Exhibit 10.2
 
REWARDS NETWORK INC.
AND
EACH OF ITS DOMESTIC SUBSIDIARIES SIGNATORY HERETO
 
LOAN AND SECURITY AGREEMENT
Dated: November 6, 2007
 
RBS BUSINESS CAPITAL,
a Division of RBS Asset Finance, Inc.,
Individually and as Agent for any Lender which is
or becomes a Party hereto
 

 

 

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TABLE OF CONTENTS

              Page  
 
       
SECTION 1. CREDIT FACILITY
    1  
 
       
1.1 Loans
    1  
1.2 Letters of Credit; LC Guaranties
    3  
 
       
SECTION 2. INTEREST, FEES AND CHARGES
    4  
 
       
2.1 Interest
    4  
2.2 Computation of Interest and Fees
    4  
2.3 Fee Letter
    4  
2.4 Letter of Credit and LC Guaranty Fees
    4  
2.5 Unused Line Fee
    5  
2.6 Intentionally Omitted
    5  
2.7 Audit Fees
    5  
2.8 Reimbursement of Expenses
    5  
2.9 Bank Charges
    6  
2.10 Collateral Protection Expenses; Appraisals
    6  
2.11 Payment of Charges
    6  
2.12 No Deductions
    6  
 
       
SECTION 3. LOAN ADMINISTRATION
    7  
 
       
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option
    7  
3.2 Payments
    11  
3.3 Mandatory Prepayments
    12  
3.4 Application of Payments and Collections
    12  
3.5 All Loans to Constitute One Obligation
    13  
3.6 Loan Account
    13  
3.7 Statements of Account
    13  
3.8 Increased Costs
    13  
3.9 Basis for Determining Interest Rate Inadequate
    14  
3.10 Sharing of Payments, Etc
    15  
3.11 Replacement of Lenders
    15  
 
       
SECTION 4. TERM AND TERMINATION
    16  
 
       
4.1 Term of Agreement
    16  
4.2 Termination
    16  
 
       
SECTION 5. SECURITY INTERESTS
    17  
 
       
5.1 Security Interest in Collateral
    17  
5.2 Other Collateral
    18  
5.3 Lien Perfection; Further Assurances
    19  
5.4 Lien on Realty
    19  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
SECTION 6. COLLATERAL ADMINISTRATION
    20  
 
       
6.1 General
    20  
6.2 Administration of Accounts
    21  
6.3 Intentionally Omitted
    22  
6.4 Administration of Equipment
    22  
6.5 Payment of Charges
    23  
 
       
SECTION 7. REPRESENTATIONS AND WARRANTIES
    23  
 
       
7.1 General Representations and Warranties
    23  
7.2 Continuous Nature of Representations and Warranties
    31  
7.3 Survival of Representations and Warranties
    31  
 
       
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
    31  
 
       
8.1 Affirmative Covenants
    31  
8.2 Negative Covenants
    35  
8.3 Specific Financial Covenants
    39  
 
       
SECTION 9. CONDITIONS PRECEDENT
    39  
 
       
9.1 Documentation
    39  
9.2 No Default
    40  
9.3 Other Conditions
    40  
9.4 Availability
    40  
9.5 No Litigation
    40  
9.6 Material Adverse Effect
    40  
9.7 Cash Deposit
    40  
 
       
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
    40  
 
       
10.1 Events of Default
    40  
10.2 Acceleration of the Obligations
    43  
10.3 Other Remedies
    43  
10.4 Setoff and Sharing of Payments
    44  
10.5 Remedies Cumulative; No Waiver
    45  
 
       
SECTION 11. AGENT
    45  
 
       
11.1 Authorization and Action
    45  
11.2 Agent’s Reliance, Etc
    46  
11.3 RBS and Affiliates
    47  
11.4 Lender Credit Decision
    47  
11.5 Indemnification
    47  
11.6 Rights and Remedies to Be Exercised by Agent Only
    47  
11.7 Agency Provisions Relating to Collateral
    48  
11.8 Agent’s Right to Purchase Commitments
    48  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
11.9 Right of Sale, Assignment, Participations
    49  
11.10 Amendment
    50  
11.11 Resignation of Agent; Appointment of Successor
    51  
11.12 Audit and Examination Reports; Disclaimer by Lenders
    51  
 
       
SECTION 12. MISCELLANEOUS
    52  
 
       
12.1 Power of Attorney
    52  
12.2 Indemnity
    53  
12.3 Sale of Interest
    53  
12.4 Severability
    53  
12.5 Successors and Assigns
    53  
12.6 Cumulative Effect; Conflict of Terms
    53  
12.7 Execution in Counterparts
    54  
12.8 Notice
    54  
12.9 Consent
    55  
12.10 Credit Inquiries
    55  
12.11 Time of Essence
    55  
12.12 Entire Agreement
    55  
12.13 Interpretation
    55  
12.14 Confidentiality
    55  
12.15 GOVERNING LAW; CONSENT TO FORUM
    55  
12.16 WAIVERS BY BORROWERS
    56  
12.17 Advertisement
    57  
12.18 Reimbursement
    57  
12.19 Patriot Act Notice
    58  

 

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Execution Copy
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this 6th day of November, 2007,
by and among RBS BUSINESS CAPITAL, a division of RBS Asset Finance, Inc., a New
York corporation (“RBS”) with an office at 71 South Wacker Drive, Suite 2800,
Chicago, Illinois 60606, individually as a Lender and as Agent (“Agent”) for
itself and any other financial institution which is or becomes a party hereto
(each such financial institution, including RBS, is referred to hereinafter
individually as a “Lender” and collectively as the “Lenders”), the Lenders and
REWARDS NETWORK INC., a Delaware corporation (“RNI”), with its chief executive
office and principal place of business at Two North Riverside Plaza, Suite 950,
Chicago, Illinois 60606 and each domestic subsidiary of RNI signatory hereto
(RNI and each such subsidiary are sometimes hereinafter referred to individually
as a “Borrower” and collectively as “Borrowers”). Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the representations
and warranties made in, this Agreement and the other Loan Documents, Lenders
agree to make a Total Credit Facility of up to $25,000,000 available upon
Borrowers’ request therefor, as follows:
1.1 Loans.
1.1.1 Revolving Credit Loans. Each Lender agrees, severally and not jointly, for
so long as no Default or Event of Default exists, to make Revolving Credit Loans
to Borrowers from time to time during the period from the date hereof to but not
including the last day of the Term, as requested by Borrower Representative, on
its own behalf and on behalf of all other Borrowers in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the lesser of (i) such Lender’s Revolving Loan Commitment
minus the product of such Lender’s Revolving Loan Percentage and the LC Amount
minus the product of such Lender’s Revolving Loan Percentage and reserves, if
any and (ii) the product of such Lender’s Revolving Loan Percentage and an
amount equal to the Borrowing Base at such time minus the LC Amount minus
reserves, if any. Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent shall reasonably deem
necessary or appropriate in Agent’s Judgment exercised in good faith, against
the amount of Revolving Credit Loans which Borrowers may otherwise request under
this subsection 1.1.1 including, without limitation, with respect to (i) price
adjustments, damages, unearned discounts, returned products or other matters for
which credit memoranda are issued in the ordinary course of any Borrower’s
business; (ii) potential dilution related to Accounts; (iii) other sums
chargeable against Borrowers’ Loan Account as Revolving Credit Loans under any
section of this Agreement; (iv) amounts owing by any Borrower to any Person to
the extent secured by a Lien on, or trust over, any Property of Borrower;
(v) amounts owing by any Borrower in connection with Product Obligations; and
(vi) such other specific events, conditions or contingencies as to which Agent,
in Agent’s Judgment exercised in good faith, determines reserves should be
established from time to time hereunder. Notwithstanding the foregoing, Agent
shall not establish any reserves in respect of any

 

 

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matters relating to any items of Collateral that have been taken into account in
determining Eligible Accounts, Eligible Dining Credits or Eligible RCR Loans, as
applicable or any adjustments in the lending formula used in determining the
Borrowing Base. The amount of any reserve established by Agent shall have a
reasonable relationship to the event, condition or other matter which is the
basis for such Reserve as determined by Agent in good faith in Agent’s Judgment.
In the event that Agent deems it necessary or appropriate to establish any such
reserve, to change any applicable advance rate contained in the definition of
Borrowing Base or to change the criteria for Eligible Accounts, Eligible Dining
Credits or Eligible RCR Loans, to make any adjustment to any Borrowing Base
Certificate, Lender shall give notice of such event(s) to a Responsible Officer,
any such reserve, change or adjustment shall only be effective upon notice of
such item to Borrower Representative (which notice may be telephonic or
electronic). Agent shall also discuss with Borrower Representative the reasons
leading to the establishment of any such reserve, change in advance rate or
change in eligibility requirements. Further, any reserve or classification of an
Account, Dining Credit or RCR Loan as in-eligible shall not be duplicative with
any reserves or similar items accounted for by Borrowers in their preparation of
the Borrowing Base Certificate. The Revolving Credit Loans shall be repayable in
accordance with the terms of the Revolving Notes and shall be secured by all of
the Collateral. Subject to the terms hereof, Revolving Credit Loans may be
borrowed, repaid without penalty or premium, except as otherwise provided in
subsection 3.1.9 hereof, and reborrowed.
1.1.2 Overadvances. Insofar as Borrower Representative, on its own behalf and on
behalf of all other Borrowers, may request and Agent or Majority Lenders (as
provided below) may be willing in their sole and absolute discretion to make
Revolving Credit Loans to Borrowers at a time when the unpaid balance of
Revolving Credit Loans plus the sum of the LC Amount plus the amount of LC
Obligations that have not been reimbursed by Borrowers or funded with a
Revolving Credit Loan, plus reserves, exceeds, or would exceed with the making
of any such Revolving Credit Loan, the Borrowing Base (and such Loan or Loans
being herein referred to individually as an “Overadvance” and collectively, as
“Overadvances”), Agent shall enter such Overadvances as debits in the Loan
Account. All Overadvances shall be repaid on demand, shall be secured by the
Collateral and shall bear interest as provided in this Agreement for Revolving
Credit Loans generally. Any Overadvance made pursuant to the terms hereof shall
be made by all Lenders ratably in accordance with their respective Revolving
Loan Percentages. Overadvances in the aggregate amount of $500,000 or less may,
unless a Default or Event of Default has occurred and is continuing, be made in
the sole and absolute discretion of Agent. Overadvances in an aggregate amount
of more than $500,000 but less than $1,000,000 may, unless a Default or an Event
of Default has occurred and is continuing, be made in the sole and absolute
discretion of the Majority Lenders. Overadvances in an aggregate amount of
$1,000,000 or more and Overadvances to be made after the occurrence and during
the continuation of a Default or an Event of Default shall require the consent
of all Lenders. The foregoing notwithstanding, in no event, unless otherwise
consented to by all Lenders, (w) shall any Overadvances be outstanding for more
than sixty (60) consecutive days, (x) after all outstanding Overadvances have
been repaid, shall Agent or Lenders make any additional Overadvances unless
sixty (60) days or more have expired since the last date on which any
Overadvances were outstanding, (y) shall Overadvances be outstanding on more
than ninety (90) days within any one hundred eighty day (180) period or
(z) shall Agent make Revolving Credit Loans on behalf of Lenders under this
subsection 1.1.2 to the extent such Revolving Credit Loans would cause a
Lender’s share of the Revolving Credit Loans to exceed such Lender’s Revolving
Loan Commitment minus such Lender’s Revolving Loan Percentage of the LC Amount.

 

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1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used solely for
(i) Borrowers’ general operating capital needs in a manner consistent with the
provisions of this Agreement and all applicable laws, (ii) to make Distributions
or prepayments or repurchases of Convertible Debentures as provided in
subsection 8.2.7, and (iii) other purposes permitted under this Agreement.
1.1.4 Agent Loans. Upon the occurrence and during the continuance of an Event of
Default, Agent, in its sole discretion, may make Revolving Credit Loans on
behalf of Lenders, in an aggregate amount not to exceed $1,000,000, if Agent, in
its reasonable business judgment, deems that such Revolving Credit Loans are
necessary or desirable (i) to protect all or any portion of the Collateral,
(ii) to enhance the likelihood, or maximize the amount of, repayment of the
Loans and the other Obligations, or (iii) to pay any other amount chargeable to
Borrowers pursuant to this Agreement, including without limitation costs, fees
and expenses as described in Sections 2.8 and 2.9 (hereinafter, “Agent Loans”);
provided, that in no event shall (a) the maximum principal amount of the
Revolving Credit Loans exceed the aggregate Revolving Loan Commitments and
(b) Majority Lenders may at any time revoke Agent’s authorization to make Agent
Loans. Any such revocation must be in writing and shall become effective
prospectively upon Agent’s receipt thereof. Each Lender shall be obligated to
advance its Revolving Loan Percentage of each Agent Loan. If Agent Loans are
made pursuant to the preceding sentence, then (a) the Borrowing Base shall be
deemed increased by the amount of such permitted Agent Loans, but only for so
long as Agent allows such Agent Loans to be outstanding, and (b) all Lenders
that have committed to make Revolving Credit Loans shall be bound to make, or
permit to remain outstanding, such Agent Loans based upon their Revolving Loan
Percentages in accordance with the terms of this Agreement.
1.2 Letters of Credit; LC Guaranties. Agent agrees, for so long as no Default or
Event of Default exists and if requested by Borrower Representative, on its own
behalf and on behalf of all other Borrowers, to (i) issue its, or cause to be
issued by Bank or another Affiliate of Agent, on the date requested by Borrower
Representative, on its own behalf and on behalf of all other Borrowers, Letters
of Credit for the account of Borrowers or (ii) execute LC Guaranties by which
Agent, Bank, or another Affiliate of Agent, on the date requested by Borrower
Representative, on its own behalf and on behalf of all other Borrowers, shall
guaranty the payment or performance by Borrowers of their reimbursement
obligations with respect to letters of credit; provided that the LC Amount shall
not exceed $1,000,000 at any time. No Letter of Credit or LC Guaranty may have
an expiration date after the last day of the Term. Notwithstanding anything to
the contrary contained herein, Borrowers, Agent and Lenders hereby agree that
all LC Obligations and all obligations of Borrowers relating thereto shall be
satisfied by the prompt issuance of one or more Revolving Credit Loans that are
Prime Rate Revolving Loans, which Borrowers hereby acknowledge are requested and
Lenders hereby agree to fund. In the event that Revolving Credit Loans are not,
for any reason, promptly made to satisfy all then existing LC Obligations, each
Lender hereby agrees to pay to Agent, on demand, an amount equal to such LC
Obligations multiplied by such Lender’s Revolving Loan Percentage, and until so
paid, such amount shall be secured by the Collateral and shall bear interest and
be payable at the same rate and in the same manner as Prime Rate Revolving
Loans. Immediately upon the issuance of a Letter of Credit or an LC Guaranty
under this Agreement, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse or warranty,
an undivided interest and participation therein equal to such LC Obligations
multiplied by such Lender’s Revolving Loan Percentage.

 

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SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. Interest shall accrue on the principal amount of the
Prime Rate Loans outstanding at the end of each day at a fluctuating rate per
annum equal to the Applicable Margin then in effect plus the Prime Rate. Said
rate of interest shall increase or decrease by an amount equal to any increase
or decrease in the Prime Rate, effective as of the opening of business on the
day that any such change in the Prime Rate occurs. If Borrower Representative,
on its own behalf and on behalf of all other Borrowers, exercises the LIBOR
Option as provided in Section 3.1, interest shall accrue on the principal amount
of the LIBOR Rate Loans outstanding at the end of each day at a rate per annum
equal to the Applicable Margin then in effect plus the LIBOR Lending Rate
applicable to each LIBOR Rate Loans for the corresponding Interest Period.
2.1.2 Default Rate of Interest. At the option of Agent or the Majority Lenders,
upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest at a
rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto
(the “Default Rate”).
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Notes and charged or collected
pursuant to the terms of this Agreement or pursuant to the Notes exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the “Maximum Rate”). If
any provisions of this Agreement or the Notes are in contravention of any such
law, such provisions shall be deemed amended to conform thereto. If at any time,
the amount of interest paid hereunder is limited by the Maximum Rate, and the
amount at which interest accrues hereunder is subsequently below the Maximum
Rate, the rate at which interest accrues hereunder shall remain at the Maximum
Rate, until such time as the aggregate interest paid hereunder equals the amount
of interest that would have been paid had the Maximum Rate not applied.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC Guaranty
fees and Unused Line Fees hereunder shall be calculated daily and shall be
computed on the actual number of days elapsed over a year of 360 days.
2.3 Fee Letter. Borrowers shall pay to Agent certain fees and other amounts in
accordance with the terms of the fee letter between Borrowers and Agent (the
“Fee Letter”).

 

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2.4 Letter of Credit and LC Guaranty Fees. Borrowers shall pay to Agent for all
Letters of Credit and LC Guaranties of letters of credit, for the ratable
benefit of Lenders a per annum fee equal to the Applicable Margin then in effect
for LIBOR Revolving Loans of the aggregate undrawn available amount of such
Letters of Credit and LC Guaranties outstanding from time to time during the
term of this Agreement, plus, for the benefit of Bank, all normal and customary
charges associated with the issuance, processing and administration thereof,
which fees and charges shall be deemed fully earned upon issuance of each such
Letter of Credit or LC Guaranty or as advised by Agent or Bank, shall be due and
payable on the first Business Day of each month or as advised by Agent or Bank
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.
2.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable benefit of
Lenders, a fee (the “Unused Line Fee”) equal to 0.25% per annum multiplied by
the average daily amount by which the Revolving Credit Maximum Amount exceeds
the sum of (i) the outstanding principal balance of the Revolving Credit Loans
plus (ii) the LC Amount.
2.6 Intentionally Omitted.
2.7 Audit Fees. Borrowers shall pay to Agent audit fees in accordance with
Agent’s current schedule of fees in effect from time to time in connection with
audits of the books and records and Properties of Borrowers and their
Subsidiaries and such other matters as Agent shall deem appropriate in its
reasonable credit judgment, plus all reasonable out-of-pocket expenses incurred
by Agent in connection with such audits; provided, that so long as no Event of
Default has occurred and is continuing, Borrowers shall not be liable for such
audit fees incurred in connection with more than four (4) such audits during any
fiscal year, whether such audits are conducted by employees of Agent or by third
parties hired by Agent; provided that if there are no outstanding Revolving
Credit Loans or Letters of Credit, Borrowers shall not be liable for such audit
fees incurred in connection with more than one audit during any fiscal year.
Such audit fees and out-of-pocket expenses shall be payable on the first day of
the month following the date of issuance by Agent of a request for payment
thereof to Borrowers upon demand therefor by Agent from time to time. Agent may,
in its discretion, provide for the payment of such amounts by making appropriate
Revolving Credit Loans to Borrowers and charging Borrowers’ Loan Account
therefor.
2.8 Reimbursement of Expenses. If, at any time or times regardless of whether or
not an Event of Default then exists, (i) Agent incurs legal or accounting
expenses or any other costs or out-of-pocket expenses in connection with (1) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or any syndication or attempted syndication of the
Obligations (including, without limitation, printing and distribution of
materials to prospective Lenders and all costs associated with bank meetings,
but excluding any closing fees paid to Lenders in connection therewith) or
(2) the administration of this Agreement or any of the other Loan Documents and
the transactions contemplated hereby and thereby; or (ii) Agent or any Lender
incurs reasonable out of pocket legal or accounting expenses or any other costs
or out-of-pocket expenses in connection with (1) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Agent, any Lender,
any Borrower or any other Person) relating to the Collateral, this Agreement or
any of the other Loan Documents or any Borrower’s, any of its Subsidiaries’ or
any Guarantor’s affairs; (2) any attempt to enforce any rights of Agent or any
Lender against any Borrower or any other Person which may be obligated to Agent
or any Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (3) any attempt to
inspect, verify, protect,

 

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preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such reasonable out-of-pocket legal and accounting
expenses, other reasonable costs and out of pocket expenses of Agent or any
Lender, as applicable, shall be charged to Borrowers; provided, that Borrowers
shall not be responsible for such costs and out-of-pocket expenses to the extent
incurred because of the gross negligence or willful misconduct of Agent or any
Lender. All amounts chargeable to Borrowers under this Section 2.8 shall be
Obligations secured by all of the Collateral, shall be payable on demand to
Agent or such Lender, as the case may be, and shall bear interest from the date
such demand is made until paid in full at the rate applicable to Prime Rate
Revolving Loans from time to time. Borrowers shall also reimburse Agent for
expenses incurred by Agent in its administration of the Collateral to the extent
and in the manner provided in Sections 2.9 and 2.10 hereof.
2.9 Bank Charges. Borrowers shall pay to Agent, on demand, any and all fees,
costs or expenses which Agent or any Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to any
Borrower or any other Person on behalf of any Borrower, by Agent or any Lender,
of proceeds of Loans made to Borrowers pursuant to this Agreement and (ii) the
depositing for collection by Agent or any Lender of any check or item of payment
received or delivered to Agent or any Lender on account of the Obligations.
2.10 Collateral Protection Expenses; Appraisals. All out-of-pocket expenses
incurred in protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, and any and all excise, property, sales, and use
taxes imposed by any state, federal, or local authority on any of the Collateral
or in respect of the sale thereof shall be borne and paid by Borrowers. If
Borrowers fail to promptly pay any portion thereof when due, Agent may, at its
option, but shall not be required to, pay the same and charge Borrowers
therefor; provided that the foregoing shall not prevent Borrowers from
contesting any such item in good faith and by appropriate proceedings, so long
as any such contest does not materially affect Agent’s Lien on the applicable
Collateral. Additionally, from time to time, Agent may, at Borrowers’ expense,
obtain appraisals from appraisers (who may be personnel of Agent), stating the
then current fair market value or orderly liquidation value of the Dining
Credits; provided that so long as no Event of Default has occurred and is
continuing, Borrowers shall not be liable for fees and expenses incurred in
connection with more than one appraisal during any fiscal year. Any such
appraisal shall be conducted using the same methodology as used in the appraisal
of Dining Credits conducted by Agent (or its agents) prior to the Closing Date.
2.11 Payment of Charges. All amounts chargeable to Borrowers under this
Agreement shall be Obligations secured by all of the Collateral, shall be,
unless specifically otherwise provided, payable on demand and shall bear
interest from the date demand was made or such amount is due, as applicable,
until paid in full at the rate applicable to Prime Rate Revolving Loans from
time to time.

