EX-10.1






Exhibit 10.1




EXECUTION VERSION




 





AGILYSYS, INC.,




AGILYSYS NV, LLC,




AGILYSYS NJ, INC.




and




and the other Persons from time to time party hereto,




as Borrowers




 






LOAN AND SECURITY AGREEMENT




Dated as of May 5, 2009




$50,000,000




 






CERTAIN FINANCIAL INSTITUTIONS,




as Lenders




and




BANK OF AMERICA, N.A.,




as Agent




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
	 	 	1	 
	1.1. Definitions
	 	 	1	 
	1.2. Accounting Terms
	 	 	25	 
	1.3. Uniform Commercial Code
	 	 	26	 
	1.4. Certain Matters of Construction
	 	 	26	 
	 
	 	 	 	 
	SECTION 2. CREDIT FACILITIES
	 	 	27	 
	2.1. Commitments
	 	 	27	 
	2.2. Increase of Commitments
	 	 	28	 
	2.3. Letter of Credit Facility
	 	 	29	 
	 
	 	 	 	 
	SECTION 3. INTEREST, FEES AND CHARGES
	 	 	32	 
	3.1. Interest
	 	 	32	 
	3.2. Fees
	 	 	33	 
	3.3. Computation of Interest, Fees, Yield Protection
	 	 	34	 
	3.4. Reimbursement Obligations
	 	 	34	 
	3.5. Illegality
	 	 	34	 
	3.6. Inability to Determine Rates
	 	 	35	 
	3.7. Increased Costs; Capital Adequacy
	 	 	35	 
	3.8. Mitigation
	 	 	36	 
	3.9. Funding Losses
	 	 	36	 
	3.10. Maximum Interest
	 	 	37	 
	 
	 	 	 	 
	SECTION 4. LOAN ADMINISTRATION
	 	 	37	 
	4.1. Manner of Borrowing and Funding Loans
	 	 	37	 
	4.2. Defaulting Lender
	 	 	38	 
	4.3. Number and Amount of LIBOR Loans; Determination of Rate
	 	 	39	 
	4.4. Borrower Agent
	 	 	39	 
	4.5. One Obligation
	 	 	39	 
	4.6. Effect of Termination
	 	 	39	 
	 
	 	 	 	 
	SECTION 5. PAYMENTS
	 	 	40	 
	5.1. General Payment Provisions
	 	 	40	 
	5.2. Repayment of Loans
	 	 	40	 
	5.3. [Reserved]
	 	 	40	 
	5.4. Payment of Other Obligations
	 	 	40	 
	5.5. Marshaling; Payments Set Aside
	 	 	40	 
	5.6. Post-Default Allocation of Payments
	 	 	41	 
	5.7. Application of Payments
	 	 	42	 
	5.8. Loan Account; Account Stated
	 	 	42	 
	5.9. Taxes
	 	 	42	 
	5.10. Lender Tax Information
	 	 	43	 






i









 






	 	 	 	 	 
	 	 	Page	 
	5.11. Nature and Extent of Each Borrower’s Liability
	 	 	44	 
	 
	 	 	 	 
	SECTION 6. CONDITIONS PRECEDENT
	 	 	46	 
	6.1. Conditions Precedent to Initial Loans
	 	 	46	 
	6.2. Conditions Precedent to All Credit Extensions
	 	 	48	 
	6.3. Limited Waiver of Conditions Precedent
	 	 	49	 
	 
	 	 	 	 
	SECTION 7. COLLATERAL
	 	 	49	 
	7.1. Grant of Security Interest
	 	 	49	 
	7.2. Lien on Deposit Accounts; Cash Collateral
	 	 	50	 
	7.3. [Reserved]
	 	 	50	 
	7.4. Other Collateral
	 	 	50	 
	7.5. No Assumption of Liability
	 	 	51	 
	7.6. Further Assurances
	 	 	51	 
	7.7. Foreign Subsidiary Stock
	 	 	51	 
	 
	 	 	 	 
	SECTION 8. COLLATERAL ADMINISTRATION
	 	 	51	 
	8.1. Borrowing Base Certificates
	 	 	51	 
	8.2. Administration of Accounts
	 	 	52	 
	8.3. Administration of Inventory
	 	 	53	 
	8.4. Administration of Equipment
	 	 	53	 
	8.5. Administration of Deposit Accounts
	 	 	53	 
	8.6. General Provisions
	 	 	54	 
	8.7. Power of Attorney
	 	 	55	 
	 
	 	 	 	 
	SECTION 9. REPRESENTATIONS AND WARRANTIES
	 	 	56	 
	9.1. General Representations and Warranties
	 	 	56	 
	9.2. Complete Disclosure
	 	 	61	 
	 
	 	 	 	 
	SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
	 	 	61	 
	10.1. Affirmative Covenants
	 	 	61	 
	10.2. Negative Covenants
	 	 	65	 
	10.3. Financial Covenant
	 	 	70	 
	 
	 	 	 	 
	SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
	 	 	70	 
	11.1. Events of Default
	 	 	70	 
	11.2. Remedies upon Default
	 	 	72	 
	11.3. License
	 	 	73	 
	11.4. Setoff
	 	 	73	 
	11.5. Remedies Cumulative; No Waiver
	 	 	73	 
	 
	 	 	 	 
	SECTION 12. AGENT
	 	 	74	 
	12.1. Appointment, Authority and Duties of Agent
	 	 	74	 
	12.2. Agreements Regarding Collateral and Field Examination Reports
	 	 	75	 
	12.3. Reliance By Agent
	 	 	76	 
	12.4. Action Upon Default
	 	 	76	 
	12.5. Ratable Sharing
	 	 	76	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	12.6. Indemnification of Agent Indemnitees
	 	 	76	 
	12.7. Limitation on Responsibilities of Agent
	 	 	77	 
	12.8. Successor Agent and Co-Agents
	 	 	77	 
	12.9. Due Diligence and Non-Reliance
	 	 	78	 
	12.10. Replacement of Certain Lenders
	 	 	78	 
	12.11. Remittance of Payments and Collections
	 	 	79	 
	12.12. Agent in its Individual Capacity
	 	 	79	 
	12.13. Agent Titles
	 	 	79	 
	12.14. No Third Party Beneficiaries
	 	 	80	 
	 
	 	 	 	 
	SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
	 	 	80	 
	13.1. Successors and Assigns
	 	 	80	 
	13.2. Participations
	 	 	80	 
	13.3. Assignments
	 	 	81	 
	 
	 	 	 	 
	SECTION 14. MISCELLANEOUS
	 	 	81	 
	14.1. Consents, Amendments and Waivers
	 	 	81	 
	14.2. Indemnity
	 	 	82	 
	14.3. Notices and Communications
	 	 	82	 
	14.4. Performance of Borrowers’ Obligations
	 	 	83	 
	14.5. Credit Inquiries
	 	 	83	 
	14.6. Severability
	 	 	83	 
	14.7. Cumulative Effect; Conflict of Terms
	 	 	84	 
	14.8. Counterparts
	 	 	84	 
	14.9. Entire Agreement
	 	 	84	 
	14.10. Relationship with Lenders
	 	 	84	 
	14.11. No Advisory or Fiduciary Responsibility
	 	 	84	 
	14.12. Confidentiality
	 	 	85	 
	14.13. [Reserved]
	 	 	85	 
	14.14. GOVERNING LAW
	 	 	85	 
	14.15. Consent to Forum
	 	 	85	 
	14.16. Waivers by Borrowers
	 	 	86	 
	14.17. Patriot Act Notice
	 	 	86	 






iii









 






LIST OF EXHIBITS AND SCHEDULES




	 	 	 	 	 
	Exhibit A

	 	—
	 	Note
	Exhibit B

	 	—
	 	Assignment and Acceptance
	Exhibit C

	 	—
	 	Assignment Notice
	Exhibit D

	 	—
	 	Borrowing Base Certificate
	Exhibit E

	 	—
	 	Compliance Certificate
	Schedule 1.1

	 	—
	 	Commitments of Lenders
	Schedule 1.2

	 	—
	 	Excluded Debt
	Schedule 8.5

	 	—
	 	Deposit Accounts
	Schedule 8.6.1

	 	—
	 	Business Locations
	Schedule 9.1.4

	 	—
	 	Names and Capital Structure
	Schedule 9.1.5

	 	—
	 	Excluded Perfection Property
	Schedule 9.1.11

	 	—
	 	Patents, Trademarks, Copyrights and Licenses
	Schedule 9.1.14

	 	—
	 	Environmental Matters
	Schedule 9.1.15

	 	—
	 	Restrictive Agreements
	Schedule 9.1.16

	 	—
	 	Litigation
	Schedule 9.1.18

	 	—
	 	Pension Plan Disclosures
	Schedule 9.1.20

	 	—
	 	Labor Contracts
	Schedule 10.2.2

	 	—
	 	Existing Liens
	Schedule 10.2.17

	 	—
	 	Existing Affiliate Transactions






iv









 





LOAN AND SECURITY AGREEMENT




     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of May 5, 2009, among
AGILYSYS, INC., an Ohio corporation (“Company”), AGILYSYS NV, LLC, a Delaware limited
liability company (“NV”), AGILYSYS NJ, INC., a New Jersey corporation (“NJ”; and
together with Company, NV and each other Person party to this Agreement from time to time as a
borrower, each a “Borrower” and collectively “Borrowers”), the other Borrowers
from time to time party hereto, the financial institutions party to this Agreement from time to
time as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a national banking
association, as agent for the Lenders (“Agent”).



R E C I T A L S:




     Borrowers have requested that Lenders provide a credit facility to Borrowers to finance their
mutual and collective business enterprise. Lenders are willing to provide the credit facility on
the terms and conditions set forth in this Agreement.



     NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties agree as follows:



SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION




     1.1. Definitions. As used herein, the following terms have the meanings set forth below:



     Account: as defined in the UCC, including all rights to payment for goods sold or
leased, or for services rendered.



     Account Debtor: a Person who is obligated under an Account, Chattel Paper or General
Intangible.



     Accounts Formula Amount: 85% of the Value of Eligible Accounts; provided,
however, that such percentage shall be reduced by 1.0% for each whole percentage point (or
portion thereof) that the Dilution Percent exceeds 5.0%.



     Affiliate: with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under common Control with
the Person specified. “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.



     Agent Indemnitees: Agent and its officers, directors, employees, Affiliates, agents
and attorneys.



     Agent Professionals: attorneys, accountants, appraisers, auditors, business valuation
experts, environmental engineers or consultants, turnaround consultants, and other professionals
and experts retained by Agent.



 









 





     Allocable Amount: as defined in Section 5.11.3.



     Anti-Terrorism Laws: any laws relating to terrorism or money laundering, including the
Patriot Act.



     Applicable Law: all laws, rules and regulations applicable to the Person, conduct,
transaction, agreement or matter in question, including all applicable statutory law, common law
and equitable principles, and all provisions of constitutions, treaties, statutes, rules,
regulations, orders and decrees of Governmental Authorities.



     Applicable Margin: for any day, the margin set forth below, as determined by the
average daily amount of Availability applicable to the preceding Fiscal Quarter, it being
understood that the Applicable Margin for (i) Loans that are Base Rate Loans shall be the
percentage set forth under the column “Base Rate Loans” and (ii) Loans that are LIBOR Loans shall
be the percentage set forth under the column “LIBOR Loans”:






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Average Daily	 	 	 	 
	 	 	Amount of	 	Base Rate	 	 
	Level	 	Availability	 	Loans	 	LIBOR Loans
	I
	 	 	< $15,000,000	 	 	 	2.50	%	 	 	3.50	%
	II
	 	≥ $15,000,000 but  <	 	 	2.25	%	 	 	3.25	%
	 
	 	$35,000,000	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	III
	 	 	≥ $35,000,000	 	 	 	2.00	%	 	 	3.00	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 




Until September 30, 2009, margins shall be determined as if Level II were applicable. Thereafter,
the margins shall be subject to increase or decrease in accordance with the table set forth above
upon receipt by Agent pursuant to Section 10.1.2 of the financial statements and corresponding
Compliance Certificate for the last Fiscal Quarter, which change shall be effective on the first
day of the calendar month following receipt. If, by the first day of a month, any financial
statements and Compliance Certificate due in the preceding month have not been received, then, at
the option of Agent or Required Lenders, the margins shall be determined as if Level I were
applicable, from such day until the first day of the calendar month following actual receipt.




     Applicable Unused Commitment Margin — for any day, the rate per annum set forth below
opposite the applicable Unused Commitments:




	 	 	 	 	 	 	 	 	 
	Level	 	Unused Commitments	 	Unused Line Fee
	1
	 	< 50% of the aggregate 


amount of all Commitments	 	 	0.500	%
	 
	2
	 	≥ 50% of the aggregate 

amount of all Commitments	 	 	0.750	%






2









 





Until September 30, 2009, the margin shall be determined as if Level 2 were applicable.
Thereafter, the margin shall be subject to increase or decrease, as set forth in the table above,
on the first day of each calendar month, according to the average daily amount of Unused
Commitments (calculated for the preceding calendar month).




     Approved Fund: any Person (other than a natural person) that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in
its ordinary course of activities, and is administered or managed by a Lender, an entity that
administers or manages a Lender, or an Affiliate of either.



     Asset Disposition: a sale, lease, license, consignment, transfer or other disposition
of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback
transaction or synthetic lease.



     Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit B.



     Availability: the Borrowing Base minus the principal balance of all Loans.



     Availability Reserve: the sum (without duplication) of (a) the LC Reserve; (b) the
Bank Product Reserve; (c) the aggregate amount of liabilities secured by Liens upon Collateral that
are senior to Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default
arising therefrom); and (d) such additional reserves, in such amounts and with respect to such
matters, as Agent in the exercise of its Credit Judgment may elect to impose from time to time.



     Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.



     Bank of America Indemnitees: Bank of America and its officers, directors, employees,
Affiliates, agents and attorneys.



     Bank Product: any of the following products, services or facilities extended to any
Borrower or Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b)
products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d)
other banking products or services as may be requested by any Borrower or Subsidiary, other than
Letters of Credit; provided, however, that for any of the foregoing to be included
as an “Obligation” for purposes of a distribution under Section 5.6.1, the applicable Secured Party
and Obligor must have previously provided written notice to Agent of (i) the existence of such Bank
Product, (ii) the maximum dollar amount of obligations arising thereunder to be included as a Bank
Product Reserve (“Bank Product Amount”), and (iii) the methodology to be used by such
parties in determining the Bank Product Debt owing from time to time. The Bank Product Amount may
be changed from time to time upon written notice to Agent by the Secured Party and Obligor. No
Bank Product Amount may be established or increased at any time that a Default or Event of Default
exists, or if a reserve in such amount would cause an Overadvance.



