Exhibit 10.1


 


EXECUTION COPY


 




 


 


SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


dated as of December 15, 2006


 


among


 


LECG, LLC,

as the Company


 


THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,

as Lenders,


 


LASALLE BANK NATIONAL ASSOCIATION,

as Administrative Agent,


 


BANK OF AMERICA, N.A.,

as Syndication Agent


 


and


 


KEYBANK NATIONAL ASSOCIATION, U. S. BANK NATIONAL ASSOCIATION  and WELLS

FARGO BANK, N.A., as Co-Documentation Agents


 


 





 


 


LASALLE BANK NATIONAL ASSOCIATION


 


and


 


BANC OF AMERICA SECURITIES, LLC,

as Co-Lead Arrangers and Book Runners


 


 

















 


Table of Contents


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  SECTION 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other
  Interpretive Provisions

  	
   

  	
  16

  
	
  1.3

  	
   

  	
  Exchange
  Rates; Currency Equivalents

  	
   

  	
  17

  
	
  1.4

  	
   

  	
  Agreed
  Currencies

  	
   

  	
  18

  
	
  1.5

  	
   

  	
  Change
  of Currency

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2

  	
   

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

  	
   

  	
   

  
	
  PROCEDURES

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Commitments

  	
   

  	
  19

  
	
  2.2

  	
   

  	
  Loan
  Procedures

  	
   

  	
  20

  
	
  2.3

  	
   

  	
  Letter
  of Credit Procedures

  	
   

  	
  23

  
	
  2.4

  	
   

  	
  Commitments
  Several

  	
   

  	
  25

  
	
  2.5

  	
   

  	
  Certain
  Conditions

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3

  	
   

  	
  EVIDENCING
  OF LOANS

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Notes

  	
   

  	
  25

  
	
  3.2

  	
   

  	
  Recordkeeping

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4

  	
   

  	
  INTEREST

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Interest
  Rates

  	
   

  	
  25

  
	
  4.2

  	
   

  	
  Interest
  Payment Dates

  	
   

  	
  26

  
	
  4.3

  	
   

  	
  Setting
  and Notice of Eurocurrency Rates

  	
   

  	
  26

  
	
  4.4

  	
   

  	
  Computation
  of Interest

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5

  	
   

  	
  FEES

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Non-Use
  Fee

  	
   

  	
  26

  
	
  5.2

  	
   

  	
  Letter
  of Credit Fees

  	
   

  	
  26

  
	
  5.3

  	
   

  	
  Administrative
  Agent’s Fees

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6

  	
   

  	
  REDUCTION
  OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Reduction
  or Termination of the Revolving Commitment

  	
   

  	
  27

  
	
  6.2

  	
   

  	
  Prepayments

  	
   

  	
  27

  
	
  6.3

  	
   

  	
  Manner
  of Prepayments

  	
   

  	
  28

  
	
  6.4

  	
   

  	
  Increase
  in Commitments

  	
   

  	
  28

  
	
  6.5

  	
   

  	
  Repayments

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7

  	
   

  	
  MAKING
  AND PRORATION OF PAYMENTS; SETOFF; TAXES

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Making
  of Payments

  	
   

  	
  29

  



 

















 


	
  7.2

  	
   

  	
  Application
  of Certain Payments

  	
   

  	
  29

  
	
  7.3

  	
   

  	
  Due
  Date Extension

  	
   

  	
  30

  
	
  7.4

  	
   

  	
  Setoff

  	
   

  	
  30

  
	
  7.5

  	
   

  	
  Proration
  of Payments

  	
   

  	
  30

  
	
  7.6

  	
   

  	
  Taxes

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8

  	
   

  	
  INCREASED
  COSTS; SPECIAL PROVISIONS FOR EUROCURRENCY RATE LOANS

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Increased
  Costs

  	
   

  	
  32

  
	
  8.2

  	
   

  	
  Basis
  for Determining Interest Rate Inadequate or Unfair

  	
   

  	
  32

  
	
  8.3

  	
   

  	
  Changes
  in Law Rendering Eurocurrency Rate Loans Unlawful

  	
   

  	
  33

  
	
  8.4

  	
   

  	
  Funding
  Losses

  	
   

  	
  33

  
	
  8.5

  	
   

  	
  Right
  of Lenders to Fund through Other Offices

  	
   

  	
  34

  
	
  8.6

  	
   

  	
  Discretion
  of Lenders as to Manner of Funding

  	
   

  	
  34

  
	
  8.7

  	
   

  	
  Mitigation
  of Circumstances; Replacement of Lenders

  	
   

  	
  34

  
	
  8.8

  	
   

  	
  Conclusiveness
  of Statements; Survival of Provisions

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Organization

  	
   

  	
  35

  
	
  9.2

  	
   

  	
  Authorization;
  No Conflict

  	
   

  	
  35

  
	
  9.3

  	
   

  	
  Validity
  and Binding Nature

  	
   

  	
  35

  
	
  9.4

  	
   

  	
  Financial
  Condition

  	
   

  	
  35

  
	
  9.5

  	
   

  	
  No
  Material Adverse Change

  	
   

  	
  35

  
	
  9.6

  	
   

  	
  Litigation
  and Contingent Liabilities

  	
   

  	
  35

  
	
  9.7

  	
   

  	
  Ownership
  of Properties; Liens

  	
   

  	
  36

  
	
  9.8

  	
   

  	
  Subsidiaries

  	
   

  	
  36

  
	
  9.9

  	
   

  	
  Pension
  Plans

  	
   

  	
  36

  
	
  9.10

  	
   

  	
  Investment
  Company Act

  	
   

  	
  36

  
	
  9.11

  	
   

  	
  Regulation
  U

  	
   

  	
  36

  
	
  9.12

  	
   

  	
  Taxes

  	
   

  	
  37

  
	
  9.13

  	
   

  	
  Solvency,
  etc

  	
   

  	
  37

  
	
  9.14

  	
   

  	
  Environmental
  Matters

  	
   

  	
  37

  
	
  9.15

  	
   

  	
  Insurance

  	
   

  	
  37

  
	
  9.16

  	
   

  	
  Information

  	
   

  	
  38

  
	
  9.17

  	
   

  	
  Intellectual
  Property

  	
   

  	
  38

  
	
  9.18

  	
   

  	
  Burdensome
  Obligations

  	
   

  	
  38

  
	
  9.19

  	
   

  	
  Labor
  Matters

  	
   

  	
  38

  
	
  9.20

  	
   

  	
  No
  Default

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10

  	
   

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Reports,
  Certificates and Other Information

  	
   

  	
  38

  
	
  10.2

  	
   

  	
  Books,
  Records and Inspections

  	
   

  	
  40

  
	
  10.3

  	
   

  	
  Maintenance
  of Property; Insurance

  	
   

  	
  41

  
	
  10.4

  	
   

  	
  Compliance
  with Laws; Payment of Taxes and Liabilities

  	
   

  	
  41

  
	
  10.5

  	
   

  	
  Maintenance
  of Existence, etc

  	
   

  	
  42

  
	
  10.6

  	
   

  	
  Use
  of Proceeds

  	
   

  	
  42

  
	
  10.7

  	
   

  	
  Employee
  Benefit Plans

  	
   

  	
  42

  



 


ii

















 


	
  10.8

  	
   

  	
  Environmental
  Matters

  	
   

  	
  42

  
	
  10.9

  	
   

  	
  Further
  Assurances

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11

  	
   

  	
  NEGATIVE
  COVENANTS

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Debt

  	
   

  	
  43

  
	
  11.2

  	
   

  	
  Liens

  	
   

  	
  44

  
	
  11.3

  	
   

  	
  Restricted
  Payments

  	
   

  	
  45

  
	
  11.4

  	
   

  	
  Mergers,
  Consolidations, Sales

  	
   

  	
  45

  
	
  11.5

  	
   

  	
  Modification
  of Organizational Documents and Navigant Subordination Agreement

  	
   

  	
  47

  
	
  11.6

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  47

  
	
  11.7

  	
   

  	
  Unconditional
  Purchase Obligations

  	
   

  	
  47

  
	
  11.8

  	
   

  	
  Inconsistent
  Agreements

  	
   

  	
  47

  
	
  11.9

  	
   

  	
  Business
  Activities

  	
   

  	
  47

  
	
  11.10

  	
   

  	
  Investments

  	
   

  	
  48

  
	
  11.11

  	
   

  	
  Fiscal
  Year

  	
   

  	
  48

  
	
  11.12

  	
   

  	
  Financial
  Covenants

  	
   

  	
  49

  
	
  11.13

  	
   

  	
  Signing
  and Performance Bonuses

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12

  	
   

  	
  EFFECTIVENESS;
  CONDITIONS OF LENDING, ETC.

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Initial
  Credit Extension

  	
   

  	
  49

  
	
  12.2

  	
   

  	
  Conditions

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13

  	
   

  	
  EVENTS
  OF DEFAULT AND THEIR EFFECT

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Events
  of Default

  	
   

  	
  51

  
	
  13.2

  	
   

  	
  Effect
  of Event of Default

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14

  	
   

  	
  THE
  AGENTS

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Appointment
  and Authorization

  	
   

  	
  53

  
	
  14.2

  	
   

  	
  Issuing
  Lender

  	
   

  	
  53

  
	
  14.3

  	
   

  	
  Delegation
  of Duties

  	
   

  	
  54

  
	
  14.4

  	
   

  	
  Exculpation
  of Administrative Agent

  	
   

  	
  54

  
	
  14.5

  	
   

  	
  Reliance
  by Administrative Agent

  	
   

  	
  54

  
	
  14.6

  	
   

  	
  Notice
  of Default

  	
   

  	
  54

  
	
  14.7

  	
   

  	
  Credit
  Decision

  	
   

  	
  55

  
	
  14.8

  	
   

  	
  Indemnification

  	
   

  	
  55

  
	
  14.9

  	
   

  	
  Administrative
  Agent in Individual Capacity

  	
   

  	
  56

  
	
  14.10

  	
   

  	
  Successor
  Administrative Agent

  	
   

  	
  56

  
	
  14.11

  	
   

  	
  Administrative
  Agent May File Proofs of Claim

  	
   

  	
  56

  
	
  14.12

  	
   

  	
  Other
  Agents; Arrangers and Managers

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15

  	
   

  	
  GENERAL

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Waiver;
  Amendments

  	
   

  	
  57

  
	
  15.2

  	
   

  	
  Confirmations

  	
   

  	
  58

  
	
  15.3

  	
   

  	
  Notices

  	
   

  	
  58

  
	
  15.4

  	
   

  	
  Computations

  	
   

  	
  58

  
	
  15.5

  	
   

  	
  Costs,
  Expenses and Taxes

  	
   

  	
  58

  



 


iii

















 


	
  15.6

  	
   

  	
  Assignments;
  Participations

  	
   

  	
  59

  
	
  15.7

  	
   

  	
  Register

  	
   

  	
  60

  
	
  15.8

  	
   

  	
  GOVERNING
  LAW

  	
   

  	
  60

  
	
  15.9

  	
   

  	
  Confidentiality

  	
   

  	
  60

  
	
  15.10

  	
   

  	
  Severability

  	
   

  	
  61

  
	
  15.11

  	
   

  	
  Nature
  of Remedies

  	
   

  	
  61

  
	
  15.12

  	
   

  	
  Entire
  Agreement

  	
   

  	
  61

  
	
  15.13

  	
   

  	
  Counterparts

  	
   

  	
  61

  
	
  15.14

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  61

  
	
  15.15

  	
   

  	
  Captions

  	
   

  	
  62

  
	
  15.16

  	
   

  	
  Customer
  Identification - USA Patriot Act Notice

  	
   

  	
  62

  
	
  15.17

  	
   

  	
  INDEMNIFICATION
  BY THE COMPANY

  	
   

  	
  62

  
	
  15.18

  	
   

  	
  Nonliability
  of Lenders

  	
   

  	
  63

  
	
  15.19

  	
   

  	
  FORUM
  SELECTION AND CONSENT TO JURISDICTION

  	
   

  	
  63

  
	
  15.20

  	
   

  	
  WAIVER
  OF JURY TRIAL

  	
   

  	
  64

  
	
  15.21

  	
   

  	
  Judgment
  Currency

  	
   

  	
  64

  
	
  15.22

  	
   

  	
  Amendment
  and Restatement

  	
   

  	
  64

  



 


iv

















 


	 
	
  ANNEXES

  
	 
	
   

  
	
  ANNEX
  A

  	
  Lenders
  and Pro Rata Shares

  	 

	
  ANNEX
  B

  	
  Addresses
  for Notices

  	 

	
   

  	
   

  	 

	 
	
  SCHEDULES

  
	 
	
   

  
	
  SCHEDULE
  2.1

  	
  Existing
  Letters of Credit

  	 

	
  SCHEDULE
  9.6

  	
  Litigation
  and Contingent Liabilities

  	 

	
  SCHEDULE
  9.8

  	
  Subsidiaries

  	 

	
  SCHEDULE
  9.15

  	
  Insurance

  	 

	
  SCHEDULE
  9.19

  	
  Labor
  Matters

  	 

	
  SCHEDULE
  11.1

  	
  Existing
  Debt

  	 

	
  SCHEDULE
  11.2

  	
  Existing
  Liens

  	 

	
  SCHEDULE
  11.6

  	
  Existing
  Affiliate Transactions

  	 

	
  SCHEDULE
  11.10

  	
  Investments

  	 

	
   

  	
   

  	 

	
  EXHIBITS

  	 

	
   

  	 

	
  EXHIBIT A

  	
  Form of
  Note (Section 3.1)

  	 

	
  EXHIBIT B

  	
  Form of
  Compliance Certificate (Section 10.1.3)

  	 

	
  EXHIBIT C

  	
  Form of
  Assignment Agreement (Section 15.6.1)

  	 

	
  EXHIBIT D

  	
  Form of
  Notice of Borrowing (Section 2.2.2)

  	 

	
  EXHIBIT E

  	
  Form of
  Notice of Conversion/Continuation (Section 2.2.3)

  	 

				



 
















 


SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


THIS
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of  December 15, 2006 (this “Agreement”)
is entered into among LECG, LLC  (the “Company”),
the financial institutions that are or may from time to time become parties
hereto (together with their respective successors and assigns, the “Lenders”),
LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity, “LaSalle”),
as administrative agent for the Lenders, and BANK OF AMERICA, N.A., as
syndication agent for the Lenders.


 


RECITALS


 


A.            The Company, U.S. Bank National
Association, as a bank and as administrative agent (in such capacity, the “Existing
Administrative Agent”), and LaSalle, as a bank and as documentation agent, are
parties to an Amended and Restated Credit Agreement dated as of March 31,
2003, as amended by that certain First Amendment to Amended and Restated Credit
Agreement dated August 18, 2003, that certain Second Amendment to Amended
and Restated Credit Agreement dated November 12, 2003, that certain Third
Amendment to Amended and Restated Credit Agreement dated April 15, 2004,
that certain Fourth Amendment to Amended and Restated Credit Agreement dated
August 12, 2004, with an effective date of July 30, 2004 and that
certain Fifth Amendment to Amended and Restated Credit Agreement dated
July 28, 2005, the “Existing Credit Agreement”).


 


B.            Pursuant to that certain Assignment
and Assumption Agreement dated concurrently herewith (the “Assignment
Agreement”) among the Administrative Agent, the Lenders, the Existing
Administrative Agent and U.S. Bank, among other things, (a) the Existing
Administrative Agent resigned as the “Administrative Agent” under the Existing
Credit Agreement pursuant to Section 14.9 of the Existing Credit Agreement
and (b) the Banks appointed LaSalle as the successor “Administrative Agent”
under the Existing Credit Agreement.


 


C.            The parties wish to amend and
restate the Existing Credit Agreement in its entirety pursuant to the terms and
conditions of this Agreement.


 


In
consideration of the mutual agreements herein contained, the parties hereto
agree that the existing Credit Agreement is amended and restated in its
entirety as follows:


 


SECTION 1            DEFINITIONS.


 


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


 


Acquired
Debt means mortgage Debt or Debt with respect to Capital Leases of a Person
existing at the time such Person became a Subsidiary or assumed by the Company
or a Subsidiary of the Company pursuant to an Acquisition permitted hereunder
(and not created or incurred in connection with or in anticipation of such
Acquisition) which is otherwise permitted by the terms of this Agreement.


 


Acquisition means any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all
of the assets of a Person, or of all or substantially all of any business or
division of a Person, (b) the acquisition of in excess of 50% of the


 

















 


Capital
Securities of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is already a Subsidiary).


 


Administrative
Agent means LaSalle in its capacity as administrative agent for the Lenders
hereunder and any successor thereto in such capacity.


 


Affected
Loan - see Section 8.3.


 


Affiliate of any Person
means (a) any other Person which, directly or indirectly, controls or is
controlled by or is under common control with such Person, (b) any officer
or director of such Person and (c) with respect to any Lender, any entity
administered or managed by such Lender or an Affiliate or investment advisor
thereof and which is engaged in making, purchasing, holding or otherwise
investing in commercial loans.  A Person
shall be deemed to be “controlled by” any other Person if such Person
possesses, directly or indirectly, power to vote 5% or more of the securities
(on a fully diluted basis) having ordinary voting power for the election of
directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.  Unless expressly stated otherwise herein,
neither the Administrative Agent nor any Lender shall be deemed an Affiliate of
any Loan Party.


 


Agent
Fee Letter means the fee letter dated as of November 3,
2006 among the Company, Administrative Agent, Bank of America, N.A., and Banc
of America Securities, LLC.


 


Agreed
Currency means, subject to Section 1.3 and Section 1.4,
(a) Dollars, (b) Euro, (c) Pounds Sterling and (d) any
other Eligible Currency approved in accordance with Section 1.5.


 


Agreement - see the Preamble.


 


Applicable Margin means, for any day, the rate per annum set
forth below opposite the level (the “Level”) then in effect, it being
understood that the Applicable Margin for (i) Eurocurrency Rate Loans
shall be the percentage set forth under the column “Eurocurrency Margin”,
(ii)  the Non-Use Fee Rate shall be the percentage set forth under the
column “Non-Use Fee Rate” and (iii) the L/C Fee shall be the percentage
set forth under the column “L/C Fee Rate”:


 


	
  Level

  	
   

  	
  Total Debt

  to EBITDA Ratio

  	
   

  	
  Eurocurrency

  Rate

  Margin

  	
   

  	
  Non-Use

  Fee Rate

  	
   

  	
  L/C Fee

  Rate

  	
   

  
	
  I

  	
   

  	
  Less
  than or equal to 3.0:1

  	
   

  	
  1.25

  	
  %

  	
  0.20

  	
  %

  	
  1.25

  	
  %

  
	
  II

  	
   

  	
  Less
  than or equal to 2.5:1 but greater than 2.0:1

  	
   

  	
  1.00

  	
  %

  	
  0.20

  	
  %

  	
  1.00

  	
  %

  
	
  III

  	
   

  	
  Less
  than or equal to 2.0:1.0 but greater than 1.5:1

  	
   

  	
  0.875

  	
  %

  	
  0.175

  	
  %

  	
  0.875

  	
  %

  
	
  IV

  	
   

  	
  Less
  than or equal to 1.5:1 but greater than 1.0:1

  	
   

  	
  0.75

  	
  %

  	
  0.15

  	
  %

  	
  0.75

  	
  %

  
	
  V

  	
   

  	
  Less
  than or equal to 1.0:1 but greater than 0.5:1

  	
   

  	
  0.625

  	
  %

  	
  0.125

  	
  %

  	
  0.625

  	
  %

  
	
  VI

  	
   

  	
  Less
  than or equal to 0.5:1

  	
   

  	
  0.50

  	
  %

  	
  0.10

  	
  %

  	
  0.50

  	
  %

  



 


2

















 


The
Eurocurrency Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be
adjusted, to the extent applicable, on the fifth (5th) Business Day after the
Company provides or is required to provide the annual and quarterly financial
statements and other information pursuant to Sections 10.1.1 or 10.1.2,
as applicable, and the related Compliance Certificate, pursuant to Section 10.1.3.  Notwithstanding anything contained in this
paragraph to the contrary, (a) if the Company fails to deliver the
financial statements and Compliance Certificate in accordance with the provisions
of Sections 10.1.1, 10.1.2 and 10.1.3, the Eurocurrency
Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be based upon
Level I above beginning on the date such financial statements and Compliance
Certificate were required to be delivered until the fifth (5th) Business Day
after such financial statements and Compliance Certificate are actually
delivered, whereupon the Applicable Margin shall be determined by the then
current Level, (b) no reduction to any Applicable Margin shall become
effective at any time when an Event of Default or Unmatured Event of Default
has occurred and is continuing, and (c) the initial Applicable Margin on
the Closing Date shall be based on Level VI until the date on which the
Applicable Margin is required to be adjusted as set forth above.


 


Asset
Disposition means the sale, lease, assignment or other transfer
for value (each, a “Disposition”) by any Loan Party to any Person (other
than a Loan Party) of any asset or right of such Loan Party (including the sale
of Capital Securities of any Subsidiary).


 


Assignee - see Section 15.6.1.


 


Assignment
Agreement - see Section 15.6.1.


 


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


 


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


 


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


 


Bank
Products means any service or facility extended to any Loan
Party by any Lender or its Affiliates including:  (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards,
(e) ACH transactions, (f) cash management, including controlled
disbursement, accounts or services, and (g) Hedging Agreements.


 


Base
Rate means at any time the greater of (a) the Federal Funds Rate plus
0.5% and (b) the Prime Rate.


 


3

















 


Base
Rate Loan means any Loan denominated in Dollars which bears
interest at or by reference to the Base Rate.


 


BSA - see Section 10.4.


 


Business
Day means any day on which LaSalle is open for commercial banking business
in Chicago, Illinois; provided,


 


(a)           if such day relates to any interest
rate settings as to a Eurocurrency Rate Loan denominated in Dollars, any
fundings, disbursements, settlements and payments in Dollars in respect of any
such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out
pursuant to this Agreement in respect of any such Eurocurrency Rate Loan,
Business Day means any such day on which dealings in deposits in Dollars are
conducted by and between banks in the London interbank eurodollar market;


 


(b)           if such day relates to any interest
rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings,
disbursements, settlements and payments in Euro in respect of any such
Eurocurrency Rate Loan, or any other dealings in Euro to be carried out
pursuant to this Agreement in respect of any such Eurocurrency Rate Loan,
Business Day means any such day which is a TARGET Day;


 


(c)           if such day relates to any interest
rate settings as to a Eurocurrency Rate Loan denominated in a currency other
than Dollars or Euro, Business Day means any such day on which dealings in
deposits in the relevant currency are conducted by and between banks in the
London or other applicable offshore interbank market for such currency; and


 


(d)           if such day relates to any fundings,
disbursements, settlements and payments in a currency other than Dollars or
Euro in respect of a Eurocurrency Rate Loan denominated in a currency other
than Dollars or Euro, or any other dealings in any currency other than Dollars
or Euro to be carried out pursuant to this Agreement in respect of any such
Eurocurrency Rate Loan (other than any interest rate settings), Business Day
means any such day on which banks are open for foreign exchange business in the
principal financial center of the country of such currency.


 


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


 


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


 


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


 


4

















 


partnership,
interests in a Trust, interests in other unincorporated organizations or any
other equivalent of such ownership interest.


 


Cash
Collateralize means to deliver cash collateral to the
Administrative Agent, to be held as cash collateral for outstanding Letters of
Credit, pursuant to documentation satisfactory to the Administrative
Agent.  Derivatives of such term have
corresponding meanings.


 


Cash
Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by a Lender or its holding company) rated at
least A-l by Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. or P-l by Moody’s Investors
Service, Inc., (c) any certificate of deposit, time deposit or banker’s
acceptance, maturing not more than one year after such time, or any overnight
Federal Funds transaction that is issued or sold by any Lender or its holding
company (or by a commercial banking institution that is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000), (d) any repurchase agreement entered into
with any Lender (or commercial banking institution of the nature referred to in
clause (c)) which (i) is secured by a fully perfected security
interest in any obligation of the type described in any of clauses (a) through
(c) above and (ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such Lender (or other commercial banking institution) thereunder
and (e) money market accounts or mutual funds which invest exclusively in
assets satisfying the foregoing requirements, and (f) other short term
liquid investments approved in writing by the Administrative Agent.


 


Change
of Control means the occurrence of any of the following
events: (a) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934) shall acquire
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
such Act) of more than 30% of the outstanding securities (on a fully diluted
basis and taking into account any securities or contract rights exercisable,
exchangeable or convertible into equity securities) of Parent having voting
rights in the election of directors under normal circumstances; (b) a
majority of the members of the Board of Directors of Parent shall cease to be
Continuing Members; or (c) Parent shall cease to own and control 100% of
the outstanding Capital Securities of the Company.  For purposes of the foregoing, “Continuing
Member” means a member of the Board of Directors of Parent who either
(i) was a member of Parent’s Board of Directors on the day before the
Closing Date and has been such continuously thereafter or (ii) became a
member of such Board of Directors after the day before the Closing Date and
whose election or nomination for election was approved by a vote of the
majority of the Continuing Members then members of Parent’s Board of Directors
or of the shareholders of Parent in an uncontested Parent-initiated election.


 


Closing
Date - see Section 12.1.


 


Code means the
Internal Revenue Code of 1986.


 


Commitment means, as to
any Lender, such Lender’s commitment to make Loans, and to issue or participate
in Letters of Credit, under this Agreement. 
The initial amount of each Lender’s commitment to make Loans is set
forth on Annex A.


 


Company - see the Preamble.


 


Compliance
Certificate means a Compliance Certificate in substantially the
form of Exhibit B.


 


5

















 


Computation Date means (a) the Closing
Date and (b) so long as any outstanding Loan or Letter of Credit is
denominated in a Foreign Currency, (i) the last Business Day of each
calendar quarter, (ii) the date of any proposed Loan or issuance of a
Letter of Credit if Administrative Agent shall determine or Required Lenders
shall require, (iii) the date of any reduction or reallocation of Commitments
pursuant to Section 6.1.1, and (iv) such additional dates as
Administrative Agent shall determine or Required Lenders shall require.


 


Computation
Period means each period of four consecutive Fiscal Quarters ending on the
last day of a Fiscal Quarter.


 


Consolidated
Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any gains from Asset
Dispositions, any extraordinary gains and any gains from discontinued
operations.


 


Contingent
Liability means any liability or obligation identified by the
Company or the Parent in their consolidated financial statements as a
contingent liability under GAAP.


 


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


 


Debt of any Person
means, without duplication, (a) all indebtedness of such Person for
borrowed money, whether or not evidenced by bonds, debentures, notes or similar
instruments, (b) all obligations of such Person as lessee under Capital
Leases which have been or should be recorded as liabilities on a balance sheet
of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person; provided that if
such Person has not assumed or otherwise become liable for such indebtedness,
such indebtedness shall be measured at the lesser of (i) the fair market
value of such property securing such indebtedness at the time of determination,
or (ii) the outstanding amount of such indebtedness at the time of
determination, (e) all obligations, contingent or otherwise, with respect
to the face amount of all letters of credit (whether or not drawn), bankers’
acceptances and similar obligations issued for the account of such Person
(including the Letters of Credit), (f) all Hedging Obligations of such
Person, (g) all Suretyship Liabilities of such Person, (h) all Debt
of any partnership of which such Person is a general partner and (i) any
Capital Securities or other equity instrument, whether or not mandatorily
redeemable, that under GAAP is characterized as debt, whether pursuant to
financial accounting standards board issuance No. 150 or otherwise.


 


Designated Currency means, (a) for
Eurocurrency Rate Loans and Letters of Credit, the Agreed Currency which is
designated for such Eurocurrency Rate Loans and Letters of Credit, (b) for
Base Rate Loans, Dollars, and (c) for Swing Line Loans, Dollars.


 


Designated
Proceeds - see Section 6.2.2(a).


 


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


 


Dollar Equivalent means, at any time,
(a) with respect to any amount denominated in Dollars, such amount, and
(b) with respect to any amount denominated in any Foreign Currency, the
equivalent


 


6

















 


amount
thereof in Dollars as determined by Administrative Agent or Issuing Lender, as
the case may be, at such time on the basis of the Exchange Rate (determined in
respect of the most recent Computation Date) for the purchase of Dollars with
such Foreign Currency.


 


EBIT means, for any period, Consolidated Net Income for
such period plus, to the extent deducted in determining such
Consolidated Net Income, (i) Interest Expense, (ii) income tax
expense, (iii) amortization of Signing and Performance Bonus expense, and
(iv) non-cash equity compensation expense.


 


EBITDA means, for any
period, Consolidated Net Income for such period plus, to the extent
deducted in determining such Consolidated Net Income, (i) Interest
Expense, (ii) income tax expense, (iii) depreciation and amortization
for such period, including, but not limited to, amortization of Signing and
Performance Bonus expense, (iv) non-cash equity compensation expense,
(v) other non-cash charges (excluding any such non-cash charge to the
extent that it represents an accrual or reserve for potential cash items in the
future), (vi) extraordinary non-cash losses (as determined in accordance
with GAAP) incurred other than in the ordinary course of business, (vii) goodwill
impairment expense per GAAP and (viii) expensed acquisition costs of up to
$500,000 minus, to the extent included in Consolidated Net Income,
extraordinary gains (as determined in accordance with GAAP) realized other than
in the ordinary course of business, for such period. In addition, “EBITDA”
shall also (x) include EBITDA for each Subsidiary, business or division
acquired in an Acquisition occurring during such period for which financial
statements have been received as required pursuant hereto as if such
Acquisition had occurred as of the first day of such period, and
(y) exclude EBITDA attributable to each Asset Disposition of a Subsidiary,
business or division occurring in the relevant period as if such Asset
Disposition had occurred as of the first day of such period.


 


Eligible Currency means any Foreign Currency
provided that: (a) quotes for loans in such currency are available in the
London interbank deposit market, (b) such currency is freely transferable
and convertible into Dollars in the London foreign exchange market, (c) no
approval of a government authority in the country of issue of such currency is
required to permit use of such currency by any applicable Lender or Issuing
Lender for making loans or issuing letters of credit, or honoring drafts
presented under letters of credit in such currency, and (d) there is no
restriction or prohibition under any applicable legal requirements against the
use of such currency for such purposes.


 


EMU Legislation means the legislative
measures of the European Council for the introduction of, changeover to or
operation of a single or unified European currency.


 


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


 


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


 


ERISA means the
Employee Retirement Income Security Act of 1974.


 


7

















 


Event
of Default means any of the events described in Section 13.1.


 


Euro and EUR mean the lawful currency of
the Participating Member States introduced in accordance with the EMU
Legislation.


 


Eurocurrency
Rate Loan means any Loan which bears interest at a rate
determined by reference to the Eurocurrency Rate.


 


Eurocurrency
Rate Margin - see the definition of Applicable Margin.


 


Eurocurrency
Rate Office means with respect to any Lender the office or
offices of such Lender which shall be making or maintaining the Eurocurrency
Rate Loans of such Lender hereunder.  A Eurocurrency
Rate Office of any Lender may be, at the option of such Lender, either a
domestic or foreign office.


 


Eurocurrency
Rate means a rate of interest equal to (a) the per annum rate of
interest at which deposits in the applicable Designated Currency in an amount
comparable to the amount of the relevant Eurocurrency Rate Loan and for a
period equal to the relevant Interest Period are offered in the London
Interbank Eurocurrency market at 11:00 A.M. (London time) two
(2) Business Days prior to the commencement of such Interest Period (or
three (3) Business Days prior to the commencement of such Interest Period
if banks in London, England were not open and dealing in the applicable
Designated Currency on such second preceding Business Day), as displayed in the
Bloomberg Financial Markets system (or
other authoritative source selected by the Administrative Agent in its sole
discretion) or, if the Bloomberg Financial
Markets system or another authoritative source is not available, as
the Eurocurrency Rate is otherwise determined by the Administrative Agent in
its sole and absolute discretion, divided by (b) a number determined by
subtracting from 1.00 the then stated maximum reserve percentage for
determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D), such rate to remain
fixed for such Interest Period.  The
Administrative Agent’s determination of the Eurocurrency Rate shall be
conclusive, absent manifest error.


