Exhibit 10.27

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

between

HURON CONSULTING GROUP INC.,

HURON CONSULTING SERVICES LLC

and

LASALLE BANK NATIONAL ASSOCIATION

 

Dated February 10, 2005

 

 

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TABLE OF CONTENTS

 

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1.

  DEFINITIONS    2     1.1   Defined Terms    2     1.2   Accounting Terms    10
    1.3   Other Terms Defined in UCC    10     1.4   Other Definitional
Provisions; Construction    10     1.5   Effect of This Agreement    11

2.

  LOANS    11     2.1   Revolving Loans    11         (a)   Revolving Loan
Facility    11         (b)   Revolving Loan Interest and Payments    12        
(c)   Revolving Loan Principal Repayments    13             (i)   Mandatory
Principal Prepayments, Overadvances and Mandatory Cleanup/Cleandown Provision   
13             (ii)   Optional Prepayments    13     2.2   Additional LIBOR Loan
Provisions    13         (a)   LIBOR Loan Prepayments    13         (b)   LIBOR
Unavailability    13         (c)   Regulatory Change    14         (d)   LIBOR
Loan Indemnity    14     2.3   Interest and Fee Computation; Collection of Funds
   14     2.4   Letters of Credit    15

3.

  CONDITIONS OF EFFECTIVENESS AND BORROWING    15     3.1   Effectiveness    15
    3.2   Loan Documents    15         (a)   Loan Agreement    15         (b)  
Revolving Note    15         (c)   Borrowing Base Certificate    15         (d)
  Resolutions    15         (e)   Additional Documents    16     3.3  
Conditions to Funding    16         (a)   Event of Default    16         (b)  
Representations and Warranties    16     3.4   Administrative Fee    16

4.

  NOTE EVIDENCING LOANS    16     4.1   Revolving Note    16

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5.

  MANNER OF BORROWING    17

6.

  SECURITY FOR THE OBLIGATIONS    17     6.1   Security for Obligations    17  
  6.2   Lockbox Agreement    18     6.3   Possession and Transfer of Collateral
   20     6.4   Financing Statements    20     6.5   Additional Collateral    20
    6.6   Preservation of the Collateral    21     6.7   Other Actions as to any
and all Collateral    21     6.8   [Intentionally Omitted]    22     6.9  
Commercial Tort Claims    22     6.10   Electronic Chattel Paper and
Transferable Records    22

7.

  REPRESENTATIONS AND WARRANTIES    22     7.1   Borrower Organization and Name
   22     7.2   Authorization; Validity    23     7.3   Compliance With Laws   
23     7.4   Environmental Laws and Hazardous Substances    23     7.5   Absence
of Breach    24     7.6   Collateral Representations    24     7.7   Financial
Statements    24     7.8   Litigation and Taxes    24     7.9   Event of Default
   24     7.10   ERISA Obligations    24     7.11   Lending Relationship    25  
  7.12   Business Loan    25     7.13   Compliance with Regulation U    25    
7.14   Governmental Regulation    25     7.15   Bank Accounts    25     7.16  
Place of Business    25     7.17   Complete Information    26

8.

  NEGATIVE COVENANTS    26     8.1   Indebtedness    26     8.2   Encumbrances
   26     8.3   Investments    27     8.4   Transfer; Merger    29     8.5  
Issuance of Membership Interests    29     8.6   [Intentionally Omitted]    29  
  8.7   Use of Proceeds    29     8.8   Bank Accounts    29     8.9   Change of
Legal Status or Location    29     8.10   [Intentionally Omitted]    29     8.11
  Collateral    29

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9.

  AFFIRMATIVE COVENANTS    30     9.1   Compliance with Bank Regulatory
Requirements    30     9.2   Borrower Existence    30     9.3   Maintain
Property    30     9.4   Maintain Insurance    30     9.5   Tax Liabilities   
31     9.6   ERISA Liabilities; Employee Plans    31     9.7   Financial
Statements    32     9.8   Supplemental Financial Statements    33     9.9  
Borrowing Base Certificate    33     9.10   Budget    33     9.11   Aged
Accounts Schedule    33     9.12   Field Audits    33     9.13   Quarterly
Compliance Certificate and Other Reports    33     9.14   Collateral Records   
34     9.15   Notice of Proceedings    34     9.16   Notice of Default    34    
9.17   Banking Relationship    34     9.18   Environmental Matters    34

10.

  FINANCIAL COVENANTS    34     10.1   Capital    34     10.2   Capital
Expenditures    34

11.

  EVENTS OF DEFAULT    35     11.1   Nonpayment of Obligations    35     11.2  
Misrepresentation    35     11.3   Nonperformance    35     11.4   Default under
Other Agreements    35     11.5   Assignment for Creditors    35     11.6  
Bankruptcy    36     11.7   Judgments    36     11.8   Change in Control    36  
  11.9   Collateral Impairment    36     11.10   Material Adverse Event    36  
  11.11   Material Adverse Change    36

12.

  REMEDIES    37     12.1   Possession and Assembly of Collateral    37     12.2
  Sale of Collateral    37     12.3   Standards for Exercising Remedies    38  
  12.4   UCC and Offset Rights    38     12.5   Additional Remedies    39    
12.6   Attorney-in-Fact    40     12.7   No Marshaling    40

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    12.8   Application of Proceeds    41     12.9   No Waiver    41 13.  
MISCELLANEOUS    41     13.1   Obligations Absolute    41     13.2   Entire
Agreement    42     13.3   Amendments; Waivers    42     13.4   Waiver of Jury
Trial    42     13.5   Litigation    42     13.6   Assignability    43     13.7
  Confidentiality    43     13.8   Binding Effect    43     13.9   Governing Law
   43     13.10   Enforceability    43     13.11   Survival of Borrower
Representations    44     13.12   Extensions of Facility and Note    44    
13.13   Time of Essence    44     13.14   Counterparts    44     13.15  
Facsimile Signatures    44     13.16   Notices    44     13.17   Indemnification
   45     13.18   Use of the Term “Borrower”    46     13.19   Joint and Several
Liability    46 Signature Page    47

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the “Agreement”) dated as
of February 10, 2005, is executed by and between HURON CONSULTING GROUP INC., a
Delaware corporation (referred to herein as “Parent” or “Parent Borrower”), and
HURON CONSULTING SERVICES LLC, a Delaware limited liability company f/k/a Huron
Consulting Group LLC (referred to herein as “Subsidiary” or “Subsidiary
Borrower”), each of whose address is 550 W. Van Buren Street, Chicago, Illinois
60607 (Parent and Subsidiary are jointly, severally and collectively referred to
in this Agreement as the “Borrower”), and LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (the “Bank”), whose address is 135 South LaSalle
Street, Chicago, Illinois 60603.

 

RECITALS:

 

A. Subsidiary and Bank entered into that certain Loan and Security Agreement
(the “Original Loan Agreement”) dated January 31, 2003, whereby Bank agreed to
provide Subsidiary a secured, revolving loan in the principal amount not to
exceed $5,000,000.00 (the “Revolving Loan”), with a maturity date of January 31,
2004.

 

B. Pursuant to a First Amendment to Loan and Security Agreement dated January
28, 2004 (the “First Amendment”), Subsidiary and Bank agreed to amend the Loan
Agreement to, among other things, (i) increase the principal amount of the
Revolving Loan to be $6,500,000.00, and (ii) extend the maturity date of the
Revolving Loan to February 29, 2004.

 

C. Pursuant to a Second Amendment to Loan and Security Agreement dated February
11, 2004, Subsidiary and Bank agreed to further amend the Loan Agreement to (i)
increase the principal amount of the Revolving Loan to be $15,000,000.00, (ii)
extend the maturity date of the Revolving Loan to February 10, 2005, and (iii)
permit certain advances under the Revolving Loan to be made on Eligible Work in
Process (as defined below).

 

D. Pursuant to a Third Amendment to Loan and Security Agreement, Subsidiary and
Bank agreed to further amend the Loan Agreement to clarify the definition of the
defined term used in the Borrower’s minimum equity covenant and to modify such
covenant.

 

E. Pursuant to a Fourth Amendment to Loan and Security Agreement dated May 7,
2004, Subsidiary and Bank agreed to further amend the Loan Agreement in
connection with a potential initial public offering of the Borrower.

 

F. Pursuant to a Fifth Amendment to Loan and Security Agreement dated December
3, 2004, Subsidiary and Bank has agreed, to further amend the Loan Agreement to
waive the covenant requiring audited annual financial statements for Borrower’s
2004 fiscal year.

 

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G. Parent and Subsidiary have requested, and Bank has agreed, to amend and
restate the Loan Agreement to: (i) incorporate the above amendments to the Loan
Agreement referred to in the above Recitals; (ii) add the Parent as a
co-borrower, (iii) increase the principal amount of the Revolving Loan to be
$25,000,000.00, (iv) extend the maturity date of the Revolving Loan to be
February 10, 2006, and (v) modify certain financial covenants, on the terms and
conditions contained in this Agreement.

 

In consideration of the mutual agreements hereinafter set forth, the Borrower
and the Bank hereby agree as follows:

 

1. DEFINITIONS.

 

1.1 Defined Terms. For the purposes of this Agreement, the following capitalized
words and phrases shall have the meanings set forth below.

 

“Bankruptcy Code” shall mean the United States Bankruptcy Code, as now existing
or hereafter amended.

 

“Borrowing Base Amount” shall mean the lesser of (i) the sum of (a) eighty-five
percent (85%) of the net amount of the Eligible Accounts, and (b) forty percent
(40%) of the net amount of the Eligible Work in Process not to exceed Five
Million and 00/1000 Dollars ($5,000,000.00), or (ii) Twenty-Five Million and
00/100 Dollars ($25,000,000.00).

 

“Borrowing Base Certificate” shall have the meaning set forth in Section 3.1
hereof.

 

“Business Day” shall mean any day other than a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed for the conduct
of commercial banking business in Chicago, Illinois.

 

“Capital Expenditures” shall mean expenditures (including Capital Lease
obligations which should be capitalized under GAAP) for the acquisition of fixed
assets which are required to be capitalized under GAAP.

 

“Capital Lease” shall mean, as to any Person, a lease of any interest in any
kind of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person as lessee that is, or should be, in accordance with
Financial Accounting Standards Board Statement No. 13, as amended from time to
time, or, if such Statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a “capital lease” on the balance sheet of the
Borrower prepared in accordance with GAAP.

 

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“Change in Control” shall have the meaning set forth in Section 11 hereof.

 

“Collateral” shall have the meaning set forth in Section 6.1.

 

“Contingent Liability” and “Contingent Liabilities” shall mean, respectively,
each obligation and liability of the Borrower and all such obligations and
liabilities of the Borrower incurred pursuant to any agreement, undertaking or
arrangement by which the Borrower: (a) guarantees, endorses or otherwise becomes
or is contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in any
manner (other than by endorsement of instruments in the course of collection),
including without limitation, any indebtedness, dividend or other obligation
which may be issued or incurred at some future time; (b) guarantees the payment
of dividends or other distributions upon the shares or ownership interest of any
other Person; (c) undertakes or agrees (whether contingently or otherwise): (i)
to purchase, repurchase, or otherwise acquire any indebtedness, obligation or
liability of any other Person or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of any
indebtedness, obligation or liability of any other Person (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, working capital or other financial
condition of any other Person, or (iii) to make payment to any other Person
other than for value received; (d) agrees to lease property or to purchase
securities, property or services from such other Person with the purpose or
intent of assuring the owner of such indebtedness or obligation of the ability
of such other Person to make payment of the indebtedness or obligation; (e) to
induce the issuance of, or in connection with the issuance of, any letter of
credit for the benefit of such other Person; or (f) undertakes or agrees
otherwise to assure a creditor against loss. The amount of any Contingent
Liability shall (subject to any limitation set forth herein) be deemed to be the
outstanding principal amount (or maximum permitted principal amount, if larger)
of the indebtedness, obligation or other liability guaranteed or supported
thereby.

 

“Default Rate” shall mean a per annum rate of interest equal to the Prime Rate
plus two percent (2%) per annum.