 

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2.12 No Deductions. Any and all payments or reimbursements made hereunder shall
be made free and clear of and without deduction for any and all taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto; excluding, however, the following: taxes imposed on the income of Agent
or any Lender or franchise taxes by the jurisdiction under the laws of which
Agent or any Lender is organized or doing business or any political subdivision
thereof and taxes imposed on its income by the jurisdiction of Agent’s or such
Lender’s applicable lending office or any political subdivision thereof or
franchise taxes (all such taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto excluding such taxes
imposed on net income, herein “Tax Liabilities”). If any Borrower shall be
required by law to deduct any such Tax Liabilities from or in respect of any sum
payable hereunder to Agent or any Lender, then the sum payable hereunder shall
be increased as may be necessary so that, after all required deductions are
made, Agent or such Lender receives an amount equal to the sum it would have
received had no such deductions been made.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option. Borrowings under
the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests; Revolving Credit Loans. A request for a Revolving Credit
Loan shall be made, or shall be deemed to be made, in the following manner:
(a) Borrower Representative, on its own behalf and on behalf of all other
Borrowers, may give Agent notice of its intention to borrow, in which notice
Borrower Representative shall specify the amount of the proposed borrowing of a
Revolving Credit Loan and the proposed borrowing date, which shall be a Business
Day, no later than 12:00 p.m. (New York time) (11:00 a.m. New York time on the
last Business Day of each month) on the proposed borrowing date (or in
accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of
a request for a LIBOR Rate Loan), provided, however, that no such request may be
made at a time when there exists a Default or an Event of Default; and (b) the
becoming due of any amount required to be paid under this Agreement, or the
Notes, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation.
3.1.2 Disbursement. Borrowers hereby irrevocably authorize Agent to disburse the
proceeds of each Loan requested, or deemed to be requested, pursuant to
subsection 3.1.1 as follows: (i) the proceeds of each Revolving Credit Loan
requested under subsection 3.1.1(a) shall be disbursed by Agent in lawful money
of the United States of America in immediately available funds by wire transfer
to such bank account as may be agreed upon by Borrowers and Agent from time to
time or elsewhere if pursuant to a written direction from Borrowers; and
(ii) the proceeds of each Revolving Credit Loan deemed requested under
subsection 3.1.1(b) shall be disbursed by Agent by way of direct payment of the
relevant interest or other Obligation. If at any time any Loan is funded by
Agent or Lenders in excess of the amount requested or deemed requested by
Borrowers, Borrowers agree to repay the excess to Agent promptly upon the
earlier to occur of (a) any Borrower’s discovery of the error and (b) notice
thereof to Borrowers from Agent or any Lender.

 

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3.1.3 Payment by Lenders. Agent shall give to each Lender prompt written notice
by facsimile, telex or cable of the receipt by Agent from Borrower
Representative of any request for a Revolving Credit Loan. Each such notice
shall specify the requested date and amount of such Revolving Credit Loan,
whether such Revolving Credit Loan shall be subject to the LIBOR Option, and the
amount of each Lender’s advance thereunder (in accordance with its applicable
Revolving Loan Percentage. Each Lender shall, not later than 1:00 p.m. (New York
time) on such requested date, wire to a bank designated by Agent the amount of
that Lender’s Revolving Loan Percentage of the requested Revolving Credit Loan.
The failure of any Lender to make the Revolving Credit Loans to be made by it
shall not release any other Lender of its obligations hereunder to make its
Revolving Credit Loan. Neither Agent nor any other Lender shall be responsible
for the failure of any other Lender to make the Revolving Credit Loan to be made
by such other Lender. The foregoing notwithstanding, Agent, in its sole
discretion, may from its own funds make a Revolving Credit Loan on behalf of any
Lender. In such event, the Lender on behalf of whom Agent made the Revolving
Credit Loan shall reimburse Agent for the amount of such Revolving Credit Loan
made on its behalf, on a weekly (or more frequent, as determined by Agent in its
sole discretion) basis. On each such settlement date, Agent will pay to each
Lender the net amount owing to such Lender in connection with such settlement,
including without limitation amounts relating to Loans, fees, interest and other
amounts payable hereunder. The entire amount of interest attributable to such
Revolving Credit Loan for the period from the date on which such Revolving
Credit Loan was made by Agent on such Lender’s behalf until Agent is reimbursed
by such Lender, shall be paid to Agent for its own account.
3.1.4 Authorization. Borrowers hereby irrevocably authorize Agent, in Agent’s
sole discretion, to advance to Borrowers, and to charge to Borrowers’ Loan
Account hereunder as a Revolving Credit Loan (which shall be a Prime Rate
Revolving Loan), a sum sufficient to pay all interest accrued on the Obligations
during the immediately preceding month and to pay all fees, costs and expenses
and other Obligations at any time owed by any Borrower to Agent or any Lender
hereunder.
3.1.5 Letter of Credit and LC Guaranty Requests. A request for a Letter of
Credit or LC Guaranty shall be made in the following manner: Borrower
Representative, on its own behalf and on behalf of all other Borrowers, may give
Agent and Bank a written notice of its request for the issuance of a Letter of
Credit or LC Guaranty, not later than 12:00 p.m. (New York time) (11:00 a.m. New
York time on the last Business Day of each month), one Business Day before the
proposed issuance date thereof, in which notice Borrower Representative shall
specify the issuance date and format and wording for the Letter of Credit or LC
Guaranty being requested (which shall be satisfactory to Agent and the Person
being asked to issue such Letter of Credit or LC Guaranty); provided, that no
such request may be made at a time when there exists a Default or Event of
Default. Such request shall be accompanied by an executed application and
reimbursement agreement in form and substance reasonably satisfactory to Agent
and the Person being asked to issue the Letter of Credit or LC Guaranty, as well
as any required resolutions and other documents.
3.1.6 Method of Making Requests. As an accommodation to Borrowers, unless a
Default or an Event of Default is then in existence, (i) Agent shall permit
telephonic or electronic requests for Revolving Credit Loans to Agent,
(ii) Agent and Bank may, in their discretion, permit electronic transmittal of
requests for Letters of Credit and LC Guaranties to them, and (iii) Agent may,
in Agent’s discretion, permit electronic transmittal of instructions,
authorizations, agreements or reports to Agent. Unless Borrower Representative,
on its own behalf and on behalf of all other Borrowers specifically directs
Agent or Bank in writing not to accept or act upon telephonic or electronic
communications from any Borrower, neither Agent nor Bank shall have any
liability to Borrowers for any loss or damage suffered by any Borrower as a
result of Agent’s or Bank’s honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Agent or Bank by any Borrower, and neither Agent nor Bank shall have any
duty to verify the origin of any such communication or the authority of the
Person sending it. Each telephonic request for a Revolving Credit Loan, Letter
of Credit or LC Guaranty accepted by Agent and Bank, if applicable, hereunder
shall be promptly followed by a written confirmation of such request from
Borrower Representative to Agent and Bank, if applicable.

 

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3.1.7 LIBOR Rate Loan Request. By delivering a borrowing request to Agent on or
before 10:00 a.m., New York time, on a Business Day, Borrower Representative, on
its own behalf and on behalf of each other Borrower, may from time to time
irrevocably request, on not less than two nor more than five Business Days’
notice, that a LIBOR Rate Loan be made in a minimum amount of $500,000 and
integral multiples of $100,000, with an Interest Period of one, two and three
months. On the terms and subject to the conditions of this agreement, each LIBOR
Rate Loan shall be made available to Borrowers no later than 12:00 p.m. New York
time on the first day of the applicable Interest Period by deposit to the
account of the Borrower as shall have been specified in its borrowing request.
In no event shall Borrowers be permitted to have outstanding at any one time
LIBOR Rate Loans with more than four (4) different Interest Periods.
3.1.8 Continuation and Conversion Elections. By delivering a
continuation/conversion notice to the Bank on or before 10:00 a.m., New York
time, on a Business Day, Borrowers’ Representative, on its own behalf and on
behalf of each other Borrower, may from time to time irrevocably elect, on not
less than two nor more than five Business Days’ notice, that all, or any portion
in an aggregate minimum amount of $500,000 and integral multiples of $100,000,
of any LIBOR Rate Loan be converted on the last day of an Interest Period into a
LIBOR Rate Loan with a different Interest Period, or continued on the last day
of an Interest Period as a LIBOR Rate Loan with a similar Interest Period,
provided, however, that no portion of the outstanding principal amount of any
LIBOR Rate Loans may be converted to, or continued as, LIBOR Rate Loans when any
Default or Event of Default has occurred and is continuing, and no portion of
the outstanding principal amount of any LIBOR Rate Loans may be converted to
LIBOR Rate Loans of a different duration if such LIBOR Rate Loans relate to any
Hedging Obligations. If any Default or Event of Default has occurred and is
continuing (if Agent or Majority Lenders does not otherwise elect to exercise
any right to accelerate the Loans it is granted hereunder), or in the absence of
delivery of a continuation/conversion notice with respect to any LIBOR Rate Loan
at least two Business Days before the last day of the then current Interest
Period with respect thereto, each maturing LIBOR Rate Loan shall automatically
be continued as a Prime Rate Loan.
3.1.9 Voluntary Prepayment of LIBOR Rate Loans. LIBOR Rate Loans may be prepaid
upon the terms and conditions set forth herein. For LIBOR Rate Loans in
connection with which Borrowers have or may incur Hedging Obligations,
additional obligations may be associated with prepayment, in accordance with the
terms and conditions of the applicable Hedging Contracts. Borrower
Representative, on its own behalf and on behalf of each other Borrower, shall
give Agent, no later than 11:00 a.m., New York City time, at least four
(4) Business Days notice of any proposed prepayment of any LIBOR Rate Loans,
specifying the

 

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proposed date of payment of such LIBOR Rate Loans, and the principal amount to
be paid. Each partial prepayment of the principal amount of LIBOR Rate Loans
shall be in an integral multiple of $500,000 and integral multiples of $100,000
and accompanied by the payment of all charges outstanding on such LIBOR Rate
Loans and of all accrued interest on the principal repaid to the date of
payment. Borrowers acknowledge that prepayment or acceleration of a LIBOR Rate
Loan during an Interest Period shall result in Lenders incurring additional
costs, expenses and/or liabilities and that it is extremely difficult and
impractical to ascertain the extent of such costs, expenses and/or liabilities.
Therefore, all full or partial prepayments of LIBOR Rate Loans shall be
accompanied by, and Borrowers hereby promise to pay, on each date a LIBOR Rate
Loan is prepaid or the date all sums payable hereunder become due and payable,
by acceleration or otherwise, in addition to all other sums then owing, an
amount (“LIBOR Rate Loan Prepayment Fee”) determined by Agent pursuant to the
following formula:
(a) the then current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the end of the Interest Period as to which prepayment is made,
subtracted from
(b) the LIBOR Lending Rate plus the Applicable Margin applicable to the LIBOR
Rate Loan being prepaid.
If the result of this calculation is zero or a negative number, then there shall
be no LIBOR Rate Loan Prepayment Fee. If the result of this calculation is a
positive number, then the resulting percentage shall be multiplied by:
(c) the amount of the LIBOR Rate Loan being prepaid.
The resulting amount shall be divided by:
(d) 360
and multiplied by:
(e) the number of days remaining in the Interest Period as to which the
prepayment is being made.
Said amount shall be reduced to present value calculated by using the referenced
United States Treasury securities rate and the number of days remaining on the
Interest Period for the LIBOR Rate Loan being prepaid.
The resulting amount of these calculations shall be the LIBOR Rate Loan
Prepayment Fee.
3.1.10 Inability to Make LIBOR Rate Loans. Notwithstanding any other provision
hereof, if any applicable law, treaty, regulation or directive, or any change
therein or in the interpretation or application thereof, shall make it unlawful
for any Lender (for purposes of this subsection 3.1.10, the term “Lender” shall
include the office or branch where such Lender or any corporation or bank then
controlling such Lender makes or maintains any LIBOR Rate Loans) to make or
maintain its LIBOR Rate Loans, or if with respect to any Interest Period, Agent
is unable to determine the LIBOR relating thereto, or adverse or unusual
conditions in, or changes in applicable law relating to, the London interbank
market make it, in the reasonable judgment of Agent, impracticable to fund
therein any of the LIBOR Rate Loans, or make the projected LIBOR unreflective of
the actual costs of funds therefor to any Lender, the obligation of Agent and
Lenders to make or continue LIBOR Rate Loans or convert Prime Rate Loans to
LIBOR Rate Loans hereunder shall forthwith be suspended during the pendency of
such circumstances and Borrowers shall, if any affected LIBOR Rate Loans are
then outstanding, promptly upon request from Agent, convert such affected LIBOR
Rate Loans into Prime Rate Loans.

 

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3.2 Payments. Except where evidenced by notes or other instruments issued or
made by Borrowers to any Lender and accepted by such Lender specifically
containing payment instructions that are in conflict with this Section 3.2 (in
which case the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal; Revolving Credit Loans. Principal on account of Revolving
Credit Loans shall be payable by Borrowers to Agent for the ratable benefit of
Lenders immediately upon the earliest of (i) the receipt by Agent or any
Borrower of any proceeds of any of the Collateral (except as otherwise provided
herein), including without limitation pursuant to subsections 3.3 and 6.2.4, to
the extent of said proceeds, subject to Borrowers’ rights to reborrow such
amounts in compliance with subsection 1.1.1 hereof; (ii) the occurrence of an
Event of Default in consequence of which Agent or Majority Lenders elect to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to Section 4 hereof; provided, however, that, if an
Overadvance shall exist at any time, Borrowers shall, on demand, repay the
Overadvance. Each payment (including principal prepayment) by Borrowers on
account of principal of the Revolving Credit Loans shall be applied first to
Prime Rate Revolving Loans and then to LIBOR Rate Revolving Loans.
3.2.2 Interest Provisions. Interest on the outstanding principal amount of any
Loan shall be payable on the applicable Interest Payment Date.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable pursuant to this
Agreement shall be payable by Borrowers to Agent, as and when provided in
Section 2 or Section 3 hereof, as applicable to Agent or a Lender, as
applicable, or to any other Person designated by Agent or such Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the payment of
money, if any, shall be payable by Borrowers to Agent for distribution to
Lenders, as appropriate, as and when provided in this Agreement, the Other
Agreements or the Security Documents, or on demand, whichever is later.
3.2.5 LIBOR Rate Loans. If the application of any payment made in accordance
with the provisions of this Section 3.3 at a time when no Event of Default has
occurred and is continuing would result in termination of a LIBOR Rate Loan
prior to the last day of the Interest Period for such LIBOR Rate Loan, the
amount of such prepayment shall not be applied to such LIBOR Rate Loan, but
will, at Borrowers’ option, be held by Agent in a non-interest bearing account
at Bank, which account is in the name of Agent and from which account only Agent
can make any withdrawal, in each case to be applied as such amount would
otherwise have been applied under this Section 3.3 at the earlier to occur of
(i) the last day of the relevant Interest Period or (ii) the occurrence of a
Default or an Event of Default.

 

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3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except
as provided in subsections 6.4.2 and 8.2.9, if any Borrower or any of its
Subsidiaries sells any of the Collateral or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrowers shall, unless otherwise agreed by
Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when
received by any Borrower or such Subsidiary and as a mandatory prepayment of the
Loans, as herein provided, a sum equal to the proceeds (including insurance
payments but net of costs and taxes incurred in connection with such sale or
event) received by Borrowers or such Subsidiary from such sale, loss,
destruction or condemnation. The applicable prepayment shall be applied to
reduce the outstanding principal balance of the Revolving Credit Loans, but
shall not permanently reduce the Revolving Loan Commitments.
3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If any
Borrower issues any additional Indebtedness (other than Indebtedness permitted
pursuant to subsection 8.2.3) or obtains any additional equity in a manner
permitted under this Agreement, Borrowers shall pay to Agent for the ratable
benefit of Lenders, when and as received by such Borrower and as a mandatory
prepayment of the Obligations, a sum equal to one hundred percent (100%) of the
net proceeds to such Borrower of the issuance of such Indebtedness or equity.
Any such prepayment shall be applied to the Loans in the manner specified in the
second sentence of subsection 3.3.1 until payment thereof in full.
3.4 Application of Payments and Collections.
3.4.1 Collections. All items of payment received by Agent by 12:00 noon, New
York, New York, time, on any Business Day shall be deemed received on that
Business Day. All items of payment received after 12:00 noon, New York, New
York, time, on any Business Day shall be deemed received on the following
Business Day. If as the result of collections of Accounts as authorized by
subsection 6.2.4 hereof or otherwise, a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrowers,
but shall be disbursed to Borrowers or otherwise at Borrower Representative’s
direction in the manner set forth in subsection 3.1.2, upon Borrower
Representative’s request at any time, so long as no Default or Event of Default
then exists. Agent may at its option, offset such credit balance against any of
the Obligations upon and during the continuance of an Event of Default.
3.4.2 Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among Lenders (according to the
unpaid principal balance of the Loans to which such payments relate held by each
Lender). All payments shall be remitted to Agent and all such payments not
relating to principal or interest of specific Loans, or not constituting payment
of specific fees, and all proceeds of Accounts, or, except as provided in
subsection 3.3.1, other Collateral received by Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees,
indemnities, or expense reimbursements (other than amounts related to Product
Obligations) then due to Agent or Lenders from Borrowers; second, to pay
interest due from

 

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Borrowers in respect of all Loans, including Agent Loans; third, to pay or
prepay principal of Agent Loans; fourth, to pay or prepay principal of the
Revolving Credit Loans (other than Agent Loans) and unpaid reimbursement
obligations in respect of Letters of Credit; fifth, to pay an amount to Agent
equal to all outstanding Letter of Credit Obligations to be held as cash
Collateral for such Obligations; sixth, to the payment of any other Obligation
(other than amounts related to Product Obligations) due to Agent or any Lender
by Borrowers; and seventh, to pay any fees, indemnities or expense
reimbursements related to Product Obligations. After the occurrence and during
the continuance of an Event of Default, Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Agent or its agent against the
Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent or any Lender upon any of its books and records.
3.5 All Loans to Constitute One Obligation. The Loans and LC Guarantees shall
constitute one general Obligation of Borrowers, and shall be secured by Agent’s
Lien upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to a loan account (the
“Loan Account”) and shall also record in the Loan Account all payments made by
Borrowers on any Obligations and all proceeds of Collateral which are finally
paid to Agent, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers. Agent shall provide Borrowers with
reasonable access to such Loan Account for Borrowers’ review.
3.7 Statements of Account. Agent will account to Borrower Representative monthly
with a statement of Loans, charges and payments made pursuant to this Agreement
during the immediately preceding month, and such account rendered by Agent shall
be deemed final, binding and conclusive upon Borrowers absent demonstrable error
unless Agent is notified by Borrowers in writing to the contrary within 45 days
of the date each accounting is received by Borrowers. Such notice shall only be
deemed an objection to those items specifically objected to therein.
3.8 Increased Costs.
(a) If on or after the date hereof the adoption of any applicable law, rule or
regulation or guideline (whether or not having the force of law), or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(x) shall subject the Bank to any tax, duty or other charge with respect to its
LIBOR Rate Loans or its obligation to make LIBOR Rate Loans, or shall change the
basis of taxation of payments to the Bank of the principal of or interest on its
LIBOR Rate Loans or any other amounts due under this agreement in respect of its
LIBOR Rate Loans or its obligation to make LIBOR Rate Loans (except for the
introduction of, or change in the rate of, tax on the overall net income of the
Bank or franchise taxes, imposed by the jurisdiction (or any political
subdivision or taxing authority thereof) under the laws of which the Bank is
organized or in which the Bank’s principal executive office is located); or

 

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(y) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System of the United States)
against assets of, deposits with or for the account of, or credit extended by,
Agent or any Lender or shall impose on Agent or any Lender or on the London
interbank market any other condition affecting its LIBOR Rate Loans or its
obligation to make LIBOR Rate Loans;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making or maintaining any LIBOR Rate Loan, or to reduce the amount of
any sum received or receivable by Agent or any Lender under this Agreement with
respect thereto, by an amount deemed by Agent or any Lender to be material,
then, within 15 days after Borrower Representative’s receipt of a certificate
from Agent or such Lender setting forth in reasonable detail a calculation of
such amount(s), Borrowers shall pay to Agent, for its own account or the account
of the applicable Lender, such additional amount or amounts as will compensate
Agent or such Lender for such increased cost or reduction; provided that
Borrowers shall not be required to compensate Agent or any Lender for any such
amount incurred more than 180 days prior to the delivery of such certificate.
(b) If any Lender gives a notice under Section 3.8, then such Lender shall use
reasonable efforts to designate a different lending office or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(a) would eliminate the need for such notice or reduce amounts payable in the
future, as applicable; and (b) in each case, would not subject such Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. Borrowers agree to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment.
3.9 Basis for Determining Interest Rate Inadequate. In the event that Agent or
any Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR for any Interest
Period; or
(ii) Dollar deposits in the relevant amount and for the relevant maturity are
not available in the London interbank market with respect to a proposed LIBOR
Rate Loan, or a proposed conversion of a Prime Rate Loan into a LIBOR Rate Loan;
then

 

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Agent or such Lender shall give Borrowers prompt written, telephonic or
electronic notice of the determination of such effect. If such notice is given,
(i) any such requested LIBOR Rate Loan shall be made as a Prime Rate Loan,
unless Borrower Representative, on its own behalf and on behalf of all other
Borrowers, shall notify Agent no later than 10:00 a.m. (Chicago, Illinois time)
three (3) Business Days’ prior to the date of such proposed borrowing that the
request for such borrowing shall be canceled or made as an unaffected type of
LIBOR Rate Loan, and (ii) any Prime Rate Loan which was to have been converted
to an affected type of LIBOR Rate Loan shall be continued as or converted into a
Prime Rate Loan, or, if Borrowers shall notify Agent, no later than 10:00 a.m.
(Chicago, Illinois time) three (3) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of LIBOR Rate Loan.
3.10 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of any Loan made by it in excess of its ratable share of
payments on account of Loans made by all Lenders, such Lender shall forthwith
purchase from each other Lender such participation in such Loan as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each other Lender; provided, that, if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lenders the purchase price to the extent of such recovery, together with an
amount equal to such Lender’s ratable share (according to the proportion of
(i) the amount of such Lender’s required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.10 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrowers in the amount of such participation. Notwithstanding
anything to the contrary contained herein, all purchases and repayments to be
made under this Section 3.10 shall be made through Agent and recorded in the
Loan Account.
3.11 Replacement of Lenders. Within thirty (30) days after (i) receipt by Agent
of notice and demand from any Lender for payment of additional costs as provided
in Section 3.8, (ii) any Lender is a Defaulted Lender, and the circumstances
causing such status shall not have been cured or waived, or (iii) any failure by
any Lender to consent to a requested amendment, waiver or modification to any
Loan Document in which Majority Lenders have already consented to such
amendment, waiver or modification but the consent of each Lender, or each Lender
affected thereby, is required with respect thereto, (each relevant Lender in the
foregoing clauses (i) through (iii) being any “Affected Lender”) each of
Borrower Representative and Agent may, at its option, notify such Affected
Lender and, in the case of Borrower Representative’s election, the Agent, of
such Person’s intention to obtain, a Borrowers’ expense, a replacement Lender
(“Replacement Lender”) for such Lender, which Replacement Lender shall be
acceptable to Agent, in Agent’s Judgment, and, in the event the Replacement
Lender is to replace an Affected Lender described in the preceding clause (iii)
such Replacement Lender consents to the requested amendment, waiver or
modification making the replacement Lender an Affected Lender. In the event
Borrower or Agent, as applicable, obtains a Replacement Lender within ninety
(90) days following notice of its intention to do so, the Affected Lender shall
sell, at par, and assign all of its Loans and funding commitments hereunder to
such Replacement Lender in accordance with the procedures set forth in
Section 12.5; provided, that (A) Borrowers shall have, as applicable, reimbursed
such Lender for its increased costs and additional payments for which it is
entitled to reimbursement under any of Section 3.8, of this Agreement through
the date of such sale and assignment and (B) Borrowers shall pay to
Administrative Agent