 


Exchange Rate means, on any Business Day,
with respect to any calculation of the Dollar Equivalent with respect to any
Foreign Currency on such date or any calculation of the Foreign Currency Equivalent
on such date, the rate at which such Foreign Currency may be exchanged into
Dollars or Dollars may be exchanged into such Foreign Currency, as set forth on
such date on the relevant FWDS Series Reuters currency page at or
about 11:00 a.m. (New York time) on such date.  In the event that such rate does not appear
on any such Reuters page, the “Exchange Rate” with respect to such Foreign
Currency shall be determined by reference to such other publicly available
service for displaying exchange rates as may be agreed upon by Administrative
Agent and Company or, in the absence of such agreement, such “Exchange Rate”
shall instead be Administrative Agent’s spot rate of exchange in the interbank
market where its currency exchange operations in respect of such Foreign
Currency are then being conducted, at or about 10:00 A.M. local time at
such date for the purchase of such Foreign Currency with Dollars or the
purchase of Dollars with such Foreign Currency, as the case may be, for
delivery two Business Days later; provided that if at the time of any such
determination no such spot rate can reasonably be quoted, Administrative Agent
may use any reasonable method (including obtaining quotes from three or more
market makers for such Foreign Currency) as it deems appropriate to determine
such rate and such determination shall be presumed correct absent manifest
error.


 


8

















 


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


 


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


 


Fiscal
Quarter means a fiscal quarter of a Fiscal Year.


 


Fiscal
Year means the fiscal year of the Company and its Subsidiaries, which
period shall be the 12-month period ending on December 31 of each
year.  References to a Fiscal Year with a
number corresponding to any calendar year (e.g., “Fiscal Year 2006”)
refer to the Fiscal Year ending on December 31  of
such calendar year.


 


Fixed
Charge Coverage Ratio means, for any Computation Period, the ratio
of (a) the sum of (i) EBIT for such Computation Period and
(ii) Rentals for such Computation Period to (b) the sum of (without
duplication) (i) cash Interest Expense for such Computation Period and
(ii) Rentals for such Computation Period.


 


Foreign Currency means a currency other than
Dollars.


 


Foreign Currency Equivalent means, at any
time, with respect to any amount denominated in Dollars, the equivalent amount
thereof in the applicable Foreign Currency as determined by Administrative
Agent or the Issuing Lender, as the case may be, at such time on the basis of
the Exchange Rate (determined in respect of the most recent Computation Date)
for the purchase of such Foreign Currency with Dollars.


 


FRB means the
Board of Governors of the Federal Reserve System or any successor thereto.


 


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


 


Group - see Section 2.2.1.


 


Guarantors means,
collectively, Parent and the Domestic Subsidiaries.


 


9

















 


Guaranty
and Pledge Agreement means the Guaranty and Pledge Agreement dated as of
the date hereof executed and delivered by the Company and the Guarantors,
together with any joinders thereto and any other guaranty executed by a Loan
Party, in each case in form and substance satisfactory to the Administrative
Agent.


 


Hazardous
Substances means any “hazardous waste”, as defined in 42
U.S.C. §6903(5), any “hazardous substance”, as defined in 42 U.S.C. §9601(14),
any “pollutant” or “contaminant”, as defined in 42 U.S.C. §9601(33), or any toxic
substance, oil or hazardous material or other chemical or substance regulated
by any Environmental Law.


 


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


 


Hedging
Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement.


 


Indemnified
Liabilities - see Section 15.16.


 


Interest
Expense means for any period the consolidated interest expense of the Company
and its Subsidiaries for such period (including all imputed interest on Capital
Leases).


 


Interest
Period means, as to any Eurocurrency Rate Loan, the period commencing on the
date such Loan is borrowed or continued as, or converted into, a Eurocurrency
Rate Loan and ending on the date one, two, three or six months thereafter as
selected by the Company pursuant to Section 2.2.2 or 2.2.3,
as the case may be; provided that:


 


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


 


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


 


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


 


Investment means, with
respect to any Person, any investment in another Person, whether by acquisition
of any debt or Capital Security, by making any loan, by becoming obligated with
respect to a Suretyship Liability in respect of obligations of such other
Person (other than travel and similar advances to employees in the ordinary
course of business) or by making an Acquisition.


 


Issuing
Lender means (i) U.S. Bank National Association, in its capacity as the
issuer of the Letters of Credit listed on Schedule 2.1 and indicated thereon
as having been issued by it, and (ii) LaSalle, in its capacity as the
issuer of all other Letters of Credit hereunder, or any Affiliate of LaSalle
that may from time to time issue such Letters of Credit, and their successors
and assigns in such capacity.


 


10

















 


LaSalle - see the Preamble.


 


L/C
Application means, with respect to any request for the issuance
of a Letter of Credit, a letter of credit application in the form being used by
the Issuing Lender at the time of such request for the type of letter of credit
requested.


 


L/C
Fee Rate - see the definition of Applicable Margin.


 


Lender - see the Preamble.  References to the “Lenders” shall include the
Issuing Lender; for purposes of clarification only, to the extent that LaSalle
(or any successor Issuing Lender) may have any rights or obligations in
addition to those of the other Lenders due to its status as Issuing Lender, its
status as such will be specifically referenced. 
In addition to the foregoing, for the purpose of identifying the Persons
entitled to benefit from the Guaranty and Pledge Agreement under, and in
accordance with the provisions of, this Agreement and the Guaranty and Pledge
Agreement, the term “Lender” shall include Affiliates of a Lender providing a
Bank Product.


 


Lender
Party - see Section 15.17.


 


Letter
of Credit - see Section 2.1.2.


 


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


 


Loan
Documents means this Agreement, the Notes, the Letters of
Credit, the Master Letter of Credit Agreement, the L/C Applications, the Agent
Fee Letter, the Guaranty and Pledge Agreement, and all documents, instruments
and agreements delivered in connection with the foregoing.


 


Loan
Party means each of Parent, the Company and each Subsidiary.


 


Loan
or Loans means, as the context may require, Revolving Loans
and/or Swing Line Loans.


 


Margin
Stock means any “margin stock” as defined in Regulation U.


 


Master
Letter of Credit Agreement means, at any time, with
respect to the issuance of Letters of Credit, a master letter of credit
agreement or reimbursement agreement in the form, if any, being used by the
Issuing Lender at such time.


 


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


 


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


 


11
















 


Navigant
Subordination Agreement means the Subordination Agreement dated as
of September 29, 2000 among LECG Holding Company, LLC, the Company,
Navigant Consulting, Inc., and First Union National Bank, as
administrative agent, which references deferred purchase price obligations, as
amended, restated, supplemented or modified from time to time.


 


Non-U.S.
Participant - see Section 7.6(d).


 


Non-Use
Fee Rate - see the definition of Applicable Margin.


 


Note means a
promissory note substantially in the form of Exhibit A.


 


Notice
of Borrowing - see Section 2.2.2.


 


Notice
of Conversion/Continuation - see Section 2.2.3.


 


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


 


OFAC - see Section 10.4.


 


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


 


Ordinary
Course of Business  means, with
respect to any transaction involving a Loan Party, the ordinary course of such
Person’s business, as conducted by any such Person in accordance with past
practice.


 


PBGC means the
Pension Benefit Guaranty Corporation and any entity succeeding to any or all of
its functions under ERISA.


 


Parent means LECG
Corporation, a Delaware corporation.


 


Participant - see Section 15.6.2.


 


Participating
Member State means each state so described in any EMU
Legislation.


 


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


 


Permitted
Lien means a Lien expressly permitted hereunder pursuant to Section 11.2.


 


12

















 


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


 


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


 


Pro
Rata Share means:


 


(a)                                 with respect to
a Lender’s obligation to make Revolving Loans, participate in Letters of
Credit, reimburse the Issuing Lender, and receive payments of principal,
interest, fees, costs, and expenses with respect thereto, (x) prior to the
Revolving Commitment being terminated or reduced to zero, the percentage
obtained by dividing (i) such Lender’s Revolving Commitment, by
(ii) the aggregate Revolving Commitment of all Lenders and (y) from
and after the time the Revolving Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (i) the aggregate unpaid
principal amount of such Lender’s Revolving Outstandings (after settlement and
repayment of all Swing Line Loans by the Lenders) by (ii) the aggregate
unpaid principal amount of all Revolving Outstandings; and


 


(b)                                with respect to
all other matters as to a particular Lender, including the consent of the
Required Lenders, the percentage obtained by dividing (i) such Lender’s
Revolving Commitment, by (ii) the aggregate amount of Revolving Commitment
of all Lenders; provided that in the event the Commitments have been
terminated or reduced to zero, Pro Rata Share shall be the percentage obtained
by dividing (A) the principal amount of such Lender’s Revolving
Outstandings (after settlement and repayment of all Swing Line Loans by the
Lenders) by (B) the principal amount of all outstanding Revolving
Outstandings.


 


Refunded
Swing Line Loan - see Section 2.2.4(c).


 


Regulation
D means Regulation D of the FRB.


 


Regulation
U means Regulation U of the FRB.


 


Rentals means, with
respect to any Person for any fiscal period, the aggregate rental obligations
of such Person determined in accordance with GAAP which are payable in respect
of such period under leases of real or personal property (net of income from
subleases thereof, but  including taxes,
insurance, maintenance and similar expenses that the lessee is obligated to pay
under the terms of such leases), whether or not such obligations are reflected
as liabilities or commitments on a consolidated balance sheet of such Person or
in the notes thereto, excluding, however, any such obligations under Capital
Leases.


 


Replacement
Lender - see Section 8.7(b).


 


13

















 


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


 


Required
Lenders means, at any time, Lenders whose Pro Rata Shares exceed 50% as
determined pursuant to clause (d) of the definition of “Pro Rata Share”; provided,
that if there are only two Lenders, then Required Lenders shall mean both
Lenders.


 


Revolving
Commitment means $100,000,000, as reduced or increased from
time to time pursuant to Section 6.1 or Section 6.4,
respectively.


 


Revolving
Loan - see Section 2.1.1.


 


Revolving
Outstandings means, at any time, the sum of (a) the
aggregate principal amount of all outstanding Revolving Loans, plus
(b) the Stated Amount of all Letters of Credit.


 


Same
Day Funds means (a) with respect to disbursements and
payments in Dollars, immediately available funds, and (b) with respect to
disbursements and payments in an Foreign Currency, same day or other funds as
may be determined by Administrative Agent or the Issuing Lender, as the case
may be, to be customary in the place of disbursement or payment for the
settlement of international banking transactions in the relevant Foreign
Currency.


 


SEC means the
Securities and Exchange Commission or any other governmental authority
succeeding to any of the principal functions thereof.


 


Senior
Officer means, with respect to any Loan Party, any of the chief executive
officer, the chief financial officer, the chief operating officer or the
secretary of such Loan Party.


 


Signing
and Performance Bonus means any payment to an expert or
professional employed by a Loan Party to provide direct services to such Loan
Party’s clients, which payment is capable of being amortized over a multi-year
period.


 


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


 


Sterling and £
mean the lawful currency of the United Kingdom.


 


Subordinated
Debt means any unsecured Debt of the Company or any of its Subsidiaries
incurred after the date hereof intended to be subordinated to the Obligations
which has subordination terms, covenants, pricing and other terms which have
been approved in writing by the Required Lenders.


 


Subordinated
Debt Documents means all documents and instruments relating to the
Subordinated Debt and all amendments and modifications thereof approved by the
Administrative Agent.


 


Subsidiary means, with
respect to any Person, a corporation, partnership, limited liability company or
other entity of which such Person owns, directly or indirectly, such number of
outstanding


 


14

















 


Capital
Securities as have more than 50% of the ordinary voting power for the election
of directors or other managers of such corporation, partnership, limited
liability company or other entity. 
Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.


 


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


 


Swing
Line Availability means the lesser of (a) the Swing Line
Commitment Amount and (b) Revolving Commitment (less Revolving
Outstandings at such time).


 


Swing
Line Commitment Amount means $10,000,000, as reduced from time to
time pursuant to Section 6.1, which commitment constitutes a
subfacility of the Revolving Commitment of the Swing Line Lender.


 


Swing
Line Lender means LaSalle.


 


Swing
Line Loan - see Section 2.2.4.


 


TARGET
Day means any day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be operative, such other payment system (if any) determined by
Administrative Agent to be a suitable replacement) is open for the settlement
of payments in Euro.


 


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


 


15

















 


Termination
Date means the earlier to occur of (a) December 15, 2011 or
(b) such other date on which the Commitments terminate pursuant to Section 6
or Section 13.


 


Termination
Event means, with respect to a Pension Plan that is subject to Title IV of
ERISA, (a) a Reportable Event, (b) the withdrawal of Company or any
other member of the Controlled Group from such Pension Plan during a plan year
in which Company or any other member of the Controlled Group was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such
Pension Plan, the filing of a notice of intent to terminate the Pension Plan or
the treatment of an amendment of such Pension Plan as a termination under
Section 4041 of ERISA, (d) the institution by the PBGC of proceedings
to terminate such Pension Plan or (e) any event or condition that might
constitute grounds under Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, such Pension Plan.


 


Total
Debt means all Debt of the Company and its Subsidiaries, determined on a
consolidated basis, excluding (a) contingent obligations in respect of
Suretyship Liabilities (except to the extent constituting Suretyship
Liabilities in respect of Debt (other than a Suretyship Liability) of a Person
other than any Loan Party), (b) Hedging Obligations, (c) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries
and (d) contingent obligations in respect of undrawn letters of credit.


 


Total
Net Leverage Ratio means, as of the last day of any Fiscal Quarter,
the ratio of (a) (i) Total Debt as of such day, less (ii) cash
held by Company and Subsidiaries as of such day in excess of $25,000,000, to
(b) EBITDA for the Computation Period ending on such day.


 


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


 


type - see Section 2.2.1.


 


UCC means the
Uniform Commercial Code as in effect on the date hereof and from time to
time in the State of Illinois.


 


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


 


Unmatured
Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.


 


Withholding
Certificate - see Section 7.6(d).


 


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


 


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


 


16

















 


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


 


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


 


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


 


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


 


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


 


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


 


1.3           Exchange Rates; Currency
Equivalents.


 


(A)          On each Computation Date,
Administrative Agent shall determine the Exchange Rate as of such Computation
Date. The Exchange Rate so determined shall become effective on the first
Business Day after such Computation Date and shall remain effective through the
next succeeding Computation Date. Except for purposes of financial statements
delivered by Company hereunder or calculating financial covenants hereunder or
except as otherwise provided herein, the applicable amount of any currency
(other than Dollars) for purposes of the Loan Documents shall be such Dollar
Equivalent amount as so determined by Administrative Agent or the Issuing
Lender, as applicable.


 


(B)           Wherever in this Agreement in
connection with a borrowing, conversion, continuation or prepayment of a
Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of
Credit denominated in a Foreign Currency, an amount, such as a required minimum
or multiple amount, is expressed in Dollars, but such borrowing, Eurocurrency
Rate Loan or Letter of Credit is denominated in a Foreign Currency, such amount
shall be the relevant Foreign Currency Equivalent of such Dollar amount
(rounded to the nearest 100,000 of such Foreign Currency units, with 50,000 of
such unit being rounded upward), as determined by Administrative Agent or the
Issuing Lender, as the case may be.


 


17

















 


1.4           Agreed Currencies.


 


(A)          The Company may from time to time
request that Eurocurrency Rate Loans be made or Letters of Credit be issued in
a currency other than those specifically listed in the definition of “Agreed
Currency;” provided that such requested currency is an Eligible Currency. Any
such request shall be subject to the approval of Administrative Agent and each
Lender.


 


(B)           Any such request shall be made to
Administrative Agent not later than 11:00 a.m. (Chicago time), ten
Business Days prior to the date of the desired borrowing or issuance (or such
other time or date as may be agreed by Administrative Agent, in its sole
discretion).  Administrative Agent shall
promptly notify each Lender thereof. Each Lender shall notify Administrative
Agent, not later than 11:00 a.m. (Chicago time), five Business Days after
receipt of such request whether it consents, in its sole discretion, to the
making of such Eurocurrency Rate Loan or the issuance of such Letter of Credit
in such requested currency. Any failure by a Lender to respond to such request
within the time period specified in the preceding sentence shall be deemed to
be a refusal by such Lender to permit Eurocurrency Rate Loans to be made or
Letters of Credit to be issued in such requested currency. If Administrative
Agent and all the Lenders consent to making Eurocurrency Rate Loans or issuing
Letters of Credit in such requested currency, Administrative Agent shall so
notify Company and such currency shall thereupon be deemed for all purposes to
be an Agreed Currency hereunder for purposes of any Eurocurrency Rate Loans or
Letters of Credit.  If Administrative
Agent shall fail to obtain consent to any request for an additional currency
under this Section 1.5, Administrative Agent shall promptly so notify
Company.


 


(C)           If, after the designation of any
currency as an Agreed Currency (including any Foreign Currency listed in clause
(b) - (d) of the definition of “Agreed Currency”), (i) currency
control or other exchange regulations are imposed in the country in which such
currency is issued with the result that different types of such currency are
introduced, (ii) such currency, in the reasonable determination of
Administrative Agent, no longer qualifies as an “Eligible Currency” or
(iii) in the reasonable determination of Administrative Agent, a Dollar
Equivalent of such currency is not readily calculable, Administrative Agent
shall promptly notify the Lenders and Company, and such currency shall no
longer be an Agreed Currency until such time as Administrative Agent and the
Lenders, as provided herein, agree to reinstate such currency as an Agreed
Currency.


 


1.5           Change of Currency.


 


(A)          Each obligation of Company to make a
payment denominated in the national currency unit of any member state of the
European Union that adopts the Euro as its lawful currency after the date
hereof shall be redenominated into Euro at the time of such adoption (in
accordance with the EMU Legislation). If, in relation to the currency of any
such member state, the basis of accrual of interest expressed in this Agreement
in respect of that currency shall be inconsistent with any convention or
practice in the London interbank market for the basis of accrual of interest in
respect of the Euro, such expressed basis shall be replaced by such convention
or practice with effect from the date on which such member state adopts the
Euro as its lawful currency; provided that if any borrowing in the currency of
such member state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such borrowing, at the end of
the then current Interest Period.


 


(B)           Each provision of this Agreement
shall be subject to such reasonable changes of construction as Administrative
Agent may from time to time specify to be appropriate to reflect the adoption
of the Euro by any member state of the European Union and any relevant market
conventions or practices relating to the Euro.


 


18

















 


(C)           Each provision of this Agreement also
shall be subject to such reasonable changes of construction as Administrative
Agent may from time to time specify to be appropriate to reflect a change in
currency of any other country other than the United States and any relevant
market conventions or practices relating to the change in currency.


 


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


 


2.1           Commitments.  On and subject to the terms and conditions of
this Agreement, each of the Lenders, severally and for itself alone, agrees to
make loans to, and to issue or participate in letters of credit for the account
of, the Company as follows:


 


2.1.1        Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitment
agrees to make loans on a revolving basis (“Revolving Loans”) in the
applicable Designated Currency requested by Company from time to time until the
Termination Date in such Lender’s Pro Rata Share of such aggregate amounts as
the Company may request from all Lenders; provided that the Revolving
Outstandings will not at any time exceed the Revolving Commitment (less the
amount of any Swing Line Loans outstanding at such time; provided, that
the aggregate Dollar Equivalent of all outstanding Loans denominated in a
Foreign Currency shall not exceed $10,000,000).


 


2.1.2        L/C Commitment.


 


(a)           Subject to Section 2.3.1, the
Issuing Lender agrees to issue letters of credit denominated in Agreed
Currencies, in each case containing such terms and conditions as are permitted
by this Agreement and are reasonably satisfactory to the Issuing Lender
(including the letters of credit listed on Schedule 2.1, each, a “Letter
of Credit”), at the request of and for the account of the Company from time to
time before the scheduled Termination Date and, as more fully set forth in Section 2.3.2,
each Lender agrees to purchase a participation in each such Letter of Credit;
provided that (i) the Dollar Equivalent of the aggregate Stated Amount of
all Letters of Credit shall not at any time exceed $25,000,000 and
(ii) the Revolving Outstandings shall not at any time exceed the Revolving
Commitment (less the amount of any Swing Line Loans outstanding at such
time).  If on any Computation Date the
Administrative Agent determines that the Dollar Equivalent of the aggregate
Stated Amount of all Letters of Credit exceeds $25,000,000 due to a change in
applicable rates of exchange between Dollars and any applicable currency, then
(i) the Administrative Agent shall promptly notify Company and
(ii) Company shall promptly Cash Collateralize any outstanding Letters of
Credit by depositing the requisite amount with the Issuing Lender in an amount
sufficient to eliminate such excess.


 


(b)           Notwithstanding anything to the
contrary in this Agreement, (i) U.S. Bank National Association, in its
capacity as an Issuing Lender (in such capacity, “U.S. Bank”) will not
have any obligation to extend the expiration date of, or to replace or make
substitutions for, any of the Letters of Credit listed in Schedule 2.1
and noted thereon as having been issued by it (the “Existing Letters of
Credit”), (ii) in the case of any Existing Letter of Credit that is
automatically extendible unless a notice of non-renewal is given, U.S. Bank
will not have any obligation to not give such notice of non-renewal and may
give such notice of non-renewal at the times and otherwise in accordance with
the terms of such Existing Letter of Credit and (iii) Company will
undertake reasonable efforts to replace such Existing Letters of Credit with
Letters of Credit issued by the other Issuing Lender within 90 days after the
date of this Agreement and, upon such replacement, will return such Existing
Letters of Credit to U.S. Bank together with an acknowledgment signed by the
beneficiary of such Existing Letter of Credit stating that such beneficiary no
longer has an interest in such Existing Letter of Credit.


 


19

















 


2.2           Loan Procedures.


 


2.2.1        Various Types of Loans.  Each Revolving Loan shall be divided into
tranches which are, either a Base Rate Loan, which shall be denominated in
Dollars, or a Eurocurrency Rate Loan, which may be denominated in any Agreed
Currency (each a “type” of Loan), as the Company shall specify in the
related notice of borrowing or conversion pursuant to Section 2.2.2
or 2.2.3.  Eurocurrency Rate
Loans denominated in the same currency having the same Interest Period which
expire on the same day are sometimes called a “Group” or collectively “Groups”.  Base Rate Loans and Eurocurrency Rate Loans
may be outstanding at the same time, provided that not more than seven
different groups of Eurocurrency Rate Loans shall be outstanding at any one
time.  All borrowings, conversions and
repayments of Revolving Loans shall be effected so that each Lender will have a
ratable share (according to its Pro Rata Share) of all types and Groups of
Loans.


 


2.2.2        Borrowing Procedures.  The Company shall give written notice (each
such written notice, a “Notice of Borrowing”) substantially in the form
of Exhibit D to the Administrative Agent of each proposed borrowing
not later than (a) in the case of a Base Rate borrowing, 1:00 P.M.,
Chicago time, on the proposed date of such borrowing, (b) in the case of a
Eurocurrency Rate borrowing denominated in Dollars, 1:00 P.M., Chicago
time, at least three Business Days prior to the proposed date of such
borrowing, and (c) in the case of a Eurocurrency Rate Borrowing
denominated in a Foreign Currency, 1:00 P.M., Chicago Time, at least four
Business Days prior to the proposed date of such borrowing.  Each such notice shall be effective upon receipt
by the Administrative Agent, shall be irrevocable, and shall specify the date,
amount and type of borrowing and, in the case of a Eurocurrency Rate borrowing,
the initial Interest Period therefor and the currency thereof.  Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof.  Not later than 3:00 P.M., Chicago time,
on the date of a proposed borrowing, each Lender shall provide the
Administrative Agent at the office specified by the Administrative Agent with
Same Day Funds in the appropriate currency covering such Lender’s Pro Rata
Share of such borrowing and, so long as the Administrative Agent has not
received written notice that the conditions precedent set forth in Section 11
with respect to such borrowing have not been satisfied, the Administrative Agent
shall pay over the funds received by the Administrative Agent to the Company on
the requested borrowing date.  Each
borrowing shall be on a Business Day. 
Each Base Rate borrowing shall be in an aggregate amount of at least
$5,000,000 and an integral multiple of $1,000,000, and each Eurocurrency Rate
borrowing shall be in an aggregate amount of at least $5,000,000 and an
integral multiple of at least $1,000,000.


 


2.2.3        Conversion and Continuation
Procedures.  (a)  Subject to Section 2.2.1,
the Company may, upon irrevocable written notice to the Administrative Agent in
accordance with clause (b) below:


 


(A)          elect, as of any
Business Day, to convert any Loans (or any part thereof in an aggregate amount
not less than $5,000,000 and an integral multiple of $1,000,000) into Loans of
the other type;


 


(B)           elect, as of the
last day of the applicable Interest Period, to continue any Eurocurrency Rate
Loans denominated in the same currency having Interest Periods expiring on such
day (or any part thereof in an aggregate amount not less than $5,000,000 and an
integral multiple of $1,000,000) for a new Interest Period;


 


provided that after
giving effect to any prepayment, conversion or continuation, the aggregate
principal amount of each Group of Eurocurrency Rate Loans shall be at least
$5,000,000 and an integral multiple of $1,000,000.


 


20

















 


(b)           The Company shall give written notice (each such written
notice, a “Notice of Conversion/Continuation”) substantially in the form
of Exhibit E to the Administrative Agent of each proposed
conversion or continuation not later than (i) in the case of conversion
into Base Rate Loans, 12:00 Noon, Chicago time, on the proposed date of such
conversion, (ii) in the case of conversion into or continuation of
Eurocurrency Rate Loans denominated in Dollars, 12:00 Noon, Chicago time, at
least three Business Days prior to the proposed date of such conversion or
continuation, and (iii) in the case of conversion into, or continuation of
Eurocurrency Rate Loans denominated in a Foreign Currency, 12:00 Noon, Chicago
time, at least four Business Days prior to the proposed date of such conversion
or continuation, specifying in each case:


 


(A)          the proposed date of
conversion or continuation;


 


(B)           the aggregate amount
and currency of Loans to be converted or continued;


 


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


 


(D)          in the case of
conversion into, or continuation of, Eurocurrency Rate Loans, the duration of
the requested Interest Period therefor.


 


(c)           If upon the expiration of any Interest Period applicable
to Eurocurrency Rate Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Eurocurrency Rate Loans, the Company
shall be deemed to have elected to convert such Eurocurrency Rate Loans into
Base Rate Loans effective on the last day of such Interest Period; provided,
that if such Eurocurrency Rate Loans are not denominated in Dollars then the
Company shall be deemed to have elected to continue such Eurocurrency Rate
Loans for an additional one month Interest Period.


 


(d)           The Administrative Agent will promptly notify each Lender
of its receipt of a notice of conversion or continuation pursuant to this Section 2.2.3
or, if no timely notice is provided by the Company, of the details of any
automatic conversion.


 


(e)           Any conversion of a Eurocurrency Rate Loan on a day other
than the last day of an Interest Period therefor shall be subject to Section 8.4.


 


2.2.4        Swing Line Facility.


 


(a)           The Administrative Agent shall notify the Swing Line
Lender upon the Administrative Agent’s receipt of any Notice of Borrowing.  Subject to the terms and conditions hereof,
the Swing Line Lender may, in its sole discretion, make available from time to
time until the Termination Date advances in Dollars (each, a “Swing Line
Loan”) in accordance with any such notice, notwithstanding that after
making a requested Swing Line Loan, the sum of the Swing Line Lender’s Pro Rata
Share of the Revolving Outstanding and all outstanding Swing Line Loans, may
exceed the Swing Line Lender’s Pro Rata Share of the Revolving Commitment.  The provisions of this Section 2.2.4
shall not relieve Lenders of their obligations to make Revolving Loans under Section 2.1.1;
provided that if the Swing Line Lender makes a Swing Line Loan pursuant
to any such notice, such Swing Line Loan shall be in lieu of any Revolving Loan
that otherwise may be made by the Lenders pursuant to such notice.  The aggregate amount of Swing Line Loans outstanding
shall not exceed at any time Swing Line Availability.  Until the Termination Date, the Company may
from time to time borrow, repay and reborrow under this Section 2.2.4.  Each Swing Line Loan shall be made pursuant
to a Notice of Borrowing delivered by the Company to the Administrative Agent
in accordance with Section 2.2.2. 
Any such notice must be given no later


 


21
















 


than 2:00 P.M., Chicago time, on the Business
Day of the proposed Swing Line Loan. 
Unless the Swing Line Lender has received at least one Business Day’s
prior written notice from the Required Lenders instructing it not to make a
Swing Line Loan, the Swing Line Lender shall, notwithstanding the failure of
any condition precedent set forth in Section 12.2, be entitled to
fund that Swing Line Loan, and to have such Lender make Revolving Loans in
accordance with Section 2.2.4(c) or purchase participating
interests in accordance with Section 2.2.4(d).   Notwithstanding any other provision of this
Agreement or the other Loan Documents, each Swing Line Loan shall constitute a
Base Rate Loan.  The Company shall repay
the aggregate outstanding principal amount of each Swing Line Loan upon demand
therefor by the Administrative Agent.


 


(b)           The entire unpaid balance of each Swing Line Loan and all
other noncontingent Obligations shall be immediately due and payable in full in
Same Day Funds on the Termination Date if not sooner paid in full.


 


(c)           The Swing Line Lender, at any time and from time to time
no less frequently than once weekly, shall on behalf of the Company (and the
Company hereby irrevocably authorizes the Swing Line Lender to so act on its
behalf) request each Lender with a Revolving Commitment (including the Swing
Line Lender) to make a Revolving Loan to the Company (which shall be a Base
Rate Loan) in an amount equal to that Lender’s Pro Rata Share of the principal
amount of all Swing Line Loans (the “Refunded Swing Line Loan”)
outstanding on the date such notice is given. 
Unless any of the events described in Section 13.1.4 has
occurred (in which event the procedures of Section 2.2.4(d) shall
apply) and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Loan are then satisfied, each Lender
shall disburse directly to the Administrative Agent, its Pro Rata Share on
behalf of the Swing Line Lender, prior to 2:00 P.M., Chicago time, in Same
Day Funds on the date that notice is given (provided that such notice is
given by 1:00 p.m., Chicago time, on such date).  The proceeds of those Revolving Loans shall
be immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.


 


(d)           If, prior to refunding a Swing Line Loan with a Revolving
Loan pursuant to Section 2.2.4(c), one of the events described in Section 13.1.4
has occurred, then, subject to the provisions of Section 2.2.4(e) below,
each Lender shall, on the date such Revolving Loan was to have been made for
the benefit of the Company, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its Pro
Rata Share of such Swing Line Loan.  Upon
request, each Lender shall promptly transfer to the Swing Line Lender, in Same
Day Funds, the amount of its participation interest.