 

“Eligible Accounts” shall mean those Accounts of the Borrower which:

 

(a) are genuine in all respects and have arisen in the ordinary course of the
Borrower’s business from (i) the performance of services by the Borrower, which
services have been fully performed or (ii) the sale or lease of Goods by the
Borrower, including C.O.D. sales, which Goods have been completed in accordance
with the Account Debtor’s specifications (if any) and delivered to and accepted
by the Account Debtor, and the Borrower has possession of, or has delivered to
the Bank at the Bank’s request, shipping and delivery receipts evidencing such
shipment;

 

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(b) are evidenced by an invoice delivered to the Account Debtor thereunder and
are not more than ninety (90) days outstanding past the invoice date;

 

(c) do not arise from a “sale on approval” or a “sale or return”;

 

(d) are not due from an Account Debtor which is a Subsidiary or a director,
officer, employee, agent, parent or affiliate of the Borrower;

 

(e) do not arise in connection with a sale to an Account Debtor who (i) is not a
resident or citizen of or (ii) is not located within the United States of
America;

 

(f) do not arise in connection with a sale to an Account Debtor who is located
within a state which requires the Borrower, as a precondition to commencing or
maintaining an action in the courts of that state, either to (i) receive a
certificate of authority to do business and be in good standing in such state or
(ii) file a notice of business activities or similar report with such state’s
taxing authority, unless (A) the Borrower has taken one of the actions described
in clauses (i) or (ii), (B) the failure to take one of the actions described in
either clause (i) or (ii) may be cured retroactively by the Borrower at its
election, or (C) the Borrower has proven to the satisfaction of the Bank that it
is exempt from any such requirements under such state’s laws;

 

(g) do not arise out of a contract or order which, by its terms, forbids or
makes void or unenforceable the assignment by the Borrower to the Bank of the
Account arising with respect thereto and are not unassignable to the Bank for
any other reason;

 

(h) are the valid, legally enforceable and unconditional obligation of the
Account Debtor, are not the subject of any setoff, counterclaim, credit,
allowance or adjustment by the Account Debtor, or of any claim by the Account
Debtor denying liability thereunder in whole or in part, but the portion of the
Accounts in excess of the amount of such setoff, counterclaim, credit,
allowance, adjustment or claim that otherwise satisfies the criteria for
Eligible Accounts shall be deemed Eligible Accounts, and the Account Debtor has
not refused to accept and/or has not returned or offered to return any of the
Goods or services which are the subject of such Account;

 

(i) are not subject to any Lien whatsoever, other than the Lien of the Bank; and

 

(j) no proceedings or actions are pending against the Account Debtor which would
be reasonably likely to result in any material adverse change in its ability to
pay such Account in full.

 

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An Account which is an Eligible Account shall cease to be an Eligible Account
whenever it ceases to meet any one of the foregoing requirements.

 

If invoices representing twenty-five percent (25%) or more of the unpaid net
amount of all Accounts from any one Account Debtor are unpaid more than ninety
(90) days after the invoice date of such invoices, then all Accounts relating to
such Account Debtor shall cease to be Eligible Accounts.

 

“Eligible Work in Process” shall mean work being performed by Borrower (and
expenses being incurred on behalf of a client to the extent such expenses are
reimbursable) in the ordinary course of the Borrower’s business which (i) was
first commenced by the Borrower within the preceding sixty (60) days but has not
yet been invoiced; (ii) is being performed for a client whose Accounts would
qualify as Eligible Accounts; and (iii) upon being invoiced by Borrower, would
result in Accounts which qualify as Eligible Accounts. Any work which is
Eligible Work in Process shall cease to be Eligible Work in Process whenever it
ceases to meet any one of the foregoing requirements.

 

“Employee Plan” includes any pension, stock bonus, employee stock ownership
plan, retirement, disability, medical, dental or other health plan, life
insurance or other death benefit plan, profit sharing, deferred compensation,
stock option, bonus or other incentive plan, vacation benefit plan, severance
plan or other employee benefit plan or arrangement, including, without
limitation, those pension, profit-sharing and retirement plans of the Borrower
described from time to time in the financial statements of the Borrower and any
pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA)
or any multi-employer plan, maintained or administered by the Borrower or to
which the Borrower is a party or may have any liability or by which the Borrower
is bound.

 

“Environmental Laws” shall mean all federal, state, district, local and foreign
laws, rules, regulations, ordinances, and consent decrees relating to health,
safety, hazardous substances, pollution and environmental matters, as now or at
any time hereafter in effect, applicable to the Borrower’s business or
facilities owned or operated by the Borrower, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes in the environment (including, without limitation, ambient air,
surface water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.

 

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

 

“Event of Default” shall mean any of the events or conditions set forth in
Section 11 hereof.

 

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“GAAP” shall mean generally accepted accounting principles, using the accrual
basis of accounting and consistently applied with prior periods, provided,
however, that GAAP with respect to any interim financial statements or reports
shall be deemed subject to fiscal year-end adjustments and footnotes made in
accordance with GAAP.

 

“Hazardous Materials” shall mean any hazardous, toxic or dangerous substance,
materials and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including, without
limitation, materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials or
wastes that are or become regulated under any Environmental Law (including
without limitation, any that are or become classified as hazardous or toxic
under any Environmental Law).

 

“Indebtedness” shall mean at any time (a) all Liabilities of the Borrower, (b)
all Capital Lease obligations of the Borrower, (c) all other debt, secured or
unsecured, created, issued, incurred or assumed by the Borrower for money
borrowed or for the deferred purchase price of any fixed or capital asset, (d)
indebtedness secured by any Lien existing on property owned by the Borrower
whether or not the Indebtedness secured thereby has been assumed, and (e) all
Contingent Liabilities of the Borrower whether or not reflected on its balance
sheet.

 

“Indemnified Party” and “Indemnified Parties” shall mean, respectively, each of
the Bank and any parent corporations, affiliated corporations or subsidiaries of
the Bank, and each of their respective officers, directors, employees, attorneys
and agents, and all of such parties and entities.

 

“Interest Period” shall mean, with regard to any LIBOR Loan, successive one,
two, three or six month periods as selected from time to time by the Borrower by
notice given to the Bank not less than two Business Days prior to the first day
of each respective Interest Period; provided, however, that: (i) each such
Interest Period occurring after the initial Interest Period of any LIBOR Loan
shall commence on the day on which the preceding Interest Period for such LIBOR
Loan expires, (ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided,
however, that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, then the last day of such
Interest Period shall occur on the immediately preceding Business Day; (iii)
whenever the first day of any Interest Period occurs on a day of a month for
which there is no numerically corresponding day in the calendar month in which
such Interest Period terminates, such Interest Period shall end on the last
Business Day of such calendar month; and (iv) the final Interest Period must be
such that its expiration occurs on or before the Revolving Loan Maturity Date.

 

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“Letter of Credit” and “Letters of Credit” shall mean, respectively, a letter of
credit and all such letters of credit issued by the Bank, in its sole
discretion, upon the execution and delivery by the Borrower and the acceptance
by the Bank of a Master Letter of Credit Agreement and an application for Letter
of Credit, as set forth in Section 2.4 of this Agreement.

 

“Letter of Credit Obligations” shall mean, at any time, an amount equal to the
aggregate of the original face amounts of all Letters of Credit minus the sum of
(i) the amount of any reductions in the original face amount of any Letter of
Credit which did not result from a draw thereunder, (ii) the amount of any
payments made by the Bank with respect to any draws made under a Letter of
Credit for which the Borrower has reimbursed the Bank, (iii) the amount of any
payments made by the Bank with respect to any draws made under a Letter of
Credit which have been converted to a Revolving Loan as set forth in Section
2.4, and (iv) the portion of any issued but expired Letter of Credit which has
not been drawn by the beneficiary thereunder. For purposes of determining the
outstanding Letter of Credit Obligations at any time, the Bank’s acceptance of a
draft drawn on the Bank pursuant to a Letter of Credit shall constitute a draw
on the applicable Letter of Credit at the time of such acceptance rather than at
the time that the request for such draw is received by the Bank.

 

“Liabilities” shall mean at all times all liabilities of the Borrower that would
be shown as such on a balance sheet of the Borrower prepared in accordance with
GAAP.

 

“LIBOR” means a rate of interest equal to the per annum rate of interest at
which United States dollar deposits in an amount comparable to the principal
balance of this Note and for a period equal to the relevant Interest Period are
offered in the London Interbank Eurodollar market at 11:00 a.m. (London time)
two Business Days prior to the commencement of each Interest Period, as
displayed in the Bloomberg Financial Markets system, or other authoritative
source selected by the Bank in its sole discretion, divided by a number
determined by subtracting from 1.00 the maximum reserve percentage for
determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency liabilities, such rate to remain fixed for such Interest
Period. The Bank’s determination of LIBOR shall be conclusive, absent manifest
error.

 

“LIBOR Loan” or “LIBOR Loans” shall mean that portion, and collectively those
portions, of the aggregate outstanding principal balance of the Revolving Loans
that will bear interest at the LIBOR Rate, of which at any time and from time to
time, the Borrower may identify no more than five (5) advances of the Revolving
Loans which are outstanding at any time which will bear interest at the LIBOR
Rate, of which each particular LIBOR Loan must be in the amount of Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) or a higher integral multiple of
Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).

 

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“LIBOR Rate” shall mean a per annum rate of interest equal to LIBOR for the
relevant Interest Period (rounded upward if necessary, to the nearest 1/100 of
1.00%) plus one and three-quarters percent (1.75%), which LIBOR Rate shall
remain fixed during such Interest Period.

 

“Lien” shall mean any mortgage, pledge, hypothecation, judgment lien or similar
legal process, title retention lien, or other lien or security interest,
including, without limitation, the interest of a vendor under any conditional
sale or other title retention agreement and the interest of a lessor under a
lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or should
be, a Capital Lease on the balance sheet of the Borrower prepared in accordance
with GAAP.

 

“Loans” shall mean, collectively, all Revolving Loans (whether Prime Loans or
LIBOR Loans) made by the Bank to the Borrower and all Letter of Credit
Obligations, under and pursuant to this Agreement.

 

“Loan Documents” shall have the meaning set forth in Section 3.1.

 

“Mandatory Prepayment” shall mean any payment required to be made pursuant to
Section 2.1(c)(i).

 

“Material Adverse Change” shall mean the occurrence of any event which, in the
Bank’s good faith and reasonable opinion, would have a material adverse change
in the financial condition of the Borrower.

 

“Material Adverse Event” shall mean the occurrence of any adverse event which,
in the Bank’s good faith and reasonable opinion, would have a material adverse
effect on the business of the Borrower.

 

“Maximum Letter of Credit Obligation” shall mean the lesser of (a) the Revolving
Loan Amount less the aggregate amount of all Revolving Loans outstanding at any
time, or (b) the Borrowing Base Amount less the aggregate amount of all
Revolving Loans outstanding at any time.

 

“Note” shall mean the Revolving Note.

 

“Obligations” shall mean the Loans, as evidenced by the Note, all interest
accrued thereon, any fees due the Bank hereunder, any expenses incurred by the
Bank hereunder and any and all other liabilities and obligations of the Borrower
(and of any partnership in which either Borrower is or may be a partner) to the
Bank, howsoever created, arising or evidenced, and howsoever owned, held or
acquired, whether now or hereafter existing, whether now due or to become due,
direct or indirect, absolute or contingent, and whether several, joint or joint
and several.

 

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“Permanent Equity Capital” shall mean the sum of paid-in capital and net income
less any distributions, determined based upon the annual audited financial
statements of the Parent Borrower provided to Bank pursuant to Section 9.7(a) of
this Agreement and a quarterly calculation for each fiscal quarter of the Parent
Borrower prepared in accordance with the guidelines of the Parent Borrower’s
outside accounting firm which prepared such audited financial statements. Such
quarterly calculation shall be certified as accurate by the Parent Borrower.

 

“Permitted Liens” means any of the Liens or encumbrances set forth in Section
8.2.

 

“Person” shall mean any individual, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.

 

“Prime Loan” or “Prime Loans” shall mean that portion, and collectively, those
portions of the aggregate outstanding principal balance of the Revolving Loans
that will bear interest at the Prime Rate per annum.

 

“Prime Rate” shall mean the floating per annum rate of interest which at any
time, and from time to time, shall be most recently announced by the Bank as its
Prime Rate, which is not intended to be the Bank’s lowest or most favorable rate
of interest at any one time. The effective date of any change in the Prime Rate
shall for purposes hereof be the date the Prime Rate is changed by the Bank. The
Bank shall not be obligated to give notice of any change in the Prime Rate.

 

“Regulatory Change” shall mean the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over the Bank or
its lending office.

 

“Revolving Interest Rate” shall mean (a) the Prime Rate, and/or (b) the LIBOR
Rate, at the Borrower’s election, from time to time, in accordance with the
terms hereof.

 

“Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct
advance and the aggregate of all such direct advances, from time to time in the
form of either Prime Loans and/or LIBOR Loans, made by the Bank to the Borrower
under and pursuant to this Agreement, as set forth in Section 2.1 of this
Agreement.

 

“Revolving Loan Amount” shall mean Twenty-Five Million and 00/100 Dollars
($25,000,000.00).

 

“Revolving Loan Availability” shall mean at any time, the lesser of (a) the
Revolving Loan Amount less the Letter of Credit Obligations, or (b) the
Borrowing Base Amount less the Letter of Credit Obligations.

 

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“Revolving Note” shall have the meaning set forth in Section 4.1 hereof.

 

“Revolving Loan Maturity Date” shall mean February 10, 2006, unless extended by
the Bank pursuant to any modification, extension or renewal note executed by the
Borrower and accepted by the Bank in its sole and absolute discretion in
substitution for the Revolving Note.

 

“Subsidiary” and “Subsidiaries” shall mean, respectively, each and all such
corporations, partnerships, limited partnerships, limited liability companies,
limited liability partnerships or other entities of which or in which a Borrower
owns directly or indirectly fifty percent (50.00%) or more of (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such entity if a
corporation, (b) the management authority and capital interest or profits
interest of such entity, if a partnership, limited partnership, limited
liability company, limited liability partnership, joint venture or similar
entity, or (iii) the beneficial interest of such entity, if a trust, association
or other unincorporated organization.

 

“UCC” shall mean the Uniform Commercial Code in effect in Delaware from time to
time.

