Exhibit 10.1

CREDIT AGREEMENT

DATED AS OF FEBRUARY 14, 2003

AMONG

KORN/FERRY INTERNATIONAL,

as Borrower,

THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders,

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Arranger

 

 

Credit Agreement

 

 

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TABLE OF CONTENTS

 

 

Page No.

 

 

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Section 1.

DEFINITIONS

1

 

 

 

 

1.1

Certain Defined Terms

1

 

 

 

 

 

1.2

Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement

24

 

 

 

 

 

1.3

Other Definitional Provisions and Rules of Construction

24

 

 

 

Section 2.

AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

25

 

 

 

 

2.1

Commitments; Making of Loans; the Register; Optional Notes

25

 

 

 

 

 

2.2

Interest on the Loans

28

 

 

 

 

 

2.3

Fees

31

 

 

 

 

2.4

Repayments, Prepayments and Reductions in Revolving Loan Commitments; General
Provisions Regarding Payments; Application of Proceeds of Collateral and
Payments Under Subsidiary Guaranty

31

 

 

 

 

 

2.5

Use of Proceeds

35

 

 

 

 

 

2.6

Special Provisions Governing Eurodollar Rate Loans

35

 

 

 

 

 

2.7

Increased Costs; Taxes; Capital Adequacy

38

 

 

 

 

 

2.8

Statement of Lenders; Obligation of Lenders and Issuing Lender to Mitigate

42

 

 

 

 

 

2.9

Replacement of a Lender

42

 

 

 

Section 3.

LETTERS OF CREDIT

43

 

 

 

 

3.1

Issuance of Letters of Credit and Lenders’ Purchase of Participations Therein

43

 

 

 

 

 

3.2

Letter of Credit Fees

45

 

 

 

 

 

3.3

Drawings and Reimbursement of Amounts Paid Under Letters of Credit

45

 

 

 

 

 

3.4

Obligations Absolute

48

 

 

 

 

 

3.5

Nature of Issuing Lender’s Duties

49

 

 

 

Section 4.

CONDITIONS TO LOANS AND LETTERS OF CREDIT

50

 

 

 

 

4.1

Conditions to Initial Revolving Loans

50

 

 

 

 

 

4.2

Conditions to All Loans

53

 

 

 

 

 

4.3

Conditions to Letters of Credit

54

 

 

 

Section 5.

COMPANY’S REPRESENTATIONS AND WARRANTIES

55

 

 

 

 

5.1

Organization, Powers, Qualification, Good Standing, Business and Subsidiaries

55

 

 

 

 

 

5.2

Authorization of Borrowing, etc

56

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5.3

Financial Condition

56

 

 

 

 

 

5.4

No Material Adverse Change; No Restricted Junior Payments

57

 

 

 

 

 

5.5

Title to Properties; Liens; Real Property; Intellectual Property

57

 

 

 

 

 

5.6

Litigation; Adverse Facts

58

 

 

 

 

 

5.7

Payment of Taxes

58

 

 

 

 

 

5.8

Performance of Agreements

59

 

 

 

 

 

5.9

Governmental Regulation

59

 

 

 

 

 

5.10

Securities Activities

59

 

 

 

 

 

5.11

Employee Benefit Plans

59

 

 

 

 

 

5.12

Certain Fees

60

 

 

 

 

 

5.13

Environmental Protection

60

 

 

 

 

 

5.14

Employee Matters

61

 

 

 

 

 

5.15

Solvency

61

 

 

 

 

 

5.16

Matters Relating to Collateral

61

 

 

 

 

 

5.17

Disclosure

62

 

 

 

 

 

5.18

Subordinated Indebtedness

62

 

 

 

 

Section 6.

COMPANY’S AFFIRMATIVE COVENANTS

63

 

 

 

 

6.1

Financial Statements and Other Reports

63

 

 

 

 

 

6.2

Existence, etc.

68

 

 

 

 

 

6.3

Payment of Taxes and Claims; Tax

68

 

 

 

 

 

6.4

Maintenance of Properties; Insurance; Application of Net Business Interruption
Insurance Proceeds

68

 

 

 

 

 

6.5

Inspection Rights; Lender Meeting

69

 

 

 

 

 

6.6

Compliance with Laws, etc.

69

 

 

 

 

 

6.7

Environmental Matters

70

 

 

 

 

 

6.8

Execution of Subsidiary Guaranty and Personal Property Collateral Documents
After the Closing Date

71

 

 

 

 

Section 7.

COMPANY’S NEGATIVE COVENANTS

73

 

 

 

 

7.1

Indebtedness

73

 

 

 

 

 

7.2

Liens and Related Matters

74

 

 

 

 

 

7.3

Investments; Acquisitions

75

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7.4

Contingent Obligations

76

 

 

 

 

 

7.5

Restricted Junior Payments

76

 

 

 

 

 

7.6

Financial Covenants

76

 

 

 

 

 

7.7

Restriction on Fundamental Changes; Asset Sales

77

 

 

 

 

 

7.8

Consolidated Capital Expenditures

78

 

 

 

 

 

7.9

Transactions with Shareholders and Affiliates

78

 

 

 

 

 

7.10

Sales and Lease-Backs

79

 

 

 

 

 

7.11

Sale or Discount of Receivables

79

 

 

 

 

 

7.12

Conduct of Business

79

 

 

 

 

 

7.13

Amendments of Documents Relating to Subordinated Indebtedness

79

 

 

 

 

 

7.14

Fiscal Year

79

     

 

Section 8.

EVENTS OF DEFAULT

80

 

 

 

 

8.1

Failure to Make Payments When Due

80

 

 

 

 

 

8.2

Default in Other Agreements

80

 

 

 

 

 

8.3

Breach of Certain Covenants

80

 

 

 

 

 

8.4

Breach of Warranty

80

 

 

 

 

 

8.5

Other Defaults Under Loan Documents

81

     

 

 

8.6

Involuntary Bankruptcy; Appointment of Receiver, etc.

81

 

 

 

 

 

8.7

Voluntary Bankruptcy; Appointment of Receiver, etc.

81

 

 

 

 

 

8.8

Judgments and Attachments

82

 

 

 

 

 

8.9

Dissolution

82

 

 

 

 

 

8.10

Employee Benefit Plans

82

 

 

 

 

 

8.11

Material Adverse Effect

82

 

 

 

 

 

8.12

Change in Control

82

 

 

 

 

 

8.13

Invalidity of Loan Documents; Failure of Security; Repudiation of Obligations

82

 

 

 

 

Section 9.

ADMINISTRATIVE AGENT

83

 

 

 

 

9.1

Appointment

83

 

 

 

 

 

9.2

Powers and Duties; General Immunity

84

 

 

 

 

 

9.3

Independent Investigation by Lenders; No Responsibility For Appraisal of
Creditworthiness

86

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9.4

Right to Indemnity

86

 

9.5

Successor Administrative Agent

87

 

9.6

Collateral Documents and Subsidiary Guaranty

87

 

9.7

Administrative Agent May File Proofs of Claim

88

 

Section 10.

MISCELLANEOUS

89

 

10.1

Successors and Assigns; Assignments and Participations in Loans and Letters of
Credit

89

 

10.2

Expenses

92

 

10.3

Indemnity

93

 

10.4

Set-Off

94

 

 

10.5

Ratable Sharing

94

 

10.6

Amendments and Waivers

95

 

10.7

Independence of Covenants

96

 

10.8

Notices; Effectiveness of Signatures

96

 

10.9

Survival of Representations, Warranties and Agreements

97

 

10.10

Failure or Indulgence Not Waiver; Remedies Cumulative

97

 

10.11

Marshalling; Payments Set Aside

97

 

10.12

Severability

97

 

10.13

Obligations Several; Independent Nature of Lenders’ Rights; Damage Waiver

98

 

10.14

Release of Security Interest or Guaranty

98

 

10.15

Applicable Law

98

 

10.16

Construction of Agreement; Nature of Relationship

99

 

10.17

Consent to Jurisdiction and Service of Process

99

 

10.18

Waiver of Jury Trial

100

 

10.19

Confidentiality

100

 

10.20

Counterparts; Effectiveness

101

 

Signature pages

 

S-1

 

 

 

4

 

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TABLE OF CONTENTS
(Continued)

 

 

Page No.

EXHIBITS 

 

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I

FORM OF NOTICE OF BORROWING

 

 

II

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

 

III

FORM OF REQUEST FOR ISSUANCE

 

 

IV

FORM OF REVOLVING NOTE

 

 

V

FORM OF COMPLIANCE CERTIFICATE

 

 

VI

FORM OF OPINION OF COMPANY COUNSEL

 

 

VII

FORM OF OPINION OF O’MELVENY & MYERS LLP

 

 

VIII

FORM OF ASSIGNMENT AGREEMENT

 

 

IX

FORM OF SUBSIDIARY GUARANTY

 

 

X

FORM OF SECURITY AGREEMENT

 

 

XI

FORM OF BORROWING BASE CERTIFICATE

 

 

 

 

 

SCHEDULES

 

 

 

 

 

 

1

APPROVED CASH EQUIVALENT INVESTMENTS

 

 

2.1

LENDERS’ COMMITMENTS AND PRO RATA SHARES

 

 

4.1C

CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT

 

 

5.1

SUBSIDIARIES OF COMPANY

 

 

5.5B

REAL PROPERTY

 

 

5.5C

INTELLECTUAL PROPERTY

 

 

5.6

LITIGATION

 

 

5.11

CERTAIN EMPLOYEE BENEFIT PLANS

 

 

7.1

CERTAIN EXISTING INDEBTEDNESS

 

 

7.2

CERTAIN EXISTING LIENS

 

 

7.3

CERTAIN EXISTING INVESTMENTS

 

 

7.4

CONTINGENT OBLIGATIONS

 

5

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KORN/FERRY INTERNATIONAL

CREDIT AGREEMENT

                    This CREDIT AGREEMENT is dated as of February 14, 2003 and
entered into by and among KORN/FERRY INTERNATIONAL, a Delaware corporation
(“Company”), THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO (each
individually referred to herein as a “Lender” and collectively as “Lenders”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), as administrative
agent for Lenders (in such capacity, “Administrative Agent”).

R E C I T A L S

                    WHEREAS, Lenders, at the request of Company, have agreed to
extend certain credit facilities to Company, the proceeds of which will be used
to provide financing for working capital and other general corporate purposes of
Company and its Subsidiaries;

                    WHEREAS, Company desires to secure all of the Obligations
hereunder and under the other Loan Documents by granting to Administrative
Agent, on behalf of Lenders, a first priority Lien on substantially all of its
real, personal and mixed property, including a pledge of certain capital stock
of its Domestic Significant Subsidiaries and 66% of the capital stock of its
Foreign Significant Subsidiaries; and

                    WHEREAS, all of the Domestic Significant Subsidiaries of
Company have agreed to guarantee the Obligations hereunder and under the other
Loan Documents and to secure their guaranties by granting to Administrative
Agent, on behalf of Lenders, a first priority Lien on substantially all of their
real, personal and mixed property, including a pledge of certain capital stock
of their Domestic Significant Subsidiaries and 66% of the capital stock of their
Foreign Significant Subsidiaries:

                    NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Administrative Agent agree as follows:

Section 1.              DEFINITIONS

                     1.1     Certain Defined Terms.

                    The following terms used in this Agreement shall have the
following meanings:

                    “Account” means, with respect to any Person, all present and
future rights of such Person to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising, and whether or not they have
been earned by performance. 

 

 

Credit Agreement

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                    “Administrative Agent” has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.

                    “Affected Lender” has the meaning assigned to that term in
subsection 2.6C.

                    “Affected Loans” has the meaning assigned to that term in
subsection 2.6C.

                    “Affiliate”, as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.

                    “Agreement” means this Credit Agreement dated as of February
14, 2003, as it may be amended, supplemented or otherwise modified from time to
time.

                    “Amortization Adjustment” means, as of the last day of any
Fiscal Quarter, an amount equal to 20.00% of the average Revolving Loan
Commitment for the consecutive four Fiscal Quarters ending on such day (or, to
the extent that the Closing Date occurs during such period, for the period since
the Closing Date). 

                    “Approved Fund” means a Fund that is administered or managed
by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an
Affiliate of an entity that administers or manages a Lender.

                    “Asset Sale” means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its wholly-owned
Subsidiaries of (i) any of the stock of any of Company’s Subsidiaries,
(ii) substantially all of the assets of any division or line of business of
Company or any of its Subsidiaries, or (iii) any other assets (whether tangible
or intangible) of Company or any of its Subsidiaries (other than (a) inventory
sold in the ordinary course of business, (b) sales, assignments, transfers or
dispositions of accounts in the ordinary course of business for purposes of
collection and (c) any such other assets to the extent that the aggregate value
of such assets sold in any single transaction or related series of transactions
is equal to $1,000,000 or less).

                    “Assignment Agreement” means an Assignment Agreement in
substantially the form of Exhibit VIII annexed hereto.

                    “Bankruptcy Code” means Title 11 of the United States Code
entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

                    “Base Rate” means, at any time, the higher of (i) the Prime
Rate or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.  Any change in the Base Rate due to a

 

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Credit Agreement

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change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change.

                    “Base Rate Loans” means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.

                    “Borrowing Availability” means, as of any date of
determination, an amount equal to (i) the lesser of (a) the Revolving Loan
Commitments then in effect and (b) the Borrowing Base then in effect minus
(ii) the Total Utilization of Revolving Loan Commitments as of such date.

                    “Borrowing Base” means, as of any date of determination, an
aggregate amount equal to 80% of Eligible Accounts Receivable; provided that
Administrative Agent may, in its reasonable credit judgment based on its
analysis of material changes arising after the date hereof in the value of
Eligible Accounts Receivable, and on at least two Business Days’ prior notice to
Company, revise from time to time the percentage of the value of any individual
item of Eligible Accounts Receivable that shall be used in determining the
Borrowing Base; provided, however, that Administrative Agent shall not increase
the percentage of value of any individual item of Eligible Accounts Receivable
to an amount in excess of that in effect on the Closing Date without the prior
consent of the Requisite Lenders.

                    “Borrowing Base Certificate” means a certificate
substantially in the form of Exhibit XI annexed hereto.

                    “Business Day” means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of California or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Eurodollar
Rate or any Eurodollar Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and between banks in
Dollar deposits in the London interbank market.

                    “Capital Lease”, as applied to any Person, means any lease
of any property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.

                    “Capital Stock” means the capital stock or other equity
interests of a Person.

                    “Cash” means money, currency or a credit balance in a
Deposit Account.

                    “Cash Equivalents” means, as at any date of determination,
(i) marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the

 

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Credit Agreement

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highest rating obtainable from either Standard & Poor’s (“S&P”) or Moody’s
Investors Service, Inc. (“Moody’s”); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody’s; and (vi) other investments set forth on Schedule 1 annexed hereto.

                    “Change in Control” means any of the following: (i) any
Person or group of Persons (other than Richard Ferry, either individually or as
a trustee of any trust for which he has sole power to direct and control
investments), shall have acquired beneficial ownership, directly or indirectly,
of Securities of Company (or other Securities convertible into such Securities)
representing 30% or more of the combined voting power of all Securities of
Company entitled to vote in the election of members of the Governing Body of
Company, other than Securities having such power only by reason of the happening
of a contingency, (ii) either of the individuals serving, as of the Closing
Date, as chairman of the board or chief executive officer of Company no longer
hold these positions and their successors are not approved by a majority of the
board of directors of Company, (iii) the occurrence of a change in the
composition of the Governing Body of Company such that a majority of the members
of any such Governing Body are not Continuing Members, (iv) the occurrence of
any “Change of Control Event” as defined in either the Convertible Subordinated
Notes or the Convertible Series A Preferred Stock, and (v) the occurrence of a
“change of control” as defined in any document governing Indebtedness of Company
or any of its Subsidiaries in excess of $3,000,000 which gives the holders of
such Indebtedness the right to accelerate or otherwise require payment of such
Indebtedness prior to the maturity date thereof.  As used herein, the term
“beneficially own” or “beneficial ownership” shall have the meaning set forth in
the Exchange Act and the rules and regulations promulgated thereunder.

                    “Closing Date” means the date on which the initial Loans are
made.

                    “Collateral” means, collectively, all of the real, personal
and mixed property (including Capital Stock) in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.

                    “Collateral Account” has the meaning assigned to that term
in the Security Agreement.

                    “Collateral Documents” means the Security Agreement, the
Foreign Pledge Agreements and all other instruments or documents delivered by
any Loan Party pursuant to this Agreement or any of the other Loan Documents in
order to grant to Administrative Agent, on behalf of

 

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Credit Agreement

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Lenders, a Lien on any real, personal or mixed property of that Loan Party as
security for the Obligations.

                    “Commitments” means the commitments of Lenders to make Loans
as set forth in subsection 2.1A and subsection 3.3.

                    “Company” has the meaning assigned to that term in the
introduction to this Agreement.

                    “Compliance Certificate” means a certificate substantially
in the form of Exhibit V annexed hereto.

                    “Consolidated Capital Expenditures” means, for any period,
the sum of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in “additions to property, plant or
equipment” or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries.  For purposes of this definition, the
purchase price of equipment that is purchased simultaneously with the trade-in
of existing equipment or with insurance proceeds shall be included in
Consolidated Capital Expenditures only to the extent of the gross amount of such
purchase price less the credit granted by the seller of such equipment for the
equipment being traded in at such time or the amount of such proceeds, as the
case may be. 

                    “Consolidated Cash Interest Expense” means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).

                    “Consolidated Current Assets” means, as at any date of
determination, the sum of (i) current Cash and Cash Equivalents, plus (ii) trade
Accounts, in each case of Company and its Subsidiaries on a consolidated basis. 

                    “Consolidated Current Liabilities” means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, including the aggregate principal amount of all
outstanding Revolving Loans. 

                    “Consolidated EBITDA” means, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) provisions for taxes based on
income, (iv) total depreciation expense, (v) total amortization expense, (vi) a
one-time restructuring charge not to exceed $16,300,000 taken in the Fiscal
Quarter ended October 31, 2002, and (vii) equity in earnings of Korn/Ferry
International S.A. de C.V., Korn/Ferry Internacional del Norte, S.A. de C.V.,
Postgraduados y Especialistas S.A. de C.V. and Servicios Romac S.A. de C.V.,
except to the extent the amount of any dividends or other distributions actually
paid to Company or any of its Subsidiaries by such Subsidiaries during such
period have been included in the calculation of Consolidated Net Income, but
only, in the case of clauses (ii)-(vi), to the extent deducted in the
calculation of Consolidated Net

 

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Credit Agreement

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Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.

                    “Consolidated Fixed Charges” means, for any period, the sum
of (i) Consolidated Cash Interest Expense for such period, plus (ii) the
Amortization Adjustment for such period, plus (iii) all principal payments
(including, without limitation, all scheduled payments and any prepayments) on
all Indebtedness of Company and its Subsidiaries during such period (excluding
prepayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such prepayments), all of
the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.

                    “Consolidated Interest Expense” means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing, net costs under Interest Rate Agreements and amounts referred to in
subsection 2.3 payable to Administrative Agent and Lenders that are considered
interest expense in accordance with GAAP, but excluding, however, any such
amounts referred to in subsection 2.3 payable on or before the Closing Date.

                    “Consolidated Leverage Ratio” means, as of the last day of
any Fiscal Quarter, the ratio of (i) Consolidated Total Debt as at such day to
(ii) Consolidated EBITDA for the consecutive four Fiscal Quarters ending on such
day.

                    “Consolidated Net Income” means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person’s assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to asset sales or returned surplus assets
of any Pension Plan, and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary gains or net non-cash extraordinary losses.

                    “Consolidated Quick Ratio” means, as of the last day of any
Fiscal Quarter, the ratio of (i) Consolidated Current Assets to (ii)
Consolidated Current Liabilities.

 

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                    “Consolidated Total Debt” means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, but excluding the Convertible Series A Preferred Stock and the
Convertible Subordinated Notes. 

                    “Contingent Obligation”,as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Hedge Agreements.  Contingent Obligations shall include
(a) the direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (b)
the obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (1) or (2) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence.  The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.

                    “Continuing Member” means, as of any date of determination
any member of the Governing Body of Company who (i) was a member of such
Governing Body on the Closing Date or (ii) was nominated for election or elected
to such Governing Body with the affirmative vote of a majority of the members
who were either members of such Governing Body on the Closing Date or whose
nomination or election was previously so approved.

                    “Contractual Obligation”, as applied to any Person, means
any provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

                    “Convertible Series A Preferred Stock” means, collectively,
(i) 10,000 shares of Company’s Convertible Series A Preferred Stock, (ii) the
Certificate of Designation pursuant to which such shares were issued, and (iii)
any shares of additional securities of the same nature issued as payment in kind
of dividends in respect thereto. 

 

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                    “Convertible Subordinated Notes” means the Company’s
Convertible Subordinated Notes dated as of June 13, 2002, in an aggregate
principal amount of $40,000,000 and any additional notes of the same nature
issued as payment in kind of interest in respect thereto.

                    “Currency Agreement” means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party.

                    “Deposit Account” means a demand, time, savings, passbook or
similar account maintained with a Person engaged in the business of banking,
including a savings bank, savings and loan association, credit union or trust
company.

                    “Dollars” and the sign “$” mean the lawful money of the
United States of America.

                    “Domestic Significant Subsidiary” means any Domestic
Subsidiary that is a Significant Subsidiary.

                    “Domestic Subsidiary” means any Subsidiary of Company that
is incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.