 


(e)           Each Lender’s obligation to make Revolving Loans in
accordance with Section 2.2.4(c) and to purchase participation
interests in accordance with Section 2.2.4(d) shall be
absolute and unconditional and shall not be affected by any circumstance,
including (i) any setoff, counterclaim, recoupment, defense or other right
that such Lender may have against the Swing Line Lender, the Company or any
other Person for any reason whatsoever; (ii) the occurrence or continuance
of any Unmatured Event of Default or Event of Default; (iii) any inability
of the Company to satisfy the conditions precedent to borrowing set forth in
this Agreement at any time or (iv) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.  If and to the extent any Lender shall not
have made such amount available to the Administrative Agent or the Swing Line
Lender, as applicable, by 2:00 P.M., Chicago time, the amount required
pursuant to Sections 2.2.4(c) or 2.2.4(d), as the case may be, on
the Business Day on which such Lender receives notice from the Administrative
Agent of such payment or disbursement (it being understood that any such notice
received after noon, Chicago time, on any Business Day shall be deemed to have
been received on the next following Business


 


22

















 


Day), such Lender agrees to pay interest on such
amount to the Administrative Agent for the Swing Line Lender’s account
forthwith on demand, for each day from the date such amount was to have been
delivered to the Administrative Agent to the date such amount is paid, at a
rate per annum equal to (a) for the first three days after demand, the
Federal Funds Rate from time to time in effect and (b) thereafter, the
Base Rate from time to time in effect.


 


2.3           Letter of Credit
Procedures.


 


2.3.1        L/C Applications.  The Company shall execute and deliver to the
Issuing Lender the Master Letter of Credit Agreement from time to time in
effect.  The Company shall give notice to
the Administrative Agent and the Issuing Lender of the proposed issuance of
each Letter of Credit on a Business Day which is at least three Business Days
(or such lesser number of days as the Administrative Agent and the Issuing
Lender shall agree in any particular instance in their sole discretion) prior
to the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an
L/C Application, duly executed by the Company and in all respects satisfactory
to the Administrative Agent and the Issuing Lender, together with such other
documentation as the Administrative Agent or the Issuing Lender may request in
support thereof, it being understood that each L/C Application shall specify,
among other things, the date on which the proposed Letter of Credit is to be
issued, the currency in which such Letter of Credit shall be denominated, which
shall be an Agreed Currency, the expiration date of such Letter of Credit
(which shall not be later than the scheduled Termination Date (unless such
Letter of Credit is Cash Collateralized)) and whether such Letter of Credit is
to be transferable in whole or in part. 
Any Letter of Credit outstanding after the scheduled Termination Date
which is Cash Collateralized for the benefit of the Issuing Lender shall be the
sole responsibility of the Issuing Lender. 
So long as the Issuing Lender has not received written notice that the
conditions precedent set forth in Section 12 with respect to the
issuance of such Letter of Credit have not been satisfied, the Issuing Lender
shall issue such Letter of Credit on the requested issuance date.  The Issuing Lender shall promptly advise the
Administrative Agent of the issuance of each Letter of Credit and of any
amendment thereto, extension thereof or event or circumstance changing the
amount available for drawing thereunder. 
In the event of any inconsistency between the terms of the Master Letter
of Credit Agreement, any L/C Application and the terms of this Agreement, the
terms of this Agreement shall control.


 


2.3.2        Participations in Letters of Credit.  Concurrently with the issuance of each Letter
of Credit, the Issuing Lender shall be deemed to have sold and transferred to
each Lender with a Revolving Loan Commitment, and each such Lender shall be
deemed irrevocably and unconditionally to have purchased and received from the
Issuing Lender, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender’s Pro Rata Share, in such Letter of
Credit and the Company’s reimbursement obligations with respect thereto.  If the Company does not pay any reimbursement
obligation when due in accordance with Section 2.3.3, the Company
shall be deemed to have immediately requested that the Lenders make a Revolving
Loan which is a Base Rate Loan in a principal amount equal to such
reimbursement obligations.  The
Administrative Agent shall promptly notify such Lenders of such deemed request
and, without the necessity of compliance with the requirements of Section 2.2.2,
Section 12.2 or otherwise such Lender shall make available to the
Administrative Agent its Pro Rata Share of such Loan in accordance with Section 2.3.4.  The proceeds of such Loan shall be paid over
by the Administrative Agent to the Issuing Lender for the account of the
Company in satisfaction of such reimbursement obligations.  For the purposes of this Agreement, the
unparticipated portion of each Letter of Credit shall be deemed to be the
Issuing Lender’s “participation” therein. 
The Issuing Lender hereby agrees, upon request of the Administrative
Agent or any Lender, to deliver to the Administrative Agent or


 


23

















 


such Lender a list of all
outstanding Letters of Credit issued by the Issuing Lender, together with such
information related thereto as the Administrative Agent or such Lender may
reasonably request.


 


2.3.3        Reimbursement Obligations.  (a) The Company hereby unconditionally
and irrevocably agrees to reimburse the Issuing Lender for each payment or
disbursement made by the Issuing Lender under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. 
Any amount not reimbursed on the date of such payment or disbursement
shall bear interest for the ratable account of the Issuing Lender and each
Lender which has funded its Pro Rata Share of such payment or disbursement from
the date of such payment or disbursement to the date that the Issuing Lender is
reimbursed by the Company therefor, payable on demand, at a rate per annum
equal to the Base Rate from time to time in effect, plus, beginning on
the third Business Day after receipt of notice from the Issuing Lender of such
payment or disbursement, 2%.  The Issuing
Lender shall notify the Company and the Administrative Agent whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided, that the failure of the Issuing Lender to so
notify the Company or the Administrative Agent shall not affect the rights of
the Issuing Lender or the Lenders in any manner whatsoever, subject to the
Company’s retention of its right to bring a claim to the extent it is
prejudiced by such failure.


 


(b)           The Company’s reimbursement
obligations hereunder shall be irrevocable and unconditional under all
circumstances, including (i) any lack of validity or enforceability of any
Letter of Credit, this Agreement or any other Loan Document, (ii) the
existence of any claim, set-off, defense or other right which any Loan Party
may have at any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Administrative Agent, the Issuing Lender, any Lender or any
other Person, whether in connection with any Letter of Credit, this Agreement,
any other Loan Document, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between any Loan Party and
the beneficiary named in any Letter of Credit), (iii) the validity,
sufficiency or genuineness of any document which the Issuing Lender has
determined complies on its face with the terms of the applicable Letter of
Credit, even if such document should later prove to have been forged,
fraudulent, invalid or insufficient in any respect or any statement therein
shall have been untrue or inaccurate in any respect, or (iv) the surrender
or impairment of any security for the performance or observance of any of the
terms hereof.  Without limiting the
foregoing, no action or omission whatsoever by the Administrative Agent or any
Lender (excluding any Lender in its capacity as the Issuing Lender) under or in
connection with any Letter of Credit or any related matters shall result in any
liability of the Administrative Agent or any Lender to the Company, or relieve
the Company of any of its obligations hereunder to any such Person.


 


2.3.4        Funding by Lenders to Issuing Lender.  If the Issuing Lender makes any payment or
disbursement under any Letter of Credit and (a) the Company has not
reimbursed the Issuing Lender in full for such payment or disbursement by
11:00 A.M., Chicago time, on the date of such payment or disbursement,
(b) a Revolving Loan may not be made in accordance with Section 2.3.2
or (c) any reimbursement received by the Issuing Lender from the Company
is or must be returned or rescinded upon or during any bankruptcy or
reorganization of the Company or otherwise, each Lender with a Revolving Loan
Commitment shall be obligated to pay to the Administrative Agent for the
account of the Issuing Lender, in full or partial payment of the purchase price
of its participation in such Letter of Credit, its Pro Rata Share of such
payment or disbursement (but no such payment shall diminish the obligations of
the Company under Section 2.3.3), and, upon notice from the Issuing
Lender, the Administrative Agent shall promptly notify each Lender
thereof.  Each Lender irrevocably and
unconditionally agrees to so pay to the Administrative Agent in immediately
available funds for the Issuing Lender’s account the amount


 


24

















 


of such other Lender’s Pro
Rata Share of such payment or disbursement. 
If and to the extent any Lender shall not have made such amount
available to the Administrative Agent by 2:00 P.M., Chicago time, on the
Business Day on which such Lender receives notice from the Administrative Agent
of such payment or disbursement (it being understood that any such notice
received after noon, Chicago time, on any Business Day shall be deemed to have
been received on the next following Business Day), such Lender agrees to pay
interest on such amount to the Administrative Agent for the Issuing Lender’s
account forthwith on demand, for each day from the date such amount was to have
been delivered to the Administrative Agent to the date such amount is paid, at
a rate per annum equal to (a) for the first three days after demand, the
Federal Funds Rate from time to time in effect and (b) thereafter, the
Base Rate from time to time in effect. 
Any Lender’s failure to make available to the Administrative Agent its
Pro Rata Share of any such payment or disbursement shall not relieve any Lender
of its obligation hereunder to make available to the Administrative Agent such
Lender’s Pro Rata Share of such payment, but no Lender shall be responsible for
the failure of any Lender to make available to the Administrative Agent such other
Lender’s Pro Rata Share of any such payment or disbursement.


 


2.4           Commitments
Several.  The failure of any Lender
to make a requested Loan on any date shall not relieve any other Lender of its
obligation (if any) to make a Loan on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Loan to be made by
such other Lender.


 


2.5           Certain
Conditions.  Except as otherwise
provided in Section 2.2.4 of this Agreement, no Lender shall have
an obligation to make any Loan, or to permit the continuation of or any
conversion into any Eurocurrency Rate Loan, and the Issuing Lender shall not
have any obligation to issue any Letter of Credit, if an Event of Default or
Unmatured Event of Default exists.


 


SECTION 3            EVIDENCING OF LOANS.


 


3.1           Notes.  The Loans of each Lender shall be evidenced
by a Note, with appropriate insertions, payable to the order of such Lender in
a face principal amount equal to the sum of such Lender’s Revolving Loan
Commitment plus the principal amount of such Lender’s Term Loans.


 


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


 


SECTION 4            INTEREST.


 


4.1           Interest Rates.  The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full as follows:


 


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


 


25

















 


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


 


provided that at any
time an Event of Default exists, unless the Required Lenders otherwise consent,
the interest rate applicable to each Loan shall be increased by 2% (and, at any
time that an Event of Default under Section 13.1.1 has occurred and
is continuing, in the case of Obligations arising under this Agreement not
bearing interest, such Obligations shall bear interest at the Base Rate
applicable to Revolving Loans plus 2%), provided  further that
such increase may thereafter be rescinded by the Required Lenders,
notwithstanding Section 15.1. 
Notwithstanding the foregoing, upon the occurrence of an Event of
Default under Section 13.1.1 or 13.1.4, such increase shall
occur automatically.


 


4.2           Interest Payment
Dates.  Accrued interest on each Base
Rate Loan shall be payable in arrears on the last day of each calendar month
and at maturity.  Accrued interest on
each Eurocurrency Rate Loan shall be payable on the last day of each Interest
Period relating to such Loan (and, in the case of a Eurocurrency Rate Loan with
an Interest Period in excess of three months, on the three-month anniversary of
the first day of such Interest Period), upon a prepayment of such Loan, and at
maturity.  After maturity, and at any
time an Event of Default exists, accrued interest on all Loans shall be payable
on demand.


 


4.3           Setting and
Notice of Eurocurrency Rates.  The
applicable Eurocurrency Rate for each Interest Period shall be determined by
the Administrative Agent, and notice thereof shall be given by the
Administrative Agent promptly to the Company and each Lender.  Each determination of the applicable
Eurocurrency Rate by the Administrative Agent shall be conclusive and binding
upon the parties hereto, in the absence of demonstrable error.  The Administrative Agent shall, upon written
request of the Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Administrative Agent in
determining any applicable Eurocurrency Rate hereunder.


 


4.4           Computation of
Interest.  Interest shall be computed
for the actual number of days elapsed on the basis of a year of (a) 360
days for interest calculated at the Eurocurrency Rate and (b) 365/366 days
for interest calculated at the Base Rate and for Eurocurrency Rate Loans
denominated in Sterling in accordance with Section 7.1.  The applicable interest rate for each Base
Rate Loan shall change simultaneously with each change in the Base Rate.


 


SECTION 5            FEES.


 


5.1           Non-Use Fee.  The Company agrees to pay to the
Administrative Agent for the account of each Lender a non-use fee, for the
period from the Closing Date to the Termination Date, at the Non-Use Fee Rate
in effect from time to time of such Lender’s Pro Rata Share (as adjusted from
time to time) of the unused amount of the Revolving Commitment (calculated
without giving effect to any outstanding Swing Line Loans).  For purposes of calculating usage under this
Section, the Revolving Commitment shall be deemed used to the extent of
Revolving Outstandings.  Such non-use fee
shall be payable in arrears on the last day of each Fiscal Quarter and on the
Termination Date for any period then ending for which such non-use fee shall
not have previously been paid.  The
non-use fee shall be computed for the actual number of days elapsed on the
basis of a year of 360 days.


 


5.2           Letter of Credit
Fees.  (a)  The Company agrees
to pay to the Administrative Agent for the account of each Lender a letter of
credit fee for each Letter of Credit equal to the L/C Fee Rate in effect from
time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of
the undrawn


 


26

















 


amount
of such Letter of Credit (computed for the actual number of days elapsed on the
basis of a year of 360 days); provided that, unless the Required Lenders
otherwise consent, the rate applicable to each Letter of Credit shall be increased
by 2% at any time that an Event of Default exists.  Such letter of credit fee shall be payable in
arrears on the last day of each calendar quarter and on the Termination Date
(or such later date on which such Letter of Credit expires or is terminated) for
the period from the date of the issuance of each Letter of Credit (or the last
day on which the letter of credit fee was paid with respect thereto) to the
date such payment is due or, if earlier, the date on which such Letter of
Credit expired or was terminated.


 


(b)           In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Issuing Lender, for its own account, (i) such
fees and expenses as the Issuing Lender customarily requires in connection with
the issuance, negotiation, processing and/or administration of letters of
credit in similar situations and (ii) a letter of credit fronting fee in
the amount and at the times agreed to by the Company and the Issuing Lender.


 


5.3           Administrative
Agent’s Fees.  The Company agrees to
pay to the Administrative Agent such agent’s fees as are mutually agreed to
from time to time by the Company and the Administrative Agent including the
fees set forth in the Agent Fee Letter.


 


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


 


6.1           Reduction or
Termination of the Revolving Commitment.


 


6.1.1        Voluntary Reduction or Termination of
the Revolving Commitment.  The
Company may from time to time on at least five Business Days’ prior written
notice received by the Administrative Agent (which shall promptly advise each
Lender thereof) permanently reduce the Revolving Commitment to an amount not
less than the Revolving Outstandings plus the outstanding amount of all
Swing Line Loans.  Any such reduction
shall be in an amount not less than $5,000,000 or a higher integral multiple of
$1,000,000.  Concurrently with any
reduction of the Revolving Commitment to zero, the Company shall pay all
interest on the Revolving Loans, all non-use fees and all letter of credit fees
and shall Cash Collateralize in full all obligations arising with respect to
the Letters of Credit.


 


6.1.2        All Reductions of the Revolving
Commitment.  All reductions of the
Revolving Commitment shall reduce the Commitments ratably among the Lenders
according to their respective Pro Rata Shares.


 


6.2           Prepayments.


 


6.2.1        Voluntary Prepayments.  The Company may from time to time prepay the
Loans in whole or in part; provided that the Company shall give the
Administrative Agent (which shall promptly advise each Lender) notice thereof
not later than 11:00 A.M., Chicago time, on the day of such prepayment
(which shall be a Business Day), specifying the Loans to be prepaid and the
date and amount of prepayment.  Any such
partial prepayment shall be in an amount not less than $5,000,000 and an
integral multiple of $1,000,000.


 


6.2.2        Mandatory Prepayments.  (a) If on any day on which the Revolving
Commitment is reduced pursuant to Section 6.1.2 the Revolving
Outstandings plus the outstanding amount of the Swing Line Loan exceeds
the Revolving Commitment, the Company shall immediately prepay Revolving Loans


 


27

















 


or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.


 


(b)           If on any Computation Date the Administrative Agent
determines that (i) the sum of the Revolving Outstandings plus the
outstanding amount of the Swing Line Loan exceeds the Revolving Commitment due
to a change in applicable rates of exchange between Dollars and any applicable
currency then (A) the Administrative Agent shall promptly notify
Company and (B) Company shall promptly (subject to the notice requirements
of Section 6.2.1) prepay Loans (and, after prepaying all Loans,
Cash Collateralize any outstanding Letters of Credit by depositing the
requisite amount with the Issuing Lender) in an amount sufficient to eliminate
such excess, or (ii) the Dollar Equivalent of the aggregate principal
amount of all Revolving Loans denominated in a Foreign Currency exceeds
$10,000,000 due to a change in applicable rates of exchange between Dollars and
any applicable currency then (A) the Administrative Agent shall
promptly notify Company and (B) Company shall promptly (subject to the
notice requirements of Section 6.2.1) prepay Loans denominated in
Foreign Currencies in an amount sufficient to eliminate such excess.


 


6.3           Manner of
Prepayments.  Each voluntary partial
prepayment shall be in a principal amount of $5,000,000 or a higher integral
multiple of $1,000,000.  Any partial
prepayment of a Group of Eurocurrency Rate Loans shall be subject to the
proviso to Section 2.2.3(a). 
Any prepayment of a Eurocurrency Rate Loan on a day other than the last
day of an Interest Period therefor shall include interest on the principal
amount being repaid and shall be subject to Section 8.4.  Except as otherwise provided by this
Agreement, all principal payments in respect of the Loans (other than the Swing
Line Loans) shall be applied first, to repay outstanding Base Rate Loans and
then to repay outstanding Eurocurrency Rate Loans in direct order of Interest
Period maturities.


 


6.4           Increase in Commitments.


 


(a)           Provided there exists no Unmatured Event of Default or
Event of Default, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), Company may from time to time request an increase in the
Revolving Commitment Amount by an amount (for all such requests) not exceeding
$100,000,000; provided that (i) the Revolving Commitment may not exceed
$200,000,000; and provided further that any such request for an increase shall
be in a minimum amount of $10,000,000 and in multiples of $5,000,000  in excess thereof and (ii) Company may not request more than four
increases.  At the time of sending such
notice, Company (in consultation with the Administrative Agent) shall specify
the time period within which each Lender is requested to respond (which shall
in no event be less than ten Business Days from the date of delivery of such
notice to the Lenders).


 


(b)           Each Lender shall notify the Administrative Agent within
such time period whether or not it agrees to increase its Revolving Commitment
and, if so, whether by an amount equal to, greater than, or less than its Pro
Rata Share of such requested increase. 
Any Lender not responding within such time period shall be deemed to
have declined to increase its Revolving Commitment.


 


(c)           The Administrative Agent shall notify Company and each
Lender of the Lenders’ responses to each request made hereunder.  If the Lenders do not agree to the full amount
of a requested increase, subject to the approval of the Administrative Agent
and the Issuing Lender (which approvals shall not be unreasonably withheld),
Company may also invite additional Persons to become Lenders pursuant to a
joinder agreement in form and substance satisfactory to the Administrative
Agent and its counsel.


 


28

















 


(d)           If the Revolving Commitment Amount is increased in
accordance with this Section, the Administrative Agent and Company shall
determine the effective date (the “Increase Effective Date”) and the final allocation of such
increase.  The Administrative Agent shall
promptly notify Company and the Lenders of the final allocation of such increase,
the Increase Effective Date and revised Pro Rata Shares.


 


(e)           As a condition precedent to such increase, Company shall
deliver to the Administrative Agent an Officer’s Certificate dated as of the
Increase Effective Date (i) certifying and attaching the resolutions
adopted by Company approving or consenting to such increase, and
(ii) certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in Section 5 and the
other Loan Documents are true and correct on and as of the Increase Effective
Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and (B) no Unmatured Event of Default or Event of
Default exists or shall result from such increase to the Revolving
Commitment.  The Lenders (new or
existing) shall accept an assignment from the existing Lenders, and the
existing Lenders shall make an assignment to the new or existing Lender accepting
a new or increased Commitment, of a direct or participation interest in each
then outstanding Loan and Letter of Credit such that, after giving effect
thereto, all Revolving Outstandings hereunder are held ratably by the Lenders
in proportion to their respective Commitments, Assignments pursuant to the
preceding sentence shall be made in exchange for the principal amount assigned
plus accrued and unpaid interest and facility and letter of credit fees.  Company shall make any payments under Section 8.4
resulting from such assignments.


 


(f)            This Section shall supersede any provisions in
Section 7.5 or 15.1 to the contrary.


 


6.5           Repayments.  The Revolving Loans of each Lender shall be
paid in full and the Revolving Commitment shall terminate on the Termination
Date.


 


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


 


7.1           Making of
Payments.  All payments of principal
or interest on the Notes, and of all fees, shall be made by the Company to the
Administrative Agent in Same Day Funds at the office specified by the
Administrative Agent not later than noon, Chicago time, on the date due; and
funds received after that hour shall be deemed to have been received by the
Administrative Agent on the following Business Day.  Except as otherwise expressly provided
herein, all payments by Company hereunder with respect to principal and
interest on Loans denominated in a Foreign Currency and Obligations in respect
of Letters of Credit denominated in a Foreign Currency shall be made to
Administrative Agent, as set forth above, in such Foreign Currency and in Same
Day Funds.  If, for any reason, Company
is prohibited by any legal requirement from making any required payment
hereunder in a Foreign Currency, Company shall make such payment in Dollars in
the Dollar Equivalent of the Foreign Currency payment amount.  The Administrative Agent shall promptly remit
to each Lender its share of all such payments received in collected funds by
the Administrative Agent for the account of such Lender.  All payments under Section 8.1 shall be
made by the Company directly to the Lender entitled thereto without setoff,
counterclaim or other defense.


 


7.2           Application of
Certain Payments.  So long as no
Unmatured Event of Default  or Event of
Default has occurred and is continuing, (a) payments matching specific
scheduled payments then due shall be applied to those scheduled payments and
(b) voluntary and mandatory prepayments shall be applied as set forth in Sections
6.2 and 6.3.  Concurrently
with each remittance to any Lender of its share of any such payment, the
Administrative Agent shall advise such Lender as to the application of such
payment.


 


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


 


7.4           Setoff.  The Company, for itself and each other Loan
Party, agrees that the Administrative Agent and each Lender have all rights of
set-off and bankers’ lien provided by applicable law, and in addition thereto,
the Company, for itself and each other Loan Party, agrees that at any time any
Event of Default exists, the Administrative Agent and each Lender may apply to
the payment of any Obligations of the Company and each other Loan Party
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Company and each other Loan Party then or thereafter
with the Administrative Agent or such Lender.


 


7.5           Proration of
Payments.  If any Lender shall obtain
any payment or other recovery (whether voluntary, involuntary, by application
of offset or otherwise, on account of (a) principal of or interest on any
Loan, but excluding (i) any payment pursuant to Section 8.7 or
15.6 and (ii) payments of interest on any Affected Loan) or
(b) its participation in any Letter of Credit) in excess of its applicable
Pro Rata Share of payments and other recoveries obtained by all Lenders on
account of principal of and interest on the Loans (or such participation) then
held by them, then such Lender shall purchase from the other Lenders such
participations in the Loans (or sub-participations in Letters of Credit) held
by them as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery.


 


7.6           Taxes.


 


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


 


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


 


30

















 


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


 


(d)           (i)            To the
extent permitted by applicable law, each Lender that is not a United States
person within the meaning of Code Section 7701(a)(30) (a “Non-U.S.
Participant”) shall deliver to the Company and the Administrative Agent on
or prior to the Closing Date (or in the case of a Lender that is an Assignee,
on the date of such assignment to such Lender) two accurate and complete
original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any
successor or other applicable form prescribed by the IRS) certifying to such
Lender’s entitlement to a complete exemption from, or a reduced rate in, United
States withholding tax on interest payments to be made hereunder or any
Loan.  If a Lender that is a Non-U.S.
Participant is claiming a complete exemption from withholding on interest
pursuant to Code Section 871(h) or 881(c), the Lender shall deliver
(along with two accurate and complete original signed copies of IRS
Form W-8BEN) a certificate in form and substance reasonably acceptable to
Administrative Agent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S.
Participant  agrees that from time to
time after the Closing Date, (or in the case of a Lender that is an Assignee,
after the date of the assignment to such Lender), when a lapse in time (or
change in circumstances occurs) renders the prior certificates hereunder
obsolete or inaccurate in any material respect, such Lender shall, to the
extent permitted under applicable law, deliver to the Company and the
Administrative Agent two new and accurate and complete original signed copies
of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other
applicable forms prescribed by the IRS), and if applicable, a new Withholding
Certificate, to confirm or establish the entitlement of such Lender or the
Administrative Agent to an exemption from, or reduction in, United States
withholding tax on interest payments to be made hereunder or any Loan.


 


(ii)           Each Lender that is not a Non-U.S.
Participant (other than any such Lender which is taxed as a corporation for
U.S. federal income tax purposes) shall provide two properly completed and duly
executed copies of IRS Form W-9 (or any successor or other applicable
form) to the Company and the Administrative Agent certifying that such Lender
is exempt from United States backup withholding tax.  To the extent that a form provided pursuant
to this Section 7.6(d)(ii) is rendered obsolete or inaccurate
in any material respect as result of change in circumstances with respect to
the status of a Lender, such Lender shall, to the extent permitted by
applicable law, deliver to the Company and the Administrative Agent revised
forms necessary to confirm or establish the entitlement to such Lender’s or
Agent’s exemption from United States backup withholding tax.


 


(iii)          The Company shall not be required to
pay additional amounts to a Lender, or indemnify any Lender, under this Section 7.6
to the extent that such obligations would not have arisen but for the failure
of such Lender to comply with Section 7.6(d).


 


(iv)          Each Lender agrees to indemnify the
Administrative Agent and hold the Administrative Agent harmless for the full
amount of any and all present or future Taxes and related liabilities
(including penalties, interest, additions to tax and expenses, and any Taxes
imposed by any jurisdiction on amounts payable to the Administrative Agent
under this Section 7.6) which are imposed on or with respect to
principal, interest or fees payable to such Lender hereunder and which are not
paid by the Company


 


31

















 


pursuant to this Section 7.6, whether or
not such Taxes or related liabilities were correctly or legally asserted.  This indemnification shall be made within 30
days from the date the Administrative Agent makes written demand therefor.


 


SECTION 8                                   INCREASED COSTS; SPECIAL PROVISIONS FOR EUROCURRENCY RATE LOANS.


 


8.1           Increased Costs.  (a)  If, after the date hereof, the
adoption of, or any change in, any applicable law, rule or regulation, or
any change in the interpretation or administration of any applicable law,
rule or regulation by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable
agency:  (i) shall impose, modify or
deem applicable any reserve (including any reserve imposed by the FRB, but
excluding any reserve included in the determination of the Eurocurrency Rate
pursuant to Section 4), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Lender; or (ii) shall impose on any Lender any other condition
affecting its Eurocurrency Rate Loans, its Note or its obligation to make
Eurocurrency Rate Loans; and the result of anything described in clauses
(i) and (ii) above is to increase the cost to (or to impose a cost
on) such Lender (or any Eurocurrency Rate Office of such Lender) of making or
maintaining any Eurocurrency Rate, or to reduce the amount of any sum received
or receivable by such Lender (or its Eurocurrency Rate Office) under this
Agreement or under its Note with respect thereto, then upon demand by such
Lender (which demand shall be accompanied by a statement setting forth the
basis for such demand and a calculation of the amount thereof in reasonable
detail, a copy of which shall be furnished to the Administrative Agent), the
Company shall pay directly to such Lender such additional amount as will
compensate such Lender for such increased cost or such reduction, so long as
such amounts have accrued on or after the day which is 180 days prior to the
date on which such Lender first made demand therefor.


 


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


 


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


 


(a)           the Administrative Agent reasonably determines (which
determination shall be binding and conclusive on the Company absent manifest
error) that by reason of circumstances affecting the


 


32

















 


interbank Eurocurrency Rate market adequate and
reasonable means do not exist for ascertaining the applicable Eurocurrency
Rate; or


 


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


 


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


 


8.3           Changes in Law
Rendering Eurocurrency Rate Loans Unlawful. 
If any change in, or the adoption of any new, law or regulation, or any
change in the interpretation of any applicable law or regulation by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of any Lender cause a substantial
question as to whether it is) unlawful for any Lender to make, maintain or fund
Eurocurrency Rate Loans, then such Lender shall promptly notify each of the
other parties hereto and, so long as such circumstances shall continue,
(a) such Lender shall have no obligation to make or convert any Base Rate
Loan into a Eurocurrency Rate Loan (but shall make Base Rate Loans concurrently
with the making of or conversion of Base Rate Loans into Eurocurrency Rate
Loans by the Lenders which are not so affected, in each case in an amount equal
to the amount of Eurocurrency Rate Loans which would be made or converted into
by such Lender at such time in the absence of such circumstances) and
(b) on the last day of the current Interest Period for each Eurocurrency
Rate Loan of such Lender (or, in any event, 
on such earlier date as may be required by the relevant law, regulation
or interpretation), such Eurocurrency Rate Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which,
but for the circumstances described in the foregoing sentence, would be a
Eurocurrency Rate Loan (an “Affected Loan”) shall remain outstanding for
the period corresponding to the Group of Eurocurrency Rate Loans of which such
Affected Loan would be a part absent such circumstances.


 


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


 


33
















 


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


 


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


 


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


 


(b)           If the Company becomes obligated to pay additional amounts
to any Lender pursuant to Section 7.6 or 8.1, or any Lender
gives notice of the occurrence of any circumstances described in Section 8.2
or 8.3, the Company may designate another bank which is acceptable to
the Administrative Agent and the Issuing Lender in their reasonable discretion
(such other bank being called a “Replacement Lender”) to purchase the
Loans of such Lender and such Lender’s rights hereunder, without recourse to or
warranty by, or expense to, such Lender, for a purchase price equal to the outstanding
principal amount of the Loans payable to such Lender plus any accrued but
unpaid interest on such Loans and all accrued but unpaid fees owed to such
Lender and any other amounts payable to such Lender under this Agreement, and
to assume all the obligations of such Lender hereunder, and, upon such purchase
and assumption (pursuant to an Assignment Agreement), such Lender shall no
longer be a party hereto or have any rights hereunder (other than rights with
respect to indemnities and similar rights applicable to such Lender prior to
the date of such purchase and assumption) and shall be relieved from all
obligations to the Company hereunder, and the Replacement Lender shall succeed
to the rights and obligations of such Lender hereunder.


 


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


 


34

















 


SECTION 9            REPRESENTATIONS AND WARRANTIES.


 


To
induce the Administrative Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make Loans and issue and participate in Letters of
Credit hereunder, the Company represents and warrants to the Administrative
Agent and the Lenders that:


 


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


 


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


 


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


 


9.4           Financial
Condition.  The audited consolidated
financial statements of the Company and its Subsidiaries as at December 31,
2005 and the unaudited consolidated financial statements of the Company and the
Subsidiaries as at September 30, 2006, copies of each of which have been
delivered to each Lender, were prepared in accordance with GAAP (subject, in
the case of such unaudited statements, to the absence of footnotes and to
normal year-end adjustments) and present fairly the consolidated financial
condition of the Company and its Subsidiaries as at such dates and the results
of their operations for the periods then ended.


 


9.5           No Material
Adverse Change.  Since
December 31, 2005, there has been no material adverse change in the
financial condition, operations, assets, business, properties or prospects of
the Loan Parties taken as a whole.


 


9.6           Litigation and
Contingent Liabilities.  Except as
set forth on Schedule 9.6, no litigation (including derivative actions),
arbitration proceeding or governmental investigation or proceeding is pending
or, to the Company’s knowledge, threatened against any Loan Party which might
reasonably be expected to have a Material Adverse Effect.  As of the Closing Date, no Loan Party has any
material Contingent Liabilities not permitted by Section 11.1,
except (a) as set forth on Schedule 9.6, and (b) any liability
incident to the litigation described in Schedule 9.6 in response to the
representation set forth in the preceding sentence.