 

1.2 Accounting Terms. Any accounting terms used in this Agreement which are not
specifically defined herein shall have the meanings customarily given them in
accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to the Bank pursuant hereto
shall be made and prepared, both as to classification of items and as to amount,
in accordance with GAAP as used in the preparation of the financial statements
of the Borrower on the date of this Agreement. If any changes in accounting
principles or practices from those used in the preparation of the financial
statements are hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successor thereto or agencies with similar functions), which results in a
material change in the method of accounting in the financial statements required
to be furnished to the Bank hereunder or in the calculation of financial
covenants, standards or terms contained in this Agreement, the parties hereto
agree to enter into good faith negotiations to amend such provisions so as
equitably to reflect such changes to the end that the criteria for evaluating
the financial condition and performance of the Borrower will be the same after
such changes as they were before such changes; and if the parties fail to agree
on the amendment of such provisions, the Borrower will furnish financial
statements in accordance with such changes but shall provide calculations for
all financial covenants, perform all financial covenants and otherwise observe
all financial standards and terms in accordance with applicable accounting
principles and practices in effect immediately prior to such changes.
Calculations with respect to financial covenants required to be stated in
accordance with applicable accounting principles and practices in effect
immediately prior to such changes shall be reviewed and certified by the
Borrower’s accountants.

 

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1.3 Other Terms Defined in UCC. All other capitalized words and phrases used
herein and not otherwise specifically defined shall have the respective meanings
assigned to such terms in the UCC, as amended from time to time, to the extent
the same are used or defined therein.

 

1.4 Other Definitional Provisions; Construction. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the single
number includes the plural, and vice versa, and in particular the word
“Borrower” shall be so construed. The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
references to Article, Section, Subsection, Annex, Schedule, Exhibit and like
references are references to this Agreement unless otherwise specified. An Event
of Default shall “continue” or be “continuing” until such Event of Default has
been cured or waived in accordance with Section 13.3 hereof. References in this
Agreement to any party shall include such party’s successors and permitted
assigns. References to any “Section” shall be a reference to such Section of
this Agreement unless otherwise stated. To the extent any of the provisions of
the other Loan Documents are inconsistent with the terms of this Loan Agreement,
the provisions of this Loan Agreement shall govern.

 

1.5 Effect of This Agreement. This Agreement amends and restates the Original
Loan Agreement in its entirety as of the date hereof and incorporates each of
the modifications to the Original Loan Agreement which are set forth in the
Amendments referred to in the Recitals of this Agreement. The indebtedness
outstanding pursuant to the Original Loan Agreement is continuing indebtedness,
and nothing herein shall be deemed to constitute a payment, settlement or
novation of the Original Loan Agreement, or to release or otherwise adversely
affect any lien, mortgage or security interest securing such indebtedness or any
rights of Bank against any guarantor, surety or other party primarily or
secondarily liable for such indebtedness.

 

2. LOANS.

 

  2.1 Revolving Loans.

 

(a) Revolving Loan Facility. Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations
and warranties of the Borrower set forth herein and in the other Loan Documents,
the Bank agrees to make such Revolving Loans at such times as the Borrower may
from time to time request until, but not including, the Revolving Loan Maturity
Date, and in such amounts as the Borrower may from time to time request,
provided, however, that the aggregate principal balance of all Revolving Loans
outstanding at any time shall not exceed the Revolving Loan Availability.
Revolving Loans made by the Bank may be repaid and, subject to

 

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the terms and conditions hereof, borrowed again up to, but not including the
Revolving Loan Maturity Date unless the Revolving Loans are otherwise terminated
or extended as provided in this Agreement. The Revolving Loans shall be used by
the Borrower for the purpose of working capital and other general corporate
purposes.

 

(b) Revolving Loan Interest and Payments. Except as otherwise provided in this
Section 2.1(b), the principal amount of the Revolving Loans outstanding from
time to time shall bear interest at the Revolving Interest Rate. Accrued and
unpaid interest on the unpaid principal balance of all Revolving Loans
outstanding from time to time which are Prime Loans, shall be due and payable
quarterly, in arrears, commencing on April 30, 2005 and continuing on the last
calendar day of each quarter thereafter, and on the Revolving Loan Maturity
Date. Accrued and unpaid interest on the unpaid principal balance of all
Revolving Loans outstanding from time to time which are LIBOR Loans shall be
payable on the last Business Day of each Interest Period, commencing on the
first such date to occur after the date hereof, on the date of any principal
repayment of a LIBOR Loan and on the Revolving Loan Maturity Date. Any amount of
principal or interest on the Revolving Loans which is not paid when due, whether
at stated maturity, by acceleration or otherwise, shall bear interest payable on
demand at the Default Rate. Borrower shall receive telephonic notice from Bank
of the amount of the Revolving Interest Rate.

 

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  (c) Revolving Loan Principal Repayments.

 

  (i) Mandatory Principal Prepayments, Overadvances and Mandatory
Cleanup/Cleandown Provision. All Revolving Loans hereunder shall be repaid by
the Borrower on the Revolving Loan Maturity Date, unless payable sooner pursuant
to the provisions of this Agreement. In the event the aggregate outstanding
principal balance of all Revolving Loans and Letter of Credit Obligations
hereunder exceed the Revolving Loan Availability, the Borrower shall, without
notice or demand of any kind, immediately make such repayments (each a
“Mandatory Prepayment”) of the Revolving Loans or take such other actions as
shall be necessary to eliminate such excess. Also, if the Borrower chooses not
to convert any Revolving Loan which is a LIBOR Loan to a Prime Loan as provided
in Section 2.2(b) and Section 2.2(c), then such Revolving Loan shall be
immediately due and payable on the last Business Day of the then existing
Interest Period or on such earlier date as required by law, all without further
demand, presentment, protest or notice of any kind, all of which are hereby
waived by the Borrower.

 

  (ii) Optional Prepayments. In addition to the Mandatory Prepayment, the
Borrower may from time to time prepay the Revolving Loans which are Prime Loans,
in whole or in part, without any prepayment penalty whatsoever, subject to the
following conditions: (i) each partial prepayment shall be in an amount equal to
$10,000.00 or a higher integral multiple of $5,000; and (ii) any prepayment of
the entire principal balance of the Prime Loans shall include accrued interest
on such Prime Loans to the date of such prepayment and payment in full of all
other Obligations (other than the LIBOR Loans), then due and payable.

 

2.2 Additional LIBOR Loan Provisions.

 

(a) LIBOR Loan Prepayments. If, for any reason, a LIBOR Loan is paid prior to
the last Business Day of any Interest Period, the Borrower agrees to indemnify
the Bank against any loss (including any loss on redeployment of the funds
repaid), cost or expense incurred by the Bank as a result of such prepayment.

 

(b) LIBOR Unavailability. If the Bank determines in good faith (which
determination shall be conclusive, absent manifest error) prior to the
commencement of any Interest Period that (i) United States dollar deposits of
sufficient amount and maturity for funding any LIBOR Loan are not available to
the Bank in the London Interbank Eurodollar market in the ordinary course of
business, or (ii) by reason of circumstances affecting the London Interbank
Eurodollar market, adequate and fair means do not exist for ascertaining the
rate

 

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of interest to be applicable to the relevant LIBOR Loan, the Bank shall promptly
notify the Borrower thereof and, so long as the foregoing conditions continue,
Revolving Loans may not be advanced as a LIBOR Loan thereafter. In addition, at
the Borrower*s option, each existing LIBOR Loan shall be immediately (i)
converted to a Prime Loan on the last Business Day of the then existing Interest
Period, or (ii) due and payable on the last Business Day of the then existing
Interest Period, without further demand, presentment, protest or notice of any
kind, all of which are hereby waived by the Borrower.

 

(c) Regulatory Change. In addition, if, after the date hereof, a Regulatory
Change shall, in the reasonable determination of the Bank, make it unlawful for
the Bank to make or maintain the LIBOR Loans, then the Bank shall promptly
notify the Borrower and Revolving Loans may not be advanced as a LIBOR Loan
thereafter. In addition, at the Borrower’s option, each existing LIBOR Loan
shall be immediately (i) converted to a Prime Loan on the last Business Day of
the then existing Interest Period or on such earlier date as required by law, or
(ii) due and payable on the last Business Day of the then existing Interest
Period or on such earlier date as required by law, all without further demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrower.

 

(d) LIBOR Loan Indemnity. If any Regulatory Change (whether or not having the
force of law) shall (a) impose, modify or deem applicable any assessment,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of or loans by, or any other acquisition of funds
or disbursements by, the Bank; (b) subject the Bank or any LIBOR Loan to any
tax, duty, charge, stamp tax or fee or change the basis of taxation of payments
to the Bank of principal or interest due from the Borrower to the Bank hereunder
(other than a change in the taxation of the overall net income of the Bank); or
(c) impose on the Bank any other condition regarding such LIBOR Loan or the
Bank’s funding thereof, and the Bank shall determine (which determination shall
be conclusive, absent manifest error) that the result of the foregoing is to
increase the cost to the Bank of making or maintaining such LIBOR Loan or to
reduce the amount of principal or interest received by the Bank hereunder, then
the Borrower shall pay to the Bank, on demand, such additional amounts as the
Bank shall, from time to time, determine are sufficient to compensate and
indemnify the Bank for such increased cost or reduced amount.

 

2.3 Interest and Fee Computation; Collection of Funds. Except as set forth in
Section 1.1 of this Agreement regarding the definition of the term “Interest
Period,” all interest and fees shall be calculated on the basis of a year
consisting of 360 days and shall be paid for the actual number of days elapsed.
Principal payments submitted in funds not immediately available shall continue
to bear interest until collected. If any payment to be made by the Borrower
hereunder or under the Note shall become due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing any interest in respect of such
payment. In no event shall interest on any Libor Loan be payable less frequently
than quarterly.

 

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2.4 Letters of Credit. Subject to the terms and conditions of this Agreement and
upon the execution by the Subsidiary Borrower or Parent Borrower the Bank of a
Master Letter of Credit Agreement and, upon the execution and delivery by the
Borrower, and the acceptance by the Bank, in its sole and absolute discretion,
of an application for letter of credit, the Bank agrees to issue for the account
of the Borrower out of the Revolving Loan Availability, such Letters of Credit
in the standard form of the Bank and otherwise in form and substance acceptable
to the Bank, from time to time during the term of this Agreement, provided that
the Letter of Credit Obligations may not at any time exceed the Maximum Letter
of Credit Obligation and provided, further, that no Letter of Credit shall have
an expiration date later than 365 days after the Revolving Loan Maturity Date.
The amount of any payments made by the Bank with respect to draws made by a
beneficiary under a Letter of Credit for which the Borrower has failed to
reimburse the Bank upon the Bank’s demand for repayment shall be deemed to have
been converted to a Revolving Loan as of the date such payment was made by the
Bank to such beneficiary. Upon the occurrence of an Event of a Default and at
the option of the Bank, all Letter of Credit Obligations shall be converted to
Prime Loans, all without demand, presentment, protest or notice of any kind, all
of which are hereby waived by the Borrower.

 

3. CONDITIONS OF EFFECTIVENESS AND BORROWING.

 

3.1 Effectiveness. Notwithstanding any other provision of this Agreement, this
Agreement shall not be deemed effective until the date on which all of the
following conditions shall have occurred (such date, the “Effective Date”).

 

3.2 Loan Documents. The Borrower shall have executed and delivered to the Bank
all of the following Loan Documents (items (a)-(e), collectively, the “Loan
Documents”), all of which must be satisfactory to the Bank and the Bank’s
counsel in form, substance and execution:

 

(a) Loan Agreement. Two copies of this Agreement duly executed by the Borrower.

 

(b) Revolving Note. A Third Amended and Restated Secured Revolving Line of
Credit Note duly executed by the Borrower, in the form attached hereto as
Exhibit “A”.

 

(c) Borrowing Base Certificate. A Borrowing Base Certificate in the form
attached hereto as Exhibit “B” (a “Borrowing Base Certificate”), certified as
accurate by the Borrower and acceptable to the Bank in its sole discretion.

 

(d) Resolutions. Resolutions of the sole member of the Borrower and board of
directors of such member authorizing the execution of this Agreement and the
other Loan Documents.

 

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(e) Additional Documents. Such other certificates, financial statements,
schedules, resolutions, opinions of counsel, notes and other documents which are
provided for hereunder or which the Bank shall require.

 

3.3 Conditions to Funding. Notwithstanding any other provision of this
Agreement, the Bank shall not be required to disburse or make all or any portion
of a Loan on any date if any of the following conditions shall have occurred and
be continuing on such date:

 

(a) Event of Default. Any Event of Default, or any event which, with notice or
lapse of time, or both, would constitute an Event of Default, shall have
occurred and be continuing.

 

(b) Representations and Warranties. Any representation or warranty of the
Borrower contained herein or in any Loan Document shall be untrue or incorrect
as of the date of any Loan as though made on such date, except to the extent
such representation or warranty expressly relates to an earlier date.

 

3.4 Administrative Fee. The Borrower shall have paid to the Bank a one-time
non-refundable administrative fee in the amount of Sixty-Two Thousand Five
Hundred and 00/100 Dollars ($62,500.00) (.25% of the Revolving Loan Amount),
payable whether or not the Revolving Loan is funded. In the event of any renewal
or extension of the Revolving Loan, the parties may negotiate additional
administrative fees as a condition to any such renewal or extension.