     Bank Product Amount: as defined in the definition of Bank Product.



     Bank Product Debt: Debt and other obligations of an Obligor relating to Bank Products.



3









 





     Bank Product Reserve: the aggregate amount of reserves established by Agent from time
to time in the exercise of its Credit Judgment in respect of Bank Product Debt, which shall be at
least equal to the sum of all Bank Product Amounts.



     Bankruptcy Code: Title 11 of the United States Code.



     Base Rate: for any day, a per annum rate equal to the greatest of: (a) the Prime Rate
for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day
interest period as determined on such day, plus 1.0%.



     Base Rate Loan: a Loan that bears interest based on the Base Rate.



     Board of Governors: the Board of Governors of the Federal Reserve System.



     Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt that
(i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced by notes,
drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a
type upon which interest charges are customarily paid (excluding trade payables owing in the
Ordinary Course of Business and the trade payables owing to Arrow Electronics, Inc.), or (iv) was
issued or assumed as full or partial payment for Property; (b) Capital Leases; (c) reimbursement
obligations with respect to letters of credit; and (d) guaranties of any Debt of the foregoing
types owing by another Person.



     Borrowing: a group of Loans of one Type that are made on the same day or are converted
into Loans of one Type on the same day.



     Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the
aggregate amount of Commitments, minus the LC Reserve; or (b) the sum of the Accounts
Formula Amount minus the Availability Reserve.



     Borrowing Base Certificate: a certificate, in the form appended hereto as Exhibit D or
such modified form of certificate reasonably requested by Agent, by which Borrowers (a) certify to
Agent calculation of the Borrowing Base from time to time as required pursuant to the terms hereof
and (b) calculate the applicable Level for the Applicable Margin.



     Business Day: any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the laws of, or are in fact closed in, Illinois or Ohio, and if
such day relates to a LIBOR Loan, any such day on which dealings in Dollar deposits are conducted
between banks in the London interbank Eurodollar market.



     Capital Expenditures: all liabilities incurred, expenditures made or payments due
(whether or not made) by a Borrower or Subsidiary for the acquisition of any fixed assets, or any
improvements, replacements, substitutions or additions thereto with a useful life of more than one
year, including the principal portion of Capital Leases.



     Capital Lease: any lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.



4









 





     Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.



     Cash Collateral Account: a demand deposit, money market or other account established
by Agent at such financial institution as Agent may select in its discretion, which account shall
be subject to Agent’s Liens for the benefit of Secured Parties.



     Cash Collateralize: the delivery of cash to Agent, as security for the payment of
Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC
Obligations, and (b) with respect to any inchoate, contingent or other Obligations (including
Obligations arising under Bank Products), Agent’s good faith estimate of the amount due or to
become due, including all fees and other amounts relating to such Obligations. “Cash
Collateralization” has a correlative meaning.



     Cash Equivalents: (a) marketable obligations issued or unconditionally guaranteed by,
and backed by the full faith and credit of, the United States government, maturing within 12 months
of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances
maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case
which are issued by a commercial bank organized under the laws of the United States or any state or
district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of
acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of the types described
in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause
(b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing
within one year of the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in the types of investments referred to
above, has net assets of at least $500,000,000 and has the highest rating obtainable from either
Moody’s or S&P.



     Cash Management Services: any services provided from time to time by Bank of America
or any of its Affiliates to any Borrower or Subsidiary in connection with operating, collections,
payroll, trust, or other depository or disbursement accounts, including automated clearinghouse,
e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft,
depository, information reporting, lockbox and stop payment services.



     CERCLA: the Comprehensive Environmental Response Compensation and Liability Act (42
U.S.C. § 9601 et seq.).



     Change in Law: the occurrence, after the date hereof, of (a) the adoption or taking
effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any Governmental
Authority; or (c) the making or issuance of any request, guideline or directive (whether or not
having the force of law) by any Governmental Authority.



     Change of Control: (a) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), becoming the ultimate “beneficial owner” (as such term is
used in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (a)



5









 




such person or group shall be deemed to have “beneficial ownership” of all shares that any
such person or group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 20% of the securities of any
class or classes of equity interests in Company entitling the holders thereof generally to vote on
the election of the board of directors or comparable body; provided, however, that
the Designated Investor shall be entitled to hold not more than 33.333% of such shares and such
circumstance shall not constitute a “Change of Control” hereunder; (b) a change in the majority of
directors of Company, unless approved by the then majority of directors; or (c) all or
substantially all of a Borrower’s assets are sold or transferred, other than sale or transfer to
another Borrower.




     Claims: all liabilities, obligations, losses, damages, penalties, judgments,
proceedings, interest, costs and expenses of any kind (including remedial response costs,
reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of
the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or
asserted against any Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan
Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to
be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection
of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any
Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of
any Loan Document, in each case including all costs and expenses relating to any investigation,
litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto. Notwithstanding the
foregoing, “Claims” shall not include any liability, obligation, loss, damage, penalty, judgment,
proceeding, interest, cost or expense that does not result from an act or omission by an Obligor or
any of its Affiliates and that is brought by an Indemnitee against any other Indemnitee (excluding
any investigation, litigation or proceeding by an Indemnitee against any Agent Indemnitee).



     Closing Date: as defined in Section 6.1.



     Code: the Internal Revenue Code of 1986.



     Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that now or hereafter
secures (or is intended to secure) any Obligations.



     Commitment: for any Lender, its obligation to make Loans and to participate in LC
Obligations up to the maximum principal amount shown on Schedule 1.1 as of the Closing Date, or as
hereafter determined pursuant to each Assignment and Acceptance to which it is a party, or as may
be reduced pursuant to Section 2.1.4 or increased pursuant to Section 2.2. “Commitments”
means, at any time, the aggregate amount of all Commitments.



     Commitment Increase: as defined in Section 2.2.



     Commitment Increase Effective Date: as defined in Section 2.2.



6









 





     Commitment Termination Date: the earliest to occur of (a) the Termination Date; (b)
the date on which Borrowers terminate the Commitments pursuant to Section 2.1.4; or (c) the date on
which the Commitments are terminated pursuant to Section 11.2.



     Company: as defined in the preamble to this Agreement.



     Compliance Certificate: a certificate, in the form appended hereto as Exhibit E or
such modified form of certificate reasonably requested by Agent, by which Borrowers certify
compliance with Sections 10.2 and 10.3 and provide all necessary covenant calculations thereto.



     Contingent Obligation: any obligation of a Person arising from a guaranty, indemnity
or other assurance of payment or performance of any Debt, lease, preferred stock dividend payable
in cash or other obligation (“primary obligations”) of another obligor (“primary
obligor”) in any manner, whether directly or indirectly, including any obligation of such
Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a
primary obligor; (b) obligation to make take-or-pay or similar payments regardless of
nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary
obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary
obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of
the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability
of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless
the holder of any primary obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or,
if less, the maximum amount for which such Person may be liable under the instrument evidencing the
Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated
liability with respect thereto.



     Credit Judgment: Agent’s judgment exercised in good faith, based upon its
consideration of any factor that it believes (a) could adversely affect the quantity, quality, mix
or value of Collateral (including any Applicable Law that may inhibit collection of an Account),
the enforceability or priority of Agent’s Liens, or the amount that Agent and Lenders could receive
in liquidation of any Collateral; (b) suggests that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material respect; (c)
materially increases the likelihood of any Insolvency Proceeding involving an Obligor; or (d)
creates or could result in a Default or Event of Default. In exercising such judgment, Agent may
consider any factors that could increase the credit risk of lending to Borrowers on the security of
the Collateral.



     CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).



     Debt: as applied to any Person, without duplication, (a) all items that would be
included as liabilities on a balance sheet in accordance with GAAP, including Capital Leases, but
excluding (i) trade payables incurred and being paid in the Ordinary Course of Business, (ii) trade
payables incurred and being paid to Arrow Electronics, Inc., (iii) accrued liabilities, (iv)
deferred revenue and (v) all Debt set forth on Schedule 1.2; (b) all Contingent Obligations; (c)
all reimbursement obligations in connection with letters of credit issued for the account of such



7









 




Person; and (d) in the case of a Borrower, the Obligations. The Debt of a Person shall
include any recourse Debt of any partnership in which such Person is a general partner or joint
venturer.




     Default: an event or condition that, with the lapse of time or giving of notice, would
constitute an Event of Default.



     Default Rate: for any Obligation (including, to the extent permitted by law, interest
not paid when due), 2% plus the interest rate otherwise applicable thereto.



     Defaulting Lender: any Lender that (a) fails to make any payment or provide funds to
Agent or any Borrower as required hereunder or fails otherwise to perform its obligations under any
Loan Document, and such failure is not cured within one Business Day, or (b) is the subject of any
Insolvency Proceeding.



     Deposit Account Control Agreements: the Deposit Account control agreements to be
executed by each institution maintaining a Deposit Account for a Borrower, in favor of Agent, for
the benefit of Secured Parties, as security for the Obligations.



     Designated Account Debtor: that certain Person designated to Agent as the “Designated
Account Debtor” on or before the Closing Date.



     Designated Investor: that certain Person designated to Agent as the “Designated
Investor” on or before the Closing Date.



     Dilution Percent: the percent, determined for Borrowers’ most recent consecutive
twelve fiscal months, equal to (a) bad debt write-downs or write-offs, discounts, returns,
promotions, credits, credit memos and other dilutive items with respect to Accounts,
divided by (b) gross sales.



     Distribution: any declaration or payment of a distribution, interest or dividend on
any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition
or retirement for value of any Equity Interest.



     Dollars: lawful money of the United States.



     Dominion Account: a special account established by Borrowers at Bank of America or
another bank acceptable to Agent, over which Agent has exclusive control for withdrawal purposes.



     Dominion Trigger Period: the period (a) commencing on the day that (i) an Event of
Default occurs or (ii) Availability is less than $20,000,000 and (b) continuing until, during the
preceding 90 consecutive days, no Event of Default has existed and Availability has been greater
than $25,000,000 at all times.



     EBITDA: determined on a consolidated basis for Borrowers and Subsidiaries, net income
from continuing operations as reflected in Company’s quarterly financial results filed with the SEC
and Company’s annual audited financial statements, calculated before (a) interest expense, (b)
provision for income taxes, (c) depreciation and amortization expense, (d) gains or losses



8









 




arising from the sale of capital assets, (e) gains arising from the write-up of assets, (f)
restructuring charges relating to employee severance and similar costs, facility closures and
downsizing, (g) non-cash charges for the write-down of goodwill and other intangible assets, (h)
non-cash charges for stock-based compensation and (i) any extraordinary gains (in each case, to the
extent included in determining net income).




     Effective Date: as defined in the definition of “Permitted Acquisition”.



     Eligible Account: an Account owing to a Borrower that arises in the Ordinary Course of
Business from the sale of goods or rendition of services, is payable in Dollars and is deemed by
Agent, in its Credit Judgment, to be an Eligible Account. Without limiting the foregoing, no
Account shall be an Eligible Account if (a) it is unpaid for more than 60 days after the original
due date, or more than 90 days after the original invoice date; (b) 50% or more of the Accounts
owing by the Account Debtor are not Eligible Accounts under the foregoing clause; (c) when
aggregated with other Accounts owing by (i) the Designated Account Debtor, it exceeds 40% of the
aggregate Eligible Accounts; provided, however, that such percentage shall be
reduced to 20% at any time that the Designated Account Debtor has a corporate credit rating lower
than BBB- by S&P or an issuer rating lower than Baa3 by Moody’s, and (ii) each other Account
Debtor, it exceeds 15% of the aggregate Eligible Accounts; provided, however, that
such percentage shall be increased to 20% at any time that such Account Debtor (A) has publicly
issued debt and (B) has a corporate credit rating equal to or greater than BBB- by S&P or an issuer
rating equal to or greater than Baa3 by Moody’s (or such higher percentage as Agent may establish
for such Account Debtors from time to time); (d) it does not conform with a covenant or
representation herein; (e) it is owing by a creditor or supplier, or is otherwise subject to a
potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense,
chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (f) an
Insolvency Proceeding has been commenced by or against the Account Debtor; or the Account Debtor
has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its
affairs, or is not Solvent; or a Borrower is not able to bring suit or enforce remedies against the
Account Debtor through judicial process; (g) the Account Debtor is organized or has its principal
offices or assets outside the United States or Canada; (h) it is owing by a Government Authority,
unless the Account Debtor is the United States or any department, agency or instrumentality thereof
and the Account has been assigned to Agent in compliance with the Assignment of Claims Act; (i) it
is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any
other Lien; (j) the goods giving rise to it have not been delivered to and accepted by the Account
Debtor, the services giving rise to it have not been accepted by the Account Debtor, or it
otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper or an Instrument of
any kind, or has been reduced to judgment; (l) its payment has been extended, the Account Debtor
has made a partial payment, or it arises from a sale on a cash-on-delivery basis; (m) it arises
from a sale to an Affiliate, from a sale on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment, or other repurchase or return basis, or from a sale to a Person for
personal, family or household purposes; (n) it represents a progress billing or retainage; or (o)
it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the
extent thereof. In calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 90 days old will be excluded.



9









 





     Eligible Assignee: a Person that is (a) a Lender, U.S.-based Affiliate of a Lender or
Approved Fund; (b) any other financial institution approved by Agent and Company (which approval by
Company shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is
made within two Business Days after notice of the proposed assignment), that is organized under the
laws of the United States or any state or district thereof, has total assets in excess of $5
billion, extends asset-based lending facilities in its ordinary course of business and whose
becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code
or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Agent in
its discretion.



     Enforcement Action: any action to enforce any Obligations or Loan Documents or to
realize upon any Collateral (whether by judicial action, self-help, notification of Account
Debtors, exercise of setoff or recoupment, or otherwise).



     Environmental Laws: all Applicable Laws (including all programs, permits and guidance
promulgated by regulatory agencies), relating to public health (but excluding occupational safety
and health, to the extent regulated by OSHA) or the protection or pollution of the environment,
including CERCLA, RCRA and CWA.



     Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a possible violation
of, litigation relating to, or potential fine or liability under any Environmental Law, or with
respect to any Environmental Release, environmental pollution or hazardous materials, including any
complaint, summons, citation, order, claim, demand or request for correction, remediation or
otherwise.



     Environmental Release: a release as defined in CERCLA or under any other Environmental
Law.



     Equity Interest: the interest of any (a) shareholder in a corporation; (b) partner in
a partnership (whether general, limited, limited liability or joint venture); (c) member in a
limited liability company; or (d) other Person having any other form of equity security or
ownership interest.



     ERISA: the Employee Retirement Income Security Act of 1974.