 


35

















 


9.7           Ownership of
Properties; Liens.  Each Loan Party
owns good and, in the case of owned real property,  marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(other than such Loan Party’s intellectual property, which is addressed in Section 9.17),
free and clear of all Liens, except as permitted by Section 11.2.


 


9.8           Subsidiaries.  Schedule 9.8 sets forth each
Subsidiary of Parent as of the date of this Agreement, together with its state
or jurisdiction of formation, its relationship to Parent, including the
percentage of each class of stock or membership interests owned by Parent or
another Subsidiary of Parent, the location of its chief executive office and
its principal place of business.


 


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


 


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


 


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


 


9.11         Regulation U.  The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.


 


36

















 


9.12         Taxes.  Each Loan Party has timely filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges due and payable with respect to such return,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.  The Loan Parties have made adequate reserves
on their books and records in accordance with GAAP for all taxes that have
accrued but which are not yet due and payable.


 


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


 


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


 


9.15         Insurance.  Set forth on Schedule 9.15 is a
complete and accurate summary of the property and casualty insurance program of
the Loan Parties as of the Closing Date (including the names of all insurers,
policy numbers, expiration dates, amounts and types of coverage, annual
premiums, exclusions, deductibles, self-insured retention, and a description in
reasonable detail of any self-insurance program, retrospective rating plan,
fronting arrangement or other risk assumption arrangement involving any Loan
Party).  Each Loan Party and its
properties are insured with financially sound and reputable insurance companies
which are not Affiliates of the Loan Parties, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
such Loan Parties operate.


 


37

















 


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


 


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


 


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


 


9.19         Labor Matters.  Except as set forth on Schedule 9.19,
no Loan Party is subject to any labor or 
collective bargaining agreement. 
There are no existing or threatened strikes, lockouts or other labor
disputes involving any Loan Party that singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees
of the Loan Parties are in compliance with the Fair Labor Standards Act and
each other applicable law, rule or regulation dealing with such matters,
except where such non-compliance could not reasonably be expected to have a
Material Adverse Effect.


 


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


 


SECTION 10          AFFIRMATIVE
COVENANTS.


 


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


 


10.1         Reports,
Certificates and Other Information. 
Furnish to the Administrative Agent and each Lender:


 


10.1.1      Annual Report.  Promptly when available and in any event
within 90 days after the close of each Fiscal Year: (a) a copy of the
annual audit report of Parent and its Subsidiaries for such Fiscal Year,
including therein consolidated balance sheets and statements of earnings and
cash flows of Parent and its Subsidiaries as at the end of such Fiscal
Year,  certified without adverse
reference to going concern value and without qualification by independent
auditors of recognized standing selected by


 


38

















 


Parent
and reasonably acceptable to the Administrative Agent, together with (i) a
written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe that
Parent was not in compliance with any provision of Section 11.12 of
this Agreement insofar as such provision relates to accounting matters or, if
something has come to their attention that caused them to believe that Parent
was not in compliance with any such provision, describing such non-compliance
in reasonable detail and (ii) a comparison with the budget for such Fiscal
Year and a comparison with the previous Fiscal Year; and (b) a
consolidating balance sheet of Parent and its Subsidiaries as of the end of
such Fiscal Year and consolidating statement of earnings and cash flows for
Parent and its Subsidiaries for such Fiscal Year, certified by a Senior Officer
of Parent.


 


10.1.2      Quarterly Reports.  Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter of each Fiscal Year), consolidated and consolidating balance sheets of
Parent and its Subsidiaries as of the end of such Fiscal Quarter, together with
consolidated and consolidating statements of earnings and cash flows for such
Fiscal Quarter and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such Fiscal Quarter and a comparison with
results for the same period in the previous Fiscal Year, certified by a Senior
Officer of Parent.


 


10.1.3      Compliance Certificates.  Contemporaneously with the furnishing of a
copy of each annual audit report pursuant to Section 10.1.1 and
each set of quarterly statements pursuant to Section 10.1.2, a duly
completed compliance certificate in the form of Exhibit B, with
appropriate insertions, dated the date of such annual report or such quarterly
statements and signed by a Senior Officer of Parent, containing (i) a
computation of each of the financial ratios and restrictions set forth in Section 11.12
and to the effect that such officer has not become aware of any Event of
Default or Unmatured Event of Default that has occurred and is continuing or,
if there is any such event, describing it and the steps, if any, being taken to
cure it and (ii) a written statement of Parent’s management setting forth
a discussion of Parent’s consolidated financial condition, changes in financial
condition and results of operations.


 


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


 


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


 


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


 


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


 


(c)           the institution of any steps by any
member of the Controlled Group or any other Person to terminate any Pension
Plan, or the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give rise to
a


 


39

















 


Lien under Section 302(f) of
ERISA) or to any Multiemployer Pension Plan, or the taking of any action with
respect to a Pension Plan which could result in the requirement that the
Company furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan or Multiemployer
Pension Plan which could result in the incurrence by any member of the
Controlled Group of any material liability, fine or penalty (including any
claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in a Contingent Liability
of the Company with respect to any post-retirement welfare benefit plan or
other employee benefit plan of the Company or another member of the Controlled
Group, or any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code,
that any such plan is or may be terminated, or that any such plan is or may
become insolvent;


 


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


 


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


 


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


 


10.1.7      Projections.  As soon as practicable, and in any event not
later than 30 days after the end of each Fiscal Year, financial projections for
Parent and its Subsidiaries for the next Fiscal Year (including monthly
operating and cash flow budgets) prepared in a manner consistent with the
projections delivered by the Company to the Lenders prior to the Closing Date
or otherwise in a manner reasonably satisfactory to the Administrative Agent,
accompanied by a certificate of a Senior Officer of Parent on behalf of Parent
to the effect that (a) such projections were prepared by Parent in good
faith, (b) Parent has a reasonable basis for the assumptions contained in
such projections and (c) such projections have been prepared in accordance
with such assumptions.


 


10.1.8      Notices With Respect to Other Debt.  Promptly following receipt, copies of any
notices (including notices of default or acceleration) received from any holder
or trustee of, under or with respect to any Subordinated Debt or any
convertible debt.


 


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


 


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


 


40

















 


independent
auditors to discuss such financial matters with any Lender or the
Administrative Agent or any representative thereof), and to examine (and, at
the expense of the Loan Parties, photocopy extracts from) any of its books or
other records; and permit, and cause each other Loan Party to permit, the
Administrative Agent and its representatives to inspect the facilities of the
Loan Parties, to perform appraisals of the equipment of the Loan Parties, and
to inspect, audit, check and make copies of and extracts from the books,
records, computer data, computer programs, journals, orders, receipts,
correspondence and other data relating to the assets of the Loan Parties.  All such inspections or audits by the Administrative
Agent shall be at the Company’s expense, provided that so long as no
Event of Default or Unmatured Event of Default exists, the Company shall not be
required to reimburse the Administrative Agent for inspections or audits more
frequently than once each Fiscal Year.


 


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


 


(b)           Maintain, and cause each other Loan Party to maintain,
with responsible insurance companies, such insurance coverage as may be
required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated, but which shall insure against all risks and liabilities of the type
identified on Schedule 9.15 and shall have insured amounts no less than,
and deductibles no higher than, those set forth on such schedule; and, upon
request of the Administrative Agent or any Lender, furnish to the
Administrative Agent or such Lender a certificate setting forth in reasonable
detail the nature and extent of all insurance maintained by the Loan Parties.  The Company shall cause each issuer of an
insurance policy to provide the Administrative Agent with an endorsement
(i) naming the Administrative Agent as an additional insured with respect
to each policy of general and umbrella liability insurance and (ii) providing
that 30 days’ notice will be given to the Administrative Agent prior to any
cancellation of,  any material reduction
in coverage provided by or any other material modification to such policy.


 


(c)           The Company shall maintain at all times a key man life
insurance policy on the life of David Teece in an amount equal to $5,000,000,
in form and substance and with a life insurance company satisfactory to the
Administrative Agent.


 


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


 


41

















 


good
faith by appropriate proceedings and shall set aside on its books adequate
reserves with respect thereto in accordance with GAAP.


 


10.5         Maintenance of
Existence, etc.  Maintain and
preserve, and (subject to Section 11.4) cause each other Loan Party
to maintain and preserve, (a) its existence and good standing in the
jurisdiction of its organization and (b) its qualification to do business
and good standing in each jurisdiction where the nature of its business makes
such qualification necessary (other than such jurisdictions in which the
failure to be qualified or in good standing could not reasonably be expected to
have a Material Adverse Effect).


 


10.6         Use of Proceeds.  Use the proceeds of the Loans, and the
Letters of Credit, solely for working capital purposes, for Acquisitions
permitted by Section 11.4, for Capital Expenditures and for other
general business purposes; and not use or permit any proceeds of any Loan to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of “purchasing or carrying” any Margin Stock.


 


10.7         Employee Benefit
Plans.


 


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


 


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


 


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


 


10.8         Environmental
Matters.  The Company shall, and
shall cause each other Loan Party to, comply with in all material respects with
all applicable Environmental Laws.


 


10.9         Further Assurances.  Take, and cause each other Loan Party to
take, such actions as are necessary or as the Administrative Agent or the
Required Lenders may reasonably request from time to time to ensure that the
Obligations of each Loan Party under the Loan Documents are guaranteed by each
domestic Subsidiary (including, upon the acquisition or creation thereof, any
Subsidiary acquired or created after the Closing Date), in each case as the
Administrative Agent may determine, including the execution and delivery of
guaranties and other documents.


 


SECTION 11          NEGATIVE COVENANTS


 


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


 


42

















 


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


 


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


 


(b)           Debt incurred or assumed after the
Closing Date which is secured by Liens permitted by Section 11.2(d),
and extensions, renewals and refinancings thereof; provided, that the
aggregate amount of all such Debt at any time outstanding shall not exceed two
percent (2.0%) of Parent’s consolidated revenues as of the previous four Fiscal
Quarters;


 


(c)           Debt of the Parent or Company to any
Wholly-Owned Subsidiary or Debt of any Wholly-Owned Subsidiary to the Company,
the Parent or another Wholly-Owned Subsidiary; provided that
(i) the sum of (A) the aggregate principal amount outstanding of any
such Debt owed by a foreign Subsidiary and (B) the aggregate Investments
made after the date hereof by the Company or any domestic Subsidiary to any
foreign Subsidiary (excluding in each case Investments the proceeds of which
are used exclusively to effect an Acquisition pursuant to Section 11.4
or to pay a Signing and Performance Bonus pursuant to Section 11.13)
shall not exceed $10,000,000, and (ii) any such Debt owed by a foreign
Subsidiary shall be evidenced by a demand note in form and substance reasonably
satisfactory to the Administrative Agent which has been pledged to the
Administrative Agent in accordance with the terms of the Guaranty and Pledge
Agreement;


 


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


 


(e)           Debt described on Schedule 11.1
and any extension, renewal or refinancing thereof so long as the principal
amount thereof is not increased;


 


(f)            Suretyship Liabilities arising with
respect to customary indemnification obligations in favor of sellers and
assumptions of obligations (other than Acquired Debt) in connection with
Acquisitions permitted under Section 11.4 and purchasers in
connection with Dispositions permitted under Section 11.4;


 


(g)           up to $2,000,000 in the aggregate of
(i) Acquired Debt assumed in Acquisitions permitted under Section 11.4
and (ii) Debt secured by property acquired by a Loan Party and assumed by
such Loan Party in transactions which do not constitute Acquisitions;


 


(h)           convertible Debt issued by Parent, so
long as (i) the stated maturity of such Debt shall be a date not earlier
than six months after the stated maturity date of the Loans as of the date of
issuance, (ii) no mandatory redemption requirements prior to maturity
other than upon a Change of Control or pursuant to other customary event risk
features, (iii) no Unmatured Event of Default or Event of Default shall
have occurred and be continuing either immediately before or immediately after
such issuance, after giving effect to the intended use of proceeds of such
convertible Debt, with evidence that the Company is in pro forma compliance
with all the financial ratios and restrictions set forth in Section 11.12
on the date of measurement, and (iv) the restrictive covenants and events
of default relating to such Debt are generally no more restrictive than those
set forth in the Credit Agreement (it being understood and agreed that Debt
that has (A) no financial covenants, (B) no restrictive covenants
with respect to incurrence, existence or making of liens, indebtedness or
restricted payments and (C) dollar thresholds with respect to any


 


43

















 


events of default as a
result of judgments and defaults under other indebtedness no lower than those
provided for in this Agreement for such categories of defaults, will satisfy
the requirements of this clause (iv));


 


(i)             Suretyship Liabilities with respect
to (A) Debt otherwise permitted under this Section 11.1, and
(B) Debt of Persons other than Loan Parties that would be permitted under
this Section 11.1 if such Person were a Loan Party, but only to the
extent (i) within the limitations set forth in this Section 11.1
and (ii) that one or more Loan Parties derive, directly or indirectly,
substantial business or finance benefits therefrom, and such Debt of other
Persons shall count against such limitations;


 


(j)           Suretyship Liabilities that
constitute Investments permitted under Section 11.10 (unless only
permitted by clause (b) of Section 11.10); and


 


(k)            other Debt, in addition to the Debt
listed above, in an aggregate outstanding amount not at any time exceeding
$2,000,000.


 


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


 


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


 


(b)           Liens arising in the Ordinary Course
of Business (such as (i) Liens of carriers, warehousemen, mechanics and
materialmen and other similar Liens imposed by law and (ii) Liens in the
form of deposits or pledges incurred in connection with worker’s compensation,
unemployment compensation and other types of social security (excluding Liens
arising under ERISA) or in connection with surety bonds, bids, performance
bonds and similar obligations) for sums not overdue or being contested in good
faith by appropriate proceedings and not involving any advances or borrowed
money or the deferred purchase price of property or services and, in each case,
for which it maintains adequate reserves;


 


(c)           Liens described on Schedule 11.2
as of the Closing Date;


 


(d)           subject to the limitation set forth
in Section 11.1(b), (i) Liens arising in connection with
Capital Leases (and attaching only to the property being leased), and
(ii)  Liens that constitute purchase money security interests on any
property securing debt incurred for the purpose of financing all or any part of
the cost of acquiring such property, provided that any such Lien
attaches to such property within 20 days of the acquisition thereof and
attaches solely to the property so acquired;


 


(e)           attachments, judgment liens and other
similar Liens, for sums not exceeding $500,000 arising in connection with court
proceedings, provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;


 


44

















 


(f)            subject to the limitation set forth
in Section 11.1(g), Liens existing on property at the time of the
acquisition thereof by any Loan Party (and not created in contemplation of such
acquisition);


 


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


 


(h)          Liens in favor of an indenture trustee
securing its fees and expenses and reimbursement, indemnification and similar
rights under an indenture, in connection with the issuance of Debt pursuant to Section 11.1(h) to
the extent customary in connection with convertible debt issuances; and


 


(i)            Liens securing other obligations of
the Loan Parties in an amount not to exceed $500,000 at any one time
outstanding; and


 


11.3         Restricted Payments.  Not, and not permit any other Loan Party to,
(a) make any distribution to any holders of its Capital Securities,
(b) purchase or redeem any of its Capital Securities, (c) pay any
management fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance, repurchase or
any other payment in respect of any Subordinated Debt or (e) set aside
funds for any of the foregoing. 
Notwithstanding the foregoing, (i) any of the foregoing
transactions may be entered into between Parent, the Company and any of Company’s
Wholly-Owned domestic Subsidiaries and any other such Loan Party, (ii) any
of the actions identified in the foregoing clauses (a), (b) (d) and
(e) shall be permitted to the extent such Restricted Payment is made
solely in the form of Capital Securities of the Parent, and (iii) so long
as no Event of Default or Unmatured Event of Default exists or would result
therefrom, one or more of the Loan Parties may purchase up to $40,000,000 of
Parent’s Capital Securities in the aggregate after the date hereof.


 


11.4         Mergers,
Consolidations, Sales.  Not, and not
permit any other Loan Party to, (a) be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any Capital Securities of any class of, or any partnership or joint
venture interest in, any other Person or all or substantially all of any
business or division of any Person, (b) make any Asset Disposition, or
(c) sell or assign with or without recourse any receivables (except in
connection with the departure of a consultant), except for (i) any such
merger, consolidation, sale, transfer, conveyance, lease or assignment of or by
any Wholly-Owned Subsidiary into the Company or into any other domestic
Wholly-Owned Subsidiary, (ii) any such purchase or other acquisition by
the Company or any domestic Wholly-Owned Subsidiary of the assets or Capital
Securities of any Wholly-Owned Subsidiary, (iii) the Disposition of any
asset which is to be replaced, and is in fact replaced, within 30 days with
another asset performing the same or a similar function, (iv) the release
by any Loan Party of a departing employee from a non-compete agreement in
exchange for a payment from such employee’s new employer, (v) Asset
Dispositions (including mergers and consolidations which effect Asset
Dispositions) for at least fair market value (as determined by the Board of
Directors of the Company) so long as (x) the net book value of all assets
sold or otherwise disposed of in any Fiscal Year does not exceed 10% of the net
book value of the consolidated assets of the Loan Parties as of the last day of
the preceding Fiscal Year, and (y) the revenues generated by such assets
do not exceed 10% of Parent’s consolidated revenues as of the prior Fiscal
Year, and (vi) any Acquisition (including any merger or consolidation
which effects an Acquisition) by the Company or any Wholly-Owned Subsidiary
where:


 


45

















 


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


 


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


 


(C)           the aggregate consideration to be
paid by the Loan Parties (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP but
excluding any consideration paid in the form of Capital Securities of any Loan
Party) in connection with such Acquisition (or any series of related
Acquisitions), together with all other Acquisitions consummated in the last
twelve months, is less than 150% of the Company’s consolidated EBITDA during
such period;


 


(D)          immediately after giving effect to
such Acquisition, the Company is in pro forma compliance with all the financial
ratios and restrictions set forth in Section 11.12;


 


(E)           in the case of the Acquisition of any
Person, the board of directors or similar governing body of such Person has
approved such Acquisition;


 


(F)           no more than 30 days after the
closing of such Acquisition, the Administrative Agent shall have received
complete executed or conformed copies of each material document, instrument and
agreement to be executed in connection with such Acquisition together with all
lien search reports and lien release letters and other documents as the
Administrative Agent may require to evidence the termination of Liens on the
assets or business to be acquired;


 


(G)           no more than 30 days after the
closing of such Acquisition, the Administrative Agent shall have received an
acquisition summary with respect to the Person and/or business or division to
be acquired, such summary to include a reasonably detailed description thereof
(including financial information) and operating results (including financial
statements for the most recent 12 month period for which they are available and
as otherwise available), the terms and conditions, including economic terms, of
the proposed Acquisition, and the Company’s calculation of pro forma EBITDA
relating thereto;


 


(H)          if the target of such Acquisition is a
Person or a business/division of a Person organized under the laws of a
jurisdiction other than the United States or any political subdivision thereof,
then (1) such Person must be organized under the laws of China, India
or one of the member countries of the Organisation for Economic Co-operation
and Development, and (2) at least 60% of Parent’s consolidated revenues
for the previous four full Fiscal Quarters must have been generated by Parent
and its domestic Subsidiaries, as determined on a pro forma basis after giving
effect to such proposed Acquisition;


 


(I)            if the aggregate consideration to be
paid in connection with any Acquisition (determined in accordance with clause
(C) above) is in excess of $5,000,000, then the target must have positive
EBIT in the most recent 12 month period;


 


(J)            after giving effect to each
Acquisition, the Revolving Commitment must exceed the sum of Revolving
Outstandings plus outstandings under the Swing Line by at least $15,000,000;


 


(K)          the provisions of Section 10.7
have been satisfied;


 


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(L)           simultaneously with the closing of
such Acquisition, the target company (if such Acquisition is structured as a
purchase of equity and the target company becomes a domestic Subsidiary)
executes and delivers to Administrative Agent a joinder to the Guaranty and
Pledge Agreement, or at the option of Administrative Agent, in Administrative
Agent’s absolute discretion, a joinder agreement satisfactory to Administrative
Agent in which such target company or surviving company, and their respective
Subsidiaries becomes a borrower under this Agreement and assumes primary, joint
and several liability for the Obligations; and


 


(M)         if the Acquisition is structured as a
merger involving the Company, then the Company is the surviving entity.


 


11.5         Modification of Organizational
Documents and Navigant Subordination Agreement.  Not permit (a) the charter, by-laws or
other organizational documents of any Loan Party to be amended or modified in
any way which could reasonably be expected to materially adversely affect the
interests of the Lenders or (b) the Navigant Subordination Agreement to be
terminated or to be amended or modified in any way which could reasonably be
expected to materially adversely affect the interests of the Lenders.


 


11.6         Transactions with
Affiliates.  Except (a) as set
forth on Schedule 11.6 hereto or (b) otherwise in the Ordinary
Course of Business, not, and not permit any other Loan Party to, enter into, or
cause, suffer or permit to exist any transaction, arrangement or contract with
any of its other Affiliates (other than the Loan Parties) which is on terms
which are less favorable than are obtainable from any Person which is not one
of its Affiliates.


 


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


 


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


 


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


 


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11.10       Investments.  Not, and not permit any other Loan Party to,
make or permit to exist any Investment in any other Person, except the
following:


 


(a)           Investments by Parent, the Company or
any Subsidiary in Parent, the Company or any Wholly-Owned Subsidiary, so long
as the sum of (i) the aggregate principal amount outstanding of any Debt
incurred by a foreign Subsidiary pursuant to Section 11.1(c) and
(ii) the aggregate of such Investments made after the date hereof by the
Company or any domestic Subsidiary in any foreign Subsidiary (excluding in each
case Investments the proceeds of which are used exclusively to effect an
Acquisition pursuant to Section 11.4 or to pay a Signing and
Performance Bonus pursuant to Section 11.13) shall not exceed
$10,000,000;


 


(b)           Investments constituting Debt
permitted by Section 11.1;


 


(c)           Suretyship Liabilities constituting
Debt permitted by Section 11.1 or Liens permitted by Section 11.2;


 


(d)           Cash Equivalent Investments;


 


(e)           bank deposits and endorsements in the
ordinary course of business;


 


(f)            Investments in securities of account
debtors received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such account debtors or received in
settlement of delinquent accounts;


 


(g)           Suretyship Liabilities under or with
respect to employee benefit plans, employment agreements and similar arrangements
in the Ordinary Course of Business;


 


(h)           Indemnity, hold harmless,
contribution, expense reimbursement and similar obligations that are unrelated
to financing transactions or credit support arrangements or, if so related, are
incidental thereto;


 


(i)            Suretyship Liabilities arising by
operation of law in the Ordinary Course of Business;


 


(j)            Investments to consummate
Acquisitions permitted by Section 11.4;


 


(k)           Investments listed on Schedule
11.10 as of the Closing Date; and


 


(l)            other Investments, in addition to
the Investments listed above in an aggregate outstanding amount not at any time
exceeding $2,000,000;


 


provided that
(x) any Investment which when made complies with the requirements of the
definition of the term “Cash Equivalent Investment” may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), or (g) shall be permitted to be made if, immediately
before or after giving effect thereto, any Event of Default or Unmatured Event
of Default exists.


 


11.11       Fiscal Year.  Not change its Fiscal Year.


 


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11.12       Financial Covenants.


 


11.12.1    Total Net Leverage Ratio.  Not permit the Total Net Leverage Ratio as of
the last day of any Computation Period to exceed 3.0  to 1.0.


 


11.12.2    Fixed Charge Coverage Ratio.  Not permit the Fixed Charge Coverage Ratio as
of the last day of any Computation Period to be less than 2.0 to 1.0.


 


11.13       Signing and Performance Bonuses.  Not, and not permit any other Loan Party to,
pay any Signing and Performance Bonus unless (i) such Signing and
Performance Bonus is paid in accordance with the terms of an agreement in
effect on the Closing Date, as such agreement is in effect on the Closing Date,
or (ii) such Signing and Performance Bonus is being paid pursuant to the
terms of any other agreement and (x) the aggregate amount of all such
Signing and Performance Bonuses paid in the most recent 12 month period does
not exceed 50% of EBITDA for such 12 month period, (y) no Unmatured Event
of Default or Event of Default would occur after giving pro forma effect to the
payment of such Signing and Performance Bonus and (z) the conditions
specified in clauses (D) and (J) of Section 11.4(c)(vi) shall
have been satisfied.


 


SECTION 12          EFFECTIVENESS; CONDITIONS OF
LENDING, ETC.


 


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


 


12.1         Initial Credit Extension.  The obligation of the Lenders to make the
initial Loans and the obligation of the Issuing Lender to issue its initial
Letter of Credit (whichever first occurs) is, in addition to the conditions
precedent specified in Section 12.2, subject to the conditions
precedent that (a) all Liens securing the Company’s obligations under the
Existing Credit Agreement have been (or concurrently with the initial borrowing
will be) terminated and (b) the Administrative Agent shall have received
all of the following, each duly executed and dated the Closing Date (or such
earlier date as shall be satisfactory to the Administrative Agent), in form and
substance satisfactory to the Administrative Agent (and the date on which all
such conditions precedent have been satisfied or waived in writing by the
Administrative Agent and the Lenders is called the “Closing Date”):


 


12.1.1      Notes.  A Note for each Lender.


 


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


 


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


 


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12.1.4      Letter of Direction.  A letter of direction containing funds flow
information with respect to the proceeds of the Loans on the Closing Date.


 


12.1.5      Guaranty and Pledge Agreement.  A counterpart of the Guaranty and Pledge
Agreement executed by Parent, the Company and each Domestic Subsidiary,
together with all instruments, transfer powers and other items required to be
delivered in connection therewith.


 


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


 


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


 


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


 


12.1.9      Solvency Certificate.  A Solvency Certificate executed by a Senior
Officer of the Company.


 


12.1.10    Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code
search reports dated a date reasonably near to the Closing Date, listing all
effective financing statements which name any Loan Party (under their present
names and any previous names) as debtors, together with (a) copies of such
financing statements, (b) the release of all Liens granted in connection
with the Existing Credit Agreement, with Uniform Commercial Code or other
appropriate termination statements and documents effective to evidence the
foregoing (other than Liens permitted by Section 11.2) and
(c) such other Uniform Commercial Code termination statements as the
Administrative Agent may reasonably request.


 


12.1.11    Closing Certificate.  A certificate executed by an officer of the
Company on behalf of the Company certifying the matters set forth in Section 12.2.1
as of the Closing Date.


 


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


 


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


 


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


 


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


 


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


 


SECTION 13          EVENTS OF DEFAULT AND THEIR EFFECT.


 


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


 


13.1.1      Non-Payment of the Loans, etc.  Default in the payment when due of the
principal of any Loan; or default, and continuance thereof for five days, in
the payment when due of any interest, fee, reimbursement obligation with
respect to any Letter of Credit or other amount payable by the Company
hereunder or under any other Loan Document.


 


13.1.2      Non-Payment of Other Debt.  (a) Any default shall occur under the
terms applicable to any Debt of any Loan Party (including any of the
Obligations not referenced in Section 13.1.1, other than any Bank
Product Obligations which are not arising under Hedging Agreements) in an
aggregate amount (for all such Debt so affected and including undrawn committed
or available amounts and amounts owing to all creditors under any combined or
syndicated credit arrangement) exceeding $1,000,000 and such default shall
(i) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (ii) accelerate the maturity of such Debt or
permit the holder or holders thereof, or any trustee or agent for such holder
or holders, to cause such Debt to become due and payable (or require any Loan
Party to purchase or redeem such Debt or post cash collateral in respect
thereof) prior to its expressed maturity, or (ii) any other event shall
occur in respect of any such Debt that would accelerate the maturity of such
Debt or permit the holder or holders thereof, or any trustee or agent for such
holder or holders, to cause such Debt to become due and payable (or require any
Loan Party to purchase or redeem such Debt or post cash collateral in respect
thereof) prior to its expressed maturity.


 


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


 


13.1.4      Bankruptcy, Insolvency, etc.  Any Loan Party becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal to pay, debts as
they become due; or any Loan Party applies for, consents to, or acquiesces in
the appointment of a trustee, receiver or other custodian for such Loan Party
or any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for any Loan Party or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any


 


51

















 


bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is commenced in respect of
any Loan Party, and if such case or proceeding is not commenced by such Loan
Party, it is consented to or acquiesced in by such Loan Party, or remains for
60 days undismissed; or any Loan Party takes any action to authorize, or in
furtherance of, any of the foregoing.


 


13.1.5      Non-Compliance with Loan Documents.  (a) Failure by any Loan Party to comply
with or to perform any covenant set forth in Section 10.1.5, 10.3(b) or
10.5 or Section 11; or (b) failure by any Loan Party to
comply with or to perform any other provision of this Agreement or any other
Loan Document (and not constituting an Event of Default under any other
provision of this Section 13) and continuance of such failure
described in this clause (b) for 30 days from the earlier of
(i) the date on which such Loan Party becomes aware of such failure and
(ii) the date on which the Company receives notice thereof from the
Administrative Agent.


 


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


 


13.1.7      Pension Plans.  (a) Any Person institutes steps to
terminate a Pension Plan if as a result of such termination the Company or any
member of the Controlled Group could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension Plan, in
excess of $500,000; (b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA; (c) the Unfunded Liability exceeds
twenty percent of the Total Plan Liability; or (d) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Pension Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Pension
Plans as a result of such withdrawal (including any outstanding withdrawal
liability that the Company or any member of the Controlled Group have incurred
on the date of such withdrawal) exceeds $500,000.


 


13.1.8      Judgments.  Final judgments which exceed an aggregate of
$500,000 shall be rendered against any Loan Party and shall not have been paid,
discharged or vacated or had execution thereof stayed pending appeal within 30
days after entry or filing of such judgments.


 


13.1.9      Invalidity of Guaranty and Pledge
Agreement.  The Guaranty and Pledge
Agreement shall cease to be in full force and effect; or any Loan Party (or any
Person by, through or on behalf of any Loan Party) shall contest in any manner
the validity, binding nature or enforceability of the Guaranty and Pledge
Agreement.


 


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


 


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


 


13.2         Effect of Event of
Default.  If any Event of Default
described in Section 13.1.4 shall occur in respect of the Company,
the Commitments shall immediately terminate and the Loans and all


 


52

















 


other
Obligations hereunder shall become immediately due and payable and the Company
shall become immediately obligated to Cash Collateralize all Letters of Credit,
all without presentment, demand, protest or notice of any kind; and, if any
other Event of Default shall occur and be continuing, the Administrative Agent
may (and, upon the written request of the Required Lenders shall) declare the
Commitments to be terminated in whole or in part and/or declare all or any part
of the Loans and all other Obligations hereunder to be due and payable and/or
demand that the Company immediately Cash Collateralize all or any Letters of
Credit, whereupon the Commitments shall immediately terminate (or be reduced, as
applicable) and/or the Loans and other Obligations hereunder shall become
immediately due and payable (in whole or in part, as applicable) and/or the
Company shall immediately become obligated to Cash Collateralize the Letters of
Credit (all or any, as applicable), all without presentment, demand, protest or
notice of any kind.  The Administrative
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration.  Notwithstanding the foregoing, the effect as
an Event of Default of any event described in Section 13.1.1 or 13.1.4 may
be waived in writing by all the Lenders, and the effect as an Event of Default
or any other event described in this Section 13 may be waived in
writing by the Required Lenders.  Any
cash collateral delivered hereunder shall be held by the Administrative Agent
(without liability for interest thereon) and applied to the Obligations arising
in connection with any drawing under a Letter of Credit.  After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Administrative
Agent to any remaining Obligations hereunder and any excess shall be delivered
to the Company or as a court of competent jurisdiction may elect.


 


SECTION 14          THE AGENTS.