 

4. NOTE EVIDENCING LOANS.

 

4.1 Revolving Note. The Revolving Loans and the Letter of Credit Obligations
shall be evidenced by a single Revolving Note (together with any and all
renewal, extension, modification or replacement notes executed by the Borrower
and delivered to the Bank and given in substitution therefor, the “Revolving
Note”) in the form of Exhibit “A” attached hereto, duly executed by the Borrower
and payable to the order of the Bank. At the time of the initial disbursement of
a Revolving Loan and at each time an additional Revolving Loan shall be
requested hereunder or a repayment made in whole or in part thereon, an
appropriate notation thereof shall be made on the books and records of the Bank.
All amounts recorded shall be, absent demonstrable error, conclusive and binding
evidence of (i) the principal amount of the Revolving Loans advanced hereunder
and the amount of all Letter of Credit Obligations, (ii) any unpaid interest
owing on the Revolving Loans, and (iii) all amounts repaid on the Revolving
Loans or the Letter of Credit Obligations. The failure to record any such amount
or any error in recording such amounts shall not, however, limit or otherwise
affect the obligations of the Borrower under the Revolving Note to repay the
principal amount of the Revolving Loans, together with all interest accruing
thereon.

 

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5. MANNER OF BORROWING.

 

Each Loan shall be made available to the Borrower upon its request, from any
Person whose authority to so act has not been revoked by the Borrower in writing
previously received by the Bank. Each Revolving Loan may be advanced either as a
Prime Loan or a LIBOR Loan, provided, however, that at any time and from time to
time, the Borrower may identify no more than five (5) Revolving Loans
outstanding at any one time which may be LIBOR Loans. A request for a Prime Loan
must be received by no later than 11:00 a.m. Chicago, Illinois time, on the day
it is to be funded. A request for a LIBOR Loan must be (i) received by no later
than 11:00 a.m. Chicago, Illinois time, two days before the day it is to be
funded, and (ii) in an amount equal to Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) or a higher integral multiple of Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00). If, for any reason, the Borrower
shall fail to select timely an Interest Period for an existing LIBOR Loan, then
such LIBOR Loan shall be immediately converted to a Prime Loan on the last
Business Day of the then existing Interest Period, all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrower. The proceeds of each Prime Loan or LIBOR Loan shall be made
available at the office of the Bank by credit to the account of the Borrower or
by other means requested by the Borrower and acceptable to the Bank.

 

Each Letter of Credit shall be issued by the Bank upon the execution of the
Bank’s standard Master Letter of Credit Agreement by the Borrower and the Bank,
and the execution and delivery by the Borrower and the acceptance by the Bank,
in its sole discretion, of the Bank’s standard application for Letter of Credit
and the payment by the Borrower of the Bank’s fees charged in connection
therewith. In addition to all other applicable fees, charges and/or interest
payable by the Borrower pursuant to the Master Letter of Credit Agreement or
otherwise payable in accordance with the Bank’s standard letter of credit fee
schedule, all standby Letters of Credit issued under and pursuant to this
Agreement shall bear an annual fee equal to two and one-half percent (2.50%) of
the undrawn amount of such standby Letter of Credit, payable by the Borrower on
or before the issuance of such Letter of Credit by the Bank and annually
thereafter on the same date unless and until (i) such Letter of Credit has
expired or has been returned to the Bank, or (ii) the Bank has paid the
beneficiary thereunder the full face amount of such Letter of Credit.

 

The Bank is authorized to rely on any written, electronic or telecopy loan
requests which the Bank believes in its good faith judgment to emanate from a
properly authorized representative of the Borrower, whether or not that is in
fact the case. The Borrower does hereby irrevocably confirm, ratify and approve
all such advances by the Bank and does hereby indemnify the Bank against losses
and expenses (including court costs, attorneys’ and paralegals’ fees) and shall
hold the Bank harmless with respect thereto.

 

6. SECURITY FOR THE OBLIGATIONS.

 

6.1 Security for Obligations. As security for the payment of the Obligations,
each Borrower does hereby pledge, assign, transfer and deliver to the Bank and
does

 

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hereby grant to the Bank a continuing and unconditional security interest in and
to any and all property of such Borrower, of any kind or description, tangible
or intangible, whether now existing or hereafter arising or acquired, including,
but not limited to, the following (all of which property, along with the
products and proceeds therefrom, are individually and collectively referred to
as the “Collateral”):

 

(a) all property of, or for the account of, the Borrower now or hereafter coming
into the possession, control or custody of, or in transit to, the Bank or any
agent or bailee for the Bank or any parent, affiliate or subsidiary of the Bank
in the Loans (whether for safekeeping, deposit, collection, custody, pledge.
transmission or otherwise), including all earnings, dividends, interest, or
other rights in connection therewith and the products and proceeds therefrom,
including the proceeds of insurance thereon; and

 

(b) the additional property of the Borrower, whether now existing or hereafter
arising or acquired, and wherever now or hereafter located, together with all
additions and accessions thereto, substitutions for, and replacements, products
and proceeds therefrom, and all of the Borrower*s books and records and recorded
data relating thereto (regardless of the medium of recording or storage),
together with all of the Borrower’s right, title and interest in and to all
computer software (to the extent the Borrower’s right, title and interest in
such software is, by its terms, so assignable) required to utilize, create,
maintain and process any such records or data on electronic media, identified
and set forth as follows:

 

  (i) All Accounts (whether or not Eligible Accounts) and all Goods whose sale,
lease or other disposition by the Borrower has given rise to Accounts and have
been returned to, or repossessed or stopped in transit by, the Borrower, or
rejected or refused by an Account Debtor;

 

  (ii) All Inventory including, without limitation, raw materials,
work-in-process and finished goods;

 

  (iii) All Goods (other than Inventory), including, without limitation,
embedded software, Equipment, vehicles, furniture and Fixtures;

 

  (iv) All Software and computer programs;

 

  (v) All Securities, Investment Property, Financial Assets and Deposit
Accounts;

 

  (vi) All Chattel Paper, Electronic Chattel Paper, Instruments, Documents,
Letter of Credit Rights, all proceeds of letters of credit, health care
insurance receivables, Supporting Obligations, notes secured by real estate,
Commercial Tort Claims and General Intangibles, including Payment Intangibles;
and

 

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  (vii) All insurance policies and proceeds insuring the foregoing property or
any part thereof, including unearned premiums.

 

6.2 Lockbox Agreement. The Borrower shall direct all of its Account Debtors to
make all payments on the Accounts directly to a post office box (the “Lockbox”)
designated by, and under the exclusive control of the Bank. Pursuant to that
certain Lockbox Mail Collection Service Agreement dated as of May 14, 2002
between the Subsidiary Borrower and the Bank (the “Lockbox Agreement”), to which
the Parent Borrower has become a party, the Borrower established the Lockbox and
an account (the “Lockbox Account”) in the Borrower’s name with the Bank into
which all payments received in the Lockbox shall be deposited, and into which
the Borrower will immediately deposit all payments made for services and
received by the Borrower in the identical form in which such payments were made,
whether by cash or check. If the Borrower, a Subsidiary or any director,
officer, employee, agent or the Borrower or any Subsidiary or any other Person
acting for or in concert with the Borrower shall receive any monies, checks,
notes, drafts or other payments relating to or as proceeds of Accounts or other
Collateral, the Borrower and each such Person shall receive all such items in
trust for, and as the sole and exclusive property of the Bank and, immediately
upon receipt thereof shall remit the same (or cause the same to be remitted) in
kind to the Lockbox Account. The Borrower agrees that if Borrower is in default
under any of the Loan Documents, then payments made to such Lockbox Account or
otherwise received by the Bank, whether in respect of the Accounts or as
proceeds of other Collateral or otherwise, at Bank’s discretion may be applied
on account of the Revolving Loans in accordance with the terms of this
Agreement. The Borrower agrees to pay all reasonable fees, costs and expenses
which the Bank incurs in connection with opening and maintaining the Lockbox
Account and depositing for collection by the Bank any check or other item of
payment received by the Bank on account of the Obligations. All of such
reasonable fees, costs and expenses shall constitute Obligations hereunder,
shall be payable to the Bank by the Borrower upon demand, and, until paid, shall
bear interest at the Prime Rate. If Borrower is in default under any of the Loan
Documents, all checks, drafts, instruments and other items of payment or
proceeds of Collateral shall be endorsed by the Borrower to the Bank, and, if
that endorsement of any such item shall not be made for any reason, the Bank is
hereby irrevocably authorized to endorse the same on the Borrower’s behalf. For
the purpose of this paragraph, the Borrower irrevocably hereby makes,
constitutes and appoints the Bank (and all Persons designated by the Bank for
that purpose) as the Borrower’s true and lawful attorney and agent-in-fact (i)
to endorse the Borrower’s name upon said items of payment and/or proceeds of
Collateral and upon any Chattel Paper, document, instrument, invoice or similar
document or agreement relating to any Account of the Borrower or goods
pertaining thereto; (ii) to take control in any manner of any item of payment or
proceeds thereof, and (iii) to have access to any lock box or postal box into
which any of the Borrower’s mail is deposited, and open and process all mail
addressed to the Borrower and deposited therein.

 

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6.3 Possession and Transfer of Collateral. Unless an Event of Default has
occurred and is continuing hereunder, the Borrower shall be entitled to
possession or use of the Collateral. Except as otherwise expressly permitted
hereunder, the Borrower shall not sell, assign (by operation of law or
otherwise), license, lease or otherwise dispose of, or grant any option with
respect to any of the Collateral, except that the Borrower may sell Inventory in
the ordinary course of business. Notwithstanding the foregoing, the following
shall be permitted: (i) the sale or other disposition by Borrower of obsolete or
surplus equipment; and (ii) the sale or other disposition of other assets not to
exceed, either singly or in the aggregate, Five Hundred Thousand Dollars
($500,000.00) during any fiscal year, in each case so long as the proceeds from
such sale or disposition are used to repay the Loans or reinvested in
replacement assets to be owned by the Borrower and subject to the Bank’s senior
security interest.

 

6.4 Financing Statements. The Borrower shall, at the Bank’s request, at any time
and from time to time, execute and deliver to the Bank such financing
statements, amendments and other documents and do such acts as the Bank deems
necessary in order to establish and maintain valid, attached and perfected first
security interests in the Collateral in favor of the Bank. free and clear of all
Liens and claims and rights of third parties whatsoever (except as otherwise
specifically set forth in Section 8 hereof). The Borrower hereby irrevocably
authorizes the Bank at any time, and from time to time, to file in any
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of the Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed, or (ii) as
being of an equal or lesser scope or within greater detail, and (b) contain any
other information required by Section 5 of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether the Borrower is an organization, the type of
organization and any organization identification number issued to the Borrower,
and (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates. The Borrower
agrees to furnish any such information to the Bank promptly upon the Bank’s
reasonable request. The Borrower further ratifies and affirms its authorization
for any financing statements and/or amendments thereto, executed and filed by
the Bank in any jurisdiction prior to the date of this Agreement.

 

6.5 Additional Collateral. The Borrower shall deliver to the Bank immediately
upon its demand, such other collateral as the Bank may from time to time
request, should the value of the Collateral, in the Bank’s sole and absolute
discretion, decline, deteriorate, depreciate or become impaired, and does hereby
grant to the Bank a continuing security interest in such other collateral,
which, when pledged, assigned and transferred to the Bank shall be and become
part of the Collateral. The Bank’s security interests in each of the foregoing
Collateral shall be valid, complete and perfected whether or not covered by a
specific assignment.

 

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6.6 Preservation of the Collateral. The Bank may, but is not required to, take
such action from time to time as the Bank deems appropriate to maintain or
protect the Collateral. The Bank shall have exercised reasonable care in the
custody and preservation of the Collateral if it takes such action as the
Borrower shall reasonably request in writing; provided, however, that such
request shall not be inconsistent with the Bank’s status as a secured party, and
the failure of the Bank to comply with any such request shall not be deemed a
failure to exercise reasonable care. In addition, any failure of the Bank to
preserve or protect any rights with respect to the Collateral against prior or
third parties, or to do any act with respect to preservation of the Collateral,
not so requested by the Borrower, shall not be deemed a failure to exercise
reasonable care in the custody or preservation of the Collateral. The Borrower
shall have the sole responsibility for taking such action as may be necessary,
from time to time, to preserve all rights of the Borrower and the Bank in the
Collateral against prior or third parties. Without limiting the generality of
the foregoing, where Collateral consists in whole or in part of securities, the
Borrower represents to, and covenants with, the Bank that the Borrower has made
arrangements for keeping informed of changes or potential changes affecting the
securities (including, but not limited to, rights to convert or subscribe,
payment of dividends, reorganization or other exchanges, tender offers and
voting rights), and the Borrower agrees that the Bank shall have no
responsibility or liability for informing the Borrower of any such or other
changes or potential changes or for taking any action or omitting to take any
action with respect thereto.