     ERISA Affiliate: any trade or business (whether or not incorporated) under common
control with an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).



     ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by any Obligor or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension



10









 







Plan or Multiemployer Plan; (e) any Obligor or ERISA Affiliate fails to meet any funding
obligations with respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding
waiver; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (g) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.



     Event of Default: as defined in Section 11.



     Exchange Act: the Securities Exchange Act of 1934, together with all rules,
regulations and interpretations thereunder or related thereto.



     Excluded Assets: (a) any obligation or property of any kind due from, owed by or
belonging to any Sanctioned Person or (b) any rights under any lease, instrument, contract or
agreement of any Obligor to the extent that the granting of a security interest therein would,
under the express terms of such lease, instrument, contract or agreement, (i) be prohibited or
restricted or (ii) result in a breach of the terms of, constitute a default under or result in a
termination of any such lease, instrument, contract or agreement governing such right, unless (x)
such prohibition or restriction is not enforceable or is otherwise ineffective under Applicable Law
or (y) consent to such security interest has been obtained from any applicable third party. The
foregoing sentence shall not affect, limit, restrict or impair the grant by any Obligor of a
security interest in any Account or any money or other amounts due and payable to any Obligor or to
become due and payable to any Obligor under any such lease, instrument, contract or agreement
unless such security interest in such Account, money or other amount due and payable is also
specifically prohibited or restricted by the terms of such lease, instrument, contract or other
agreement or such security interest in such Account, money or other amount due and payable would
expressly constitute a default under or would expressly grant a party a termination right under any
such lease, instrument, contract or agreement governing such right unless, in each case, (x) such
prohibition is not enforceable or is otherwise ineffective under Applicable Law or (y) consent to
such security interest has been obtained from any applicable third party; provided
further, that notwithstanding anything to the contrary contained in the foregoing sentence,
the security interests granted herein shall immediately and automatically attach to and the term
“Collateral” shall immediately and automatically include the rights under any such lease,
instrument, contract or agreement and in such Account, money, or other amounts due and payable to
any Obligor at such time as such prohibition, restriction, event of default or termination right
terminates or is waived or consent to such security interest has been obtained from any applicable
third party.



     Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other recipient
of a payment to be made by or on account of any Obligation, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such
recipient is organized or in which its principal office is located or, in the case of any Lender,
in which its applicable Lending Office is located; (b) any branch profits taxes imposed by the
United States or any similar tax imposed by any other jurisdiction in which Company is located; (c)
any backup withholding tax required by the Code to be withheld from amounts



11









 




payable to a Lender that has failed to comply with Section 5.10; and (d) in the case of a
Foreign Lender, any United States withholding tax that is (i) required pursuant to laws in force at
the time such Lender becomes a Lender (or designates a new Lending Office) hereunder, or (ii)
attributable to such Lender’s failure or inability (other than as a result of a Change in Law) to
comply with Section 5.10, except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new Lending Office (or assignment), to receive
additional amounts from Borrowers with respect to such withholding tax.




     Extraordinary Expenses: all costs, expenses or advances that Agent may incur during a
Default or Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor,
including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal,
insurance, manufacture, preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding
(whether instituted by or against Agent, any Lender, any Obligor, any representative of creditors
of an Obligor or any other Person) in any way relating to any Collateral (including the validity,
perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan
Documents, Letters of Credit or Obligations, including any lender liability or other Claims; (c)
the exercise, protection or enforcement of any rights or remedies of Agent in, or the monitoring
of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with
respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any
modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or
Obligations; and (g) Protective Advances. Such costs, expenses and advances include transfer fees,
Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees,
legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions,
accountants’ fees, environmental study fees, wages and salaries paid to employees of any Obligor or
independent contractors in liquidating any Collateral, and travel expenses. Notwithstanding the
foregoing, “Extraordinary Expenses” shall not include any cost, expense or advance arising under
clause (b) above that does not result from an act or omission by an Obligor or any of its
Affiliates and that is brought by an Indemnitee against any other Indemnitee (excluding any action,
arbitration or other proceeding by an Indemnitee against any Agent Indemnitee).



     Federal Funds Rate: (a) the weighted average of interest rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by federal funds brokers on
the applicable Business Day (or on the preceding Business Day, if the applicable day is not a
Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or
(b) if no such rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such
transactions, as determined by Agent.



     Fee Letter: the fee letter agreement between Agent and Borrowers, dated as of the date
hereof.



     Financial Covenant Trigger Period: the period (a) commencing on the day that (i) an
Event of Default occurs or (ii) Availability is less than $15,000,000 and (b) continuing until,
during the preceding 90 consecutive days, no Event of Default has existed and Availability has been
greater than $20,000,000 at all times.



12









 





     Fiscal Quarter: each period of three months, commencing on the first day of a Fiscal
Year.



     Fiscal Year: the fiscal year of Borrowers and Subsidiaries for accounting and tax
purposes, ending on March 31 of each year.



     Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
Borrowers and Subsidiaries for the most recent four Fiscal Quarters, of (a) EBITDA minus
Capital Expenditures (except those financed with Borrowed Money other than Loans) minus
cash taxes paid in such period net of tax amounts refunded in such period on account of such taxes
paid in such period (such net amount of taxes not to be less than $0.00 at any time), to (b) Fixed
Charges.



     Fixed Charges: the sum of (a) interest expense (which shall not include losses
recognized on investments in the Reserve Fund’s Primary Fund, write-off of deferred financing fees
and payments-in-kind), (b) principal payments made on Borrowed Money (other than principal payments
on Loans), (c) Distributions made (other than Distributions made pursuant to Section 10.2.4(a)(ii))
(d) cash payments related to remaining earnout payments in connection with the Innovative Systems
Design, Inc. acquisition, and (e) restructuring charges relating to employee severance and similar
costs, facility closures and downsizing paid in cash.



     FLSA: the Fair Labor Standards Act of 1938.



     Foreign Lender: any Lender that is organized under the laws of a jurisdiction other
than the laws of the United States, or any state or district thereof.



     Foreign Plan: any employee benefit plan or arrangement (a) maintained or contributed
to by any Obligor or Subsidiary that is not subject to the laws of the United States; or (b)
mandated by a government other than the United States for employees of any Obligor or Subsidiary.



     Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation” under
Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on
the assets of such Subsidiary to secure the Obligations would result in material tax liability to
Borrowers.



     Full Payment: with respect to any Obligations, (a) the full and indefeasible cash
payment thereof, including any interest, fees and other charges accruing during an Insolvency
Proceeding (whether or not allowed in the proceeding); (b) if such Obligations are LC Obligations
or inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby
letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral);
and (c) a release of any Claims of Obligors against Agent, Lenders and Issuing Bank arising on or
before the payment date. No Loans shall be deemed to have been paid in full until all Commitments
related to such Loans have expired or been terminated.



     GAAP: generally accepted accounting principles in effect in the United States from
time to time.



13









 





     Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all Governmental
Authorities.



     Governmental Authority: any federal, state, municipal, foreign or other governmental
department, agency, commission, board, bureau, court, tribunal, instrumentality, political
subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or
administrative functions for or pertaining to any government or court, in each case whether
associated with the United States, a state, district or territory thereof, or a foreign entity or
government.



     Guarantor Payment: as defined in Section 5.11.3.



     Guarantors: each Subsidiary of a Borrower and each other Person who guarantees payment
or performance of any Obligations.



     Guaranty: each guaranty agreement executed by a Guarantor in favor of Agent.



     Hedging Agreement: an agreement relating to any swap, cap, floor, collar, option,
forward, cross right or obligation, or combination thereof or similar transaction, with respect to
interest rate, foreign exchange, currency, commodity, credit or equity risk.



     Indemnified Taxes: Taxes other than Excluded Taxes.



     Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Bank
of America Indemnitees.



     Insolvency Proceeding: any case or proceeding commenced by or against a Person under
any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an
order for relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt
adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator
or other custodian for such Person or any part of its Property; or (c) an assignment or trust
mortgage for the benefit of creditors.



     Intellectual Property: all intellectual and similar Property of a Person, including
inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets,
confidential or proprietary information, customer lists, know-how, software and databases; all
embodiments or fixations thereof and all related documentation, applications, registrations and
franchises; all licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.



     Intellectual Property Claim: any claim or assertion (whether in writing, by suit or
otherwise) that a Borrower’s or Subsidiary’s ownership, use, marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property or other Property violates another Person’s
Intellectual Property.



     Interest Period: as defined in Section 3.1.3.



14









 





     Inventory: as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other materials and
supplies of any kind that are or could be used in connection with the manufacture, printing,
packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or
consumed in a Borrower’s business (but excluding Equipment).



     Investment: any acquisition of all or substantially all assets of a Person; any
acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance
or capital contribution to or other investment in a Person.



     IRS: the United States Internal Revenue Service.



     Issuing Bank: Bank of America or an Affiliate of Bank of America.



     Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees,
Affiliates, agents and attorneys.



     LC Application: an application by Company to Issuing Bank for issuance of a Letter of
Credit, in form and substance satisfactory to Issuing Bank.



     LC Conditions: the following conditions necessary for issuance of a Letter of Credit:
(a) each of the conditions set forth in Section 6; (b) after giving effect to such issuance, total
LC Obligations do not exceed the Letter of Credit Subline, no Overadvance exists and, if no Loans
are outstanding, the LC Obligations do not exceed the Borrowing Base (without giving effect to the
LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is
(i) no more than 365 days from issuance, in the case of standby Letters of Credit, (ii) no more
than 120 days from issuance, in the case of documentary Letters of Credit, and (iii) at least 20
Business Days prior to the Termination Date; (d) the Letter of Credit and payments thereunder are
denominated in Dollars; and (e) the purpose and form of the proposed Letter of Credit is
satisfactory to Agent and Issuing Bank in their discretion.



     LC Documents: all documents, instruments and agreements (including LC Requests and LC
Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in connection
with issuance, amendment or renewal of, or payment under, any Letter of Credit.



     LC Obligations: the sum (without duplication) of (a) all amounts owing by Borrowers
for any drawings under Letters of Credit; (b) the stated amount of all outstanding Letters of
Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.



     LC Request: a request for issuance of a Letter of Credit, to be provided by Company to
Issuing Bank, in form satisfactory to Agent and Issuing Bank.



     LC Reserve: the aggregate of all LC Obligations, other than (a) those that have been
Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting charges
owing to the Issuing Bank.



     Lender Indemnitees: Lenders and their officers, directors, employees, Affiliates,
agents and attorneys.



15









 





     Lenders: as defined in the preamble to this Agreement and any other Person who
hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.



     Lending Office: the office designated as such by the applicable Lender at the time it
becomes party to this Agreement or thereafter by notice to Agent and Company.



     Letter of Credit: any standby or documentary letter of credit issued by Issuing Bank
for the account of a Borrower, or any indemnity, guarantee, exposure transmittal memorandum or
similar form of credit support issued by Agent or Issuing Bank for the benefit of a Borrower.



     Letter of Credit Subline: $10,000,000.



     LIBOR: for any Interest Period with respect to a LIBOR Loan, the per annum rate of
interest (rounded up, if necessary, to the nearest 1/8th of 1%), determined by Agent at
approximately 11:00 a.m. (London time) two Business Days prior to commencement of such Interest
Period, for a term comparable to such Interest Period, equal to (a) the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source
designated by Agent); or (b) if BBA LIBOR is not available for any reason, the interest rate at
which Dollar deposits in the approximate amount of the LIBOR Loan would be offered by Bank of
America’s London branch to major banks in the London interbank Eurodollar market. If the Board of
Governors imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be the
foregoing rate, divided by 1 minus the Reserve Percentage.



     LIBOR Loan: each set of Loans that bears interest based on LIBOR having a common
length and commencement of Interest Period.



     License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing, distribution or disposition of
Collateral, any use of Property or any other conduct of its business.



     Licensor: any Person from whom an Obligor obtains the right to use any Intellectual
Property.



     Lien: any Person’s interest in Property securing an obligation owed to, or a judgment
obtained by, such Person, whether such interest is based on common law, statute or contract,
including liens, security interests, pledges, hypothecations, statutory trusts, reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases,
and other title exceptions and encumbrances affecting Property.



     Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which (a)
for any material Collateral located on leased premises, the lessor waives or subordinates any Lien
it may have on the Collateral, and agrees to permit Agent to enter upon the premises and remove the
Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral
held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives
or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its
possession relating to the Collateral as agent for Agent, and agrees to deliver the Collateral to
Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person
acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and



16









 




agrees to deliver the Collateral to Agent upon request; and (d) for any Collateral subject to
a Licensor’s Intellectual Property rights, the Licensor grants to Agent the right, vis-à-vis such
Licensor, to enforce Agent’s Liens with respect to the Collateral, including the right to dispose
of it with the benefit of the Intellectual Property, whether or not a default exists under any
applicable License.




     Loan: a loan made pursuant to Section 2.1, and any Overadvance Loan or Protective
Advance.



     Loan Account: the loan account established by each Lender on its books pursuant to
Section 5.8.



     Loan Documents: this Agreement, Other Agreements and Security Documents.



     Loan Year: each 12 month period commencing on the Closing Date and on each anniversary
of the Closing Date.



     Margin Stock: as defined in Regulation U of the Board of Governors.



     Material Adverse Effect: the effect of any event or circumstance that, taken alone or
in conjunction with other events or circumstances, (a) has or could be reasonably expected to have
a material adverse effect on the business, operations, Properties or condition (financial or
otherwise) of any Obligor, on the value of any material Collateral, on the enforceability of any
Loan Documents, or on the validity or priority of Agent’s Liens on any material Collateral; (b)
impairs the ability of any Obligor to perform any obligations under the Loan Documents, including
repayment of any Obligations; or (c) otherwise impairs the ability of Agent or any Lender to
enforce or collect any Obligations or to realize upon any Collateral.



     Material Contract: any agreement or arrangement to which a Borrower or Subsidiary is
party (other than the Loan Documents) (a) that is deemed to be a material contract under any
securities law applicable to such Obligor, including the Securities Act of 1933; (b) for which
breach, termination, nonperformance or failure to renew could reasonably be expected to have a
Material Adverse Effect; or (c) that relates to Subordinated Debt, or Debt in an aggregate amount
of $1,000,000 or more.



     Moody’s: Moody’s Investors Service, Inc., and its successors.



     Multiemployer Plan: any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated to make
contributions.



     Net Proceeds: with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by a Borrower or Subsidiary in cash from such
disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection
therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt
secured by a Permitted Lien senior to Agent’s Liens on Collateral sold; (c)



17









 




transfer, franchise, income or similar taxes; and (d) reserves for indemnities, until such
reserves are no longer needed.




     Non-Obligor Subsidiary: any Subsidiary that is not an Obligor.