                    “Eligible Accounts Receivable” means all Accounts of
Company; provided that an Account shall not be an Eligible Account Receivable
if:

 

     (a)     it arises out of a sale made by Company to (a) an Affiliate or
(b) a natural person (other than credit card sales not otherwise ineligible
hereunder); or

 

 

 

 

     (b)     its payment terms are longer than 30 days from date of invoice; or

 

 

 

 

     (c)     it is unpaid more than 90 days after the original payment due date;
or

 

 

 

 

     (d)     it is from the same account debtor or its Affiliate and 20% or more
of all Accounts from that account debtor (and its Affiliates) are ineligible
under (c) above; or

 

 

 

 

     (e)     when aggregated with all other Accounts of an account debtor, such
Account exceeds 5% in face value of all Accounts of Company then outstanding,
but only to the extent of such excess, unless such excess is supported by an
irrevocable letter of credit satisfactory to Administrative Agent (as to form,
substance and issuer) and assigned to and directly drawable by Administrative
Agent; or

 

 

 

 

     (f)     the account debtor for such Account is a creditor of Company or any
other Loan Party, has or has asserted a right of setoff against Company or any
other Loan Party, or has disputed its liability or otherwise has made any claim

 

 

 

 

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with respect to such Account or any other Account which has not been resolved,
in each case to the extent of the amount owed by such Loan Party to such account
debtor, the amount of such actual or asserted right of setoff, or the amount of
such dispute or claim, as the case may be; or

 

 

 

 

     (g)     the account debtor is (or its assets are) the subject of an
Insolvency Event; or

 

 

 

 

     (h)     such Account is not payable in Dollars or the account debtor for
such Account is located outside the continental United States; or

 

 

 

 

     (i)     the account debtor is the United States of America or any
department, agency or instrumentality thereof; or

 

 

 

 

     (j)     such Account is subject to any adverse security deposit, progress
payment or other similar advance made by or for the benefit of the applicable
account debtor; or

 

 

 

 

     (k)     it is not subject to a valid and perfected First Priority Lien in
favor of Administrative Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents.

In determining the amount to be so included, the face amount of such Accounts
shall be reduced by the amount of all returns, discounts, deductions, claims,
credits, charges, or other allowances.

                    “Eligible Assignee” means (i) any Lender, any Affiliate of
any Lender and any Approved Fund of any Lender; and (ii) (a) a commercial bank
organized under the laws of the United States or any state thereof; (b) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof; (c) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided that
(1) such bank is acting through a branch or agency located in the United States
or (2) such bank is organized under the laws of a country that is a member of
the Organization for Economic Cooperation and Development or a political
subdivision of such country; and (d) any other entity that is an “accredited
investor” (as defined in Regulation D under the Securities Act) that extends
credit or buys loans as one of its businesses including insurance companies,
mutual funds and lease financing companies; provided that neither Company nor
any Affiliate of Company shall be an Eligible Assignee.

                    “Employee Benefit Plan” means any “employee benefit plan” as
defined in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.

                    “Environmental Claim” means any investigation, notice,
notice of violation, claim, action, suit, proceeding, demand, abatement order or
other order or directive (conditional or otherwise), by any Government Authority
or any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection

 

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with any Hazardous Materials or any actual or alleged Hazardous Materials
Activity, or (iii) in connection with any actual or alleged damage, injury,
threat or harm to health, safety, natural resources or the environment.

                    “Environmental Laws” means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of any Government
Authority relating to (i) environmental matters, including those relating to any
Hazardous Materials Activity, (ii) the generation, use, storage, transportation
or disposal of Hazardous Materials, or (iii) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal health
or welfare, in any manner applicable to Company or any of its Subsidiaries or
any Facility.

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

                    “ERISA Affiliate”, as applied to any Person, means (i) any
corporation that is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) that is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is a
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member.  Any former ERISA Affiliate of a Person or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of such
Person or such Subsidiary within the meaning of this definition with respect to
the period such entity was an ERISA Affiliate of such Person or such Subsidiary
and with respect to liabilities arising after such period for which such Person
or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

                    “ERISA Event” means (i) a “reportable event” within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan resulting in liability pursuant to
Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries

 

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or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069
of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal of Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Company, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against Company, any of its Subsidiaries or any of their
respective ERISA Affiliates in connection with any Employee Benefit Plan; (ix)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.

                    “Eurodollar Rate” means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) (A) the rate per annum (rounded upward to the
nearest 1/16 of one percent) that appears on the Moneyline Telerate, page 3750
(or such other comparable page as may, in the opinion of Administrative Agent,
replace such page for the purpose of displaying such rate) as the interbank
offered rate for Dollar deposits with maturities comparable to such Interest
Period as of approximately 11:00 a.m. (London time) on such Interest Rate
Determination Date or (B) if such rate is not available at such time for any
reason, the arithmetic average (rounded upward to the nearest 1/16 of one
percent) of the offered quotations, if any, to first class banks in the
interbank Eurodollar market by Wells Fargo for Dollar deposits of amounts in
same day funds comparable to the principal amount of the Eurodollar Rate Loan of
Wells Fargo for which the Eurodollar Rate is then being determined with
maturities comparable to such Interest Period as of approximately 10:00 A.M.
(California time) on such Interest Rate Determination Date by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements
(including any marginal, emergency, supplemental, special or other reserves)
applicable on such Interest Rate Determination Date to any member bank of the
Federal Reserve System in respect of “Eurocurrency liabilities” as defined in
Regulation D (or any successor category of liabilities under Regulation D).

                    “Eurodollar Rate Loans” means Loans bearing interest at
rates determined by reference to the Eurodollar Rate as provided in subsection
2.2A.

                    “Event of Default” means each of the events set forth in
Section 8.

                    “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.

 

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                    “Exchange Rate” means, on any date when an amount expressed
in a currency other than Dollars is to be determined with respect to any Letter
of Credit, the nominal rate of exchange of Administrative Agent in the New York
foreign exchange market for the sale of such currency in exchange for Dollars at
12:00 noon (New York time) one Business Day prior to such date, expressed as a
number of units of such currency per one Dollar.

                    “Facilities” means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.

                    “Federal Funds Effective Rate” means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.

                    “Financial Plan” has the meaning assigned to that term in
subsection 6.1(xii).

                    “First Priority” means, with respect to any Lien purported
to be created in any Collateral pursuant to any Collateral Document, that (i)
such Lien is perfected and has priority over any other Lien on such Collateral
and (ii) such Lien is the only Lien (other than Liens permitted pursuant to
subsection 7.2) to which such Collateral is subject.

                    “Fiscal Month” means a fiscal month of any Fiscal Year.

                    “Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

                    “Fiscal Year” means the fiscal year of Company and its
Subsidiaries ending on April 30 of each calendar year.  For purposes of this
Agreement, any particular Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year ends.

                    “Foreign Plan” means any employee benefit plan maintained by
Company or any of its Subsidiaries that is mandated or governed by any law, rule
or regulation of any Government Authority other than the United States of
America, any state thereof or any other political subdivision thereof.

                    “Foreign Pledge Agreement” means each pledge agreement or
similar instrument governed by the laws of a country other than the United
States, executed from time to time in accordance with subsection 6.8 by Company
or any Domestic Significant Subsidiary that owns Capital Stock of one or more
Foreign Significant Subsidiaries organized in such country, in form and
substance satisfactory to Administrative Agent, as such Foreign Pledge Agreement
may be amended, supplemented or otherwise modified from time to time.

 

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                    “Foreign Significant Subsidiary” means any Foreign
Subsidiary that is a Significant Subsidiary.

                    “Foreign Subsidiary” means any Subsidiary of Company that is
not a Domestic Subsidiary.

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

                    “Funding and Payment Office” means (i) the office of
Administrative Agent located at Commercial Banking Loan Center, 201 3rd Street,
8th Floor, San Francisco, California 94105 or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated as such in
a written notice delivered by Administrative Agent to Company and each Lender.

                    “Funding Date” means the date of the funding of a Loan.

                    “GAAP” means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.

                    “Governing Body” means the board of directors or other body
having the power to direct or cause the direction of the management and policies
of a Person that is a corporation, partnership, trust or limited liability
company.

                    “Government Authority” means any political subdivision or
department thereof, any other governmental or regulatory body, commission,
central bank, board, bureau, organ or instrumentality or any court, in each case
whether federal, state, local or foreign.

                    “Governmental Authorization” means any permit, license,
registration, authorization, plan, directive, consent, order or consent decree
of or from, or notice to, any Government Authority.

                    “Hazardous Materials” means (i) any chemical, material or
substance at any time defined as or included in the definition of “hazardous
substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous
waste”, “acutely hazardous waste”, “radioactive waste”, “biohazardous waste”,
“pollutant”, “toxic pollutant”, “contaminant”, “restricted hazardous waste”,
“infectious waste”, “toxic substances”, or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, “TCLP toxicity” or “EP toxicity” or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum,

 

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petroleum fraction or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) any
asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any Government Authority or which may or could pose a hazard to the
health and safety of the owners, occupants or any Persons in the vicinity of any
Facility or to the indoor or outdoor environment.

                    “Hazardous Materials Activity” means any past, current,
proposed or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.

                    “Hedge Agreement” means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.

                    “Indebtedness”, as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person.  Obligations under Interest Rate Agreements and Currency
Agreements constitute (1) in the case of Hedge Agreements, Contingent
Obligations, and (2) in all other cases, Investments, and in neither case
constitute Indebtedness. 

                    “Indemnified Liabilities” has the meaning assigned to that
term in subsection 10.3.

                    “Indemnitee” has the meaning assigned to that term in
subsection 10.3.

                    “Insolvency Event” means, with respect to any Person, the
occurrence of any of the events described in subsection 8.6 or 8.7; provided
that, solely for purposes of this definition, any references to Company or any
of its Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference
to such Person.

                    “Intellectual Property” means all patents, trademarks,
tradenames, copyrights, technology, software, know-how and processes used in or
necessary for the conduct of the

 

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business of Company and its Subsidiaries as currently conducted that are
material to the condition (financial or otherwise), business or operations of
Company and its Subsidiaries, taken as a whole.

                    “Interest Payment Date” means (i) with respect to any Base
Rate Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each Interest Period of
six months “Interest Payment Date” shall also include the date that is three
months after the commencement of such Interest Period.

                    “Interest Period” has the meaning assigned to that term in
subsection 2.2B.

                    “Interest Rate Agreement” means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.

                    “Interest Rate Determination Date”, with respect to any
Interest Period, means the second Business Day prior to the first day of such
Interest Period.

                    “Internal Revenue Code” means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.

                    “Investment” means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business, or (iv) Interest Rate Agreements or Currency Agreements not
constituting Hedge Agreements.  As used herein, the term “Investment” does not
include investments relating to the cash surrender value of insurance policies. 
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment (other than adjustments for the repayment of, or the refund of
capital with respect to, the original principal amount of any such Investment).

                    “IP Collateral” means, collectively, the Intellectual
Property that constitutes Collateral under the Security Agreement.

                    “Issuing Lender” means Wells Fargo, in its capacity as
issuer of any Letter of Credit hereunder.

 

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                    “Joint Venture” means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form.

                    “Lender” and “Lenders” means the Persons identified as
“Lenders” and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1.

                    “Letter of Credit” or “Letters of Credit” means any standby
letters of credit or similar instruments issued by Issuing Lender for the
account of Company pursuant to subsection 3.1 for the purpose of supporting
(i) Indebtedness of Company or any of its Subsidiaries in respect of industrial
revenue or development bonds or financings, (ii) workers’ compensation
liabilities of Company or any of its Subsidiaries, (iii) the obligations of
third party insurers of Company or any of its Subsidiaries arising by virtue of
the laws of any jurisdiction requiring third party insurers, (iv) obligations
with respect to Capital Leases or Operating Leases of Company or any of its
Subsidiaries, and (v) performance, payment, deposit or surety obligations of
Company or any of its Subsidiaries, in any case if required by law or
governmental rule or regulation or in accordance with custom and practice in the
industry.

                    “Letter of Credit Usage” means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lender and not theretofore reimbursed out of the
proceeds of Revolving Loans pursuant to subsection 3.3B or otherwise reimbursed
by Company.  For purposes of this definition, any amount described in clause (i)
or (ii) of the preceding sentence which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination.

                    “Lien” means any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.

                    “Loan” or “Loans” means one or more of the Revolving Loans.

                    “Loan Documents” means this Agreement, the Notes, the
Letters of Credit (and any applications for, or reimbursement agreements or
other documents or certificates executed by Company in favor of Issuing Lender
relating to, the Letters of Credit), the Subsidiary Guaranty and the Collateral
Documents.

                    “Loan Party” means each of Company and any of Company’s
Significant Subsidiaries from time to time executing a Loan Document, and “Loan
Parties” means all such Persons, collectively.

                    “Margin Stock” has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.

 

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                    “Material Adverse Effect” means (i) a material adverse
effect upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company and its Subsidiaries taken as a whole or
(ii) the impairment of the ability of any Loan Party to perform, or of
Administrative Agent or Lenders to enforce, the Obligations.

                    “Maximum Consolidated Capital Expenditures Amount” has the
meaning assigned to that term in subsection 7.8.

                    “Multiemployer Plan” means any Employee Benefit Plan that is
a “multiemployer plan” as defined in Section 3(37) of ERISA.

                    “Net Business Interruption Insurance Proceeds” means any
Cash payments or proceeds received by Company or any of its Subsidiaries under
any business interruption or similar insurance policy in respect of a covered
loss thereunder, net of any actual and reasonable documented costs incurred by
Company or any of its Subsidiaries in connection with the adjustment or
settlement of any claims of Company or such Subsidiary in respect thereof.

                    “Non-US Lender” means a Lender that is organized under the
laws of any jurisdiction other than the United States or any state or other
political subdivision thereof.

                    “Notes” means one or more of the Revolving Notes.

                    “Notice of Borrowing” means a notice substantially in the
form of Exhibit I annexed hereto.

                    “Notice of Conversion/Continuation” means a notice
substantially in the form of Exhibit II annexed hereto.

                    “Obligations” means all obligations of every nature of each
Loan Party from time to time owed to Administrative Agent, Lenders or any of
them under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.

                    “Officer” means the president, chief executive officer, a
vice president, chief financial officer, treasurer, general partner (if an
individual), managing member (if an individual) or other individual appointed by
the Governing Body or the Organizational Documents of a corporation,
partnership, trust or limited liability company to serve in a similar capacity
as the foregoing.

                    “Officer’s Certificate”, as applied to any Person that is a
corporation, partnership, trust or limited liability company, means a
certificate executed on behalf of such Person by one or more Officers of such
Person or one or more Officers of a general partner or a managing member if such
general partner or managing member is a corporation, partnership, trust or
limited liability company.

 

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                    “Operating Lease”, as applied to any Person, means any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.

                    “Organizational Documents” means the documents (including
Bylaws, if applicable) pursuant to which a Person that is a corporation,
partnership, trust or limited liability company is organized.

                    “Participant” means a purchaser of a participation in the
rights and obligations under this Agreement pursuant to subsection 10.1C.

                    “PBGC” means the Pension Benefit Guaranty Corporation or any
successor thereto.

                    “Pension Plan” means any Employee Benefit Plan, other than a
Multiemployer Plan, that is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA, and, for purposes of subsection 8.10, any Foreign Plan.

                    “Permitted Encumbrances” means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA, any such Lien imposed by a Government
Authority in connection with any Foreign Plan, any such Lien relating to or
imposed in connection with any Environmental Claim, and any such Lien expressly
prohibited by any applicable terms of any of the Collateral Documents):

 

     (i)     Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;

 

 

 

 

     (ii)     statutory Liens of landlords, Liens of collecting banks under the
UCC on items in the course of collection, statutory Liens and rights of set-off
of banks, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law, in each case incurred
in the ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of 5 days) are being contested in good faith by appropriate
proceedings, so long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any such contested
amounts, and (2) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral on account of such Lien;

 

 

 

 

     (iii)     deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of statutory obligations, bids, leases,
government contracts, trade contracts, and other similar obligations (exclusive
of obligations for the payment of borrowed money), so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;

 

 

 

 

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     (iv)     any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;

 

 

 

 

     (v)     licenses (with respect to Intellectual Property and other
property), leases or subleases granted to third parties in accordance with any
applicable terms of the Collateral Documents and not interfering in any material
respect with the ordinary conduct of the business of Company or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations;

 

 

 

 

     (vi)     easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries or result in a material diminution in the
value of any Collateral as security for the Obligations;

 

 

 

 

     (vii)     any (a) interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement, (b) Lien or restriction that the
interest or title of such lessor or sublessor may be subject to, or
(c) subordination of the interest of the lessee or sublessee under such lease to
any Lien or restriction referred to in the preceding clause (b), so long as the
holder of such Lien or restriction agrees to recognize the rights of such lessee
or sublessee under such lease;

 

 

 

 

     (viii)     Liens arising from filing UCC financing statements relating
solely to leases not prohibited by this Agreement;

 

 

 

 

     (ix)     any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;

 

 

 

 

     (x)     Liens granted pursuant to the Collateral Documents; and

 

 

 

 

     (xi)     Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of Company and its
Subsidiaries.

 

 

 

                    “Person” means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.

                    “Pledged Collateral” means, collectively, the “Pledged
Collateral” as defined in the Security Agreement and any Foreign Pledge
Agreement.

 

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                    “Potential Event of Default” means a condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default.

                    “Prime Rate” means the rate that Wells Fargo announces from
time to time as its prime lending rate, as in effect from time to time.  The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer.  Wells Fargo or any other Lender may
make commercial loans or other loans at rates of interest at, above or below the
Prime Rate.

                    “Prior Letters of Credit” means, collectively, (i) that
certain Letter of Credit No. 3020196 in the original face amount of
approximately $470,400.00, issued by Bank of America, N.A. on or about November
2, 1999 for the account of Company and for the benefit of 444 Madison LLC, (ii)
that certain Letter of Credit No. 3033942 in the original face amount of
approximately 3,257,059.50 British Pounds, issued by Bank of America, N.A. on or
about January 9, 2001 for the account of Company and for the benefit of Bank of
America London, and (iii) that certain Letter of Credit No. 3041996 in the
original face amount of approximately 125,000.00 British Pounds, issued by Bank
of America, N.A. on or about November 9, 2001 for the account of Company and for
the benefit of Bank of America London. 

                    “Prior Reimbursement Obligations” means any and all
reimbursement obligations in respect of the Prior Letters of Credit issued by
Bank of America, N.A. 

                    “Proceedings” means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.

                    “Pro Rata Share” means, with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein deemed purchased by any Lender, the percentage obtained by dividing
(x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving
Loan Exposure of all Lenders, as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1.  The initial Pro Rata Share
of each Lender is set forth opposite the name of that Lender set forth on
Schedule 2.1 annexed hereto.

                    “PTO” means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or, in the
opinion of Administrative Agent, desirable in order to create or perfect Liens
on any IP Collateral.

                    “Real Property Asset” means, at any time of determination,
any interest then owned by any Loan Party (other than any Foreign Subsidiary) in
any real property.

                    “Regional Consolidated Financial Statements” means, with
respect to the Foreign Subsidiaries located in Europe, Latin America and Asia,
financial statements prepared such that individual Subsidiaries within the
above-mentioned geographic areas are consolidated together and presented as
consolidated entities (e.g., presented as “consolidated European Subsidiaries”,
“consolidated Asian Subsidiaries”, etc.), each in form satisfactory to
Administrative Agent. 

 

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                    “Register” has the meaning assigned to that term in
subsection 2.1D.

                    “Regulation D” means Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time.

                    “Reimbursement Date” has the meaning assigned to that term
in subsection 3.3B.

                    “Release” means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.

                    “Request for Issuance” means a request substantially in the
form of Exhibit III annexed hereto.

                    “Requisite Lenders” means Revolving Lenders having or
holding more than 50% of the aggregate Revolving Loan Exposure of all Lenders.

                    “Restricted Junior Payment” means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and
(iv) any payment or prepayment of principal of, premium, if any, or interest on,
or redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.

                    “Revolving Lender” means a Lender that has a Revolving Loan
Commitment and/or that has an outstanding Revolving Loan.

                    “Revolving Loan Commitment” means the commitment of a
Revolving Lender to make Revolving Loans to Company pursuant to subsection 2.1A,
and “Revolving Loan Commitments” means such commitments of all Revolving Lenders
in the aggregate.

                    “Revolving Loan Commitment Termination Date” means February
14, 2005. 

                    “Revolving Loan Exposure”, with respect to any Revolving
Lender, means, as of any date of determination (i) prior to the termination of
the Revolving Loan Commitments, that Lender’s Revolving Loan Commitment, and
(ii) after the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Revolving Loans of that Lender
plus (b) in the event that Lender is Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that Lender (in each
case net of any

 

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participations purchased by other Lenders in such Letters of Credit or in any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit. 

                    “Revolving Loans” means the Loans made by Revolving Lenders
to Company pursuant to subsection 2.1A.

                    “Revolving Notes” means any promissory notes of Company
issued pursuant to subsection 2.1E to evidence the Revolving Loans of any
Revolving Lenders, substantially in the form of Exhibit IV annexed hereto, as
they may be amended, supplemented or otherwise modified from time to time.

                    “Securities” means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated, certificated or uncertificated, or otherwise, or in general any
instruments commonly known as “securities” or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

                    “Securities Act” means the Securities Act of 1933, as
amended from time to time, and any successor statute.

                    “Security Agreement” means the Security Agreement executed
and delivered on the Closing Date, substantially in the form of Exhibit X
annexed hereto, as such Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.

                    “Significant Subsidiary” means, collectively, (i) Korn/Ferry
International Futurestep, Inc., Korn/Ferry International GmbH, Korn/Ferry
International, Limited, Nippon Korn/Ferry International, Korn/Ferry
International (H.K.) Limited, and (ii), as of any date of determination, each
additional Subsidiary of Company that had on the last day of the Fiscal Quarter
then most recently ended, any of the following:  (a) total assets (excluding
intercompany Indebtedness owing from Company or any of the Significant
Subsidiaries) with a book value equal to 5% or greater of the total assets
(excluding intercompany Indebtedness) of Company and its Subsidiaries, on a
consolidated basis, or (b) total revenue (excluding intercompany revenue) equal
to 5% or greater of the total revenue (excluding intercompany revenue) of
Company and its Subsidiaries, on a consolidated basis, in each case as
determined in accordance with GAAP. 