 

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the $3,500 processing fee in respect of such assignment. In the event that a
replaced Lender does not execute an Assignment Agreement pursuant to
Section 12.5 within five (5) Business Days after receipt by such replaced Lender
of notice of replacement pursuant to this Section 3.11 and presentation to such
replaced Lender of an Assignment Agreement evidencing an assignment pursuant to
this Section 3.11, such replaced Lender shall be deemed to have consented to the
terms of such Assignment Agreement, and any such Assignment Agreement executed
by Agent, the Replacement Lender and, to the extent required pursuant to
Section 12.5, Borrowers, shall be effective for purposes of this Section 3.11
and Section 12.5. Upon any such assignment and payment, such replaced Lender
shall no longer constitute a “Lender” for purposes hereof, other than with
respect to such rights and obligations that survive termination as set forth in
Section 12.2.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to the right of Lenders to cease making Loans to
Borrowers during the continuance of any Default or Event of Default, this
Agreement shall be in effect for a period of two (2) years from the date hereof,
through and including November 6, 2009 (the “Term”), unless terminated as
provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lenders. Agent may, and at the direction of Majority
Lenders shall, terminate this Agreement without notice upon or after the
occurrence and during the continuance of an Event of Default. Further, Agent
may, and at the direction of Majority Lenders shall, terminate this Agreement,
upon two (2) Business Days’ notice to Borrower Representative, if Borrowers have
not obtained a firm commitment to Refinance the Convertible Debentures, the
terms and conditions of which commitment and Refinancing are acceptable to Agent
in Agent’s Judgment, on or prior to August 15, 2008.
4.2.2 Termination by Borrowers. Upon at least 30 days prior written notice to
Agent and Lenders, Borrowers may, at their option, terminate this Agreement;
provided, however, that no such termination shall be effective until Borrowers
have paid or collateralized to Agent’s reasonable satisfaction all of the
Obligations (other than contingent Obligations (including contingent indemnity
claims)) in immediately available funds, all Letters of Credit and LC Guaranties
have expired, terminated or have been cash collateralized to Agent’s reasonable
satisfaction and Borrowers have complied with subsection 3.1.9. Except as
otherwise provided in subsection 3.1.9, any such termination shall be without
prepayment penalty or termination charge to Borrowers. Any notice of termination
given by Borrowers shall be irrevocable unless all Lenders otherwise agree in
writing and no Lender shall have any obligation to make any Loans or issue or
procure any Letters of Credit or LC Guaranties on or after the termination date
stated in such notice. Borrowers may elect to terminate this Agreement in its
entirety only. No section of this Agreement or type of Loan available hereunder
may be terminated singly.

 

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4.2.3 Effect of Termination. All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement. All undertakings, agreements, covenants, warranties and
representations of Borrowers contained in the Loan Documents shall survive any
such termination and Agent shall retain its Liens in the Collateral and Agent
and each Lender shall retain all of its rights and remedies under the Loan
Documents notwithstanding such termination until all Obligations (other than
contingent Obligations) including contingent indemnity claims)) have been
discharged or paid, in full, in immediately available funds, including, without
limitation, all Obligations under Section 2.6 and subsection 3.2.5 resulting
from such termination. Notwithstanding the foregoing or the payment in full of
the Obligations, Agent shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Agent may incur as a
result of dishonored checks or other items of payment received by Agent from any
Borrower or any Account Debtor and applied to the Obligations, Agent shall, at
its option, (i) have received a written agreement reasonably satisfactory to
Agent, executed by any Borrower and by any Person whose loans or other advances
to Borrowers are used in whole or in part to satisfy the Obligations,
indemnifying Agent and each Lender from any such loss or damage or (ii) have
retained cash Collateral or other Collateral for such period of time as Agent,
in its reasonable discretion, may deem necessary to protect Agent and each
Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, each Borrower hereby
grants to Agent for the benefit of itself and each Lender a continuing Lien upon
all of such Borrower’s assets, including all of the following Property and
interests in Property of such Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect thereto,
including, any and all licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;

 

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(xi) General Intangibles, including Payment Intangibles and Software;
(xii) Goods (including all of its Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements, substitutions and replacements
thereto and therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all other personal property
of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that, to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest therein, Agent will not enforce
its security interest in such Borrower’s rights under such lease or license
(other than in respect of the Proceeds thereof) for so long as such prohibition
continues, it being understood that upon request of Agent, such Borrower will in
good faith use reasonable efforts to obtain consent for the creation of a
security interest in favor of Agent (and to Agent’s enforcement of such security
interest) in Agent’s rights under such lease or license.
5.2 Other Collateral.
5.2.1 Commercial Tort Claims. Borrowers shall promptly notify Agent in writing
upon any Borrower incurring or otherwise obtaining a Commercial Tort Claim
(having a value reasonably expected to be in excess of $50,000 ($1,000 if an
Event of Default has occurred and is continuing)) after the Closing Date against
any third party and, upon request of Agent, promptly enter into an amendment to
this Agreement and do such other acts or things deemed appropriate by Agent to
give Agent a security interest in any such Commercial Tort Claim. Borrowers
represent and warrant that as of the date of this Agreement, to their knowledge,
no Borrower possesses any Commercial Tort Claims.

 

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5.2.2 Other Collateral. Borrowers shall promptly notify Agent in writing upon
acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Deposit Accounts, Investment Property, Letter-of-Credit Rights or Electronic
Chattel Paper and, upon the request of Agent, promptly execute such other
documents, and do such other acts or things deemed appropriate by Agent to
deliver to Agent control with respect to such Collateral; promptly notify Agent
in writing upon acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Documents or Instruments and, upon the request of Agent,
will promptly execute such other documents, and do such other acts or things
deemed appropriate by Agent to deliver to Agent possession of such Documents
which are negotiable and Instruments, and, with respect to nonnegotiable
Documents, to have such nonnegotiable Documents issued in the name of Agent; and
with respect to Collateral in the possession of a third party, other than
Certificated Securities and Goods covered by a Document, obtain an
acknowledgement from the third party that it is holding the Collateral for the
benefit of Agent.
5.3 Lien Perfection; Further Assurances. Borrowers shall deliver such UCC-1
financing statements as are required by the UCC and shall execute and deliver
such other instruments, assignments or documents as are necessary to perfect
Agent’s Lien upon any of the Collateral and shall take such other action as may
be reasonably required to perfect or to continue the perfection of Agent’s Lien
upon the Collateral. Unless prohibited by applicable law, each Borrower hereby
authorizes Agent to file any such financing statement, including, without
limitation, financing statements that indicate the Collateral (i) as all assets
of such Borrower or words of similar effect, or (ii) as being of an equal or
lesser scope, or with greater or lesser detail, than as set forth in
Section 5.1, on such Borrower’s behalf. Each Borrower also hereby ratifies its
authorization for Agent to have filed in any jurisdiction any like financing
statements or amendments thereto if filed prior to the date hereof. The parties
agree that a carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Agent’s request, each Borrower shall also promptly
execute or cause to be executed and shall deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent, to give effect
to or carry out the terms or intent of the Loan Documents.
5.4 Lien on Realty. If any Borrower shall acquire at any time or times hereafter
any fee simple interest in other real Property (other than leasehold interests
in sales offices or warehouses), such Borrower agrees promptly to execute and
deliver to Agent, for its benefit and the ratable benefit of Lenders, as
additional security and Collateral for the Obligations, deeds of trust, security
deeds, mortgages or other collateral assignments reasonably satisfactory in form
and substance to Agent and its counsel (herein collectively referred to as “New
Mortgages”) covering such real Property. Each New Mortgage shall be duly
recorded (at Borrowers’ expense) in each office where such recording is required
to constitute a valid Lien on the real Property covered thereby. In respect to
any New Mortgage, Borrowers shall deliver to Agent, at Borrowers’ expense,
mortgagee title insurance policies issued by a title insurance company
reasonably satisfactory to Agent, which policies shall be in form and substance
reasonably satisfactory to Agent and shall insure a valid Lien in favor of Agent
for the benefit of itself and each Lender on the Property covered thereby,
subject only to Permitted Liens and those other exceptions reasonably acceptable
to Agent and its counsel. Borrowers shall also deliver to Agent such other usual
and customary documents, including, without limitation, ALTA Surveys of the real
Property described in any New Mortgage, as Agent and its counsel may reasonably
request relating to the real Property subject to the New Mortgages.

 

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SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than Inventory in transit,
motor vehicles and Collateral being repaired at third party locations, will at
all times be kept by Borrowers and their Subsidiaries at one or more of the
business locations set forth in Exhibit 6.1.1 hereto, as updated by Borrowers
providing prior written notice to Agent of any new location.
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for insurance
upon all Collateral wherever located and with respect to the business of
Borrowers and each of their Subsidiaries, covering casualty, hazard, public
liability, workers’ compensation and such other risks in such amounts and with
such insurance companies as are reasonably satisfactory to Agent. Borrowers
shall deliver certificates of insurance with respect to such policies to Agent
as promptly as practicable, with satisfactory lender’s loss payable
endorsements, naming Agent as a loss payee, assignee or additional insured, as
appropriate, as its interest may appear, and showing only such other loss
payees, assignees and additional insureds as are reasonably satisfactory to
Agent. Each policy of insurance or endorsement shall contain a clause requiring
the insurer to give not less than 10 days’ prior written notice to Agent in the
event of cancellation of the policy for nonpayment of premium and not less than
30 days’ prior written notice to Agent in the event of cancellation of the
policy for any other reason whatsoever and a clause specifying that the interest
of Agent shall not be impaired or invalidated by any act or neglect of any
Borrower, any of its Subsidiaries or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. Borrowers agree to deliver to Agent, promptly as rendered, true
copies of all reports made in any reporting forms to insurance companies. All
proceeds of business interruption insurance (if any) of Borrowers and their
Subsidiaries shall be remitted to Agent for application to the outstanding
balance of the Revolving Credit Loans.
Unless Borrowers provide Agent with evidence of the insurance coverage required
by this Agreement, Agent may purchase insurance at Borrowers’ expense to protect
Agent’s interests in the Properties of Borrowers and their Subsidiaries. This
insurance may, but need not, protect the interests of Borrowers and their
Subsidiaries. The coverage that Agent purchases may not pay any claim that any
Borrowers or any Subsidiary makes or any claim that is made against any Borrower
or any such Subsidiary in connection with said Property. Borrowers may later
cancel any insurance purchased by Agent, but only after providing Agent with
evidence that Borrowers and their Subsidiaries have obtained insurance as
required by this Agreement. If Agent purchases insurance, Borrowers will be
responsible for the costs of that insurance, including interest and any other
charges Agent may impose in connection with the placement of insurance, until
the effective date of the cancellation or expiration of the insurance. The costs
of the insurance may be added to the Obligations. The costs of the insurance may
be more than the cost of insurance that Borrowers and their Subsidiaries may be
able to obtain on their own.

 

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6.1.3 Protection of Collateral. Neither Agent nor any Lender shall be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Agent’s or any Lender’s actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency or other person whomsoever, but the same shall be at
Borrowers’ sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrowers shall keep
accurate and complete records of their Accounts and Dining Credits all payments
and collections thereon and shall submit to Agent on such periodic basis as
Agent shall request a sales and collections report for the preceding period, in
form consistent with the reports currently prepared by Borrowers with respect to
such information. Concurrently with the delivery of each Borrowing Base
Certificate described in subsection 8.1.4, or quarterly if a Trigger Period has
not occurred and is continuing, or more frequently as requested by Agent in
Agent’s Judgment, from and after the date hereof, Borrowers shall deliver to
Agent a detailed aged trial balance of all of its Accounts, Dining Credits and
RCR Loans, specifying the names, addresses, face values, dates of invoices and
due dates for each Account Debtor obligated on an Account, a Dining Credit or an
RCR Loan so listed (“Schedule of Accounts”), and upon Agent’s request therefor,
copies of proof of delivery and the original copy of all documents, including,
without limitation, repayment histories and present status reports relating to
the Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Agent shall reasonably request. If requested
by Agent in Agent’s Judgment, Borrowers shall execute and deliver to Agent
formal written assignments of all of its Accounts weekly or daily, which shall
include all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto.
6.2.2 Discounts, Allowances, Disputes. If any Borrower grants any discounts,
allowances or credits with respect to any Account, Dining Credit or RCR Loan,
Borrowers shall reflect such discounts, allowances or credits, as the case may
be, to Agent as part of the next required Schedule of Accounts.
6.2.3 Account Verification. Any of Agent’s officers, employees or agents shall
have the right, at any time or times hereafter, in the name of Agent, any
designee of Agent or any Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, electronic communication or
otherwise. Borrowers shall cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process. Unless an Event of Default
has occurred and is continuing, any such verifications shall be conducted in the
name of Borrower Representative or a third party.

 

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6.2.4 Maintenance of Dominion Account. Commencing with the date which is the
earlier of 120 days after the Closing Date or the date on which Borrowers
request a Revolving Credit Loan or the issuance of a Letter of Credit, Borrowers
shall maintain Dominion Accounts at Bank (or such other lockbox servicer
reasonably acceptable to Agent) pursuant to lockbox or other arrangements
reasonably acceptable to Agent. Borrowers shall enter into an agreement (in form
and substance satisfactory to Agent) from Bank, establishing Agent’s control
over and Lien in the lockbox or Dominion Account, which may be exercised by
Agent during any Trigger Period, requiring immediate deposit of all remittances
received in the lockbox to a Dominion Account, and waiving offset rights of
Bank, except for customary administrative charges. If a Dominion Account is not
maintained with Bank, Agent may, during any Trigger Period, require immediate
transfer of all funds in such account to a Dominion Account maintained with
Bank. Neither Agent nor Lenders assume any responsibility to Borrowers for any
lockbox arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to any Payment Items accepted by any bank.
6.2.5 Collection of Accounts, Proceeds of Collateral. Each Borrower agrees that
all invoices rendered and other requests made by any Borrower for payment in
respect of Accounts shall contain a written statement directing payment in
respect of such Accounts to be paid to a lockbox established pursuant to
subsection 6.2.4. To expedite collection, each Borrower shall endeavor in the
first instance to make collection of its Accounts for Agent. All remittances
received by any Borrower on account of Accounts, together with the proceeds of
any other Collateral, shall be held as Agent’s property, for its benefit and the
benefit of Lenders, by such Borrower as trustee of an express trust for Agent’s
benefit and such Borrower shall immediately deposit same in kind in the Dominion
Account. Agent retains the right at all times after the occurrence and during
the continuance of a Default or an Event of Default to notify Account Debtors
that Borrowers’ Accounts have been assigned to Agent and to collect Borrowers’
Accounts directly in its own name, or in the name of Agent’s agent, and to
charge the collection costs and expenses, including attorneys’ fees, to
Borrowers.
6.2.6 Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority, Agent is authorized, in its sole discretion, to
pay the amount thereof to the proper taxing authority for the account of
Borrowers and to charge Borrowers therefor, except for taxes that (i) are being
actively contested in good faith and by appropriate proceedings and with respect
to which Borrowers maintain reasonable reserves on its books therefor and
(ii) would not reasonably be expected to result in any Lien other than a
Permitted Lien. In no event shall Agent or any Lender be liable for any taxes to
any governmental taxing authority that may be due by any Borrower.
6.3 Intentionally Omitted.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrowers shall keep records of their
Equipment which shall be complete and accurate in all material respects
itemizing and describing the kind, type, quality, quantity and book value of its
Equipment and all dispositions made in accordance with subsection 6.4.2 hereof,
and upon request by Agent, Borrowers shall, and shall cause each of their
Subsidiaries to, furnish Agent with a current schedule containing the foregoing
information on at least an annual basis and more often if reasonably requested
by Agent. Promptly after the request therefor by Agent, Borrowers shall deliver
to Agent any and all evidence of ownership, if any, of any of their Equipment.

 

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6.4.2 Dispositions of Equipment. Borrowers shall not, and shall not permit any
of their Subsidiaries to, sell, lease or otherwise dispose of or transfer any of
their respective Equipment or other fixed assets or any part thereof without the
prior written consent of Agent; provided, however, that the foregoing
restriction shall not apply, for so long as no Default or Event of Default
exists and is continuing, to (i) dispositions of Equipment and other fixed
assets which, in the aggregate during any consecutive twelve-month period, have
a fair market value or a book value, whichever is more, of $500,000 or less,
provided that all proceeds thereof are remitted to Agent for application to the
Loans as provided in subsection 3.3.1, or (ii) replacements of Equipment or
other fixed assets that are substantially worn, damaged or obsolete with
Equipment or other fixed assets of like kind, function and value which are
useful in the business of any Borrower or one of its Subsidiaries, provided that
the replacement Equipment or other fixed assets shall be acquired within 90 days
after any disposition of the Equipment or other fixed assets that are to be
replaced and the replacement Equipment or other fixed assets shall be free and
clear of Liens other than Permitted Liens that are not Purchase Money Liens.
6.5 Payment of Charges. All amounts chargeable to Borrowers under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Prime Rate Revolving Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and each Lender to
enter into this Agreement and to make advances hereunder, Borrowers warrant,
represent and covenant to Agent and each Lender, on a joint and several basis,
that:
7.1.1 Qualification. Each Borrower and each of its Subsidiaries is a
corporation, limited partnership or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. Each Borrower and each of its Subsidiaries is
duly qualified and is authorized to do business and is in good standing as a
foreign limited liability company, limited partnership or corporation, as
applicable, in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in
all other states and jurisdictions in which the failure of any Borrower or any
of its Subsidiaries to be so qualified could reasonably be expected to have a
Material Adverse Effect.
7.1.2 Power and Authority. Each Borrower and each of its Subsidiaries is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary corporate or other relevant
action and do not and will not: (i) require any consent or approval of the
partners, shareholders or members of any Borrower or any of the shareholders,
partners or members, as the case may be, of any Subsidiary of any Borrower;
(ii) contravene any Borrower’s or any of its Subsidiaries’ charter, articles or
certificate of incorporation, partnership agreement, certificate of formation,

 

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by-laws, limited liability agreement, operating agreement or other
organizational documents (as the case may be); (iii) violate, or cause any
Borrower or any of its Subsidiaries to be in default under, any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award in effect having applicability to such Borrower or any of its
Subsidiaries, the violation of which could reasonably be expected to have a
Material Adverse Effect; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower or any of its Subsidiaries is a party or by
which it or its Properties may be bound or affected, the breach of or default
under which could reasonably be expected to have a Material Adverse Effect; or
(v) result in, or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Properties now owned or
hereafter acquired by any Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the other
Loan Documents when delivered under this Agreement will be, a legal, valid and
binding obligation of each Borrower and each of its Subsidiaries party thereto,
enforceable against it in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, or other laws affecting
creditors’ rights generally or by principles of equity.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states, as of the date hereof,
(i) the correct name of each of the Subsidiaries of each Borrower, its
jurisdiction of incorporation or organization and the percentage of its Voting
Stock owned by the applicable Borrower, (ii) the name of each Borrower’s and
each of its Subsidiaries’ corporate or joint venture relationships and the
nature of the relationship, (iii) the number, nature and holder (except with
respect to RNI) of all outstanding Securities of each Borrower and the holder of
Securities of each Subsidiary of each Borrower and (iv) the number of
authorized, issued and treasury Securities of each Borrower. Borrower has good
title to all of the Securities it purports to own of each of such Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens. All such
Securities have been duly issued and are fully paid and non-assessable. As of
the date hereof, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell any
Securities or obligations convertible into, or any powers of attorney relating
to any Securities of any Borrower (other than RNI) or any of its Subsidiaries.
Except as set forth on Exhibit 7.1.4, as of the date hereof, there are no
outstanding agreements or instruments binding upon any of any Borrower’s or any
of its Subsidiaries’ partners, members or shareholders, as the case may be,
relating to the ownership of its Securities.
7.1.5 Names; Organization. Since November 1, 2002, neither any Borrower nor any
of its Subsidiaries has been known as or has used any legal, fictitious or trade
names except those listed on Exhibit 7.1.5 hereto. Except as set forth on
Exhibit 7.1.5, neither any Borrower nor any of its Subsidiaries has been the
surviving entity of a merger or consolidation or has acquired all or
substantially all of the assets of any Person. Each of each Borrower’s and each
of its Subsidiaries’ state(s) of incorporation or organization, Type of
Organization and Organizational I.D. Number is set forth on Exhibit 7.1.5. The
exact legal name of each Borrower and each of its Subsidiaries is set forth on
Exhibit 7.1.5. Borrowers also represent and warrant that 47K Corp., a New Jersey
corporation (“Inactive Subsidiary”), is a Subsidiary of a Borrower that
Borrowers are in the process of dissolving and that Inactive Subsidiary has no
operations and has assets and liabilities of less than $10,000 each. So long as
such representation and warranty is true, Agent and Lenders agree that Inactive
Subsidiary shall not be subject to the representations, warranties, covenants or
other terms of the Agreement or other Loan Documents and Borrowers shall not be
required to pledge to Agent the capital stock of Inactive Subsidiary.