     Notes: each promissory note to be executed by Borrowers in favor of a Lender in the
form of Exhibit A, which shall be in the amount of such Lender’s Commitment and shall evidence the
Loans made by such Lender, or other promissory note executed by a Borrower to evidence any
Obligations.



     Notice of Borrowing: a Notice of Borrowing to be provided by Company to request a
Borrowing of Loans, in form satisfactory to Agent.



     Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be provided
by Company to request a conversion or continuation of any Loans as LIBOR Loans, in form
satisfactory to Agent.



     Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit, (c) interest,
expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligors
under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product Debt, and (g) other
Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents,
whether now existing or hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a
letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or
indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.



     Obligor: each Borrower, Guarantor, or other Person that is liable for payment of any
Obligations or that has granted a Lien in favor of Agent on its assets to secure any Obligations.



     Ordinary Course of Business: the ordinary course of business of any Borrower or
Subsidiary, consistent with its past practices as an information technology (IT) solutions provider
of hardware, software and/or services and independent software vendor, and undertaken in good
faith.



     Organic Documents: with respect to any Person, its charter, certificate or articles of
incorporation, bylaws, codes of regulations, articles of organization, limited liability agreement,
operating agreement, members agreement, shareholders agreement, partnership agreement, certificate
of partnership, certificate of formation, voting trust agreement, or similar agreement or
instrument governing the formation or operation of such Person.



     OSHA: the Occupational Safety and Hazard Act of 1970.



     Other Agreement: each Note, LC Document, Fee Letter, Lien Waiver, Borrowing Base
Certificate, Compliance Certificate, financial statement or report delivered hereunder; or other
document, instrument or agreement (other than this Agreement or a Security Document) now or
hereafter delivered by an Obligor or other Person to Agent or a Lender in connection with any



18









 







transactions relating hereto; provided, however, that documents, instruments
and agreements relating to Bank Products shall not be considered “Other Agreements”.



     Other Taxes: all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made under any Loan Document or
from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.



     Overadvance: as defined in Section 2.1.5.



     Overadvance Loan: a Base Rate Loan made when an Overadvance exists or is caused by the
funding thereof.



     Participant: as defined in Section 13.2.



     Patent Assignment: each patent collateral assignment agreement pursuant to which an
Obligor assigns to Agent, for the benefit of Secured Parties, such Obligor’s interests in its
patents, as security for the Obligations.



     Patriot Act: the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).



     Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.



     PBGC: the Pension Benefit Guaranty Corporation.



     Pension Plan: any employee pension benefit plan (as such term is defined in Section
3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is
sponsored or maintained by any Obligor or ERISA Affiliate or to which the Obligor or ERISA
Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any time during the
preceding five plan years.



     Permitted Acquisition: any acquisition (whether by purchase, merger, consolidation or
otherwise) or series of related acquisitions by any Obligor of all or substantially all or any
significant portion of (a) the assets of a Person or division or line of business or a business
unit of a Person, or (b) the Equity Interests of a Person, which meets each of the following
criteria:



     (i) at the time of and after giving effect to such acquisition, no Default has occurred and is
continuing;



     (ii) the Person being acquired or whose assets, division, line of business or business unit is
being acquired, is engaged in a line of business in which a Borrower is engaged as of, or
immediately prior to, the date on which such acquisition is consummated (the “Effective
Date”), or any similar or related or complementary business, or that is a reasonable extension
or expansion thereof, or any business which provides a service and/or supplies products in



19









 




connection with a line of business in which a Borrower is engaged as of, or immediately prior
to, the Effective Date;




     (iii) the aggregate consideration paid by the Obligors for such acquisition and all other
Permitted Acquisitions consummated after the Effective Date (including for this purpose all
transaction costs and all Debt (including all earn out payments and similar obligations) incurred
or assumed in connection with such acquisition and all such other Permitted Acquisitions or
otherwise reflected in the balance sheet of Company and its Subsidiaries on a consolidated basis)
shall not exceed $35,000,000 over the term of this Agreement;



     (iv) as soon as available, but not less than fifteen (15) Business Days prior to the closing
of such acquisition, the Obligors shall submit to Agent (A) notice of such acquisition; (B) copies
of all business and financial information reasonably requested by Agent; (C) pro forma financial
statements which demonstrate, on a pro forma basis (1) the Fixed Charge Coverage Ratio for the most
recent consecutive four Fiscal Quarters ended immediately prior to such acquisition shall, after
giving effect to such acquisition, be at least 1.15 to 1.00, (2) the average daily amount of
Availability for the 30 day period immediately preceding such acquisition shall, after giving
effect to such acquisition, be at least $25,000,000 and (3) Availability on the date of such
acquisition shall, after giving effect to such acquisition, be at least $25,000,000; and (D) a
certificate of the chief financial officer of Company certifying that, to the best of his or her
knowledge, such pro forma financial statements present fairly in all material respects the
financial condition of Company and its Subsidiaries on a consolidated basis as of the date thereof
after giving effect to such acquisition and setting forth reasonably detailed calculations
demonstrating compliance with the minimum Fixed Charge Coverage Ratio and Availability calculations
set forth in clause (C) above, and which shall include a representation and warranty as to
compliance with each of the other criteria for a “Permitted Acquisition”;



     (v) if the Accounts acquired in connection with such acquisition are proposed to be included
in the determination of any Borrowing Base and Agent elects in its discretion, Agent shall have
conducted an audit and field examination and appraisal of such Accounts to its satisfaction;



     (vi) in connection with an acquisition of the Equity Interests of any Person, all Liens on the
assets of such Person, and on the Equity Interests of such Person, shall be terminated, except for
Permitted Liens, and in connection with an acquisition of the assets of any Person, all Liens on
the assets of such Person shall be terminated, except for Permitted Liens;



     (vii) if such Acquisition is structured as a merger involving an Obligor or any Subsidiary and
a Person that is not a Subsidiary, such Obligor or such Subsidiary will be the surviving
corporation;



     (viii) no Obligor shall, as a result of or in connection with any such Acquisition, assume or
incur any direct or contingent liabilities (whether relating to environmental, tax, litigation, or
other matters) that would be reasonably likely to have a Material Adverse Effect;



20









 





     (ix) in the case of an Acquisition of the Equity Interests of another Person, the board of
directors (or other comparable governing body) of such other Person shall have duly approved such
Acquisition; and



     (x) if, as a result of such investment, a new Subsidiary is formed or acquired, the Obligors
shall comply with all applicable provisions of Section 10.1.9.



     Permitted Asset Disposition: as long as no Default or Event of Default exists and all
Net Proceeds are remitted to Agent, an Asset Disposition that is (a) a sale of Inventory in the
Ordinary Course of Business; (b) a disposition of Equipment that, in the aggregate during any 12
month period, has a fair market or book value (whichever is more) of (i) if no Loans or LC
Obligations are outstanding, $5,000,000 or less and (ii) if any Loans or LC Obligations are
outstanding, $2,500,000 or less; (c) a disposition of Inventory that is obsolete, unmerchantable or
otherwise unsalable in the Ordinary Course of Business; (d) termination of a lease of real or
personal Property that is not necessary for the Ordinary Course of Business, could not reasonably
be expected to have a Material Adverse Effect and does not result from an Obligor’s default; or (e)
approved in writing by Agent and Required Lenders.



     Permitted Contingent Obligations: Contingent Obligations (a) arising from endorsements
of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from
Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or
renewal thereof that does not increase the amount of such Contingent Obligation when extended or
renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or
performance bonds, or other similar obligations; (e) arising from customary indemnification
obligations in favor of purchasers in connection with dispositions of Equipment permitted
hereunder; (f) arising under the Loan Documents; or (g) all earn out payments and similar
obligations incurred or assumed in connection with any Permitted Acquisition.



     Permitted Lien: as defined in Section 10.2.2.



     Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries that
is unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not
exceed $5,000,000 at any time and its incurrence does not violate Section 10.2.3.



     Person: any individual, corporation, limited liability company, partnership, joint
venture, joint stock company, land trust, business trust, unincorporated organization, Governmental
Authority or other entity.



     Plan: any employee benefit plan (as such term is defined in Section 3(3) of ERISA)
established by an Obligor or, with respect to any such plan that is subject to Section 412 of the
Code or Title IV of ERISA, an ERISA Affiliate.



     Pledge Agreement: that certain Pledge Agreement dated as of the date hereof, by and
among Borrowers and Agent, as the same may be amended, modified or replaced in accordance with the
terms hereof.



     Prime Rate: the rate of interest announced by Bank of America from time to time as its
prime rate. Such rate is set by Bank of America on the basis of various factors, including its



21









 







costs and desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above or below such rate. Any
change in such rate announced by Bank of America shall take effect at the opening of business on
the day specified in the public announcement of such change.



     Pro Rata: with respect to any Lender, a percentage (carried out to the ninth decimal
place) determined (a) while Commitments are outstanding, by dividing the amount of such Lender’s
Commitment by the aggregate amount of all Commitments; and (b) at any other time, by dividing the
amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans
and LC Obligations.



     Properly Contested: with respect to any obligation of an Obligor, (a) the obligation
is subject to a bona fide dispute regarding amount or the Obligor’s liability to pay; (b) the
obligation is being properly contested in good faith by appropriate proceedings promptly instituted
and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d)
non-payment could not reasonably be expected to have a Material Adverse Effect, nor result in
forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed on assets of the Obligor,
unless bonded and stayed to the satisfaction of Agent; and (f) if the obligation results from entry
of a judgment or other order, such judgment or order is stayed pending appeal or other judicial
review.



     Property: any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.



     Protective Advances: as defined in Section 2.1.6.



     Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of the
purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 10 days
before or after acquisition of any fixed assets, for the purpose of financing any of the purchase
price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.



     Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only the
fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security
interest under the UCC.



     RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).



     Real Estate: all right, title and interest (whether as owner, lessor or lessee) in any
real Property or any buildings, structures, parking areas or other improvements thereon.



     Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is in
an aggregate principal amount that does not exceed the principal amount of the Debt being extended,
renewed or refinanced; (b) it has a final maturity no sooner than, a weighted average life no less
than, and an interest rate no greater than, the Debt being extended, renewed or refinanced; (c) it
is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed
or refinanced; (d) the representations, covenants and defaults applicable to it are no less
favorable to Borrowers than those applicable to the Debt being extended, renewed or



22









 




refinanced; (e) no additional Lien is granted to secure it; (f) no additional Person is
obligated on such Debt; and (g) upon giving effect to it, no Default or Event of Default exists.




     Refinancing Debt: Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).



     Reimbursement Date: as defined in Section 2.3.2.



     Report: as defined in Section 12.2.3.



     Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.



     Required Lenders: Lenders (subject to Section 4.2) having (a) Commitments in excess of
50% of the aggregate Commitments; and (b) if the Commitments have terminated, Loans in excess of
50% of all outstanding Loans.



     Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up to the
nearest 1/8th of 1%) applicable to member banks under regulations issued from time to time by the
Board of Governors for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency liabilities”).



     Restrictive Agreement: an agreement (other than a Loan Document) that conditions or
restricts the right of any Borrower, Subsidiary or other Obligor to incur or repay Borrowed Money,
to grant Liens on any assets, to declare or make Distributions, to modify, extend or renew any
agreement evidencing Borrowed Money, or to repay any intercompany Debt.



     Restricted Investment: any Investment by an Obligor or Subsidiary, other than (a)
Investments in Subsidiaries to the extent existing on the Closing Date; (b) Investments by (i)
Obligors in other Obligors, (ii) Non-Obligor Subsidiaries in Obligors and (iii) Obligors or
Non-Obligor Subsidiaries in Non-Obligor Subsidiaries in an aggregate amount not to exceed
$3,500,000; provided, that additional Investments by Obligors or Non-Obligor Subsidiaries
in Non-Obligor Subsidiaries in excess of such amount shall be permitted so long as (A) Company
shall deliver pro forma financial statements which demonstrate, on a pro forma basis (1) the
average daily amount of Availability for the 30 day period immediately preceding such additional
Investment and (2) Availability on the date of such additional Investment shall, in each case after
giving effect to such additional Investment, be at least $25,000,000, (B) before and after giving
effect to such additional Investment, no Default or Event of Default shall have occurred and be
continuing and (C) the aggregate amount of all such additional Investments made pursuant to this
proviso shall not exceed $1,500,000; (c) Cash Equivalents that are subject to Agent’s Lien and
control, pursuant to documentation in form and substance satisfactory to Agent; (d) loans and
advances permitted under Section 10.2.7; (e) Permitted Acquisitions; (f) loans consisting of
extensions of credit in the nature of accounts receivable or notes receivable arising from the
grant of trade credit and investments received in satisfaction or partial satisfaction thereof from
financially troubled account debtors in the Ordinary Course of Business; and (g) Hedging
Agreements; provided, however, that such Hedging Agreements shall



23









 




only hedge risks arising in the Ordinary Course of Business and shall not be entered into for
speculative purposes.




     Royalties: all royalties, fees, expense reimbursement and other amounts payable by a
Borrower under a License.



     S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., and its successors.



     Sanctioned Person: a person named on the list of Specially Designated Nationals or
Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets
Control available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise
published from time to time.



     Secured Parties: Agent, Issuing Bank, Lenders and providers of Bank Products.



     Security Documents: the Guaranties, Pledge Agreement, Patent Assignments, Trademark
Security Agreements, Deposit Account Control Agreements, and all other documents, instruments and
agreements now or hereafter securing (or given with the intent to secure) any Obligations.



     Senior Officer: the president, chief executive officer or chief financial officer of a
Borrower or, if the context requires, an Obligor.



     Settlement Report: a report delivered by Agent to Lenders summarizing the Loans and
participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on
a Pro Rata basis in accordance with their Commitments.



     Solvent: as to any Person, such Person (a) owns Property whose fair salable value is
greater than the amount required to pay all of its debts (including contingent, subordinated,
unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as
defined below) is greater than the probable total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is
able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its
business and is sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section
101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any
obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any
conveyance in connection therewith, with actual intent to hinder, delay or defraud either present
or future creditors of such Person or any of its Affiliates. “Fair salable value” means
the amount that could be obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller to an interested
buyer who is willing (but under no compulsion) to purchase.



     Subordinated Debt: Debt incurred by a Borrower that is expressly subordinate and
junior in right of payment to Full Payment of all Obligations, and is on terms (including maturity,
interest, fees, repayment, covenants and subordination) satisfactory to Agent.



24









 





     Subsidiary: any entity at least 50% of whose voting securities or Equity Interests is
owned by a Borrower or any combination of Borrowers (including indirect ownership by a Borrower
through other entities in which such Borrower directly or indirectly owns 50% of the voting
securities or Equity Interests).