                    “Solvent”, with respect to any Person, means that as of the
date of determination both (i)(a) the then fair saleable value of the property
of such Person is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount that
will be required to pay the probable liabilities on such Person’s then existing
debts as they become absolute and due considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person’s
capital is not unreasonably small in

 

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relation to its business or any contemplated or undertaken transaction; and
(c) such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due; and (ii) such Person is “solvent” within the meaning given that term
and similar terms under applicable laws relating to fraudulent transfers and
conveyances.  For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

                    “Subordinated Indebtedness” means (i) the Convertible
Subordinated Notes and the Convertible Series A Preferred Stock, and (ii) any
Indebtedness of Company incurred from time to time and subordinated in right of
payment to the Obligations.

                    “Subordination Agreement” has the meaning assigned to that
term in subsection 4.1N.

                    “Subsidiary”, with respect to any Person, means any
corporation, partnership, trust, limited liability company, association, Joint
Venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled (without regard
to the occurrence of any contingency) to vote in the election of the members of
the Governing Body is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.

                    “Subsidiary Guarantor” means any Domestic Significant
Subsidiary of Company that executes and delivers a counterpart of the Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant to
subsection 6.8.

                    “Subsidiary Guaranty” means the Subsidiary Guaranty executed
and delivered by existing Subsidiaries of Company on the Closing Date and to be
executed and delivered by additional Subsidiaries of Company from time to time
thereafter in accordance with subsection 6.8, substantially in the form of
Exhibit IX annexed hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.

                    “Supplemental Collateral Agent” has the meaning assigned to
that term in subsection 9.1B.

                    “Tax” or “Taxes” means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed, including interest, penalties, additions to tax and any
similar liabilities with respect thereto; except that, in the case of a Lender,
there shall be excluded (i) taxes that are imposed on the overall net income or
net profits (including franchise taxes imposed in lieu thereof) (a) by the
United States, (b) by any other Government Authority under the laws of which
such Lender is organized or has its principal office or maintains its applicable
lending office, or (c) by any jurisdiction solely as a result of a present or
former connection between such Lender and such jurisdiction (other than any such
connection arising solely from such Lender having executed, delivered or
performed its

 

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obligations or received a payment under, or enforced, any of the Loan
Documents), (ii) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which such Lender is located,
and (iii) any tax, assessment or other governmental charge that would not have
been imposed but for such Lender’s failure to comply with any certification,
identification or other reporting requirements concerning such Lender’s
nationality, residence, identity or connection with the United States, if
compliance is required as a precondition to exemption from or reduction of such
tax, assessment or other governmental charge. 

                    “Total Utilization of Revolving Loan Commitments” means, as
at any date of determination, the sum of (i) the aggregate principal amount of
all outstanding Revolving Loans plus (ii) the Letter of Credit Usage.

                    “UCC” means the Uniform Commercial Code as in effect in any
applicable jurisdiction.

                    “Wells Fargo” has the meaning assigned to that term in the
introduction to this Agreement.

                    “WF Letter of Credit” means that certain Letter of Credit
No. NZS472364 in the original face amount of approximately $470,400.00, issued
by Wells Fargo on or about February 12, 2003 for the account of Company and for
the benefit of 444 Madison LLC.

                     1.2     Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement.

                    Except as otherwise expressly provided in this Agreement,
all accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.  Financial statements and other
information required to be delivered by Company to Lenders pursuant to clauses
(ii), (iii), (iv) and (xii) of subsection 6.1 shall be prepared in accordance
with GAAP as in effect at the time of such preparation (and delivered together
with the reconciliation statements provided for in subsection 6.1(vi)). 
Calculations in connection with the definitions, covenants and other provisions
of this Agreement shall utilize GAAP as in effect on the date of determination,
applied in a manner consistent with that used in preparing the financial
statements referred to in subsection 5.3. If at any time any change in GAAP
would affect the computation of any financial ratio or requirement set forth in
any Loan Document, and Company, Administrative Agent or Requisite Lenders shall
so request, Administrative Agent, Lenders and Company shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of Requisite Lenders),
provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and Company shall
provide to Administrative Agent and Lenders reconciliation statements provided
for in subsection 6.1(vi).

                     1.3     Other Definitional Provisions and Rules of
Construction.

                    A.      Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference.

 

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                    B.      References to “Sections” and “subsections” shall be
to Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.  Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

                    C.     The use in any of the Loan Documents of the word
“include” or “including”, when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not nonlimiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.

Section 2.             AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

              2.1           Commitments; Making of Loans; the Register; Optional
Notes.

                    A.      Commitments.  Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Company herein set forth, each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount not exceeding its
Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to be
used for the purposes identified in subsection 2.5A.  The original amount of
each Revolving Lender’s Revolving Loan Commitment is set forth opposite its name
set forth on Schedule 2.1 annexed hereto and the aggregate original amount of
the Revolving Loan Commitments is $30,000,000; provided that the Revolving Loan
Commitments of Revolving Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to subsection 10.1B and
shall be reduced from time to time by the amount of any reductions thereto made
pursuant to subsection 2.4.  Each Revolving Lender’s Revolving Loan Commitment
shall expire on the Revolving Loan Commitment Termination Date and all Revolving
Loans and all other amounts owed hereunder with respect to the Revolving Loans
and the Revolving Loan Commitments shall be paid in full no later than that
date.  Amounts borrowed under this subsection 2.1A may be repaid and reborrowed
to but excluding the Revolving Loan Commitment Termination Date.  Anything
contained in this Agreement to the contrary notwithstanding, the Revolving Loans
and the Revolving Loan Commitments shall be subject to the limitation that in no
event shall the Total Utilization of Revolving Loan Commitments at any time
exceed the lesser of the Revolving Loan Commitments then in effect or the
Borrowing Base then in effect.

                    B.       Borrowing Mechanics.  Revolving Loans made on any
Funding Date (other than Revolving Loans made pursuant to subsection 3.3B) shall
be in an aggregate minimum amount of $500,000 and multiples of $100,000 in
excess of that amount; provided that Revolving Loans made on any Funding Date as
Eurodollar Rate Loans with a particular Interest Period shall be in an aggregate
minimum amount of $1,000,000 and multiples of $500,000 in excess of that

 

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amount.  Whenever Company desires that Lenders make Revolving Loans it shall
deliver to Administrative Agent a duly executed Notice of Borrowing no later
than 10:00 A.M. (California time) at least three Business Days in advance of the
proposed Funding Date (in the case of a Eurodollar Rate Loan) or on the proposed
Funding Date (in the case of a Base Rate Loan).  Revolving Loans may be
continued as or converted into Base Rate Loans and Eurodollar Rate Loans in the
manner provided in subsection 2.2D.  In lieu of delivering a Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a duly
executed Notice of Borrowing to Administrative Agent on or before the applicable
Funding Date.

                    Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by an Officer or
other person authorized to borrow on behalf of Company or for otherwise acting
in good faith under this subsection 2.1B or under subsection 2.2D, and upon
funding of Loans by Lenders, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans
pursuant to subsection 2.2D, in each case in accordance with this Agreement,
pursuant to any such telephonic notice Company shall have effected Loans or a
conversion or continuation, as the case may be, hereunder.

                    Company shall notify Administrative Agent prior to the
funding of any Loans in the event that any of the matters to which Company is
required to certify in the applicable Notice of Borrowing is no longer true and
correct as of the applicable Funding Date, and the acceptance by Company of the
proceeds of any Loans shall constitute a re-certification by Company, as of the
applicable Funding Date, as to the matters to which Company is required to
certify in the applicable Notice of Borrowing.

                    Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for, or a Notice of Conversion/Continuation for
conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice
in lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing or to effect
a conversion or continuation in accordance therewith.

                    C.       Disbursement of Funds.  All Revolving Loans shall
be made by Lenders simultaneously and proportionately to their respective Pro
Rata Shares, it being understood that neither Administrative Agent nor any
Lender shall be responsible for any default by any other Lender in that other
Lender’s obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender to make the particular type of Loan requested be increased or
decreased as a result of a default by any other Lender in that other Lender’s
obligation to make a Loan requested hereunder.  Promptly after receipt by
Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B (or
telephonic notice in lieu thereof), Administrative Agent shall notify each
Lender for that type of Loan of the proposed borrowing.  Each such Lender shall
make the amount of its Loan available to Administrative Agent not later than
10:00 A.M. (California time) on the applicable Funding Date in same day funds in
Dollars at the

 

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Funding and Payment Office.  Except as provided in subsection 3.3B with respect
to Revolving Loans used to reimburse Issuing Lender for the amount of a drawing
under a Letter of Credit issued by it, upon satisfaction or waiver of the
conditions precedent specified in subsections 4.1 (in the case of Loans made on
the Closing Date) and 4.2 (in the case of all Loans), Administrative Agent shall
make the proceeds of such Loans available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Loans received by Administrative Agent from Lenders to be credited to
the account of Company at the Funding and Payment Office.

                    Unless Administrative Agent shall have been notified by any
Lender prior to a Funding Date for any Loans that such Lender does not intend to
make available to Administrative Agent the amount of such Lender’s Loan
requested on such Funding Date, Administrative Agent may assume that such Lender
has made such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date.  If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate.  If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent’s demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans.  Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.

                    D.       The Register.

                    Administrative Agent, acting for these purposes solely as an
agent of Company (it being acknowledged that Administrative Agent, in such
capacity, and its officers, directors, employees, agent and affiliates shall
constitute Indemnitees under subsection 10.3), shall maintain (and make
available for inspection by Company upon reasonable prior notice at reasonable
times) at its address referred to in subsection 10.8 a register for the
recordation of, and shall record, the names and addresses of Lenders and the
Revolving Loan Commitment and Revolving Loans of each Lender from time to time
(the “Register”).  Company and Administrative Agent shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof; all
amounts owed with respect to any Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof; and any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.  Each Lender shall record on its internal
records the amount of its Loans

 

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and Commitments and each payment in respect hereof, and any such recordation
shall be conclusive and binding on Company, absent manifest error, subject to
the entries in the Register, which shall, absent manifest error, govern in the
event of any inconsistency with any Lender’s records.  Failure to make any
recordation in the Register or in any Lender’s records, or any error in such
recordation, shall not affect any Loans or Commitments or any Obligations in
respect of any Loans.

                    E.       Optional Notes.  If so requested by any Lender by
written notice to Company (with a copy to Administrative Agent) at least two
Business Days prior to the Closing Date or at any time thereafter, Company shall
execute and deliver to such Lender (and/or, if applicable and if so specified in
such notice, to any Person who is an assignee of such Lender pursuant to
subsection 10.1) on the Closing Date (or, if such notice is delivered after the
Closing Date, promptly after Company’s receipt of such notice) a promissory note
or promissory notes to evidence such Lender’s Revolving Loans, substantially in
the form of Exhibit IV annexed hereto, with appropriate insertions.

                     2.2       Interest on the Loans.

                    A.        Rate of Interest.  Subject to the provisions of
subsections 2.6 and 2.7, each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Eurodollar Rate.  The applicable basis for determining the rate of interest
with respect to any Revolving Loan shall be selected by Company initially at the
time a Notice of Borrowing is given with respect to such Loan pursuant to
subsection 2.1B, and the basis for determining the interest rate with respect to
any Revolving Loan may be changed from time to time pursuant to subsection
2.2D.  If on any day a Revolving Loan is outstanding with respect to which
notice has not been delivered to Administrative Agent in accordance with the
terms of this Agreement specifying the applicable basis for determining the rate
of interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate.  Subject to the provisions of subsections 2.2E, 2.2G
and 2.7, the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus 1.00% per annum
or (ii)if a Eurodollar Rate Loan, then at the sum of the Eurodollar Rate plus
2.50% per annum.

                    B.        Interest Periods.  In connection with each
Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be, select an
interest period (each an “Interest Period”) to be applicable to such Loan, which
Interest Period shall be, at Company’s option, either a one, two, three or six
month period; provided that:

 

          (i)     the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan converted to
a Eurodollar Rate Loan;

 

 

 

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          (ii)     in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;

 

 

 

          (iii)    if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

 

 

 

          (iv)    any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (v) of this subsection 2.2B, end on the last Business Day of a calendar
month;

 

 

 

          (v)     no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Loan Commitment Termination
Date;

 

 

 

          (vi)    there shall be no more than five Interest Periods outstanding
at any time; and

 

 

 

          (vii)   in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an Interest
Period of one month.

 

 

                    C.        Interest Payments.  Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in arrears on and to
each Interest Payment Date applicable to that Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity) provided that in the event any Revolving Loans that
are Base Rate Loans are prepaid pursuant to subsection 2.4A(i), interest accrued
on such Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).

                    D.        Conversion or Continuation.  Subject to the
provisions of subsection 2.6, Company shall have the option (i) to convert at
any time all or any part of its outstanding Revolving Loans equal to $500,000
and multiples of $100,000 in excess of that amount from Loans bearing interest
at a rate determined by reference to one basis to Loans bearing interest at a
rate determined by reference to an alternative basis or (ii) upon the expiration
of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or
any portion of such Loan equal to $1,000,000 and multiples of $500,000 in excess
of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar
Rate Loan may only be converted into a Base Rate Loan on the expiration date of
an Interest Period applicable thereto.

                    Company shall deliver a duly executed Notice of
Conversion/Continuation to Administrative Agent no later than 10:00 A.M.
(California time) at least one Business Day in

 

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advance of the proposed conversion date (in the case of a conversion to a Base
Rate Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan).  In lieu of delivering a Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a duly executed Notice of Conversion/Continuation to
Administrative Agent on or before the proposed conversion/continuation date. 
Upon receipt of written or telephonic notice of any proposed
conversion/continuation under this subsection 2.2D, Administrative Agent shall
promptly transmit such notice by telefacsimile or telephone to each Lender of
the Loan subject to the Notice of Conversion/Continuation.

                    E.        Default Rate.  Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
Loans and, to the extent permitted by applicable law, any interest payments
thereon not paid when due and any fees and other amounts then due and payable
hereunder, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans.  Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Administrative
Agent or any Lender. 

                    F.        Computation of Interest.  Interest on the Loans
shall be computed on the basis of a 360-day year, in each case for the actual
number of days elapsed in the period during which it accrues.  In computing
interest on any Loan, the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day’s
interest shall be paid on that Loan.

                    G.        Maximum Rate.  Notwithstanding the foregoing
provisions of this subsection 2.2, in no event shall the rate of interest
payable by Company with respect to any Loan exceed the maximum rate of interest
permitted to be charged under applicable law.

 

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                     2.3    Fees.

                    A.     Commitment Fees. Company agrees to pay to
Administrative Agent, for distribution to each Revolving Lender in proportion to
that Lender’s Pro Rata Share, commitment fees for the period from and including
the Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to the average of the daily excess of the Revolving Loan Commitments over
the sum of (i) the aggregate principal amount of outstanding Revolving Loans
plus (ii) the Letter of Credit Usage multiplied by 0.50% per annum, such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on the first such date
to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date. 

                    B.     Other Fees. Company agrees to pay to Administrative
Agent such fees in the amounts and at the times separately agreed upon between
Company and Administrative Agent.

                     2.4     Repayments, Prepayments and Reductions in Revolving
Loan Commitments; General Provisions Regarding Payments; Application of Proceeds
of Collateral and Payments Under Subsidiary Guaranty.

                    A.     Prepayments and Reductions in Revolving Loan
Commitments.

 

          (i)     Voluntary Prepayments.  Company may, upon any Business Day
with prior written or telephonic notice, in the case of Base Rate Loans, and
three Business Days’ prior written or telephonic notice, in the case of
Eurodollar Rate Loans, in each case given to Administrative Agent by 10:00 A.M.
(California time) on the date required and, if given by telephone, promptly
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by telefacsimile
or telephone to each Lender for the Loans to be prepaid), at any time and from
time to time prepay any Revolving Loans on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and multiples of $500,000 in excess
of that amount with respect to Eurodollar Rate Loans, and $500,000 and multiples
of $100,000 in excess of that amount with respect to Base rate Loans.  Notice of
prepayment having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment date
specified therein.  Any such voluntary prepayment shall be applied as specified
in subsection 2.4A(iv).

 

 

 

          (ii)     Voluntary Reductions of Revolving Loan Commitments.  Company
may, upon not less than three Business Days’ prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by telefacsimile
or telephone to each Revolving Lender), at any time and from time to time
terminate in whole or permanently reduce in part, without premium or penalty,
the Revolving Loan Commitments in an amount up to the amount by which the
Revolving Loan Commitments exceed the Total Utilization of Revolving Loan
Commitments at the time of such proposed termination or

 

 

 

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reduction; provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $1,000,000 and multiples
of $1,000,000 in excess of that amount.  Company’s notice to Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Revolving Loan Commitments shall be effective on
the date specified in Company’s notice and shall reduce the Revolving Loan
Commitment of each Revolving Lender proportionately to its Pro Rata Share.  Any
such voluntary reduction of the Revolving Loan Commitments shall be applied as
specified in subsection 2.4A(iv).

 

 

 

          (iii)     Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.  The Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4A(iv):

 

 

 

 

           (a)     Prepayments and Reductions from Net Business Interruption
Insurance Proceeds.  No later than the first Business Day following the date of
receipt by Administrative Agent or by Company or any of its Subsidiaries of any
Net Business Interruption Insurance Proceeds that are required to be applied to
prepay the Loans and/or reduce the Revolving Loan Commitments pursuant to the
provisions of subsection 6.4C, Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an aggregate amount
equal to the amount of such Net Business Interruption Insurance Proceeds.

 

 

 

 

 

          (b)     Calculations of Net Business Interruption Insurance Proceeds
Amounts; Additional Prepayments and Reductions Based on Subsequent
Calculations.  Concurrently with any prepayment of the Loans and/or reduction of
the Revolving Loan Commitments pursuant to subsection 2.4A(iii)(a), Company
shall deliver to Administrative Agent an Officer’s Certificate demonstrating the
calculation of the amount of the applicable Net Business Interruption Insurance
Proceeds that gave rise to such prepayment and/or reduction.  In the event that
Company shall subsequently determine that the actual amount was greater than the
amount set forth in such Officer’s Certificate, Company shall promptly make an
additional prepayment of the Loans (and/or, if applicable, the Revolving Loan
Commitments shall be permanently reduced) in an amount equal to the amount of
such excess, and Company shall concurrently therewith deliver to Administrative
Agent an Officer’s Certificate demonstrating the derivation of the additional
amount resulting in such excess.

 

 

 

 

 

          (c)     Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments or Due to Insufficient Borrowing Base.  Company shall from time
to time prepay the Revolving Loans to the extent necessary so that the Total
Utilization of Revolving Loan Commitments shall not at any time exceed the

 

 

 

 

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lesser of the Revolving Loan Commitments then in effect and the Borrowing Base
then in effect.

 

 

 

          (iv)     Application of Prepayments.

 

 

 

 

          (a)     Application of Voluntary Prepayments by Type of Loans and
Order of Maturity.  Any voluntary prepayments pursuant to subsection 2.4A(i)
shall be applied as specified by Company in the applicable notice of prepayment;
provided that in the event Company fails to specify the Loans to which any such
prepayment shall be applied, such prepayment shall be applied to repay
outstanding Revolving Loans to the full extent thereof.

 

 

 

 

 

          (b)     Application of Mandatory Prepayments by Type of Loans.  Except
as provided in subsection 2.4C, any amount required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan Commitments
pursuant to subsection 2.4A(iii)(a) shall be applied first, to prepay the
Revolving Loans to the full extent thereof and to further permanently reduce the
Revolving Loan Commitments by the amount of such prepayment, and second, to the
extent of any remaining portion of such amount, to further permanently reduce
the Revolving Loan Commitments to the full extent thereof.  Any mandatory
reduction of Revolving Commitments pursuant to this subsection 2.4A shall be in
proportion to each Revolving Lender’s Pro Rata Share.

 

 

 

 

 

          (c)     Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans.  Any prepayment shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans, in each case in
a manner that minimizes the amount of any payments required to be made by
Company pursuant to subsection 2.6D.

 

 

 

                    B.     General Provisions Regarding Payments.

 

          (i)     Manner and Time of Payment.  All payments by Company of
principal, interest, fees and other Obligations shall be made in Dollars in same
day funds, without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Administrative Agent not later than 10:00 A.M.
(California time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that time on
such due date shall be deemed to have been paid by Company on the next
succeeding Business Day.  Company hereby authorizes Administrative Agent to
charge its accounts with Administrative Agent in order to cause timely payment
to be made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts for
that purpose).

 

 

          (ii)     Application of Payments to Principal and Interest.  Except as
provided in subsection 2.2C, all payments in respect of the principal amount of
any Loan shall

 

 

 

 

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include payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments (and, in any event, any payments in respect of
any Loan on a date when interest is due and payable with respect to such Loan)
shall be applied to the payment of interest before application to principal.

 

 

 

          (iii)     Apportionment of Payments.  Aggregate principal and interest
payments in respect of Revolving Loans shall be apportioned among all
outstanding Loans to which such payments relate, in each case proportionately to
Lenders’ respective Pro Rata Shares.  Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by Administrative
Agent and the commitment fees of such Lender, if any, when received by
Administrative Agent pursuant to subsection 2.3.  Notwithstanding the foregoing
provisions of this subsection 2.4B(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give
effect thereto in apportioning payments received thereafter.

 

 

 

          (iv)     Payments on Business Days.  Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder
or of the commitment fees hereunder, as the case may be.

 

 

 

          (v)     Notation of Payment.  Each Lender agrees that before disposing
of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments previously made thereon and of
the date to which interest thereon has been paid; provided that the failure to
make (or any error in the making of) a notation of any Loan made under such Note
shall not limit or otherwise affect the obligations of Company hereunder or
under such Note with respect to any Loan or any payments of principal or
interest on such Note.