 


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


 


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


 


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


 


14.4         Exculpation of
Administrative Agent.  None of the
Administrative Agent nor any of its directors, officers, employees or agents
shall (a) be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except to the extent resulting from its
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein as determined by a final, nonappealable judgment by
a court of competent jurisdiction), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Loan Party or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document (or the creation, perfection or priority of any Lien or security
interest therein), or for any failure of the Company or any other party to any
Loan Document to perform its Obligations hereunder or thereunder.  The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company’s Subsidiaries or Affiliates.


 


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


 


14.6         Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a


 


54

















 


Lender
or the Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a “notice of default”.  The Administrative Agent will notify the
Lenders of its receipt of any such notice. 
The Administrative Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Lenders in accordance with Section 13; provided
that unless and until the Administrative Agent has received any such request,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest
of the Lenders.


 


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


 


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


 


55

















 


Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, termination of this Agreement and the resignation or replacement
of the Administrative Agent.


 


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


 


14.10       Successor
Administrative Agent.  The
Administrative Agent may resign as Administrative Agent upon 30 days’ notice to
the Lenders and the Company.  If the
Administrative Agent resigns under this Agreement, the Required Lenders shall,
with (so long as no Event of Default exists) the consent of the Company (which
shall not be unreasonably withheld or delayed), appoint from among the Lenders
a successor agent for the Lenders.  If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders.  Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term “Administrative Agent” shall mean such successor agent, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Section 14
and Sections 15.5 and 15.16 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.  If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent’s notice of resignation, the
retiring Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.


 


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


 


(a)           to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, and all other
Obligations that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative
Agent and their respective agents and counsel and all other amounts due the
Lenders and the Administrative Agent under Sections 5, 15.5 and 15.17)
allowed in such judicial proceedings; and


 


56

















 


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


 


and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5, 15.5 and 15.17.


 


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


 


14.12       Other Agents;
Arrangers and Managers.  None of the
Lenders or other Persons identified on the facing page or signature
pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,”
“book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger”,
if any, shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than, in the case of such Lenders, those
applicable to all Lenders as such. 
Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender.  Each Lender acknowledges that it
has not relied, and will not rely, on any of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.


 


SECTION 15          GENERAL.


 


15.1         Waiver; Amendments.  No delay on the part of the Administrative
Agent or any Lender in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. 
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the other Loan Documents shall in any event be
effective unless the same shall be in writing and acknowledged by the Company
and Lenders having an aggregate Pro Rata Shares of not less than the aggregate
Pro Rata Shares expressly designated herein with respect thereto or, in the
absence of such designation as to any provision of this Agreement, by the Required
Lenders, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No amendment, modification,
waiver or consent shall (a) extend or increase the Commitment of any
Lender without the written consent of such Lender, (b) extend the date
scheduled for payment of any principal (excluding mandatory prepayments) of or
interest on the Loans or any fees payable hereunder without the written consent
of each Lender directly affected thereby, (c) reduce the principal amount
of any Loan, the rate of interest thereon or any fees payable hereunder,
without the consent of each Lender directly affected thereby (except for
periodic adjustments of interest rates and fees resulting from a change in the
Applicable Margin as provided for in this Agreement); or (d) release any
party from its obligations under the Guaranty and Pledge Agreement, change the
definition of Required Lenders, any provision of this Section 15.1
or reduce the aggregate Pro Rata Share required to effect an amendment,
modification, waiver or consent, without, in each case, the written consent of
all Lenders.  No provision of Section 14
or other provision of this Agreement affecting the Administrative Agent in its
capacity as such shall be amended, modified or waived without the consent of
the Administrative Agent.  No provision
of this Agreement relating to the rights or duties of the Issuing Lender in its
capacity as such shall be amended, modified or


 


57

















 


waived
without the consent of the Issuing Lender. 
No provision of this Agreement relating to the rights or duties of the
Swing Line Lender in its capacity as such shall be amended, modified or waived
without the consent of the Swing Line Lender.


 


15.2         Confirmations.  The Company and each holder of a Note agree
from time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to the
Administrative Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.


 


15.3         Notices.  All notices hereunder shall be in writing
(including facsimile transmission) and shall be sent to the applicable party at
its address shown on Annex B or at such other address as such party may,
by written notice received by the other parties, have designated as its address
for such purpose.  Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received.


 


15.4         Computations.  Where the character or amount of any
asset or liability or item of income or expense is required to be determined,
or any consolidation or other accounting computation is required to be made,
for the purpose of this Agreement, such determination or calculation shall, to
the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP, consistently applied; provided that if the
Company notifies the Administrative Agent that the Company wishes to amend any
covenant in Section 10 or 11.12 (or any related definition) to eliminate
or to take into account the effect of any change in GAAP on the operation of
such covenant (or if the Administrative Agent notifies the Company that the
Required Lenders wish to amend Section 10 or 11.12 (or any related
definition) for such purpose), then the Company’s compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant (or related definition) is amended in a manner satisfactory to
the Company and the Required Lenders.


 


15.5         Costs, Expenses
and Taxes.  The Company agrees to pay
on demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent (including Attorney Costs and any Taxes) in connection with the
preparation, execution, syndication, delivery and administration (including the
costs of Intralinks (or other similar service), if applicable) of this Agreement,
the other Loan Documents and all other documents provided for herein or
delivered or to be delivered hereunder or in connection herewith (including any
amendment, supplement or waiver to any Loan Document), whether or not the
transactions contemplated hereby or thereby shall be consummated, and all
reasonable out-of-pocket costs and expenses (including Attorney Costs and any
Taxes) incurred by the Administrative Agent and each Lender after an Event of
Default in connection with the collection of the Obligations or the enforcement
of this Agreement the other Loan Documents or any such other documents or
during any workout, restructuring or negotiations in respect thereof.  In addition, the Company agrees to pay, and
to save the Administrative Agent and the Lenders harmless from all liability
for, any fees of the Company’s auditors in connection with any reasonable
exercise by the Administrative Agent and the Lenders of their rights pursuant
to Section 10.2.  All
Obligations provided for in this Section 15.5 shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit and termination of this Agreement.  The Company’s obligation to pay the
Obligations provided for in this Section 15.5 shall be conditioned on its
receipt from the Administrative Agent or the Lenders, as applicable, of
reasonably detailed invoices setting forth such Obligations.


 


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15.6         Assignments;
Participations.


 


15.6.1      Assignments.  (a)  Any Lender may at any time assign
to one or more Persons (any such Person, an “Assignee”) all or any
portion of such Lender’s Loans and Commitments, with the prior written consent
of the Administrative Agent, the Issuing Lender (for an assignment of the
Revolving Loans and the Revolving Commitment) and, so long as no Event of
Default exists, the Company (which consents shall not be unreasonably withheld
or delayed and shall not be required for an assignment by a Lender to a Lender
or an Affiliate of a Lender).  Except as
the Administrative Agent may otherwise agree, any such assignment shall be in a
minimum aggregate amount equal to $5,000,000 or, if less, the remaining
Commitment and Loans held by the assigning Lender.  The Company and the Administrative Agent
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned to an Assignee until the Administrative
Agent shall have received and accepted an effective assignment agreement in
substantially the form of Exhibit D hereto (an “Assignment
Agreement”) executed, delivered and fully completed by the applicable
parties thereto and a processing fee of $3,500. 
No assignment may be made to any Person if at the time of such
assignment the Company would be obligated to pay any greater amount under Section 7.6
or 8 to the Assignee than the Company is then obligated to pay to the
assigning Lender under such Sections (and if any assignment is made in
violation of the foregoing, the Company will not be required to pay such
greater amounts).  Any attempted
assignment not made in accordance with this Section 15.6.1 shall be
treated as the sale of a participation under Section 15.6.2.  The Company shall be deemed to have granted
its consent to any assignment requiring its consent hereunder unless the
Company has expressly objected to such assignment within five Business Days
after notice thereof.


 


(b)           From and after the date on which the
conditions described above have been met, (i) such Assignee shall be
deemed automatically to have become a party hereto and, to the extent that
rights and obligations hereunder have been assigned to such Assignee pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (ii) the assigning Lender, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, shall be released from its rights (other than its indemnification
rights) and obligations hereunder.  Upon
the request of the Assignee (and, as applicable, the assigning Lender) pursuant
to an effective Assignment Agreement, the Company shall execute and deliver to
the Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata
Share of the Revolving Commitment (and, as applicable, a Note in the principal
amount of the Pro Rata Share of the Revolving Commitment retained by the
assigning Lender.  Each such Note shall
be dated the effective date of such assignment. 
Upon receipt by the assigning Lender of such Note, the assigning Lender
shall return to the Company any prior Note held by it.


 


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


 


15.6.2      Participations.  Any Lender may at any time sell to one or
more Persons participating interests in its Loans, Commitments or other
interests hereunder (any such Person, a “Participant”).  In the event of a sale by a Lender of a
participating interest to a Participant, (a) such Lender’s obligations
hereunder shall remain unchanged for all purposes, (b) the Company and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and


 


59

















 


obligations hereunder and
(c) all amounts payable by the Company shall be determined as if such
Lender had not sold such participation and shall be paid directly to such
Lender.  No Participant shall have any direct
or indirect voting rights hereunder except with respect to any event described
in Section 15.1 expressly requiring the unanimous vote of all
Lenders or, as applicable, all affected Lenders.  Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. 
The Company agrees that if amounts outstanding under this Agreement are
due and payable (as a result of acceleration or otherwise), each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement and with respect to any Letter
of Credit to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement; provided
that such right of set-off shall be subject to the obligation of each
Participant to share with the Lenders, and the Lenders agree to share with each
Participant, as provided in Section 7.5.  The Company also agrees that each Participant
shall be entitled to the benefits of Section 7.6 or 8 as if
it were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to Section 7.6
or 8 than would have been paid to the participating Lender on such date
if no participation had been sold and that each Participant complies with Section 7.6(d) as
if it were an Assignee).


 


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


 


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


 


15.9         Confidentiality.  As
required by federal law and the Administrative Agent’s policies and practices,
the Administrative Agent may need to obtain, verify, and record  certain customer identification
information and documentation in connection with opening or maintaining
accounts, or establishing or continuing to provide services.  The Administrative Agent and each
Lender agree to use commercially reasonable efforts (equivalent to the efforts
the Administrative Agent or such Lender applies to maintain the confidentiality
of its own confidential information) to maintain as confidential all
information provided to them by any Loan Party and designated as confidential,
except that the Administrative Agent and each Lender may disclose such
information (a) to Persons employed or engaged by the Administrative Agent
or such Lender in evaluating, approving, structuring or administering the Loans
and the Commitments; (b) to any assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained
in this Section 15.9 (and any such assignee or participant or
potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as
required or requested by any federal or state regulatory authority or examiner,
or any insurance industry association, or as reasonably believed by the
Administrative Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the
advice of the Administrative Agent’s or such Lender’s counsel, is required by
law; (e) in


 


60

















 


connection
with the exercise of any right or remedy under the Loan Documents or in
connection with any litigation to which the Administrative Agent or such Lender
is a party; (f) to any nationally recognized rating agency that requires
access to information about a Lender’s investment portfolio in connection with
ratings issued with respect to such Lender; (g) to any Affiliate of the
Administrative Agent, the Issuing Lender or any other Lender who may provide
Bank Products to the Loan Parties; or (h) that ceases to be confidential
through no fault of the Administrative Agent or any Lender.  Notwithstanding the foregoing, the Company
consents to the publication by the Administrative Agent or any Lender of a
tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement, and the Administrative Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.


 


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


 


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


 


15.12       Entire Agreement.  This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof (except as relates to the fees described in Section 5.3)
and any prior arrangements made with respect to the payment by the Company of
(or any indemnification for) any fees, costs or expenses payable to or incurred
(or to be incurred) by or on behalf of the Administrative Agent or the Lenders.


 


15.13       Counterparts.  This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
Agreement.  Receipt of an executed
signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documents
maintained by the Lenders shall deemed to be originals.


 


15.14       Successors and
Assigns.  This Agreement shall
be binding upon the Company, the Lenders and the Administrative Agent and
their respective successors and assigns, and shall inure to the benefit of the
Company, the Lenders and the Administrative Agent and the successors and
assigns of the Lenders and the Administrative Agent.  No other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Agreement or any of the other Loan Documents.  The Company may not assign or transfer any of
its rights or Obligations under this Agreement without the prior written
consent of the Administrative Agent and each Lender.


 


61

















 


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


 


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


 


15.17       INDEMNIFICATION
BY THE COMPANY.  IN
CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE
ADMINISTRATIVE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE
COMMITMENTS PROVIDED HEREUNDER, THE COMPANY HEREBY AGREES TO INDEMNIFY, EXONERATE
AND HOLD THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THE OFFICERS,
DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS OF THE ADMINISTRATIVE AGENT AND
EACH LENDER (EACH A “LENDER PARTY”) FREE AND HARMLESS FROM AND AGAINST ANY AND
ALL ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES, DAMAGES AND
EXPENSES, INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT
OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE
OF CAPITAL SECURITIES, PURCHASE OF ASSETS OR OTHER SIMILAR TRANSACTION FINANCED
OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH
THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE,
EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY
HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY,
(C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT
ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS CONDUCTED
THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE
LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED
TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION. 
IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, THE COMPANY HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  THE COMPANY SHALL NOT BE LIABLE FOR ANY
SETTLEMENT MADE BY A LENDER PARTY WITHOUT THE COMPANY’S WRITTEN CONSENT, SUCH
CONSENT NOT TO BE UNREASONABLY WITHHELD OR DELAYED.  PROMPTLY AFTER RECEIPT BY A LENDER PARTY
UNDER THIS PARAGRAPH OF NOTICE OF ITS INVOLVEMENT IN ANY ACTION ARISING OUT OF
THIS AGREEMENT, IF A CLAIM FOR INDEMNIFICATION IN RESPECT THEREOF IS TO BE
MADE AGAINST THE COMPANY UNDER THIS PARAGRAPH, SUCH LENDER PARTY


 


62

















 


SHALL NOTIFY THE COMPANY IN
WRITING OF SUCH INVOLVEMENT.  FAILURE BY
SUCH LENDER PARTY TO SO NOTIFY THE COMPANY SHALL NOT RELIEVE THE COMPANY FROM
THE OBLIGATION TO INDEMNIFY THE LENDER PARTY IN ACCORDANCE WITH THIS SECTION 15.17,
EXCEPT AND ONLY TO THE EXTENT THE COMPANY SUFFERS ACTUAL PREJUDICE AS A RESULT
OF SUCH FAILURE TO NOTIFY.  ALL
OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17 SHALL SURVIVE
REPAYMENT OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF
THE LETTERS OF CREDIT, OR TERMINATION OF THE GUARANTY AND PLEDGE AGREEMENT AND
THIS AGREEMENT.


 


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


 


15.19       FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION. 
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF


 


63

















 


THE
STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE.  THE COMPANY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


 


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


 


15.21       Judgment Currency.  If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due from Company hereunder in the
currency expressed to be payable herein (the “specified currency”) into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with usual and customary banking procedures Administrative Agent
could purchase the specified currency with such other currency at any of
Administrative Agent’s offices in the United States of America on the Business
Day preceding that on which final judgment is given.  The obligations of the Company in respect of
any sum due to any Lender, Issuing Lender, or Administrative Agent
hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the Business Day
following receipt by such Lender, Issuing Lender or Administrative Agent
(as the case may be) of any sum adjudged to be so due in such other currency
such Lender, Issuing Lender or Administrative Agent (as the case may be)
may in accordance with normal, reasonable banking procedures purchase the
specified currency with such other currency. 
If the amount of the specified currency so purchased is less than the
sum originally due to such Lender, Issuing Lender or Administrative Agent,
as the case may be, in the specified currency, Company agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender, Issuing
Lender or Administrative Agent, as the case may be, against such loss, and if
the amount of the specified currency so purchased exceed (a) the sum
originally due to any Lender, Issuing Lender or Administrative Agent, as
the case may be, in the specified currency and (b) any amounts shared with
other Lenders as a result of allocations of such excess as a disproportionate
payment to such Lender under Section 7.5, each Lender, Issuing
Lender or Administrative Agent, as the case may be, agrees to promptly remit
such excess to the Company.


 


15.22       Amendment and
Restatement.


 


(a)           On the Closing Date, the Existing Credit Agreement shall
be amended, restated and superseded in its entirety.  The parties hereto acknowledge and agree that
(i) this Agreement, any Notes


 


64

















 


delivered pursuant to Section 3.1 and
the other Loan Documents executed and delivered in connection herewith do not
constitute a novation, payment and reborrowing, or termination of the “Obligations”
(as defined in the Existing Credit Agreement) under the Existing Credit
Agreement as in effect prior to the Closing Date; (ii) such “Obligations”
are in all respects continuing with only the terms thereof being modified as
provided in this Agreement; (iii) the Liens as granted under the
collateral documents securing payment of such “Obligations” have been
terminated and do not secure the payment of the Obligations (as defined in this
Agreement); and (iv) upon the effectiveness of this Agreement all loans
and letters of credit outstanding under the Existing Credit Agreement
immediately before the effectiveness of this Agreement will be part of the
Loans and Letters of Credit hereunder on the terms and conditions set forth in
this Agreement.


 


(b)           Notwithstanding the modifications effected by this
Agreement of the representations, warranties and covenants of the Company
contained in the Existing Credit Agreement, the Company acknowledges and agrees
that any causes of action or other rights created in favor of any Lender and
its successors arising out of the representations and warranties of the Company
contained in or delivered (including representations and warranties delivered
in connection with the making of the loans or other extensions of credit
thereunder) in connection with the Existing Credit Agreement shall survive the
execution and delivery of this Agreement to the extent specifically provided in
the Existing Credit Agreement and without extending any applicable statute of
limitations; provided, however, that it is understood and agreed that the
Company’s monetary obligations under the Existing Credit Agreement in respect
of the loans and letters of credit thereunder are evidenced by this Agreement
as provided in Section 2 hereof.


 


(c)           All indemnification obligations of the Company pursuant to
the Existing Credit Agreement (including any arising from a breach of the
representations thereunder) shall survive the amendment and restatement of the
Existing Credit Agreement pursuant to this Agreement.


 


(d)           On and after the Closing Date, (i) each reference in
the Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or
similar words referring to the Credit Agreement shall mean and be a reference
to this Agreement and (ii) each reference in the Loan Documents to a “Note”
shall mean and be a Note as defined in this Agreement.


 


[signature pages follow]


 


65
















 


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


 


	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  LECG
  Corporation

  Sole Managing Member of LECG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  John
  C. Burke

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  



 


Signature
Page to Credit Agreement


 

















 


	
   

  	
  LASALLE
  BANK NATIONAL ASSOCIATION, as

  
	
   

  	
  Administrative
  Agent, as Issuing Lender and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patrick J. O’Toole

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  First
  Vice President

  



 

















 


	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as
  Syndication Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Wilson Jui

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  



 

















 


	
   

  	
  U. S.
  BANK NATIONAL ASSOCIATION, as Co-

  
	
   

  	
  Documentation
  Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas Marks

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  



 

















 


	
   

  	
  KEY
  BANK N. A., as Co-Documentation Agent and a

  
	
   

  	
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrew Chang

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  



 

















 


	
   

  	
  WELLS
  FARGO BANK , N.A., as Co-Documentation

  
	
   

  	
  Agent
  and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nuzha Bukhari

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  



 

















 


	
   

  	
  THE
  NORTHERN TRUST COMPANY, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Burda

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  



 






 












 


ANNEX A


 


LENDERS AND PRO RATA SHARES


 


	
  Lender

  	
   

  	
  Revolving

  Commitment Amount

  	
   

  	
  Pro Rata Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LaSalle Bank National Association

  	
   

  	
  $

  	
  26,000,000

  	
  *

  	
  26.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  26,000,000

  	
   

  	
  26.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U. S. Bank National Association

  	
   

  	
  $

  	
  14,000,000

  	
   

  	
  14.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank National Association

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  12.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  12.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Northern Trust Company

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  10.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  100

  	
  %

  



 






*              Includes Swing Line Commitment
Amount of $10,000,000.


 

















 


ANNEX B


 


ADDRESSES FOR NOTICES


 


LECG,
LLC


 


c/o
LECG Corporation


33
West Monroe Street


23rd Floor


Chicago, Illinois
60603


Attention:
Marvin A. Tenenbaum, Esq.


Telephone:
(312) 267-8203


Facsimile:
(312) 267-8206


 


LASALLE
BANK NATIONAL ASSOCIATION, as Administrative Agent, Issuing
Lender and a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


135
South LaSalle Street


Chicago, Illinois
60603


Attention:
Patrick O’Toole


Telephone:
(312) 904-0735


Facsimile:  (312) 904-8802


 


All
Other Notices


 


135
South LaSalle Street


Chicago, Illinois
60603


Attention:
Patrick O’Toole


Telephone:
(312) 904-0735


Facsimile:  (312) 904-8802


 


BANK
OF AMERICA, N.A., as Syndication Agent and a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


101
South Marengo


Pasadena,
California  91101


Attention:
Michael Towman/ Linda Escamilla


Telephone:
(626) 666-2238


Facsimile:  (626) 666-2241


 


All
Other Notices


 


315
Montgomery Street


San
Francisco, California  94104


Attention:
David Leimsleder


Telephone:
(415) 622-3371


Facsimile:  (877) 431-3816


 

















 


U.S.
BANK NATIONAL ASSOCIATION, as Co-Documentation Agent and a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


CLS-West
Complex Credits Department


555
S.W. Oak Street


Mail
Code PD-OR-P7LN


Portland,
Oregon  97204


Attention:
Lennie Regalado


Telephone:
(503) 275-4395


Facsimile:  (503) 275-4600


 


All
Other Notices


 


National
Corporate Banking West


555
S.W. Oak Street


Mail
Code PD-OR-P4CB


Portland,
Oregon  97204


Attention:
Thomas Marks


Telephone:
(503) 275-5864


Facsimile:  (503) 275-5428


 


KEYBANK
NATIONAL ASSOCIATION., as Co-Documentation Agent and a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


Attention:
Matthew Schorgl


Telephone:
(216) 689-5459


Facsimile:  (216) 689-5184


 


All
Other Notices


 


Attention:
Andrew Chang


Telephone:
(415) 486-3419


Facsimile:  (415) 486-3414


 

















 


WELLS
FARGO BANK, N.A., as Co-Documentation Agent and a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


Attention:
Mina Tran


Telephone:
(510) 464-1797


Facsimile:  (510) 839-2296


 


All
Other Notices


 


Attention:
Nuzha Bukhari


Telephone:
(510) 464-1706


Facsimile:  (510) 839-2296


 


THE
NORTHERN TRUST COMPANY, as a Lender


 


Notices
of Borrowing , Conversion, Continuation and Letter of Credit Issuance


 


Attention:
Michael Lorenzi


Telephone:
(312) 557-1840


Facsimile:  (312) 630-1566


 


All
Other Notices


 


Attention:
John Burda


Telephone:
(312) 444-3455


Facsimile:  (312) 444-7028


 






 












 


EXHIBIT A


 


FORM OF

NOTE


 




	
   

  	
   

  	
                 ,                

  
	
  $

  	
   

  	
  Chicago, Illinois

  






 


The
undersigned, for value received, promises to pay to the order of
                   
(the “Lender”) at the principal office of LaSalle Bank National
Association (the “Administrative Agent”) in Chicago, Illinois the
aggregate unpaid amount of all Loans made to the undersigned by the Lender
pursuant to the Credit Agreement referred to below (as shown on the schedule
attached hereto (and any continuation thereof) or in the records of the
Lender), such principal amount to be payable on the dates set forth in the
Credit Agreement.


 


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


 


This
Note evidences indebtedness incurred under, and is subject to the terms and
provisions of, the Second Amended and Restated Credit Agreement, dated as of
December 15, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”; terms not otherwise
defined herein are used herein as defined in the Credit Agreement), among the
undersigned, certain financial institutions (including the Lender) and the
Administrative Agent, to which Credit Agreement reference is hereby made for a
statement of the terms and provisions under which this Note may or must be paid
prior to its due date or its due date accelerated.


 


This
Note is made under and governed by the laws of the State of Illinois applicable
to contracts made and to be performed entirely within such State.


 


	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT B


 


FORM OF COMPLIANCE CERTIFICATE


 


To:                                                                              LaSalle Bank
National Association, as Administrative Agent


 


Please
refer to the Second Amended and Restated Credit Agreement dated as of
December 15, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”) among LECG, LLC (the
“Company”), various financial institutions and LaSalle Bank National
Association, as Administrative Agent. 
Terms used but not otherwise defined herein are used herein as defined
in the Credit Agreement.


 


I.                                         Reports.  Enclosed herewith is a copy of the [annual audited/quarterly/monthly] report of the Company as
at
                           ,
        (the “Computation Date”),
which report fairly presents in all material respects the financial condition
and results of operations [(subject to the absence
of footnotes and to normal year-end adjustments)] of the Company as
of the Computation Date and has been prepared in accordance with GAAP
consistently applied.


 


II.                                     Financial Tests.  The Company hereby certifies and warrants to
you that the following is a true and correct computation as at the Computation
Date of the following ratios and/or financial restrictions contained in the
Credit Agreement:


 


A.                                    Section 11.12.1
- Minimum Fixed Charge Coverage Ratio


 


	
  1.

  	
   

  	
  Consolidated
  Net Income

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Plus:    Interest
  Expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  income tax expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  amortization of signing and performance bonuses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  non-cash equity compensation

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Total
  (EBIT)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Rentals

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Sum
  of (3) and (4)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Cash
  Interest Expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Sum
  of (4) and (6)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Ratio
  of (5) to (7)

  	
   

  	
  to 1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Minimum
  required

  	
   

  	
  2.0 to 1

  	
   

  



 


B.                                    Section 11.12.2
- Maximum Total Net Leverage Ratio


 


	
  1.

  	
   

  	
  Total
  Debt

  	
   

  	
  $

  	
   

  	
   

  



 

















 


	
  2.

  	
   

  	
  Cash
  in excess of $25,000,000

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  (1) less
  (2)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Consolidated
  Net Income

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Plus:    Interest
  Expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  income tax expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  depreciation

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  amortization

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  non-cash equity compensation

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  other non-cash charges

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  extraordinary non-cash losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  goodwill impairment

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  expensed acquisition costs

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  (up to $500,000)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  extraordinary gains

  	
   

  	
  $

  	
  (            

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Total
  (EBITDA)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Ratio
  of (3) to (6)      

  	
   

  	
  to 1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Maximum
  allowed

  	
   

  	
  3.0 to 1

  	
   

  



 


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


 


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


 


	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT C


 


FORM OF


 


ASSIGNMENT AGREEMENT


 


Date:


 


To:                              LECG, LLC


 


and


 


LaSalle
Bank National Association, as Administrative Agent


 


Re:                               Assignment
under the Credit Agreement referred to below


 


Gentlemen
and Ladies:


 


Please
refer to Section 15.6.1 of the Second Amended and Restated Credit
Agreement (as amended or otherwise modified from time to time, the “Credit
Agreement”) dated as of December 15, 2006 among LECG, LLC (the “Company”),
various financial institutions and LaSalle Bank National Association, as
administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.


 


(the
“Assignor”) hereby sells and assigns, without recourse, to
                
(the “Assignee”), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to the Assignor’s rights and obligations under
the Credit Agreement as of the date hereof equal to
     % of all of the Loans, of the participation
interests in the Letters of Credit and of the Commitments, such sale, purchase,
assignment and assumption to be effective as of
     ,     or such later date
on which the Company and the Administrative Agent shall have consented hereto
(the “Effective Date”).  After
giving effect to such sale, purchase, assignment and assumption, the Assignee’s
and the Assignor’s respective Percentages for purposes of the Credit Agreement
will be as set forth opposite their names on the signature pages hereof.


 


The
Assignor hereby instructs the Administrative Agent to make all payments from
and after the Effective Date in respect of the interest assigned hereby
directly to the Assignee.  The Assignor
and the Assignee agree that all interest and fees accrued up to, but not
including, the Effective Date are the property of the Assignor, and not the
Assignee.  The Assignee agrees that, upon
receipt of any such interest or fees, the Assignee will promptly remit the same
to the Assignor.


 


The
Assignor represents and warrants that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim.


 


The
Assignee represents and warrants to the Company and the Administrative Agent
that, as of the date hereof, the Company will not be obligated to pay any
greater amount under Section 7.6 or 8 of the Credit Agreement than the
Company is obligated to pay to the Assignor under such Section.  [The Assignee has delivered, or is delivering
concurrently herewith, to the Company and the Administrative Agent the forms
required by Section 7.6 of the Credit Agreement.] [INSERT IF ASSIGNEE IS
ORGANIZED UNDER THE LAWS OF A JURISDICTION OTHER THAN THE UNITED STATES OF
AMERICA OR A STATE THEREOF.]  The
[Assignee/Assignor] [Borrower] shall pay the fee payable to the Administrative
Agent pursuant to Section 15.6.1.


 

















 


The
Assignee hereby confirms that it has received a copy of the Credit
Agreement.  Except as otherwise provided
in the Credit Agreement, effective as of the Effective Date:


 


(a)                                  the Assignee (i) shall
be deemed automatically to have become a party to the Credit Agreement and to
have all the rights and obligations of a “Lender” under the Credit Agreement as
if it were an original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and conditions
set forth in the Credit Agreement as if it were an original signatory thereto;
and


 


(b)                                 the Assignor
shall be released from its obligations under the Credit Agreement to the extent
specified in the second paragraph hereof.


 


The
Assignee hereby advises each of you of the following administrative details
with respect to the assigned Loans and Commitment:


 


	
  (A)

  	
   

  	
  Institution
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  Payment
  Instructions:

  



 


This
Assignment shall be governed by and construed in accordance with the laws of
the State of Illinois


 


Please
evidence your receipt hereof and your consent to the sale, assignment, purchase
and assumption set forth herein by signing and returning counterparts hereof to
the Assignor and the Assignee.


 


	
  Percentage
  =    %

  	
  [ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Adjusted
  Percentage =    %

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


ACKNOWLEDGED
AND CONSENTED TO


 


this
         day of
           ,


 

















 


	
  LASALLE BANK NATIONAL ASSOCIATION, as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED
  AND CONSENTED TO

  	
   

  
	
  this    day
  of      ,

  	
   

  
	
   

  	
   

  
	
  LECG,
  LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 

















 


EXHIBIT D


 


FORM OF NOTICE OF BORROWING


 


To:                                                                              LaSalle Bank
National Association, as Administrative Agent


 


Please
refer to the Second Amended and Restated Credit Agreement dated as of
December 15, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”) among LECG, LLC (the “Company”),
various financial institutions and LaSalle Bank National Association, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.


 


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


 


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


 


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


 


(iii)                               The type of
Revolving Loans comprising the proposed borrowing are [Base Rate] [Eurocurrency
Rate] Loans denominated in
                          .


 


(iv)                              The duration of
the Interest Period for each Eurocurrency Rate Loan made as part of the
proposed borrowing, if applicable, is
                          
months (which shall be 1, 2, 3 or 6 months).


 


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


 


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


 


	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT E


 


FORM OF NOTICE OF CONVERSION/CONTINUATION


 


To:                                                                              LaSalle Bank
National Association, as Administrative Agent


 


Please
refer to the Second Amended and Restated Credit Agreement dated as of
December 15, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”) among LECG, LLC (the “Company”),
various financial institutions and LaSalle Bank National Association, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.


 


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


 


(a)           on
[     date     ] convert
$[           ]of the
aggregate outstanding principal amount of the
[           ] Loan
denominated in
                ,
bearing interest at the
[           ] Rate, into
a(n) [             ]
Loan [and, in the case of a Eurocurrency Rate Loan, having an Interest Period
of [         ] month(s)];


 


[(b)          on
[     date     ] continue
$[               ]of
the aggregate outstanding principal amount of the [              ]
Loan denominated in
                  ,
bearing interest at the Eurocurrency Rate, as a Eurocurrency Rate Loan having
an Interest Period of [            ]
month(s)].