     Taxes: all present or future taxes, levies, imposts, duties, deductions, withholdings
(including backup withholding), assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.



     Termination Date: May 5, 2012.



     Trademark Security Agreement: each trademark security agreement pursuant to which an
Obligor grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in
trademarks, as security for the Obligations.



     Transferee: any actual or potential Eligible Assignee, Participant or other Person
acquiring an interest in any Obligations.



     Type: any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same
interest option and, in the case of LIBOR Loans, the same Interest Period.



     UCC: the Uniform Commercial Code as in effect in the State of Illinois or, when the
laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform
Commercial Code of such jurisdiction.



     Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.



     Unused Commitments: on any date, the amount by which the Commitments exceed the sum of
(a) the outstanding aggregate principal amount of all Loans plus (b) the outstanding
aggregate principal amount of all LC Obligations.



     Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.



     Value: for an Account, its face amount, net of any returns, rebates, discounts
(calculated on the shortest terms), credits, allowances or Taxes (including sales, excise or other
taxes) that have been or could be claimed by the Account Debtor or any other Person.



     1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting determinations shall be made,
and all financial statements shall be prepared, in accordance with GAAP applied on a basis
consistent with the most recent audited financial statements of Borrowers delivered to Agent before
the Closing Date and using the same inventory valuation method as used in such financial
statements, except for any change required or permitted by GAAP if Borrowers’ certified public
accountants concur in such change and the change is disclosed to Agent. If at any time any change
in GAAP would affect the computation of any financial covenant or requirement set forth



25









 




in any Loan Document, and either Company or Required Lenders shall so request, the Agent, the
Lenders and Company shall negotiate in good faith to amend such ratio or requirement to preserve
the original intent thereof in light of such change in GAAP; provided, however,
that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and (ii) Company shall provide to the Agent financial
statements and other documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.




     1.3. Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of Illinois from time to time: “Chattel Paper,”
“Commercial Tort Claim,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles,”
“Goods,” “Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting Obligation.”



     1.4. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the
computation of periods of time from a specified date to a later specified date, “from” means “from
and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each Loan Document, the
parties agree that the rule of ejusdem generis shall not be applicable to limit any provision.
Section titles appear as a matter of convenience only and shall not affect the interpretation of
any Loan Document. All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document, instrument or agreement
include any amendments, waivers and other modifications, extensions or renewals (to the extent
permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a
section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e)
any Person include successors and assigns; (f) time of day mean time of day at Agent’s notice
address under Section 14.3.1; or (g) discretion of Agent, Issuing Bank or any Lender mean the sole
and absolute discretion of such Person. All calculations of Value, fundings of Loans, issuances of
Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise
requires, all determinations (including calculations of Borrowing Base and financial covenants)
made from time to time under the Loan Documents shall be made in light of the circumstances
existing at such time. Borrowing Base calculations shall be consistent with historical methods of
valuation and calculation, and otherwise satisfactory to Agent (and not necessarily calculated in
accordance with GAAP). Borrowers shall have the burden of establishing any alleged negligence,
misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents. No
provision of any Loan Documents shall be construed against any party by reason of such party
having, or being deemed to have, drafted the provision. Whenever the phrase “to the best of
Borrowers’ knowledge” or words of similar import are used in any Loan Documents, it means actual
knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she
had engaged in good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which
such phrase relates. All time references in this Agreement and the other Loan Documents shall be
to Eastern



26









 




Daylight or Eastern Standard time, as then in effect, from time to time unless otherwise
indicated.




SECTION 2. CREDIT FACILITIES




     2.1. Commitments.



          2.1.1. Loans. Each Lender agrees, severally on a Pro Rata basis up to its Commitment,
on the terms set forth herein, to make Loans to Borrowers from time to time through the Commitment
Termination Date. The Loans may be repaid and reborrowed as provided herein. In no event shall
Lenders have any obligation to honor a request for a Loan if the unpaid balance of Loans
outstanding at such time (including the requested Loan) would exceed the Borrowing Base.




          2.1.2. Notes. The Loans made by each Lender and interest accruing thereon shall be
evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall
deliver a Note to such Lender.




          2.1.3. Use of Proceeds. The proceeds of Loans shall be used by Borrowers solely (a)
to satisfy existing Debt; (b) to pay fees and transaction expenses associated with the closing of
this credit facility; (c) to pay Obligations in accordance with this Agreement; or (d) for working
capital and other lawful corporate purposes of Borrowers.




          2.1.4. Voluntary Reduction or Termination of Commitments.




          (a) The Commitments shall terminate on the Termination Date, unless sooner terminated in
accordance with this Agreement. Upon at least 30 days prior written notice to Agent at any time
after the first Loan Year, Borrowers may, at their option, terminate the Commitments and this
credit facility. Any notice of termination given by Borrowers shall be irrevocable. On the
Commitment Termination Date, Borrowers shall make Full Payment of all Obligations.




          (b) Borrowers may permanently reduce the Commitments, on a Pro Rata basis for each Lender,
upon at least 10 days prior written notice to Agent, which notice shall specify the amount of the
reduction and shall be irrevocable once given. Each reduction shall be in a minimum amount of
$5,000,000, or an increment of $1,000,000 in excess thereof.




          2.1.5. Overadvances. If the aggregate Loans exceed the Borrowing Base
(“Overadvance”) or the aggregate Commitments at any time, the excess amount shall be
payable by Borrowers on demand by Agent, but all such Loans shall nevertheless constitute
Obligations secured by the Collateral and entitled to all benefits of the Loan Documents. Unless
its authority has been revoked in writing by Required Lenders, Agent may require Lenders to honor
requests for Overadvance Loans and to forbear from requiring Borrowers to cure an Overadvance, (a)
when no other Event of Default is known to Agent, as long as (i) the Overadvance does not continue
for more than 30 consecutive days (and no Overadvance may exist for at least five consecutive days
thereafter before further Overadvance Loans are required), and (ii) the Overadvance is not known by
Agent to exceed 5.0% of the Borrowing Base; and (b) regardless of whether an Event of Default
exists, if Agent discovers an Overadvance not previously known




27









 







by it to exist, as long as from the date of such discovery the Overadvance (i) is not
increased by more than $1,000,000, and (ii) does not continue for more than 30 consecutive days.
In no event shall Overadvance Loans be required that would cause the outstanding Loans and LC
Obligations to exceed the aggregate Commitments. Any funding of an Overadvance Loan or sufferance
of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event of Default caused
thereby. In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section
nor authorized to enforce any of its terms.




          2.1.6. Protective Advances. Without regard to the aggregate Commitments, Agent shall
be authorized, in its discretion, at any time that any conditions in Section 6 are not satisfied,
to make Base Rate Loans (“Protective Advances”) (a) up to an aggregate amount of $2,500,000
outstanding at any time, if Agent deems such Loans necessary or desirable to preserve or protect
Collateral, or to enhance the collectibility or repayment of Obligations; or (b) to pay any other
amounts chargeable to Obligors under any Loan Documents, including costs, fees and expenses. Each
Lender shall participate in each Protective Advance on a Pro Rata basis. Required Lenders may at
any time revoke Agent’s authority to make further Protective Advances by written notice to Agent.
Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate
shall be conclusive.




     2.2. Increase of Commitments. At any time following the Closing Date, Company shall
have the right from time to time and upon not less than thirty (30) days prior notice to Agent to
increase the aggregate amount of Commitments (each such increase, a “Commitment Increase”);
provided, however, that:



          (a) no Default or Event of Default shall have occurred and be continuing or would result from
any such requested Commitment Increase or borrowings thereunder;




          (b) each Commitment Increase shall be in an aggregate principal amount of at least $10,000,000
or a whole multiple of $1,000,000 in excess thereof;




          (c) the aggregate amount of all Commitment Increases made pursuant to this Section shall not
exceed $25,000,000;




          (d) Commitment Increases shall not increase or otherwise affect the Letter of Credit Subline;




          (e) the Commitment of any Lender shall not be increased without the approval of such Lender;




          (f) in connection with each proposed Commitment Increase, Company shall first solicit
Commitment Increases from the Lenders (provided, however, that no Lender shall have
an obligation to commit to all or a portion of the proposed Commitment Increase) and if any Lender
shall decline such solicitation, Company shall solicit Commitment Increases from (i) the remaining
Lenders and then (ii) Eligible Assignees that are reasonably acceptable to both Agent and Company;




28









 








          (g) in connection with each proposed Commitment Increase, Company and the Lenders providing
for such Commitment Increase shall determine the other terms of such Commitment Increase;




          (h) in the event that any existing Lender or any new Lender commits to such requested
Commitment Increase, (i) any new Lender will execute an accession agreement to this Agreement, (ii)
the Commitment of any existing Lender that has committed to provide any of the requested Commitment
Increase shall be increased, (iii) the Pro Rata share of each Lender shall be adjusted, (iv)
Borrowers shall make such borrowings and repayments as shall be necessary to effect the
reallocation of the Commitments (and Borrowers shall pay any breakage costs in connection
therewith) and (v) other changes shall be made to the Loan Documents as may be necessary to reflect
the aggregate amount, if any, by which the Lenders have agreed to increase their respective
Commitments or make new commitments in response to Company’s request for a Commitment Increase
pursuant to this Section and which other changes do not adversely affect the rights of those
Lenders not participating in the requested Commitment Increase;




          (i) if the aggregate amount of all Commitments is increased in accordance with this Section,
Agent and Company shall determine the effective date (the “Commitment Increase
Effective Date”) and the final allocation of such increase. Agent shall promptly notify
Company and the Lenders of the final allocation of such increase and Commitment Increase Effective
Date; and




          (j) each Commitment Increase shall be subject to all of the terms and conditions of this
Agreement, and shall be secured by the Collateral and guaranteed by Guarantors pursuant to the
terms hereof.




2.3. Letter of Credit Facility.




          2.3.1. Issuance of Letters of Credit. Issuing Bank agrees to issue Letters of Credit
from time to time until 30 days prior to the Termination Date (or until the Commitment Termination
Date, if earlier), on the terms set forth herein, including the following:




          (a) Each Borrower acknowledges that Issuing Bank’s willingness to issue any Letter of Credit
is conditioned upon Issuing Bank’s receipt of a LC Application with respect to the requested Letter
of Credit, as well as such other instruments and agreements as Issuing Bank may customarily require
for issuance of a letter of credit of similar type and amount. Issuing Bank shall have no
obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of issuance; (ii) each LC
Condition is satisfied; and (iii) if a Defaulting Lender exists, such Lender or Borrowers have
entered into arrangements satisfactory to Agent and Issuing Bank to eliminate any funding risk
associated with the Defaulting Lender. If Issuing Bank receives written notice from a Lender at
least five Business Days before issuance of a Letter of Credit that any LC Condition has not been
satisfied, Issuing Bank shall have no obligation to issue the requested Letter of Credit (or any
other) until such notice is withdrawn in writing by that Lender or until Required Lenders have
waived such condition in accordance with this Agreement. Prior to receipt of any such notice,
Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.




29









 








          (b) Letters of Credit may be requested by a Borrower only (i) to support obligations of such
Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent and
Lenders may approve from time to time in writing. The renewal or extension of any Letter of Credit
shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC
Application shall be required at the discretion of Issuing Bank.




          (c) Borrowers assume all risks of the acts, omissions or misuses of any Letter of Credit by
the beneficiary. In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank
or any Lender shall be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition, packing, value or delivery
of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Documents or of any endorsements thereon; the time, place,
manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions,
delay, default or fraud by any shipper or other Person in connection with any goods, shipment or
delivery; any breach of contract between a shipper or vendor and a Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the
misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any
consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender, including
any act or omission of a Governmental Authority. The rights and remedies of Issuing Bank under the
Loan Documents shall be cumulative. Issuing Bank shall be fully subrogated to the rights and
remedies of each beneficiary whose claims against Borrowers are discharged with proceeds of any
Letter of Credit.




          (d) In connection with its administration of and enforcement of rights or remedies under any
Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully
protected in acting, upon any certification, documentation or communication in whatever form
believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or
made by a proper Person. Issuing Bank may consult with and employ legal counsel, accountants and
other experts to advise it concerning its obligations, rights and remedies, and shall be entitled
to act upon, and shall be fully protected in any action taken in good faith reliance upon, any
advice given by such experts. Issuing Bank may employ agents and attorneys-in-fact in connection
with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the
negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.




     2.3.2. Reimbursement; Participations.



          (a) If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall
pay to Issuing Bank, on the same day (“Reimbursement Date”), the amount paid by Issuing
Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Loans
from the Reimbursement Date until payment by Borrowers. The obligation of Borrowers to reimburse
Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional,
irrevocable, and joint and several, and shall be paid without regard to




30









 







any lack of validity or enforceability of any Letter of Credit or the existence of any claim,
setoff, defense or other right that Borrowers may have at any time against the beneficiary.
Whether or not Company submits a Notice of Borrowing, Borrowers shall be deemed to have requested a
Borrowing of Base Rate Loans in an amount necessary to pay all amounts due Issuing Bank on any
Reimbursement Date and each Lender agrees to fund its Pro Rata share of such Borrowing whether or
not the Commitments have terminated, an Overadvance exists or is created thereby, or the conditions
in Section 6 are satisfied.




          (b) Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Issuing Bank, without recourse or warranty, an undivided Pro Rata
interest and participation in all LC Obligations relating to the Letter of Credit. If Issuing Bank
makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the
Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one
Business Day) and unconditionally pay to Agent, for the benefit of Issuing Bank, the Lender’s Pro
Rata share of such payment. Upon request by a Lender, Issuing Bank shall furnish copies of any
Letters of Credit and LC Documents in its possession at such time.




          (c) The obligation of each Lender to make payments to Agent for the account of Issuing Bank in
connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional
and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever,
and shall be made in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft, certificate or other
document presented under a Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any
respect; or the existence of any setoff or defense that any Obligor may have with respect to any
Obligations. Issuing Bank does not assume any responsibility for any failure or delay in
performance or any breach by any Borrower or other Person of any obligations under any LC
Documents. Issuing Bank does not make to Lenders any express or implied warranty, representation
or guaranty with respect to the Collateral, LC Documents or any Obligor. Issuing Bank shall not be
responsible to any Lender for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any
LC Documents; the validity, genuineness, enforceability, collectibility, value or sufficiency of
any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of any Obligor.




          (d) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action
taken or omitted to be taken in connection with any LC Documents except as a result of its gross
negligence or willful misconduct. Issuing Bank shall not have any liability to any Lender if
Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives
written instructions from Required Lenders.