 

6.7 Other Actions as to any and all Collateral. The Borrower further agrees to
take any other action reasonably requested by the Bank to insure the attachment,
perfection and first priority of, and the ability of the Bank to enforce, the
Bank’s security interest in any and all of the Collateral including, without
limitation, (a) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the Uniform Commercial Code, to
the extent, if any, that the Borrower’s signature thereon is required therefor,
(b) causing the Bank’s name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the bank to enforce, the Bank’s
security interest in such Collateral, (c) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Bank to enforce, the Bank’s security interest in
such Collateral, (d) obtaining governmental and other third party consents and
approvals, including without limitation any consent of any licensor, lessor or
other Person obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to the Bank, and (f) taking all
actions required by the UCC in effect from time to time or by other law, as
applicable in any relevant UCC jurisdiction, or by other law as applicable in
any foreign jurisdiction. Borrower hereby authorizes Bank to file such financing
statements and extensions as Bank from time to time deems necessary or desirable
to continue the perfection of its security interest in the Collateral.

 

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6.8 [Intentionally Omitted]

 

6.9 Commercial Tort Claims. If the Borrower shall at any time hold or acquire a
commercial tort claim, the Borrower shall immediately notify the Bank in writing
signed by the Borrower of the details thereof and grant to the Bank in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Bank.

 

6.10 Electronic Chattel Paper and Transferable Records. If the Borrower at any
time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in §16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
the Borrower shall promptly notify the Bank thereof and, at the request of the
Bank, shall take such action as the Bank may reasonably request to vest in the
Bank control under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, §16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Bank agrees with the Borrower that the Bank will arrange, pursuant
to procedures satisfactory to the Bank and so long as such procedures will not
result in the Bank’s loss of control, for the Borrower to make alterations to
the electronic chattel paper or transferable record permitted under Section
9-105 of the UCC or, as the case may be, Section 201 of the federal Electronic
Signatures in Global and National Commerce Act or §16 of the Uniform Electronic
Transactions Act for a party in control to make without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by the Borrower with respect to such electronic chattel
paper or transferable record.

 

7. REPRESENTATIONS AND WARRANTIES.

 

To induce the Bank to make the Revolving Loans, the Borrower makes the following
representations and warranties to the Bank, each of which shall be true and
correct as of the date of the execution and delivery of this Agreement, and
which shall survive the execution and delivery of this Agreement:

 

7.1 Borrower Organization and Name. The Parent Borrower is a corporation duly
organized, existing and in good standing under the laws of the State of Delaware
and duly qualified and in good standing under the laws of the State of Illinois,
with full and adequate power to carry on and conduct its business as presently
conducted. The Parent Borrower’s state issued organizational identification
number is 3504093. The Subsidiary Borrower is a limited liability company duly
organized, existing and in good standing under the laws of the State of Delaware
and duly qualified and in good standing under the laws of the State of Illinois,
with full and adequate power to carry on and conduct its business as presently
conducted. The Subsidiary Borrower’s state issued organizational identification
number is 3521607. Each Borrower is duly licensed

 

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or qualified in all other foreign jurisdictions wherein the nature of its
activities require such qualification or licensing, except where the failure to
be so qualified would not be reasonably likely to have a Material Adverse Change
on the Borrower. The exact legal name of each Borrower is as set forth in the
first paragraph of this Agreement, and each Borrower currently does not conduct,
nor has it during the last five (5) years conducted, business under any other
name or trade name, except as identified at the outset of this Agreement.

 

7.2 Authorization; Validity. The Borrower has full right, power and authority to
enter into this Agreement, to make the borrowings and execute and deliver the
Loan Documents as provided herein and to perform all of its duties and
obligations under this Agreement and the Loan Documents. The execution and
delivery of this Agreement and the Loan Documents will not, nor will the
observance or performance of any of the matters and things herein or therein set
forth, violate or contravene any provision of law or of the Certificate of
Incorporation, By-laws, or Articles of Organization of either Borrower (as
applicable), except where such violation or contravention would not be
reasonably likely to have a Material Adverse Change. All necessary and
appropriate action has been taken on the part of the Borrower to authorize the
execution and delivery of this Agreement and the Loan Documents. This Agreement
and the Loan Documents are valid and binding agreements and contracts of the
Borrower in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).

 

7.3 Compliance With Laws. The nature and transaction of the Borrower*s business
and operations and the use of its properties and assets, including, but not
limited to, the Collateral or any real estate owned or occupied by the Borrower,
do not and during the term of the Loans shall not, violate or conflict with any
applicable law, statute, ordinance, rule, regulation or order of any kind or
nature, including, without limitation, the provisions of the Fair Labor
Standards Act or any zoning, land use, building, noise abatement, occupational
health and safety or other laws, any building permit or any condition, grant,
easement, covenant, condition or restriction, whether recorded or not, except to
the extent that such violation or conflict would not be reasonably likely to
result in a Material Adverse Change.

 

7.4 Environmental Laws and Hazardous Substances. (i) The Borrower has not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off any of the premises of the
Borrower (whether or not owned by it), in any manner which at any time violates
any Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder, except where such violation would not reasonably be
expected to have a Material Adverse Change, (ii) the operations of the Borrower
comply in all material respects with all Environmental Laws and all licenses,
permits certificates, approvals and similar authorizations thereunder, (iii)
there has been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any governmental authority or any

 

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other Person that would reasonably be expected to have a Material Adverse
Change, nor is any pending or, to the best of the Borrower’s knowledge,
threatened, and (iv) the Borrower has no material liability, contingent or
otherwise, in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.

 

7.5 Absence of Breach. The execution, delivery and performance of this
Agreement, the Loan Documents and any other documents or instruments to be
executed and delivered by the Borrower in connection with the Loans shall not:
(i) violate any provisions of law or any applicable regulation, order, writ,
injunction or decree of any court or governmental authority except where such
violation would not be reasonably likely to have a Material Adverse Change, or
(ii) conflict with, be inconsistent with, or result in any breach or default of
any of the terms, covenants, conditions, or provisions of any indenture,
mortgage, deed of trust, instrument, document, agreement or contract of any kind
to which the Borrower is a party or by which the Borrower or any of its property
or assets may be bound.

 

7.6 Collateral Representations. Each Borrower is the sole owner of the
Collateral pledged by such Borrower hereunder, free from any Lien of any kind,
other than the Permitted Liens.

 

7.7 Financial Statements. All financial statements submitted to the Bank
pursuant to Section 9.7 have been prepared in accordance with GAAP on a basis,
except as otherwise noted therein, consistent with the previous fiscal year and
fairly and accurately reflect the financial condition of the Borrower and the
results of the operations for the Borrower as of such date and for the periods
indicated. Since the date of the most recent financial statement submitted by
the Borrower to the Bank, there has been no Material Adverse Change.

 

7.8 Litigation and Taxes. There is no litigation, demand, charge, claim,
petition or governmental investigation or proceeding pending, or threatened,
against the Borrower, which, if adversely determined, would be reasonably likely
to result in any Material Adverse Change. The Borrower has duly filed all
applicable income or other tax returns and has paid all income or other taxes
when due except where the failure to file such returns or pay such taxes would
not be reasonably likely to have a Material Adverse Change. There is no
controversy or objection pending, or, to the Borrower’s knowledge, threatened in
respect of any tax returns of the Borrower.

 

7.9 Event of Default. No Event of Default has occurred and is continuing, and no
event has occurred and is continuing which, with the lapse of time, the giving
of notice, or both, would constitute such an Event of Default under this
Agreement or any of the other Loan Documents.

 

7.10 ERISA Obligations. All Employee Plans of the Borrower meet the minimum
funding standards of Section 302 of ERISA where applicable and each such

 

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Employee Plan that is intended to be qualified within the meaning of Section 401
of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has
been incurred under any such Employee Plans and no “Reportable Event” or
“Prohibited Transaction” (as such terms are defined in ERISA). has occurred with
respect to any such Employee Plans, unless approved by the appropriate
governmental agencies. The Borrower has promptly paid and discharged all
obligations and liabilities arising under the Employee Retirement Income
Security Act of 1974 (“ERISA”) of a character which if unpaid or unperformed
would be reasonably likely to result in the imposition of a Lien against any of
its properties or assets.

 

7.11 Lending Relationship. The relationship hereby created with the Bank is and
has been conducted on an open and arm’s length basis in which no fiduciary
relationship exists. The Borrower has not relied and is not relying on any such
fiduciary relationship in executing this Agreement and in consummating the
Loans.

 

7.12 Business Loan. The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are business loans within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) are an exempted transaction
under the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not, violate the provisions of
the Illinois usury laws, any consumer credit laws or the usury laws of any state
which may have jurisdiction over this transaction, the Borrower or any property
securing the Loans.

 

7.13 Compliance with Regulation U. No portion of the proceeds of the Loans shall
be used by the Borrower, or any affiliates of the Borrower, either directly or
indirectly, for the purpose of purchasing or carrying any margin stock, within
the meaning of Regulation U as adopted by the Board of Governors of the Federal
Reserve System.

 

7.14 Governmental Regulation. The Borrower is not, or after giving effect to any
loan, will not be, subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940
or to any federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.

 

7.15 Bank Accounts. The account numbers and locations of all Deposit accounts
and other bank accounts of the Borrower and each of its Subsidiaries are as
follows: Account No. 5800413329, Huron Consulting Group LLC Flexible Spending
Account; Account No. 5800297276, Huron Consulting Group LLC Operating Account;
Account No. 5800413337, Huron Consulting Group LLC Payroll Account, and Huron
Consulting Group Inc. Account No. 5800297284. The Borrower and its Subsidiaries
shall be permitted to maintain other deposit accounts and other bank accounts at
the Bank.

 

7.16 Place of Business. The principal place of business of the Borrower is 550
W. Van Buren Street, Chicago, Illinois 60607.

 

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7.17 Complete Information. This Agreement, the financial statements submitted
pursuant to Section 9.7, the Schedules attached hereto and the certificates
submitted in connection herewith fully and fairly state the matters with which
they purport to deal, and neither misstate any material fact nor, separately or
in the aggregate, fail to state any material fact necessary to make the
statements contained herein or therein not misleading.

 

8. NEGATIVE COVENANTS.

 

8.1 Indebtedness. The Borrower shall not, either directly or indirectly, create,
assume, incur or have outstanding any Indebtedness (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of any other Person, except:

 

(a) the Obligations;

 

(b) endorsement for collection or deposit of any commercial paper secured in the
ordinary course of business;

 

(c) obligations of the Borrower for taxes, assessments, municipal or other
governmental charges;

 

(d) obligations of the Borrower for accounts payable, other than for money
borrowed, incurred in the ordinary course of business;

 

(e) obligations existing on the date hereof which are disclosed on the financial
statements referred to in Section 9.7 (including any extensions, renewals,
refundings and refinancings thereof which are on terms no less favorable to the
Borrower than the existing terms);

 

(f) obligations arising under Capital Leases for property acquired (or deemed to
be acquired) by the Borrower or claims arising from the use or loss of, or
damage to, such property (including any extensions, renewals, refundings and
refinancings thereof which are on terms no less favorable to the Borrower than
the existing terms); and

 

(g) Indebtedness for Capital Expenditures in accordance with Section 10.2 hereof
(including purchase money indebtedness incurred in connection therewith).

 

8.2 Encumbrances. The Borrower shall not, either directly or indirectly, create,
assume, incur or suffer or permit to exist any Lien or charge of any kind or
character upon any asset of the Borrower, whether owned at the date hereof or
hereafter acquired except:

 

(a) Liens for taxes, assessments or other governmental charges not yet due or
which are being contested in good faith by appropriate proceedings in such a
manner as not to make the property forfeitable;

 

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(b) Liens or charges incidental to the conduct of its business or the ownership
of its property and assets which were not incurred in connection with the
borrowing of money or the obtaining of an advance or credit, and which do not in
the aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;

 

(c) Liens arising out of judgments or awards against the Borrower with respect
to which it shall concurrently therewith be prosecuting a timely appeal or
proceeding for review and with respect to which it shall have secured a stay of
execution pending such appeal or proceedings for review;

 

(d) pledges or deposits to secure obligations under worker’s compensation laws
or similar legislation;

 

(e) good faith deposits in connection with lending contracts or leases to which
the Borrower is a party;

 

(f) deposits to secure public or statutory obligations of the Borrower;

 

(g) Liens existing on the date hereof and disclosed on the financial statements
referred to in Section 9.7;

 

(h) Liens securing obligations permitted under Section 8.1(f) and/or Section
8.1(g); and

 

(i) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
similar Liens, in each case securing obligations that are not overdue by more
than thirty (30) days or are being reasonably and in good faith contested by
Borrower by appropriate proceedings, with adequate reserves being set aside by
Borrower on its books.”

 

(j) Liens granted to the Bank hereunder.