 

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7.1.6 Business Locations; Agent for Process. Each of each Borrower’s and each of
its Subsidiaries’ chief executive office, location of books and records and
other places of business are as listed on Exhibit 6.1.1 hereto, as updated from
time to time by Borrowers in accordance with the provisions of subsection 6.1.1.
During the preceding one-year period, neither any Borrower nor any of its
Subsidiaries has had an office, place of business or agent for service of
process, other than as listed on Exhibit 6.1.1. All tangible Collateral is and
will at all times be kept by Borrowers and their Subsidiaries in accordance with
subsection 6.1.1. Except as shown on Exhibit 6.1.1, as of the date hereof, no
Inventory is stored with a bailee, distributor, warehouseman or similar party,
nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each Borrower and each of its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Each Borrower
and each of its Subsidiaries has paid or discharged all lawful claims which, if
unpaid, might become a Lien against any of such Borrower’s or such Subsidiary’s
Properties that is not a Permitted Lien. The Liens granted to Agent under
Section 5 hereof are first priority Liens, subject only to Permitted Liens.
7.1.8 Accounts; Dining Credits and RCR Loans.
(a) Agent may rely, in determining which Accounts are Eligible Accounts, on all
statements and representations made by Borrowers with respect to any Account or
Accounts. With respect to each of Borrowers’ Accounts, whether or not such
Account is an Eligible Account, unless otherwise disclosed to Agent in writing
(including by not scheduling the applicable Account as an Eligible Account on a
Borrowing Base Certificate):
(i) It is genuine and in all respects what it purports to be, and it is not
evidenced by a judgment;
(ii) It arises out of a completed, bona fide rendition of services by a
Borrower, in the ordinary course of its business and in accordance with the
terms and conditions of all contracts or other documents relating thereto and
forming a part of the contract between a Borrower and the Account Debtor;
(iii) It is for a liquidated amount as stated in the applicable Dining Contract
covering such rendition of services, a copy of which has been furnished or is
available to Agent;
(iv) There are no facts, events or occurrences which in any way impair the
validity or enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the statements delivered or made available to
Agent with respect thereto;

 

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(v) To the best of Borrowers’ knowledge, the Account Debtor thereunder (1) had
the capacity to contract at the time any contract or other document giving rise
to the Account was executed and (2) at such time such Account Debtor was
Solvent; and
(vi) To the best of Borrowers’ knowledge, there are no proceedings or actions
which are threatened or pending against the Account Debtor thereunder which
might result in any material adverse change in such Account Debtor’s financial
condition or the collectibility of such Account.
(b) Agent may rely, in determining which Dining Credits are Eligible Dining
Credits, on all statements and representations made by Borrowers with respect to
any Dining Credit or Dining Credits. With respect to each of Borrowers’ Dining
Credits, whether or not such Dining Credit is an Eligible Dining Credit, unless
otherwise disclosed to Agent in writing (including by not scheduling the
applicable Dining Credit as an Eligible Dining Credit on a Borrowing Base
Certificate):
(i) It is genuine and in all respects what it purports to be, and it is not
evidenced by a judgment;
(ii) It arises out of a completed, bona fide rendition of services or advances
by a Borrower, in the ordinary course of its business and in accordance with the
terms and conditions of the applicable Dining Contract, copies of which Dining
Contract(s) have been furnished or are available to Agent;
(iii) There are no facts, events or occurrences which in any way impair the
validity or enforceability of any Dining Credits or tend to reduce the amount
payable thereunder from the amounts shown on the statements delivered or made
available to Agent with respect thereto;
(iv) To the best of Borrowers’ knowledge, the Restaurant Account Debtor
thereunder (1) had the capacity to contract at the time Dining Contract(s) was
(were) executed and (2) at such time such Dining Contract Account Debtor was
Solvent; and
(v) To the best of Borrowers’ knowledge, there are no proceedings or actions
which are threatened or pending against the Dining Contract Account Debtor
thereunder which might result in any material adverse change in such Dining
Contract Account Debtor’s financial condition or the collectibility of such
Dining Credit.

 

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(c) Agent may rely, in determining which RCR Loans are Eligible RCR Loans, on
all statements and representations made by Borrowers with respect to any RCR
Loan or RCR Loans. With respect to each of Borrowers’ RCR Loans, whether or not
such RCR Loan is an Eligible RCR Loan, unless otherwise disclosed to Agent in
writing (including by not scheduling the applicable RCR Loan as an Eligible RCR
Loan on a Borrowing Base Certificate):
(i) It is genuine and in all respects what it purports to be, and it is not
evidenced by a judgment;
(ii) It arises out of a completed, bona fide loan or advance of funds by a
Borrower, in the ordinary course of its business and in accordance with the
terms and conditions of the applicable RCR Loan Documents;
(iii) There are no facts, events or occurrences which in any way impair the
validity or enforceability of any RCR Loan or RCR Loan Document or tend to
reduce the amount payable thereunder from the amounts shown on the statements
delivered or made available to Agent with respect thereto;
(iv) To the best of Borrowers’ knowledge, the RCR Loan Account Debtor thereunder
(1) had the capacity to contract at the time any RCR Loan Document giving rise
to or evidencing the RCR Loan Account was executed and (2) at such time such RCR
Loan Account Debtor was Solvent; and
(v) To the best of Borrowers’ knowledge, there are no proceedings or actions
which are threatened or pending against the RCR Loan Account Debtor thereunder
which might result in any material adverse change in such RCR Loan Account
Debtor’s financial condition or the collectibility of such Account.
7.1.9 Equipment. The Equipment of each Borrower and its Subsidiaries is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the operating efficiency thereof shall be
maintained and preserved, reasonable wear and tear excepted. Neither any
Borrower nor any of its Subsidiaries will permit any Equipment to become affixed
to any real Property leased to any Borrower or any of its Subsidiaries so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form reasonably acceptable to
Agent, and Borrowers will not permit any of the Equipment of any Borrower or any
of its Subsidiaries to become an accession to any personal Property other than
Equipment that is subject to first priority (except for Permitted Liens) Liens
in favor of Agent.
7.1.10 Financial Statements; Fiscal Year. The Consolidated and consolidating
balance sheets of Borrowers and their Subsidiaries (including the accounts of
all Subsidiaries of Borrowers and their respective Subsidiaries for the
respective periods during which a Subsidiary relationship existed) as of
December 31, 2006, and the related statements of income, changes in
shareholder’s equity, and changes in financial position for the periods ended on
such dates, have been prepared in accordance with GAAP, and present fairly in
all material respects the financial positions of Borrowers and such Persons,
taken as a whole, at such dates and the results of Borrowers’ and such Persons’
operations, taken as a whole, for such periods. As of the date hereof, since
December 31, 2006, there has been no material adverse change in the financial
position of Borrowers and their Subsidiaries, taken as a whole, as reflected in
the Consolidated balance sheet as of such date. As of the date hereof, the
fiscal year of Borrowers and each of its Subsidiaries ends on December 31 of
each year.

 

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7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrowers to Agent or any Lender contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading, in any material respect. There is no fact
which Borrowers have failed to disclose to Agent or any Lender in writing which
could reasonably be expected to have a Material Adverse Effect.
7.1.12 Solvent Financial Condition. Each Borrower and each of its Subsidiaries,
is now and, after giving effect to the initial Loans to be made and the initial
Letters of Credit and LC Guaranties to be issued hereunder, all related
transactions will be and the reimbursement provisions of Section 12.18, Solvent.
7.1.13 Surety Obligations. Except as set forth on Exhibit 7.1.13, as of the date
hereof, neither any Borrower nor any of its Subsidiaries is obligated as surety
or indemnitor under any surety or similar bond or other contract or has issued
or entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
7.1.14 Taxes. Borrower Representative’s federal tax identification number is
84-6028875. The federal (or applicable Canadian, if any) tax identification
number of each Subsidiary of Borrower Representative is shown on Exhibit 7.1.14
hereto. Each Borrower and each of its Subsidiaries has filed all material
federal, state and local tax returns and other reports relating to taxes it is
required by law to file, and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and Properties as and when such taxes, assessments, fees, levies and
charges are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings, and each
Borrower and each of its Subsidiaries maintains reasonable reserves on its books
therefor. The provision for taxes on the books of each Borrower and its
Subsidiaries is adequate for all years not closed by applicable statutes, and
for the current fiscal year.
7.1.15 Brokers. Except as shown on Exhibit 7.1.15 hereto, there are no claims
for brokerage commissions, finder’s fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower and each of
its Subsidiaries owns, possesses or licenses or has the right to use all the
patents, trademarks, service marks, trade names, copyrights, licenses and other
Intellectual Property necessary for the present and planned future conduct of
its business without any known conflict with the rights of others, except for
such conflicts as could not reasonably be expected to have a Material Adverse
Effect. All such federally registered patents, trademarks, service marks, trade
names, copyrights, licenses and other similar rights are listed on
Exhibit 7.1.16 hereto. No claim has been asserted to any Borrower or any
Subsidiary of any Borrower which is currently pending that their use of their
Intellectual Property or the conduct of their business does or may infringe upon
the Intellectual Property rights of any third party. To the knowledge of
Borrowers and except as set forth on Exhibit 7.1.16 hereto, as of the date
hereof, no Person is engaging in any activity

 

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that infringes in any material respect upon any Borrower’s or any of its
Subsidiaries’ material Intellectual Property. Except as set forth on
Exhibit 7.1.16, each Borrower’s and each of its Subsidiaries’ material
trademarks, service marks and copyrights are registered with the U.S. Patent and
Trademark Office or in the U.S. Copyright Office, as applicable. The
consummation and performance of the transactions and actions contemplated by
this Agreement and the other Loan Documents, including, without limitation, the
exercise by Agent of any of its rights or remedies under Section 10, will not
result in the termination or impairment of any of such Borrower’s or any of its
Subsidiaries’ ownership or rights relating to its Intellectual Property, except
for such Intellectual Property rights the loss or impairment of which could not
reasonably be expected to have a Material Adverse Effect. Except as listed on
Exhibit 7.1.16 and except as could not reasonably be expected to have a Material
Adverse Effect, (i) neither any Borrower nor any of its Subsidiaries is in
breach of, or default under, any term of any license or sublicense with respect
to any of its Intellectual Property and (ii) to the knowledge of Borrowers, no
other party to such license or sublicense is in breach thereof or default
thereunder, and such license is valid and enforceable.
7.1.17 Governmental Consents. Each Borrower and each of its Subsidiaries has,
and is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it, except where the failure to possess or so maintain such rights
could not reasonably be expected to have a Material Adverse Effect.
7.1.18 Compliance with Laws. Each Borrower and each of its Subsidiaries has duly
complied, and its Properties, business operations and leaseholds are in
compliance with, the provisions of all federal, state and local laws, rules and
regulations applicable to such Borrower or such Subsidiary, as applicable, its
Properties or the conduct of its business, except for such non-compliance as
could not reasonably be expected to have a Material Adverse Effect, and there
have been no citations, notices or orders of noncompliance issued to any
Borrower or any of its Subsidiaries under any such law, rule or regulation,
except where such noncompliance could not reasonably be expected to have a
Material Adverse Effect. Each Borrower and each of its Subsidiaries has
established and maintains an adequate monitoring system to insure that it
remains in compliance in all material respects with all federal, state and local
rules, laws and regulations applicable to it.
7.1.19 Restrictions. Neither any Borrower nor any of its Subsidiaries is a party
or subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto, none of
which prohibit the execution of or compliance with this Agreement or the other
Loan Documents by any Borrower or any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto or as disclosed
in the Public Filings existing as of the Closing Date and accrued for in RNI’s
most recent financial statements, there are no actions, suits, proceedings or
investigations pending, or to the knowledge of Borrowers, threatened, against or
affecting any Borrower or any of its Subsidiaries, which, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither any Borrower nor any of its Subsidiaries is in default with respect to
any order, writ, injunction, judgment, decree or rule of any court, governmental
authority or arbitration board or tribunal, which, singly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

 

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7.1.21 No Defaults. No event has occurred and no condition exists which would,
upon or after the execution and delivery of this Agreement or any Borrower’s
performance hereunder, constitute a Default or an Event of Default. Neither any
Borrower nor any of its Subsidiaries is in default in (and no event has occurred
and no condition exists which constitutes, or which the passage of time or the
giving of notice or both would constitute, a default in) the payment of any
Indebtedness to any Person for Money Borrowed in excess of $250,000.
7.1.22 Leases. Exhibit 7.1.22 hereto is a complete listing of all capitalized
and operating personal property leases of Borrowers and their Subsidiaries and
all real property leases of Borrowers and their Subsidiaries (in each case with
annual rentals of $150,000 or more). Each Borrower and each of its Subsidiaries
is in full compliance with all of the terms of each of its respective
capitalized and operating leases, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto, neither any
Borrower nor any of its Subsidiaries has any Plan. Each Borrower and each of its
Subsidiaries is in compliance with the requirements of ERISA and the regulations
promulgated thereunder with respect to each Plan, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. No
fact or situation that could reasonably be expected to result in a material
adverse change in the financial condition of Borrowers and their Subsidiaries
exists in connection with any Plan. Neither any Borrower nor any of their
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.24 Trade Relations. There exists no actual or, to Borrowers’ knowledge,
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship between any Borrower or any of its
Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrowers and
their Subsidiaries, or with any material supplier, except in each case, where
the same could not reasonably be expected to have a Material Adverse Effect, and
there exists no present condition or state of facts or circumstances which would
prevent any Borrower or any of its Subsidiaries from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25 hereto, as of the
date hereof, neither any Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of any Borrower’s or any
of its Subsidiaries’ employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization,
except those that could not reasonably be expected to have a Material Adverse
Effect.

 

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7.1.26 Related Businesses. Borrowers are engaged in the businesses of marketing
services, business intelligence, loyalty programs and access to capital to the
restaurant industry as of the Closing Date, as well as in certain other
businesses. These operations require financing on a basis such that the credit
supplied can be made available from time to time to Borrowers, as required for
the continued successful operation of Borrowers taken as a whole. Borrowers have
requested the Lenders to make credit available hereunder primarily for the
purposes set forth in Section 1.1.3 and generally for the purposes of financing
the operations of Borrowers. Each Borrower and each Subsidiary of each Borrower
expects to derive benefit (and the Board of Directors of each Borrower and each
Subsidiary of each Borrower has determined that such Borrower or Subsidiary may
reasonably be expected to derive benefit), directly or indirectly, from a
portion of the credit extended by Lenders hereunder, both in its separate
capacity and as a member of the group of companies, since the successful
operation and condition of each Borrower and each Subsidiary of each Borrower is
dependent on the continued successful performance of the functions of the group
as a whole. Each Borrower acknowledges that, but for the agreement of each of
the other Borrowers to execute and deliver this Agreement, Agent and Lenders
would not have made available the credit facilities established hereby on the
terms set forth herein.
7.2 Continuous Nature of Representations and Warranties. During a Trigger
Period, each representation and warranty contained in this Agreement and the
other Loan Documents shall be continuous in nature and shall remain accurate,
complete and not misleading at all times during the term of this Agreement,
except for changes in the nature of any Borrower’s or one of any Borrower’s
Subsidiary’s business or operations that would render the information in any
exhibit attached hereto or to any other Loan Document either inaccurate,
incomplete or misleading, so long as Majority Lenders have consented to such
changes, such changes are expressly permitted by this Agreement or such changes
do not have or evidence a Material Adverse Effect. Borrowers shall have the
right to amend the Exhibits attached hereto from time to time so long as any
such amendment does not have or evidence a Material Adverse Effect. Without
limiting the generality of the foregoing, except as otherwise qualified by the
preceding sentence, each Loan request made or deemed made pursuant to
subsection 3.1.1 hereof shall constitute Borrowers’ reaffirmation, as of the
date of each such loan request, of each representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of any
Borrower, any Subsidiary of any Borrower, or any Guarantor in this Agreement,
any of the other Loan Documents, or any instrument, certificate or financial
statement furnished in compliance with or in reference thereto.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and each Lender and the parties thereto and the closing of the transactions
described therein or related thereto.

 

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SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the Term, and thereafter for so long as there
are any Obligations (other than contingent Obligations (including contingent
indemnity claims)) outstanding, Borrowers covenant that, unless otherwise
consented to by Majority Lenders, in writing, they shall:
8.1.1 Visits and Inspections; Lender Meeting. Permit (i) representatives of
Agent, and during the continuation of any Default or Event of Default any
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of each
Borrower and each of its Subsidiaries, inspect, audit and make extracts from its
books and records, and discuss with its officers, its employees and its
independent accountants, each Borrower’s and each of its Subsidiaries’ business,
assets, liabilities, financial condition, business prospects and results of
operations and (ii) appraisers engaged pursuant to Section 2.10 (whether or not
personnel of Agent), from time to time, as often as may be reasonably requested,
but only during normal business hours, to visit and inspect the Properties of
each Borrower and each of its Subsidiaries, for the purpose of completing
appraisals pursuant to Section 2.10. Agent, if no Default or Event of Default
then exists, shall give Borrowers reasonable prior notice of any such inspection
or audit. Without limiting the foregoing, Borrowers will participate and will
cause their key management personnel to participate in a meeting with Agent and
Lenders periodically during each year, which meeting(s) shall be held at such
times and such places as may be reasonably requested by Agent.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of any event
or the existence of any fact which renders any representation or warranty in
this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading in any material respect as of the date made or remade. In addition,
Borrowers agree to provide Agent with prompt written notice of any change in the
information disclosed in any Exhibit hereto (other than those specifically
relating to the date hereof), in each case after giving effect to the
materiality limits and Material Adverse Effect qualifications contained therein.
8.1.3 Financial Statements. Keep, and cause each of their Subsidiaries to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with customary accounting practices
reflecting all its financial transactions; and cause to be prepared and
furnished to Agent and each Lender, the following, all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrowers’ certified
public accountants concur in any change therein and such change is disclosed to
Agent and is consistent with GAAP:
(i) not later than 90 days after the close of each fiscal year of Borrower
Representative, unqualified (except for a qualification for a change in
accounting principles with which the accountant concurs) audited financial
statements of Borrower Representative and its Subsidiaries as of the end of such
year, on a Consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing selected by
Borrower Representative but reasonably acceptable to Agent and, within a
reasonable time thereafter a copy of any management letter issued in connection
therewith;
(ii) not later than 30 days after the end of each month hereafter, including the
last month of Borrower Representative’s fiscal year, unaudited interim financial
statements of Borrower Representative and its Subsidiaries as of the end of such
month and of the portion of the fiscal year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of Borrower
Representative as prepared in accordance with GAAP and fairly presenting in all
material respects the financial position and results of operations of Borrower
Representative and its Subsidiaries for such month and period subject only to
changes from audit and year-end adjustments and except that such statements need
not contain notes;

 

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(iii) together with each delivery of financial statements pursuant to
clauses (i) and (ii) of this subsection 8.1.3, a management report (1) setting
forth in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the most
recent Projections for the current fiscal year delivered pursuant to
subsection 8.1.7 and (2) identifying the reasons for any significant variations.
The information above shall be presented in reasonable detail and shall be
certified by the principal financial officer of Borrower Representative to the
effect that such information fairly presents in all material respects the
results of operation and financial condition of Borrower Representative and its
Subsidiaries as at the dates and for the periods indicated;
(iv) promptly after the sending or filing thereof, as the case may be, copies of
any proxy statements, financial statements or reports which Borrower
Representative has made available to its Securities holders and copies of any
regular, periodic and special reports or registration statements which Borrower
Representative or any of its Subsidiaries files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor or
any national securities exchange;
(v) upon request of Agent, copies of any annual report to be filed with ERISA in
connection with each Plan; and
(vi) such other data and information (financial and otherwise) as Agent or any
Lender, from time to time, may reasonably request, bearing upon or related to
the Collateral or Borrowers’ or any of their Subsidiaries’ financial condition
or results of operations.
Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Borrowers shall forward to Agent a copy of
the accountants’ letter to Borrower Representative’s management that is prepared
in connection with such financial statements. Concurrently with the delivery of
the financial statements described in paragraph (i) and (ii) of this
subsection 8.1.3, or more frequently if requested by Agent, in Agent’s Judgment,
Borrowers shall cause to be prepared and furnished to Agent a Compliance
Certificate in the form of Exhibit 8.1.3 hereto executed by the principal
financial officer of Borrower Representative (a “Compliance Certificate”).
8.1.4 Borrowing Base Certificates. On or before the 15th day of each month from
and after the date hereof, Borrowers shall deliver to Agent, in form reasonably
acceptable to Agent, a Borrowing Base Certificate as of the last day of the
immediately preceding month, with such supporting materials as Agent shall
reasonably request. If Borrowers deem it advisable, or Agent shall request, in
Agent’s Judgment, Borrowers shall execute and deliver to Agent Borrowing Base
Certificates more frequently than monthly.

 

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8.1.5 Landlord Agreements. Upon request by Agent, provide Agent with copies of
all agreements between any Borrower or any of its Subsidiaries and any landlord
which owns any premises at which any Collateral may, from time to time, be kept.
With respect to any lease (other than leases for sales offices), in any case
entered into after the Closing Date, Borrowers shall provide Agent with landlord
waivers, with respect to such premises. Such landlord waivers shall be in a form
supplied by Agent to Borrowers with such reasonable revisions as are customarily
accepted by Agent or by similar financial institutions in similar financial
transactions.
8.1.6 Guarantor Financial Statements. Deliver or cause to be delivered to Agent
financial statements, if any, for each Guarantor (to the extent not Consolidated
with the financial statements delivered to Agent under subsection 8.1.3 and to
the extent any such Guaranty Agreement exists) in form and substance
satisfactory to Agent at such intervals and covering such time periods as Agent
may request.
8.1.7 Projections. No later than the last day of each fiscal year of RNI,
deliver to Agent Projections of Borrower Representative and each of its
Subsidiaries for the forthcoming fiscal year, month by month. Agent and Lenders
understand and agree that (i) any projections furnished to the Agent or any
Lender are subject to significant uncertainties and contingencies, which are
beyond the Borrowers’ control, (ii) no assurance is given by any Borrower that
such projections will be realized, and (iii) the actual results may differ from
such projections and such differences may be material. Borrowers consent that
any such Projections delivered to Agent will, at the time of delivery to Agent,
be based on reasonable assumptions, as determined by RNI’s senior management and
shall, in light of such assumptions, be realistic and achievable.
8.1.8 Subsidiaries. Cause each domestic Subsidiary of each Borrower, whether now
or hereafter in existence, promptly upon Agent’s request therefor, to execute
and deliver to Agent a Guaranty Agreement and a security agreement pursuant to
which such domestic Subsidiary guaranties the payment of all Obligations and
grants to Agent a first priority Lien (subject only to Permitted Liens) on all
of its Properties of the types described in Section 5.1. Additionally, the
applicable Borrower shall execute and deliver to Agent a pledge agreement
pursuant to which such Borrower grants to Agent a first priority Lien (subject
only to Permitted Liens) with respect to all of the issued and outstanding
Securities of each domestic Subsidiary and 66% of the issued and outstanding
Securities of each foreign Subsidiary.
8.1.9 Deposit and Brokerage Accounts. For each deposit account or brokerage
account that any Borrower at any time opens or maintains, Borrowers shall, at
Agent’s request and option, pursuant to an agreement in form and substance
reasonably satisfactory to Agent, cause the depository bank or securities
intermediary, as applicable, to agree to comply at any time with instructions
from Agent to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of Borrowers.
8.1.10 Cash Management Services. Commencing with the date that is 120 days after
the Closing Date, Borrowers shall maintain its lockbox deposit and disbursement
accounts with Bank and shall utilize Bank for its other cash management and/or
treasury services.