          2.3.3. Cash Collateral. If any LC Obligations, whether or not then due or payable,
shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that
Availability is less than zero, (c) after the Commitment Termination Date, or (d) within 20
Business Days prior to the Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s



31









 







request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to
Issuing Bank the amount of all other LC Obligations. Borrowers shall, on demand by Issuing Bank or
Agent from time to time, Cash Collateralize the LC Obligations of any Defaulting Lender. If
Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may (and shall upon
direction of Agent) advance, as Loans, the amount of the Cash Collateral required (whether or not
the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are
satisfied).




SECTION 3. INTEREST, FEES AND CHARGES




     3.1. Interest.



          3.1.1. Rates and Payment of Interest.




          (a) The Obligations (other than Bank Products) shall bear interest (i) if a Base Rate Loan, at
the Base Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR Loan, at
LIBOR for the applicable Interest Period, plus the Applicable Margin; and (iii) if any other
Obligation (other than Bank Products) (including, to the extent permitted by law, interest not paid
when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate
Loans. Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by Borrowers. If a Loan is repaid on the same day made, one day’s interest
shall accrue.




          (b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of
Default if Required Lenders in their discretion so elect, Obligations shall bear interest at the
Default Rate (whether before or after any judgment). Each Borrower acknowledges that the cost and
expense to Lenders due to an Event of Default are difficult to ascertain and that the Default Rate
is a fair and reasonable estimate to compensate Lenders for this.




          (c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of
each month; (ii) on any date of prepayment, with respect to the principal amount of Loans being
prepaid; and (iii) on the Commitment Termination Date. Interest accrued on any other Obligations
shall be due and payable as provided in the Loan Documents and, if no payment date is specified,
shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default
Rate shall be due and payable on demand.




          3.1.2. Application of LIBOR to Outstanding Loans.




          (a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans to, or to continue any
LIBOR Loan at the end of its Interest Period as, a LIBOR Loan. During any Default or Event of
Default, Agent may (and shall at the direction of Required Lenders) declare that no Loan may be
made, converted or continued as a LIBOR Loan.




          (b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans, Company shall give
Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Days
before the requested conversion or continuation date. Promptly after




32









 







receiving any such notice, Agent shall notify each Lender thereof. Each Notice of
Conversion/Continuation shall be irrevocable, and shall specify the amount of Loans to be converted
or continued, the conversion or continuation date (which shall be a Business Day), and the duration
of the Interest Period (which shall be deemed to be 30 days if not specified). If, upon the
expiration of any Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to
deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Loans.




          3.1.3. Interest Periods. In connection with the making, conversion or continuation of
any LIBOR Loans, Borrowers shall select an interest period (“Interest Period”) to apply,
which interest period shall be 30, 60 or 90 days; provided, however, that:




          (a) the Interest Period shall commence on the date the Loan is made or continued as, or
converted into, a LIBOR Loan, and shall expire on the numerically corresponding day in the calendar
month at its end;




          (b) if any Interest Period commences on a day for which there is no corresponding day in the
calendar month at its end or if such corresponding day falls after the last Business Day of such
month, then the Interest Period shall expire on the last Business Day of such month; and if any
Interest Period would expire on a day that is not a Business Day, the period shall expire on the
next Business Day; and




          (c) no Interest Period shall extend beyond the Termination Date.




          3.1.4. Interest Rate Not Ascertainable. If Agent shall determine that on any date for
determining LIBOR, due to any circumstance affecting the London interbank market, adequate and fair
means do not exist for ascertaining such rate on the basis provided herein, then Agent shall
immediately notify Borrowers of such determination. Until Agent notifies Borrowers that such
circumstance no longer exists, the obligation of Lenders to make LIBOR Loans shall be suspended,
and no further Loans may be converted into or continued as LIBOR Loans.




     3.2. Fees.



          3.2.1. Unused Line Fee. Borrowers shall pay to Agent for the Pro Rata benefit of
Lenders, on the first day of each calendar month, a fee equal to the average daily Unused
Commitment for the immediately preceding calendar month multiplied by the
Applicable Unused Commitment Margin in effect on such date; provided, however, that
if the Commitments are terminated on a day other than the first day of a calendar month, then any
such fee payable for the calendar month in which termination shall occur shall be paid on the
effective date of such termination.




          3.2.2. LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata benefit
of Lenders, a fee equal to the Applicable Margin in effect for LIBOR Loans times the average daily
stated amount of Letters of Credit, which fee shall be payable monthly in arrears, on the first day
of each month; (b) to Agent, for its own account, a fronting fee equal to 0.125% per annum on the
stated amount of each Letter of Credit, which fee shall be payable monthly in arrears, on the first
day of each month; and (c) to Issuing Bank, for its own account, all




33









 







customary charges associated with the issuance, amending, negotiating, payment, processing,
transfer and administration of Letters of Credit, which charges shall be paid as and when incurred.
During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.




          3.2.3. Other Fees. Borrowers shall pay to Agent such fees as are described in the Fee
Letter.




     3.3. Computation of Interest, Fees, Yield Protection. All interest, as well as fees
and other charges calculated on a per annum basis, shall be computed for the actual days elapsed,
based on a year of 360 days. Each determination by Agent of any interest, fees or interest rate
hereunder shall be final, conclusive and binding for all purposes, absent manifest error. All fees
shall be fully earned when due and shall not be subject to rebate, refund or proration. All fees
payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be,
interest or any other charge for the use, forbearance or detention of money. A certificate as to
amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Company by Agent
or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes,
absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days
following receipt of the certificate.



     3.4. Reimbursement Obligations. Borrowers shall reimburse Agent for all Extraordinary
Expenses. Borrowers shall also reimburse Agent for all reasonable out of pocket legal, accounting,
appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a)
negotiation and preparation of any Loan Documents, including any amendment or other modification
thereof; (b) administration of and actions relating to any Collateral, Loan Documents and
transactions contemplated thereby, including any actions taken to perfect or maintain priority of
Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify
Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection, audit or appraisal
with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party.
If, for any reason (including inaccurate reporting on financial statements or a Compliance
Certificate), it is determined that a higher Applicable Margin should have applied to a period than
was actually applied, then the proper margin shall be applied retroactively and Borrowers shall
immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal to the difference
between the amount of interest and fees that would have accrued using the proper margin and the
amount actually paid. All amounts payable by Borrowers under this Section shall be due on demand.



     3.5. Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or
its applicable Lending Office to make, maintain or fund LIBOR Loans, or to determine or charge
interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on
the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to Agent, any obligation of such Lender to
make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended until
such Lender notifies Agent that the circumstances giving rise to such determination no longer
exist. Upon delivery of such notice, Borrowers shall prepay or, if applicable, convert all LIBOR
Loans of such Lender to Base Rate Loans, either on the last day of



34









 




the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR
Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR
Loans. Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the
amount so prepaid or converted.




     3.6. Inability to Determine Rates. If Required Lenders notify Agent for any reason in
connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Loan
that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market
for the applicable amount and Interest Period of such Loan, (b) adequate and reasonable means do
not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for the requested
Interest Period does not adequately and fairly reflect the cost to such Lenders of funding such
Loan, then Agent will promptly so notify Company and each Lender. Thereafter, the obligation of
Lenders to make or maintain LIBOR Loans shall be suspended until Agent (upon instruction by
Required Lenders) revokes such notice. Upon receipt of such notice, Company may revoke any pending
request for a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing that, will be
deemed to have submitted a request for a Base Rate Loan.



     3.7. Increased Costs; Capital Adequacy.



          3.7.1. Change in Law. If any Change in Law shall:




          (a) impose modify or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in LIBOR) or
Issuing Bank;




          (b) subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document,
Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to
such Lender or Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 5.9 and the imposition of, or any change in the rate of, any Excluded Tax payable by
such Lender or Issuing Bank); or




          (c) impose on any Lender or Issuing Bank or the London interbank market any other condition,
cost or expense affecting any Loan, Loan Document, Letter of Credit or participation in LC
Obligations;



and the result thereof shall be to increase the cost to such Lender of making or maintaining any
LIBOR Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to
such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the
amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of
principal, interest or any other amount) then, upon request of such Lender or Issuing Bank,
Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts
as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred
or reduction suffered; provided, however, that any such additional amount shall be
applicable to all customers of such Lender or Issuing Bank under loan facilities of the types
provided under this Agreement.




35









 








          3.7.2. Capital Adequacy. If any Lender or Issuing Bank determines that any Change in
Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or
Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect
of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a
consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments, Loans, Letters of
Credit or participations in LC Obligations, to a level below that which such Lender, Issuing Bank
or holding company could have achieved but for such Change in Law (taking into consideration such
Lender’s, Issuing Bank’s and holding company’s policies with respect to capital adequacy), then
from time to time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such
additional amount or amounts as will compensate it or its holding company for any such reduction
suffered; provided, however, that any such additional amount shall be applicable to
all customers of such Lender or Issuing Bank under loan facilities of the types provided under this
Agreement.




          3.7.3. Compensation. Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of its right to demand
such compensation, but Borrowers shall not be required to compensate a Lender or Issuing Bank for
any increased costs incurred or reductions suffered more than nine months prior to the date that
the Lender or Issuing Bank notifies Company of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to include the period
of retroactive effect thereof).




     3.8. Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrowers are required to pay additional amounts with respect
to a Lender under Section 5.9, then such Lender shall use reasonable efforts to designate a
different Lending Office or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment
(a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the
future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to it. Borrowers shall pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or assignment.



     3.9. Funding Losses. If for any reason (other than default by a Lender) (a) any
Borrowing of, or conversion to or continuation of, a LIBOR Loan does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not
withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day other than the end of
its Interest Period, or (c) Borrowers fail to repay a LIBOR Loan when required hereunder, then
Borrowers shall pay to Agent its customary administrative charge and to each Lender all losses and
expenses that it sustains as a consequence thereof, including loss of anticipated profits and any
loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate
deposits of matching funds. Lenders shall not be required to purchase Dollar deposits in the
London interbank market or any other offshore Dollar market to fund any LIBOR Loan, but the
provisions hereof shall be deemed to apply as if each Lender had purchased such deposits to fund
its LIBOR Loans.



36









 





     3.10. Maximum Interest. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by Applicable Law (“maximum rate”). If
Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess
interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid
principal, refunded to Borrowers. In determining whether the interest contracted for, charged or
received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by
Applicable Law, (a) characterize any payment that is not principal as an expense, fee or premium
rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.



SECTION 4. LOAN ADMINISTRATION




     4.1. Manner of Borrowing and Funding Loans.



          4.1.1. Notice of Borrowing.




          (a) Whenever Borrowers desire funding of a Borrowing of Loans, Company shall give Agent a
Notice of Borrowing. Such notice must be received by Agent no later than 11:00 a.m. (i) on the
Business Day of the requested funding date, in the case of Base Rate Loans, and (ii) at least three
Business Days prior to the requested funding date, in the case of LIBOR Loans. Notices received
after 11:00 a.m. shall be deemed received on the next Business Day. Each Notice of Borrowing shall
be irrevocable and shall specify (A) the amount of the Borrowing, (B) the requested funding date
(which must be a Business Day), (C) whether the Borrowing is to be made as Base Rate Loans or LIBOR
Loans, and (D) in the case of LIBOR Loans, the duration of the applicable Interest Period (which
shall be deemed to be 30 days if not specified).




          (b) Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations
(whether principal, interest, fees or other charges, including Extraordinary Expenses, LC
Obligations, Cash Collateral and Bank Product Debt) shall be deemed to be a request for Base Rate
Loans on the due date, in the amount of such Obligations. The proceeds of such Loans shall be
disbursed as direct payment of the relevant Obligation. In addition, during any Dominion Trigger
Period, Agent may, at its option, charge such Obligations against any operating, investment or
other account of a Borrower maintained with Agent or any of its Affiliates.




          (c) If Borrowers establish a controlled disbursement account with Agent or any Affiliate of
Agent, then the presentation for payment of any check or other item of payment drawn on such
account at a time when there are insufficient funds to cover it shall be deemed to be a request for
Base Rate Loans on the date of such presentation, in the amount of the check and items presented
for payment. The proceeds of such Loans may be disbursed directly to the controlled disbursement
account or other appropriate account.




          4.1.2. Fundings by Lenders. Each Lender shall timely honor its Commitment by funding
its Pro Rata share of each Borrowing of Loans that is properly requested hereunder.




37









 







Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a
Borrowing) by 12:00 noon on the proposed funding date for Base Rate Loans or by 3:00 p.m. at least
two Business Days before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent such
Lender’s Pro Rata share of the Borrowing to the account specified by Agent in immediately available
funds not later than 2:00 p.m. on the requested funding date, unless Agent’s notice is received
after the times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m.
on the next Business Day. Subject to its receipt of such amounts from Lenders, Agent shall
disburse the proceeds of the Loans as directed by Company. Unless Agent shall have received (in
sufficient time to act) written notice from a Lender that it does not intend to fund its Pro Rata
share of a Borrowing, Agent may assume that such Lender has deposited or promptly will deposit its
share with Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s share
of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then
Borrowers agree to repay to Agent on demand the amount of such share, together with interest
thereon from the date disbursed until repaid, at the rate applicable to the Borrowing.




          4.1.3. Settlement.




          (a) [Reserved].




          (b) To facilitate administration of the Loans, Lenders and Agent agree (which agreement is
solely among them, and not for the benefit of or enforceable by any Borrower) that settlement among
them with respect to Loans may take place on a date determined from time to time by Agent, which
shall occur at least once each week. On each settlement date, settlement shall be made with each
Lender in accordance with the Settlement Report delivered by Agent to Lenders. Each Lender’s
obligation to make settlements with Agent is absolute and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have terminated, an Overadvance
exists or the conditions in Section 6 are satisfied.




          4.1.4. Notices. Each Borrower authorizes Agent and Lenders to extend, convert or
continue Loans, effect selections of interest rates, and transfer funds to or on behalf of
Borrowers based on telephonic or e-mailed instructions. Borrowers shall confirm each such request
by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if
applicable, but if it differs in any material respect from the action taken by Agent or Lenders,
the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any
liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its
understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent
or any Lender to be a person authorized to give such instructions on a Borrower’s behalf.




     4.2. Defaulting Lender. Agent may (but shall not be required to), in its discretion,
retain any payments or other funds received by Agent that are to be provided to a Defaulting Lender
hereunder, and may apply such funds to such Lender’s defaulted obligations or readvance the funds
to Borrowers in accordance with this Agreement. The failure of any Lender to fund a Loan, to make
any payment in respect of LC Obligations or to otherwise perform its obligations hereunder shall
not relieve any other Lender of its obligations, and no Lender shall be



38









 




responsible for default by another Lender. Lenders and Agent agree (which agreement is solely
among them, and not for the benefit of or enforceable by any Borrower) that, solely for purposes of
determining a Defaulting Lender’s right to vote on matters relating to the Loan Documents and to
share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed
to be a “Lender” until all its defaulted obligations have been cured.