 


The
undersigned hereby represents and warrants that all of the conditions contained
in Section 12.2 of the Credit Agreement have been satisfied on and
as of the date hereof, and will continue to be satisfied on and as of the date
of the conversion/continuation requested hereby, before and after giving effect
thereto.


 


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


 


	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  



 






 












 


Schedule 2.1


 


Existing Letters of Credit


 


	
  Beneficiary Name

  	
   

  	
  LC Number

  	
   

  	
  L/C Balance in FCY

  	
   

  	
  L/C Balance in US$

  	
   

  	
  Expiry

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CA-Mission Street Limited

  	
   

  	
  SLCMMSP03559

  	
   

  	
  USD

  	
   

  	
  60,000.00

  	
   

  	
  US$

  	
   

  	
  60,000.00

  	
   

  	
  02/23/07*

  	
   

  
	
  One Hundred Towers, L.L.C.

  	
   

  	
  SLCMMSP03043

  	
   

  	
  USD

  	
   

  	
  595,518.00

  	
   

  	
  US$

  	
   

  	
  595,518.00

  	
   

  	
  08/15/07*

  	
   

  
	
  Royal Realty Corp., as Agent

  	
   

  	
  SLCMMSP02572

  	
   

  	
  USD

  	
   

  	
  426,780.00

  	
   

  	
  US$

  	
   

  	
  426,780.00

  	
   

  	
  03/31/07*

  	
   

  
	
  Travelers Indemnity Company

  	
   

  	
  SLCMMSP03963

  	
   

  	
  USD

  	
   

  	
  460,000.00

  	
   

  	
  US$

  	
   

  	
  460,000.00

  	
   

  	
  10/31/07*

  	
   

  
	
  ABN AMRO
  Madrid in support of a guarantee in favor of Fongadea Recoletos 7-9, S.L.

  	
   

  	
  S571652000

  	
   

  	
  EUR

  	
   

  	
  90,096.78

  	
   

  	
  US$

  	
   

  	
  121,441.45

  	
   

  	
  03/31/08**

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  US$

  	
   

  	
  1,663,739.45

  	
   

  	
   

  	
   

  



 






* Issuing Lender is U.S. Bank National
Association


 


** Issuing Lender is LaSalle Bank National
Association


 

















 


SCHEDULE
9.6


 


LITIGATION
AND CONTINGENT LIABILITIES


 


Litigation


 


1.             In June 2004, National
Economic Research Associates, Inc., or NERA, and its parent company, Marsh &
McLennan Companies, Inc., filed a complaint against the Company and one of
our experts. This action arises out of the Company’s hiring of a professional
in March 2004 who was formerly employed by NERA. The complaint alleges
that during and after his employment with NERA, this expert violated
contractual commitments and fiduciary duties to NERA. The complaint further
alleges that the Company interfered with NERA’s contractual relations and
advantageous business relationship, misappropriated confidential business
information and goodwill, and engaged in unfair and deceptive trade practices.
The complaint asks for unspecified damages and disgorgement of wrongful gain,
invalidation of an indemnification agreement provided to this expert by the
Company and contains a demand for a jury trial.


 


In August 2004, the Company served a
motion to dismiss the breach of contract, tortious interference with
contractual relations and the unfair and deceptive trade practices counts,
which motion has been denied. The Company has filed an answer to the complaint
denying the substantive allegations of the complaint. The parties are in the
process of completing non-expert discovery, and both expert and nonexpert
discovery is currently scheduled to be completed by May 31, 2007. The
Company is not able to determine the outcome or resolution of the litigation,
or to estimate the amount or potential range of loss with respect to this
litigation.


 


2.             The Company has a dispute with
Navigant Consulting, Inc. arising out of its management led buyout of
certain of the assets and liabilities of LECG, Inc. from Navigant
Consulting, Inc. and LECG, Inc. In the management led buyout, the
Company acquired substantially all of the assets and assumed certain
liabilities of LECG, Inc. pursuant to an asset purchase agreement with
Navigant Consulting, Inc. and LECG, Inc. dated September 29,
2000. Under the asset purchase agreement, up to $5.0 million of the purchase
price was deferred, as it was contingent upon whether specific individuals
listed on a schedule to the asset purchase agreement had an employment,
consulting, contracting or other relationship with the Company on September 29,
2001. Navigant Consulting, Inc. contends that it is entitled to a payment
of approximately $4.9 million plus interest with respect to the contingent
purchase price amount. On several occasions before and after September 29,
2001, the Company notified Navigant Consulting, Inc. that several of the
individuals listed on the schedule to the asset purchase agreement did not have
an employment, consulting, contracting or other relationship with the Company
on September 29, 2001. Neither party to the dispute has initiated any
formal legal proceeding against the other with respect to the subject matter of
the dispute.


 

















 


SCHEDULE
9.8


 


SUBSIDIARIES


 


	
  Name of Subsidiary

  	
   

  	
  Jurisdiction of

  Formation

  	
   

  	
  Relationship to Parent

  	
   

  	
  Location of

  Chief Executive

  Office

  	
   

  	
  Location of

  Principal Place of

  Business
 (if different)

  
	
  LECG, LLC

  	
   

  	
  California

  	
   

  	
  Parent is
  the sole member.

  	
   

  	
  Emeryville, CA

  	
   

  	
   

  
	
  LECG Canada
  Holding, Inc.

  	
   

  	
  California

  	
   

  	
  LECG, LLC is
  the sole shareholder.

  	
   

  	
  Emeryville, CA

  	
   

  	
   

  
	
  LECG Canada
  Ltd.

  	
   

  	
  Ontario, Canada

  	
   

  	
  LECG Canada
  Holding, Inc. is the sole shareholder.

  	
   

  	
  Toronto,

  Canada

  	
   

  	
   

  
	
  LECG Holding
  Company (UK) Ltd.

  	
   

  	
  United Kingdom

  	
   

  	
  LECG, LLC is
  the sole shareholder.

  	
   

  	
  London

  	
   

  	
   

  
	
  LECG Limited

  	
   

  	
  United Kingdom

  	
   

  	
  LECG, LLC is
  the sole shareholder.

  	
   

  	
  London

  	
   

  	
   

  
	
  LECG Limited

  	
   

  	
  New Zealand

  	
   

  	
  LECG, LLC is
  the sole shareholder.

  	
   

  	
  Wellington,

  New Zealand

  	
   

  	
   

  
	
  LECG Korea
  LLC

  	
   

  	
  Seoul, Republic of Korea

  	
   

  	
  LECG, LLC
  holds 37.5% of the membership interests.

  	
   

  	
  Seoul, Korea

  	
   

  	
   

  
	
  LECG
  Consulting France, SAS

  	
   

  	
  France

  	
   

  	
  LECG Holding
  Company (UK) Ltd. is the sole shareholder.

  	
   

  	
  Paris

  	
   

  	
   

  
	
  LECG
  Consulting Spain, SL

  	
   

  	
  Spain

  	
   

  	
  LECG Holding
  Company (UK) Ltd. is the sole shareholder.

  	
   

  	
  Madrid

  	
   

  	
   

  
	
  LECG
  Consulting Belgium, SA

  	
   

  	
  Belgium

  	
   

  	
  LECG Holding
  Company (UK) Ltd. holds 99.9984% of the shares; LECG Limited [UK] holds
  0.0016% of the shares.

  	
   

  	
  Brussels

  	
   

  	
   

  
	
  LECG
  Consulting Italy, SrL

  	
   

  	
  Italy

  	
   

  	
  LECG Holding
  Company (UK) Ltd. is the sole quota holder.

  	
   

  	
  Milan

  	
   

  	
   

  
	
  Silicon
  Valley Expert Witness Group, Inc.

  	
   

  	
  California

  	
   

  	
  LECG, LLC is
  the sole shareholder.

  	
   

  	
  Mountain View, California

  	
   

  	
   

  



 
















 


SCHEDULE
9.15


 


INSURANCE
SCHEDULE


 


	
  INSURED: 

  	
  LECG, etal

  2000 Powell Street, #600

  Emeryville, CA 94608

  	
   

  	
   

  	
  PREPARED BY:

  	
  Diversified Risk Insurance Brokers

  5900 Christie Avenue

  Emeryville, CA 94608

  (510) 547-3203; www.drib.com

  License #0529776

  



 


	
  PACKAGE

  	
  TRAVELERS PROPERTY & CASUALTY CO

  	
  POLICY #P-630-110D4942-TIL-06

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $93,444

  
	
   

  
	
  LOCATIONS:

  	
   

  	
  SEE BREAKDOWN OF VALUES
  FOR LIST OF LOCATIONS

  	
   

  
						



 


Protective Safeguard (Sprinkler, Alarm) Warranty applies to all
sprinklered and alarmed locations.


 


	
  BUSINESS
  PERSONAL PROPERTY:

  	
   

  	
   

  	
  Special Form; No
  Coinsurance; Replacement Cost Applicable to Insured’s Equipment; $5,000
  Deductible; Property of Others Not Included; Windstorm and Hall Deductible
  applies to Loc 12; 5%, subject to $100,000 minimum any one occurrence

  
	
   

  	
  Loc
  1-11, 13-28

  	
  $22,164,156

  	
   

  	
   

  
	
   

  	
  Loc
  12

  	
  $375,934

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EARTHQUAKE
  SPRINKLER LEAKAGE:

  	
  $1,000,000

  	
   

  	
  Per Occurrence and Annual
  Aggregate; Applies to Loc 1; $25,000 Deductible.

  
	
   

  	
  $250,000

  	
   

  	
  Per Occurrence and Annual
  Aggregate; Applies to Loc 9, 10, and 18; $25,000 Deductible.

  
	
   

  	
   

  	
   

  	
   

  
	
  EXCESS
  FIRE LEGAL LIABILITY:

  	
   

  	
   

  	
  Legal Liability for Real
  Property that you rent or lease.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  1)              Basic limits
  of $500,000 provided by Commercial General Liability coverage. Higher limits
  are available.

  
	
   

  	
   

  	
   

  	
   

  
	
  BUSINESS INCOME INCLUDING
  EXTRA EXPENSE:

  	
  Loc
  1-11, 13-28

  Loc
  12

  	
  $10,789,000

  $150,000

  	
   

  	
  Coverage applies only
  after physical loss to property from Insured perils; Special Form; 100%
  Coinsurance; Extended Period of Indemnity Included for 120 Days; 72 Hour Deductible
  (a 168 Hour Deductible applies to Loc 12); Ordinary Payroll Included; Rental
  Value Excluded

  
	
   

  	
   

  	
   

  	
   

  
	
  ELECTRONIC
  DATA PROCESSING:

  	
   

  	
   

  	
  Special Form; 100%
  Coinsurance; Replacement Cost; (Data Covered for Reproduction Cost); $1,000
  Deductible; Mechanical Breakdown Included; Limits are specific to each
  location; See Breakdown of Values

  
	
  Hardware &
  Software:

  	
  See
  spreadsheet

  	
   

  	
   

  
	
  Transit/At
  Temporary Locations:

  	
  $75,000

  	
   

  	
   

  
	
  Business
  Income/Extra Expense:

  	
  Not
  Covered

  	
   

  	
   

  



 

















 


	
  VALUABLE
  PAPERS:

  	
  $2,000,000

  	
   

  	
  Per Occurrence; Special
  Form; $5,000 Deductible.

  
	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE:

  	
  $2,000,000

  	
   

  	
  Per Occurrence; Special
  Form; $5,000 Deductible.

  
	
   

  	
   

  	
   

  	
   

  
	
  COMMERCIAL
  GENERAL LIABILITY:

  	
  $2,000,000

  	
   

  	
  General Aggregate Limit
  (Other than Products/Completed Operations)

  
	
   

  	
  $2,000,000

  	
   

  	
  Products/Completed
  Operations Aggregate Limit

  
	
   

  	
  $1,000,000

  	
   

  	
  Personal and Advertising
  Injury Limits

  
	
   

  	
  $1,000,000

  	
   

  	
  Each Occurrence Limit

  
	
   

  	
  $500,000

  	
   

  	
  Fire Damage Limit (Legal
  Liability to real property that you rent or lease) HIGHER LIMITS ARE
  AVAILABLE.

  
	
   

  	
  $5,000

  	
   

  	
  Medical Expense Limit

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Flat - not subject to
  annual audit. Premium based on square footage.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Special Endorsements:

  
	
   

  	
   

  	
   

  	
  XTEND Endorsement

  
	
   

  	
   

  	
   

  	
  Blanket Additional Insured
  - Contractors (if required by written contract) 

  
	
   

  	
   

  	
   

  	
  Blanket Waiver of Subrogation

  Blanket Additional Insured
  - Managers or Lessors of Premises

  Blanket Additional Insured
  - Lessor Leased Equipment

  
	
   

  	
   

  	
   

  	
  Amendment of Pollution
  Exclusion - exception for building heating equipment

  
	
   

  	
   

  	
   

  	
  Asbestos Exclusion

  
	
   

  	
   

  	
   

  	
  War Exclusion

  
	
   

  	
   

  	
   

  	
  Cap on Losses from
  certified acts of terrorism

  
	
   

  	
   

  	
   

  	
  Employment Related
  Practices Exclusion

  
	
   

  	
   

  	
   

  	
  Amendment of Insuring
  Agreement - Known Injury or Damage

  
	
   

  	
   

  	
   

  	
  Discrimination Exclusion

  
	
   

  	
   

  	
   

  	
  Aircraft Products and
  Grounding Exclusion

  
	
   

  	
   

  	
   

  	
  Nuclear Energy Liability
  Exclusion

  
	
   

  	
   

  	
   

  	
  Exclusion - Testing or
  Consulting Errors and Omissions

  
	
   

  	
   

  	
   

  	
  Limitation of coverage
  territory; USA, Puerto Rico and Canada

  
	
   

  	
   

  	
   

  	
  Exclusion - Unsolicited
  Communications

  
	
   

  	
   

  	
   

  	
  Web X-Tend Liability
  Endorsement

  
	
   

  	
   

  	
   

  	
  Fungi or Bacteria
  Exclusion

  
	
   

  	
   

  	
   

  	
  Amendment - Non Cumulation
  of Each Occurrence Limit, etc.

  
	
   

  	
   

  	
   

  	
  Amend Liquor Liability
  Exclusion Exception for Schedule Activities

  
	
   

  	
   

  	
   

  	
   

  
	
  EMPLOYEE
  BENEFITS LIABILITY:

  	
  $1,000,000

  	
   

  	
  Each Employee

  
	
   

  	
  $2,000,000

  	
   

  	
  Aggregate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Covering Error or Omission
  During “administration” of Employee Benefits Plan (Excluding ERISA
  requirements); Claims Made Basis; No Deductible; 9/29/00 Retroactive Date.

  



 

















 


	
  AUTOMOBILE

  	
  TRAVELERS PROPERTY & CASUALTY CO.

  	
  POLICY #P-810-110D4954-TIL-06

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $1,145

  
					



 


	
  AUTOMOBILE LIABILITY:

  	
  $1,000,000

  	
   

  	
  Combined Single Limit for Bodily Injury and Property
  Damage; Employers’ Non-Ownership and Hired Automobile Liability Only.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $50,000

  	
   

  	
  Hired Auto Physical Damage
  Coverage subject to a $1,000 deductible (added
  9-1-06)

  



 


	
  CANADIAN PACKAGE

  	
  ST. PAUL FIRE & MARINE

  	
  POLICY #UXCPC70397

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $9,030

  
					



 


	
  NAMED INSURED:

  	
  LECG Canada
  Holdings, Inc.; LECG Canada Ltd.

  
	
   

  	
   

  
	
  LOCATION:

  	
  55 University Avenue,
  #1000, Toronto, Ontario

  



 


	
  BUSINESS PERSONAL PROPERTY:

  (including EDP Hardware)

  	
  $1,038,000

  	
   

  	
  Special Form; 100%
  Coinsurance; Replacement Cost; $5,000 Deductible; Property of Others Not
  Included.

  
	
   

  	
   

  	
   

  	
   

  
	
  BUSINESS
  INCOME INCLUDING

  	
   

  	
   

  	
   

  
	
  EXTRA
  EXPENSE:

  	
  $150,000

  	
   

  	
  Coverage applies only
  after physical loss to property from insured perils; Special Form; 100%
  Coinsurance; Extended Period of Indemnity included for 90 Days; 72 Hour
  Deductible Applies.

  
	
   

  	
   

  	
   

  	
   

  
	
  DATA &
  RECORDS 

  	
   

  	
   

  	
   

  
	
  RECONSTRUCTION
  COSTS:

  	
  $1,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $2,000,000

  	
   

  	
  General Aggregate Limit
  (Other than Products/Completed Operations)

  
	
   

  	
  Excluded
  

  	
  *

  	
  Products/Completed
  Operations Aggregate Limit

  



 






	
  * Covered under domestic policy

  	
  $1,000,000

  	
   

  	
  Personal and Advertising
  Injury Limits

  
	
   

  	
  $1,000,000

  	
   

  	
  Each Occurrence Limit

  
	
   

  	
  $1,000,000

  	
   

  	
  Fire Damage Limit (Legal
  Liability to real property that you rent or lease) HIGHER LIMITS ARE
  AVAILABLE.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $10,000

  	
   

  	
  Medical Expense Limit

  
	
   

  	
  $1,000,000

  	
   

  	
  Non-owned and Hired
  Automobile Liability

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Flat - not subject to
  annual audit. Premium based on square footage.

  



 


NOTE:        All
deductibles and limits are American dollars; losses, if any, will be adjusted
and paid in Canadian dollars.


 

















 


	
  COMMERCIAL
  GENERAL LIABILITY (continued):

  	
   

  	
  Special Endorsements:

  Amendment of Insuring Agreement - Known Injury or Damage

  Extension of Coverage - Tenant’s Legal Liability

  Limitation of Coverage Territory - Canada

  Employment Related Practices Exclusion

  Discrimination Exclusion

  Exclusion - Designated Professional Services: Economic Management Consulting
  Svcs.

  Asbestos Exclusion

  Web Xtend Endorsement

  Aircraft Products Exclusion

  War Exclusion

  Testing or Consulting Exclusion

  
	
   

  	
   

  	
   

  
	
  EMPLOYEE
  BENEFITS LIABILITY:

  	
  $1,000,000

  	
   

  	
  Each Employee

  
	
   

  	
  $1,000,000

  	
   

  	
  Aggregate

  
	
   

  	
   

  	
   

  	
  Covering Error or Omission During “administration” of Employee
  Benefits Plan (Excluding ERISA requirements); Claims Made Basis; No
  Deductible; 9/29/00 Retroactive Date.

  



 


	
  FOREIGN PACKAGE

  	
  ST. Paul Fire & Marine

  	
  Policy #GB09400400

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium : 
  $29;957

  
					



 


	
  LOCATION:

  	
  SEE BREAKDOWN OF VALUES FOR
  LIST OF LOCATIONS

  



 


	
  BUSINESS
  PERSONAL PROPERTY:

  	
  $3,142,138

  	
   

  	
  Special
  Form; Replacement Cost; 100% Coinsurance; $2,500 Deductible; Blanket Loc.
  1-11

  
	
   

  	
   

  	
   

  	
   

  
	
  VALUABLE
  PAPERS:

  	
  $2,000,000

  	
   

  	
  London
  Location Only

  
	
   

  	
  $1,000,000

  	
   

  	
  All
  Other Locations

  
	
   

  	
   

  	
   

  	
   

  
	
  BUSINESS INCOME INCLUDING
  EXTRA EXPENSE:

  	
  $5,100,000

  	
   

  	
  Coverage
  applies only after physical loss to property from insured perils; Special
  Form; No Coinsurance; Extended Period of Indemnity Included for 180 Days; 72
  Hour Deductible; Ordinary Payroll Excluded; Blanket Locations 1-11

  
	
   

  	
   

  	
   

  	
   

  
	
  UNSCHEDULED
  LOCATIONS:

  	
  $25,000

  	
   

  	
  Special
  Form; $2,500 Deductible.

  
	
   

  	
   

  	
   

  	
   

  
	
  GENERAL
  LIABILITY:

  	
  $2,000,000

  	
   

  	
  General
  Aggregate Limit (Other than Products/Completed Operations)

  
	
   

  	
  $1,000,000

  	
   

  	
  Products/Completed
  Operations Aggregate Limit

  
	
   

  	
  $1,000,000

  	
   

  	
  Personal
  and Advertising Injury Limits

  
	
   

  	
  $1,000,000

  	
   

  	
  Each
  Occurrence Limit

  
	
   

  	
  $100,000

  	
   

  	
  Legal
  Liability for Damage to Rented Premises Limit

  
	
   

  	
  $10,000

  	
   

  	
  Medical
  Expense Limit

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Professional
  Services Specifically Excluded. Flat non auditable premium

  



 

















 


	
  AUTOMOBILE:

  	
  $1,000,000

  	
   

  	
  Hired
  and Non-Owned Automobile Liability (excess only).

  
	
   

  	
  $10,000

  	
   

  	
  Medical
  Payments.

  
	
   

  	
  $50,000

  	
   

  	
  Hired
  Auto Physical Damage Coverage subject to a $1,000 deductible (added 9-1-06)

  
	
   

  	
   

  	
   

  	
   

  
	
  EMPLOYEE
  INJURY:

  	
  Statutory

  	
   

  	
  Voluntary
  Workers’ Compensation for U.S. and Canadian citizens/residents while  traveling
  outside the U.S., its territories, possessions and Puerto Rico, and Canada
  (excludes coverage for Australia and any country where compulsory insurance is
  required).

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Employers
  Liability for International Employees, excluding UK:

  
	
   

  	
  $1,000,000

  	
   

  	
  Bodily
  Injury by Accident / Each Employee

  
	
   

  	
  $1,000,000

  	
   

  	
  Bodily
  Injury by Disease / Each Employee

  
	
   

  	
  $1,000,000

  	
   

  	
  Bodily
  Injury by Disease / Policy Limit

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $250,000

  	
   

  	
  Repatriation
  - Each Employee

  
	
   

  	
  $500,000

  	
   

  	
  Repatriation
  - Policy Limit

  
	
   

  	
   

  	
   

  	
   

  
	
  INSURED
  ORGANIZATION:

  	
  LECG
  Corporation and its subsidiaries

  



 


	
  Umbrella Policy

  	
  Travelers
  Property & Casualty CO

  	
  Policy #PSM-Cup-110D4966-TIL-06

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $11,612

  



 


	
  Umbrella
  applies to domestic and foreign liability

  	
  $10,000,000

  	
   

  	
  Each Occurrence Limit

  
	
   

  	
  $10,000,000

  	
   

  	
  General
  Aggregate Limit (Not Applicable to Auto)

  
	
   

  	
  $10,000,000

  	
   

  	
  Products/Completed
  Operations Aggregate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  In
  Excess of Underlying General, Automobile, Employee Benefits Liability and
  Employer’s Liability Limits.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  Retained
  limit; Applicable to those losses covered by the Umbrella Policy but not
  covered by any underlying insurance.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Flat
  - Not subject to audit.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Special
  Endorsements:           Nuclear
  Energy Liability Exclusion; Pollution Exclusion; Employment Related Practices
  Exclusion; Asbestos Exclusion; War Exclusion; Cap on Losses from Certified
  Acts of Terrorism; Discrimination Exclusion; Aircraft Products &
  Grounding Exclusion; Real and/or Personal Property Exclusion; Known Injury or
  Damage Amendment; Professional Liability Exclusion; Worldwide Coverage
  Revision; Exclusion - Unsolicited Communications; Excess - Personal and
  Advertising Injury and Website; Amendment of Coverage - Named Insured;
  Employee Benefits Liability Endorsement; Fungi or Bacteria Exclusion;
  Additional Policy Conditions Foreign Liability; Knowledge and Notice of
  Occurrence or Offense - Unintentional Omission

  



 
















 


	
  EXECUTIVE PROTECTION POLICY

  	
  CHUBB/FEDERAL INSURANCE CO.

  	
  POLICY #8207-2909

  	
  9/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $21,750

  
					



 


	
  CRIME:

  	
   

  	
  Insuring Clause I:
  Employee Theft

  	
   

  	
  $5,000,000

  	
   

  	
  Covering loss of money
  or other property through any fraudulent or dishonest acts

  
	
   

  	
   

  	
  Insuring Clause IV:
  Forgery

  	
   

  	
  $5,000,000

  	
   

  	
  committed by employees;
  $50,000 Deductible.

  
	
   

  	
   

  	
  Insuring Clause V:
  Computer Fraud

  	
   

  	
  $5,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Special Endorsements:

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8754

  	
   

  	
  Delete Exclusion 17 by
  Endorsement to include Third
  Party coverage.

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8925

  	
   

  	
  Amend Valuation of
  Securities Endorsement to include the cost of replacing such securities plus cost to post a Lost Instrument
  Bond.

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8926

  	
   

  	
  Removal of Exclusion
  12(j) - Loss of Money or Securities from Fire.

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8927

  	
   

  	
  Amend Exclusion 12
  (a) - to only apply to Insuring Clause I

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8928

  	
   

  	
  Amend Exclusion
  12(k) to carve out Insuring Clauses I

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8931

  	
   

  	
  Amends Definition of
  Employee to include temporary and leased employees.

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8932

  	
   

  	
  Amend Difinition of Securities
  to mirror the language contained in the 1992 form.

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8933

  	
   

  	
  Amends Definition of
  Money Orders and Counterfeit Currency Fraud to Include counterfelt paper
  currency of any country

  
	
   

  	
   

  	
   

  	
   

  	
  14-02-8961

  	
   

  	
  Amends definition of
  Computer System to include computers and connected communication facilities
  that are utilized by an Organization.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KIDNAP
  RANSOM AND EXTORTION COVERAGE:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Insuring Clause 1:
  Kidnap & Extortion

  	
   

  	
  $5,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Insuring Clause 2:
  Custody

  	
   

  	
  $5,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  Insuring Clause 3:
  Expenses

  	
   

  	
  $5,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $50,000

  	
   

  	
  Sublimit for Recall
  Expenses

  
	
   

  	
   

  	
   

  	
   

  	
  $50,000

  	
   

  	
  Sublimit for Rest and
  Rehabilitation Expenses

  
	
   

  	
   

  	
  Insuring Clause 4:
  Accidental Loss

  	
   

  	
  $250,000

  	
   

  	
  Loss Of Life Benefit

  
	
   

  	
   

  	
   

  	
   

  	
  $1,000,000

  	
   

  	
  Event Benefit Amount

  
	
   

  	
   

  	
   

  	
   

  	
  25%

  	
   

  	
  of Loss of Life Benefit
  for Mutilation

  
	
   

  	
   

  	
   

  	
   

  	
  50%

  	
   

  	
  of Loss of Life Benefit
  for Accidenteal Loss other than Mutilation

  
	
   

  	
   

  	
  Insuring Clause 5: Legal
  Liability

  	
   

  	
  $5,000,000

  	
   

  	
  Costs coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Coverage Enhancements:

  	
   

  	
  $100,000

  	
   

  	
  Business Income

  
	
   

  	
   

  	
   

  	
   

  	
  $100,000

  	
   

  	
  Threat Response

  
	
   

  	
   

  	
   

  	
   

  	
  $100,000

  	
   

  	
  Emergency Political
  Repatriation Expense Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Special Endorsements:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amend Definition of
  Insured Person

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amend Definition of
  Hijacking Endorsement

  Consultant Fees
  Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amend Definition of
  Employee Endorsement

  Amend Definition of
  Relative Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amend Definition of
  Wongful Detention Endorsement

  Corporate Child
  Abduction Endorsment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amend Definition of
  Expenses Endorsement

  



 

















 


	
  ERISA BOND

  	
  ST. PAUL TRAVELERS

  	
  POLICY #103478293

  	
  1/1/2004-2007

  
	
   

  	
   

  	
  3 Year Premium: $542

  
					



 


	
   

  	
   

  	
   

  	
   

  	
  $500,000

  	
   

  	
  LECG 401K Profit Sharing
  Plan.

