity or lack of authority of any
signatory for Borrower. The Administrative Agent or the Required Lenders, acting
through the Administrative Agent, may compromise or settle, extend the period of
duration for the time for payment, discharge performance of, or may refuse to
enforce, or may release, all or any part of any and all of the Obligations
hereunder due to it, and of the Collateral for such Obligations, and may grant
other indulgences to any of Borrower or any guarantor in respect thereof, or
agree to the release or substitution of any guarantor, all without otherwise
affecting or impairing the obligations of Borrower hereunder.

13.8 WAIVER OF JURY TRIAL. EACH OF ADMINISTRATIVE AGENT, EACH LENDER, BANK AND
BORROWER, BY EXECUTING THIS AGREEMENT OR ANY OTHER DOCUMENT PROVIDED FOR BY THIS
AGREEMENT, WAIVES ITS RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING
IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY DOCUMENT PROVIDED FOR BY THIS AGREEMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDERS TO EXTEND CREDIT TO BORROWER AND NO WAIVER OR
LIMITATION OF THE RIGHTS OF ADMINISTRATIVE AGENT, BANK OR ANY LENDER UNDER THIS
SECTION SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON BEHALF OF
ADMINISTRATIVE AGENT, BANK OR SUCH LENDER. BORROWER AGREES THAT ADMINISTRATIVE
AGENT, BANK OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THIS WAIVER OF RIGHT TO TRIAL BY
JURY.

Borrower acknowledges that the above paragraph has been expressly bargained for
by Administrative Agent and that, but for Borrower’s agreement thereto, Lenders
would not extend the Loans to Borrower for the term and interest rate provided
in Demand Line of Credit Notes described herein and Bank would not agree to
issue Letters of Credit for the benefit of Borrower.

13.9 Jurisdiction and Venue. Borrower hereby agrees that all actions or
proceedings arising directly or indirectly out of this Agreement shall be
litigated in the Supreme Court of the State of New York, Erie County, or the
United States District Court for the Western District of New York or in any
court in which Administrative Agent shall initiate such action, to the extent
such court has jurisdiction. Borrower hereby expressly submits and consents in
advance to such jurisdiction and waives any claim that Buffalo, New York or the
Western District of New York is an inconvenient forum or an improper forum based
on lack of venue. Borrower agrees that a copy of this Agreement kept in
Administrative Agent’s course of business may be admitted into evidence as an
original.

 

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13.10 Survival. Borrower’s obligations under Sections 10 and 11 hereof shall
continue notwithstanding that Borrower may have fully repaid all other amounts
owing pursuant to this Agreement.

13.11 Severability. If any provision of this Agreement shall be determined by a
court to be invalid, such provision shall be deemed modified to conform to the
minimum requirements of applicable law.

13.12 Headings. The section headings inserted in this Agreement are provided for
convenience of reference only and shall not be used in the construction or
interpretation of this Agreement.

13.13 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute one and the same Agreement.

13.14 Further Assurances. Borrower shall, at its expense and without expense to
the Administrative Agent, Bank or any Lender execute, acknowledge and deliver
such further instruments, assignments, notices and assurances as the
Administrative Agent shall, from time to time, reasonably require for the better
assuring, assigning, and confirming to the Administrative Agent, Bank and the
Lenders the rights granted to them hereunder and under the Loan Documents, or
for carrying out the intention or facilitating the performance of the terms of
this Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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

 

COMPUTER TASK GROUP, INCORPORATED By:  

/s/ Brendan M. Harrington

Name:   Brendan M. Harrington Title:   Chief Financial Officer Address for
Notices: 800 Delaware Avenue Buffalo, New York 14209 Attention: Peter P.
Radetich Senior Vice President & General Counsel Telephone: 716-887-7366
Telecopier: 716-887-7370

 

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MANUFACTURERS AND TRADERS TRUST

COMPANY, as Administrative Agent, Bank and as a Lender

By:  

/s/ Andrew M. Constantino

  Andrew M. Constantino   Vice President Address for Notices: One Fountain Plaza
12th Floor Buffalo, NY 14203 Attention: Andrew M. Constantino Vice President
Telephone: 716-848-7315 Telecopier: 716-848-7318