 

 

 

                    C.     Application of Proceeds of Collateral and Payments
after Event of Default.

                    Upon termination of the Revolving Loan Commitments or upon
the occurrence and during the continuation of an Event of Default, if requested
by Requisite Lenders (a) all payments received on account of the Obligations,
whether from Company, from any Guarantor or otherwise, shall be applied by
Administrative Agent against the Obligations and (b) all proceeds received by
Administrative Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral under any Collateral Document
may, in the discretion of Administrative Agent, be held by Administrative Agent
as Collateral for, and/or (then or at any time thereafter) applied in full or in
part by Administrative Agent against, the

 

 

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applicable Secured Obligations (as defined in such Collateral Document), in each
case in the following order of priority:

 

 

 

          (i)     to the payment of all costs and expenses of such sale,
collection or other realization, all other expenses, liabilities and advances
made or incurred by Administrative Agent in connection therewith, and all
amounts for which Administrative Agent is entitled to compensation (including
the fees described in subsection 2.3), reimbursement and indemnification under
any Loan Document and all advances made by Administrative Agent thereunder for
the account of the applicable Loan Party, and to the payment of all costs and
expenses paid or incurred by Administrative Agent in connection with the Loan
Documents, all in accordance with subsections 9.4, 10.2 and 10.3 and the other
terms of this Agreement and the Loan Documents;

 

 

 

          (ii)     thereafter, to the payment of all other Obligations for the
ratable benefit of the holders thereof (subject to the provisions of subsection
2.4B(ii) hereof); and

 

 

 

          (iii)     thereafter, to the payment to or upon the order of such Loan
Party or to whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct.

 

 

                     2.5     Use of Proceeds.

                    A.     Revolving Loans.  The proceeds of any Revolving Loans
shall be applied by Company for working capital and other general corporate
purposes, which may include the making of intercompany loans to any of Company’s
Subsidiaries, to the extent permitted pursuant to subsection 7.1, for their own
general corporate purposes.

                    B.     Margin Regulations.  No portion of the proceeds of
any borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation U, Regulation T or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.

                     2.6     Special Provisions Governing Eurodollar Rate Loans.

                    Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:

                    A.     Determination of Applicable Interest Rate.  As soon
as practicable after 10:00 A.M. (California time) on each Interest Rate
Determination Date, Administrative Agent shall determine (which determination
shall, absent manifest error, be conclusive and binding upon all parties) the
interest rate that shall apply to the Eurodollar Rate Loans for which an
interest rate is then being determined for the applicable Interest Period and
shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to Company and each Lender.

 

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                    B.     Inability to Determine Applicable Interest Rate.  In
the event that Administrative Agent shall have determined (which determination
shall be conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date that by reason of circumstances affecting the London
interbank market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Eurodollar Rate, Administrative Agent shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to Company and
each Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent
notifies Company and Lenders that the circumstances giving rise to such notice
no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be for a Base Rate Loan.

                    C.     Illegality or Impracticability of Eurodollar Rate
Loans.  In the event that on any date any Lender shall have determined (which
determination shall be conclusive and binding upon all parties hereto but shall
be made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the London interbank market or
the position of such Lender in that market, then, and in any such event, such
Lender shall be an “Affected Lender” and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender).  Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan,
(c) the Affected Lender’s obligation to maintain its outstanding Eurodollar Rate
Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination.  Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender).  Except as
provided in the immediately preceding

 

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sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.

                    D.     Compensation For Breakage or Non-Commencement of
Interest Periods.  Company shall compensate each Lender, upon written request by
that Lender pursuant to subsection 2.8, for all reasonable losses, expenses and
liabilities (including any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request therefor, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request therefor, (ii) if any prepayment
or other principal payment or any conversion of any of its Eurodollar Rate Loans
(including any prepayment or conversion occasioned by the circumstances
described in subsection 2.6C) occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.

                    E.     Booking of Eurodollar Rate Loans.  Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any
of its branch offices or the office of an Affiliate of that Lender.

                    F.     Assumptions Concerning Funding of Eurodollar Rate
Loans.  Calculation of all amounts payable to a Lender under this subsection 2.6
and under subsection 2.7A shall be made as though that Lender had funded each of
its Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan
and having a maturity comparable to the relevant Interest Period, whether or not
its Eurodollar Rate Loans had been funded in such manner.

                    G.     Eurodollar Rate Loans After Default.  After the
occurrence of and during the continuation of a Potential Event of Default or an
Event of Default, (i) Company may not elect to have a Loan be made or maintained
as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest
Period then in effect for that Loan and (ii) subject to the provisions of
subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be for a
Base Rate Loan or, if the conditions to making a Loan set forth in subsection
4.2 cannot then be satisfied, to be rescinded by Company.

 

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                     2.7     Increased Costs; Taxes; Capital Adequacy.

                    A.     Compensation for Increased Costs.  Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender (including Issuing
Lender) shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or other Government Authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other Government Authority (whether or not having the force of
law):

 

          (i)     subjects such Lender to any additional Tax with respect to
this Agreement or any of its obligations hereunder (including with respect to
issuing or maintaining any Letters of Credit or purchasing or maintaining any
participations therein or maintaining any Commitment hereunder) or any payments
to such Lender of principal, interest, fees or any other amount payable
hereunder;

 

 

 

          (ii)     imposes, modifies or holds applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, or advances
or loans by, or other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other requirements
with respect to Eurodollar Rate Loans that are reflected in the definition of
Eurodollar Rate); or

 

 

 

          (iii)     imposes any other condition (other than with respect to
Taxes) on or affecting such Lender or its obligations hereunder or the London
interbank market;

 

 

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loans or Commitments or agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto; then, in any such
case, Company shall promptly pay to such Lender, upon receipt of the statement
referred to in subsection 2.8A, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder.

                   B.     Taxes.

 

           (i)     Payments to Be Free and Clear.  All sums payable by Company
under this Agreement and the other Loan Documents shall be paid free and clear
of, and without any deduction or withholding on account of, any Tax imposed,
levied, collected, withheld or assessed by or within the United States of
America or any political subdivision in or of

 

 

 

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the United States of America or any other jurisdiction from which a payment is
made by or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at the time of
payment.

 

 

 

          (ii)     Grossing-up of Payments.  If Company or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by Company to Administrative Agent or any Lender
under any of the Loan Documents:

 

 

 

 

          (a)     Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company becomes
aware of it;

 

 

 

 

 

          (b)     Company shall pay any such Tax when such Tax is due, such
payment to be made (if the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Administrative Agent or such Lender,
as the case may be) on behalf of and in the name of Administrative Agent or such
Lender;

 

 

 

 

 

          (c)     the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to the extent
necessary to ensure that, after the making of that deduction, withholding or
payment, Administrative Agent or such Lender, as the case may be, receives on
the due date a net sum equal to what it would have received had no such
deduction, withholding or payment been required or made; and

 

 

 

 

 

          (d)     within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after the due
date of payment of any Tax which it is required by clause (b) above to pay,
Company shall deliver to Administrative Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;

 

 

 

provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date on which such Lender became a Lender in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect on the date on which such Lender became a Lender, in respect of payments
to such Lender.

 

          (iii)     Evidence of Exemption from U.S. Withholding Tax.

 

 

 

 

          (a)     Each Non-US Lender shall deliver to Administrative Agent and
to Company, on or prior to the Closing Date (in the case of each Lender listed
on the signature pages hereof) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at

 

 

 

 

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such other times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its discretion), two
original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any
successor forms) properly completed and duly executed by such Lender, or, in the
case of a Non-US Lender claiming exemption from United States federal
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of “portfolio interest”, a form W-8BEN, and, in the case of
a Lender that has certified in writing to Administrative Agent that it is not a
“bank” (as defined in Section 881(c)(3)(A) of the Internal Revenue Code), a
certificate of such Lender certifying that such Lender is not (i) a “bank” for
purposes of Section 881(c) of the Internal Revenue Code, (ii) a ten-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of Company or (iii) a controlled foreign corporation related to Company
(within the meaning of Section 864(d)(4) of the Internal Revenue Code) in each
case together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to United States withholding tax with
respect to any payments to such Lender of interest payable under any of the Loan
Documents.

 

 

 

 

 

          (b)     Each Non-US Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Lender under any of the Loan Documents (for example, in the case of a
typical participation by such Lender), shall deliver to Administrative Agent and
to Company, on or prior to the Closing Date (in the case of each Lender listed
on the signature pages hereof), on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), or on such later date when such Lender ceases to act for its own
account with respect to any portion of any such sums paid or payable, and at
such other times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its discretion), (1)
two original copies of the forms or statements required to be provided by such
Lender under subsection 2.7B(iii)(a), properly completed and duly executed by
such Lender, to establish the portion of any such sums paid or payable with
respect to which such Lender acts for its own account that is not subject to
United States withholding tax, and (2) two original copies of Internal Revenue
Service Form W-8IMY (or any successor forms) properly completed and duly
executed by such Lender, together with any information, if any, such Lender
chooses to transmit with such form, and any other certificate or statement of
exemption required under the Internal Revenue Code or the regulations issued
thereunder, to establish that such Lender is not acting for its own account with
respect to a portion of any such sums payable to such Lender.

 

 

 

 

 

          (c)     Each Non-US Lender hereby agrees, from time to time after the
initial delivery by such Lender of such forms, whenever a lapse in time or
change in circumstances renders such forms, certificates or other evidence so
delivered

 

 

 

 

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Credit Agreement

 

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obsolete or inaccurate in any material respect, that such Lender shall promptly
(1) deliver to Administrative Agent and to Company two original copies of
renewals, amendments or additional or successor forms, properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption required in order to confirm or establish that such Lender is not
subject to United States withholding tax with respect to payments to such Lender
under the Loan Documents and, if applicable, that such Lender does not act for
its own account with respect to any portion of such payment, or (2) notify
Administrative Agent and Company of its inability to deliver any such forms,
certificates or other evidence.

 

 

 

 

 

          (d)     Company shall not be required to pay any additional amount to
any Non-US Lender under clause (c) of subsection 2.7B(ii), (1) with respect to
any Tax required to be deducted or withheld on the basis of the information,
certificates or statements of exemption such Lender chooses to transmit with an
Internal Revenue Service Form W-8IMY pursuant to subsection 2.7B(iii)(b)(2) or
(2) if such Lender shall have failed to satisfy the requirements of clause (a),
(b) or (c)(1) of this subsection 2.7B(iii); provided that if such Lender shall
have satisfied the requirements of subsection 2.7B(iii)(a) on the date such
Lender became a Lender, nothing in this subsection 2.7B(iii)(d) shall relieve
Company of its obligation to pay any amounts pursuant to subsection 2.7B(ii)(c)
in the event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).

 

 

 

                   C.     Capital Adequacy Adjustment.  If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any Government Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Government Authority, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender’s Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in subsection 2.8A, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction.

 

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                     2.8     Statement of Lenders; Obligation of Lenders and
Issuing Lender to Mitigate.

                    A.     Statements.  Each Lender claiming compensation or
reimbursement pursuant to subsection 2.6D, 2.7 or 2.8B shall deliver to Company
(with a copy to Administrative Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such compensation or
reimbursement, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.

                    B.     Mitigation.  Each Lender and Issuing Lender agrees
that, as promptly as practicable after the officer of such Lender or Issuing
Lender responsible for administering the Loans or Letters of Credit of such
Lender or Issuing Lender, as the case may be, becomes aware of the occurrence of
an event or the existence of a condition that would cause such Lender to become
an Affected Lender or that would entitle such Lender or Issuing Lender to
receive payments under subsection 2.7, use reasonable effort to make, issue,
fund or maintain the Commitments of such Lender or the Affected Loans or Letters
of Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, if (i) as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would cease
to exist or the additional amounts which would otherwise be required to be paid
to such Lender or Issuing Lender pursuant to subsection 2.7 would be materially
reduced and (ii) as determined by such Lender or Issuing Lender in its sole
discretion, such action would not otherwise be disadvantageous to such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8B unless Company agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described above.

                     2.9     Replacement of a Lender.

                    If Company receives a statement of amounts due pursuant to
subsection 2.8A from a Lender, a Revolving Lender defaults in its obligations to
fund a Revolving Loan pursuant to this Agreement, or a Lender becomes an
Affected Lender (any such Lender, a “Subject Lender”), so long as (i) no
Potential Event of Default or Event of Default shall have occurred and be
continuing and Company has obtained a commitment from another Lender or an
Eligible Assignee to purchase at par the Subject Lender’s Loans and assume the
Subject Lender’s Commitments and all other obligations of the Subject Lender
hereunder, (ii) such Lender is not Issuing Lender with respect to any Letters of
Credit outstanding (unless all such Letters of Credit are terminated or
arrangements acceptable to Issuing Lender (such as a “back-to-back” letter of
credit) are made) and (iii), if applicable, the Subject Lender is unwilling to
withdraw the notice delivered to Company pursuant to subsection 2.8 and/or is
unwilling to remedy its default upon 10 days prior written notice to the Subject
Lender and Administrative Agent, Company may require the Subject Lender to
assign all of its Loans and Commitments to such other Lender, Lenders, Eligible
Assignee or Eligible Assignees pursuant to the provisions of subsection 10.1B;
provided that, prior to or concurrently with such replacement, (1) the Subject
Lender shall have received payment in full of all principal, interest, fees and
other amounts (including all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable)) through such date of replacement and a

 

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 release from its obligations under the Loan Documents, (2) the processing fee
required to be paid by subsection 10.1B(i) shall have been paid to
Administrative Agent, and (3) all of the requirements for such assignment
contained in subsection 10.1B, including, without limitation, the consent of
Administrative Agent (if required) and the receipt by Administrative Agent of an
executed Assignment Agreement and other supporting documents, have been
fulfilled.

Section 3.     LETTERS OF CREDIT

 

 

3.1     Issuance of Letters of Credit and Lenders’ Purchase of Participations
Therein.

 

 

             A.      Letters of Credit.  In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A, Company may request,
in accordance with the provisions of this subsection 3.1, from time to time
during the period from the Closing Date to but excluding the 30th day prior to
the Revolving Loan Commitment Termination Date, that Issuing Lender issue
Letters of Credit payable on a sight basis for the account of Company for the
purposes specified in the definition of Letters of Credit.  Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, Issuing Lender shall issue such Letters
of Credit in accordance with the provisions of this subsection 3.1; provided
that Company shall not request that Issuing Lender issue (and Issuing Lender
shall not issue):

 

 

 

 

          (i)     any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the lesser of
the Revolving Loan Commitments then in effect or the Borrowing Base then in
effect;

 

 

 

 

          (ii)     any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $8,000,000;

 

 

 

          (iii)     any Letter of Credit having an expiration date later than
the earlier of (a) ten days prior to the Revolving Loan Commitment Termination
Date and (b) the date which is one year from the date of issuance of such Letter
of Credit; provided that the immediately preceding clause (b) shall not prevent
Issuing Lender from agreeing that a Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each unless
Issuing Lender elects not to extend for any such additional period; and
provided, further that Issuing Lender shall elect not to extend such Letter of
Credit if it has knowledge that an Event of Default has occurred and is
continuing (and has not been waived in accordance with subsection 10.6) at the
time Issuing Lender must elect whether or not to allow such extension;

 

 

 

          (iv)     any Letter of Credit issued for the purpose of supporting (a)
trade payables or (b) any Indebtedness constituting “antecedent debt” (as that
term is used in Section 547 of the Bankruptcy Code); or

 

 

 

 

          (v)     any Letter of Credit denominated in a currency other than
Dollars or Pounds.

 

 

 

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On and after the date of this Agreement, the WF Letter of Credit shall be deemed
for all purposes, including for purposes of the fees to be collected pursuant to
subsection 3.2, and reimbursement of costs and expenses to the extent provided
herein, to be a Letter of Credit outstanding under this Agreement and entitled
to the benefits of this Agreement and the other Loan Documents, and shall be
governed by the applications and agreements pertaining thereto and by this
Agreement; provided, however, that, notwithstanding any other provision of this
Agreement, no fees with respect to the issuance of the WF Letter of Credit shall
be due hereunder.

                    B.     Mechanics of Issuance.

 

          (i)     Request for Issuance.  Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a Request for
Issuance no later than 10:00 A.M. (California time) at least three Business
Days, or such shorter period as may be agreed to by Issuing Lender in any
particular instance, in advance of the proposed date of issuance.  Issuing
Lender, in its reasonable discretion, may require changes in the text of the
proposed Letter of Credit or any documents described in or attached to the
Request for Issuance.  In furtherance of the provisions of subsection 10.8, and
not in limitation thereof, Company may submit Requests for Issuance by
telefacsimile and Administrative Agent and Issuing Lender may rely and act upon
any such Request for Issuance without receiving an original signed copy
thereof.  No Letter of Credit shall require payment against a conforming demand
for payment to be made thereunder on the same business day (under the laws of
the jurisdiction in which the office of Issuing Lender to which such demand for
payment is required to be presented is located) that such demand for payment is
presented if such presentation is made after 10:00 A.M. (in the time zone of
such office of Issuing Lender) on such business day.

 

 

 

          Company shall notify Issuing Lender prior to the issuance of any
Letter of Credit in the event that any of the matters to which Company is
required to certify in the applicable Request for Issuance is no longer true and
correct as of the proposed date of issuance of such Letter of Credit, and upon
the issuance of any Letter of Credit Company shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to which
Company is required to certify in the applicable Request for Issuance.

 

 

 

          (ii)     Issuance of Letter of Credit.  Upon satisfaction or waiver
(in accordance with subsection 10.6) of the conditions set forth in subsection
4.3, Issuing Lender shall issue the requested Letter of Credit in accordance
with Issuing Lender’s standard operating procedures.

 

 

 

          (iii)     Notification to Revolving Lenders.  Upon the issuance of or
amendment to any Letter of Credit Issuing Lender shall promptly notify
Administrative Agent and Company of such issuance or amendment in writing and
such notice shall be accompanied by a copy of such Letter of Credit or
amendment.  Upon receipt of such notice (or, if Administrative Agent is Issuing
Lender, together with such notice), Administrative Agent shall notify each
Revolving Lender in writing of such issuance or

 

 

 

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amendment and the amount of such Revolving Lender’s respective participation in
such Letter of Credit or amendment, and, if so requested by a Revolving Lender,
Administrative Agent shall provide such Lender with a copy of such Letter of
Credit or amendment.

 

 

                    C.     Revolving Lenders’ Purchase of Participations in
Letters of Credit.  Immediately upon the issuance of each Letter of Credit, each
Revolving Lender shall be deemed to, and hereby agrees to, have irrevocably
purchased from Issuing Lender a participation in such Letter of Credit and any
drawings honored thereunder in an amount equal to such Revolving Lender’s Pro
Rata Share of the maximum amount that is or at any time may become available to
be drawn thereunder.

                     3.2     Letter of Credit Fees.

                    Company agrees to pay, with respect to Letters of Credit
issued hereunder, (i) a fronting fee, payable directly to Issuing Lender for its
own account, equal to the greater of (a) $500 and (b) 0.25% per annum of the
daily amount available to be drawn under such Letter of Credit and (ii) a letter
of credit fee, payable to Administrative Agent for the account of Revolving
Lenders, equal to 2.50% per annum of the daily amount available to be drawn
under such Letter of Credit, each such fronting fee or letter of credit fee to
be payable in arrears on and to (but excluding) each March 31, June 30,
September 30 and December 31 of each year and computed on the basis of a 360-day
year for the actual number of days elapsed, and (ii) with respect to the
issuance, amendment or transfer of each Letter of Credit and each payment of a
drawing made thereunder (without duplication of the fees payable under clauses
(i) above), documentary and processing charges payable directly to Issuing
Lender for its own account in accordance with Issuing Lender’s standard schedule
for such charges in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.  For purposes of calculating any fees payable under
this subsection 3.2, (1) the daily amount available to be drawn under any Letter
of Credit shall be determined as of the close of business on any date of
determination and (2) any amount described in such clauses which is denominated
in a currency other than Dollars shall be valued based on the applicable
Exchange Rate for such currency as of the applicable date of determination. 
Promptly upon receipt by Administrative Agent of any amount described in clause
(i)(b) of this subsection 3.2, Administrative Agent shall distribute to each
Revolving Lender its Pro Rata Share of such amount.

                     3.3     Drawings and Reimbursement of Amounts Paid Under
Letters of Credit.

                    A.     Responsibility of Issuing Lender With Respect to
Drawings.  In determining whether to honor any drawing under any Letter of
Credit by the beneficiary thereof, Issuing Lender shall be responsible only to
examine the documents delivered under such Letter of Credit with reasonable care
so as to ascertain whether they appear on their face to be in accordance with
the terms and conditions of such Letter of Credit.

                    B.     Reimbursement by Company of Amounts Paid Under
Letters of Credit.  In the event Issuing Lender has determined to honor a
drawing under a Letter of Credit issued by it,

 

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Issuing Lender shall immediately notify Company and Administrative Agent, and
Company shall reimburse Issuing Lender on or before the Business Day immediately
following the date on which such drawing is honored (the “Reimbursement Date”)
in an amount in Dollars (which amount, in the case of a payment under a Letter
of Credit which is denominated in a currency other than Dollars, shall be
calculated by reference to the applicable Exchange Rate) and in same day funds
equal to the amount of such payment; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and Issuing Lender prior to 10:00 A.M. (California
time) on the date such drawing is honored that Company intends to reimburse
Issuing Lender for the amount of such payment with funds other than the proceeds
of Revolving Loans, Company shall be deemed to have given a timely Notice of
Borrowing to Administrative Agent requesting Revolving Lenders to make Revolving
Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars
(which amount, in the case of a payment under a Letter of Credit which is
denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Exchange Rate) equal to the amount of such payment and (ii)
subject to satisfaction or waiver of the conditions specified in subsection
4.2C, Revolving Lenders shall, on the Reimbursement Date, make Revolving Loans
that are Base Rate Loans in the amount of such payment, the proceeds of which
shall be applied directly by Administrative Agent to reimburse Issuing Lender
for the amount of such payment; and provided, further that if for any reason
proceeds of Revolving Loans are not received by Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such payment, Company
shall reimburse Issuing Lender, on demand, in an amount in same day funds equal
to the excess of the amount of such payment over the aggregate amount of such
Revolving Loans, if any, which are so received.  Nothing in this subsection 3.3B
shall be deemed to relieve any Revolving Lender from its obligation to make
Revolving Loans on the terms and conditions set forth in this Agreement, and
Company shall retain any and all rights it may have against any Revolving Lender
resulting from the failure of such Revolving Lender to make such Revolving Loans
under this subsection 3.3B.