  



 


	
  FIDUCIARY LIABILITY

  	
  FEDERAL INSURANCE CO (CHUBB)

  	
  POLICY #82072178

  	
  8/18/06-07

  
	
   

  	
   

  	
  Annual Premium: $8,925

  
					



 


	
   

  	
   

  	
   

  	
   

  	
  $5,000,000

  	
   

  	
  Each claim and
  Aggregate; Covering liability for breach of fiduciary duties (including those
  imposed by ERISA); Claims Made; Prior or Pending Date 8/18/06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $10,000

  	
   

  	
  Retention

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1 Year Extended
  Reporting Period available for 150% of annual expiring premium

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  8/18/06

  	
   

  	
  Pending or Prior Date

  



 


	
  WORKERS COMPENSATION

  	
  ST. PAUL TRAVELERS

  	
  POLICY #UB-4239B55-0-06

  	
  11/1/06-07

  
	
   

  	
   

  	
  Annual Premium: $277,169

  
					



 


	
   

  	
   

  	
  Deductible Program:
  $150,000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Experience Modification:
  64% in California; 69% in all other states

  Executive Officers
  Included for Coverage

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Part One Coverage:
  Statutory

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Part Two -
  Employers Liability:

  	
   

  	
  Bodily Injury by
  Accident:

  	
   

  	
  $1,000,000
  Each Accident

  
	
   

  	
   

  	
   

  	
   

  	
  Bodily Injury By
  Disease:

  	
   

  	
  $1,000,000
  Policy Limit 

  
	
   

  	
   

  	
   

  	
   

  	
  Bodily Injury By
  Disease:

  	
   

  	
  $1,000,000
  Each Employee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Estimated Payroll:

  	
   

  	
  $

  	
  195,662,553 

  	
   

  	
  subject to annual audit
  of actual payroll

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fixed Expenses:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Claim Handling Charges

  	
   

  	
  1.10

  	
   

  	
   

  
	
   

  	
   

  	
  Surcharges/Assessments:

  	
   

  	
  $

  	
  14,393

  	
   

  	
   

  
	
   

  	
   

  	
  Deductible Premium and
  Expense Reimbursement: 

  	
   

  	
  $

  	
  262,776

  	
   

  	
   

  
	
   

  	
   

  	
  Pre-Loss Funding Deposit
  (escrow)

  	
   

  	
  $

  	
  —

  	
   

  	
  ($20,000 deposit
  transferred from last year)

  
	
   

  	
   

  	
  Total Expenses Paid
  During 12 Months:

  	
   

  	
  $

  	
  277,189

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Letter of Credit

  	
   

  	
  $

  	
  460,000

  	
   

  	
  transferred from last
  year -no additional LOC required

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maximum Aggregate
  Losses:

  	
   

  	
  $

  	
  1,148,000

  	
   

  	
   

  
	
   

  	
   

  	
  Maximum Cost:

  	
   

  	
  $

  	
  1,425,169

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Cost (before
  surcharges)

  	
   

  	
  $

  	
  262,776

  	
   

  	
   

  



 

















 


	
  NAMED
  INSURED: LECG, etal

  	
   

  
	
   

  	
   

  
	
  Attachment
  to Insurance Schedule dated

  	
  12/1/2006

  
	
   

  	
   

  
	
   

  	
  MAJOR Coverages
  Not Included Unless Otherwise Indicated

  



 


	
  INCL*

  	
   

  	
  Accounts Receivable

  
	
   

  	
   

  	
  Aircraft

  
	
   

  	
   

  	
  Americans with
  Disabilities Act (ADA)

  
	
   

  	
   

  	
  Asbestos

  
	
   

  	
   

  	
  Boiler &
  Machinery

  
	
   

  	
   

  	
  Breach of Contract

  
	
   

  	
   

  	
  Building Ordinance

  
	
   

  	
   

  	
  Contingent
  Liability

  
	
   

  	
   

  	
  Demoiltion

  
	
   

  	
   

  	
  Increased
  Cost of Construction

  
	
   

  	
   

  	
  Business
  Income Increased Period of Restoration

  
	
   

  	
   

  	
  Computer Virus

  
	
   

  	
   

  	
  Contingent Business
  Income

  
	
   

  	
   

  	
  Cyber Liability

  
	
   

  	
   

  	
  Cyber Property

  
	
   

  	
   

  	
  Directors’ &
  Officers’ Liability (written by a different broker)

  
	
   

  	
   

  	
  Discrimination

  
	
   

  	
   

  	
  Earthquake

  
	
  INCL*

  	
   

  	
  Employee Dishonesty

  
	
  INCL*

  	
   

  	
  Employee Benefits
  Liability

  
	
  INCL*

  	
   

  	
  Employment
  Practices Liability (Employment Discrimination, Wrongful Termination, ADA)
  SEE SEPARATE SCHEDULE

  
	
   

  	
   

  	
  Electrical
  Arcing/Injury

  
	
  INCL*

  	
   

  	
  Extra Expense

  
	
  INCL*

  	
   

  	
  Fiduciary Liability

  
	
   

  	
   

  	
  Flood

  
	
   

  	
   

  	
  Governmental Action

  
	
   

  	
   

  	
  Intellectual Property
  Infringement

  
	
  INCL*

  	
   

  	
  International Coverages

  
	
  INCL*

  	
   

  	
  Kidnap/Ransom

  
	
   

  	
   

  	
  Liquor Liability
  (Arising out of sale of liquor)

  
	
  INCL*

  	
   

  	
  Loss of Computer Stored
  Data

  
	
  INCL*

  	
   

  	
  Loss of Income

  
	
   

  	
   

  	
  Maritime Law

  
	
  INCL*

  	
   

  	
  Mechanical/Equipment
  Breakdown

  
	
   

  	
   

  	
  Mold

  
	
  INCL*

  	
   

  	
  Money &
  Securities

  
	
   

  	
   

  	
  Mysterious
  Disappearance

  
	
   

  	
   

  	
  Nuclear Hazards

  
	
   

  	
   

  	
  Off Premises Power
  Interruption

  
	
   

  	
   

  	
  Partnership Legal
  Liability

  
	
   

  	
   

  	
  Product Extortion

  
	
   

  	
   

  	
  Product Recall

  
	
   

  	
   

  	
  Pollution

  
	
  INCL*

  	
   

  	
  Professional Liability
  (E&O) SEE SEPARATE SCHEDULE

  
	
  **

  	
   

  	
  Property at Unspecified
  Locations

  
	
  **

  	
   

  	
  Property in Transit

  
	
   

  	
   

  	
  Property in Custody of
  Salespeople

  
	
   

  	
   

  	
  Property at Exhibitions

  
	
   

  	
   

  	
  Replacing Faulty
  Workmanship

  
	
   

  	
   

  	
  Subsidence

  
	
   

  	
   

  	
  Telephone Fraud

  
	
  INCL*

  	
   

  	
  Terrorism (Subject to
  Policy Limitations)

  
	
   

  	
   

  	
  Underground Storage
  Tanks

  
	
   

  	
   

  	
  Unfair competition or
  anti-trust

  
	
   

  	
   

  	
  Vacancy

  
	
  INCL*

  	
   

  	
  Valuable Papers

  
	
   

  	
   

  	
  War & Military
  Action

  
	
   

  	
   

  	
  Watercraft Liability

  
	
   

  	
   

  	
  Year 2000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 






*REFER TO SCHEDULE

**LIMITED COVERAGE PROVIDED BY POLICY EXTENSIONS; ALL SUBJECT TO TERMS AND
DEDUCTIBLES


 


	
  This list includes exposures for which coverage is
  not always available in the marketplace.

  
	
  If you feel you have a need in any of these areas,
  please contact us so that we can research availability.

  



 
















 


LECG

DOMESTIC BREAKDOWN OF VALUES - 2006-2007


	
  LOCATION

  	
   

  	
  BPP

  	
   

  	
  EDP

  HARDWARE

  	
   

  	
  EDP

  SOFTWARE

  	
   

  	
  EQSL

  	
   

  	
  VALUABLE

  PAPERS

  	
   

  	
  ACCTS REC

  	
   

  	
  BI AND EE

  	
   

  
	
  2000 Powell
  Street, #600

  Emeryville, CA 94608

  	
   

  	
  6,797,542

  	
   

  	
  3,497,550

  	
   

  	
  1,500,890

  	
   

  	
  1,000,000

  	
   

  	
  2,000,000

  	
   

  	
  2,000,000

  	
   

  	
  3,785,500

  	
   

  
	
  1725 Eye Street
  NW, #800

  Washington, DC 20006

  	
   

  	
  3,915,058

  	
   

  	
  2,301,010

  	
   

  	
  65,094

  	
   

  	
   

  	
   

  	
  2,000,000

  	
   

  	
  2,000,000

  	
   

  	
  3,953,600

  	
   

  
	
  1603 Orrington
  Ave., #1500

  Evanston, IL 60201

  	
   

  	
  844,944

  	
   

  	
  300,630

  	
   

  	
  20,558

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  2700 Earl Rudder
  Fwy S., #4800

  College Station, TX 77845

  	
   

  	
  371,413

  	
   

  	
  120,519

  	
   

  	
  42,196

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  201 S. Main
  Street. #450

  Salt Lake City, UT 84111

  	
   

  	
  812,795

  	
   

  	
  220,576

  	
   

  	
  22,979

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  350 Massachusetts
  Ave., #300

  Cambridge, MA 02139

  	
   

  	
  882,704

  	
   

  	
  268,033

  	
   

  	
  18,930

  	
   

  	
   

  	
   

  	
  2,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  201 Mission
  Street, #800

  San Francisco, CA 94105

  	
   

  	
  1,310,500

  	
   

  	
  154,935

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  675 Third Avenue,
  26th Floor

  New York, NY 10017

  	
   

  	
  775,466

  	
   

  	
  263,851

  	
   

  	
  13,486

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  333 South Grand
  Ave., #3750

  Los Angeles, CA 90071

  	
   

  	
  642,108

  	
   

  	
  338,653

  	
   

  	
  34,813

  	
   

  	
  250,000

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  335 Bryant
  Street, 2nd Floor

  Palo Alto, CA 94301

  	
   

  	
  106,061

  	
   

  	
  33,520

  	
   

  	
  5,100

  	
   

  	
  250,000

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  33 West Monroe,
  #2300

  Chicago, IL 60603

  	
   

  	
  2,645,320

  	
   

  	
  329,245

  	
   

  	
  3,200

  	
   

  	
   

  	
   

  	
  2,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  1401 McKinney,
  #2300

  Houston, TX 77010

  	
   

  	
  375,934

  	
   

  	
  69,883

  	
   

  	
  33,106

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  424 Church
  Street, #2550

  Nashville, TN 37219

  	
   

  	
  171,975

  	
   

  	
  75,695

  	
   

  	
  1,351

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  1018 Garden
  Street, #208

  Santa Barbara, CA 93101

  	
   

  	
  13,734

  	
   

  	
  8,948

  	
   

  	
  1,385

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  1255 Drummers
  Lane, #320

  Wayne, PA 19087

  	
   

  	
  134,119

  	
   

  	
  77,177

  	
   

  	
  7,828

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  1201 Main Street,
  #1950

  Dallas, TX 75202

  	
   

  	
  927,241

  	
   

  	
  167,582

  	
   

  	
  671,232

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  1608 Walnut
  Street, #1200

  Philadelphia, PA 19103

  	
   

  	
  217,529

  	
   

  	
  110,079

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  2049 Century Park
  East, #2300

  Los Angeles, CA 90067

  	
   

  	
  563,731

  	
   

  	
  77,070

  	
   

  	
  2,417

  	
   

  	
  250,000

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  2570 W. El Comino
  Real, #850

  Mountain View, CA 94040

  	
   

  	
  82,298

  	
   

  	
  20,282

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  740 E. Campbell
  Road, #550

  Richardson, TX 75081

  	
   

  	
  75,906

  	
   

  	
  5,888

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  1276 K Street NW,
  #1025

  Washington, DC 20005

  	
   

  	
  35,410

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  5005 SW Meadows
  Road

  Lake Oswego, OR 97035

  	
   

  	
  428,142

  	
   

  	
  237,678

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  2,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  1201 Peachtree
  Street NE, #200

  Atlanta, GA 30361

  	
   

  	
  11,715

  	
   

  	
  11,715

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  600 Anton Blvd.,
  #1350

  Costa Mesa, CA 92626

  	
   

  	
  25,238

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  8400 E. Crescent
  Pkwy, #500

  Greenwood Village, CO 80111

  	
   

  	
  1,324

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  5130 North
  Central Ave.

  Phoenix, AZ 85012

  	
   

  	
  41,447

  	
   

  	
  17,916

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
  999 3rd Ave.,
  #3800

  Seattle, WA 98104

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  655 West
  Broadway, #1300

  San Diego, CA 92101

  	
   

  	
  330,436

  	
   

  	
  108,897

  	
   

  	
  31,570

  	
   

  	
   

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  
	
   

  	
   

  	
  22,540,090

  	
   

  	
  8,815,332

  	
   

  	
  2,476,136

  	
   

  	
  1,750,000

  	
   

  	
  33,000,000

  	
   

  	
  4,000,000

  	
   

  	
  10,939,000

  	
   

  



 


NOTE:  Not all limits are blanket, refer
to insurance Schedule


 

















 


LECG

INTERNATIONAL BREAKDOWN OF VALUES - 2006-2007


 


	
  INTERNATIONAL LOCATIONS

  	
   

  	
  OFFICE

  CONTENTS

  	
   

  	
  BIEE

  	
   

  	
  VALUABLE

  PAPERS

  	
   

  
	
  Davidson
  Building, 5 Southampton Street

  London WC2E
  7HA, United Kingdom

  	
   

  	
  1,783,392

  	
   

  	
  4,600,000

  	
  (1)

  	
  2,000,000

  	
   

  
	
  Cerrito 866,
  Piso 4

  C1010AAR
  Buenos Aires, Argentina

  	
   

  	
  152,870

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Paseo de
  Recoletos n° 7-9, 5th floor

  Madrid,
  Spain 28004

  	
   

  	
  454,193

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  72, rue du
  Faubourg Saint-Honore

  Paris,
  France 75008

  	
   

  	
  25,389

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  11 Rue des
  Colonies

  Brussels,
  1000 Belgium

  	
   

  	
  24,395

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Via Pontacclo,
  10

  20121
  Milano, Italy

  	
   

  	
  521,720

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Level 9, 1 Willeston
  Street

  PO Box 587

  Wellington,
  6140 New Zealand

  	
   

  	
  180,379

  	
  (2)

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Level 3, 12
  Viaduct Harbour Avenue, Viaduct Basin

  PO Box 2475,
  Shortland Street

  Auckland,
  New Zealand

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  GPO Box 220

  Sydney NSW
  2001, Australia

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  GPO Box 5034

  Melbourne,
  Victoria 3000, Australia

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Juksun
  Hyundai Building, 10th Floor

  80
  Juksun-dong, Chongro-gu

  Seoul
  110-756, Korea

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  1,000,000

  	
   

  
	
  Total:

  	
   

  	
  3,142,338

  	
   

  	
  5,100,000

  	
   

  	
  12,000,000

  	
   

  



 






(1) The lease at this location requires
three years worth of rents ($3,600,000, plus a requirement that LECG move back
in once the building is repaired ($1,000,000).


(2) The value of Office Contents
includes the values of the 4 locations in Wellington, Auckland, Sydney, and
Melbourne.


 


	
  CANADIAN LOCATIONS

  	
   

  	
  OFFICE

  CONTENTS

  	
   

  	
  BIEE

  	
   

  	
  VALUABLE

  PAPERS

  	
   

  
	
  55 University Avenue,
  #1000

  Toronto, Ontario M5J 2H7

  	
   

  	
  1,038,960

  	
   

  	
  150,000

  	
   

  	
  1,000,000

  	
   

  



 

















 


INSURANCE
SCHEDULE


 


	
  INSURED:

  	
  LECG CORPORATION

  2000 Powell Street, #600

  Emeryville, CA 94608

  	
  PREPARED BY:

  	
  Diversified Risk
  Insurance Brokers

  5900 Christie Avenue

  Emeryville, CA 94608

  (510) 547-3203;
  www.drib.com

  
	
   

  	
   

  	
   

  	
  License #0529776

  



 


	
  CORPORATE
  COUNSEL PROFESSIONAL LIABILITY

  	
  EXECUTIVE
  RISK

  	
  POLICY
  #82076025

  	
  11/12/06-07

  
	
   

  	
   

  	
  Annual
  Premium: $26,503

  
					



 


	
   

  	
   

  	
  $5,000,000

  	
   

  	
   

  	
   

  	
  Per Claim (
  INCLUDING securities claims)

  
	
   

  	
   

  	
  $5,000,000

  	
   

  	
   

  	
   

  	
  Aggregate
  (including defense costs)

  
	
   

  	
   

  	
  $0

  	
   

  	
   

  	
   

  	
  Retention -
  Non-indemnifiable Loss

  
	
   

  	
   

  	
  $25,000

  	
   

  	
   

  	
   

  	
  Retention - All
  Other Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $500,000

  	
   

  	
   

  	
   

  	
  Defense costs
  sublimit (for certain claims brought by the employer, board of directors, or
  officers)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Further defined
  in policy section II Definitions (e) in connection with Exclusions
  (G)(3) and (H)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Claims Made; No Coinsurance;
  Coverage is excess over any applicable Directors & Officers
  Liability coverage; 11/12/03 Retroactive Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Special
  Endorsements:

  
	
   

  	
   

  	
   

  	
   

  	
  C24154

  	
   

  	
  California
  Amendatory Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
  D33522

  	
   

  	
  Compliane with
  Applicable Trade Sanction Laws

  
	
   

  	
   

  	
   

  	
   

  	
  D33954

  	
   

  	
  Association of
  Corporate Counsel Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
  D33955

  	
   

  	
  “Full House”
  Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
  D33956

  	
   

  	
  Most Favorable
  Jurisdiction Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
  D33957

  	
   

  	
  SEC and
  Sarbanes-Oxley Coverage Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
  D34103

  	
   

  	
  Amend Item 3A
  Defense Sublimit Endorsement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Enhancements

  
	
   

  	
   

  	
   

  	
   

  	
  *

  	
   

  	
  Broad Definition
  of professional services includes personal legal services for officers or
  employees of the company (Item 10 of endorsement D33955)

  
	
   

  	
   

  	
   

  	
   

  	
  *

  	
   

  	
  Cancellation -
  Failure to pay premium only

  



 

















 


Diversified Risk Insurance Brokers


5900 Christie Avenue 


Emeryville, CA 94608 


510-547-3203


License #0529776 


www.drib.com


 


LECG,
Corporation


PRIMARY
PROFESSIONAL LIABILITY


6/13/06-6/13/07


 


	
  PRIMARY INSURER:

  	
   

  	
  Executive Risk Indemnity, Inc. (Chubb)

  
	
   

  	
   

  	
   

  
	
  POLICY NUMBER:

  	
   

  	
  8171-5372

  
	
   

  	
   

  	
   

  
	
  POLICY FORM:

  	
   

  	
  Chubb ProE&O -
  Form C33192 (Ed. 7/03)

  
	
   

  	
   

  	
   

  
	
  TYPE OF COVERAGE:

  	
   

  	
  Claims Made and Reported

  
	
   

  	
   

  	
   

  
	
  NAMED INSURED:

  	
   

  	
  LECG Corporation etal (see list of named insureds at end of proposal)

  
	
   

  	
   

  	
   

  
	
  PROFESSIONAL SERVICES:

  	
   

  	
  Independent
  testimony, authoritative studies, advisory services to clients throughout the
  world, including but not limited to: economics and finance as well as
  disciplines such as accounting, environmental studies, health care services,
  archival research, antitrust and competition policy, claims services,
  discovery & evidence consulting; finance and damages, intellectual
  property, arbitration, labor & employment matters,
  mergers & acquisitions, public policy, strategic planning, transfer
  pricing, real estate valuations and other forms of business consulting,
  software security assessment analysis, enterprise research investigation and
  analysis, self-evidentiary and self anti-fraud software.

  
	
   

  	
   

  	
   

  
	
  DEFINITION OF NAMED INSURED:

  	
   

  	
  Entity stated on the declarations page, any subsidiary and any past,
  present or future natural person director, officer, partner, or employee, but
  only while such person was, is or shall be acting within the scope of his or
  her duties as such. Coverage also extends to the lawful spouse of such persons.

  
	
   

  	
   

  	
   

  
	
  COVERAGE TERRITORY:

  	
   

  	
  Anywhere in the world

  
	
   

  	
   

  	
   

  
	
  LIMIT OF LIABILITY:*

  	
   

  	
  $10,000,000 Each Claim

  
	
   

  	
   

  	
  $10,000,000 Policy Aggregate

  
	
   

  	
   

  	
   

  
	
  ‘Claims expenses are included within the Limit of
  Liability

  
	
   

  	
   

  	
   

  
	
  DEDUCTIBLE:

  	
   

  	
  $100,000 Deductible

  
	
   

  	
   

  	
   

  
	
  RETROACTIVE DATE:

  	
   

  	
  9/29/2000

  
	
   

  	
   

  	
   

  
	
  EXTENDED REPORTING

  	
   

  	
   

  
	
  PERIOD:

  	
   

  	
  12 months at 100% of total annual premium

  
	
   

  	
   

  	
   

  
	
  PRIMARY PREMIUM:

  	
   

  	
  Option 1: $ 219,414 *

  
	
  (NET)

  	
   

  	
   

  



 






* Renewal premium is based on $337,856,000 in revenues; expiring
annualized premium of $205,048 was based on $280,000,000 in revenues; expiring
deductible was $100,000. Revenues are up 20%, premium is up 7%.


 

















 


	
  TERMS/ENDORSEMENTS:

  	
   

  	
  California Amendatory Endorsement

  
	
   

  	
   

  	
  Commingling Only Exclusion

  
	
   

  	
   

  	
  Governmental Actions Exclusion

  
	
   

  	
   

  	
  Notary Public Endorsement

  
	
   

  	
   

  	
  Compliance with applicable Trade Sanction Laws Prior Knowledge
  Endorsement (6/13/03)

  
	
   

  	
   

  	
  Specified Services Exclusion (attestation, etc; with amendment to
  include examination and evaluation of a problem)

  
	
   

  	
   

  	
  Specified Independent Contractors as Additional Insured (“per list on
  file with insured”)

  
	
   

  	
   

  	
  Amended Guaranty of Value Exclusion

  
	
   

  	
   

  	
  Definition of Insured Endorsement (see list of named Insureds)

  
	
   

  	
   

  	
  Unsolicited Electronic Communications Exclusion Endorsement

  
	
   

  	
   

  	
  Additional Insured Endorsement - CTAS

  
	
   

  	
   

  	
   

  
	
  LIST OF NAMED INSUREDS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LECG Corporation

  	
   

  	
   

  
	
  LECG LLC

  	
   

  	
   

  
	
  LECG Canada Holding Inc.

  	
   

  	
   

  
	
  LECG Limited (UK)

  	
   

  	
   

  
	
  LECG Limited (NZ)

  	
   

  	
   

  
	
  LECG Korea LLC

  	
   

  	
   

  
	
  LECG Holding Company (UK) Ltd.

  	
   

  	
   

  
	
  LECG Consulting France SAS

  	
   

  	
   

  
	
  LECG Consulting Spain SL

  	
   

  	
   

  
	
  LECG Consulting Belgium NV

  	
   

  	
   

  
	
  LECG Consulting Italy

  	
   

  	
   

  
	
  Silicon Valley Expert Witness Group, Inc.

  	
   

  	
   

  
	
  LECG Canada Ltd.

  	
   

  	
   

  



 


 
















 


LECG, Corporation


EXCESS PROFESSIONAL
LIABILITY


6/13/06-6/13/07


 


	
  EXCESS INSURER:

  	
   

  	
  Indian Harbor Insurance Company

  
	
   

  	
   

  	
   

  
	
  POLICY NUMBER:

  	
   

  	
  B171-5372

  
	
   

  	
   

  	
   

  
	
  POLICY FORM:

  	
   

  	
  Following form over Executive Risk Indemnity underlying policy

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROFESSIONAL SERVICES:

  	
   

  	
  Independent testimony, authoritative studies, advisory services to
  clients throughout the world, including but not limited to: economics and
  finance as well as disciplines such as accounting, environmental studies,
  health care services, archival research, antitrust and competition policy,
  claims services, discovery & evidence consulting, finance and
  damages, Intellectual property, arbitration, labor & employment
  matters, mergers & acquisitions, public policy, strategic planning,
  transfer pricing, real estate valuations and appraisals and other forms of
  business consulting, software security assessment analysis, enterprise
  research investigation and analysis, self-evidentiary and self anti-fraud
  software.

  
	
   

  	
   

  	
   

  
	
  LIMIT OF LIABILITY:

  	
   

  	
  $10,000,000 aggregate excess $10,000,000; excess $100,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RETROACTIVE DATE:

  	
   

  	
  9/29/2000

  	
   

  	
  for the first $5,000,000

  
	
   

  	
   

  	
  7/13/2005

  	
   

  	
  for $5,000,000 excess of $5,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXCESS PREMIUM:

  	
   

  	
  $150,000* plus $4,762.50 taxes and fees = $154,762.50

  
	
  (Net)

  	
   

  	
   

  



 






* Expiring premium was $140,000; premium increase is 7%


 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TERMS/ENDORSEMENTS: 

  	
   

  	
  Schedule of underlying insurance endorsement

  
	
   

  	
   

  	
  Notice of claim endorsement

  
	
   

  	
   

  	
  Depletion or exhaustion of underlying limits endorsement

  
	
   

  	
   

  	
  Additional Named Insured Endorsement (see list of named Insureds at
  end of proposal)

  
	
   

  	
   

  	
  Terrorism Disclosure endorsement

  
	
   

  	
   

  	
  Service of process endorsement

  
	
   

  	
   

  	
  Amended Retroactive date

  



 

















 


Diversified Risk Insurance Brokers


5900 Christie Avenue 


Emeryville, CA 94608 


510-547-3203                   License
#0529776


 


LECG


EMPLOYMENT PRACTICES
LIABILITY


11/14/06-11/14/07


 


	
  INSURER:

  	
   

  	
  Federal Insurance Company Admitted, A++, XV

  
	
   

  	
   

  	
   

  
	
  POLICY NUMBER: 

  	
   

  	
  8198-1563

  
	
   

  	
   

  	
   

  
	
  POLICY FORM:

  	
   

  	
  14-02-7304

  
	
   

  	
   

  	
   

  
	
  LIMITS:

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  Each Employment Claim

  
	
  Including Defense Costs

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  All Claims Each Policy Period

  
	
   

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  Third Party Each Claim

  
	
   

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  Sub-limit for all Third Party Claims

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RETENTIONS:

  	
   

  	
  $

  	
  150,000

  	
   

  	
  Non-Mass or Class Action - EPL

  
	
  Including Defense Costs

  	
   

  	
  $

  	
  250,000

  	
   

  	
  Mass or Class Action - EPL

  
	
   

  	
   

  	
  $

  	
  150,000

  	
   

  	
  Non-Mass or Class Action - Third Party

  
	
   

  	
   

  	
  $

  	
  250,000

  	
   

  	
  Mass or Class Action - Third Party

  
	
   

  	
   

  	
   

  
	
  EXTENDED REPORTING PERIOD:

  	
   

  	
  One year for 200% of annualized premium for expiring period

  
	
   

  	
   

  	
   

  
	
  PRIOR & PENDING DATE:

  	
   

  	
  9/29/2000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL PREMIUM:

  	
   

  	
  $

  	
  101,860

  	
   

  	
  Based on 1,463 employees at inception (last year’s premium was
  $92,600 based on 930 employees at inception at a $3,000,000 limit)

  



 


TERMS &
ENDORSEMENTS:


·                 California
Premium Endorsement


·                 Loss
Prevention Consultant Services Endorsement (SEE BELOW DESCRIPTION)


·                 California
Amendatory Endorsement


·                 Notice
of Loss Control Services


·                 Compliance
with Applicable Trade Sanction Laws


·                 Amend
Representations and Severability Endorsement


·                 Pending
or Prior Date for Increased Limits Endorsement - 6/17/04 for $1M xs $2M


·                 Notice
to Purchasers of Employment Practices Liability


 


POLICY ENHANCEMENTS:


 


The loss Prevention Consultant Services Endorsement
will reimburse LECG for 50% of the cost of approved loss prevention services up
to 10% of the premium, or $10,186. The following services qualify for
reimbursement:


·                 Legal Compliance audits of
human resources/employment policies and practices;


·                 Development or updating of
human resources/employment policies and practices;


·                 Training program design and
implementation on topics such as employment discrimination laws, equal
employment opportunity obligations, maintaining hostile free work environments,
interviewing skills, managing diversity, and handling corrective action and
discharge issues, all with a focus on loss prevention;


·                 Legal Advise and counsel on
employment issues;


·                 Statistical analyses on
work force and employment practices to detect trends or patterns that could
lead to regulatory problems, lawsuits or employee allegations;


 

















 


Diversified Risk Insurance Brokers


5900 Christie Avenue


Emeryville, CA 94608


License #0529776


 


LECG —
BUSINESS TRAVEL ACCIDENT COVERAGE


 


SCHEDULE OF  COVERAGE


 


Proposed Insured:


LECG Corporation


2000 Powell Street, #600 


Emeryville, CA 94608


 


Policy Number: ADD NO 1289287


 


Proposed Coverage: 


Business Travel Coverage


 


Underwriting Company:


ACE American Insurance Company


 


Effective Date:


August 18, 2006 to August 18, 2007


 


Class(es) of Eligible Persons:


 


Class 1: All
Executives of the Policyholder who are in active service.


Class 2: All Managers and Supervisors of the Policyholder who are
in active service. 


Class 3: All full-time salaried employees of the Policyholder who
are in active service.


 






* Spouses and dependents of Class 1, 2 and 3
Insured’s are covered while on Business and/or relocation.


 


Premium: 


$6,341,00 Annual Premium


 


SCHEDULE OF
BENEFITS


 


Aggregate Limit:                                                                                                 $5,000,000 per accident


 


We will not pay more than the Benefit Maximum for all losses per
Covered Accident. If, in the absence of this provision, We would pay more than
Benefit Maximum for all losses from one Covered Accident, then the benefits
payable to each person with a valid claim will be reduced proportionately, so
the total amount We will pay is the Benefit Maximum.


 


Covered Activities:


Class 1, 2 & 3: Business Travel Coverage including 7 days
personal deviation


 

















 


Business Travel Coverage


The Covered Accident must take place while:


 


1. on business for the Policyholder; and


2. in the course of the Policyholder’s business.


 


This coverage will start at the actual start of the trip. It does not
matter whether the trip starts at the Covered Person’s home, {place of work},
or other place. It will end on the first of the following dates to occur:


 


1. the date a Covered Person returns to his or her home;


2. the date a Covered Person returns to his or her place of work; or


3. the date a Covered Person’s Personal Deviation is more than 7 days.


 


“Personal Deviation” means:


 


1. an activity that is not reasonably related to the Policyholder’s
business; and


2. not incidental to the purpose of the trip.


 


This coverage does not include commuting between home and the place of
work.


 


Hijacking and Air Piracy Coverage


The Covered Accident must take place during the:


 


1. hijacking of an Aircraft;


2. air piracy; or


3. unlawful seizure or attempted seizure of an Aircraft and


4. takes place while the Covered Person is in the course of the
Policyholder’s business.


 


Coverage begins with the onset of the hijacking or air piracy and
continues while the Covered Person is subject to the control of the person or
persons responsible for the skyjacking/air piracy and during travel directly to
his home or scheduled destinations.


 


“Hijacking” or “Air Piracy” as used here, means, the unlawful seizure
or wrongful exercise of control of an aircraft or conveyance, or the crew
thereof, in which the Covered Person is traveling solely as a passenger.


 


Accidental Death & Dismemberment Benefits:


Class 1: $500,000 


Class 2: $200,000 


Class 3: $100,000 


Spouses $25,000 while traveling on business and/or relocation


Children $10,000 while traveling on business and/or relocation


 


If Injury to the Covered Person results, within 365 days from the date
of a Covered Accident, We will pay the Benefit Amount shown below for that
loss. The Principal Sum is shown in the Schedule of Benefits. If multiple
losses occur, only one Benefit Amount, the largest, will be paid for all
Covered Losses due to the same Accident.


 

















 


	
  Covered Loss

  	
   

  	
  Benefit Amount

  
	
  Life

  	
   

  	
  100% of the Principal Sum

  
	
  Two or more Members

  	
   

  	
  100% of the Principal Sum

  
	
  One Member

  	
   

  	
  50% of the Principal Sum

  
	
  Thumb and Index Finger of the Same Hand

  	
   

  	
  25% of the Principal Sum

  
	
  Quadriplegia

  	
   

  	
  100% of the Principal Sum

  
	
  Hemiplegia

  	
   

  	
  75% of the Principal Sum

  
	
  Paraplegia

  	
   

  	
  75% of the Principal Sum

  
	
  Uniplegia

  	
   

  	
  25% of the Principal Sum

  



 


“Member” means Loss of Hand or Foot, Loss of Sight or Loss of Speech,
and Loss of Hearing. 


 


“Loss of Hand or Foot” means complete Severance through or above the
wrist or ankle joint.


 


“Loss of Sight” means the total, permanent Loss of Sight of one eye
that is irrecoverable by natural, surgical or artificial means. “Loss of
Speech” means total and permanent loss of audible communication that is
irrecoverable by natural, surgical or artificial means. “Loss of Hearing” means
total and permanent Loss of Hearing in both ears that is irrecoverable and
cannot be corrected by any means. “Loss of a Thumb and Index Finger of the Same
Hand” means complete Severance through or above the metacarpophalangeal joints
of the same hand (the joints between the fingers and the hand). “Severance”
means the complete separation and dismemberment of the part from the body.


 


“Quadriplegia” means total Paralysis of both upper and lower limbs.
“Hemiplegia” means totalParalysis of the upper and lower limbs on one side of
the body. “Paraplegia” means total Paralysis of the lower limbs or upper limbs.
“Paralysis” means total foss of use. A Doctor must determine the loss of use to
be complete and not reversible at the time the claim is submitted.


 


Exposure and Disappearance


Coverage includes exposure to the elements after the forced landing,
stranding, sinking, or wrecking of a vehicle in which the Insured was
traveling.


 


An Insured is presumed dead if:


 


1. he or she is in a vehicle that disappears, sinks or is stranded or
wrecked on a covered trip; and


2. the body is not found within one year of the Covered Accident.


 


Coma Benefit


We will pay a monthly benefit of 1% of the Insured’s Principal Sum if a
covered person becomes comatose within 31 days of a Covered Accident and
remains in a Coma for at least 31 days. We reserve the right, at the end of the
first 31 days of Coma, to require proof that the Covered Person remains
Comatose. This proof may include, but is not limited to, requiring an
independent medical examination at Our expense.


 


Monthly payments will end on the first of the following dates:


 


1. the end of the month in which the Covered Person dies;


2. the end of the 11th month for which this benefit is payable;


3. the end of the month in which the Covered Person recovers from the
Coma.


 

















 


At the end of the 11th month if the Covered Person has not recovered
from the Coma, we will then pay a lump sum of the remaining Principal Sum.