 

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8.2 Negative Covenants. During the Term, and thereafter for so long as there are
any Obligations (often than contingent obligations (including contingent
indemnity claims)) outstanding, Borrowers covenant that, unless otherwise
consented to by Majority Lenders, in writing, they shall not:
8.2.1 Mergers; Consolidations; Acquisitions; Structural Changes. Merge or
consolidate, or permit any Subsidiary of any Borrower to merge or consolidate,
with any Person; nor, except upon thirty (30) days’ notice to Agent, change its
or any of its Subsidiaries’ state of incorporation or organization, Type of
Organization or Organizational I.D. Number; nor except upon thirty days’ notice
to Agent change its or any of its Subsidiaries’ legal name; nor acquire, nor
permit any of its Subsidiaries to acquire, all or any substantial part of the
Properties of any Person, except for:
(i) mergers of any Subsidiary of a Borrower into another Borrower or another
wholly-owned Subsidiary of a Borrower; and
(ii) acquisitions of assets consisting of fixed assets or real property that
constitute Capital Expenditures permitted under subsection 8.2.8.
8.2.2 Loans. Make, or permit any Subsidiary of any Borrower to make, any loans
or other advances of money to any Person, other than (i) for salary, travel
advances, advances against commissions and other similar advances to employees
in the ordinary course of business, (ii) extensions of trade credit in the
ordinary course of business consistent with past practice, (iii) deposits with
financial institutions permitted under this Agreement, (iv) prepaid expenses,
(v)  RCR Loans and loans and advances make pursuant to Dining Contracts and
(vi) unsecured intercompany loans from one Borrower to another provided that the
aggregate amount of all such intercompany loans outstanding at one time shall
not exceed $500,000.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist, or permit
any Subsidiary of any Borrower to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Agent or any Lender under this Agreement or any of the
other Loan Documents;
(ii) Indebtedness, including without limitation Subordinated Debt, existing on
the date of this Agreement and listed on Exhibit 8.2.3;
(iii) Permitted Purchase Money Indebtedness;
(iv) contingent liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of
business;
(v) Guaranties of any Indebtedness permitted hereunder;
(vi) Indebtedness in respect of intercompany loans permitted under
subsection 8.2.2(v);

 

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(vii) to the extent not included above, trade payables, accruals and accounts
payable in the ordinary course of business (in each case to the extent not
overdue) not for Money Borrowed;
(viii) Indebtedness outstanding in respect of the Convertible Debentures and
Permitted Refinancings thereof;
(ix) Indebtedness incurred in the ordinary course of business in connection with
operating leases; and
(x) Indebtedness not included in paragraphs (i) through (ix) above which does
not exceed at any time, in the aggregate, the sum of $500,000.
8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit any
Subsidiary of any Borrower to enter into or be a party to, any transaction with
any Affiliate of Borrower or any holder of any Securities of any Borrower or any
Subsidiary of any Borrower, including without limitation any management,
consulting or similar fees, except (i) in the ordinary course of and pursuant to
the reasonable requirements of such Borrower’s or such Subsidiary’s business and
upon fair and reasonable terms which are fully disclosed to Agent and are no
less favorable to such Borrower or such Subsidiary than would be obtained in a
comparable arms-length transaction with a Person not an Affiliate or Security
holder of any Borrower, and (ii) as otherwise permitted under this Agreement.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any Subsidiary
of any Borrower to create or suffer to exist, any Lien upon any of its Property,
income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent for the benefit of Lenders;
(ii) Liens for taxes, assessments or governmental charges (excluding any Lien
imposed pursuant to any of the provisions of ERISA) not yet due, or being
contested in the manner described in subsection 7.1.14 hereto, but only if in
Agent’s judgment such Lien would not reasonably be expected to adversely effect
Agent’s rights or the priority of Agent’s lien on any Collateral;
(iii) Liens arising in the ordinary course of the business of any Borrower or
any of its Subsidiaries by operation of law or regulation, but only if payment
in respect of any such Lien is not at the time required and such Liens do not,
in the aggregate, materially detract from the value of the Property of such
Borrower or any of its Subsidiaries or materially impair the use thereof in the
operation of the business of such Borrower or any of its Subsidiaries;
(iv) Purchase Money Liens securing Permitted Purchase Money Indebtedness;
(v) such other Liens as appear on Exhibit 8.2.5 hereto;

 

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(vi) Liens incurred or deposits made in the ordinary course of business in
connection with (1) worker’s compensation, social security, unemployment
insurance and other like laws or (2) sales contracts, leases, statutory
obligations, work in progress advances and other similar obligations not
incurred in connection with the borrowing of money or the payment of the
deferred purchase price of property;
(vii) reservations, covenants, zoning and other land use regulations, title
exceptions or encumbrances granted in the ordinary course of business, affecting
real Property owned or leased by a Borrower or one of its Subsidiaries; provided
that such exceptions do not in the aggregate materially interfere with the use
of such Property in the ordinary course of any Borrower’s or such Subsidiary’s
business;
(viii) judgment Liens that do not give rise to an Event of Default under
subsection 10.1.15; and
(ix) such other Liens as Majority Lenders may hereafter approve in writing.
8.2.6 Payments and Amendments of Certain Debt.
(i) make or permit any Subsidiary of any Borrower to make any payment of any
part or all of any Subordinated Debt or take any other action or omit to take
any other action in respect of any Subordinated Debt, except in accordance with
the subordination agreement relative thereto or the subordination provisions
thereof;
(ii) amend or modify any agreement, instrument or document evidencing or
relating to any Subordinated Debt or, except in connection with a Permitted
Refinancing, the Convertible Debentures; and
(iii) except in connection with a Permitted Refinancing or as provided below,
make of permit any Subsidiary of any Borrower to make any prepayment of interest
or principal on Convertible Debentures or to repurchase or otherwise prepay any
of the Convertible Debentures.
The foregoing notwithstanding, Borrowers may repurchase or repay a portion of
the Convertible Debentures (or Permitted Refinancings thereof) and/or make a
Distribution in the form of open market repurchases of Borrower Representative’s
publicly traded common stock so long as after giving effect to any such
repurchase, prepayment or Distribution: (x) the aggregate amount of all such
repurchases, prepayments or Distributions made with the proceeds of Revolving
Credit Loans does not exceed $10,000,000 during the Term; and (y) if any
Revolving Credit Loan or Letter of Credit is outstanding (i) the Convertible
Debentures have been Refinanced pursuant to a Permitted Refinancing; (ii) the
Fixed Charge Coverage Ratio for the most recently ended Testing Period computed
on a pro forma basis assuming that such Distribution, repurchase or repayment
was made within such Testing Period would exceed 1.10 to 1; (iii) no Default or
Event of Default has occurred and is continuing; and (iv) Availability on an
average pro forma basis for the 30 days immediately prior to any such
repurchase, prepayment or Distribution and immediately after such repurchase,
prepayment or Distribution shall equal or exceed $15,000,000. As used herein,
Testing Period means the three month period ending December 31, 2007, the six
month period ending March 31, 2007, the nine month period ending June 30, 2007
and any twelve month period ending any September 30, December 31, March 31 or
June 30 thereafter.

 

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8.2.7 Distributions. Declare or make, or permit any Subsidiary of any Borrower
to declare or make, any Distributions, except for:
(i) Distributions by any Subsidiary of a Borrower to a Borrower;
(ii) Distributions paid solely in Securities of a Borrower or any of its
Subsidiaries;
(iii) Distributions by a Borrower in amounts necessary to permit such Borrower
to repurchase Securities of a Borrower from employees of any Borrower or any of
its Subsidiaries upon the termination of their employment, so long as no Default
or Event of Default exists at the time of or would be caused by the making of
such Distributions and the aggregate cash amount of such Distributions, measured
at the time when made, does not exceed $500,000 in any fiscal year of Borrowers;
and
(iv) as provided in subsection 8.2.6 above.
8.2.8 Capital Expenditures. Make Capital Expenditures (including, without
limitation, by way of capitalized leases) which, in the aggregate, as to
Borrowers and all of their Subsidiaries, exceed $7,000,000 during any fiscal
year of Borrowers, except that 50% of the unused portion of the Capital
Expenditure allowance for any fiscal year may be carried over to the immediately
succeeding fiscal year only, to be used in such succeeding fiscal year after all
of the Capital Expenditure allowance for that year has been used.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any of, or
permit any Subsidiary of any Borrower to sell, lease or otherwise dispose of any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) transfers of Property to a Borrower by a Subsidiary of a Borrower;
(iii) dispositions of Property that is substantially worn, damaged, uneconomic,
obsolete or no longer useful in the business of any Borrower (subject to
subsection 6.4.2 hereof);
(iv) dispositions of investments described in paragraphs (iv), (v), (vi) and
(vii) of the definition of the term “Restricted Investments”; and
(v) other dispositions expressly authorized by this Agreement.

 

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8.2.10 Securities of Subsidiaries. Permit any of their Subsidiaries to issue any
additional Securities except to a Borrower and except for director’s qualifying
Securities.
8.2.11 Restricted Investment. Make or have, or permit any Subsidiary of any
Borrower to make or have, any Restricted Investment.
8.2.12 Subsidiaries and Joint Ventures. Create, acquire or otherwise suffer to
exist, or permit any Subsidiary of any Borrower to create, acquire or otherwise
suffer to exist, any Subsidiary or joint venture arrangement not in existence as
of the date hereof.
8.2.13 Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than another Borrower and Borrowers’
Subsidiaries.
8.2.14 Organizational Documents. Agree to, or suffer to occur, any amendment,
supplement or addition to its or any of their Subsidiaries’ charter, articles or
certificate of incorporation, certificate of formation, limited partnership
agreement, bylaws, limited liability agreement, operating agreement or other
organizational documents (as the case may be), that would reasonably be expected
to have a Material Adverse Effect.
8.2.15 Fiscal Year End. Change, or permit any Subsidiary of any Borrower to
change, its fiscal year end.
8.2.16 Negative Pledges. Enter into any agreement limiting the ability of
Borrower or any of its Subsidiaries to voluntarily create Liens upon any of its
Property.
8.3 Specific Financial Covenants. During the Term, and thereafter for so long as
there are any Obligations (other than contingent Obligations (including
contingent indemnity claims)) outstanding, Borrowers covenant that, unless
otherwise consented to by Majority Lenders, in writing, they shall comply with
all of the financial covenants set forth in Exhibit 8.3 hereto. If GAAP changes
from the basis used in preparing the audited financial statements delivered to
Agent by Borrowers on or before the Closing Date, Borrowers will provide Agent
with certificates demonstrating compliance with such financial covenants and
will include, at the election of Borrowers or upon the request of Agent,
calculations setting forth the adjustments necessary to demonstrate how
Borrowers are also in compliance with such financial covenants based upon GAAP
as in effect on the Closing Date.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Agent or any Lender
under the other sections of this Agreement, no Lender shall be required to make
any Loan, nor shall Agent be required to issue or procure any Letter of Credit
or LC Guaranty unless and until each of the following conditions has been and
continues to be satisfied or waived:
9.1 Documentation. Agent shall have received, in form and substance satisfactory
to Agent and its counsel, a duly executed copy of this Agreement and the other
Loan Documents, together with such additional documents, instruments, opinions
and certificates as Agent and its counsel shall require in connection therewith
from time to time, all in form and substance satisfactory to Agent and its
counsel.

 

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9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Conditions. Each of the conditions precedent set forth in the Loan
Documents shall have been satisfied or waived.
9.4 Availability. Agent shall have determined that immediately upon the
effectiveness of this Agreement and the payment of all closing costs incurred in
connection with the transactions contemplated by this Agreement (treating any
accrued closing costs as paid), Availability shall not be less than $25,000,000.
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to (x) enjoin, restrain or prohibit, or
to obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby, or
(y) except as described in the Public Filings existing as of the Closing Date or
in Schedule 7.1.20, which could reasonably be expected to have or evidence a
Material Adverse Effect.
9.6 Material Adverse Effect. As of the Closing Date, since September 30, 2007,
there has not been any material adverse change in its business, assets,
financial condition, income or prospects and no event or condition exists which
would be reasonably likely to result in any Material Adverse Effect.
9.7 Cash Deposit. On or prior to the Closing Date, Borrowers shall have
deposited at least $5,000,000 (which amount shall increase to $20,000,000 on or
prior to the date which is 30 days after the Closing Date) in a Bank (or an
affiliate of a Bank) depository account, which depository account shall be
pledged to Agent as additional Collateral pursuant to a usual and customary
Deposit Account Control Agreement. Thereafter, Borrowers covenant to maintain at
least $15,000,000 on deposit at Bank until such time as Borrowers have
established lockbox and disbursement accounts with Bank and are utilizing Bank
for its other cash management and/or treasury services.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following events
shall constitute an “Event of Default”:
10.1.1 Payment of Obligations. Borrowers shall fail to pay any of the
Obligations (other than an Overadvance) hereunder or under any Note on the due
date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other statement made
or furnished to Agent or any Lender by or on behalf of any Borrower, any
Subsidiary of any Borrower or any Guarantor in this Agreement, any of the other
Loan Documents or any instrument, certificate or financial statement furnished
in compliance with or in reference thereto proves to have been false or
misleading in any material respect when made, furnished or reaffirmed pursuant
to Section 7.2 hereof.

 

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10.1.3 Breach of Specific Covenants. Any Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Section or subsection 5.2
(Other Collateral), 5.3 (Lien Perfection; Further Assurances), 5.4 (Lien on
Realty), 6.1.1 (Location of Collateral), 6.1.2 (Insurance of Collateral), 6.2.4
(Maintenance of Dominion Account), 6.2.5 (Collection of Accounts; Proceeds of
Collateral), 8.1.1 (Visits and Inspections; Lender Meeting), 8.1.2 (Notices),
8.1.4 (Borrowing Base Certificates), 8.1.9 (Deposit and Brokerage Accounts),
8.1.10 (Interest Rate Protection), 8.2 (Negative Covenants) or 8.3 (Specific
Financial Covenants) hereof on the date that Borrowers are required to perform,
keep or observe such covenant or shall fail or neglect to perform, keep or
observe any covenant contained in Section 8.1.3 (Financial Statements) or 8.1.7
(Projections) hereof within 5 days following the date on which Borrowers are
required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Borrowers shall fail or neglect to perform,
keep or observe any covenant contained in this Agreement (other than a covenant
which is dealt with specifically elsewhere in Section 10.1 hereof) and the
breach of such other covenant is not cured to Agent’s satisfaction within
30 days after the sooner to occur of any Borrower’s receipt of notice of such
breach from Agent or the date on which such failure or neglect first becomes
known to any officer of any Borrower.
10.1.5 Default Under Security Documents or Other Agreements. Any event of
default shall occur under, or any Borrower, any of its Subsidiaries or any other
Guarantor shall default in the performance or observance of any term, covenant,
condition or agreement contained in, any of the Security Documents, or the Other
Agreements and such default shall continue beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of default on the
part of any Borrower, any Subsidiary of any Borrower or any other Guarantor
under any agreement, document or instrument to which such Borrower, such
Subsidiary of such Borrower or such Guarantor is a party or by which such
Borrower, such Subsidiary of such Borrower or such Guarantor or any of its
Property is bound, evidencing or relating to any Indebtedness (other than the
Obligations) with an outstanding principal balance in excess of $250,000, which
Default or Event of Default has not been cured or waived within the applicable
grace or cure period, if the payment or maturity of such Indebtedness is or
could be accelerated in consequence of such event of default or demand for
payment of such Indebtedness is made or could be made in accordance with the
terms thereof.
10.1.7 Uninsured Losses. Any material loss, theft, damage or destruction of any
portion of the Collateral having a fair market value of $250,000, in the
aggregate, if not fully covered (subject to such deductibles and self-insurance
retentions as Agent shall have permitted) by insurance.
10.1.8 Insolvency and Related Proceedings. Borrowers, taken as a whole, shall
cease to be Solvent or any Borrower shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for the
benefit of creditors, or any petition for an order for relief shall be filed by
or against any Borrower under U.S. federal bankruptcy laws (if against any
Borrower, the continuation of such proceeding for more than 60 days), or any
Borrower shall make any offer of settlement, extension or composition to their
respective unsecured creditors generally.

 

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10.1.9 Business Disruption; Condemnation. There shall occur a cessation of a
substantial part of the business of any Borrower, any Subsidiary of any Borrower
or any other Guarantor for a period which materially adversely affects such
Borrower’s, such Subsidiary’s or such Guarantor’s capacity to continue its
business on a profitable basis; or any Borrower, any Subsidiary of any Borrower
or any other Guarantor shall suffer the loss or revocation of any material
license or permit now held or hereafter acquired by any Borrower, any Subsidiary
of any Borrower or any other Guarantor which is necessary to the continued or
lawful operation of its business; or any Borrower, any Subsidiary of any
Borrower or any other Guarantor shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its business affairs; or any material lease or agreement
pursuant to which any Borrower, any Subsidiary of any Borrower or any other
Guarantor leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term, except any such lease or agreement
the cancellation or termination of which could not reasonably be expected to
have a Material Adverse Effect; or any material portion of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation.
10.1.10 Change of Ownership. (a) a Change in Control shall have occurred or
(b) Borrower Representative shall cease to own and control, beneficially and of
record (directly or indirectly), 100% of the issued and outstanding Securities
and Voting Stock of each of its Subsidiaries.
10.1.11 ERISA. A Reportable Event shall occur which, in Agent’s reasonable
determination, constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or any Plan shall be
terminated or any such trustee shall be requested or appointed, or if any
Borrower, any Subsidiary of any Borrower or any other Guarantor is in “default”
(as defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from such Borrower’s, such Subsidiary’s or such
Guarantor’s complete or partial withdrawal from such Plan and any such event
could reasonably be expected to have a Material Adverse Effect.
10.1.12 Challenge to Agreement. Any Borrower, any Subsidiary of Borrower or any
other Guarantor, or any Affiliate of any of them, shall challenge or contest in
any action, suit or proceeding the validity or enforceability of this Agreement
or any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent.
10.1.13 Repudiation of or Default Under Guaranty Agreement. Any Guarantor shall
revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor, or
shall repudiate such Guarantor’s liability thereunder or shall be in default
under the terms thereof.

 

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10.1.14 Criminal Forfeiture. Any Borrower, any Subsidiary of Borrower or any
other Guarantor shall be criminally indicted or convicted under any law that
could lead to a forfeiture of any Property (with a value of $250,000 or more) of
any Borrower, any Subsidiary of Borrower or any other Guarantor.
10.1.15 Judgments. Any money judgment, writ of attachment or similar processes
(collectively, “Judgments”) are issued or rendered against any Borrower, any
Subsidiary of any Borrower or any other Guarantor, or any of their respective
Property (i) in the case of money judgments, in an amount of $250,000 or more
for any single judgment, attachment or process or $500,000 or more for all such
judgments, attachments or processes in the aggregate, in each case in excess of
any applicable insurance with respect to which the insurer has admitted
liability, and (ii) in the case of non-monetary Judgments, such Judgment or
Judgments (in the aggregate) could reasonably be expected to have a Material
Adverse Effect, in each case which Judgment is not stayed, released or
discharged within 30 days.
10.2 Acceleration of the Obligations. Upon or at any time after the occurrence
and during the continuance of an Event of Default, (i) the Revolving Loan
Commitments shall, at the option of Agent or Majority Lenders be terminated
and/or (ii) Agent or Majority Lenders may declare all or any portion of the
Obligations at once due and payable without presentment, demand protest or
further notice by Agent or any Lender, and Borrowers shall forthwith pay to
Agent, the full amount of such Obligations, provided, that upon the occurrence
of an Event of Default specified in subsection 10.1.8 hereof, the Revolving Loan
Commitments shall automatically be terminated and all of the Obligations shall
become automatically due and payable, in each case without declaration, notice
or demand by Agent or any Lender.
10.3 Other Remedies. Upon the occurrence and during the continuance of an Event
of Default, Agent shall have and may exercise from time to time the following
other rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the UCC or under
other applicable law, and all other legal and equitable rights to which Agent or
Lenders may be entitled, all of which rights and remedies shall be cumulative
and shall be in addition to any other rights or remedies contained in this
Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral, and to
(i) require each Borrower and each of its Subsidiaries to assemble the
Collateral, at Borrowers’ expense, and make it available to Agent at a place
designated by Agent which is reasonably convenient to both parties, and
(ii) enter any premises where any of the Collateral shall be located and to keep
and store the Collateral on said premises until sold (and if said premises be
the Property of any Borrower or any Subsidiary of any Borrower, Borrowers agree
not to charge, or permit any of its Subsidiaries to charge, Agent for storage
thereof).

 

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10.3.3 The right to sell or otherwise dispose of all or any Collateral in its
then condition, or after any further manufacturing or processing thereof, at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Agent may, at Agent’s option, disclaim any and all
warranties regarding the Collateral in connection with any such sale. Borrowers
agree that 10 days’ written notice to Borrowers or any of their Subsidiaries of
any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Agent may
designate in said notice. Agent shall have the right to conduct such sales on
any Borrower’s or any of its Subsidiaries’ premises, without charge therefor,
and such sales may be adjourned from time to time in accordance with applicable
law. Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Agent, on behalf of Lenders, may purchase all or any part of the Collateral
at public or, if permitted by law, private sale and, in lieu of actual payment
of such purchase price, may set off the amount of such price against the
Obligations. The proceeds realized from the sale of any Collateral may be
applied, after allowing 2 Business Days for collection, first to the costs,
expenses and attorneys’ fees incurred by Agent in collecting the Obligations, in
enforcing the rights of Agent and Lenders under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, each Borrower and each Guarantor shall remain jointly
and severally liable to Agent and Lenders therefor.
10.3.4 Agent is hereby granted a license or other right to use, without charge,
each Borrower’s and each of its Subsidiaries’ labels, patents, copyrights,
licenses, rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any Property of a similar nature, as it pertains to the
Collateral, in completing, advertising for sale and selling any Collateral and
each Borrower’s and each of its Subsidiaries’ rights under all licenses and all
franchise agreements shall inure to Agent’s benefit. Agent agrees not to
exercise any such license or right to use unless an Event of Default exists and
is continuing.
10.3.5 Agent may, at its option, require Borrowers to deposit with Agent funds
equal to the LC Amount and, if Borrowers fail to promptly make such deposit,
Agent may advance such amount as a Revolving Credit Loan (whether or not an
Overadvance is created thereby). Each such Revolving Credit Loan shall be
secured by all of the Collateral and shall constitute a Prime Rate Revolving
Loan. Any such deposit or advance shall be held by Agent as a reserve to fund
future payments on such LC Guaranties and future drawings against such Letters
of Credit. At such time as all LC Guaranties have been paid or terminated and
all Letters of Credit have been drawn upon or expired, any amounts remaining in
such reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, returned to Borrowers.
10.4 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
during the continuance of any Event of Default, each Lender is hereby authorized
by Borrowers at any time or from time to time, with prior written consent of
Agent and with reasonably prompt subsequent notice to Borrowers (any prior or
contemporaneous notice to Borrowers being hereby expressly waived) to set off
and to appropriate and to apply any and all (i) balances held by such Lender at
any of its offices for the account of any Borrower or any of its Subsidiaries
(regardless of whether such balances are then due to a Borrower or its
Subsidiaries), and (ii) other property at any time held or owing by such Lender
to or for the credit or for the account of any Borrower or any of its
Subsidiaries, against and on account of any of the Obligations. Any Lender
exercising a right to set off shall, to the extent the amount of any such set
off exceeds its Revolving Loan Percentage of the amount set off, purchase for
cash (and the other Lenders shall sell) interests in each such other Lender’s
pro rata share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective
Revolving Loan Percentages. Each Borrower agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its pro rata share of the Obligations and upon doing so
shall deliver such excess to Agent for the benefit of all Lenders in accordance
with the Revolving Loan Percentages.