 

8.3 Investments. The Borrower shall not, either directly or indirectly, make or
have outstanding any new investments (whether through purchase of stocks,
obligations or otherwise) in, or loans or advances to, any other Person, or
acquire all or any substantial part of the assets, business, stock or other
evidence of beneficial ownership of any other Person except:

 

(a) AAA-Rated money market mutual funds;

 

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(b) Obligations issued by the U.S. Treasury such as Treasury Bills, Treasury
Notes and/or Treasury Bond;

 

(c) Obligations issued by a U.S. Government Agency or Government Sponsored
Entity (GSE) (i.e., Federal Home Loan Bank, Federal Farm Credit Bank, Fannie
Mae, etc.);

 

(d) Obligations of major corporations and bank holding companies and limited to:

 

1. Commercial paper with an A1, P1 rating or better

 

2. Corporate Notes with an A2 by Moody’s, A by S&P or better

 

3. Corporate Bonds with an A2 by Moody’s, A by S&P or better

 

4. Medium-Term-Notes with an A2 by Moody’s, A by S&P or better;

 

(e) Negotiable Certificates of Deposit, Time Deposits, Bankers Acceptance of
banks with a network in excess of $500m and a rating from at least two
nationally recognized rating agencies of at least a single A on the S&P scale;

 

(f) Taxable and/or tax exempt municipal securities, which also includes variable
rate demand notes (VRDNs) and auction rate securities, taxable and tax-free with
a AAA (long-term) rating by Moody’s, S&P and/or Fitch, or short-term rating of
MIG1/VMIG1 by Moody’s and SP1 by S&P;

 

(g) Repurchase agreements fully collateralized by U.S. government and/or Federal
Agency securities with a maximum maturity of seven days. The market value of the
collateral securities, when marked to market daily, must be equal to or greater
than 102% of the face value of the agreement;

 

(h) Reasonable loans and advances by the Borrower to its current and prospective
employees in the ordinary course of its business, including, without limitation,
payments to current and prospective employees in connection with travel,
business entertainment and releases from existing non-compete agreements,
provided that such loans and advances shall not exceed an aggregate of Five
Hundred Thousand Dollars ($500,000.00) in any calendar year.

 

(i) Investments by the Borrower in newly-formed or acquired direct or indirect
wholly-owned subsidiaries of the Borrower; provided that any such subsidiary
shall, as soon as reasonable practicable after its formation or acquisition as
applicable (but in no event later than thirty (30) days from such formation or
acquisition), execute a joinder agreement, in form and substance reasonably
satisfactory to the Bank, pursuant to which such subsidiary becomes a party to
the Loan Agreement, as a joint and several borrower under the Loan Agreement,
and all references to the Borrower in the Loan Documents shall include such
subsidiary, and such joinder agreement shall also provide for such subsidiary to
pledge its assets to secure the Obligations, providing Bank with a senior
security interest in such assets.

 

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8.4 Transfer; Merger. The Borrower shall not, either directly or indirectly,
merge, consolidate, sell, transfer, license, lease, encumber or otherwise
dispose of all or any part of its property or business or all or any substantial
part of its assets, or sell or discount (with or without recourse) any of its
Promissory Notes, Chattel Paper, Payment Intangibles or Accounts other than in
the ordinary course of its business. Notwithstanding the foregoing, the
following shall be permitted: (i) the sale or other disposition by Borrower of
obsolete or surplus equipment; and (ii) the sale or other disposition of other
assets not to exceed, either singly or in the aggregate, Five Hundred Thousand
Dollars ($500,000.00) during any fiscal year, in each case so long as the
proceeds from such sale or disposition are used to repay the Loans or reinvested
in replacement assets to be owned by the Borrower and subject to the Bank’s
senior security interest.

 

8.5 Issuance of Stockholder or Membership Interests. The Borrower shall not,
either directly or indirectly, issue or distribute any additional stockholder or
membership interests or other securities of the Borrower in any manner which
would result in the occurrence of an Event of Default under Section 11.8 of this
Agreement entitled “Change in Control.”

 

[8.6 Intentionally Omitted.]

 

8.7 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries or
affiliates shall use any portion of the proceeds of the Loans, either directly
or indirectly, for the purpose of purchasing any securities underwritten by ABN
AMRO Incorporated, an affiliate of the Bank.

 

8.8 Bank Accounts. The Borrower shall not establish any new deposit accounts or
other bank accounts, other than bank accounts established at or with the Bank,
or amend or terminate the Lockbox or Lockbox Agreement without the prior written
consent of the Bank.

 

8.9 Change of Legal Status or Location. The Borrower shall not change its name,
its organizational identification number, if it has one, its type of
organization, its jurisdiction of organization or other legal structure or the
location of its principal place of business without giving at least thirty days’
prior written notice to the Bank.

 

8.10 Intentionally Omitted.

 

8.11 Collateral. The Borrower will not remove or permit the Collateral to be
removed from its current location without the prior written consent of the Bank,
except for Inventory sold in the usual and ordinary course of the Borrower’s
business.

 

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9. AFFIRMATIVE COVENANTS.

 

9.1 Compliance with Bank Regulatory Requirements. Upon demand by the Bank, the
Borrower shall reimburse the Bank for the Bank’s additional costs and/or
reductions in the amount of principal or interest received or receivable by the
Bank if at any time after the date of this Agreement any law, treaty or
regulation or any change in any law, treaty or regulation or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or the Loans, whether or not having the force of law,
shall impose, modify or deem applicable any reserve (except reserve requirements
taken into account in calculating the Revolving Interest Rate) and/or special
deposit requirement against or in respect of assets held by or deposits in or
for the account of the Loans by the Bank or impose on the Bank any other
condition with respect to this Agreement or the Loans, the result of which is to
either increase the cost to the Bank of making or maintaining the Loans or to
reduce the amount of principal or interest received or receivable by the Bank
with respect to such Loans. Said additional costs and/or reductions will be
those which directly result from the imposition of such requirement or condition
on the making or maintaining of such Loans. All Loans shall be deemed to be
match funded for the purposes of the Bank’s determination in the previous
sentence. Notwithstanding the foregoing, the Borrower shall not be required to
pay any such additional costs which could be avoided by the Bank with the
exercise of reasonable conduct and diligence.

 

9.2 Borrower Existence. The Borrower shall at all times preserve and maintain
its existence, rights, franchises and privileges, and shall at all times
continue as a going concern in the business which the Borrower is presently
conducting.

 

9.3 Maintain Property. The Borrower shall at all times maintain, preserve and
keep its plant, properties and Equipment, including, but not limited to, any
Collateral, in good repair, working order and condition, normal wear and tear
excepted, and shall from time to time make all needful and proper repairs,
renewals, replacements, and additions thereto so that at all times the
efficiency thereof shall be fully preserved and maintained. The Borrower shall
permit the Bank to examine and inspect such plant, properties and Equipment,
including, but not limited to, any Collateral, at all reasonable times and upon
reasonable notice, and without disruption to the Borrower’s business operation.

 

9.4 Maintain Insurance. The Borrower shall at all times insure and keep insured
in insurance companies reasonably acceptable to the Bank, all insurable property
owned by it which is of a character typically insured by companies similarly
situated and operating like properties, against loss or damage from fire and
such other hazards or risks as are customarily insured against by companies
similarly situated and operating like properties; and shall similarly insure
employers’ public and professional liability risks. Prior to the date of the
funding of the Note, the Borrower shall deliver to the Bank a certificate
setting forth in summary form the nature and extent of the insurance maintained
by the Borrower pursuant to this Section 9.4. All such policies of

 

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insurance must be satisfactory to the Bank in relation to the amount and term of
the Obligations and type and value of the Collateral and assets of the Borrower,
shall identify the Bank as lender’s loss payee and as an additional insured. In
the event the Borrower either fails to provide the Bank with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then the Bank, without waiving
or releasing any obligation or default by the Borrower hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto, which the Bank deems advisable. This insurance coverage (i)
may, but need not, protect the Borrower’s interest in the such property,
including, but not limited to the Collateral, and (ii) may not pay any claim
made by, or against, the Borrower in connection with such property, including,
but not limited to the Collateral. The Borrower may later cancel any such
insurance purchased by the Bank, but only after providing the Bank with evidence
that the Borrower has obtained the insurance coverage required by this Section.
The costs of such insurance obtained by the Bank, through and including the
effective date such insurance coverage is canceled or expires, shall be payable
on demand by the Borrower to the Bank, together with interest at the Default
Rate, on such amounts until repaid and any other charges by the Bank in
connection with the placement of such insurance. The costs of such insurance,
which may be greater than the cost of insurance which the Borrower may be able
to obtain on its own, together with interest thereon at the Default Rate and any
other charges by the Bank in connection with the placement of such insurance,
may be added to the total Obligations due and owing.

 

9.5 Tax Liabilities. The Borrower shall at all times pay and discharge all
property and other taxes, assessments and governmental charges upon, and all
claims (including claims for labor, materials and supplies) against the Borrower
or any of its properties, Equipment or Inventory, before the same shall become
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings and are
insured against or bonded over to the satisfaction of the Bank.

 

9.6 ERISA Liabilities; Employee Plans. The Borrower shall (i) keep in full force
and effect any and all Employee Plans which are presently in existence or may,
from time to time, come into existence under ERISA, and not withdraw from any
such Employee Plans, unless such withdrawal can be effected or such Employee
Plans can be terminated without liability to the Borrower; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the standards of ERISA; including the minimum
funding standards of ERISA; (iii) comply with all material requirements of ERISA
which relate to such Employee Plans; (iv) notify the Bank immediately upon
receipt by the Borrower of any notice concerning the imposition of any
withdrawal liability or of the institution of any proceeding or other action
which may result in the termination of any such Employee Plans or the
appointment of a trustee to administer such Employee Plans; (v) promptly advise
the Bank of the occurrence of any “Reportable Event” or “Prohibited Transaction”
(as such

 

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terms are defined in ERISA), with respect to any such Employee Plans; and (vi)
amend any Employee Plan that is intended to be qualified within the meaning of
Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep
the Employee Plan qualified, and to cause the Employee Plan to be administered
and operated in a manner that does not cause the Employee Plan to lose its
qualified status.

 

9.7 Financial Statements. The Borrower shall at all times maintain a proper
system of accounting, on the accrual basis of accounting and in all respects in
accordance with GAAP, and shall furnish to the Bank or its authorized
representatives such information reasonably requested by the Bank regarding the
business affairs, operations and financial condition of the Borrower, including,
but not limited to:

 

(a) as soon as available, and in any event, within ninety (90) days after the
close of each of its fiscal years, a copy of the annual audited financial
statements of the Parent Borrower on a consolidated basis, including balance
sheet, statement of income and retained earnings, statement of cash flows for
the fiscal year then ended, statement of changes in and the reconciliation of
significant equity accounts of the Borrower, and such other financial
information as the Bank reasonably may request, in reasonable detail, with such
annual audited financial statements to be prepared and certified by an
independent certified public accountant acceptable to the Bank, containing an
unqualified opinion; and

 

(b) as soon as available, and in any event, within forty-five (45) days
following the end of each fiscal quarter, a copy of the financial statements of
the Parent Borrower on a consolidated basis regarding such fiscal quarter,
including balance sheet, statement of income and retained earnings, statement of
cash flows for the fiscal quarter then ended and such other information
(including nonfinancial information) as the Bank reasonably may request, in
reasonable detail, prepared and certified as accurate by the Borrower; and

 

(c) The Bank reserves the right to request Borrower to provide, as soon as
available, and in any event, within fifteen (15) days following the end of each
fiscal month, a copy of the financial statements of the Parent Borrower on a
consolidated basis regarding such fiscal month, including statement of income
and budget comparison, and statement of cash flows for the fiscal month then
ended and such other information (including nonfinancial information) as the
Bank reasonably may request, in reasonable detail, prepared and certified as
accurate by such Borrower.

 

No change with respect to such accounting principles shall be made by the
Borrower without giving prior notification to the Bank. The Borrower represents
and warrants to the Bank that the financial statements delivered to the Bank at
or prior to the execution and delivery of this Agreement and to be delivered at
all times thereafter accurately reflect and will accurately reflect in all
material respects the financial condition of the Borrower as of the date of such
financial statements. The Bank shall

 

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have the right at all times during business hours upon reasonable notice to the
Borrower and without disruption to the Borrower’s business operation to inspect
the books and records of the Borrower and make extracts therefrom. The Borrower
agrees to advise the Bank immediately of any Material Adverse Change.

 

9.8 Supplemental Financial Statements. The Borrower shall immediately upon
receipt thereof, provide to the Bank copies of interim and supplemental reports
if any, submitted to the Borrower by independent accountants in connection with
any interim audit or review of the books of the Borrower.

 

9.9 Borrowing Base Certificate. The Parent Borrower shall, within fifteen (15)
days after the end of each month, deliver to the Bank: (i) a Borrowing Base
Certificate, certified as accurate by such Borrower’s Chief Financial Officer or
other senior executive and acceptable to the Bank in its sole and absolute
discretion; and (ii) a summary of revenue, expense and income, certified as
accurate by such Borrower’s Chief Financial Officer or other senior executive
acceptable to the Bank in its sole and absolute discretion.

 

9.10 Budget. The Borrower shall provide Bank, within thirty (30) days after the
end of each fiscal year, a copy of the Borrower’s operating budget for the
succeeding fiscal year.

 

9.11 Aged Accounts Schedule. The Borrower shall, within fifteen (15) days after
the end of each month, deliver to the Bank an aged schedule of the Accounts of
the Borrower, listing the name and amount due from each Account Debtor and
showing the aggregate amounts due from (a) 0-30 days, (b) 31-60 days, (c) 61-90
days and (d) more than 90 days, and certified as accurate by the Borrower’s
Chief Financial Officer or other senior executive. Such schedule shall also
include an aging of Eligible Work in Process, in the same format and providing
the same information as required in this Section 9.11 for Accounts.