     4.3. Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of LIBOR
Loans when made shall be in a minimum amount of $1,000,000, plus any increment of $500,000 in
excess thereof.



     No more than six Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans
having the same length and beginning date of their Interest Periods shall be aggregated together
and considered one Borrowing for this purpose.



     Upon determining LIBOR for any Interest Period requested by Borrowers, Agent shall promptly
notify Borrowers thereof by telephone or electronically and, if requested by Borrowers, shall
confirm any telephonic notice in writing.



     4.4. Borrower Agent. Each Borrower hereby designates Company as its representative
and agent for all purposes under the Loan Documents, including requests for Loans and Letters of
Credit, designation of interest rates, delivery or receipt of communications, preparation and
delivery of Borrowing Base and financial reports, receipt and payment of Obligations, requests for
waivers, amendments or other accommodations, actions under the Loan Documents (including in respect
of compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender.
Company hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon, and
shall be fully protected in relying upon, any notice or communication (including any notice of
borrowing) delivered by Company on behalf of any Borrower. All notices and other forms of
communication with a Borrower hereunder shall be provided to Company on behalf of such Borrower.
Each of Agent, Issuing Bank and Lenders shall deal exclusively with Company for any or all purposes
under the Loan Documents. Each Borrower agrees that any notice, election, communication,
representation, agreement or undertaking made on its behalf by Company shall be binding upon and
enforceable against it.



     4.5. One Obligation. The Loans, LC Obligations and other Obligations shall constitute
one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document)
shall be secured by Agent’s Lien upon all Collateral; provided, however, that Agent
and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against,
each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.



     4.6. Effect of Termination. On the effective date of any termination of the
Commitments, all Obligations (other than contingent indemnity obligations with respect to then
unasserted claims) shall be immediately due and payable, and any Lender may terminate its and its
Affiliates’ Bank Products (including, only with the consent of Agent, any Cash Management
Services). All undertakings of Borrowers contained in the Loan Documents shall survive any
termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies
under the Loan Documents until Full Payment of the Obligations (other than contingent



39









 




indemnity obligations with respect to then unasserted claims). Notwithstanding Full Payment
of the Obligations, Agent shall not be required to terminate its Liens in any Collateral unless,
with respect to any damages Agent may incur as a result of the dishonor or return of Payment Items
applied to Obligations, Agent receives (a) a written agreement, executed by Borrowers and any
Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Agent
and Lenders from any such damages; or (b) such Cash Collateral as Agent, in its discretion, deems
necessary to protect against any such damages. Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10,
12, 14.2 and this Section, and the obligation of each Obligor and Lender with respect to each
indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any
release relating to this credit facility.




SECTION 5. PAYMENTS




     5.1. General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for)
any Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any
payment after such time shall be deemed made on the next Business Day. Any payment of a LIBOR Loan
prior to the end of its Interest Period shall be accompanied by all amounts due under Section 3.9.
Any prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR Loans, unless a
LIBOR Loan is then required to be paid in which case the prepayment shall be applied first to such
LIBOR Loan.



     5.2. Repayment of Loans. Loans shall be due and payable in full on the Termination
Date, unless payment is sooner required hereunder. Loans may be prepaid from time to time, without
penalty or premium. If any Asset Disposition includes the disposition of Accounts, then Net
Proceeds equal to the greater of (a) the net book value of such Accounts or (b) the reduction in
the Borrowing Base upon giving effect to such disposition, shall be applied to the Loans;
provided, however, that no such application shall be required if, both immediately
before and after giving effect to any such Asset Disposition, no Dominion Trigger Period exists.
Notwithstanding anything herein to the contrary, if an Overadvance exists, Borrowers shall, on the
sooner of Agent’s demand or the first Business Day after any Borrower has knowledge thereof, repay
the outstanding Loans in an amount sufficient to reduce the principal balance of Loans to the
Borrowing Base.



     5.3. [Reserved].



     5.4. Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan
Documents or, if no payment date is specified, on demand.



     5.5. Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any Obligations. If any
payment by or on behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or Agent,
Issuing Bank or any Lender exercises a right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or
such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the



40









 




extent of such recovery, the Obligation originally intended to be satisfied, and all Liens,
rights and remedies relating thereto, shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred.




     5.6. Post-Default Allocation of Payments.



          5.6.1. Allocation. Notwithstanding anything herein to the contrary, during any
Dominion Trigger Period or at such time following the exercise of remedies pursuant to Section
11.2(a) or (b), monies to be applied to the Obligations, whether arising from payments by Obligors,
realization on Collateral, setoff or otherwise, shall be allocated as follows:




          (a) first, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;




          (b) second, to all amounts owing to Issuing Bank on LC Obligations;




          (c) third, to all Obligations constituting fees (excluding amounts relating to Bank
Products);




          (d) fourth, to all Obligations constituting interest (excluding amounts relating to
Bank Products);




          (e) fifth, to provide Cash Collateral for outstanding Letters of Credit;




          (f) sixth, to all other Obligations, other than Bank Product Debt; and




          (g) last, to Bank Product Debt.



Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof
and then to the next category. If amounts are insufficient to satisfy a category, they shall be
applied on a pro rata basis among the Obligations in the category. Amounts distributed with
respect to any Bank Product Debt shall be the lesser of the applicable Bank Product Amount last
reported to Agent or the actual Bank Product Debt as calculated by the methodology reported to
Agent for determining the amount due. Agent shall have no obligation to calculate the amount to be
distributed with respect to any Bank Product Debt, but may rely upon written notice of the amount
(setting forth a reasonably detailed calculation) from the Secured Party. In the absence of such
notice, Agent may assume the amount to be distributed is the Bank Product Amount last reported to
it. The allocations set forth in this Section are solely to determine the rights and priorities of
Agent and Lenders as among themselves, and may be changed by agreement among them without the
consent of any Obligor. This Section is not for the benefit of or enforceable by any Borrower.




          5.6.2. Erroneous Application. Agent shall not be liable for any application of
amounts made by it in good faith and, if any such application is subsequently determined to have
been made in error, the sole recourse of any Lender or other Person to which such amount should
have been made shall be to recover the amount from the Person that actually received it (and, if
such amount was received by any Lender, such Lender hereby agrees to return it).




41









 








     5.7. Application of Payments. The ledger balance in the main Dominion Account as of
the end of a Business Day shall be applied to the Obligations at the beginning of the next Business
Day, during any Dominion Trigger Period. If, as a result of such application, a credit balance
exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to
Borrowers as long as no Default or Event of Default exists. At any time Section 5.6.1 applies,
each Borrower irrevocably waives the right to direct the application of any payments or Collateral
proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and reapply
same against the Obligations, in such manner as Agent deems advisable.



     5.8. Loan Account; Account Stated.



          5.8.1. Loan Account. Agent shall maintain in accordance with its usual and customary
practices an account or accounts (“Loan Account”) evidencing the Debt of Borrowers
resulting from each Loan or issuance of a Letter of Credit from time to time. Any failure of Agent
to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise
affect the obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a single
Loan Account in the name of Company, and each Borrower confirms that such arrangement shall have no
effect on the joint and several character of its liability for the Obligations.




          5.8.2. Entries Binding. Entries made in the Loan Account shall constitute presumptive
evidence of the information contained therein. If any information contained in the Loan Account is
provided to or inspected by any Person, then such information shall be conclusive and binding on
such Person for all purposes absent manifest error, except to the extent such Person notifies Agent
in writing within 30 days after receipt or inspection that specific information is subject to
dispute.




     5.9. Taxes.



          5.9.1. Payments Free of Taxes. All payments by Obligors of Obligations shall be free
and clear of and without reduction for any Taxes. If Applicable Law requires any Obligor or Agent
to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or
deduction shall be based on information provided pursuant to Section 5.10 and Agent shall pay the
amount withheld or deducted to the relevant Governmental Authority. If the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers
shall be increased so that Agent, Lender or Issuing Bank, as applicable, receives an amount equal
to the sum it would have received if no such withholding or deduction (including deductions
applicable to additional sums payable under this Section) had been made. Without limiting the
foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.




          5.9.2. Payment. Borrowers shall indemnify, hold harmless and reimburse (within 10
days after demand therefor) Agent, Lenders and Issuing Bank for any Indemnified Taxes or Other
Taxes (including those attributable to amounts payable under this Section) withheld or deducted by
any Obligor or Agent, or paid by Agent, any Lender or Issuing Bank, with respect to any
Obligations, Letters of Credit or Loan Documents, whether or not such Taxes were properly asserted
by the relevant Governmental Authority, and including all penalties,



42









 






interest and reasonable expenses relating thereto, as well as any amount that a Lender or
Issuing Bank fails to pay indefeasibly to Agent under Section 5.10. A certificate as to the amount
of any such payment or liability delivered to Company by Agent, or by a Lender or Issuing Bank
(with a copy to Agent), shall be conclusive, absent manifest error. As soon as practicable after
any payment of Taxes by a Borrower in accordance with the terms of any indemnification hereunder,
Company shall deliver to Agent a receipt from the Governmental Authority or other evidence of
payment satisfactory to Agent.




     5.10. Lender Tax Information.



          5.10.1. Status of Lenders. Each Lender shall deliver documentation and information to
Agent and Company, at the times and in form required by Applicable Law or reasonably requested by
Agent or Company, sufficient to permit Agent or Borrowers to determine (a) whether or not payments
made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of
withholding or deduction, and (c) such Lender’s entitlement to any available exemption from, or
reduction of, applicable Taxes for such payments or otherwise to establish such Lender’s status for
withholding tax purposes in the applicable jurisdiction.




          5.10.2. Documentation. If a Borrower is resident for tax purposes in the United
States, any Lender that is a “United States person” within the meaning of section 7701(a)(30) of
the Code shall deliver to Agent and Company IRS Form W-9 or such other documentation or information
prescribed by Applicable Law or reasonably requested by Agent or Company to determine whether such
Lender is subject to backup withholding or information reporting requirements. If any Foreign
Lender is entitled to any exemption from or reduction of withholding tax for payments with respect
to the Obligations, it shall deliver to Agent and Company, on or prior to the date on which it
becomes a Lender hereunder (and from time to time thereafter upon request by Agent or Company, but
only if such Foreign Lender is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI;
(c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, IRS
Form W-8BEN and a certificate showing such Foreign Lender is not (i) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning
of section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in
section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for
claiming exemption from or a reduction in withholding tax, together with such supplementary
documentation necessary to allow Agent and Borrowers to determine the withholding or deduction
required to be made.




          5.10.3. Lender Obligations. Each Lender and Issuing Bank shall promptly notify
Borrowers and Agent of any change in circumstances that would change any claimed Tax exemption or
reduction. Each Lender and Issuing Bank shall indemnify, hold harmless and reimburse (within 10
days after demand therefor) Borrowers and Agent for any Taxes, losses, claims, liabilities,
penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted
against a Borrower or Agent by any Governmental Authority due to such Lender’s or Issuing Bank’s
failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by
it pursuant to this Section. Each Lender and Issuing Bank authorizes Agent to



43









 






set off any amounts due to Agent under this Section against any amounts payable to such Lender
or Issuing Bank under any Loan Document. This Section shall survive Full Payment of the
Obligations, or any resignation or replacement of Agent, any Lender or Issuing Bank.




     5.11. Nature and Extent of Each Borrower’s Liability.



          5.11.1. Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt
payment and performance of, all Obligations and all agreements under the Loan Documents. Each
Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment
and not of collection, that such obligations shall not be discharged until Full Payment of the
Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future modification of, or
change in, any Obligations or Loan Document, or any other document, instrument or agreement to
which any Obligor is or may become a party or be bound; (b) the absence of any action to enforce
this Agreement (including this Section) or any other Loan Document, or any waiver, consent or
indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or
condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty
for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect
thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e)
any election by Agent or any Lender in an Insolvency Proceeding for the application of Section
1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of
any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under
Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that
might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations (other than contingent indemnity obligations with respect to
then unasserted claims).




          5.11.2. Waivers.




          (a) Each Borrower expressly waives all rights that it may have now or in the future under any
statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to
proceed against any Obligor, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Borrower. Each Borrower waives
all defenses available to a surety, guarantor or accommodation co-obligor other than Full Payment
of all Obligations. It is agreed among each Borrower, Agent and Lenders that the provisions of
this Section 5.11 are of the essence of the transaction contemplated by the Loan Documents and
that, but for such provisions, Agent and Lenders would decline to make Loans and issue Letters of
Credit. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such business.




          (b) Agent and Lenders may, in their discretion, in accordance with the provisions of the Loan
Documents and Applicable Law, pursue such rights and remedies as they deem appropriate, including
realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without
affecting any rights and remedies under this Section 5.11. If, in



44









 






taking any action in connection with the exercise of any rights or remedies, Agent or any
Lender shall forfeit any other rights or remedies, including the right to enter a deficiency
judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to
“election of remedies” or otherwise, each Borrower consents to such action and waives any claim
based upon it, even if the action may result in loss of any rights of subrogation that any Borrower
might otherwise have had; provided, however, that notwithstanding the foregoing,
Borrowers shall not be considered to have waived any claim relating to any action arising out of
gross negligence or willful misconduct. Any election of remedies that results in denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower
shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each
Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Obligations, even though that election of remedies
destroys such Borrower’s rights of subrogation against any other Person. Agent may bid all or a
portion of the Obligations at any foreclosure or trustee’s sale or at any private sale, and the
amount of such bid need not be paid by Agent but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent or any other Person is the successful
bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11,
notwithstanding that any present or future law or court decision may have the effect of reducing
the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for
such bidding at any such sale.




          5.11.3. Extent of Liability; Contribution.




          (a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this
Section 5.11 shall be limited to the greater of (i) all amounts for which such Borrower is
primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.




          (b) If any Borrower makes a payment under this Section 5.11 of any Obligations (other than
amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking
into account all other Guarantor Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the
aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such
Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments from, and to be
reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The
“Allocable Amount” for any Borrower shall be the maximum amount that could then be
recovered from such Borrower under this Section 5.11 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.




          (c) Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay
Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower
and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC
Obligations relating to Letters of Credit issued to support such Borrower’s



45









 






business, and all accrued interest, fees, expenses and other related Obligations with respect
thereto, for which such Borrower shall be primarily liable for all purposes hereunder. Agent and
Lenders shall have the right, at any time in their discretion, to condition Loans and Letters of
Credit upon a separate calculation of borrowing availability for each Borrower and to restrict the
disbursement and use of such Loans and Letters of Credit to such Borrower.