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KEYBANK NATIONAL ASSOCIATION, as a Lender By:  

/s/ Mark F. Wachowiak

Name:   Mark F. Wachowiak Title:   Vice President Address for Notices: Key
Center 50 Fountain Plaza Buffalo, NY 14202-2299 Attention: Mark F. Wachowiak
Vice President Telephone: 716-847-2330 Telecopier: 716-847-7897

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Schedule A

Lenders

 

Name of Lender

   Approved
Principal Amount  

Manufacturers and Traders Trust Company

   $ 26,000,000   

KeyBank National Association

   $ 14,000,000   

Total:

   $ 40,000,000   

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EXHIBIT A

FORM OF DEMAND LINE OF CREDIT NOTE

DEMAND LINE OF CREDIT NOTE

 

$                           Buffalo, New York       As of May 1, 2014

FOR VALUE RECEIVED, the undersigned, COMPUTER TASK GROUP, INCORPORATED
(“Borrower”), a New York corporation with its chief executive office at
800 Delaware Avenue, Buffalo, New York 14209, promises to pay to the order of
                            (the “Lender”), ON DEMAND, and at such earlier dates
as may be required by the Agreement (as defined below), the principal sum of
            Million and 00/100 Dollars ($        ,000,000.00) or the outstanding
principal amount of this Note, if less. The Borrower further promises to pay to
the order of the Lender interest on the unpaid principal amount hereof from time
to time outstanding at the rate or rates per annum determined pursuant to the
Agreement, payable on the dates set forth in the Agreement, together with fees,
costs and expenses as set forth in the Agreement (defined below).

This Note is one of the Demand Line of Credit Notes referred to in, is due and
payable as provided in, is subject to the terms and conditions set forth in, and
is entitled to the benefits of, the Loan Agreement dated as of May 1, 2014, by
and between Borrower, the Bank and Lenders, as defined therein, and
Manufacturers and Traders Trust Company, as Administrative Agent (as the same
may be amended, modified or supplemented from time to time, the “Agreement”),
which among other things provides for the acceleration of the maturity hereof
upon the occurrence of certain events and for prepayments in certain
circumstances and upon certain conditions. Terms defined in the Agreement and
capitalized herein have the same meanings herein as in the Agreement.

This is a demand Note and all amounts due hereunder shall become immediately due
and payable upon demand by the Administrative Agent, at the request of the
Required Lenders; provided, however, that without prejudice to the right of the
Administrative Agent to demand payment of all amounts outstanding hereunder at
any time at the request of the Required Lenders, all amounts due and payable
hereunder shall automatically become immediately due and payable if any Loan
Party or any guarantor or endorser of this Note commences or has commenced
against it any bankruptcy or insolvency proceeding.

The Borrower acknowledges and agrees that all principal, interest and other
fees, charges, costs and expenses now or hereafter advanced, accrued or
otherwise outstanding or owing pursuant to this Note are payable ON DEMAND. The
right of the Administrative Agent to make demand at the direction of the
Required Lenders is unconditional and unlimited. Provisions

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contained in this Note or in the Loan Agreement providing times or schedules for
periodic payments are intended to govern payments hereunder unless and until
demand for payment is made. The Borrower hereby acknowledges and agrees that the
occurrence or continuance of any Event of Default or any failure by the Borrower
to observe or perform any covenant or agreement contained in this Note or any
other Loan Document shall not be required in order to make any such demand. The
Borrower agrees that the Required Lenders may direct the Administrative Agent to
make demand, at any time, in the exercise of the sole discretion of each such
Lender, for immediate payment of any or all principal, interest and other fees,
charges, costs and expenses now or hereafter outstanding under this Note,
notwithstanding timely payments by the Borrower in accordance with the times and
schedules for payments hereunder, and whether or not any Potential Default or
failure has occurred. The Borrower agrees that, in exercising their discretion,
each Lender may direct the Administrative Agent to demand for any reasons which
it deems appropriate, and such reasons may be related or unrelated to the
Borrower, its business or financial condition or prospects. Each Lender’s right
to direct the Administrative Agent to make demand upon receipt of such direction
from the Required Lenders is a continuing right, and acceptance by the Lender of
any payment after demand shall not be deemed a waiver of such right to make
demand on any other occasion.