 


A person is deemed “Comatose” or in a “Coma” if he or she is in a
profound stupor or state of complete and total unconsciousness, as the result
directly and independently of all other causes, of a covered Accident.


 


Seatbelt and Airbag Benefit


We will pay 10% of the Insured’s Principal Sum to a maximum of
$25,000.00, subject to the conditions described below, when the Covered Person
dies directly and independently of all other causes from a Covered Accident
while wearing a seatbelt and operating or riding as a passenger in an
Automobile. We will pay an additional benefit of $5,000 if the Covered Person
was also positioned in a seat protected by a properly-functioning and properly
deployed Supplemental Restraint System (Airbag). Verification of proper use of
the seatbelt at the time of the Covered Accident and that the Supplemental Restraint
System properly inflated upon impact must be a part of an official police
report of the Covered Accident or be certified, in writing, by the
investigating officer(s) and submitted with the Covered Person’s claim to
Us.


 


Special Counseling Benefit


We will pay the Special Counseling Benefit of $100 per session for up to
10 sessions for mental health counseling to assist a Covered Person in dealing
with a Covered Loss if he or she:


 


1. suffers an Injury that
results in a loss for which the Accidental Death and Dismemberment Benefit is
payable; and


2. obtains mental health
counseling.


 


Home Alteration and Vehicle Modification Benefit


We  will pay a benefit of 10% of the principal
sum to a maximum benefit of $10,000, subject to the following conditions, when
the Covered Person suffers a Covered Loss, other than a Loss of Life, resulting
directly and independently of all other causes from a Covered Accident.


 


This benefit will be payable if all of the following conditions are
met:


 


	
  1.

  	
  prior to the date of the Covered Accident causing such Covered Loss,
  the Covered Person did not require the use of any adaptive devices or
  adaptation of residence and/or vehicle.

  
	
  2.

  	
  as a direct result of such Covered Loss, the Covered Person now
  requires such adaptive devices or adaptation of residence and/or vehicle to
  maintain an independent lifestyle;

  
	
  3.

  	
  the Covered Person requires home alteration or vehicle modification
  within one year of the date of the Covered Accident.

  



 


Carjacking Benefit


We will pay a benefit of 10% of the Principal Sum to a maximum of $10,000
if the Covered Person suffers a Covered Loss resulting directly and
independently of all other causes from a Covered Accident that occurs during a
Carjacking of an Automobile that the Covered Person was operating, getting into
or out of, or riding in as a passenger. Verification of the Carjacking must be
made part of an official police report within 24 hours of the Carjacking, or as
soon as reasonably possible, or be certified in writing by the investigating
officer(s) within 24 hours of the Carjacking, or as soon as reasonably
possible.


 

















 


Rehabilitation Benefit


We will pay a benefit of $10,000.00 subject to the following conditions
when the Covered Person requires rehabilitation after sustaining a Covered Loss
resulting directly and independently of all other causes from a Covered
Accident.


 


The Covered Person must require Rehabilitation within two years after
the date of the Covered Accident or Covered Loss.


 


“Rehabilitation” means medical services, supplies or treatment or
Hospital confinement that satisfies all of the following conditions:


 


1. are essential for physical rehabilitation required due to the
Covered Person’s Covered Loss.


2. meet generally accepted standards of medical practice;


3. are performed under the care, supervision or order of a Doctor


4. prepare the Covered Person to return to his or any other occupation.


 


Emergency Medical Evacuation Benefit


We will pay Emergency Medical Evacuation Benefits up to a maximum of
$100,000 of Benefits for expenses incurred for the medical evacuation of a
Covered Person. Benefits are payable if the Covered Person:


 


1. is traveling 100 miles away from his or her place of permanent
residence;


2. suffers a Medical Emergency during the course of the Trip; and


3. requires Emergency Medical Evacuation.


 


Benefits will not be payable unless:


 


	
  1.

  	
  the Doctor ordering the Emergency Medical Evacuation certifies the
  severity of the Covered Person’s Medical Emergency requires an Emergency
  Medical Evacuation;

  
	
  2.

  	
  all transportation arrangements made for the Emergency Medical
  Evacuation are by the most direct and economical conveyance and route
  possible;

  
	
  3.

  	
  the charges incurred are Medically Necessary and do not exceed the
  usual level of charges for similar transportation, treatment, services or
  supplies in the locality where the expense is incurred; and

  
	
  4.

  	
  do not include charges that would not have been made if there were no insurance.

  



 


“Emergency Medical Evacuation” means:


 


	
  1.

  	
  the Covered Person’s immediate transportation from the place where he
  or she suffers Medical Emergency to the nearest Hospital or other medical
  facility where appropriate medical treatment can be obtained; or

  
	
  2.

  	
  the Covered Person’s transportation to his or her home to obtain
  further medical treatment in a Hospital or other medical facility or to
  recover after suffering a Medical Emergency.

  



 


“Medical Emergency” means a condition caused by an Accidental injury or
Sickness that manifests itself by symptoms of sufficient severity that a
prudent lay person possessing an average knowledge of health and medicine would
reasonably expect that failure to receive immediate medical attention would
place the health of the person in serious jeopardy.


 






 












 


“Sickness” means an illness, disease or condition of the Insured that
first occurs while coverage under the Policy is in force. All related
conditions and recurrent symptoms of the same or similar condition will be
considered one Sickness.


 


An Emergency Medical Evacuation also includes Medically Necessary
medical treatment, medical services and medical supplies necessarily received
in connection with such transportation. Benefits will not be payable unless We
authorize in writing, or by an authorized electronic or telephonic means, all
expenses in advance.


 


Repatriation Benefit


We will pay Repatriation Benefits up to a maximum of $50,000 for
preparation and return of a Covered Person’s body to his or her home if he or
she dies due to an Accidental injury or Sickness while traveling 100 miles away
from his or her place of permanent residence. Covered expenses include, but are
not limited to:


 


1. reasonable expenses incurred to return the insured’s person’s body
home to his/her home country;


2. coverage includes, but is not limited to, expenses for embalming,
cremation, coffin and transportation.


 


“Sickness” means an illness, disease or condition of the Insured that
first occurs while coverage under the Policy is in force. All related
conditions and recurrent symptoms of the same or similar condition will be
considered one Sickness. Benefits will not be payable unless We authorize in
writing, or by an authorized electronic or telephonic means, all expenses in
advance.


 


Assistance Services


In order to provide you with superior travel information and. services,
ACE USA has contracted with Worldwide Assistance to provide you with certain
services When you travel a distance of more than 100 miles away from your
primary residence or permanent place of assignment. These services include:


 


· Arrangement of medical emergency services


· Arrangement of medical evacuation or
repatriation


· Legal referral assistance


· Pre-trip assistance


· Emergency message service


· Emergency translation services


· Medication Shipment and lost document
assistance


· Emergency vehicle return


 


Age-based Reductions: Yes


 


Attainment of age Principal Sum is reduced to


 


70 65% 


75 45% 


80 30% 


85 15%


 

















 


Aircraft Restrictions


If the Covered Accident happens while a Covered Person is riding in, or
getting on or off of, an aircraft, We will pay benefits, but only if:


 


	
  a)

  	
  he or she is riding as a passenger only, and not as a pilot or member
  of the crew; and

  
	
  b)

  	
  the aircraft has a valid certificate of airworthiness; and

  
	
  c)

  	
  the aircraft is flown by a pilot with a valid license; and

  
	
  d)

  	
  the aircraft is not being used for: (i) crop dusting, spraying,
  or seeding; fire fighting; sky writing; sky diving or hang gliding; pipeline
  or power line inspection; aerial photography or exploration; racing,
  endurance tests, stunt or acrobatic flying; or (ii) any operation which
  requires a special permit from the FAA, even if it is granted (this does not
  apply if the permit is required only because of the territory flown over or
  landed on).

  
	
  e)

  	
  the aircraft is a military transport aircraft flown by the U.S.
  Military Airlift Command (MAC), or a similar air transport service of another
  country.

  



 


Owned Aircraft Not Covered


Benefits will not be paid if the aircraft is owned, leased or
controlled by the Policyholder, or any of the Policyholder’s affiliates. An
aircraft will be deemed “controlled” by the Policyholder if the Policyholder
may use it for more than 10 straight days, or more than 15 days in any year.


 


Schedule of Affiliates


Eligible Persons employed by any affiliate or subsidiary corporation of
the Policyholder as of the Policy Effective Date are covered under the Policy.
Their coverage will begin and end in accordance with the Effective Date of
Insurance and Termination Date of Insurance provisions in the Policy. A list of
these affiliates and subsidiaries must be kept on file with the Company.


 


Newly Acquired Organizations


The premium shown on the Schedule of Benefits applies
only to the Policyholder and any affiliates or subsidiary corporations covered
on the Policy Effective Date. However, eligible employees of organizations
acquired by the Policyholder during the Policy Term may be covered based on the
following terms. The Policyholder must: (1) report to Us within 60 days of
the acquisition the name of the newly acquired organization and any
underwriting information we may need to calculate the premium; and (2) the
required additional premium, if any, must be paid.


 


Payment Of Claims


If the insured dies, any death benefits or other benefits unpaid at the
time of the Insured’s death will be paid to the beneficiary our records
indicate the Insured designated for these plan benefits. If there is no named
beneficiary or surviving beneficiary on record with us or Our authorized agent,
We pay benefits in equal shares to the first surviving class of the following:
1) Spouse; 2) Children; 3) Parents; 4) Brothers and sisters. If there are no
survivors in any of these classes, We will pay the Insured’s estate. All other
benefits will be paid to the Insured. If the Insured is: (1) a minor; or
(2) in Our opinion unable to give a valid release because of incompetence,
We may pay any amount due to a parent, guardian, or other person actually
supporting him or her. Any payment made in good faith will end Our liability to
the extent of the payment.


 

















 


Exclusions


We will not pay benefits for any loss or Injury that is caused by, or
results from:


 


	
  1.

  	
  intentionally self-inflicted Injury.

  
	
  2.

  	
  suicide or attempted suicide.

  
	
  3.

  	
  war or any act of war, whether declared or not.

  
	
  4.

  	
  service in the military, naval or air service of any country.

  
	
  5.

  	
  sickness, disease, bodily or mental infirmity, bacterial or viral
  infection or medical or viral infection or medical or surgical treatment
  thereof, except for any bacterial infection resulting from an accidental
  external cut or wound or accidental ingestion of contaminated food.

  
	
  6.

  	
  piloting or serving as a crewmember or riding in any aircraft except
  as a fare-paying passenger on a regularly scheduled or charter airline.

  
	
  7.

  	
  injury or loss contributed by the use of drugs unless administered by
  a Doctor.

  
	
  8.

  	
  commission or attempt to commit an assault or a felony, or that
  occurs while he or she is engaged in a criminal occupation.

  



 

















 


Diversified Risk Insurance Brokers 


Christie Avenue


Emeryville, CA 94608


License #0529776


 


LECG —
OCCUPATIONAL COVERAGE INCLUDING BUSINESS TRAVEL


 


SCHEDULE OF
COVERAGE


 


Named Insured:


LECG Corporation


2000 Powell Street, #600


Emeryville, CA 94608


 


Policy Number: OCA N01289299


 


Coverage:


Full Occupational Coverage including Business Travel


 


Underwriting Company:


ACE American Insurance Company


 


Effective Date:


August 18, 2006 to August 18, 2007


 


Class(es) of Eligible Persons:


Class 1: All employees of the Policyholder who are in active
service.


 


Premium:


$21,119.00 Annual Premium


 


SCHEDULE OF
BENEFITS


 


AGGREGATE LIMIT:                                                                          $750,000 PER ACCIDENT


 


We will not pay more than the Benefit Maximum for all losses per Covered
Accident. If, in the absence of this provision, We would pay more than Benefit
Maximum for all losses from one Covered Accident, then the benefits payable to
each person with a valid claim will be reduced proportionately, so the total
amount We will pay is the Benefit Maximum.


 


Covered Activities:


 


Class 1:                                                       Full Occupational Coverage including Business
Travel including personal deviation up to 7 days


 


Full Occupational Coverage
(including Business Travel)


The Covered Accident must take place:


 


1. on the Policyholder’s premises; and


2. in the course of a Covered Person’s Job; or


3. on a business trip authorized by the Policyholder.


 


This coverage does not include commuting between
home and the place of work.


 

















 


This Coverage will start at the actual start of the
trip. It does not matter whether the trip starts at the Covered Person’s home,
place of work, or other place. It will end on the first of the following dates
to occur:


 


1. the date a Covered Person returns to his or her
home;


2. the date a Covered Person returns to his or her
place of work; or


3. the date a Covered Person’s Personal Deviation is
more than 7 days.


 


“Personal Deviation” means:


1. an activity that is not reasonably related to the
Policyholder’s business; and


2. not incidental to the purpose of the trip.


 


Accidental Death &
Dismemberment Benefits:                                                           $150,000


 


If Injury to the Covered Person results, within 365 days from the date
of a Covered Accident, We will pay the Benefit Amount shown below for that
loss. The Principal Sum is shown in the Schedule of Benefits. If multiple
losses occur, only one Benefit Amount, the largest, will be paid for all
Covered Losses due to the same Accident.


 


	
  Covered Loss

  	
   

  	
  Benefit Amount

  
	
  Life

  	
   

  	
  100% of the Principal Sum

  
	
  Two or more Members

  	
   

  	
  100% of the Principal Sum

  
	
  One Member

  	
   

  	
  50% of the Principal Sum

  
	
  Thumb and Index Finger of the Same Hand

  	
   

  	
  25% of the Principal Sum

  
	
  Quadriplegia

  	
   

  	
  100% of the Principal Sum

  
	
  Hemiplegia

  	
   

  	
  75% of the Principal Sum

  
	
  Paraplegia

  	
   

  	
  75% of the Principal Sum

  
	
  Uniplegia

  	
   

  	
  25% of the Principal Sum

  
	
  Loss of Use of Four Limbs

  	
   

  	
  100% of the. Principal Sum

  
	
  Loss of Use of Three Limbs

  	
   

  	
  75% of the Principal Sum

  
	
  Loss of Use of Two Limbs

  	
   

  	
  50% of the Principal Sum

  
	
  Loss of Use of One Limb

  	
   

  	
  25% of the Principal Sum

  



 


“Member” means Loss of Hand or Foot, Loss of Sight, Loss of Speech and
Loss of Hearing. 


 


“Loss of Hand or Foot” means complete Severance through or above the
wrist or ankle joint.


 


“Loss of Sight” means the total, permanent Loss of Sight of one eye.
“Loss of Speech” means total and permanent loss of audible communication that
is irrecoverable by natural, surgical or artificial means. “Loss of Hearing”
means total and permanent Loss of Hearing in both ears that is irrecoverable
and cannot be corrected by any means. “Loss of a Thumb and Index Finger of the
Same Hand” means complete Severance through or above the metacarpophalangeal
joints of the same hand (the joints between the fingers and the hand).
“Severance” means the complete separation and dismemberment of the part from
the body.


 


“Quadriplegia” means total Paralysis of both upper and lower limbs.
“Hemiplegia” means total Paralysis of the upper and lower limbs on one side of
the body. “Uniplegia” means total Paralysis of one lower limb or one upper
limb. “Paraplegia” means total Paralysis of both lower limbs or both upper
limbs. “Paralysis” means total loss of use. A Doctor must determine the loss of
use to be complete and not reversible at the time the claim is submitted.


 


“Loss of Use” means total paralysis of a limb or limbs which is
determined by a competent medical authority to be permanent, complete and
irreversible with respect to: 1) arm, at or above the elbow joint; 2) leg, at
or above the knee joint; 3) hand, at or above the wrist joint; and, 4) foot, at
or above the ankle joint.


 

















 


Exposure and Disappearance:


Coverage includes exposure to the elements after the forced landing,
stranding, sinking, or wrecking of a vehicle in which the Insured was
traveling.


 


An Insured is presumed dead if:


1.               he or she is in a vehicle that disappears,
sinks or is stranded or wrecked on a covered trip; and


 


2.               the body is not found within one year of the
Covered Accident.


 


Payment Of Claims: In consideration of the Policyholder’s
payment of the entire premium, the Policyholder shall be the beneficiary under
the policy. The Policyholder will act as a trustee for the Insured, collecting
all benefits payable on behalf of the Insured.


 


Schedule of Affiliates: Eligible Persons employed by any affiliate or
subsidiary corporation of the Policyholder as of the Policy Effective Date are
covered under the Policy. Their coverage will begin and end in accordance with
the Effective Date of Insurance and Termination Date of Insurance provisions in
the Policy. A list of these affiliates and subsidiaries must be kept on file with the Company.


 


Newly Acquired Organizations: The premium shown on the Schedule of Benefits
applies only to the Policyholder and any affiliates or subsidiary corporations
covered on the Policy Effective Date. However, eligible employees of
organizations acquired by the Policyholder during the Policy Term may be
covered based on the following terms. The Policyholder must: (1) report to
Us within 60 days of the
acquisition the name of the newly acquired organization and any underwriting
information we may need to calculate the premium; and (2) the required
additional premium, If any, must be paid.


 


Age-based Reductions: Yes


 


Attainment of age Principal Sum is reduced to


 


70 65%


75 45%


80 30%


85 15%


 


Exclusions and Limitations:


We will not pay benefits for any loss or Injury that is caused by, or
results from:


	
  1.

  	
  intentionally self-inflicted Injury.

  
	
  2.

  	
  suicide or attempted suicide.

  
	
  3.

  	
  war or any act of war, whether declared or not.

  
	
  4.

  	
  service in the military, naval or air service of any country.

  
	
  5.

  	
  sickness, disease, bodily or mental infirmity, bacterial or viral
  infection or medical or viral infection or medical or surgical treatment
  thereof, except for any bacterial infection resulting from an accidental
  external cut or wound or accidental ingestion of contaminated food.

  
	
  6.

  	
  piloting or serving as a crewmember or riding in any aircraft except
  as a fare-paying passenger on a regularly scheduled or charter airline
  (except as provided by the Policy).

  
	
  7.

  	
  commission of, or attempt to commit, a felony, an assault or other
  criminal activity.

  



 

















 


SCHEDULE 9.19


 


LABOR MATTERS


 


None.


 


Note, however, that the foreign Subsidiaries of LECG, LLC enter into
statutorily required labor agreements in the jurisdictions in which they do
business.


 






 












 


SCHEDULE
11.1


 


EXISTING
DEBT


 


LECG CORPORATION


DEBT


AS OF OCTOBER 31, 2006


 


	
   

  	
   

  	
  Payments due by years ending December 31,

  	
   

  
	
  ($000s)

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  Thereafter

  	
   

  	
  Maximum

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guaranteed/earned purchase
  price commitments (1)

  	
   

  	
  87

  	
   

  	
  6,301

  	
   

  	
  —

  	
   

  	
  2,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  8,388

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  1,748

  	
   

  	
  6,301

  	
   

  	
  —

  	
   

  	
  2,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  10,049

  	
   

  



 






(1)                                 Represents actual amounts to be paid for
purchase price of acquired businesses. Timing may vary if certain performance
targets are achieved.


 


Note:
               Under the terms of certain purchase
agreements for acquired business, maximum aggregate contingent purchase price
payments total approximately $33.7 million and are subject to achieving certain
significant performance criteria. Actual amounts, if any, to be paid could be
significantly less than this maximum. A description of actual amounts to be
paid and the contingent payments that may become due are described in more
detail under the heading “Acquisition Related Liabilities” below.


 


Further, the Company has deferred purchase price
obligations owing to Navigant Consulting, Inc. pursuant to that certain Asset
Purchase Agreement with Navigant Consulting, Inc. and LECG, Inc.
dated September 29, 2000. The amount of these obligations is in dispute.
Please refer to Schedule 9.6 for a description of this contingent liability.


 


In addition, the Company holds a note from LECG
Limited [UK] in the amount of $668,296 and a note from LECG Limited [NZ] in the
amount of $570,373, each as more particularly described in Schedule 11.10.


 


Acquisition Related Liabilities


 


The Company has made
commitments in connection with current and prior years acquisitions that will
require the Company to make additional payments and recognize additional
goodwill if specified performance targets are met. The Company has also made
commitments that will require the Company to make guaranteed purchase price
payments. In addition, the Company has made commitments to make bonus
compensation payments if specified performance targets are achieved.


 


In connection with the
Company’s May 2006 acquisition of the business of BMB Mack
Barclay, Inc., if specified annual performance targets are achieved
through April 2011, the Company will make additional payments of up to
$8.8 million by no later than July 2011. As a result of achieving
specified performance targets through September 30, 2006, the Company
recognized $784,000 of additional goodwill, which amount will be paid to BMB
Mack Barclay, Inc. in July 2007.


 

















 


In connection with the
Company’s December 2005 acquisition of the business of Lancaster
Consulting LLC, if specified annual performance targets are achieved through
December 2009, the Company will make additional payments of up to $1.35
million by no later than March 2010. As a result of achieving specified
performance targets through September 30, 2006, the Company recognized
$266,000 of additional goodwill in the nine months ended September 30,
2006, which amount will be paid to Lancaster Consulting LLC in March 2007.


 


In connection with the
Company’s December 2005 acquisition of the business of Beach &
Company International LP, if specified performance targets are achieved through
June 2008, the Company will make an additional payment of $500,000 by no
later than August 2008.


 


In connection with the Company’s
November 2005 acquisition of the business of Neilson Elggren LLP, if
specified annual performance targets are achieved through October 2010,
the Company will make additional payments of up to $3.75 million by no later
than January 2011. An additional payment of up to $1.5 million will also
be made in December 2010 if higher targets are met by no later than
October 2010. As a result of achieving specified performance targets
through September 30, 2006, the Company recognized $1.1 million of
additional goodwill, which amount will be paid to Neilson Elggren LLP in
January 2007.


 


In connection with the
Company’s August 2005 acquisition of the business of Bates Private Capital
Incorporated, if specified annual performance targets are achieved through
July 2011, the Company will make additional payments of up to $13.0
million by no later than September 2011. In addition, as a result of
achieving specified performance targets from August 1, 2006 to
September 30, 2006, the Company recognized $1.2 million of additional
goodwill, which amount will be paid to Bates Private Capital Incorporated in
September 2007.


 


In connection with the
Company’s March 2005 acquisition of J. Philip Cook &
Associates, Inc, if specified performance targets are achieved through
December 2008, the Company will make additional payments of up to $1.2
million by no later than March 2009.


 


In connection with the
Company’s October 2004 acquisition of Washington Advisory Group, LLC, the
Company will make an additional guaranteed payment of $400,000 no later than
February 2007, and, if specified performance targets are achieved through
December 2006, the Company will make additional payments of up to $2.1
million by no later than February 2007.


 


In connection with the
Company’s August 2004 acquisition of Silicon Valley Expert Witness
Group, Inc., the Company will make guaranteed payments of $2.0 million
over the period beginning September 2006 and ending no later than
September 2009, and if specified performance targets are achieved through
July 2009, the Company will make additional payments of up to $2.7 million
over the same period.


 


In connection with the
Company’s March 2004 acquisition of Economics Analysis LLC, if specified
annual performance targets are achieved in 2006, the Company will make
additional payments of up to $2.55 million by no later than March 2007.


 


In connection with the
Company’s March 2004 acquisition of Low Rosen Taylor Soriano, as a result
of achieving specified performance targets for 2006, the Company


 

















 


recognized $715,000 of additional goodwill in the
nine months ended September 30, 2006, which amount will be paid to Low
Rosen Taylor Soriano in February 2007.


 


In connection with the
Company’s August 2003 acquisition of Center for Forensic Economic Studies,
as a result of achieving specified performance targets in 2006, the Company has
recognized $1.9 million of additional goodwill in the nine months ended
September 30, 2006, which amount will be paid to Center for Forensic
Economic Studies in August 2007. In addition, if specified performance
targets are achieved in 2006 and 2007, the Company will pay bonus compensation
of up to $580,000 in August 2007.


 


In connection with the
hiring of certain experts and professional staff in March 2004, the
Company paid $5.7 million in March 2006 as specified performance targets
were achieved in 2005, and the Company agreed to pay performance bonuses of up
to $5.7 million in March 2007, if specified performance targets are
achieved in 2006. Because the unearned portion of the bonus payments are
recoverable in the event the experts leave the Company prior to
March 2011, all such bonus payments are subject to amortization from the
time the bonus is recognized through March 2011. The Company believes it
is probable that the 2006 performance criteria will be met for the $5.7 million
bonus to be paid in March 2007, and has recognized a performance bonus and
associated liability of $5.7 million and recorded amortization expense of
$822,000 in the nine months ended September 30, 2006.


 

















 


SCHEDULE 11.2


 


EXISTING LIENS


 


The Company has multiple outstanding lease financing
arrangements regarding office equipment, primarily computer hardware and
software and related accessories, pursuant to which U.S. Bancorp Oliver-Allen
Technology Leasing has filed financing statements under the Uniform Commercial
Code as the secured party.


 

















 


SCHEDULE
11.6


 


TRANSACTIONS
WITH AFFILIATES


 


Expert and Senior Management Agreements


 


The Company is party to expert agreements with Walter H.A. Vandaele, a
director, David T. Scheffman, a director through February 2005, David J.
Teece, our Chairman of the Board of Directors, and David P. Kaplan, who
resigned as President and director effective February 22, 2006. All of
these agreements are terminable at will, and the agreements with
Drs. Vandaele and Scheffman do not contain restrictions on competition
after termination. Pursuant to these agreements, these experts provide expert
services on the Company’s behalf in consideration for a cash payment based on a
percentage, which varies by expert from 70% to 100%, of the sum of the amount
of fees collected by the Company for the hours billed by this person and a
percentage (up to 14%) of staff fees collected by the Company on projects
secured by this person. The Company is also required to pay to Mr. Kaplan
$58,333 per month, and collected fees for billings and projects secured by
Mr. Kaplan will be deducted against this amount; and the Company is
required to pay to Dr. Vandaele $41,666 per month, and collected fees for
billings and projects secured by Dr. Vandaele are deducted against this
amount;


 


In September 2000, the Company entered into a senior management
agreement with David J. Teece, our Chairman of the Board of Directors,
providing for among other things, Dr. Teece’s compensation as an expert
and the Company’s Chairman of the Board of Directors. Dr. Teece’s annual
base salary as the Company’s Chairman of the Board of Directors was $225,000
from January 1, 2005 through July 31, 2005. Dr. Teece’s annual
base salary was increased to $500,000 effective August ‘1, 2005.
Dr. Teece’s agreement recognizes that his time availability and commitment
to the Company must accommodate his position as a part-time faculty member at
the University of California at Berkeley, and the University’s regulations
regarding conflict of commitment. Dr. Teece is not required to spend more
than 50% of his business or professional time on the Company’s affairs or
provide services on engagements. In addition, the Company is obligated to
provide him with two executive assistants at its expense. The senior management
agreement does not have a specified term and is terminable at will.


 


If Dr. Teece’s services as the Chairman of the Board of Directors
are terminated by the Company without cause, Dr. Teece will be entitled to
severance payments for a six-month period following termination at his then
annual base salary rate, which period may be extended by an additional six
months in exchange for a six-month extension of the non-competition covenants
of Dr. Teece. Dr. Teece is generally prohibited from managing or
controlling a competitive business to the Company’s that has annual revenues
greater than $5.0 million during the twelve-month period following his
termination, which period is reduced to six months in the event he is
terminated by us without cause; however, Dr. Teece may act as an expert in
a non-managerial control position. In addition, Dr. Teece is prohibited
from soliciting certain of the Company’s clients and staff during the twelve-month
period following his termination.


 


In September 2000, the Company entered into a senior management
agreement with David P. Kaplan. In September 2003, the Company entered
into an amended and restated senior 


 

















 


management agreement with Mr. Kaplan, providing for among other
things, Mr. Kaplan’s compensation as an expert, as previously described,
and as our President. Mr. Kaplan’s base salary as our President was
$225,000 for the year ended December 31, 2005. Mr. Kaplan resigned as
our President and Board member effective February 22, 2006.
Mr. Kaplan is also eligible for benefits generally available to our other
executive and managerial employees, and the Company is obligated to provide him
with one executive assistant at our expense. The senior management agreement
does not have a specified term and is terminable at will.


 


If the Company terminates Mr. Kaplan’s services without cause,
Mr. Kaplan will be entitled to severance payments totaling $250,000
payable over a 12-month period following termination. Mr. Kaplan is
generally prohibited from managing or controlling a competitive business to the
Company’s that has annual revenues greater than $5.0 million during the
twelve-month period following his termination; however, Mr. Kaplan may act
as an expert in a non-managerial control position. In addition, Mr. Kaplan
is prohibited from soliciting certain of the Company’s clients and staff during
the twelve-month period following his termination.


 


Pursuant to their respective agreements, the Company paid
Dr. Teece, director and executive officer, Mr. Kaplan, former
director and executive officer effective February 22, 2006, and
Dr. Vandaele, director, $2,628,258, $2,152,838 and $1,734,461,
respectively, during 2005 for expert services and project origination fees.


 


Other Agreements


 


Pursuant to an agreement with David Teece, the Company’s Chairman of
the Board of Directors, the Company pays the project origination fees otherwise
owing to Dr. Teece to Enterprise Research, Inc., a corporation in
which Dr. Teece has a 40% equity position. In identifying.the compensation
paid to Dr. Teece during 2005, the Company has included the $1,186,980
amounts paid to this corporation for project origination fees, representing the
contractual percentage (typically 14%) applied to professional staff revenue
recognized on engagements secured by the expert.


 


Indemnification Agreements of Officers and Directors


 


The Company’s amended and restated certificate of incorporation and its
bylaws provide that the Company will indemnify each of its directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law. Further, the Company has indemnification agreements for its directors and
officers.


 

















 


SCHEDULE 11.10


 


INVESTMENTS


 


1.                                      Note receivable by LECG Limited [UK] in favor
of the Company in the amount of $668,296, which amount represents outstanding
principal as of November 30, 2006; there is no accrued interest on this
note.


 


2.                                      Note receivable by LECG Limited [NZ] in favor
of the Company in the amount of $570,373, which amount represents outstanding
principal and accrued interest as of November 30, 2006.


 


3.                                      Further, because the Parent, the Company, and
the Subsidiaries own all or a portion of the equity interests of each of their
respective Subsidiaries, they each hold Investments in such Subsidiaries as
follows (please refer to Schedule 9.8 for the equity ownership
percentage of each Investment):


 


	
   

  	
   

  	
  Subsidiaries in Which

  
	
  Entity

  	
   

  	
  the Entity Holds an Investment

  
	
   

  	
   

  	
   

  
	
  LECG Corporation

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  
	
  LECG, LLC

  	
   

  	
  (a) LECG Canada Holding, Inc.

  
	
   

  	
   

  	
  (b) LECG Holding Company (UK) Ltd.

  
	
   

  	
   

  	
  (c) LECG Limited [UK]

  
	
   

  	
   

  	
  (d) LECG Limited [NZ]

  
	
   

  	
   

  	
  (e) LECG Korea LLC

  
	
   

  	
   

  	
  (f) Silicon Valley Expert Witness Group, Inc.

  
	
   

  	
   

  	
   

  
	
  LECG Canada Holding, Inc.

  	
   

  	
  LECG Canada Ltd.

  
	
   

  	
   

  	
   

  
	
  LECG Holding Company (UK) Ltd.

  	
   

  	
  (a) LECG Consulting France, SAS

  
	
   

  	
   

  	
  (b) LECG Consulting Spain, SL

  
	
   

  	
   

  	
  (c) LECG Consulting Belgium, SA

  
	
   

  	
   

  	
  (d) LECG Consulting Italy, SrL

  
	
   

  	
   

  	
   

  
	
  LECG Limited [UK]

  	
   

  	
  LECG Consulting Belgium, SA