 

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10.5 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to Agent or any Lender or contained
in any other agreement between any Lender and Borrowers or between Agent and
Borrowers heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrowers herein contained. The failure
or delay of Agent or any Lender to require strict performance by Borrowers of
any provision of this Agreement or to exercise or enforce any rights, Liens,
powers, or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and other Obligations owing or to become owing from Borrowers to
Agent and each Lender have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrowers contained in
this Agreement or any of the other Loan Documents and no Default or Event of
Default by Borrowers under this Agreement or any other Loan Documents shall be
deemed to have been suspended or waived by Lenders, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Agent and directed to
Borrowers.
SECTION 11. AGENT
11.1 Authorization and Action. Each Lender hereby appoints and authorizes Agent
to take such action on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. Each Lender hereby acknowledges that Agent shall not have by reason of
this Agreement assumed a fiduciary relationship in respect of any Lender. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and shall not assume, or be deemed to have assumed, any
obligation toward, or relationship of agency or trust with or for, Borrower. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including without limitation enforcement and collection of the
Notes), Agent may, but shall not be required to, exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided,
that Agent shall be fully justified in failing or refusing to take any action
which exposes Agent to any liability or which is contrary to this Agreement, the
other Loan Documents or applicable law, unless Agent is indemnified to its
satisfaction by the other Lenders against any and all liability and expense
which it may incur by reason of taking or continuing to take any such action. If
Agent seeks the consent or approval of the Majority Lenders (or a greater or
lesser number of Lenders as required in this Agreement), with respect to any
action hereunder, Agent shall send notice thereof to each Lender and shall
notify each Lender at any time that the Majority Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.

 

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11.2 Agent’s Reliance, Etc. Neither Agent, any Affiliate of Agent, nor any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, Agent: (i) may treat each Lender party hereto as the holder of
Obligations until Agent receives written notice of the assignment or transfer of
such lender’s portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranties or representations to any Lender and shall not be responsible to
any Lender for any recitals, statements, warranties or representations made in
or in connection with this Agreement or any other Loan Documents; (iv) shall not
have any duty beyond Agent’s customary practices in respect of loans in which
Agent is the only lender, to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of Borrowers, to inspect the property
(including the books and records) of Borrowers, to monitor the financial
condition of Borrowers or to ascertain the existence or possible existence or
continuation of any Default or Event of Default; (v) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto;
(vi) shall not be liable to any Lender for any action taken, or inaction, by
Agent upon the instructions of Majority Lenders pursuant to Section 11.1 hereof
or refraining to take any action pending such instructions; (vii) shall not be
liable for any apportionment or distributions of payments made by it in good
faith pursuant to Section 3 hereof; (viii) shall incur no liability under or in
respect of this Agreement or the other Loan Documents by acting upon any notice,
consent, certificate, message or other instrument or writing (which may be by
telephone, facsimile, telegram, cable or telex) believed in good faith by it to
be genuine and signed or sent by the proper party or parties; and (ix) may
assume that no Event of Default has occurred and is continuing, unless Agent has
actual knowledge of the Event of Default, has received notice from Borrowers or
Borrowers’ independent certified public accountants stating the nature of the
Event of Default, or has received notice from a Lender stating the nature of the
Event of Default and that such Lender considers the Event of Default to have
occurred and to be continuing. In the event any apportionment or distribution
described in clause (vii) above is determined to have been made in error, the
sole recourse of any Person to whom payment was due but not made shall be to
recover from the recipients of such payments any payment in excess of the amount
to which they are determined to have been entitled.

 

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11.3 RBS and Affiliates. With respect to its commitment hereunder to make Loans,
RBS shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it were
not Agent; and the terms “Lender,” “Lenders” or “Majority Lenders” shall, unless
otherwise expressly indicated, include RBS in its individual capacity as a
Lender. RBS and its Affiliates may lend money to, and generally engage in any
kind of business with, Borrowers, and any Person who may do business with or own
Securities of any Borrower, all as if RBS were not Agent and without any duty to
account therefor to any other Lender.
11.4 Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender and based on the financial
statements referred to herein and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Agent
shall not have any duty or responsibility, either initially or on an ongoing
basis, to provide any Lender with any credit or other similar information
regarding Borrowers.
11.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers), in accordance with their respective Aggregate
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Agent in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by Agent under this
Agreement; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share, as set forth above,
of any out-of-pocket expenses (including attorneys’ fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrowers. The
obligations of Lenders under this Section 11.5 shall survive the payment in full
of all Obligations and the termination of this Agreement. If after payment and
distribution of any amount by Agent to Lenders, any Lender or any other Person,
including Borrowers, any creditor of any Borrower, a liquidator, administrator
or trustee in bankruptcy, recovers from Agent any amount found to have been
wrongfully paid to Agent or disbursed by Agent to Lenders, then Lenders, in
accordance with their respective Aggregate Percentages, shall reimburse Agent
for all such amounts.
11.6 Rights and Remedies to Be Exercised by Agent Only. Each Lender agrees that,
except as set forth in Section 10.4, no Lender shall have any right individually
(i) to realize upon the security created by this Agreement or any other Loan
Document, (ii) to enforce any provision of this Agreement or any other Loan
Document, or (iii) to make demand under this Agreement or any other Loan
Document.

 

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11.7 Agency Provisions Relating to Collateral. Each Lender authorizes and
ratifies Agent’s entry into this Agreement and the Security Documents for the
benefit of Lenders. Each Lender agrees that any action taken by Agent with
respect to the Collateral in accordance with the provisions of this Agreement or
the Security Documents, and the exercise by Agent of the powers set forth herein
or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders. Agent is hereby
authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected Agent’s Liens upon the Collateral, for its benefit and the ratable
benefit of Lenders. Lenders hereby irrevocably authorize Agent, at its option
and in its discretion, to release any Lien granted to or held by Agent upon any
Collateral (i) upon termination of the Agreement and payment and satisfaction of
all Obligations; or (ii) constituting property being sold or disposed of if
Borrowers certify to Agent that the sale or disposition is made in compliance
with subsection 8.2.9 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry); or (iii) constituting property in which
no Borrower owned any interest at the time the Lien was granted or at any time
thereafter; or (iv) in connection with any foreclosure sale or other disposition
of Collateral after the occurrence and during the continuation of an Event of
Default; or (v) if approved, authorized or ratified in writing by Agent at the
direction of all Lenders. Upon request by Agent at any time, Lenders will
confirm in writing Agent’s authority to release particular types or items of
Collateral pursuant hereto. Agent shall have no obligation whatsoever to any
Lender or to any other Person to assure that the Collateral exists or is owned
by any Borrower or is cared for, protected or insured or has been encumbered or
that the Liens granted to Agent herein or pursuant to the Security Documents
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of its rights, authorities and powers granted or
available to Agent in this Section 11.7 or in any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, but consistent with the provisions of this
Agreement, including given Agent’s own interest in the Collateral as a Lender
and that Agent shall have no duty or liability whatsoever to any Lender.
11.8 Agent’s Right to Purchase Commitments. Agent shall have the right, but
shall not be obligated, at any time upon written notice to any Lender and with
the consent of such Lender, which may be granted or withheld in such Lender’s
sole discretion, to purchase for Agent’s own account all of such Lender’s
interests in this Agreement, the other Loan Documents and the Obligations, for
the face amount of the outstanding Obligations owed to such Lender, including
without limitation all accrued and unpaid interest and fees.

 

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11.9 Right of Sale, Assignment, Participations. Except as set forth below,
Borrowers hereby consent to any Lender’s participation, sale, assignment,
transfer or other disposition, at any time or times hereafter, of this Agreement
and any of the other Loan Documents, or of any portion hereof or thereof,
including, without limitation, such Lender’s rights, title, interests, remedies,
powers and duties hereunder or thereunder subject to the terms and conditions
set forth below:
11.9.1 Sales, Assignments. Each Lender hereby agrees that, with respect to any
sale or assignment (i) no such sale or assignment shall be for an amount of less
than $5,000,000, (ii) each such sale or assignment shall be made on terms and
conditions which are customary in the industry at the time of the transaction,
(iii) Agent and, in the absence of a Default or Event of Default, Borrowers,
must consent, such consent not to be unreasonably withheld, to each such
assignment to a Person that is not an original signatory to this Agreement,
(iv) the assigning Lender shall pay to Agent a processing and recordation fee of
$3,500 and any out-of-pocket attorneys’ fees and expenses incurred by Agent in
connection with any such sale or assignment, (v) Agent, the assigning Lender and
the assignee Lender shall each have executed and delivered an Assignment and
Acceptance Agreement and (vi) Agent shall at all times hold a majority of the
Revolving Loan Commitment. After such sale or assignment has been consummated
(x) the assignee Lender thereupon shall become a “Lender” for all purposes of
this Agreement and (y) the assigning Lender shall have no further liability for
funding the portion of Revolving Loan Commitments assumed by such other Lender.
11.9.2 Participations. Any Lender may grant participations in its extensions of
credit hereunder to any other Lender or other lending institution (a
“Participant”), provided that (i) no such participation shall be for an amount
of less than $5,000,000, (ii) no Participant shall thereby acquire any direct
rights under this Agreement, (iii) no Participant shall be granted any right to
consent to any amendment, except to the extent any of the same pertain to
(1) reducing the aggregate principal amount of, or interest rate on, or fees
applicable to, any Loan or (2) extending the final stated maturity of any Loan
or the stated maturity of any portion of any payment of principal of, or
interest or fees applicable to, any of the Loans; provided that the rights
described in this subclause (2) shall not be deemed to include the right to
consent to any amendment with respect to or which has the effect of requiring
any mandatory prepayment of any portion of any Loan or any amendment or waiver
of any Default or Event of Default, (iv) no sale of a participation in
extensions of credit shall in any manner relieve the originating Lender of its
obligations hereunder, (v) the originating Lender shall remain solely
responsible for the performance of such obligations, (vi) Borrowers and Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, (vii) in no event shall any financial
institution purchasing the participation grant a participation in its
participation interest in the Loans without the prior written consent of Agent,
and, in the absence of a Default or an Event of Default, Borrowers, which
consents shall not unreasonably be withheld and (viii) all amounts payable by
Borrowers hereunder shall be determined as if the originating Lender had not
sold any such participation.
11.9.3 Certain Agreements of Borrowers. Borrowers agree that (i) they will use
their best efforts to assist and cooperate with each Lender in any manner
reasonably requested by such Lender to effect the sale of participation in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents and making members of management available at
reasonable times to meet with and answer questions of potential assignees and
Participants; and (ii) subject to the provisions of Section 12.14 hereof, such
Lender may disclose credit information regarding Borrowers to any potential
Participant or assignee.

 

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11.9.4 Non U.S. Resident Transferees. If, pursuant to this Section 11.9, any
interest in this Agreement or any Loans is transferred to any transferee which
is organized under the laws of any jurisdiction other than the United States or
any state thereof, the transferor Lender shall cause such transferee (other than
any Participant), and may cause any Participant, concurrently with and as a
condition precedent to the effectiveness of such transfer, to (i) represent to
the transferor Lender (for the benefit of the transferor Lender, Agent, and
Borrowers) that under applicable law and treaties no taxes will be required to
be withheld by Agent, any Borrowers or the transferor Lender with respect to any
payments to be made to such transferee in respect of the interest so
transferred, (ii) furnish to the transferor Lender, Agent and Borrowers either
United States Internal Revenue Service Form W-8BEN or United States Internal
Revenue Service Form W-8ECI (wherein such transferee claims entitlement to
complete exemption from United States federal withholding tax on all interest
payments hereunder), and (iii) agree (for the benefit of the transferor Lender,
Agent and Borrowers) to provide the transferor Lender, Agent and Borrowers a new
Form W-8BEN or Form W-8ECI upon the obsolescence of any previously delivered
form and comparable statements in accordance with applicable United States laws
and regulations and amendments duly executed and completed by such transferee,
and to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
11.10 Amendment. No amendment or waiver of any provision of this Agreement or
any other Loan Document (including without limitation any Note), nor consent to
any departure by Borrowers therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Lenders and Borrowers, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, that no amendment, waiver or
consent shall be effective, unless (i) in writing and signed by each Lender, to
do any of the following: (1) increase or decrease the aggregate Loan
Commitments, or any Lender’s Revolving Loan Commitment, (2) reduce the principal
of, or interest on, any amount payable hereunder or under any Note, other than
those payable only to RBS in its capacity as Agent, which may be reduced by RBS
unilaterally, (3) increase or decrease any interest rate payable hereunder,
(4) postpone any date fixed for any payment of principal of, or interest on, any
amounts payable hereunder or under any Note, other than those payable only to
RBS in its capacity as Agent, which may be postponed by RBS unilaterally,
(5) increase any advance percentage contained in the definition of the term
Borrowing Base, (6) reduce the number of Lenders that shall be required for
Lenders or any of them to take any action hereunder, (7) release or discharge
any Person liable for the performance of any obligations of any Borrower
hereunder or under any of the Loan Documents, (8) amend any provision of this
Agreement that requires the consent of all Lenders or consent to or waive any
breach thereof, (9) amend the definition of the term Majority Lenders,
(10) amend this Section 11.10 or (11) release any substantial portion of the
Collateral, unless otherwise permitted pursuant to Section 11.7 hereof; or
(ii) in writing and signed by Agent in addition to the Lenders required above to
affect the rights or duties of Agent under this Agreement, any Note or any other
Loan Document. If a fee is to be paid by Borrowers in connection with any waiver
or amendment hereunder, the agreement evidencing such amendment or waiver may,
at the discretion of Agent (but shall not be required to), provide that only
Lenders executing such agreement by a specified date may share in such fee (and
in such case, such fee shall be divided among the applicable Lenders on a pro
rata basis without including the interests of any Lenders who have not timely
executed such agreement).

 

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11.11 Resignation of Agent; Appointment of Successor. Agent may resign as Agent
by giving not less than thirty (30) days’ prior written notice to Lenders and
Borrowers. If Agent shall resign under this Agreement, then, (i) subject to the
consent of Borrowers (which consent shall not be unreasonably withheld and which
consent shall not be required during any period in which a Default or an Event
of Default exists), Majority Lenders shall appoint from among Lenders a
successor agent for Lenders or (ii) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following Agent’s
notice to Lenders and Borrowers of its resignation, then Agent shall appoint a
successor agent who shall serve as Agent until such time as Majority Lenders
appoint a successor agent, subject to Borrowers’ consent as set forth above.
Upon its appointment, such successor agent shall succeed to the rights, powers
and duties of Agent and the term “Agent” shall mean such successor effective
upon its appointment, and the former Agent’s rights, powers and duties as Agent
shall be terminated without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 11 shall inure to the
benefit of such former Agent and such former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was an Agent under this Agreement.
11.12 Audit and Examination Reports; Disclaimer by Lenders. By signing this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each audit or examination report (each a
“Report” and collectively, “Reports”) prepared by or on behalf of Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and will
rely significantly upon Borrowers’ books and records, as well as on
representations of Borrowers’ personnel;
(d) agrees to keep all Reports confidential and strictly for its internal use,
and not to distribute except to its participants, or use any Report in any other
manner, in accordance with the provisions of Section 12.14; and

 

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(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts (including
attorneys’ fees and expenses) incurred by Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
SECTION 12. MISCELLANEOUS
12.1 Power of Attorney. Each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower’s true and lawful attorney (and agent-in-fact), solely with respect to
the matters set forth in this Section 12.1, and Agent, or Agent’s agent, may,
without notice to any Borrower and in any Borrower’s or Agent’s name, but at the
cost and expense of Borrowers:
12.1.1 At such time or times as Agent or said agent, in its sole discretion, may
determine, after and during the occurrence of an Event of Default, or during a
Trigger Period with respect to the operation of the Dominion Account, endorse
any Borrower’s name on any checks, notes, acceptances, drafts, money orders or
any other evidence of payment or proceeds of the Collateral which come into the
possession of Agent or under Agent’s control.
12.1.2 At such time or times upon or after the occurrence and during the
continuance of an Event of Default (provided that the occurrence of an Event of
Default shall not be required with respect to clauses (iv), (vi), and (ix) below
during a Trigger Period in connection with the operation of the Dominion
Account), as Agent or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of any
Borrower’s rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable, and at Agent’s option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign any
Borrower’s name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to any Borrower and notify postal authorities
to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse the name of any Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of any
Borrower upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use any Borrower’s stationery and sign
the name of any Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and Computer Hardware and Software relating to the
Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things
necessary, in Agent’s determination, to fulfill any Borrower’s obligations under
this Agreement.

 

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The power of attorney granted hereby shall constitute a power coupled with an
interest and shall be irrevocable.
12.2 Indemnity. Each Borrower hereby agrees to indemnify Agent and each Lender
(and each of their Affiliates) and hold Agent and each Lender (and each of their
Affiliates) harmless from and against any liability, loss, damage, suit, action
or proceeding ever suffered or incurred by any such Person (including reasonable
attorneys’ fees and legal expenses) as the result of such Borrower’s failure to
observe, perform or discharge such Borrower’s duties hereunder. In addition,
each Borrower shall defend Agent and each Lender (and each of their Affiliates)
against and save it harmless from all claims of any Person with respect to the
Collateral (except those resulting from the gross negligence or intentional
misconduct of Agent, any Lender or any Affiliate of Agent or any Lender, as
applicable). Without limiting the generality of the foregoing, these indemnities
shall extend to any claims asserted against Agent or any Lender (and each of
their Affiliates) by any Person under any Environmental Laws by reason of any
Borrower’s or any other Person’s failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrowers under this
Section 12.2 shall survive the payment in full of the Obligations (other than
contingent Obligations (including contingent indemnity claims)) and the
termination of this Agreement.
12.3 Sale of Interest. No Borrower may sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, such Borrower’s rights,
title, interests, remedies, powers and duties hereunder or thereunder.
12.4 Severability. 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 or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower, Agent and each Lender permitted under
Section 11.9 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.

 

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12.7 Execution in 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 counterparts taken together shall constitute but one and the same
instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing, and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given, delivered or received immediately when delivered against receipt,
three (3) Business Days’ after deposit in the mail, postage prepaid, one
(1) Business Day after deposit with an overnight courier or, in the case of
facsimile notice, when sent with respect to machine confirmed, addressed as
follows:

         
 
  (A) If to Agent:   RBS Business Capital,
 
      a division of RBS Asset Finance, Inc.
 
      71 South Wacker Drive
 
      Suite 2800
 
      Chicago, Illinois 60606
 
      Attention: Senior Portfolio Manager
 
      Facsimile No.: (312) 777-4003
 
       
 
  With a copy to:   Vedder, Price, Kaufman & Kammholz, P.C.
 
      222 North LaSalle Street
 
      Suite 2600
 
      Chicago, Illinois 60601
 
      Attention: John T. McEnroe
 
      Facsimile No.: (312) 609-5005
 
       
 
  (B) If to Borrowers:   Rewards Network Inc.
 
      Two North Riverside Plaza, Suite 950
 
      Chicago, Illinois 60606
 
      Attention: Christopher Locke, Chief Financial Officer
 
      Facsimile No.: (312) 264-6295
 
       
 
  With a copy to:   Reed Smith LLP
 
      10 South Wacker Drive, 40th Floor
 
      Chicago, Illinois 60606-7507
 
      Attention: Benjamin L. Brimeyer
 
      Facsimile No.: (312) 207-6400

(C) If to any Lender, at its address indicated on the signature pages hereof or
in an Assignment and Acceptance Agreement,

or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent or a Lender pursuant to subsection 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or such Lender.

 

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12.9 Consent. Whenever Agent’s, Majority Lenders’ or all Lenders’ consent is
required to be obtained under this Agreement, any of the Other Agreements or any
of the Security Documents as a condition to any action, inaction, condition or
event, except as otherwise specifically provided herein, Agent, Majority Lenders
or all Lenders, as applicable, shall be authorized to give or withhold such
consent in its or their sole and absolute discretion and to condition its or
their consent upon the giving of additional Collateral security for the
Obligations, the payment of money or any other matter.
12.10 Credit Inquiries. Borrowers hereby authorize and permit Agent and each
Lender to respond to usual and customary credit inquiries from third parties
concerning any Borrower or any of its Subsidiaries.
12.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and the other Loan Documents, together
with all other instruments, agreements and certificates executed by the parties
in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
12.13 Interpretation. No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
12.14 Confidentiality. Agent and each Lender shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement in
accordance with Agent’s and such Lender’s customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure reasonably required by a
prospective participant or assignee in connection with the contemplated
participation or assignment or as required or requested by any governmental
authority or representative thereof or pursuant to legal process and shall
require any such participant or assignee to agree to comply with this
Section 12.14.