 

9.12 Field Audits. The Borrower shall allow the Bank, upon reasonable notice and
without disruption to the Borrower’s operation, at the Borrower’s sole expense
(not to exceed $17,000.00 each audit), to conduct one annual field examination
of the Accounts of the Borrower, the results of which must be satisfactory in
all material respects to the Bank in the Bank’s reasonable discretion. The Bank
will have the right to perform additional field audits at the Bank’s discretion
and expense, but no more frequently than one each calendar quarter.

 

9.13 Quarterly Compliance Certificate and Other Reports. The Parent Borrower
shall on a quarterly basis, but no later than 45 days after the end of each
fiscal quarter, deliver to Bank a compliance certificate in form and substance
satisfactory to Bank executed by the chief financial officer of such Borrower.
The Borrower shall, within such period of time as the Bank may specify, deliver
to the Bank such other certificates, schedules and reports as the Bank may
reasonably require.

 

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9.14 Collateral Records. Borrower shall keep full and accurate books and records
relating to the Collateral and shall mark such books and records to indicate the
Bank’s Lien on the Collateral.

 

9.15 Notice of Proceedings. The Borrower shall, immediately after knowledge
thereof shall have come to the attention of any officer of the Borrower, give
written notice to the Bank of all pending actions, suits, and proceedings before
any court or governmental department, commission, board or other administrative
agency that, if adversely determined, would be reasonably likely to have a
Material Adverse Change.

 

9.16 Notice of Default. The Borrower shall, immediately after the commencement
thereof, give notice to the Bank in writing of the occurrence of an Event of
Default or of any event which, with the lapse of time, the giving of notice or
both, would constitute an Event of Default hereunder.

 

9.17 Banking Relationship. The Borrower covenants and agrees, at all times
during the term of this Agreement, to utilize the Bank as its primary bank of
account and depository for all financial services, including all receipts,
disbursements, cash management and related service.

 

9.18 Environmental Matters. The Borrower shall immediately notify the Bank upon
becoming aware of any such investigation, proceeding, complaint, order,
directive, claim, citation or notice, and shall take prompt and appropriate
actions to respond thereto, with respect to any non-compliance with, or
violation of, the requirements of any Environmental Law by the Borrower or the
release, spill discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Material or any other environmental,
health or safety matter, which affects the Borrower or its business, operations
or assets or any properties at which the Borrower has transported, stored or
disposed of any Hazardous Materials,. Without limited the generality of the
foregoing, the Borrower shall, following determination by the Bank that there is
non-compliance, or any condition which requires any action by or on behalf of
the Borrower in order to avoid any non-compliance, with any Environmental Law,
at the Borrower’s sole expense, cause an independent environmental engineer
acceptable to the Bank to conduct such tests of the relevant site as are
appropriate, and prepare an deliver a report setting forth the result of such
tests, a proposed plan for remediation and an estimate of the costs thereof.

 

10. FINANCIAL COVENANTS.

 

10.1 Capital. The Parent Borrower shall at all times maintain Permanent Equity
Capital of its shareholders in the amount of Forty-Five Million and no/100
Dollars ($45,000,000.00).

 

10.2 Capital Expenditures. The Borrower shall not incur expenditures including
Capital Lease obligations) for the acquisition of fixed assets, including, but
not limited to

 

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machinery, Equipment, land and buildings, in an amount greater than Ten Million
and 00/100 Dollars ($10,000,000.00) in the aggregate in any one fiscal year
(excluding any such expenditures for which the Borrower is reimbursed by its
landlord).

 

11. EVENTS OF DEFAULT.

 

The Borrower, without notice or demand of any kind, shall be in default under
this Agreement upon the occurrence of any of the following events with respect
to either entity constituting the Borrower (each an “Event of Default”).

 

11.1 Nonpayment of Obligations The Borrower shall fail to make (a) any payment
of principal when due or (b) any payment of interest or fees or other payment
when due hereunder which failure shall continue for a period in excess of three
Business Days.

 

11.2 Misrepresentation. Any representation, warranty, certificate or statement
in this Agreement, the Loan Documents or any other agreement with the Bank shall
be false when made.

 

11.3 Nonperformance. Any failure to perform or default in the performance of any
covenant, condition or agreement contained in this Agreement or in any other
Loan Documents (other than monetary defaults referred to in Section 11.1 and as
otherwise set forth in this Section 11) and such failure to perform or default
in performance continues for a period in excess of thirty (30) Business Days,
except that a shorter cure period of ten (10) Business Days will be permitted
for the delivery of any financial statements, certificates, schedules, reports,
borrowing base certificates or other financial related documents required to be
delivered by Borrower to Bank.

 

11.4 Default under Other Agreements. Any default in the payment of principal,
interest or any other sum for any other obligation beyond any period of grace
provided with respect thereto or in the performance of any other term, condition
or covenant contained in any agreement (including, but not limited to any
capital or operating lease or any agreement in connection with the deferred
purchase price of property or any other agreement with Bank) under which any
such obligation is created, the effect of which default is to cause or permit
the holder of such obligation (or the other party to such other agreement) to
cause such obligation to become due prior to its stated maturity or terminate
such other agreement, except where the amount of any such obligation(s), either
singly or in the aggregate when combined with such obligations resulting from
other defaults of Borrower (whether related or unrelated), is less than One
Million Dollars ($1,000,000.00).

 

11.5 Assignment for Creditors. The Borrower makes an assignment for the benefit
of creditors, fails to pay, or admits in writing its inability to pay its debts
as they mature; or if a trustee of any substantial part of the assets of the
Borrower is applied for or appointed.

 

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11.6 Bankruptcy. Any proceeding involving the Borrower, is commenced by or
against the Borrower under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute of
the federal government or any state government and, if such proceeding was
commenced against the Borrower, such proceeding is not stayed or lifted within
sixty (60) days thereafter.

 

11.7 Judgments. The entry of any judgment, decree, levy, attachment, garnishment
or other process, or the filing of any Lien against the Borrower which is not
fully (subject to any deductibles) covered by insurance, that is reasonably
likely to have a Material Adverse Change.

 

11.8 Change in Control. (a) The acquisition of ownership directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof (collectively, the “Act”))
(other than HCG Holdings LLC or its current or former members or their
affiliates (as such term is defined in the Act)), of Equity Interests
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding Equity Interests of each Borrower, or any change in
the direct ownership, beneficially or of record, of twenty-five percent (25%) or
more of the Equity Interests of either Borrower, or the grant of any security
interest in any such Equity Interests which could result in any of such changes.
For purposes of this Section 11.8, “Equity Interests” means shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
a Person, and any warrants, options or other rights entitling the holder thereof
to purchase or acquire any such equity interest or the grant of any security
interest in any such equity interests which could result in any of such
changes.”

 

11.9 Collateral Impairment. The entry of any judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien (other than a Permitted
Lien) against, any of the Collateral and such judgment or other process shall
not have been, within thirty (30) days from the entry thereof, (a) bonded over
to the satisfaction of the Bank and appealed, (b) vacated, or (c) discharged, or
the loss, theft, destruction, seizure or forfeiture.

 

11.10 Material Adverse Event. The occurrence of any Material Adverse Event.

 

11.11 Material Adverse Change. The occurrence of any Material Adverse Change.

 

 

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12. REMEDIES.

 

Upon the occurrence of an Event of Default, the Bank shall have all rights,
powers and remedies set forth in the Loan Documents, in any written agreement or
instrument (other than this Agreement or the Loan Documents) relating to any of
the Obligations or any security therefor, or as otherwise provided at law or in
equity. Without limiting the generality of the foregoing, the Bank may, at its
option upon the occurrence of an Event of Default, declare its commitments to
the Borrower to be terminated and all Obligations to be immediately due and
payable, provided, however, that upon the occurrence of an Event of Default
under either Section 11.6, “Assignment for Creditors”, or Section 11.7,
“Bankruptcy”, all commitments of the Bank to the Borrower shall immediately
terminate and all Obligations shall be automatically due and payable, all
without demand, notice or further action of any kind required on the part of the
Bank. The Borrower hereby waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of Bank’s rights under the Loan Documents, and hereby consents to,
and waives notice of release, with or without consideration of the Borrower, of
any Collateral, notwithstanding anything contained herein or in the Loan
Documents to the contrary. In addition to the foregoing:

 

12.1 Possession and Assembly of Collateral. The Bank may, without notice, demand
or legal process of any kind, take possession of any or all of the Collateral
(in addition to Collateral of which the Bank already has possession), wherever
it may be found, and for that purpose may pursue the same wherever it may be
found, and may enter into any of the Borrower’s premises where any of the
Collateral may be or is supposed to be, and search for, take possession of,
remove, keep and store any of the Collateral until the same shall be sold or
otherwise disposed of and the Bank shall have the right to store the same, in
any of the Borrower’s premises without cost to the Bank. At the Bank’s request,
the Borrower will, at the Borrower’s sole expense, assemble the Collateral and
make it available to the Bank at a place or places to be designated by the Bank
which is reasonably convenient to the Bank and the Borrower.

 

12.2 Sale of Collateral. The Bank may sell any or all of the Collateral at
public or private sale, upon such terms and conditions as the Bank may deem
proper, and the Bank may purchase any or all of the Collateral at any such sale.
The Bank may apply the net proceeds, after deducting all costs, expenses,
attorneys’ and paralegals’ fees incurred or paid at any time in the collection,
protection and sale of the Collateral and the Obligations, to the payment of the
Note and/or any of the other Obligations, returning the excess proceeds, if any,
to the Borrower. The Borrower shall remain liable for any amount remaining
unpaid after such application, with interest. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed
reasonably and properly given if given by the Bank at least five (5) calendar
days before the date of such disposition. The Borrower hereby confirms, approves
and ratifies all acts and deeds of the Bank relating to the foregoing, and each
part thereof.

 

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12.3 Standards for Exercising Remedies. To the extent that applicable law
imposes duties on the Bank to exercise remedies in a commercially reasonable
manner, the Borrower acknowledges and agrees that it is not commercially
unreasonable for the Bank (a) to fail to incur expenses reasonably deemed
significant by the Bank to prepare Collateral for disposition or otherwise to
complete raw material or work-in-process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including, without limitation, any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (i) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank in
the collection or disposition of any of the Collateral. The Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by the Bank would not be commercially
unreasonable in the Bank’s exercise of remedies against the Collateral and that
other actions or omissions by the Bank shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation upon the foregoing, nothing contained in this Section shall be
construed to grant any rights to the Borrower or to impose any duties on the
Bank that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section.

 

12.4 UCC and Offset Rights. The Bank may exercise, from time to time, any and
all rights and remedies available to it under the UCC or under any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any other agreements between the
Borrower and the Bank, and may, without demand or notice of any kind,
appropriate and apply toward the payment of such of the Obligations, whether
matured or unmatured, including costs of collection and attorneys’ and
paralegals’ fees, and in such order of application as the Bank may, from time to
time, elect, any indebtedness of the Bank to the Borrower, however created or
arising, including, but not limited to, balances, credits, deposits, accounts or
moneys

 

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of the Borrower in the possession, control or custody of, or in transit to the
Bank. The Borrower, hereby waives the benefit of any law that would otherwise
restrict or limit the Bank in the exercise of its right, which is hereby
acknowledged, to appropriate at any time hereafter any such indebtedness owing
from the Bank to the Borrower.

 

12.5 Additional Remedies. Upon the occurrence and during the continuance of an
Event of Default, the Bank shall have the right and power to:

 

(a) instruct the Borrower, at its own expense, to notify any parties obligated
on any of the Collateral, including, but not limited to, any Account Debtors, to
make payment directly to the Bank of any amounts due or to become due
thereunder, or the Bank may directly notify such obligors of the security
interest of the Bank, and/or of the assignment to the Bank of the Collateral and
direct such obligors to make payment to the Bank of any amounts due or to become
due with respect thereto, and thereafter, collect any such amounts due on the
Collateral directly from such Persons obligated thereon;

 

(b) enforce collection of any of the Collateral, including, but not limited to,
any Accounts, by suit or otherwise, or make any compromise or settlement with
respect to any of the Collateral, or surrender, release or exchange all or any
part thereof, or compromise, extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder;

 

(c) take possession or control of any proceeds and products of any of the
Collateral, including the proceeds of insurance thereon;

 

(d) extend, renew or modify for one or more periods (whether or not longer than
the original period) the Note, any other of the Obligations, any obligation of
any nature of any other obligor with respect to the Note or any of the
Obligations;

 

(e) grant releases, compromises or indulgences with respect to the Note, any of
the Obligations, any extension or renewal of any of the Obligations, any
security therefor, or to any other obligor with respect to the Note or any of
the Obligations;

 

(f) transfer the whole or any part of securities which may constitute Collateral
into the name of the Bank or the Bank’s nominee without disclosing, if the Bank
so desires, that such securities so transferred are subject to the security
interest of the Bank, and any corporation, association, or any of the managers
or trustees of any trust issuing any of said securities, or any transfer agent,
shall not be bound to inquire, in the event that the Bank or said nominee makes
any further transfer of said securities, or any portion thereof, as to whether
the Bank or such nominee has the right to make such further transfer, and shall
not be liable for transferring the same;

 

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(g) vote the Collateral;

 

(h) make an election with respect to the Collateral under Section 1111 of the
Bankruptcy Code or take action under Section 364 or any other section of the
Bankruptcy Code; provided, however, that any such action of the Bank as set
forth herein shall not, in any manner whatsoever, impair or affect the liability
of the Borrower hereunder, nor prejudice, waive, nor be construed to impair,
affect, prejudice or waive the Bank’s rights and remedies at law, in equity or
by statute, nor release, discharge, nor be construed to release or discharge,
the Borrower, any guarantor or other Person liable to the Bank for the
Obligations; and

 

(i) at any time, and from time to time, accept additions to, releases,
reductions, exchanges or substitution of the Collateral, without in any way
altering, impairing, diminishing or affecting the provisions of this Agreement,
the Loan Documents, or any of the other Obligations, or the Bank’s rights
hereunder, under the Note or under any of the other Obligations.