This Note may be prepaid in whole or in part at any time in accordance with the
terms and provisions of the Agreement.

This Note is issued by Borrower to Lender in connection with the Demand Line of
Credit Loan. Lender may, in its sole discretion, make any advance of the Demand
Line of Credit Loan in reliance upon any oral (including, but not limited to,
telephonic), written (including, but not limited to teletransmitted) or other
request made by the Administrative Agent. Lender shall incur no liability to
Borrower or any other person as a direct or indirect result of making any
advance in accordance with this paragraph and the request of the Administrative
Agent.

The Borrower hereby expressly waives presentment, demand, notice, protest and
all other demands and notices, unless notice is specifically provided for in the
Agreement, in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Agreement, and an action for amounts due
hereunder or thereunder shall immediately accrue.

Borrower agrees that a copy of this Note kept in Lender’s course of business may
be admitted into evidence as an original.

This Note shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York, without regard to principles of choice of
law.

This Note is given, in part, in replacement of and in substitution for, but not
in payment of, a Revolving Credit Note from Borrower to Lender dated
            , 20            in the maximum principal amount of
$        ,000,000.00.

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COMPUTER TASK GROUP, INCORPORATED By:  

 

Name:   Title:   Address for Notices: 800 Delaware Avenue Buffalo, New York
14209 Attention: Peter P. Radetich Senior Vice President & General Counsel
Telephone: 716-887-7366 Telecopier: 716-887-7370

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EXHIBIT B

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (the “Assignment”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Loan Agreement identified below (as amended, modified or
supplemented from time to time, the “Loan Agreement”), receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions
set forth in Annex 1 attached hereto are hereby agreed to and incorporated
herein by reference and made a part of this Assignment as if set forth herein in
full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Loan Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, the interest in and to all of the
Assignor’s rights and obligations under the Loan Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below (the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.

 

1.    Assignor:   

 

   2.    Assignee:   

 

   3.    Borrower(s):    Computer Task Group, Incorporated 4.    Administrative
Agent:    Manufacturers and Traders Trust Company, as the Administrative Agent
under the Loan Agreement 5.    Loan Agreement:    The Loan Agreement dated as of
May 1, 2014 among the Borrower listed above, the Lenders parties thereto and
Manufacturers and Traders Trust Company, as Administrative Agent and Letter of
Credit Issuer, as amended. 6.    Lending Office          of Assignee:   

 

        

 

        

 

  

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7.    Assigned Interest:      

 

Facility Assigned

   Aggregate
Amount of Approved
Principal Amounts/Loans
for all Lenders    Amount of Approved
Principal Amount/Loans
Assigned    Percentage
Assigned of
Demand Line of Credit
Loans   Demand Line of Credit Loan    $40,000,000.00    $                       
                      %   

Effective Date:             , 20            [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

  Title: ASSIGNEE [NAME OF ASSIGNEE] By:  

 

  Title:

Accepted:

 

MANUFACTURERS AND TRADERS TRUST COMPANY, as     Administrative Agent By  

 

  Title:

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ANNEX 1

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ASSUMPTION AGREEMENT

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien or encumbrance and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and to consummate the transactions contemplated hereby; and
(b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with any Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement or any other Loan Document other than this Assignment, or
any collateral thereunder, (iii) the financial condition of the Borrower, any of
its Subsidiaries or Affiliates or any other Person obligated in respect of any
Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and to consummate the transactions contemplated hereby and to
become a Lender under the Loan Agreement, (ii) it meets all requirements of an
Assignee under the Loan Agreement, (iii) from and after the Effective Date, it
shall be bound by the provisions of the Loan Agreement and, to the extent of the
Assigned Interest, shall have the obligations of a Lender thereunder, and
(iv) it has received a copy of the Loan Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 6.2(a) and
(b) thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and to purchase the Assigned Interest on the basis of which it
has made such analysis and decision; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments collected by the Administrative Agent in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

3. General Provisions. This Assignment shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This
Assignment may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment by telecopy shall be effective as delivery of a manually
executed counterpart of this Assignment. This Assignment shall be governed by,
and construed in accordance with, the law of the State of New York, without
regard to conflicts of laws principles.