                    C.     Payment by Lenders of Unreimbursed Amounts Paid Under
Letters of Credit.

 

           (i)     Payment by Revolving Lenders.  In the event that Company
shall fail for any reason to reimburse Issuing Lender as provided in subsection
3.3B in an amount (calculated, in the case of a payment under a Letter of Credit
denominated in a currency other than Dollars, by reference to the applicable
Exchange Rate) equal to the amount of any payment by Issuing Lender under a
Letter of Credit issued by it, Issuing Lender shall promptly notify each other
Lender of the unreimbursed amount of such honored drawing and of such other
Revolving Lender’s respective participation therein based on such Revolving
Lender’s Pro Rata Share.  Each Revolving Lender shall make available to Issuing
Lender an amount equal to its respective participation, in Dollars and in same
day funds, at the office of Issuing Lender specified in such notice, not later
than 10:00 A.M. (California time) on the first business day (under the laws of
the jurisdiction in which such office of Issuing Lender is located) after the
date notified by Issuing Lender.  In the event that any Revolving Lender fails
to make available to Issuing Lender on such business day the amount of such
Revolving Lender’s participation in such Letter of

 

 

 

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Credit as provided in this subsection 3.3C, Issuing Lender shall be entitled to
recover such amount on demand from such Revolving Lender together with interest
thereon at the rate customarily used by Issuing Lender for the correction of
errors among banks for three Business Days and thereafter at the Base Rate. 
Nothing in this subsection 3.3C shall be deemed to prejudice the right of any
Lender to recover from Issuing Lender any amounts made available by such
Revolving Lender to Issuing Lender pursuant to this subsection 3.3C in the event
that it is determined by the final judgment of a court of competent jurisdiction
that the payment with respect to a Letter of Credit by Issuing Lender in respect
of which payment was made by such Revolving Lender constituted gross negligence
or willful misconduct on the part of Issuing Lender.

 

 

 

          (ii)     Distribution to Lenders of Reimbursements Received From
Company.  In the event Issuing Lender shall have been reimbursed by other
Revolving Lenders pursuant to subsection 3.3C(i) for all or any portion of any
payment by Issuing Lender under a Letter of Credit issued by it, Issuing Lender
shall distribute to each other Revolving Lender that has paid all amounts
payable by it under subsection 3.3C(i) with respect to such payment such other
Revolving Lender’s Pro Rata Share of all payments subsequently received by
Issuing Lender from Company in reimbursement of such payment under the Letter of
Credit when such payments are received.  Any such distribution shall be made to
a Revolving Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Revolving
Lender may request.

                  D.     Interest on Amounts Paid Under Letters of Credit.

 

          (i)     Payment of Interest by Company.  Company agrees to pay to
Issuing Lender, with respect to payments under any Letters of Credit issued by
it, interest on the amount paid by Issuing Lender in respect of each such
payment from the date a drawing is honored to but excluding the date such amount
is reimbursed by Company (including any such reimbursement out of the proceeds
of Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date such drawing is honored to but excluding the Reimbursement
Date, the rate then in effect under this Agreement with respect to Revolving
Loans that are Base Rate Loans and (b) thereafter, a rate which is 2% per annum
in excess of the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans.  Interest payable pursuant
to this subsection 3.3D(i) shall be computed on the basis of a 360-day year for
the actual number of days elapsed in the period during which it accrues and
shall be payable on demand or, if no demand is made, on the date on which the
related drawing under a Letter of Credit is reimbursed in full.

 

 

 

          (ii)     Distribution of Interest Payments by Issuing Lender. 
Promptly upon receipt by Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a payment under a Letter of Credit issued by
it, (a) Issuing Lender shall distribute to each other Revolving Lender, out of
the interest received by Issuing Lender in respect of the period from the date
such drawing is honored to but excluding the date

 

 

 

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on which Issuing Lender is reimbursed for the amount of such payment (including
any such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Revolving Lender would have been
entitled to receive in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been honored under such Letter of Credit, and
(b) in the event Issuing Lender shall have been reimbursed by other Revolving
Lenders pursuant to subsection 3.3C(i) for all or any portion of such payment,
Issuing Lender shall distribute to each other Revolving Lender that has paid all
amounts payable by it under subsection 3.3C(i) with respect to such payment such
other Revolving Lender’s Pro Rata Share of any interest received by Issuing
Lender in respect of that portion of such payment so reimbursed by other
Revolving Lenders for the period from the date on which Issuing Lender was so
reimbursed by other Revolving Lenders to but excluding the date on which such
portion of such payment is reimbursed by Company.  Any such distribution shall
be made to a Revolving Lender at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such Revolving
Lender may request.

 

 

                     3.4     Obligations Absolute.

                    The obligation of Company to reimburse Issuing Lender for
payments under the Letters of Credit issued by it and to repay any Revolving
Loans made by Revolving Lenders pursuant to subsection 3.3B and the obligations
of Revolving Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:

 

          (i)     any lack of validity or enforceability of any Letter of
Credit;

 

 

 

          (ii)     the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such transferee
may be acting), Issuing Lender or other Revolving Lender or any other Person or,
in the case of a Revolving Lender, against Company, whether in connection with
this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of its
Subsidiaries and the beneficiary for which any Letter of Credit was procured);

 

 

 

          (iii)     any draft or 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;

 

 

 

          (iv)     payment by Issuing Lender under any Letter of Credit against
presentation of a draft or other document which does not substantially comply
with the terms of such Letter of Credit;

 

 

 

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          (v)     any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries;

 

 

 

          (vi)     any breach of this Agreement or any other Loan Document by
any party thereto;

 

 

 

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

 

 

 

          (viii)     the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;

 

 

provided, in each case, that payment by Issuing Lender under the applicable
Letter of Credit shall not have constituted gross negligence or willful
misconduct of Issuing Lender under the circumstances in question (as determined
by a final judgment of a court of competent jurisdiction).

                     3.5     Nature of Issuing Lender’s Duties.

                              As between Company and Issuing Lender, Company
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by Issuing Lender by, the respective beneficiaries of such Letters
of Credit.  In furtherance and not in limitation of the foregoing, Issuing
Lender shall not be responsible for:  (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Lender, including
any act or omission by a Government Authority, and none of the above shall
affect or impair, or prevent the vesting of, any of Issuing Lender’s rights or
powers hereunder.

                    In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5, any
action taken or omitted by Issuing Lender under or in connection with the
Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put Issuing Lender
under any resulting liability to Company.

 

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                    Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against
Issuing Lender for any liability arising solely out of the gross negligence or
willful misconduct of Issuing Lender, as determined by a final judgment of a
court of competent jurisdiction.

Section 4.      CONDITIONS TO LOANS AND LETTERS OF CREDIT

 

     The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.

 

 

     4.1      Conditions to Initial Revolving Loans.

 

 

     The obligations of Lenders to make any Revolving Loans to be made on the
Closing Date are, in addition to the conditions precedent specified in
subsection 4.2, subject to prior or concurrent satisfaction of the following
conditions:

 

 

     A.     Loan Party Documents.  On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to
Administrative Agent with sufficient originally executed copies, where
appropriate, for each Lender) the following with respect to Company or such Loan
Party, as the case may be, each, unless otherwise noted, dated the Closing Date:

 

 

 

          (i)     Copies of the Organizational Documents of such Person,
certified by the Secretary of State of its jurisdiction of organization or, if
such document is of a type that may not be so certified, certified by the
secretary or similar officer of the applicable Loan Party, together with a good
standing certificate from the Secretary of State of its jurisdiction of
organization and each other state in which such Person is qualified to do
business and, to the extent generally available, a certificate or other evidence
of good standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such jurisdictions, each dated a
recent date prior to the Closing Date;

 

 

 

          (ii)     Resolutions of the Governing Body of such Person approving
and authorizing the execution, delivery and performance of the Loan Documents to
which it is a party, certified as of the Closing Date by the secretary or
similar officer of such Person as being in full force and effect without
modification or amendment;

 

 

 

          (iii)     Signature and incumbency certificates of the officers of
such Person executing the Loan Documents to which it is a party;

 

 

 

          (iv)     Executed originals of the Loan Documents to which such Person
is a party; and

 

 

 

          (v)     Such other documents as Administrative Agent may reasonably
request.

 

 

 

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                    B.     Fees.  Company shall have paid to Administrative
Agent, for distribution (as appropriate) to Administrative Agent and Lenders,
the fees payable on the Closing Date referred to in subsection 2.3.

                    C.     Corporate and Capital Structure.

 

               (i)     Corporate Structure.  The corporate organizational
structure of Company and its Subsidiaries shall be as set forth on Schedule 4.1C
annexed hereto.

 

 

 

               (ii)     Capital Structure.  The capital structure of Company
shall be as set forth on Schedule 4.1C annexed hereto.

 

 

                    D.     Representations and Warranties; Performance of
Agreements.  Company shall have delivered to Administrative Agent an Officer’s
Certificate, in form and substance satisfactory to Administrative Agent, to the
effect that the representations and warranties in Section 5 are true, correct
and complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent; provided that, if a representation and warranty, covenant
or condition is qualified as to materiality, with respect to such representation
and warranty, covenant or condition the applicable materiality qualifier set
forth above shall be disregarded for purposes of this condition.

                    E.     Opinions of Counsel to Loan Parties.  Lenders shall
have received originally executed copies of one or more favorable written
opinions of Sullivan & Cromwell, counsel for Loan Parties, in form and substance
reasonably satisfactory to Administrative Agent and its counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit VI annexed hereto and as to such other matters as
Administrative Agent acting on behalf of Lenders may reasonably request (this
Credit Agreement constituting a written request by Company to such counsel to
deliver such opinions to Lenders).

                    F.     Opinion of Administrative Agent’s Counsel.  Lenders
shall have received originally executed copies of  a favorable written opinion
of O’Melveny & Myers LLP, counsel to Administrative Agent, dated as of the
Closing Date, substantially in the form of Exhibit VII annexed hereto.

                    G.     Evidence of Insurance.  Administrative Agent shall
have received a certificate from Company’s insurance broker or other evidence
satisfactory to it that all insurance required to be maintained pursuant to
subsection 6.4 is in full force and effect and that Administrative Agent on
behalf of Lenders has been named as additional insured and/or loss payee
thereunder to the extent required under subsection 6.4.

 

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                    H.     Necessary Governmental Authorizations and Consents;
Expiration of Waiting Periods, Etc.  Company shall have obtained
all Governmental Authorizations and all consents of other Persons, in each case
that are necessary or advisable in connection with the transactions contemplated
by the Loan Documents and the continued operation of the business conducted by
Company and its Subsidiaries in substantially the same manner as conducted prior
to the Closing Date.  Each such Governmental Authorization and consent shall be
in full force and effect, except in a case where the failure to obtain or
maintain a Governmental Authorization or consent, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority that would restrain,
prevent or otherwise impose adverse conditions on the transactions contemplated
by the Loan Documents or the financing thereof.  No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect to any
of the foregoing shall be pending, and the time for any applicable Government
Authority to take action to set aside its consent on its own motion shall have
expired.  There shall not have occurred any material adverse change in
governmental regulation or policy of any Governmental Authority that adversely
affects any of the Company, its Subsidiaries or the Lenders.

                    I.     Security Interests in Personal and Mixed Property. 
Administrative Agent shall have received evidence satisfactory to it that
Company and Subsidiary Guarantors shall have taken or caused to be taken all
such actions, executed and delivered or caused to be executed and delivered all
such agreements, documents and instruments, and made or caused to be made all
such filings and recordings (other than the filing or recording of items
described in clauses (ii), (iii) and (iv) below) that may be necessary or, in
the opinion of Administrative Agent, desirable in order to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and (upon such filing
and recording) perfected First Priority security interest in the entire personal
and mixed property Collateral.  Such actions shall include the following:

 

          (i)     Stock Certificates and Instruments.  Delivery to
Administrative Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Administrative Agent)
representing all Capital Stock pledged pursuant to the Security Agreement and
(b) all promissory notes or other instruments (duly endorsed, where appropriate,
in a manner satisfactory to Administrative Agent) evidencing any Collateral;

 

 

 

          (ii)     Lien Searches and UCC Termination Statements.  Delivery to
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing statements
and fixture filings and all judgment and tax lien filings which may have been
made with respect to any personal or mixed property of any Loan Party, together
with copies of all such filings disclosed by such search, and (b) UCC
termination statements duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings disclosed in such search (other than any
such financing statements or fixture filings in respect of Liens permitted to
remain outstanding pursuant to the terms of this Agreement).

 

 

 

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          (iii)     UCC Financing Statements and Fixture Filings.  Delivery to
Administrative Agent of UCC financing statements and, where appropriate, fixture
filings, duly executed by each applicable Loan Party (if required) with respect
to all personal and mixed property Collateral of such Loan Party, for filing in
all jurisdictions as may be necessary or, in the opinion of Administrative
Agent, desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents; and

 

 

 

          (iv)     PTO Cover Sheets, Etc.  Delivery to Administrative Agent of
all cover sheets or other documents or instruments required to be filed with the
PTO in order to create or perfect Liens in respect of any IP Collateral.

 

 

                    J.     Matters Relating to Existing Indebtedness of Company
and its Subsidiaries.  On the Closing Date, Company and its Subsidiaries shall
have (a) repaid in full all Indebtedness in respect of the Prior Reimbursement
Obligations, (b) delivered to Administrative Agent all documents or instruments
necessary to release all Liens securing Indebtedness or other obligations of
Company and its Subsidiaries in connection therewith, and (d) made arrangements
satisfactory to Administrative Agent with respect to the cancellation of the
Prior Letters of Credit. 

                    K.     Borrowing Base Certificate.  On or before the Closing
Date, Company shall have delivered to Administrative Agent and Lenders a
Borrowing Base Certificate substantially in the form of Exhibit XI annexed
hereto, prepared as of December 31, 2002. 

                    L.     Collateral Audits and Appraisals.  Administrative
Agent shall have received audits of the Accounts of Company and its Subsidiaries
in form, scope and substance satisfactory to Administrative Agent.

                    M.     Completion of Proceedings.  All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel
shall be satisfactory in form and substance to Administrative Agent and such
counsel, and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.

                    N.     Subordination Agreement.  Administrative Agent,
Company and each of the holders of the Convertible Subordinated Notes and the
Convertible Series A Preferred Stock shall have entered into a subordination
agreement (the “Subordination Agreement”) in form and substance satisfactory to
Administrative Agent. 

                     4.2     Conditions to All Loans.

                    The obligations of Lenders to make Loans on each Funding
Date are subject to the following further conditions precedent:

 

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                    A.     Administrative Agent shall have received before that
Funding Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by a duly
authorized Officer of Company.

                    B.     Administrative Agent shall have received before that
Funding Date, the timely delivery of the most recent Borrowing Base Certificate
(dated as contemplated in subsection 6.1(xvii)) required to be delivered
hereunder.

                    C.     As of that Funding Date:

 

          (i)     The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material respects
on and as of such earlier date; provided, that, if a representation and warranty
is qualified as to materiality, with respect to such representation and warranty
the materiality qualifier set forth above shall be disregarded for purposes of
this condition;

 

 

 

          (ii)     No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;

 

 

 

          (iii)     Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before that Funding Date;
and

 

 

 

          (iv)     No order, judgment or decree of any arbitrator or Government
Authority shall purport to enjoin or restrain any Lender from making the Loans
to be made by it on that Funding Date.

 

 

                     4.3     Conditions to Letters of Credit.

                    The issuance of any Letter of Credit hereunder (whether or
not Issuing Lender is obligated to issue such Letter of Credit) is subject to
the following conditions precedent:

                    A.     On or before the date of issuance of such Letter of
Credit, Administrative Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Request for Issuance
(or a facsimile copy thereof) in each case signed by a duly authorized Officer
of Company, together with all other information specified in subsection 3.1B(i)
and such other documents or information as Issuing Lender may reasonably require
in connection with the issuance of such Letter of Credit.

 

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                    B.     Administrative Agent shall have received the timely
delivery of the most recent Borrowing Base Certificate (dated as contemplated in
subsection 6.1(xvii)) required to be delivered hereunder.

                    C.     On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the same
extent as if the issuance of such Letter of Credit were the making of a Loan and
the date of issuance of such Letter of Credit were a Funding Date.

Section 5.       COMPANY’S REPRESENTATIONS AND WARRANTIES

 

             In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Issuing Lender to issue Letters of Credit and to induce
Revolving Lenders to purchase participations therein, Company represents and
warrants to each Lender:

 

 

          5.1      Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries.

 

 

          A.     Organization and Powers.  Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  Each of Company and its Subsidiaries has all requisite power and
authority to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated thereby.

 

 

          B.     Qualification and Good Standing.  Each of Company and its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and could not reasonably be expected
to result in a Material Adverse Effect.

 

 

          C.     Conduct of Business.  Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection 7.12.

 

 

          D.     Subsidiaries.  All of the Subsidiaries of Company as of the
Closing Date and their jurisdictions of organization, and the identity of those
Subsidiaries deemed to be Significant Subsidiaries in accordance with the terms
hereof, are set forth on Schedule 5.1 annexed hereto, as said Schedule 5.1 may
be supplemented from time to time pursuant to the provisions of subsection
6.1(xv).  The Capital Stock of each of the Subsidiaries of Company set forth on
Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such Capital Stock constitutes
Margin Stock.  Each of the Subsidiaries of Company set forth on Schedule 5.1
annexed hereto (as so supplemented) is a corporation, partnership, trust or
limited liability company duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization set forth therein,
has all requisite power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing

 

 

 

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or a lack of such power and authority has not had and could not reasonably be
expected to result in a Material Adverse Effect.  Schedule 5.1 annexed hereto
(as so supplemented) correctly sets forth, as of the Closing Date, the ownership
interest of Company and each of its Subsidiaries in each of the Subsidiaries of
Company identified therein.

                     5.2     Authorization of Borrowing, etc.

                    A.     Authorization of Borrowing.  The execution, delivery
and performance of the Loan Documents have been duly authorized by all necessary
action on the part of each Loan Party that is a party thereto.

                    B.     No Conflict.  The execution, delivery and performance
by Loan Parties of the Loan Documents to which they are parties and the
consummation of the transactions contemplated by the Loan Documents do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Organizational
Documents of Company or any of its Subsidiaries or any order, judgment or decree
of any court or other Government Authority binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Company or any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of Company or any of
its Subsidiaries (other than any Liens created under any of the Loan Documents
in favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders.

                    C.     Governmental Consents.  The execution, delivery and
performance by Loan Parties of the Loan Documents to which they are parties and
the consummation of the transactions contemplated by the Loan Documents do not
and will not require any Governmental Authorization other than filings and
recordings pursuant to this Agreement and the Loan Documents relating to the
Collateral.

                    D.     Binding Obligation.  Each of the Loan Documents has
been duly executed and delivered by each Loan Party that is a party thereto and
is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.

                     5.3     Financial Condition.

                    Company has heretofore delivered to Lenders, at Lenders’
request, financial statements and information for the Fiscal Year ended April
30, 2002 and interim statements for the Fiscal Quarters ended July 31, 2002 and
October 31, 2002.  All such statements were prepared in conformity with GAAP and
fairly present, in all material respects, the financial position (on a

 

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consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments. 
Neither Company nor any of its Subsidiaries has (and will not have following the
funding of the initial Loans) any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that, as of the Closing Date, is not reflected in the foregoing financial
statements or the notes thereto and, as of any Funding Date subsequent to the
Closing Date, is not reflected in the most recent financial statements delivered
to Lenders pursuant to subsection 6.1 or the notes thereto and that, in any such
case, is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries.

                     5.4     No Material Adverse Change; No Restricted Junior
Payments.

                    Since April 30, 2002, no event or change has occurred that
has resulted in or evidences, either in any case or in the aggregate, a Material
Adverse Effect, and neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so, except as permitted by
subsection 7.5.

                     5.5     Title to Properties; Liens; Real Property;
Intellectual Property.

                    A.     Title to Properties; Liens.  Company and its
Subsidiaries have (i) good, sufficient and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 7.7, and except for such defects in title and interests that do not
interfere with the ability of Company and its Subsidiaries to conduct their
business.  Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens.

                    B.     Real Property.  As of the Closing Date, Schedule 5.5B
annexed hereto contains a true, accurate and complete list of (i) all fee
interests in any Real Property Assets and (ii) all leases, subleases or
assignments of leases (together with all amendments, modifications, supplements,
renewals or extensions of any thereof) affecting each Real Property Asset,
regardless of whether a Loan Party is the landlord or tenant (whether directly
or as an assignee or successor in interest) under such lease, sublease or
assignment.  Except as set forth on Schedule 5.5B annexed hereto, each agreement
listed in clause (ii) of the immediately preceding sentence is in full force and
effect and Company does not have knowledge of any material default that has
occurred and is continuing thereunder, and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party, enforceable
against such

 

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Loan Party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles.

                    C.     Intellectual Property.  As of the Closing Date,
Company and its Subsidiaries own or have the right to use, all Intellectual
Property used in the conduct of their business, except where the failure to own
or have such right to use in the aggregate could not reasonably be expected to
result in a Material Adverse Effect.  No claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property, nor
does Company know of any valid basis for any such claim, except for such claims
that in the aggregate could not reasonably be expected to result in a Material
Adverse Effect.  The use of such Intellectual Property by Company and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  All federal and state and all
foreign registrations of and applications for Intellectual Property that are
owned or licensed by Company or any of its Subsidiaries on the Closing Date are
set forth on Schedule 5.5C annexed hereto.