 

The Borrower hereby ratifies and confirms whatever the Bank may do with respect
to the Collateral and agrees that the Bank shall not be liable for any error of
judgment or mistakes of fact or law with respect to actions taken in connection
with the Collateral.

 

12.6 Attorney-in-Fact. The Borrower hereby irrevocably makes, constitutes and
appoints the Bank (and any officer of the Bank or any Person designated by the
Bank for that purpose) as the Borrower’s true and lawful proxy and
attorney-in-fact (and agent-in-fact) in the Borrower’s name, place and stead,
with full power of substitution, to (i) take such actions as are permitted in
this Agreement, (ii) execute such financing statements and other documents and
to do such other acts as the Bank may require to perfect and preserve the Bank’s
security interest in, and to enforce such interests in the Collateral, and (iii)
carry out any remedy provided for in this Agreement, including, without
limitation, endorsing the Borrower’s name to checks, drafts, instruments and
other items of payment, and proceeds of the Collateral, executing change of
address forms with the postmaster of the United States Post Office serving the
address of the Borrower, changing the address of the Borrower to that of the
Bank, opening all envelopes addressed to the Borrower and applying any payments
contained therein to the Obligations. The Borrower hereby acknowledges that the
constitution and appointment of such proxy and attorney-in-fact are coupled with
an interest and are irrevocable. The Borrower hereby ratifies and confirms all
that said attorney-in-fact may do or cause to be done by virtue of any provision
of this Agreement.

 

12.7 No Marshaling. The Bank shall not be required to marshal any present or
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order. To the extent that it lawfully may, the Borrower hereby
agrees that it will not invoke any law relating to the marshaling of collateral
which would be reasonably likely to cause delay

 

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in or impede the enforcement of the Bank’s rights under this Agreement or under
any other instrument creating or evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, the Borrower hereby irrevocably waives the benefits of all such
laws.

 

12.8 Application of Proceeds. The Bank will within one (1) Business Day after
receipt of cash or solvent credits from collection of items of payment, proceeds
of Collateral or any other source, apply the whole or any part thereof against
the Obligations secured hereby. The Bank shall further have the exclusive right
to determine how, when and what application of such payments and such credits
shall be made on the Obligations, and such determination shall be conclusive
upon the Borrower. Any proceeds of any disposition by the Bank of all or any
part of the Collateral may be first applied by the Bank to the payment of
expenses incurred by the Bank in connection with the Collateral, including
attorneys’ fees and legal expenses as provided for in Section 13 hereof.

 

12.9 No Waiver. No Event of Default shall be waived by the Bank except in
writing. No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. There
shall be no obligation on the part of the Bank to exercise any remedy available
to the Bank in any order. The remedies provided for herein are cumulative and
not exclusive of any remedies provided at law or in equity. The Borrower agrees
that in the event that the Borrower fails to perform, observe or discharge any
of its Obligations or liabilities under this Agreement or any other agreements
with the Bank, no remedy of law will provide adequate relief to the Bank, and
further agrees that the Bank shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.

 

13. MISCELLANEOUS.

 

13.1 Obligations Absolute. None of the following shall affect the Obligations of
the Borrower to the Bank under this Agreement or the Bank’s rights with respect
to the Collateral:

 

(a) acceptance or retention by the Bank of other property or any interest in
property as security for the Obligations;

 

(b) release by the Bank of the Borrower or of all or any part of the Collateral
or of any party liable with respect to the Obligations;

 

(c) release, extension, renewal, modification or substitution by the Bank of the
Note, or any note evidencing any of the Obligations, or the compromise of the
liability of any guarantor of the Obligations; or

 

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(d) failure of the Bank to resort to any other security or to pursue the
Borrower or any other obligor liable for any of the Obligations before resorting
to remedies against the Collateral.

 

13.2 Entire Agreement. This Agreement (i) is valid, binding and enforceable
against the Borrower and the Bank in accordance with its provisions and no
conditions exist as to its legal effectiveness (except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law)); (ii) constitutes the entire agreement between
the parties; and (iii) is the final expression of the intentions of the Borrower
and the Bank. No promises, either expressed or implied, exist between the
Borrower and the Bank, unless contained herein. This Agreement supersedes all
negotiations, representations, warranties, commitments, offers, or contracts (of
any kind or nature, whether oral or written) prior to or contemporaneous with
the execution hereof.

 

13.3 Amendments; Waivers. No amendment, modification, termination, discharge or
waiver of any provision of this Agreement or of the other Loan Documents, or
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only for the specific purpose for
which given.

 

13.4 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY
OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS
AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BANK AND
THE BORROWER ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER.

 

13.5 LITIGATION. TO INDUCE THE BANK TO MAKE THE LOANS, THE BORROWER IRREVOCABLY
AGREES THAT ALL ACTIONS ARISING. DIRECTLY OR INDIRECTLY, AS A RESULT OR
CONSEQUENCE OF THIS AGREEMENT, THE NOTE, ANY OTHER AGREEMENT WITH THE BANK OR
THE COLLATERAL, SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING THEIR
SITUS IN THE CITY OF CHICAGO, ILLINOIS. THE BORROWER HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS
IN SAID CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE
BORROWER HEREBY WAIVES PERSONAL

 

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SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE BORROWER AS
SET FORTH HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF
COURT OR OTHERWISE.

 

13.6 Assignability. The Bank may at any time assign the Bank’s rights in this
Agreement, the Note, the Obligations, or any part thereof and transfer the
Bank’s rights in any or all of the Collateral, and the Bank thereafter shall be
relieved from all liability with respect to such Collateral. The Borrower may
not sell or assign this Agreement, or any other agreement with the Bank or any
portion thereof, either voluntarily or by operation of law, without the prior
written consent of the Bank. This Agreement shall be binding upon the Bank and
the Borrower and their respective legal representatives and successors. All
references herein to the Borrower shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership, the
term “Borrower” shall be deemed to include all joint venturers or partners
thereof, who shall be jointly and severally liable hereunder.

 

13.7 Confidentiality. The Borrower and the Bank hereby agree and acknowledge
that any and all information relating to the Borrower which is (a) furnished by
the Borrower to the Bank (or to any affiliate of the Bank), and (b) non-public,
confidential or proprietary in nature, shall be kept confidential by the Bank or
such affiliate in accordance with applicable law, provided, however, that such
information and other credit information relating to the Borrower may be
distributed by the Bank or such affiliate to the Bank’s or such affiliate’s
directors, officers, employees, attorneys, affiliates, auditors and regulators,
and upon the order of a court or other governmental agency having jurisdiction
over the Bank or such affiliate, to any other party. The Borrower and the Bank
further agree that this provision shall survive the termination of this
Agreement.

 

13.8 Binding Effect. This Agreement shall become effective upon execution by the
Borrower and the Bank. If this Agreement is not dated when executed by the
Borrower, the Bank is hereby authorized, without notice to the Borrower, to date
this Agreement as of the date when it was executed by the Borrower.

 

13.9 Governing Law. This Agreement, the Loan Documents and the Note shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Illinois (but giving effect to
federal laws applicable to national banks), and for all purposes shall be
construed in accordance with the laws of such State, without giving effect to
the choice of law provisions of such State.

 

13.10 Enforceability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by, unenforceable or
invalid under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be

 

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ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

13.11 Survival of Borrower Representations. All covenants, agreements,
representations and warranties made by the Borrower herein shall,
notwithstanding any investigation by the Bank, be deemed material and relied
upon by the Bank and shall survive the making and execution of this Agreement
and the other Loan Documents and the issuance of the Note. The Bank, in
extending financial accommodations to the Borrower, is expressly acting and
relying on the aforesaid representations and warranties.

 

13.12 Extensions of Facility and Note. This Agreement shall secure and govern
the terms of any extensions or renewals of the Bank’s facility hereunder and the
Note pursuant to the execution of any modification, extension or renewal note
executed by the Borrower and accepted by the Bank in its sole and absolute
discretion in substitution for the Note.

 

13.13 Time of Essence. Time is of the essence in making payments of all amounts
due the Bank under this Agreement and in the performance and observance by the
Borrower of each covenant, agreement, provision and term of this Agreement.

 

13.14 Counterparts. This Agreement 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 to be an original and all of which taken
together shall constitute one and the same instrument.

 

13.15 Facsimile Signatures. The Bank is hereby authorized to rely upon and
accept as an original any Loan Documents or other communication which is sent to
the Bank by facsimile, telegraphic or other electronic transmission (each, a
“Communication”) which the Bank in good faith believes has been signed by
Borrower and has been delivered to the Bank by a properly authorized
representative of the Borrower, whether or not that is in fact the case.
Notwithstanding the foregoing, the Bank shall not be obligated to accept any
such Communication as an original and may in any instance require that an
original document be submitted to the Bank in lieu of, or in addition to, any
such Communication.

 

13.16 Notices. Except as otherwise provided herein, the Borrower waives all
notices and demands in connection with the enforcement of the Bank’s rights
hereunder. All notices, requests, demands and other communications provided for
hereunder shall be in writing, sent by certified or registered mail, postage
prepaid, by facsimile, telegram or delivered in person, and addressed as
follows:

 

If to the Borrower:

  c/o Huron Consulting Group Inc.     550 W. Van Buren Street     Suite 1700    
Chicago, Illinois 60607     Attention: Gary Burge    

Chief Financial Officer

 

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with a copy to:

  Huron Consulting Services LLC     550 W. Van Buren Street     Suite 1700    
Chicago, Illinois 60607     Attention: Natalia Delgado    

General Counsel

If to the Bank:

  LaSalle Bank National Association     135 South LaSalle Street     Chicago,
Illinois 60603     Attention: David Bacon    

Vice President

 

or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.

 

13.17 Indemnification. The Borrower agrees to defend (with counsel reasonably
satisfactory to the Bank), protect, indemnify and hold harmless each Indemnified
Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions
of any kind or nature (including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party thereto, which shall also
include, without limitation, attorneys’ fees and time charges of attorneys who
may be employees of the Bank, any parent corporation or affiliated corporation
of the Bank), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities, Environmental Laws and commercial laws and regulations,
under common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any of the Loan Documents, or
any act, event or transaction related or attendant thereto, the preparation,
execution and delivery of this Agreement and the Loan Documents, including, but
not limited to, the making or issuance and management of the Loans, the use or
intended use of the proceeds of the Loans, the enforcement of the Bank’s rights
and remedies under this Agreement, the Loan Documents, the Note, any other
instruments and documents delivered hereunder, or under any other agreement
between the Borrower and the Bank; provided, however, that the Borrower shall
not have any obligations hereunder to any Indemnified Party with respect to
matters caused by or resulting from the willful misconduct or gross negligence
of such Indemnified Party. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, the Borrower shall satisfy such undertaking to the maximum
extent

 

45

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permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall, together with interest
thereon at the Default Rate from the date incurred by each Indemnified Party
until paid by the Borrower, be added to the Obligations of the Borrower and be
secured by the Collateral. The provisions of this Section 13.17 shall survive
the satisfaction and payment of the other Obligations and the termination of
this Agreement.

 

13.18 Use of the Term “Borrower”. The term “Borrower” as used in this Agreement
includes the individual or individuals, entity, association, partnership,
limited liability company or corporation named herein as Borrower and, if more
than one Borrower is listed above, all indebtedness of each Borrower
individually and collectively and (a) any successor individual or individuals,
association, entity, partnership, limited liability company or corporation to
which all or substantially all of the business or assets of said Borrower shall
have been transferred, and (b) in the case of a corporate Borrower, any other
corporation into or with which Borrower shall have been merged, consolidated,
reorganized or absorbed.

 

13.19 Joint and Several Liability. All obligations of Borrower under this
Agreement shall be joint and several and may be fully enforced against any of
them in legal proceedings without any requirement that all other parties be
joined as a party defendant in those proceedings.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Borrower and the Bank have executed this Loan and
Security Agreement as of the date first above written.

 

        HURON CONSULTING GROUP INC., a         Delaware corporation         By:
  /s/ Gary L. Burge         Name:   Gary L. Burge         Title:   CFO

ATTEST:

       

By:

  /s/ Lisa P. Robison        

Name:

  Lisa P. Robison        

Title:

  Director of Finance                 HURON CONSULTING SERVICES LLC, a        
Delaware limited liability company         By:   /s/ Gary E. Holdren        
Name:   Gary E. Holdren         Title:   President

ATTEST:

       

By:

  /s/ Lisa P. Robison        

Name:

  Lisa P. Robison        

Title:

  Director of Finance                 Agreed and accepted:         LASALLE BANK
NATIONAL ASSOCIATION,         a national banking association         By:   /s/
David Bacon         Name:   David Bacon         Title:   Vice President

 

47