 

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12.15 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF AGENT’S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT’S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT OR ANY
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK
COUNTY, ILLINOIS, OR, AT AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS ON
THE ONE HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY
OBJECTION WHICH ANY BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWERS’ ACTUAL
RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.16 WAIVERS BY BORROWERS. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH BORROWERS MAY IN ANY
WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS

 

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WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO
AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF
AGENT’S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY
RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
AGENT’S AND EACH LENDER’S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH
LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
12.17 Advertisement. Borrowers hereby authorize Agent to publish the name of any
Borrower and the amount of the credit facility provided hereunder in any
“tombstone” or comparable advertisement which Agent elects to publish.
12.18 Reimbursement. The undertaking by Borrowers to repay the Obligations and
each representation, warranty or covenant of each Borrower are and shall be
joint and several. To the extent that any Borrower shall be required to pay a
portion of the Obligations which shall exceed the amount of loans, advances or
other extensions of credit received by such Borrower and all interest, costs,
fees and expenses attributable to such loans, advances or other extensions of
credit, then such Borrower shall be reimbursed by the other Borrowers for the
amount of such excess. This Section 12.18 is intended only to define the
relative rights of Borrowers, and nothing set forth in Section 12.18 is intended
or shall impair the obligations of each Borrower, jointly and severally, to pay
to Agent and Lenders the Obligations as and when the same shall become due and
payable in accordance with the terms hereof. Notwithstanding anything to the
contrary set forth in this Section 12.18 or any other provisions of this
Agreement, it is the intent of the parties hereto that the liability incurred by
each Borrower in respect of the Obligations of the other Borrowers (and any Lien
granted by each Borrower to secure such Obligations), not constitute a
fraudulent conveyance or fraudulent transfer under the provisions of any
applicable law of any state or other governmental unit (“Fraudulent
Conveyance”). Consequently, each Borrower, Agent and each Lender hereby agree
that if a court of competent jurisdiction determines that the incurrence of
liability by any Borrower in respect of the Obligations of any other Borrower
(or any Liens granted by such Borrower to secure such Obligations) would, but
for the application of this sentence, constitute a Fraudulent Conveyance, such
liability (and such Liens) shall be valid and enforceable only to the maximum
extent that would not cause the same to constitute a Fraudulent Conveyance, and
this Agreement and the other Loan Documents shall automatically be deemed to
have been amended accordingly, nunc pro tunc.

 

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12.19 Patriot Act Notice. Agent and Lenders hereby notify Borrowers that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Borrower,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding any Borrower’s management and owners,
such as legal name, address, social security number and date of birth.
(Signature Page Follows)

 

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(Signature Page to Loan and Security Agreement)
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year
specified at the beginning of this Agreement.

                  REWARDS NETWORK INC.    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    
 
                REWARDS NETWORK
ESTABLISHMENT SERVICES INC.    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    
 
                REWARDS NETWORK
INTERNATIONAL, INC.    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    
 
                RTR FUNDING LLC    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    

 

 

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(Signature Page to Loan and Security Agreement)

                  RESTAURANT CASH LLC    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    
 
                RESTAURANT CASH CALIFORNIA LLC    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    
 
                REWARDS NETWORK SERVICES INC.    
 
           
 
  By:   /s/ Christopher J. Locke    
 
           
 
      Christopher J. Locke
Senior Vice President and Treasurer    

 

 

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(Signature Page to Loan and Security Agreement)

                  RBS BUSINESS CAPITAL, a division of RBS Asset Finance, Inc.,
as Agent and as a Lender    
 
           
 
  By:   /s/ John S. Gil    
 
           
 
      John S. Gil
Vice President      
 
  Revolving Loan Commitment: $25,000,000    

 

 

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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of November 6, 2007, by
and among RBS Business Capital, a division of RBS Asset Finance, Inc.,
individually and as Agent, the other financial institutions which are or become
parties thereto and Rewards Network Inc. and each domestic subsidiary of Rewards
Network Inc. signatory thereto (a) the terms Account, Certificated Security,
Chattel Paper, Commercial Tort Claims, Deposit Account, Document, Electronic
Chattel Paper, Equipment, Financial Asset, Fixture, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Payment
Intangibles, Proceeds, Security, Security Entitlement, Software, Supporting
Obligations, Tangible Chattel Paper and Uncertificated Security have the
respective meanings assigned thereto under the UCC; (b) all terms reflecting
Collateral having the meanings assigned thereto under the UCC shall be deemed to
mean such Property, whether now owned or hereafter created or acquired by any
Borrower or in which such Borrower now has or hereafter acquires any interest;
(c) capitalized terms which are not otherwise defined have the respective
meanings assigned thereto in said Loan and Security Agreement; and (d) the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on account
of any Account, Contract Right, Chattel Paper or General Intangible, including,
without limitation, Dining Credits.
Affiliate - a Person (other than a Subsidiary): (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, a Person; (ii) which beneficially owns or holds 10% or more
of any class of the Voting Stock of a Person; or (iii) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agent - RBS Citizens, N.A. in its capacity as agent for the Lenders under the
Agreement and any successor in that capacity appointed pursuant to
subsection 11.11 of the Agreement.
Agent’s Judgment – Agent’s commercially reasonable credit judgment determination
on a basis consistent with its credit procedures for lending purposes as
generally applied.
Agent Loans — as defined in subsection 1.1.4 of the Agreement.
Aggregate Percentage - with respect to each Lender, the percentage equal to the
quotient of (i) such Lender’s Loan Commitment divided by (ii) the aggregate of
all Loan Commitments.
Agreement - the Loan and Security Agreement referred to in the first sentence of
this Appendix A, all Exhibits and Schedules thereto and this Appendix A, as each
of the same may be amended from time to time.

 

A-1

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ALTA Survey — a survey prepared in accordance with the standards adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1997, known as the “Minimum Standard Detail Requirements of Land
Title Surveys”. The ALTA Survey shall be in sufficient form to satisfy the
requirements of                      Title Insurance Company to provide extended
coverage over survey defects and shall also show the location of all easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the location of any
flood plain area affecting the subject real estate. The ALTA Survey shall
contain the following certification: “To [Name of Applicable Borrower], RBS
Citizens, N.A. as Agent, and                      Title Insurance Company. This
is to certify that this map of plat and the survey on which it is based were
made in accordance with the “Minimum Standard Detail Requirements for Land Title
Surveys” jointly established and adopted by ALTA and ACSM in 1997. (signed
(SEAL) License No.                     ”.
Applicable Margin – with respect to Prime Rate Revolving Loans: zero percent
(0%) and with respect to LIBOR Revolving Loans: one and one-half percent
(1.50%).
Assignment and Acceptance Agreement — an assignment and acceptance agreement in
form and content reasonably acceptable to Agent pursuant to which a Lender
assigns to another Lender all or any portion of any of such Lender’s Revolving
Loan Commitment as permitted pursuant to the terms of this Agreement.
Availability - the amount of additional money which Borrowers are entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Agent or any Lender may have
paid for the account of any Borrower pursuant to any of the Loan Documents and
which have not been reimbursed by Borrowers), the LC Amount and any reserves is
subtracted from the Borrowing Base. If the amount outstanding is equal to or
greater than the Borrowing Base, Availability is 0.
Average Life – as of the date of determination, with respect to any Money
Borrowed, the quotient obtained by dividing (i) the sum of the products of
numbers of months from the date of determination to the dates of each successive
scheduled principal payment of such Money Borrowed multiplied by the amount of
such payment by (ii) the sum of all such payments.
Bank – RBS Citizens, N.A.
Borrowing Base - as at any date of determination thereof, an amount equal to the
lesser of:
(i) the Revolving Credit Maximum Amount; and
(ii) an amount (the “Collateral Borrowing Base”) equal to the sum of
(a) 85% of the net amount of Eligible Accounts (other than Eligible Dining
Credits and Eligible RCR Loans) outstanding at such date; plus
(b) the lesser of (x) 50% of the net amount of Eligible Dining Credits and
(y) 85% of the Net Orderly Liquidation Value of Eligible Dining Credits
outstanding at such time; plus
(c) the lesser of (x) $2,000,000 and (y) 50% of the net amount of Eligible RCR
Loans outstanding at such time.

 

A-2

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The limitations set forth in the immediately preceding sentence and each of the
advance rates set forth above may be adjusted downward by Agent, as Agent shall
deem necessary or appropriate in Agent’s Judgment. For purposes hereof, (x) the
net amount of Eligible Accounts at any time shall be the face amount of such
Eligible Accounts less any and all returns, rebates, discounts (which may, at
Agent’s option, be calculated on shortest terms), credits, allowances or excise
taxes of any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Accounts at such time,
(y) the net amount of Eligible Dining Credits shall be the cash value of such
Dining Credits less any reserve established by a Borrower with respect to such
Eligible Dining Credits and (z) the net amount of Eligible RCR Loans shall be
the outstanding principal balance of such Eligible RCR Loans less any reserves
established by a Borrower with respect to such Eligible RCR Loans.
Borrowing Base Certificate — a certificate by a responsible officer of Borrower
Representative, on its own behalf and on behalf of all other Borrowers,
substantially in the form of Exhibit 8.1.4 (or another form reasonably
acceptable to Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to Agent. All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by Borrowers and certified to Agent; provided, that Agent
shall have the right to review and adjust, in the exercise of Agent’s Judgment,
any such calculation after giving notice thereof to Borrowers, (1) to reflect
its reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that in Agent’s Judgment such calculation is not
in accordance with this Agreement.
Borrower Representative – Rewards Network Inc.
Business Day - any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of Illinois or is a day on which banking
institutions located in either of such states are closed.
Canadian Subsidiary(ies) – Rewards Network Canada GP Corp., a Nova Scotia
corporation and/or Rewards Network Canada L.P., an Ontario limited partnership.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by obligations under
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.

 

A-3

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Change of Control – an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than any such “person” or “group” existing as of the
Closing Date, becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, provided that a person shall be deemed to have
“beneficial ownership” of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of thirty-five percent (35%) or more of the
combined voting power of Borrower Representative’s outstanding Equity Interests
ordinarily having the right to vote at an election of directors; or
(b) the majority of the board of directors of Borrower Representative fails to
consist of Continuing Directors; or
(c) Borrower Representative consolidates with or mergers into another
corporation or conveys, transfers or leases all or substantially all of its
property to any Person, or any corporation consolidates with or merges into
Borrower Representative, in any such event pursuant to a transaction in which
the outstanding Equity Interests of Borrower Representative are reclassified or
changed into or exchanged for cash, securities (not constituting Equity
Interests) or other property; or
(d) Borrower Representative shall cease to own and control directly or
indirectly all of the economic and voting rights associated with all of the
outstanding Equity Interests of its existing Subsidiaries so owned and
controlled as of the Closing Date.
Closing Date - the date on which all of the conditions precedent in Section 9 of
the Agreement are satisfied or waived and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Collateral Borrowing Base – as defined in the definition of Borrowing Base.
Compliance Certificate — as defined in subsection 8.1.3 of the Agreement.
Computer Hardware and Software — all of any Borrower’s rights (including rights
as licensee and lessee) with respect to (i) computer and other electronic data
processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all Software and all software programs
designed for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system software,
utilities and application programs in any form (source code and object code in
magnetic tape, disk or hard copy format or any other listings whatsoever);
(iii) any firmware associated with any of the foregoing; and (iv) any
documentation for hardware, Software and firmware described in clauses (i),
(ii) and (iii) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.

 

A-4

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Continuing Director - means, with respect to any Person as of any date of
determination, any member of the board of directors of such Person who (a) was a
member of such board of directors on the date of this Agreement, or (b) was
nominated for election or elected to such board of directors with the approval
of the Continuing Directors who were members of such board at the time of such
nomination or election.
Contract Right — any right of any Borrower to payment under a contract for the
sale or lease of goods or the rendering of services, which right is at the time
not yet earned by performance.
Convertible Debentures – those certain 3.25% Convertible Subordinated Debentures
issued by Borrower Representative pursuant to the terms and conditions of that
certain Indenture dated October 15, 2003 by and among Borrower Representative
(f/k/a iDine Rewards Network Inc.) and LaSalle National Bank Association, as
Trustee, as the same may be amended, supplemented, restated or modified from
time to time.
Default - an event or condition the occurrence of which would, with the lapse of
time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Defaulted Lender – as defined in the definition of Majority Lenders.
Derivative Obligations - every obligation of a Person under any forward
contract, futures contract, exchange contract, swap, option or other financing
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreement), the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices.
Dining Contract(s) – as defined in the definition of Dining Credits.
Dining Credit Account Debtor – as defined in the definition of Dining Credits.
Dining Credits – amounts owed to a Borrower and arising out of a contract or
agreement (“Dining Contract”) between a Borrower and a Person engaged in the
restaurant industry (a “Dining Credit Account Debtor”) pursuant to which, inter
alia, a Borrower shall (i) advance funds to the Dining Credit Card Account
Debtor to purchase future credit card receivables generated by qualified
transactions at the Dining Credit Account Debtor by members of Borrowers’
programs and (ii) agree to provide other services to such Dining Credit Account
Debtor, and said Dining Credit Account Debtor shall pay the applicable Borrower
the purchased future credit card receivables and other amounts due under the
applicable Dining Contract to the applicable Borrower.
Distribution - in respect of any Person means and includes: (i) the payment of
any dividends or other distributions on Securities (except distributions in such
Securities) and (ii) the redemption or acquisition of Securities of such Person,
as the case may be, unless made contemporaneously from the net proceeds of the
sale of Securities.

 

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Dominion Account - a special bank account or accounts of Agent established by
Borrowers or any one of them pursuant to subsection 6.2.4 of the Agreement at
banks selected by Borrower Representative, but acceptable to Agent in its
reasonable discretion, and over which Agent shall have sole and exclusive access
and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary course of the business of
any Borrower from the sale of goods or rendition of services which Agent, in
Agent’s Judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made or services rendered by a Borrower to a
Subsidiary of a Borrower or an Affiliate of a Borrower or to a Person controlled
by an Affiliate of a Borrower; or
(ii) it remains unpaid more than 10 days after the original due date; or
(iii) the total unpaid Accounts of the Account Debtor exceed 20% of the net
amount of all Eligible Accounts, but only to the extent of such excess; or
(iv) any covenant, representation or warranty contained in the Agreement with
respect to such Account has been breached; or
(v) the Account Debtor is also a creditor or supplier of a Borrower or any
Subsidiary of a Borrower, or the Account Debtor has disputed liability with
respect to such Account, or the Account Debtor has made any claim with respect
to any other Account due from such Account Debtor to a Borrower or any
Subsidiary of a Borrower, or the Account otherwise is or may become subject to
right of setoff by the Account Debtor, provided, that any such Account shall be
eligible to the extent such amount thereof exceeds such contract, dispute,
claim, setoff or similar right; or
(vi) the Account Debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an assignment
for the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the Account Debtor
in an involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other petition or other application for relief under
the federal bankruptcy laws, as now constituted or hereafter amended, has been
filed against the Account Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or
(vii) it arises from a sale made or services rendered to an Account Debtor
outside the United States, unless the sale is either (1) to an Account Debtor
located in Ontario or any other province of Canada in which the Personal
Property Security Act has been adopted in substantially the same form as
currently in effect in Ontario or (2) on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its reasonable credit
judgment; or
(viii) it is subject to a reserve established by a Borrower for potential
returns or refunds, to the extent of such reserve; or

 

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(ix) the Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless the applicable Borrower assigns its
right to payment of such Account to Agent, in a manner satisfactory to Agent, in
its reasonable credit judgment, so as to comply with the Assignment of Claims
Act of 1940 (31 U.S.C. §203 et seq., as amended); or
(x) it is not at all times subject to Agent’s duly perfected, first priority
security interest or is subject to a Lien that is not a Permitted Lien; or
(xi) the services giving rise to such Account have not been performed by the
applicable Borrower and accepted by the Account Debtor or the Account otherwise
does not represent a final sale; or
(xii) the Account is evidenced by chattel paper or an instrument of any kind, or
has been reduced to judgment; or
(xiii) Any Borrower or a Subsidiary of any Borrower has made any agreement with
the Account Debtor for any extension, compromise, settlement or modification of
the Account or deduction therefrom, except for discounts or allowances which are
made in the ordinary course of business for prompt payment and which discounts
or allowances are reflected in the calculation of the face value of each invoice
related to such Account; or
(xiv) 25% or more of the Accounts owing from the Account Debtor are not Eligible
Accounts hereunder; or
(xv) it represents service charges, late fees or similar charges; or
(xvi) payment of the applicable Account has been rejected; or
(xvii) it is not otherwise acceptable to Agent in Agent’s Judgment.
For purposes of this Agreement, Eligible Accounts shall not include Eligible
Dining Credits and Eligible RCR Loans; provided, however, that Eligible Accounts
shall include amounts that have become due and owing under any Dining Contract
as a result of a customer of such Dining Credit Account Debtor making a purchase
with an affinity credit card.
Eligible Dining Credits – a Dining Credit arising in the ordinary course of the
business of any Borrower which Agent, in Agent’s Judgment, deems to be an
Eligible Dining Credit. Without limiting the generality of the foregoing, no
Dining Credit shall be an Eligible Dining Credit if:
(i) it arises out of advances made or services rendered by a Borrower to a
Subsidiary of a Borrower or an Affiliate of a Borrower or to a Person controlled
by an Affiliate of a Borrower; or
(ii) the applicable Dining Credit Account Debtor has committed a material breach
of the applicable Dining Contract and such breach continues uncured or unwaived
for fourteen (14) days;

 

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(iii) the total unpaid Dining Credits of the Dining Credit Account Debtor exceed
20% of the net amount of all Dining Credits, but only to the extent of such
excess; or
(iv) any covenant, representation or warranty contained in the Agreement with
respect to such Dining Credit has been breached; or
(v) the Dining Credit Account Debtor is also a creditor or supplier of a
Borrower or any Subsidiary of a Borrower, or the Dining Credit Account Debtor
has disputed liability with respect to such Dining Credit, or the Dining Credit
Account Debtor has made any claim with respect to any other Dining Credit due
from such Dining Credit Account Debtor to a Borrower or any Subsidiary of a
Borrower, or the Dining Credit otherwise is or may become subject to right of
setoff by the Dining Credit Account Debtor, provided, that any such Dining
Credit or other Account shall be eligible to the extent such amount thereof
exceeds such contract, dispute, claim, setoff or similar right; or
(vi) the Dining Credit Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Dining Credit Account Debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws, as now constituted or
hereafter amended, has been filed against the Dining Credit Account Debtor, or
if the Dining Credit Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; or
(vii) it arises from an advance made or services rendered to a Dining Credit
Account Debtor outside the United States, unless the advance made or services
rendered is either (1) to an Dining Credit Account Debtor located in Ontario or
any other province of Canada in which the Personal Property Security Act has
been adopted in substantially the same form as currently in effect in Ontario or
(2) on letter of credit, guaranty or acceptance terms, in each case acceptable
to Agent in its reasonable credit judgment; or
(viii) it is not at all times subject to Agent’s duly perfected, first priority
security interest or is subject to a Lien that is not a Permitted Lien; or
(ix) the Dining Credit has been reduced to judgment; or
(x) Any Borrower or a Subsidiary of any Borrower has made any agreement with the
Dining Credit Account Debtor for any extension, compromise, settlement or
modification of the Dining Credit or deduction therefrom other than in the
ordinary course of business; or
(xi) 25% or more of the Dining Credits owing from the Dining Credit Account
Debtor are not Eligible Dining Credits hereunder; or
(xii) it represents service charges, late fees or similar charges; or
(xiii) it is not otherwise acceptable to Agent in Agent’s Judgment.

 

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For purposes of this Agreement, Eligible Dining Credits shall not include
amounts that have become due under any Dining Contract as a result of a customer
of such Dining Credit Account Debtor making a purchase with an affinity credit
card, which amounts are eligible to be included in Eligible Accounts.
Eligible RCR Loans — an RCR Loan arising in the ordinary course of the business
of any Borrower which Agent, in Agent’s Judgment, deems to be an Eligible RCR
Loan. Without limiting the generality of the foregoing, no RCR Loan shall be an
Eligible RCR Loan if:
(i) it arises out of advances made by a Borrower to a Subsidiary of a Borrower
or an Affiliate of a Borrower or to a Person controlled by an Affiliate of a
Borrower; or
(ii) it, or any portion thereof, remains unpaid more than 5 days after the due
date; or
(iii) the total unpaid RCR Loans of the RCR Loan Account Debtor exceed 20% of
the net amount of all RCR Loans, but only to the extent of such excess; or
(iv) any covenant, representation or warranty contained in the Agreement with
respect to such RCR Loan has been breached; or
(v) the RCR Loan Account Debtor is also a creditor or supplier of a Borrower or
any Subsidiary of a Borrower, or the RCR Loan Account Debtor has disputed
liability with respect to such RCR Loan, or the RCR Loan Account Debtor has made
any claim with respect to any other RCR Loan due from such RCR Loan Account
Debtor to a Borrower or any Subsidiary of a Borrower, or the RCR Loan otherwise
is or may become subject to right of setoff by the RCR Loan Account Debtor,
provided, that any such RCR Loan shall be eligible to the extent such amount
thereof exceeds such contract, dispute, claim, setoff or similar right; or
(vi) the RCR Loan Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
RCR Loan Account Debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws, as now constituted or
hereafter amended, has been filed against the RCR Loan Account Debtor, or if the
RCR Loan Account Debtor has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs;
or
(vii) the RCR Loan Account Debtor is located outside the United States, unless
either (1) to an RCR Loan Account Debtor located in Ontario or any other
province of Canada in which the Personal Property Security Act has been adopted
in substantially the same form as currently in effect in Ontario or (2) the
applicable RCR Loan is secured by a letter of credit, guaranty or acceptance
terms, in each case acceptable to Agent in its reasonable credit judgment; or
(viii) it is not at all times subject to Agent’s duly perfected, first priority
security interest (which may be effected by designating an employee of a
Borrower to act as an agent of Agent for purposes of holding Instruments) or is
subject to a Lien that is not a Permitted Lien; or

 

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(ix) the RCR Loan has been reduced to judgment; or
(x) Any Borrower or a Subsidiary of any Borrower has made any agreement with the
RCR Loan Account Debtor for any extension, compromise, settlement or
modification of the RCR Loan or deduction therefrom; or
(xi) 25% or more of the RCR Loans owing from the RCR Loan Account Debtor are not
Eligible RCR Loans hereunder; or
(xii) it represents service charges, late fees or similar charges; or
(xiii) it is not otherwise acceptable to Agent in Agent’s Judgment.
Environmental Laws - all federal, state and local laws, rules, regulations,
ordinances, orders and consent decrees relating to health, safety and
environmental matters.
Equity Interest – the interest of any (a) shareholder in a corporation,
(b) partner in a partnership (whether general, limited, limited liability or
joint venture), (c) member in a limited liability, company, or (d) other Person
having any other form of equity security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Fee Letter - as defined in Section 2.3 of the Agreement.
GAAP - generally accepted accounting principles in the United States of America
in effect from time to time.
Gross Availability – the amount being the difference derived when the sum of the
principal amount of Revolving Credit Loans then outstanding (including any
amounts which Agent or any Lender may have paid for the account of any Borrower
pursuant to any of the Loan Documents and which have not been reimbursed by
Borrowers), the LC Amount and any reserves is subtracted from the Collateral
Borrowing Base. If the amount outstanding is equal to or greater than the
Collateral Borrowing Base, Gross Availability is 0.
Guarantors – any Person who now or hereafter guarantees payment or performance
of the whole or any part of the Obligations.
Guaranty Agreements - any Continuing Guaranty Agreement, in form and substance
reasonably satisfactory to Agent, together with each other guaranty hereafter
executed by any Guarantor.
Inactive Subsidiary – as defined in subsection 7.1.5 of the Agreement.
Indebtedness - as applied to a Person means, without duplication:

 

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(i) all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations;
(ii) all obligations of other Persons which such Person has guaranteed;
(iii) all reimbursement obligations in connection with letters of credit or
letter of credit guaranties issued for the account of such Person;
(iv) Derivative Obligations; and
(v) in the case of Borrowers (without duplication), the Obligations.
Intellectual Property - all past, present and future: trade secrets, know-how
and other proprietary information; trademarks, internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and
all translations, adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and the goodwill of the
business relating thereto and all registrations or applications for
registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patent applications and patents; industrial design applications and
registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to sue for all past, present and future infringements of any of the foregoing;
all other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
Interest Payment Date –as to any Prime Rate Loan, the first day of each calendar
month, and (b) as to any LIBOR Rate Loan, the last day of each Interest Period
for such LIBOR Rate Loan, and in addition, where the applicable Interest Period
exceeds three months, the date every three months after the beginning of such
Interest Period. If an Interest Payment Date falls on a date that is not a
Business Day, such Interest Payment Date shall be deemed to be the immediately
succeeding Business Day.
Interest Period - relative to any LIBOR Rate Loans
(a) initially, the period beginning on (and including) the date on which such
LIBOR Rate Loan is made or continued as, or converted into, a LIBOR Rate Loan
pursuant to Section 3.1 and ending on (but excluding) the day which numerically
corresponds to such date one, two or three months thereafter (or, if such month
has no numerically corresponding day, on the last Business Day of such month),
in each case as the Borrower may select in its notice pursuant to Section 3.1;
and

 

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(b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Rate Loan and ending one, two or three
months thereafter, as selected by the Borrower by irrevocable notice to Agent
not less than two Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided, however, that
(c) all Interest Periods of the same duration which commence on the same date
shall end on the same date;
(d) Interest Periods commencing on the same date for LIBOR Rate Loans comprising
part of the same advance under this agreement shall be of the same duration;
(e) Interest Periods for LIBOR Rate Loans in connection with which Borrowers
have or may incur Hedging Obligations with Agent shall be of the same duration
as the relevant periods set under the applicable Hedging Contracts;
(f) if such Interest Period would otherwise end on a day which is not a Business
Day, such Interest Period shall end on the next following Business Day unless
such day falls in the next calendar month, in which case such Interest Period
shall end on the first preceding Business Day; and
(g) no Interest Period may end later than the termination of this agreement.
LC Amount - at any time, the greater of the aggregate maximum committed amount
and the aggregate undrawn available amount of all Letters of Credit and LC
Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate of Agent
shall guaranty the payment or performance by Borrowers of their reimbursement
obligation under any letter of credit.
LC Obligations - any Obligations that arise from any draw against any Letter of
Credit or against any Letter of Credit supported by an LC Guaranty.
Letter of Credit - any standby or documentary letter of credit issued by Agent
or any Affiliate of Agent for the account of any Borrower.
LIBOR – relative to any Interest Period for LIBOR Rate Loans, the offered rate
for deposits of U.S. Dollars in an amount approximately equal to the amount of
the requested LIBOR Rate Loans for a term coextensive with the designated
Interest Period which the British Bankers’ Association fixes as its LIBOR rate
as of 11:00 a.m. London time on the day which is two London Banking Days prior
to the beginning of such Interest Period.
LIBOR Lending Rate – relative to any LIBOR Rate Loan to be made, continued or
maintained as, or converted into, a LIBOR Rate Loan for any Interest Period, a
rate per annum determined pursuant to the following formula:

 

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LIBOR Lending Rate
  =   LIBOR
 
       
 
      (1.00 – LIBOR Reserve Percentage)

LIBOR Rate Loans – the LIBOR Revolving Loans.
LIBOR Option – the option granted pursuant to Section 3.1 of the Agreement to
have the interest on all or any portion of the principal amount of the Revolving
Credit Loans based on the LIBOR.
LIBOR Request - a notice in writing (or by telephone confirmed electronically or
by telecopy or other facsimile transmission on the same day as the telephone
request) from Borrower Representative to Agent requesting that interest on a
Revolving Credit Loan be based on the LIBOR Lending Rate, specifying: (i) the
first day of the Interest Period (which shall be a Business Day); (ii) the
length of the Interest Period; (iii) whether the LIBOR Rate Loan is a new Loan,
a conversion of a Prime Rate Loan, or a continuation of a LIBOR Rate Loan; and
(iv) the dollar amount of the LIBOR Rate Loan, which shall be in an amount not
less than $500,000 or an integral multiple of $100,000 in excess thereof.
LIBOR Reserve Percentage – relative to any day of any Interest Period for LIBOR
Rate Loans, the maximum aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
under any regulations of the Board of Governors of the Federal Reserve System
(the “Board”) or other governmental authority having jurisdiction with respect
thereto as issued from time to time and then applicable to assets or liabilities
consisting of “Eurocurrency Liabilities,” as currently defined in Regulation D
of the Board, having a term approximately equal or comparable to such Interest
Period.
LIBOR Revolving Loan – any Revolving Loan for the periods when the rate of
interest applicable to such Revolving Loan is calculated by reference to the
LIBOR Lending Rate.
Lien – any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on
common law, statute or contract. The term “Lien” shall also include rights of
seller under conditional sales contracts or title retention agreements,
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, a Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Loan Account - the loan account established on the books of Agent pursuant to
Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount of such Lender’s
Revolving Loan Commitment.
Loan Documents - the Agreement, the Other Agreements and the Security Documents.

 

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Loans - all loans and advances of any kind made by Agent, any Lender, or any
Affiliate of Agent or any Lender, pursuant to the Agreement.
London Banking Day - any date on which commercial banks are open for business in
London, England.
Majority Lenders - as of any date, Lenders holding greater than 50% of the
Revolving Loan Commitments determined on a combined basis and following the
termination of the Revolving Loan Commitments, Lenders holding greater than 50%
of the outstanding Loans, LC Amounts and LC Obligations not yet reimbursed by
Borrower or funded with a Revolving Credit Loan; provided, that (i) in each
case, if there are 2 or more Lenders with outstanding Loans, LC Amounts,
unfunded and unreimbursed LC Obligations or Revolving Loan Commitments, at least
2 Lenders shall be required to constitute Majority Lenders; and (ii) prior to
termination of the Revolving Loan Commitments, if any Lender (a “Defaulted
Lender”) breaches its obligation to fund any requested Revolving Credit Loan,
then for so long as such breach exists, such Defaulted Lender’s Revolving Loan
Commitments, outstanding Loans and LC Obligations shall be excluded for the
purposes of calculating Majority Lenders.
Material Adverse Effect - (i) a material adverse effect on the business,
financial condition, operation, performance or properties of Borrowers and their
Subsidiaries taken as a whole, (ii) a material adverse effect on the rights and
remedies of Agent or Lenders under the Loan Documents, or (iii) the material
impairment of the ability of any Borrowers and any of their Subsidiaries, taken
as a whole, to perform its obligations hereunder or under any Loan Document.
Money Borrowed - (i) Indebtedness arising from the lending of money by any
Person to any Borrower or any of its Subsidiaries; (ii) Indebtedness, whether or
not in any such case arising from the lending by any Person of money to any
Borrower or any of its Subsidiaries, (1) which is represented by notes payable
or drafts accepted that evidence extensions of credit, (2) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or
(3) upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for Property;
(iii) Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Borrower or any of its
Subsidiaries under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed
directly by Borrower or any of its Subsidiaries. Money Borrowed shall not
include trade payables or accrued expenses.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of ERISA.
New Mortgages — as defined in Section 5.4 of the Agreement.
Notes - the Revolving Notes.

 

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Obligations - all Loans, all LC Obligations, all reimbursement and other
obligations with respect to Letters of Credit and all other advances, debts,
liabilities, obligations, covenants and duties, together with all interest, fees
and other charges thereon, owing, arising, due or payable from any Borrower to
Agent, for its own benefit, from any Borrower to Agent for the benefit of any
Lender, from any Borrower to any Lender or from any Borrower to Bank or any
other Affiliate of Agent, of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, whether arising under
the Agreement or any of the other Loan Documents or otherwise, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, including without limitation any Product Obligations owing
to Agent, any Lender, Bank or any Affiliate of Bank or Agent.
Organizational I.D. Number - with respect to any Person, the organizational
identification number assigned to such Person by the applicable governmental
unit or agency of the jurisdiction of organization of such Person.
Other Agreements - any and all agreements, instruments and documents (other than
the Agreement and the Security Documents), heretofore, now or hereafter executed
by Borrower, any Subsidiary of Borrower or any other third party and delivered
to Agent or any Lender in respect of the transactions contemplated by the
Agreement.
Overadvance - as defined in subsection 1.1.2 of the Agreement.
Patent Security Agreement - any patent collateral assignment agreement pursuant
to which any Borrower assigns to Agent, for the benefit of Lenders, such
Person’s interests in its patents, as security for the Obligations.
Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of any
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and the principal amount of which, when aggregated with the principal
amount of all other such Indebtedness and Capitalized Lease Obligations of
Borrowers and their Subsidiaries at the time outstanding, does not exceed
$500,000. For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of capitalized leases (as opposed to
operating leases) shall be computed as a Capitalized Lease Obligation.
Permitted Refinancing – Money Borrowed that Refinances any Indebtedness of a
Borrower or a Subsidiary of a Borrower existing on the closing of incurred in
compliance with this Agreement, including, Money Borrowed that Refinances
Permitted Refinancings; provided, however, that
(i) except with respect to Refinancings of the Convertible Debentures, such
Permitted Refinancing has a Stated Maturity no earlier than the Stated Maturity
of the Money Borrowed being Refinanced;
(ii) except with respect to Refinancings of the Convertible Debentures, such
Permitted Refinancing has an Average Life at the time such Permitted Refinancing
is incurred that is equal to or greater than the Average Life of the Money
Borrowed being Refinanced;

 

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(iii) such Permitted Refinancing has an aggregate principal amount (or if
incurred with original issue discount, an aggregate issue price) that is equal
to or less than the aggregate principal amount (or if incurred with original
issue discount, the aggregate accreted value) then outstanding or committed
(plus fees and expenses, including any premium and defeasance costs) under the
Money Borrowed being Refinanced; and
(iv) the terms and conditions of the proposed Permitted Refinancing, taken as a
whole, as determined by Agent, in Agent’s Judgment, are not more adverse, in any
material respect, to Borrowers or Agent and Lenders than the Money Borrowed
being Refinanced.
Person - an individual, partnership, corporation, limited liability company,
joint stock company, land trust, business trust, or unincorporated organization,
or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees of any
Borrower or any of their Subsidiaries that is covered by Title IV of ERISA.
Pledge Agreement – the Pledge Agreement to be executed by Borrower
Representative or any other Borrower as applicable on or abut the Closing Date,
or thereafter, in favor of Agent for the benefit of itself and Lenders with
respect to the common equity Securities of each Borrower Representative’s
Subsidiaries, as such Pledge Agreement shall be amended from time to time after
the Closing Date.
Prime Rate – the rate of interest announced by Bank in Chicago, Illinois from
time to time as its “Prime Rate.” Borrower acknowledges that Bank may make loans
to its customers above, at or below the Prime Rate. Interest accruing by
reference to the Prime Rate shall be calculated on the basis of actual days
elapsed and a 360-day year.
Prime Rate Revolving Loan or Prime Rate Loans – any Revolving Loan for the
periods when the rate of interest applicable to such Revolving Loan is
calculated by reference to the Prime Rate.
Product Obligations - every obligation of any Borrower under and in respect of
any one or more of the following types of services or facilities extended to
such Borrower by Bank, Agent, any Lender or any Affiliate of Bank or Agent:
(i) credit cards, (ii) cash management or related services including the
automatic clearing house transfer of funds for the account of such Borrower
pursuant to agreement or overdraft, (iii) treasury management, including
controlled disbursement services and (iv) Derivative Obligations.
Projections – Borrowers’ forecasted Consolidated and consolidating (i) balance
sheets, (ii) profit and loss statements, (iii) cash flow statements, and
(iv) capitalization statements, all prepared on a consistent basis with the
historical financial statements of Borrowers and their Subsidiaries, together
with appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

 

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Public Filings – RNI’s annual reports on Form 10-K as filed with the SEC and
RNI’s quarterly reports on Form 10-Q as filed with the SEC.
Purchase Money Indebtedness - includes (i) Indebtedness (other than the
Obligations) for the payment of all or any part of the purchase price of any
fixed assets, (ii) any Indebtedness (other than the Obligations) incurred at the
time of or within 10 days prior to or after the acquisition of any fixed assets
for the purpose of financing all or any part of the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
RBS – as defined in the preamble hereto.
RCR Account Debtor – as defined in the definition of RCR Loans.
RCR Loans – amounts owed to a Borrower and arising out of a loan agreement or
similar document (“RCR Loan Documents”) between a Borrower and a Person engaged
in the restaurant or hospitality industry (“RCR Loan Account Debtor”) pursuant
to which a Borrower shall advance funds to such RCR Loan Account Debtor and said
RCR Loan Account Debtor shall repay such advances pursuant to regularly
scheduled installments of principal and interest as set forth in the applicable
RCR Loan Documents.
RCR Loan Documents – as defined in the definition of RCR Loans.
Refinance – in respect of any Indebtedness, to refinance, extend, renew, refund,
repay, prepay, purchase, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. Refinanced and
Refinancing shall have correlative meanings.
Reportable Event - any of the events set forth in Section 4043(c) of ERISA.
Reserve Percentage - the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against “Euro-currency Liabilities” as
defined in Regulation D.
Responsible Officer – Borrower Representative’s chief financial officer and such
other officer of Borrower Representative designated as such to Agent by such
chief financial officer.

 

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Restricted Investment - any investment made in cash or by delivery of Property
to any Person, whether by acquisition of stock, Indebtedness or other obligation
or Security, or by loan, advance or capital contribution, or otherwise, or in
any Property except the following:
(i) investments by a Borrower, to the extent existing on the Closing Date, in
one or more Subsidiaries of such Borrower;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in the ordinary
course of business of any Borrower or any of its Subsidiaries;
(iv) investments in direct obligations of the United States of America, or any
agency thereof or obligations guaranteed by the United States of America;
provided that such obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing within one year from the
date of acquisition and fully insured by the Federal Deposit Insurance
Corporation;
(vi) investments in commercial paper given the highest rating by a national
credit rating agency and maturing not more than 270 days from the date of
creation thereof;
(vii) investments in money market, mutual or similar funds having assets in
excess of $100,000,000 and the investments of which are limited to investment
grade securities;
(viii) intercompany loans permitted under subsection 8.2.2(v) of the Agreement;
(ix) investments existing on the date hereof and listed on Exhibit 8.2.11
hereto; and
(x) investments otherwise expressly permitted pursuant to the Agreement.
Revolving Credit Loan - a Loan made by any Lender pursuant to Section 1.1 of the
Agreement.
Revolving Credit Maximum Amount - $25,000,000.
Revolving Loan Commitment - with respect to any Lender, the amount of such
Lender’s Revolving Loan Commitment pursuant to subsection 1.1.1 of the
Agreement, as set forth below such Lender’s name on the signature page hereof or
any Assignment and Acceptance Agreement executed by such Lender.
Revolving Loan Percentage - with respect to each Lender, the percentage equal to
the quotient of such Lender’s Revolving Loan Commitment divided by the aggregate
of all Revolving Loan Commitments.
Revolving Notes - the Secured Promissory Notes to be executed by Borrowers on or
about the Closing Date in favor of each Lender to evidence the Revolving Credit
Loans, which shall be in the form of Exhibit 1.1 to the Agreement, together with
any replacement or successor notes therefor.
SEC – the Securities and Exchange Commission.
Security - all shares of stock, partnership interests, membership interests,
membership units or other ownership interests in any other Person and all
warrants, options or other rights to acquire the same.

 

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Security Documents - the Guaranty Agreements, the Patent Security Agreement, the
Pledge Agreement, the Trademark Security Agreement and all other instruments and
agreements now or at any time hereafter securing the whole or any part of the
Obligations.
Solvent - as to any Person, that such Person (i) owns Property whose fair
saleable value delivered on a going concern basis is greater than the amount
required to pay all of such Person’s Indebtedness (including contingent debts),
(ii) is able to pay all of its Indebtedness as such Indebtedness matures in the
ordinary course of business and (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage.
Stated Maturity – means, with respect, to any Money Borrowed, the date specified
in such agreements evidencing such Money Borrowed as the fixed date on which the
final payment of principal of such Money Borrowed is due and payable, including
pursuant to any mandatory redemption provision (but excluding any provision
providing for the repurchase of such security at the option of the holder
thereof upon the happening of any contingency unless such contingency has
occurred).
Subordinated Debt - Indebtedness of any Borrower or any Subsidiary of any
Borrower that is subordinated to the Obligations in a manner reasonably
satisfactory to Agent, and contains terms, including without limitation, payment
terms, satisfactory to Agent.
Subsidiary - any Person of which another Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the
time of determination.
Term - as defined in Section 4.1 of the Agreement.
Total Credit Facility - $25,000,000, as reduced or increased from time to time
pursuant to the terms of the Agreement.
Trademark Security Agreement – any trademark collateral assignment pursuant to
which any Borrower assigns to Agent, for the benefit of Lenders, such Person’s
interest in its trademarks as security for the Obligations.
Trigger Period – the period (a) commencing on the day the principal amount of
outstanding Revolving Credit Loans exceeds $0; and (b) continuing until the
principal amount of outstanding Revolving Credit Loans is $0.
Type of Organization - with respect to any Person, the kind or type of entity by
which such Person is organized, such as a corporation or limited liability
company.
UCC - the Uniform Commercial Code as in effect in the State of Illinois on the
date of this Agreement, as it may be amended or otherwise modified.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
Voting Stock - Securities of any class or classes of a corporation, limited
partnership or limited liability company or any other entity the holders of
which are ordinarily, in the absence of contingencies, entitled to vote with
respect to the election of corporate directors (or Persons performing similar
functions).

 

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Other Terms. All other terms contained in the Agreement shall have, when the
context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.
Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder”
and other words of similar import refer to the Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. The section titles, table of contents and list of
exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.

 

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EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
Consolidated Net Income (Loss) — with respect to any fiscal period, the net
income (or loss) of Borrower Representative and its Subsidiaries determined in
accordance with GAAP on a Consolidated basis; provided, however, Consolidated
Net Income shall not include: (a) the income (or loss) of any Person (other than
a subsidiary of a Borrower) in which Borrowers or any of their wholly-owned
subsidiaries has an ownership interest unless received in a cash distribution or
requiring the payment of cash; (b) the income (or loss) of any Person accrued
prior to the date it became a Subsidiary of a Borrower or is merged into or
consolidated with such Borrower; (c) all amounts included in determining net
income (or loss) in respect of the write-up of assets on or after the Closing
Date, including the subsequent amortization or expensing of the written-up
portion of the assets; (d) extraordinary gains as defined under GAAP; and
(e) gains from asset dispositions (other than sales of inventory).
Current Assets – at any date means the amount at which all of the Consolidated
current liabilities of Borrower Representative and its Subsidiaries would be
properly classified as current liabilities shown on a Consolidated balance sheet
at such date in accordance with GAAP.
Current Liabilities – at any date means the amount at which all of the
Consolidated current liabilities of Borrower Representative and its Subsidiaries
would be properly classified as current liabilities shown on a Consolidated
balance sheet at such date in accordance with GAAP, excluding that portion, if
any, of the Obligations or the Indebtedness outstanding under the Convertible
Debentures classified as a current liability.
EBITDA – with respect to any period, the sum of Consolidated Net Income (Loss)
before Interest Expense, income taxes, depreciation and amortization for such
period (but excluding any extraordinary gains for such period), plus the sum of
(i) non-cash gains and losses (as determined by Agent in Agent’s Judgment), plus
(ii) fees and expenses incurred in connection with the negotiation and
finalization of the Loan Documents, plus (iii) up to $2,000,000 of fees and
expenses incurred in connection with a Permitted Refinancing of the Convertible
Debentures, all as determined for Borrower Representative and its Subsidiaries
on a Consolidated basis and in accordance with GAAP.
Fixed Charge Coverage Ratio – with respect to any period, the ratio of
(i) EBITDA for such period minus the sum of (a) any provision for (plus any
benefit from) income taxes including in the determination of net earnings (or
loss) for such period plus (b) non-financed Capital Expenditures during such
period, to (ii) Fixed Charges for such period, all as determined for Borrower
Representative and its Subsidiaries on a Consolidated basis and in accordance
with GAAP.
Fixed Charges – with respect to any period, the sum of: (i) scheduled principal
payments required to be made during such period in respect to Indebtedness for
Money Borrowed (including the principal portion of Capitalized Lease
Obligations), but excluding scheduled principal payments required pursuant to
the Convertible Debentures (but including scheduled principal payments required
under any Permitted Refinancings thereof) plus (iii) Interest Expense for such
period, all as determined for Borrower Representative and its Subsidiaries on a
Consolidated basis and in accordance with GAAP.

 

Exhibit 8.3 - Page 1

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Interest Expense — with respect to any period, cash interest expense paid for
such period, including without limitation the interest portion of Capitalized
Lease Obligations, plus the Letter of Credit and LC Guaranty fees paid in cash
during such period, net of interest income, all as determined for Borrower
Representative and its Subsidiaries on a Consolidated basis and in accordance
with GAAP.
Quick Ratio – as of any date the ratio of Current Assets to Current Liabilities.
COVENANTS
1. Gross Availability. Borrowers shall not permit Gross Availability at any time
to be less than $5,000,000.
2. Fixed Charge Coverage Ratio. Borrowers shall not permit the Fixed Charge
Coverage Ratio for any period set forth below to be less than the ratio set
forth below opposite such period:

      Period   Ratio
 
   
Three Month Period Ended December 31, 2007
  1.10 to 1.0
 
   
Six Month Period Ended March 31, 2008
  1.10 to 1.0
 
   
Nine Month Period Ended June 30, 2008
  1.10 to 1.0
 
   
Twelve Month Period Ended September 30, 2008 and the last day of each December,
March, June and September thereafter
  1.10 to 1.0

3. Quick Ratio. Borrowers shall not permit the Quick Ratio as of any date set
forth below to be less than the ratio set forth below opposite such date:

      Date   Ratio
 
   
December 31, 2007 and the last day of March, June, September and December
thereafter
  4.00 to 1.0

 

Exhibit 8.3 - Page 2