                     5.6     Litigation; Adverse Facts.

                    Except as set forth in Schedule 5.6 annexed hereto, there
are no Proceedings (whether or not purportedly on behalf of Company or any of
its Subsidiaries) at law or in equity, or before or by any court or other
Government Authority (including any Environmental Claims) that are pending or,
to the knowledge of Company, threatened against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  Neither Company nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or other Government Authority that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

                     5.7     Payment of Taxes.

                    Except to the extent permitted by subsection 6.3, all
material tax returns and reports of Company and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon Company and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises that are due and payable have been
paid when due and payable, expect where the failure to pay could not reasonably
be expected to result in a Material Adverse Effect.  Company knows of no
material proposed tax assessment against Company or any of its Subsidiaries that
is not being actively contested by Company or such Subsidiary in good faith and
by appropriate

 

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proceedings; provided that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor.

                     5.8     Performance of Agreements.

                    Neither Company nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, could not reasonably be expected to result in
a Material Adverse Effect.

                     5.9     Governmental Regulation.

                    Neither Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.

                     5.10     Securities Activities.

                    A.     Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.

                    B.     Following application of the proceeds of each Loan,
not more than 25% of the value of the assets (either of Company only or of
Company and its Subsidiaries on a consolidated basis) subject to the provisions
of subsection 7.2 or 7.7 or subject to any restriction contained in any
agreement or instrument, between Company and any Lender or any Affiliate of any
Lender, relating to Indebtedness and within the scope of subsection 8.2, will be
Margin Stock.

                     5.11     Employee Benefit Plans.

                    A.     Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their obligations under each Employee Benefit Plan, except for any failure to
comply that, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.  Each Employee Benefit Plan that is intended
to qualify under Section 401(a) of the Internal Revenue Code is so qualified. 

                    B.     No ERISA Event has occurred or is reasonably expected
to occur.

                    C.     Except to the extent required under Section 4980B of
the Internal Revenue Code, or except as set forth in Schedule 5.11 annexed
hereto, no Employee Benefit Plan provides

 

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 health or welfare benefits (through the purchase of insurance or otherwise) for
any retired or former employee of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates.

                    D.     As of the most recent valuation date for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $1,000,000.

                    E.     As of the most recent valuation date for each
Multiemployer Plan for which the actuarial report is available, the potential
liability of Company, its Subsidiaries and their respective ERISA Affiliates for
a complete withdrawal from such Multiemployer Plan (within the meaning of
Section 4203 of ERISA), when aggregated with such potential liability for a
complete withdrawal from all Multiemployer Plans, based on information available
pursuant to Section 4221(e) of ERISA, does not exceed $1,000,000.

                    F.     As of the date hereof, Company and its Subsidiaries
have made full payment when due of all material required contributions to any
Foreign Plan.

                     5.12     Certain Fees.

                    No broker’s or finder’s fee or commission will be payable
with respect to this Agreement or any of the transactions contemplated hereby,
and Company hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such broker’s or
finder’s fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.

                     5.13     Environmental Protection.

 

          (i)     to Company’s knowledge, neither Company nor any of its
Subsidiaries nor any of their respective Facilities or operations are subject to
any outstanding written order, consent decree or settlement agreement with any
Person relating to (a) any Environmental Law, (b) any Environmental Claim, or
(c) any Hazardous Materials Activity that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;

 

 

 

          (ii)     to Company’s knowledge, neither Company nor any of its
Subsidiaries has received any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9604) or any comparable state law;

 

 

 

          (iii)     to Company’s knowledge, there are and have been no
conditions, occurrences, or Hazardous Materials Activities that could be
reasonably expected to form the basis of an Environmental Claim against Company
or any of its Subsidiaries that,

 

 

 

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                    individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;

 

           (iv)     to Company’s knowledge, neither Company nor any of its
Subsidiaries nor any predecessor of Company or any of its Subsidiaries has filed
any notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of Company’s or any of its
Subsidiaries’ operations involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent; and

 

 

 

           (v)      to Company’s knowledge, compliance with all current or
reasonably foreseeable future requirements pursuant to or under Environmental
Laws would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.

                    5.14      Employee Matters.

                    There is no strike or work stoppage in existence or
threatened involving Company or any of its Subsidiaries that could reasonably be
expected to result in a Material Adverse Effect.

                    5.15      Solvency.

                    Each Loan Party is and, upon the incurrence of any
Obligations by such Loan Party on any date on which this representation is made,
will be, Solvent.

                    5.16      Matters Relating to Collateral.

                    A.        Creation, Perfection and Priority of Liens.  The
execution and delivery of the Collateral Documents by Loan Parties, together
with (i) the actions taken on or prior to the date hereof pursuant to
subsections 4.1I and 6.8 and (ii) the delivery to Administrative Agent of any
Pledged Collateral not delivered to Administrative Agent at the time of
execution and delivery of the applicable Collateral Document are effective to
create in favor of Administrative Agent for the benefit of Lenders, as security
for the respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid First Priority Lien on all of
the Collateral, and all filings and other actions necessary or desirable to
perfect and maintain the perfection and First Priority status of such Liens have
been duly made or taken and remain in full force and effect, other than the
filing of any UCC financing statements delivered to Administrative Agent for
filing (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Administrative Agent.

 

                    B.        Governmental Authorizations.  No authorization,
approval or other action by, and no notice to or filing with, any Government
Authority is required for either (i) the pledge or grant by any Loan Party of
the Liens purported to be created in favor of Administrative Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Administrative Agent of
any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for

 

 

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filings or recordings contemplated by subsection 5.16A and except as may be
required, in connection with the disposition of any Pledged Collateral, by laws
generally affecting the offering and sale of securities.

                    C.        Absence of Third-Party Filings.  Except such as
may have been filed in favor of Administrative Agent as contemplated by
subsection 5.16A and to evidence permitted lease obligations and other Liens
permitted pursuant to subsection 7.2, (i) no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part of
the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the IP Collateral is on file in the
PTO.

                    D.        Margin Regulations.  The pledge of the Pledged
Collateral pursuant to the Collateral Documents does not violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System.

                    E.        Information Regarding Collateral.  All information
supplied to Administrative Agent by or on behalf of any Loan Party with respect
to any of the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects.

                    5.17      Disclosure.

No representation or warranty of Company or any of its Subsidiaries contained in
any Loan Document or in any other document, certificate or written statement
furnished to Lenders by or on behalf of Company or any of its Subsidiaries for
use in connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact (known
to Company, in the case of any document not furnished by it) necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made.  Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made,
it being recognized by Lenders that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.  There
are no facts known (or which should upon the reasonable exercise of diligence be
known) to Company (other than matters of a general economic nature) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect and that have not been disclosed herein or in such other
documents, certificates and statements furnished to Lenders for use in
connection with the transactions contemplated hereby.

                    5.18      Subordinated Indebtedness.

The Obligations constitute senior indebtedness that is entitled to the benefits
of the subordination provisions, if any, of all Indebtedness of Company and its
Subsidiaries, including, without limitation, any subordination provisions
contained in the Subordination Agreement.

 

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Section 6.               COMPANY’S AFFIRMATIVE COVENANTS

Company covenants and agrees that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.

                    6.1      Financial Statements and Other Reports.

                    Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP.  Company will deliver to Administrative Agent and Lenders:

 

          (i)     Events of Default, etc.:  promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that any Lender has
given any notice (other than to Administrative Agent) or taken any other action
with respect to a claimed Event of Default or Potential Event of Default,
(b) that any Person has given any notice to Company or any of its Subsidiaries
or taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2, or (c) of the occurrence of
any event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officer’s Certificate specifying the
nature and period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event or
condition, and what action Company has taken, is taking and proposes to take
with respect thereto;

 

 

 

          (ii)    Monthly Financials:  as soon as available and in any event
within 30 days after the end of each Fiscal Month, the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end of
such Fiscal Month and the related consolidated and consolidating statements of
income of Company and its Subsidiaries for such Fiscal Month and for the period
from the beginning of the then current Fiscal Year to the end of such Fiscal
Month (provided that Company shall be permitted, unless otherwise requested by
Administrative Agent, to provide Regional Consolidating Financial Statements in
lieu of consolidating statements) setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the Financial Plan for the current
Fiscal Year, to the extent prepared for such Fiscal Month, all in reasonable
detail;

 

 

 

          (iii)     Quarterly Financials:  as soon as available and in any event
within 45 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year, (a) the consolidated and consolidating balance sheets of Company
and its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated and consolidating statements of

 

 

 

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income, stockholders’ equity and cash flows of Company and its Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the Financial Plan for
the current Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material respects,
the financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of Company and
its Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Quarter and for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter;

 

 

 

          (iv)     Year-End Financials:  as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated and consolidating statements of
income, stockholders’ equity and cash flows of Company and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief financial
officer of Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, (b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for such
Fiscal Year, and (c) in the case of such consolidated financial statements, a
report thereon of Ernst & Young LLP or other independent certified public
accountants of recognized national standing selected by Company and satisfactory
to Administrative Agent, which report shall be unqualified, shall express no
doubts about the ability of Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards;

 

 

 

          (v)      Compliance Certificates:  together with each delivery of
financial statements pursuant to subdivisions (iii) and (iv) above, (a) an
Officer’s Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence

 

 

 

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during or at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officer’s Certificate, of any
condition or event that constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at the end
of the applicable accounting periods with the restrictions contained in
Section 7, in each case to the extent compliance with such restrictions is
required to be tested at the end of the applicable accounting period;

 

 

 

          (vi)     Reconciliation Statements:  if, as a result of any change in
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in subsection 5.3, the consolidated
financial statements of Company and its Subsidiaries delivered pursuant to
subdivision (ii), (iii), (iv) or (xii) of this subsection 6.1 will differ in any
material respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first delivery of
financial statements pursuant to subdivision (ii), (iii), (iv) or (xii) of this
subsection 6.1 following such change, consolidated financial statements of
Company and its Subsidiaries for (y) the current Fiscal Year to the effective
date of such change and (z) the two full Fiscal Years immediately preceding the
Fiscal Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision (ii), (iii),
(iv) or (xii) of this subsection 6.1 following such change, if required pursuant
to subsection 1.2, a written statement of the chief accounting officer or chief
financial officer of Company setting forth the differences (including any
differences that would affect any calculations relating to the financial
covenants set forth in subsection 7.6) which would have resulted if such
financial statements had been prepared without giving effect to such change;

 

 

 

          (vii)     Accountants’ Reports:  promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in connection
with each annual, interim or special audit of the financial statements of
Company and its Subsidiaries made by such accountants, including any comment
letter submitted by such accountants to management in connection with their
annual audit;

 

 

 

          (viii)    SEC Filings and Press Releases:  promptly upon their
becoming available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its security
holders or by any Subsidiary of Company to its security holders other than
Company or another Subsidiary of Company, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press releases and
other

 

 

 

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statements made available generally by Company or any of its Subsidiaries to the
public concerning material developments in the business of Company or any of its
Subsidiaries;

 

 

 

          (ix)    Litigation or Other Proceedings:  (a) promptly upon any
Officer of Company obtaining knowledge of (1) the institution of, or
non-frivolous threat of, any Proceeding against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries not
previously disclosed in writing by Company to Lenders or (2) any material
development in any Proceeding that, in any case:

 

 

 

 

          (x)     if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or

 

 

 

 

 

          (y)     seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the transactions
contemplated hereby;

 

 

 

 

written notice thereof together with such other information as may be reasonably
available to Company to enable Lenders and their counsel to evaluate such
matters; and (b) within twenty days after the end of each Fiscal Quarter, a
schedule of all Proceedings involving an alleged liability of, or claims against
or affecting, Company or any of its Subsidiaries equal to or greater than
$5,000,000, and promptly after request by Administrative Agent such other
information as may be reasonably requested by Administrative Agent to enable
Administrative Agent and its counsel to evaluate any of such Proceedings;

 

 

 

          (x)     ERISA Events:  promptly upon becoming aware of the occurrence
of or forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;

 

 

 

        (xi)     ERISA Notices:  with reasonable promptness, copies of (a) all
notices received by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event;
and (b) copies of such other documents or governmental reports or filings
relating to any Employee Benefit Plan as Administrative Agent shall reasonably
request;

 

 

 

        (xii)     Financial Plans:  as soon as practicable and in any event no
later than 30 days after the beginning of each Fiscal Year, a consolidated and
consolidating plan and financial forecast for such Fiscal Year (the “Financial
Plan” for such Fiscal Year), including (a) a forecasted consolidated balance
sheet and forecasted consolidated statements of income and cash flows of Company
and its Subsidiaries for such Fiscal Year, together with a pro forma Compliance
Certificate for such Fiscal Year and an explanation of the assumptions on which
such forecasts are based, (b) forecasted

 

 

 

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consolidated statements of income and cash flows of Company and its Subsidiaries
for each Fiscal Quarter of such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, and (c) such other information
and projections as any Lender may reasonably request;

 

 

 

          (xiii)     Insurance:  as soon as practicable after any material
change in insurance coverage maintained by Company and its Subsidiaries notice
thereof to Administrative Agent specifying the changes and reasons therefor;

 

 

 

          (xiv)     Governing Body:  with reasonable promptness, written notice
of any change in the Governing Body of Company;

 

 

 

          (xv)      New Subsidiaries:  promptly upon any Person becoming a
Subsidiary of Company or any Subsidiary becoming, or ceasing to be, a
Significant Subsidiary, a written notice setting forth with respect to such
Person or Subsidiary (a) the date on which such Person or Subsidiary (x) became
a Subsidiary of Company or (y) became, or ceased to be, a Significant
Subsidiary, as the case may be, and (b) all of the data required to be set forth
in Schedule 5.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to supplement Schedule
5.1 annexed hereto for all purposes of this Agreement);

 

 

 

        (xvi)      Good Standing Certificates:  upon request by Administrative
Agent, good standing certificates as to each Loan Party from its jurisdiction of
organization;

 

 

 

        (xvii)     Borrowing Base Certificates:  within ten Business Days after
the last day of each Fiscal Month ending after the Closing Date, a Borrowing
Base Certificate dated as of the last Business Day of such Fiscal Month,
together with any additional schedules and other information as Administrative
Agent may reasonably request.  In addition to such monthly Borrowing Base
Certificates, Company may from time to time, deliver to Administrative Agent and
Lenders on any Business Day after the last day of each Fiscal Month an updated
Borrowing Base Certificate dated as of such Business Day, together with any
additional schedules and other information as Administrative Agent may
reasonably request, and the most recent Borrowing Base Certificate described in
this clause (xvii) that is delivered to Administrative Agent shall be used in
calculating the Borrowing Base as of any date of determination;

 

 

 

        (xviii)     Subordinated Indebtedness Notices:  with reasonable
promptness, and in any event within one Business Day of the receipt of any
notice of acceleration of the Convertible Subordinated Notes, copies of all
notices received by Company from holders of the Convertible Subordinated Notes
or the Convertible Series A Preferred Stock; and

 

 

 

        (xix)      Other Information:  with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as from
time to time may be reasonably requested by any Lender.

 

 

 

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                    6.2      Existence, etc.

                    Except as permitted under subsection 7.7, Company will, and
will cause each of its Significant Subsidiaries to, at all times preserve and
keep in full force and effect its existence in the jurisdiction of organization
set forth on Schedule 5.1 annexed hereto and all rights and franchises material
to its business; provided, however, that neither Company nor any of its
Subsidiaries shall be required to preserve its existence or any such right or
franchise if the Governing Body of Company or such Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of Company and its Subsidiaries taken as a whole and that the loss
thereof is not disadvantageous in any material respect to Company and its
Subsidiaries taken as a whole or Lenders.

                    6.3      Payment of Taxes and Claims; Tax.

                    A.     Company will, and will cause each of its Subsidiaries
to, pay all taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such tax, assessment, charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (i) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor (unless the amount is not
material to Company’s financial condition) and (ii) in the case of a tax,
assessment, charge or claim which has or may become a Lien against any of the
Collateral, such proceedings conclusively operate to stay the sale of any
material portion of the Collateral to satisfy such charge or claim.

                    B.     Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than Company or any of its Subsidiaries).

                    6.4      Maintenance of Properties; Insurance; Application
of Net Business Interruption Insurance Proceeds.

                    A.      Maintenance of Properties.  Company will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of Company and its
Subsidiaries (including all Intellectual Property) and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof, except to the extent that any failure to maintain could not reasonably
be expected to have a Material Adverse Effect.

                    B.      Insurance.  Company will maintain or cause to be
maintained, with financially sound and reputable insurers, such public liability
insurance, third party property damage

 

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insurance, business interruption insurance and casualty insurance with respect
to liabilities, losses or damage in respect of the assets, properties and
businesses of Company and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry.  Each such policy of insurance shall (i) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear, and (ii) contain a loss payable clause
or endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss and provides for at least 30 days prior written
notice to Administrative Agent of any modification or cancellation of such
policy. 

                    C.     Application of Net Business Interruption Insurance
Proceeds.  Upon receipt by Company or any of its Subsidiaries of any Net
Business Interruption Insurance Proceeds, (a) so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, Company or
such Subsidiary may retain and apply such Net Business Interruption Insurance
Proceeds for working capital purposes, and (b) if an Event of Default or
Potential Event of Default shall have occurred and be continuing, Company shall
apply an amount equal to such Net Business Interruption Insurance Proceeds to
prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) as
provided in subsection 2.4A;

                    6.5      Inspection Rights; Lender Meeting.

                    A.      Inspection Rights.  Company shall, and shall cause
each of its Subsidiaries to, permit any authorized representatives designated by
any Lender to visit and inspect any of the properties of Company or of any of
its Subsidiaries, to inspect, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.

                    B.     Lender Meeting.  Company will, upon the request of
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company’s principal offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.

                    6.6      Compliance with Laws, etc.

                    Company shall comply, and shall cause each of its
Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any Government Authority (including all Environmental
Laws), noncompliance with which could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.

 

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                    6.7      Environmental Matters.

                    A.      Environmental Disclosure.  Company will deliver to
Administrative Agent and Lenders:

 

        (i)     Environmental Audits and Reports.  As soon as practicable
following receipt thereof, copies of all environmental audits, investigations,
analyses and reports of any kind or character, whether prepared by personnel of
Company or any of its Subsidiaries or by independent consultants, governmental
authorities or any other Persons, with respect to significant environmental
matters at any Facility that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect or with respect to any
Environmental Claims that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;

 

 

 

        (ii)     Notice of Certain Releases, Remedial Actions, Etc.  Promptly
upon the occurrence thereof, written notice describing in reasonable detail (a)
any Release required to be reported to any federal, state or local governmental
or regulatory agency under any applicable Environmental Laws, (b) any remedial
action taken by Company or any other Person in response to (1) any Hazardous
Materials Activities the existence of which could reasonably be expected to
result in one or more Environmental Claims having, individually or in the
aggregate, a Material Adverse Effect, or (2) any Environmental Claims that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, and (c) Company’s discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof under
any Environmental Laws.

 

 

 

        (iii)     Written Communications Regarding Environmental Claims,
Releases, Etc.  As soon as practicable following the sending or receipt thereof
by Company or any of its Subsidiaries, a copy of any and all written
communications with respect to (a) any Environmental Claims that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect, (b) any Release required to be reported to any federal, state or
local governmental or regulatory agency, and (c) any request for information
from any governmental agency that suggests such agency is investigating whether
Company or any of its Subsidiaries may be potentially responsible for any
Hazardous Materials Activity.

 

 

 

        (iv)     Notice of Certain Proposed Actions Having Environmental
Impact.  Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to (1) expose Company or any of its
Subsidiaries to, or result in, Environmental Claims that could reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect or (2) affect the ability of Company or any of its Subsidiaries to
maintain in full force and effect all material Governmental Authorizations
required under any Environmental Laws for their respective operations and
(b) any proposed action to be

 

 

 

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taken by Company or any of its Subsidiaries to commence manufacturing or other
industrial operations or to modify current operations in a manner that could
reasonably be expected to subject Company or any of its Subsidiaries to any
material additional obligations or requirements under any Environmental Laws
that could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.

                    B.     Company’s Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws.

 

        (i)     Remedial Actions Relating to Hazardous Materials Activities. 
Company shall, in compliance with all applicable Environmental Laws, promptly
undertake, and shall cause each of its Subsidiaries promptly to undertake, any
and all investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity on, under or about any Facility that
is in violation of any Environmental Laws or that presents a material risk of
giving rise to an Environmental Claim, except where the failure could not
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect.

 

 

 

        (ii)    Actions with Respect to Environmental Claims and Violations of
Environmental Laws.  Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all actions necessary to (i) cure any
material violation of applicable Environmental Laws by Company or its
Subsidiaries that could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect and (ii) make an appropriate response
to any Environmental Claim against Company or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where failure to
do so could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.

                    6.8      Execution of Subsidiary Guaranty and Personal
Property Collateral Documents After the Closing Date.

                    A.      Execution of Subsidiary Guaranty and Personal
Property Collateral Documents.  In the event that any Person becomes a Domestic
Significant Subsidiary of Company after the date hereof, Company will promptly
notify Administrative Agent of that fact and cause such Domestic Significant
Subsidiary to execute and deliver to Administrative Agent a counterpart of the
Subsidiary Guaranty and Security Agreement and to take all such further actions
and execute all such further documents and instruments (including actions,
documents and instruments comparable to those described in subsection 4.1I) as
may be necessary or, in the opinion of Administrative Agent, desirable to create
in favor of Administrative Agent, for the benefit of Lenders, a valid and
perfected First Priority Lien on all of the personal and mixed property assets
of such Domestic Significant Subsidiary described in the applicable forms of
Collateral Documents.  In addition, as provided in the Security Agreement,
Company shall, or shall cause the Subsidiary that owns the Capital Stock of such
Person, to execute and deliver to Administrative Agent a supplement to the
Security Agreement and to deliver to Administrative

 

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Agent all certificates representing such Capital Stock of such Person
(accompanied by irrevocable undated stock powers, duly endorsed in blank).

                    B.     Foreign Significant Subsidiaries.  If requested by
Administrative Agent, Company shall execute and deliver Foreign Pledge
Agreements with respect to 66% of the Capital Stock owned by Company or a
Domestic Subsidiary of some or all Foreign Significant Subsidiaries with respect
to which Administrative Agent deems a Foreign Pledge Agreement necessary or
advisable to perfect or otherwise protect the First Priority Liens granted to
Administrative Agent on behalf of Lenders in such Capital Stock, and take all
such other actions under the laws of such jurisdictions as Administrative Agent
may deem necessary or advisable to perfect or otherwise protect such Liens.  In
addition, in the event that any Person becomes a Foreign Significant Subsidiary
of Company after the date hereof, Company will promptly notify Administrative
Agent of that fact and, if requested by Administrative Agent, if such Foreign
Significant Subsidiary is directly owned by Company or a Domestic Subsidiary,
cause such Foreign Significant Subsidiary to execute and deliver to
Administrative Agent such documents and instruments and take such further
actions (including actions, documents and instruments comparable to those
described above in this subsection 6.8B) as may be necessary, or in the
reasonable opinion of Administrative Agent, desirable to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and perfected First
Priority Lien on 66% of the capital stock of such Foreign Significant
Subsidiary.

                    C.     Subsidiary Organizational Documents, Legal Opinions,
Etc.  Company shall deliver to Administrative Agent, together with such Loan
Documents, (i) certified copies of such Significant Subsidiary’s Organizational
Documents, together with, if such Significant Subsidiary is a Domestic
Significant Subsidiary, a good standing certificate from the Secretary of State
of the jurisdiction of its organization and each other state in which such
Person is qualified to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a certificate executed by the secretary or similar
officer of such Significant Subsidiary as to (a) the fact that the attached
resolutions of the Governing Body of such Significant Subsidiary approving and
authorizing the execution, delivery and performance of such Loan Documents are
in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Significant Subsidiary
executing such Loan Documents, (iii) an executed supplement to the Security
Agreement evidencing the pledge of the Capital Stock of such Significant
Subsidiary by Company or a Significant Subsidiary of Company that owns such
Capital Stock, accompanied by certificate evidencing such Capital Stock,
together with an irrevocable undated stock powers duly endorsed in blank and
satisfactory in form and substance to Administrative Agent, and (iv) a favorable
opinion of counsel to such Significant Subsidiary, in form and substance
satisfactory to Administrative Agent and its counsel, as to (a) the due
organization and good standing of such Significant Subsidiary, (b) the due
authorization, execution and delivery by such Significant Subsidiary of such
Loan Documents, (c) the enforceability of such Loan Documents against such
Significant Subsidiary and (d) such other matters (including matters relating to
the creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Administrative Agent may reasonably

 

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request, all of the foregoing to be satisfactory in form and substance to
Administrative Agent and its counsel.

Section 7.              COMPANY’S NEGATIVE COVENANTS

                    Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.

                    7.1       Indebtedness.

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

 

          (i)     Company may become and remain liable with respect to the
Obligations;

 

 

 

          (ii)    Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;

 

 

 

          (iii)   Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases aggregating not in excess
of $1,000,000 at any one time;

 

 

 

          (iv)   Company may become and remain liable with respect to
Indebtedness to any Subsidiary Guarantor, and any Subsidiary Guarantor may
become and remain liable with respect to Indebtedness to Company or any other
Subsidiary Guarantor; provided that (a) a Lien on all such intercompany
Indebtedness to Company or any Subsidiary Guarantor shall have been granted to
Administrative Agent for the benefit of Lenders and (b) if such intercompany
Indebtedness to Company or any Subsidiary Guarantor is evidenced by a promissory
note or other instrument, such promissory note or instrument shall have been
pledged to Administrative Agent pursuant to the Security Agreement;

 

 

 

          (v)    Company may become and remain liable with respect to
Indebtedness to any Foreign Subsidiary, and any Foreign Subsidiary of Company
may become and remain liable with respect to Indebtedness to Company or any
Subsidiary Guarantor, in an aggregate principal amount not to exceed $5,000,000;
provided that (a) a Lien on all such intercompany Indebtedness to Company or any
Subsidiary Guarantor shall have been granted to Administrative Agent for the
benefit of Lenders and (b) if such intercompany Indebtedness to Company or any
Subsidiary Guarantor is evidenced by a promissory note or other instrument, such
promissory note or instrument shall have been pledged to Administrative Agent
pursuant to the Security Agreement;

 

 

 

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          (vi)     Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness set forth on Schedule 7.1 annexed hereto,
including any Indebtedness that refinances or replaces such Indebtedness;

 

 

 

          (vii)    Company may remain liable with respect to Indebtedness
pursuant to the Convertible Subordinated Notes and the Convertible Series A
Preferred Stock;

 

 

 

          (viii)   Foreign Subsidiaries of Company may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not to
exceed $1,000,000 at any time outstanding;

 

 

 

          (ix)     Company and its Domestic Subsidiaries may become and remain
liable with respect to other Indebtedness in an aggregate principal amount not
to exceed $1,000,000 at any time outstanding;

 

 

 

          (x)      Foreign Subsidiaries may become and remain liable with
respect to Indebtedness to any other Foreign Subsidiaries, to the extent
incurred in the ordinary course of business and consistent with past practices
of such Subsidiaries;

 

 

 

          (xi)     Company may become and remain liable with respect to
Indebtedness secured by the cash surrender value of life insurance policies in
an amount not to exceed, at any time, 95% of the aggregate cash surrender value
of such policies; and

 

 

 

          (xii)    Company may become and remain liable with respect to
Indebtedness subordinated to the Obligations subject to terms, including,
without limitation, subordination provisions, satisfactory in form and substance
to Administrative Agent in an aggregate principal amount not to exceed
$20,000,000 at any time outstanding.

                    7.2      Liens and Related Matters.

                    A.      Prohibition on Liens.  Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods or
accounts receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:

 

(i)     Permitted Encumbrances; and

 

 

 

(ii)     Liens set forth on Schedule 7.2 annexed hereto.

                    B.     Equitable Lien in Favor of Lenders.  If Company or
any of its Subsidiaries shall create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause

 

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to be made effective provision whereby the Obligations will be secured by such
Lien equally and ratably with any and all other Indebtedness secured thereby as
long as any such Indebtedness shall be so secured; provided that,
notwithstanding the foregoing, this covenant shall not be construed as a consent
by Requisite Lenders to the creation or assumption of any such Lien not
permitted by the provisions of subsection 7.2A.

                    C.     No Further Negative Pledges.  Neither Company nor any
of its Subsidiaries shall enter into any agreement (other than an agreement
prohibiting only the creation of Liens securing Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale.

                    D.     No Restrictions on Subsidiary Distributions to
Company or Other Subsidiaries.  Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary’s Capital Stock owned by Company or any other Subsidiary
of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
Company or any other Subsidiary of Company, (iii) make loans or advances to
Company or any other Subsidiary of Company, or (iv) transfer any of its property
or assets to Company or any other Subsidiary of Company, except (a) as provided
in this Agreement and (b) as may be provided in an agreement with respect to an
Asset Sale.

                    7.3      Investments; Acquisitions.

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, or acquire, by purchase or otherwise, all
or substantially all the business, property or fixed assets of, or Capital Stock
or other ownership interest of any Person, or any division or line of business
of any Person except:

 

          (i)     Company and its Subsidiaries may make and own Investments in
Cash Equivalents;

 

 

 

          (ii)    Company and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 7.1;

 

 

 

          (iii)   Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;

 

 

 

          (iv)   Company and its Subsidiaries may continue to own the
Investments owned by them and set forth on Schedule 7.3 annexed hereto;

 

 

 

          (v)    Company and its Subsidiaries may make additional Investments in
their respective Foreign Subsidiaries; provided that the amount of all such
Investments constituting equity Investments (other than the conversion to equity
of the intercompany

 

 

 

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Indebtedness set forth on Schedule 7.1 annexed hereto) does not exceed
$5,000,000 in the aggregate for all such Investments since the Closing Date; and

 

 

 

          (vi)    Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time $2,500,000.

                    7.4      Contingent Obligations

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:

 

          (i)     Subsidiaries of Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty;

 

 

 

          (ii)   Company and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations set forth on Schedule 7.4 annexed hereto;
and

 

 

 

          (iii)  Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum aggregate
liability, contingent or otherwise, of Company and its Subsidiaries in respect
of all such Contingent Obligations shall at no time exceed $2,000,000.

                    7.5      Restricted Junior Payments.

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that Company may make
mandatory payments in respect of the Convertible Subordinated Notes and the
Convertible Series A Preferred Stock in accordance with the terms of, and only
to the extent required by, and subject to the subordination provisions contained
in, the indenture or other agreement pursuant to which such Subordinated
Indebtedness was issued, as such indenture or other agreement may be amended
from time to time to the extent permitted under subsection 7.13, and the
Subordination Agreement, as the case may be; provided, further, that Company may
make payments for acquisitions of shares of its common stock from its current or
former employees provided that (i) the aggregate amount of any such payments
does not exceed $1,500,000 in any Fiscal Year and (ii) no Event of Default shall
have occurred and be continuing or would result after giving effect to any such
payment.

                    7.6      Financial Covenants.

                    A.      Minimum Consolidated Fixed Charge Coverage Ratio. 
Company shall not permit the ratio of (i) the sum of (a) Consolidated EBITDA for
any four Fiscal Quarter period ending on or after July 31, 2003, minus (b)
Consolidated Capital Expenditures made during such period, minus (c) income
taxes payable for such period to (ii) Consolidated Fixed Charges for such period
to be less than 1.40:1.00. 

 

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                    B.      Maximum Consolidated Leverage Ratio.  Company shall
not permit the Consolidated Leverage Ratio, as of the last day of any Fiscal
Quarter, to exceed 1.50:1.00.

                    C.     Minimum Consolidated EBITDA.  Company shall not
permit Consolidated EBITDA for (i) the three Fiscal Quarter period ended January
31, 2003 to be less than $12,000,000 and (ii) the four Fiscal Quarter period
ended on any of the dates set forth below to be less than the correlative amount
indicated:

Period

 

Minimum Consolidated EBITDA

 

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

 

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

 

April 30, 2003
 

$

16,000,000

 

July 31, 2003
 

$

17,000,000

 

October 31, 2003
 

$

18,000,000

 

January 31, 2004
 

$

21,000,000

 

April 30, 2004
 

$

23,000,000

 

July 31, 2004 and thereafter
 

$

25,000,000

 

                    D.     Minimum Consolidated Quick Ratio.  Company shall not
permit the Consolidated Quick Ratio, as of the last day of any Fiscal Quarter,
to be less than 1.25:1.00. 

                    7.7     Restriction on Fundamental Changes; Asset Sales.

                    Company shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets (including its
notes or receivables and Capital Stock of a Subsidiary, whether newly issued or
outstanding), whether now owned or hereafter acquired, except:

 

          (i)     any Subsidiary of Company may be merged with or into Company
or any Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or
any part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any Subsidiary Guarantor; provided that, in the case
of such a merger, Company or such Subsidiary Guarantor shall be the continuing
or surviving Person;

 

 

 

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          (ii)    Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof;

 

 

 

          (iii)   Company and its Subsidiaries may dispose of obsolete, worn out
or surplus property in the ordinary course of business;

 

 

 

          (iv)   Company and its Subsidiaries may make Asset Sales of assets
having a fair market value not in excess of $1,000,000; provided that (a) the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof and (b) the sole consideration received shall be
Cash or an Investment permitted by subsection 7.3;

 

 

 

          (v)    in order to resolve disputes that occur in the ordinary course
of business, Company and its Subsidiaries may discount or otherwise compromise
for less than the face value thereof, notes or accounts receivable; and

 

 

 

          (vi)   Company or a Subsidiary may sell or dispose of shares of
Capital Stock of any of its Subsidiaries in order to qualify members of the
Governing Body of the Subsidiary if required by applicable law.

                    7.8      Consolidated Capital Expenditures.

                    Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount (the
“Maximum Consolidated Capital Expenditures Amount”) set forth below opposite
such Fiscal Year:

 

 

Maximum Consolidated
Capital Expenditures

 

Fiscal Year

 

 

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

 

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

 

2003

 

$

2,000,000

 

2004 and thereafter

 

$

6,000,000

 

                    7.9      Transactions with Shareholders and Affiliates.

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any holder of 5% or more of any class of
equity Securities of Company or with any Affiliate of Company or of any such
holder, on terms that are less favorable to Company or that Subsidiary, as the
case may be, than those that might be obtained at the time from Persons who are
not such a holder or Affiliate; provided that the foregoing restriction shall
not apply to (i) any transaction between Company and any of its

 

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wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries,
(ii) reasonable and customary fees paid to members of the Governing Bodies of
Company and its Subsidiaries or (iii) subject to the terms of the Subordination
Agreement, any transaction under or contemplated by the documents, instruments
or agreements governing or evidencing the Subordinated Indebtedness. 

                    7.10      Sales and Lease-Backs.

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) that Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) that Company or
any of its Subsidiaries intends to use for substantially the same purpose as any
other property that has been or is to be sold or transferred by Company or any
of its Subsidiaries to any Person (other than Company or any of its
Subsidiaries) in connection with such lease.

                    7.11      Sale or Discount of Receivables .

                    Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its notes or
Accounts, except in connection with bona fide efforts to collect Accounts which
are past due 120 days or more.

                    7.12      Conduct of Business.

                    From and after the Closing Date, Company shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
the businesses engaged in by Company and its Subsidiaries on the Closing Date
and similar or related businesses. 

                    7.13      Amendments of Documents Relating to Subordinated
Indebtedness.

                    Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any Subordinated
Indebtedness, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon
which payments of principal or interest are due thereon, change any event of
default or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral). 

                    7.14      Fiscal Year.

                    Company shall not change its Fiscal Year-end from April 30.

 

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Section 8.              EVENTS OF DEFAULT

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

                    8.1      Failure to Make Payments When Due.

                    Failure by Company to pay any installment of principal of
any Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay any interest on
any Loan or any fee or any other amount due under this Agreement within five
days after the date due; or

                    8.2      Default in Other Agreements.

 

          (i)     Failure of Company or any of its Subsidiaries to pay when due
(a) any principal of or interest on or any other amount payable in respect of
one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations in an individual principal amount of
$1,000,000 or more or with an aggregate principal amount of $1,000,000 or more,
in each case beyond the end of any grace period provided therefor, or (b) any
dividends on or any other amounts payable in respect of the Convertible Series A
Preferred Stock; or

 

 

 

          (ii)    breach or default by Company or any of its Subsidiaries with
respect to any other material term of (a) one or more items of Indebtedness or
Contingent Obligations in the individual or aggregate principal amounts referred
to in clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent Obligation(s),
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or

                    8.3      Breach of Certain Covenants.

                    Failure of Company to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or

                    8.4      Breach of Warranty.

                    Any representation, warranty, certification or other
statement made by Company or any of its Subsidiaries in any Loan Document or in
any statement or certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or

 

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                    8.5      Other Defaults Under Loan Documents.

                    Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an Officer of Company or such Loan Party becoming
aware of such default or (ii) receipt by Company and such Loan Party of notice
from Administrative Agent or any Lender of such default; or

                    8.6      Involuntary Bankruptcy; Appointment of Receiver,
etc..

 

           (i)     A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Significant
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or

 

 

 

           (ii)    an involuntary case shall be commenced against Company or any
of its Significant Subsidiaries under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Company or any of its Subsidiaries, or over
all or a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver, trustee
or other custodian of Company or any of its Significant Subsidiaries for all or
a substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Significant Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or

                    8.7      Voluntary Bankruptcy; Appointment of Receiver, etc.

 

           (i)     Company or any of its Significant Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Company or any of its
Significant Subsidiaries shall make any assignment for the benefit of creditors;
or

 

 

 

           (ii)    Company or any of its Significant Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its inability, to pay
its debts as such debts become due; or the Governing Body of Company or any of
its Significant Subsidiaries (or any

 

 

 

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committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or

                    8.8      Judgments and Attachments.

                    Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $500,000 or
(ii) in the aggregate at any time an amount in excess of $1,000,000 (in either
case not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or

                    8.9      Dissolution.

                    Any order, judgment or decree shall be entered against
Company or any of its Significant Subsidiaries decreeing the dissolution or
split up of Company or that Significant Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or

                    8.10     Employee Benefit Plans.

                    There shall occur one or more ERISA Events or similar events
in respect of any Foreign Plans, that individually or in the aggregate results
in or might reasonably be expected to result in liability of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in excess of $1,000,000
during the term of this Agreement; or there shall exist an amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA) and unfunded
liabilities in respect of Foreign Plans, individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which exceeds
$1,000,000; or

                    8.11     Material Adverse Effect.

                    Any event or change shall occur that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect; or

                    8.12     Change in Control.

                    A Change in Control shall have occurred; or

                    8.13     Invalidity of Loan Documents; Failure of Security;
Repudiation of Obligations.

                    At any time after the execution and delivery thereof, (i)
any Loan Document or any material provision thereof, for any reason other than
the satisfaction in full of all Obligations, shall cease to be in full force and
effect (other than in accordance with its terms) or shall be declared to be null
and void, (ii) Administrative Agent shall not have or shall cease to have a

 

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valid First Priority Lien in any material Collateral purported to be covered by
the Collateral Documents, in each case for any reason other than the failure of
Administrative Agent or any Lender to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document or any material provision thereof in writing or deny in writing that it
has any further liability, including with respect to future advances by Lenders,
under any Loan Document or any provision thereof to which it is a party:

THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Revolving Lenders under
subsection 3.3C(i). 

                    Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Security Agreement and shall be applied as therein provided. 

Section 9.               ADMINISTRATIVE AGENT

                    9.1      Appointment.

                    A.     Appointment of Administrative Agent.Wells Fargo is
hereby appointed Administrative Agent hereunder and under the other Loan
Documents.  Each Lender hereby authorizes Administrative Agent to act as its
agent in accordance with the terms of this Agreement and the other Loan
Documents.  Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable.  The
provisions of this Section 9 are solely for the benefit of Administrative Agent
and Lenders and no Loan Party shall have rights as a third party beneficiary of
any of the provisions thereof.  In performing its functions and duties under
this Agreement, Administrative Agent (other than as provided in subsection 2.1D)
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Company or any other Loan Party.

 

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                    B.     Appointment of Supplemental Collateral Agents.  It is
the purpose of this Agreement and the other Loan Documents that there shall be
no violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction.  It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case Administrative Agent deems
that by reason of any present or future law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
“Supplemental Collateral Agent” and collectively as “Supplemental Collateral
Agents”).

                    In the event that Administrative Agent appoints a
Supplemental Collateral Agent with respect to any Collateral, (i) each and every
right, power, privilege or duty expressed or intended by this Agreement or any
of the other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.

                    Should any instrument in writing from Company or any other
Loan Party be required by any Supplemental Collateral Agent so appointed by
Administrative Agent for more fully and certainly vesting in and confirming to
him or it such rights, powers, privileges and duties, Company shall, or shall
cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Administrative Agent.  In case any
Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Administrative Agent until the
appointment of a new Supplemental Collateral Agent.

                    9.2      Powers and Duties; General Immunity.

                    A.     Powers; Duties Specified.  Each Lender irrevocably
authorizes Administrative Agent to take such action on such Lender’s behalf and
to exercise such powers, rights and remedies hereunder and under the other Loan
Documents as are specifically delegated or granted to Administrative Agent by
the terms hereof and thereof, together with such powers, rights and

 

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 remedies as are reasonably incidental thereto.  Administrative Agent shall have
only those duties and responsibilities that are expressly specified in this
Agreement and the other Loan Documents.  Administrative Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees.  Administrative Agent shall not have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in respect of any
Lender or Company; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon Administrative Agent any obligations in respect of this Agreement or
any of the other Loan Documents except as expressly set forth herein or therein.

                    B.     No Responsibility for Certain Matters. 
Administrative Agent shall not be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made by
Administrative Agent to Lenders or by or on behalf of Company to Administrative
Agent or any Lender in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Company or any other Person liable for the payment of any Obligations, nor shall
Administrative Agent be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default. 
Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.

                    C.     Exculpatory Provisions.  None of Administrative Agent
or any of its officers, directors, employees or agents shall be liable to
Lenders for any action taken or omitted by Administrative Agent under or in
connection with any of the Loan Documents except to the extent caused by
Administrative Agent’s gross negligence or willful misconduct.  Administrative
Agent shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents or from the exercise of any power, discretion or
authority vested in it hereunder or thereunder unless and until Administrative
Agent shall have received instructions in respect thereof from Requisite Lenders
(or such other Lenders as may be required to give such instructions under
subsection 10.6) and, upon receipt of such instructions from Requisite Lenders
(or such other Lenders, as the case may be), Administrative Agent shall be
entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions. 
Without prejudice to the generality of the foregoing, (i) Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have

 

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any right of action whatsoever against Administrative Agent as a result of
Administrative Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).

                    D.     Administrative Agent Entitled to Act as Lender.  The
agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, Administrative Agent in its
individual capacity as a Lender hereunder.  With respect to its participation in
the Loans and the Letters of Credit, Administrative Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term “Lender” or “Lenders” or any similar term shall, unless
the context clearly otherwise indicates, include Administrative Agent in its
individual capacity.  Administrative Agent and its Affiliates may accept
deposits from, lend money to, acquire equity interests in and generally engage
in any kind of commercial banking, investment banking, trust, financial advisory
or other business with Company or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.

                    9.3      Independent Investigation by Lenders; No
Responsibility For Appraisal of Creditworthiness.

                    Each Lender agrees that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. 
Administrative Agent shall have no duty or responsibility, either initially or
on a continuing basis, to make any such investigation or any such appraisal on
behalf of Lenders or to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter, and Administrative Agent shall
have no responsibility with respect to the accuracy of or the completeness of
any information provided to Lenders.

                    9.4      Right to Indemnity.

                    Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Administrative Agent and its officers, directors, employees,
agents, attorneys, professional advisors and Affiliates to the extent that any
such Person shall not have been reimbursed by Company, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements and fees and
disbursements of any financial advisor engaged by Administrative Agent) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Administrative Agent or and other such Persons in
exercising the powers, rights and remedies of Administrative Agent or performing
duties of Administrative Agent hereunder or under the other Loan Documents or
otherwise in its capacity as Administrative Agent in any way relating to or

 

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arising out of this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of Administrative Agent resulting solely from Administrative Agent’s gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.  If any indemnity furnished to Administrative Agent or
any other such Person for any purpose shall, in the opinion of Administrative
Agent, be insufficient or become impaired, Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.

                    9.5      Successor Administrative Agent.

                    Administrative Agent may resign at any time by giving 30
days’ prior written notice thereof to Lenders and Company.  Upon any such notice
of resignation, Requisite Lenders shall have the right, upon five Business Days’
notice to Company, to appoint a successor Administrative Agent.  Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, that 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 under this Agreement.  After any
retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.

                    9.6      Collateral Documents and Subsidiary Guaranty.

                    Each Lender hereby further authorizes Administrative Agent,
on behalf of and for the benefit of Lenders, to enter into each Collateral
Document as secured party and to be the agent for and representative of Lenders
under the Subsidiary Guaranty, and each Lender agrees to be bound by the terms
of each Collateral Document and the Subsidiary Guaranty; provided that
Administrative Agent shall not (i) enter into or consent to any material
amendment, modification, termination or waiver of any provision contained in any
Collateral Document or the Subsidiary Guaranty or (ii) release any Collateral
(except as otherwise expressly permitted or required pursuant to the terms of
this Agreement or the applicable Collateral Document), in each case without the
prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders); provided further, however, that, without further written consent
or authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented, (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the Capital
Stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented or
(c) subordinate the Liens of Administrative Agent, on behalf of Lenders, to any
Liens permitted by subsection 7.2; provided that, in the case of a sale of such
item of Collateral or stock referred to in subdivision (a) or (b), the
requirements of

 

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subsection 10.14 are satisfied.  Anything contained in any of the Loan Documents
to the contrary notwithstanding, Company, Administrative Agent and each Lender
hereby agree that (1) no Lender shall have any right individually to realize
upon any of the Collateral under any Collateral Document or to enforce the
Subsidiary Guaranty, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents and the Subsidiary Guaranty may be
exercised solely by Administrative Agent for the benefit of Lenders in
accordance with the terms thereof, and (2) in the event of a foreclosure by
Administrative Agent on any of the Collateral pursuant to a public or private
sale, Administrative Agent or any Lender may be the purchaser of any or all of
such Collateral at any such sale and Administrative Agent, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by Administrative Agent
at such sale.

                    9.7      Administrative Agent May File Proofs of Claim.

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

 

           (i)     to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Loans and any other Obligations
that are owing and unpaid and to file such other papers or documents as may be
necessary or advisable in order to have the claims of Lenders and Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders and Administrative Agent and their agents
and counsel and all other amounts due Lenders and Administrative Agent under
subsections 2.3 and 10.2) allowed in such judicial proceeding, and

 

 

 

 

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and
its agents and counsel, and any other amounts due Administrative Agent under
subsections 2.3 and 10.2.

 

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

Section 10.               MISCELLANEOUS

                    10.1      Successors and Assigns; Assignments and
Participations in Loans and Letters of Credit.

                    A.        General.  This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of Lenders (it
being understood that Lenders’ rights of assignment are subject to the further
provisions of this subsection 10.1).  Neither Company’s rights or obligations
hereunder nor any interest therein may be assigned or delegated by Company
without the prior written consent of all Lenders (and any attempted assignment
or transfer by Company without such consent shall be null and void).  No sale,
assignment or transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Revolving Lender effecting such sale, assignment,
transfer or participation.  Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Affiliates of each of Administrative Agent
and Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

                    B.         Assignments.

 

             (i)     Amounts and Terms of Assignments.  Any Lender may assign to
one or more Eligible Assignees all or any portion of its rights and obligations
under this Agreement; provided that (a), except (1) in the case of an assignment
of the entire remaining amount of the assigning Lender’s rights and obligations
under this Agreement or (2) in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund of a Lender, the aggregate amount of
the Revolving Loan Exposure of the assigning Lender and the assignee subject to
each such assignment shall not be less than $2,000,000 unless each of
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, Company otherwise consents, each such consent not to be unreasonably
withheld or delayed), (b) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loan or the Commitment assigned,
(c) the parties to each assignment shall execute and deliver to Administrative
Agent an Assignment Agreement, together with a processing and recordation fee of
$3,500 (unless the assignee is an Affiliate or an Approved Fund of the assignor,
in which case no fee shall be required), and the Eligible Assignee, if it shall
not be a Lender, shall deliver to Administrative Agent information reasonably
requested by Administrative Agent, including such forms,

 

 

 

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certificates or other evidence, if any, with respect to United States federal
income tax withholding matters as the assignee under such Assignment Agreement
may be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii) and (d), except in the case of an assignment to another Lender, an
Affiliate of a Lender or an Approved Fund of a Lender,  Administrative Agent
and, if no Event of Default has occurred and is continuing, Company, shall have
consented thereto (which consent shall not be unreasonably withheld).  Upon such
execution, delivery and consent, from and after the effective date specified in
such Assignment Agreement, (y) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment Agreement, shall have the rights and obligations
of a Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment Agreement, relinquish its rights (other than any rights which
survive the termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is Issuing Lender with
respect to any outstanding Letters of Credit such Lender shall continue to have
all rights and obligations of Issuing Lender with respect to such Letters of
Credit until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder).  The assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its Notes, if any, to Administrative Agent for
cancellation, and thereupon new Notes shall, if so requested by the assignee
and/or the assigning Lender in accordance with subsection 2.1E, be issued to the
assignee and/or to the assigning Lender, substantially in the form of Exhibit
IV, with appropriate insertions, to reflect the new Commitments and/or
outstanding Revolving Loans of the assignee and/or the assigning Lender.  Other
than as provided in subsection 10.5, any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection 10.1B shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection 10.1C.

 

 

 

             (ii)    Acceptance by Administrative Agent; Recordation in
Register.  Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee, together
with the processing and recordation fee referred to in subsection 10.1B(i) and
any forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii), Administrative Agent
shall, if Administrative Agent and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required pursuant
to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence any
required consent of Administrative Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company.

 

 

 

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Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii).

 

 

 

     (iii)     Deemed Consent by Company.  If the consent of Company to an
assignment or to an Eligible Assignee is required hereunder (including a consent
to an assignment which does not meet the minimum assignment thresholds specified
in subsection 10.1B(i)), Company shall be deemed to have given its consent five
Business Days after the date notice thereof has been delivered by the assigning
Lender (through Administrative Agent) unless such consent is expressly refused
by Company prior to such fifth Business Day.

                  C.     Participations.  Any Lender may, without the consent
of, or notice to, Company or Administrative Agent, sell participations to one or
more Persons (other than a natural Person or Company or any of its Affiliates)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement; provided that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) Company,
Administrative Agent and Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver directly affecting (i) the extension of
the scheduled final maturity date of  any Loan allocated to such participation
or (ii) a reduction of the principal amount of or the rate of interest payable
on any Loan allocated to such participation.  Subject to the further provisions
of this subsection 10.1C, Company agrees that each Participant shall be entitled
to the benefits of subsections 2.6D and 2.7 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection
10.1B.  To the extent permitted by law, each Participant also shall be entitled
to the benefits of subsection 10.4 as though it were a Lender, provided such
Participant agrees to be subject to subsection 10.5 as though it were a Lender. 
A Participant shall not be entitled to receive any greater payment under
subsections 2.6D and 2.7 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant unless the
sale of the participation to such Participant is made with Company’s prior
written consent.  A Participant that would be a Non-US Lender if it were a
Lender shall not be entitled to the benefits of subsection 2.7 unless Company is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Company, to comply with subsection 2.7B(iii) as
though it were a Lender.

                   D.     Pledges and Assignments.  Any Lender may at any time
pledge or assign a security interest in all or any portion of its Loans, and the
other Obligations owed to such Lender, to secure obligations of such Lender,
including, without limitation, any pledge or assignment to secure obligations to
any Federal Reserve Bank; provided that (i) no Lender shall be relieved of any
of its obligations hereunder as a result of any such assignment or pledge and

 

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(ii) in no event shall any assignee or pledgee be considered to be a “Lender” or
be entitled to require the assigning Lender to take or omit to take any action
hereunder.

                    E.       Information.  Each Lender may furnish any
information concerning Company and its Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject to subsection 10.19.

                    F.       Agreements of Lenders.  Each Lender listed on the
signature pages hereof hereby agrees (i) that it is an Eligible Assignee
described in clause (ii) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control).  Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the agreements of such
Lender contained in Section 2(c) of such Assignment Agreement are incorporated
herein by this reference.

                     10.2     Expenses.

                    Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all reasonable costs and
expenses of negotiation, preparation and execution of the Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all costs and
expenses of furnishing all opinions by counsel for Company (including any
opinions requested by Administrative Agent or Lenders as to any legal matters
arising hereunder) and of Company’s performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to confirming
compliance with environmental, insurance and solvency requirements; (iii) all
reasonable fees, expenses and disbursements of counsel to Administrative Agent
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all costs and expenses of
creating and perfecting Liens in favor of Administrative Agent on behalf of
Lenders pursuant to any Collateral Document, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums, and reasonable fees, expenses and disbursements of counsel
to Administrative Agent and of counsel providing any opinions that
Administrative Agent or Requisite Lenders may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all costs and
expenses incurred by Administrative Agent in connection with the custody or
preservation of any of the Collateral; (vi) all other costs and expenses
incurred by Administrative Agent in connection with the syndication of the
Commitments; (vii) all costs and expenses, including reasonable attorneys’ fees
(including allocated costs of internal counsel) and fees, costs and expenses of
accountants, advisors and consultants, incurred by Administrative Agent and its
counsel relating to efforts to (a) evaluate or assess any Loan Party, its
business or financial condition and (b) protect, evaluate, assess or dispose of
any of the Collateral; and (viii) all costs

 

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and expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel),  fees, costs and expenses of accountants, advisors and
consultants and costs of settlement, incurred by Administrative Agent and
Lenders in enforcing any Obligations of or in collecting any payments due from
any Loan Party hereunder or under the other Loan Documents (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral or the enforcement of the Loan Documents) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings.

                     10.3     Indemnity.

                    In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated hereby shall be
consummated, Company agrees to defend (subject to Indemnitees’ selection of
counsel), indemnify, pay and hold harmless Administrative Agent and Lenders
(including Issuing Lender), and the officers, directors, employees, agents and
Affiliates of Administrative Agent and Lenders (collectively called the
“Indemnitees”), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.

                               As used herein, “Indemnified Liabilities” means,
collectively, any and all liabilities, obligations, losses, damages (including
natural resource damages), penalties, actions, judgments, suits, claims
(including Environmental Claims), costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity), expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders’ agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, the failure of Issuing Lender to honor a drawing under a Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto Government Authority, or any enforcement
of any of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty)), (ii) the statements contained in the commitment letter delivered by
any Lender to Company with respect thereto, or (iii) any Environmental Claim or

 

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any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of Company or any of its Subsidiaries.

                    To the extent that the undertakings to defend, indemnify,
pay and hold harmless set forth in this subsection 10.3 may be unenforceable in
whole or in part because they are violative of any law or public policy, Company
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.

                     10.4     Set-Off.

                    In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, provisional or final, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender or any Affiliate
of that Lender to or for the credit or the account of Company and each other
Loan Party against and on account of the Obligations of Company or any other
Loan Party to that Lender (or any Affiliate of that Lender) or to any other
Lender (or any Affiliate of any other Lender) under this Agreement, the Letters
of Credit and participations therein and the other Loan Documents, including all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured. 

                    10.5      Ratable Sharing.

                    Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by realization
upon security, through the exercise of any right of set-off or banker’s lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the “Aggregate
Amounts Due” to such Lender) that is greater than the proportion received by any
other Lender in respect of the Aggregate Amounts Due to such other Lender, then
the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase assignments (which it shall be
deemed to have purchased from each seller of an assignment simultaneously upon
the receipt by such seller of its portion of such payment)

 

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of the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such assignments shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest.  Company expressly consents to
the foregoing arrangement and agrees that any purchaser of an assignment so
purchased may exercise any and all rights of a Lender as to such assignment as
fully as if that Lender had complied with the provisions of subsection 10.1B
with respect to such assignment.  In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter into
an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.

                     10.6      Amendments and Waivers.

                    No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, and no consent to any departure by
Company therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that no such amendment, modification,
termination, waiver or consent shall, without the consent of (a) each Lender,
(1) reduce the principal amount of any Loan, (2) increase the maximum aggregate
amount of Letters of Credit, (3) postpone the date or reduce the amount of any
scheduled payment (but not prepayment) of principal of any Loan, (4) postpone
the date on which any interest or any fees are payable, (5) decrease the
interest rate borne by any Loan (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the
amount of any fees payable hereunder, (6) reduce the amount or postpone the due
date of any amount payable in respect of any Letter of Credit, (7) extend the
expiration date of any Letter of Credit beyond the Revolving Loan Commitment
Termination Date or (8) change in any manner the obligations of Revolving
Lenders relating to the purchase of participations in Letters of Credit; (b)
each Lender, (1) change in any manner the definition of “Pro Rata Share” or the
definition of “Requisite Lenders” or the definition of “Requisite Lenders”
(except for any changes resulting solely from an increase in Commitments
approved by Requisite Lenders), (2) change in any manner any provision of this
Agreement that, by its terms, expressly requires the approval or concurrence of
all Lenders, (3) increase the maximum duration of Interest Periods permitted
hereunder, (4) release any Lien granted in favor of Administrative Agent with
respect to all or substantially all of the Collateral or more in aggregate fair
market value of the Collateral or release all or substantially all of the
Subsidiary Guarantors from their obligations under the Subsidiary Guaranty, in
each case other than in accordance with the terms of the Loan Documents, or (5)
change in any manner or waive the provisions contained in subsection 8.1 or this
subsection 10.6.  In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 4 shall be effective only
if evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, (iii)  no amendment,

 

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modification, termination or waiver of any provision of Section 3 shall be
effective without the written concurrence of  Administrative Agent and, with
respect to the purchase of participations in Letters of Credit, without the
written concurrence of Issuing Lender that has issued an outstanding Letter of
Credit or has not been reimbursed for a payment under a Letter of Credit,
(iv) no amendment, modification, termination or waiver of any provision of
Section 9 or of any other provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of Administrative Agent shall be
effective without the written concurrence of Administrative Agent, and (v) no
Commitment of a Lender shall be increased without the consent of such Lender. 
Administrative Agent may, but shall have no obligation to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender.  Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.  No notice to or
demand on Company in any case shall entitle Company to any other or further
notice or demand in similar or other circumstances.  Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company.

                     10.7     Independence of Covenants.

                    All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.

                     10.8      Notices; Effectiveness of Signatures.

                    Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile in complete and legible
form, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Administrative
Agent and Issuing Lender shall not be effective until received.  For the
purposes hereof, the address of each party hereto shall be as set forth under
such party’s name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent. 

                    Loan Documents and notices under the Loan Documents may be
transmitted and/or signed by telefacsimile.  The effectiveness of any such
documents and signatures shall, subject to applicable law, have the same force
and effect as an original copy with manual signatures and shall be binding on
all Loan Parties, Administrative Agent and Lenders.  Administrative Agent may
also require that any such documents and signature be confirmed by a
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thereof; provided, however, that the failure to request or deliver any such
manually-signed copy shall not affect the effectiveness of any facsimile
document or signature.

                     10.9     Survival of Representations, Warranties and
Agreements.

                    A.      All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the making
of the Loans and the issuance of the Letters of Credit hereunder.

                    B.       Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Company set forth in
subsections 2.6D, 2.7, 10.2, 10.3, 10.4, 10.17 and 10.18 and the agreements of
Lenders set forth in subsections 9.2C, 9.4, 10.5 and 10.18 shall survive the
payment of the Loans, the cancellation or expiration of the Letters of Credit
and the reimbursement of any amounts drawn thereunder, and the termination of
this Agreement.

                     10.10    Failure or Indulgence Not Waiver; Remedies
Cumulative.

                    No failure or delay on the part of Administrative Agent or
any Lender in the exercise of any power, right or privilege hereunder or under
any other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege.  All
rights and remedies existing under this Agreement and the other Loan Documents
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

                     10.11    Marshalling; Payments Set Aside.

                    Neither Administrative Agent nor any Lender shall be under
any obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations.  To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or any
Lender enforces any security interests or exercises its rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.

                     10.12    Severability.

                    In case any provision in or obligation under this Agreement
or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

 

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                     10.13       Obligations Several; Independent Nature of
Lenders’ Rights; Damage Waiver.

                    The obligations of Lenders hereunder are several and no
Lender shall be responsible for the obligations or Commitments of any other
Lender hereunder.  Nothing contained herein or in any other Loan Document, and
no action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders, or Lenders and Company, as a partnership, an association, a
Joint Venture or any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.

To the extent permitted by law, Company shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with or as a result of this Agreement (including,
without limitation, subsection 2.1C hereof), any other Loan Document, any
transaction contemplated by the Loan Documents, any Loan or the use of proceeds
thereof.

                     10.14    Release of Security Interest or Guaranty.

                    Upon the proposed sale or other disposition of any
Collateral that is permitted by this Agreement or to which Requisite Lenders
have otherwise consented, or the sale or other disposition of all of the Capital
Stock of a Subsidiary Guarantor to any Person (other than an Affiliate of
Company) permitted by this Agreement or to which Requisite Lenders have
otherwise consented, for which a Loan Party desires to obtain a security
interest release or a release of the Subsidiary Guaranty from Administrative
Agent, such Loan Party shall deliver an Officer’s Certificate (i) stating that
the Collateral or the Capital Stock subject to such disposition is being sold or
otherwise disposed of in compliance with the terms hereof and (ii) specifying
the Collateral or Capital Stock being sold or otherwise disposed of in the
proposed transaction.  Upon the receipt of such Officer’s Certificate,
Administrative Agent shall, at such Loan Party’s expense, so long as
Administrative Agent has no reason to believe that the facts stated in such
Officer’s Certificate are not true and correct, execute and deliver such
releases of its security interest in such Collateral or such Subsidiary
Guaranty, as may be reasonably requested by such Loan Party.

                    10.15.   Applicable Law

                    THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION
1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

 

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                     10.16    Construction of Agreement; Nature of Relationship.

                    Each of the parties hereto acknowledges that (i) it has been
represented by counsel in the negotiation and documentation of the terms of this
Agreement, (ii) it has had full and fair opportunity to review and revise the
terms of this Agreement, (iii) this Agreement has been drafted jointly by all of
the parties hereto, and (iv) neither Administrative Agent nor any Lender or
other Agent has any fiduciary relationship with or duty to Company arising out
of or in connection with this Agreement or any of the other Loan Documents, and
the relationship between Administrative Agent and Lenders, on one hand, and
Company, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor.  Accordingly, each of the parties hereto acknowledges
and agrees that the terms of this Agreement shall not be construed against or in
favor of another party.

                     10.17    Consent to Jurisdiction and Service of Process.

                    ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF LOS ANGELES.  BY
EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY

 

     (I)     ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;

 

 

 

 

     (II)     WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

 

 

 

 

     (III)     AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;

 

 

 

 

 

     (IV)     AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT;

 

 

 

 

     (V)     AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE COURTS OF
ANY OTHER JURISDICTION; AND

 

 

 

 

     (VI)     AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND

 

 

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ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 410.40 OR OTHERWISE.

                     10.18.     Waiver of Jury Trial.

                    EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.  THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.  In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.

                     10.19.     Confidentiality.

                    Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement in accordance with such Lender’s
customary procedures for handling confidential information of this nature, it
being understood and agreed by Company that in any event a Lender may
make disclosures (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential), (b) to the extent requested by any Government
Authority, (c) to the extent required by applicable laws or regulations or by
any

 

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subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this subsection 10.19, to (i) any Eligible Assignee of or
participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to obligations of Company, (g) with the consent
of Company, (h) to the extent such information (i) becomes publicly available
other than as a result of a breach of this subsection 10.19 or (ii) becomes
available to Administrative Agent or any Lender on a nonconfidential basis from
a source other than Company or (i) to the National Association of Insurance
Commissioners or any other similar organization or any nationally recognized
rating agency that requires access to information about a Lender’s or its
Affiliates’ investment portfolio in connection with ratings issued with respect
to such Lender or its Affiliates and that no written or oral communications from
counsel to Administrative Agent and no information that is or is designated as
privileged or as attorney work product may be disclosed to any Person unless
such Person is a Lender or a participant hereunder; provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any Government Authority or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such Government Authority) for disclosure
of any such non-public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated or required to
return any materials furnished by Company or any of its Subsidiaries.  In
addition, Administrative Agent and Lenders may disclose the existence of this
Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to
Administrative Agent and Lenders.

                     10.20.      Counterparts; Effectiveness.

                    This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.  This Agreement shall become effective upon the execution of
a counterpart hereof by each of the parties hereto.

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

COMPANY:

 

 

 

KORN/FERRY INTERNATIONAL

 

 

 

 

 

By: 

/s/ GARY D. BURNISON

 

 

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

 

 

Title: 

Chief Financial Officer and Executive Vice President

 

 

 

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

 

 

 

 

 

 

Notice Address:

 

 

 

 

 

Korn/Ferry International
1800 Century Park East, Suite 900
Los Angeles, California 90067
Attention: Gary D. Burnison

 

 

 

 

 

 

 

LENDERS:

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

 

individually and as Administrative Agent

 

 

 

 

 

 

 

 

By: 

/s/  HUGH DIDDY

 

 

 

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

 

 

Title:

Vice President

 

 

 

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

 

 

 

 

 

 

Notice Address:

 

 

 

 

 

Wells Fargo Bank, National Association

 

 

555 Montgomery Street, 17th Floor

 

 

San Francisco, California 94111

 

 

Attention:  Hugh Diddy

 

 

 

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Credit Agreement