          5.11.4. Joint Enterprise. Each Borrower has requested that Agent and Lenders make this credit
facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most
efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and
Borrowers believe that consolidation of their credit facility will enhance the borrowing power of
each Borrower and ease the administration of their relationship with Lenders, all to the mutual
advantage of Borrowers. Borrowers acknowledge and agree that Agent’s and Lenders’ willingness to
extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth
herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.




          5.11.5. Subordination. Each Borrower hereby subordinates any claims, including any
rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution,
indemnification or set off, that it may have at any time against any other Obligor, howsoever
arising, to the Full Payment of all Obligations.




SECTION 6. CONDITIONS PRECEDENT




     6.1. Conditions Precedent to Initial Loans. In addition to the conditions set forth
in Section 6.2, Lenders shall not be required to fund any requested Loan, issue any Letter of
Credit, or otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”)
that each of the following conditions has been satisfied:



          (a) Notes shall have been executed by Borrowers and delivered to each Lender that requests
issuance of a Note. Each other Loan Document shall have been duly executed and delivered to Agent
by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.




          (b) Agent shall have received acknowledgments of all filings or recordations necessary to
perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence
satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted
Liens. Agent shall have received all Deposit Account Control Agreements and such other third party
agreements (including all necessary approvals, waivers and consents from all Governmental
Authorities) as Agent may require, all in form and substance satisfactory to Agent.




          (c) Agent shall have received duly executed agreements establishing each Dominion Account and
related lockbox, in form and substance, and with financial institutions, satisfactory to Agent.




          (d) Agent shall have received certificates, in form and substance satisfactory to it, from a
knowledgeable Senior Officer of each Borrower certifying that, after giving effect to the initial
Loans and transactions hereunder, (i) such Borrower is Solvent; (ii) no Default or




46









 







Event of Default exists; (iii) the representations and warranties set forth in this Agreement
and the other Loan Documents are true and correct; and (iv) such Borrower has complied with all
agreements and conditions to be satisfied by it under the Loan Documents.




          (e) Agent shall have received a certificate of a duly authorized officer of each Obligor,
certifying (i) that attached copies of such Obligor’s Organic Documents are true and complete, and
in full force and effect, without amendment except as shown; (ii) that an attached copy of
resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that
such resolutions are in full force and effect, were duly adopted, have not been amended, modified
or revoked, and constitute all resolutions adopted with respect to this credit facility; and (iii)
to the title, name and signature of each Person authorized to sign the Loan Documents. Agent may
conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in
writing.




          (f) Agent shall have received a written opinion of (i) Company’s internal counsel, (ii)
Calfee, Halter & Griswold LLP, and (iii) any local counsel to Borrowers or Agent, in form and
substance satisfactory to Agent.




          (g) Agent shall have received copies of the charter documents of each Obligor, certified by
the Secretary of State or other appropriate official of such Obligor’s jurisdiction of
organization. Agent shall have received good standing certificates for each Obligor, issued by the
Secretary of State or other appropriate official of (i) such Obligor’s jurisdiction of
organization, (ii) the jurisdiction where such Obligor maintains its chief executive office and
(iii) each jurisdiction where such Obligor owns Real Estate or holds a material amount of
Collateral.




          (h) Agent shall have received copies of policies or certificates of insurance for the
insurance policies carried by Borrowers, all in compliance with the Loan Documents.




          (i) Agent shall have completed its business, financial and legal due diligence of Obligors,
including a roll-forward of its previous field examination, with results satisfactory to Agent. No
material adverse change in the financial condition of any Obligor or in the quality, quantity or
value of any Collateral shall have occurred since March 31, 2008.




          (j) Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the
Closing Date.




          (k) Agent shall have received a Borrowing Base Certificate prepared as of the Closing Date,
except that: (i) the Accounts included will be as of April 30, 2009; (ii) Accounts that are not
Eligible Accounts because they are unpaid for more than 60 days after the original due date, or
more than 90 days after the original invoice date will be as of April 30, 2009; and (iii) all other
ineligible Accounts will be as of March 31, 2009. Upon giving effect to the initial funding of
Loans and issuance of Letters of Credit, and the payment by Borrowers of all fees and expenses
incurred in connection herewith, as well as any payables stretched beyond their customary payment
practices, Availability shall be at least $25,000,000.




          (l) Agent shall have received (i) financial projections of Company, prepared on a monthly
basis for Fiscal Year 2010 (including income statements, balance sheets and



47









 






statements of cash flows) and (ii) draft financial statements (including income statements,
balance sheets and statements of cash flows) for Company as of March 31, 2009, together with
comparable statements for Company as of March 31, 2008.




          (m) Agent shall have received (i) a statement of sources and uses of funds covering all
payments reasonably expected to be made by Borrowers in connection with the transactions
contemplated by the Loan Documents to be consummated on the Closing Date, including an itemized
estimate of all fees, expenses and other closing costs and (ii) payment instructions with respect
to each wire transfer to be made by Agent on behalf of the Lenders or Borrowers on the Closing Date
setting forth the amount of such transfer, the purpose of such transfer, the name and number of the
account to which such transfer is to be made, the name and ABA number of the bank or other
financial institution where such account is located and the name and telephone number of an
individual that can be contacted to confirm receipt of such transfer.




          (n) Agent shall have received all information from Borrowers requested by Agent and necessary
for the Lenders’ compliance with the Patriot Act.




          (o) Agent shall have received a fully executed Fee Letter, in form and substance satisfactory
to Agent.




          (p) Agent shall have received a fully executed Pledge Agreement, together with the original
stock certificate and stock power required to properly perfect Agent’s first priority security
interest in 100% of the Equity Interests of Agilysys NJ, Inc., each in form and substance
satisfactory to Agent.




     6.2. Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and Lenders
shall not be required to fund any Loans, arrange for issuance of any Letters of Credit or grant any
other accommodation to or for the benefit of Borrowers, unless the following conditions are
satisfied:



          (a) No Default or Event of Default shall exist at the time of, or result from, such funding,
issuance or grant;




          (b) The representations and warranties of each Obligor in the Loan Documents shall be true and
correct in all material respects on the date of, and upon giving effect to, such funding, issuance
or grant, except for representations and warranties that expressly relate to an earlier date (in
which case such representations and warranties shall have been true and correct in all material
respects on and as of such earlier date); provided, however, that any
representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or
similar language shall be true and correct (after giving effect to any qualification therein) in
all respects;




          (c) All conditions precedent in any other Loan Document shall be satisfied;




          (d) No event shall have occurred or circumstance exist that has or could reasonably be
expected to have a Material Adverse Effect; and




48









 








          (e) With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied.



Each request (or deemed request) by Borrowers for funding of a Loan, issuance of a Letter of Credit
or grant of an accommodation shall constitute a representation by Borrowers that the foregoing
conditions are satisfied on the date of such request and on the date of such funding, issuance or
grant.




     6.3. Limited Waiver of Conditions Precedent. If Agent, Issuing Bank or Lenders fund
any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation when any
conditions precedent are not satisfied (regardless of whether the lack of satisfaction was known or
unknown at the time), it shall not operate as a waiver of (a) the right of Agent, Issuing Bank and
Lenders to insist upon satisfaction of all conditions precedent with respect to any subsequent
funding, issuance or grant; nor (b) any Default or Event of Default due to such failure of
conditions or otherwise.



SECTION 7. COLLATERAL




     7.1. Grant of Security Interest. To secure the prompt payment and performance of all
Obligations, each Borrower hereby grants to Agent, for the benefit of Secured Parties, a continuing
security interest in and Lien upon all personal Property of such Borrower, including all of the
following Property (but specifically excluding Excluded Assets), whether now owned or hereafter
acquired, and wherever located:



          (a) all Accounts;




          (b) all Chattel Paper, including electronic chattel paper;




          (c) all Commercial Tort Claims, including those related to Agilysys, Inc. v. Keith M.
Gordon, et al (N.D. Ohio 12-10-2008; Case No. 1:06 CV 1665);




          (d) all Deposit Accounts;




          (e) all Documents;




          (f) all General Intangibles, including Intellectual Property;




          (g) all Goods, including Inventory, Equipment and fixtures;




          (h) all Instruments;




          (i) all Investment Property;




          (j) all Letter-of-Credit Rights;




          (k) all Supporting Obligations;




          (l) all monies, whether or not in the possession or under the control of Agent, a Lender, or a
bailee or Affiliate of Agent or a Lender, including any Cash Collateral;




49









 








          (m) all accessions to, substitutions for, and all replacements, products, and cash and
non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to
insurance policies, and claims against any Person for loss, damage or destruction of any
Collateral; and




          (n) all books and records (including customer lists, files, correspondence, tapes, computer
programs, print-outs and computer records) pertaining to the foregoing.




     7.2. Lien on Deposit Accounts; Cash Collateral.



          7.2.1. Deposit Accounts. To further secure the prompt payment and performance of all
Obligations, each Borrower hereby grants to Agent, for the benefit of Secured Parties, a continuing
security interest in and Lien upon all amounts credited to any Deposit Account of such Borrower,
including any sums in any blocked or lockbox accounts or in any accounts into which such sums are
swept. During any Dominion Trigger Period, each Borrower hereby authorizes and directs each bank
or other depository to deliver to Agent, upon request of the Agent, all balances in any Deposit
Account maintained by such Borrower, without inquiry into the authority or right of Agent to make
such request.




          7.2.2. Cash Collateral. During any Dominion Trigger Period, any Cash Collateral may
be invested, at Agent’s discretion, in Cash Equivalents, but Agent shall have no duty to do so,
regardless of any agreement or course of dealing with any Borrower, and shall have no
responsibility for any investment or loss. Each Borrower hereby grants to Agent, for the benefit
of Secured Parties, a security interest in all Cash Collateral held from time to time and all
proceeds thereof, as security for the Obligations, whether such Cash Collateral is held in a Cash
Collateral Account or elsewhere. Agent may apply Cash Collateral to the payment of any
Obligations, in such order as Agent may elect, as they become due and payable. Each Cash
Collateral Account and all Cash Collateral shall be under the sole dominion and control of Agent.
No Borrower or other Person claiming through or on behalf of any Borrower shall have any right to
any Cash Collateral, until Full Payment of all Obligations.




     7.3. [Reserved].



     7.4. Other Collateral.



          7.4.1. Commercial Tort Claims. Borrowers shall promptly notify Agent in writing if
any Borrower has knowledge of or shall have asserted a Commercial Tort Claim (other than, as long
as no Default or Event of Default exists, a Commercial Tort Claim for less than $1,000,000) and,
upon Agent’s request, shall promptly take such actions as Agent deems appropriate to confer upon
Agent (for the benefit of Secured Parties) a duly perfected, first priority Lien upon such claim.




          7.4.2. Certain After-Acquired Collateral. Borrowers shall promptly (but no more often
than quarterly with respect to Intellectual Property) notify Agent in writing if, after the Closing
Date, any Borrower obtains any interest in any Collateral consisting of Deposit Accounts, Chattel
Paper, Documents, Instruments, Intellectual Property, Investment Property or Letter-of-Credit
Rights and, upon Agent’s request, shall promptly take such actions as Agent deems appropriate to
effect Agent’s duly perfected, first priority Lien upon such Collateral,




50









 







including obtaining any appropriate possession, control agreement or Lien Waiver;
provided that a Lien Waiver shall not be required to be delivered with respect to any
Collateral or any leased premises of the Borrowers (other than such premises where the Borrowers’
books and records relating to Accounts are located) until the occurrence of a Dominion Trigger
Period. If any Collateral is in the possession of a third party, at Agent’s request, Borrowers
shall obtain an acknowledgment that such third party holds the Collateral for the benefit of Agent.




     7.5. No Assumption of Liability. The Lien on Collateral granted hereunder is given as
security only and shall not subject Agent or any Lender to, or in any way modify, any obligation or
liability of Borrowers relating to any Collateral.



     7.6. Further Assurances. Promptly upon request, Borrowers shall deliver such
instruments, assignments or other documents (excluding title certificates) or agreements, and shall
take such actions, as Agent deems appropriate under Applicable Law to evidence or perfect its Lien
on any Collateral, or otherwise to give effect to the intent of this Agreement. Each Borrower
authorizes Agent to file any financing statement that indicates the Collateral as “all assets” or
“all personal property” of such Borrower, or words to similar effect, and ratifies any action taken
by Agent before the Closing Date to effect or perfect its Lien on any Collateral.



     7.7. Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral shall
include only 65% of the voting stock of any Foreign Subsidiary. Other than the stock certificates,
stock powers or endorsements and related documentation of Agilysys Canada, Inc. required to be
delivered on or prior to the Closing Date, during a Dominion Trigger Period, Borrowers shall
deliver all pledge agreements and other documents as Agent deems appropriate under Applicable Law
to evidence or perfect its Lien on 65% of the voting stock of each Foreign Subsidiary.



SECTION 8. COLLATERAL ADMINISTRATION




     8.1. Borrowing Base Certificates. Borrowers shall deliver to Agent a Borrowing Base
Certificate (a) on the Closing Date, (b) by the 15th day of each month, prepared as of the close of
business of the previous month, (c) if the average daily amount of Availability applicable to the
previous month is less than $20,000,000, by Wednesday of each week, prepared as of the close of
business of the previous week, which Borrowing Base Certificate shall update all information from
the most recent Borrowing Base Certificate delivered by Borrowers to Agent, including, without
limitation, sales and collection reports, a reconciliation of Accounts and other reports regarding
Accounts, in form satisfactory to Agent; provided, however, that Borrowers’ report
of Accounts which are not Eligible Accounts shall not be required to be updated more frequently
than monthly, by the 15th day of each month as of the close of business of the previous
month, and (d) at such other times as Agent may request in the exercise of its Credit Judgment,
together with such supporting information as Agent may require. All calculations of Availability
in any Borrowing Base Certificate shall originally be made by Borrowers and certified by a Senior
Officer, provided that Agent may from time to time review and adjust any such calculation (x) to
reflect its reasonable estimate of declines in value of any Collateral, due to collections received
in the Dominion Account or otherwise; (y) to adjust advance rates to reflect changes in dilution,
quality, mix and other factors affecting Collateral;



51









 




and (z) to the extent the calculation is not made in accordance with this Agreement or does
not accurately reflect the Availability Reserve.




     8.2. Administration of Accounts.



          8.2.1. Records and Schedules of Accounts. Each Borrower shall keep accurate and
complete records of its Accounts, including all payments and collections thereon, and shall submit
to Agent sales, collection, reconciliation and other reports in form satisfactory to Agent, on such
periodic basis as Agent may request. Each Borrower shall also provide to Agent, on or before the
15th day of each month, a detailed aged trial balance of all Accounts as of the end of the
preceding month, specifying each Account’s Account Debtor name and address, amount, invoice date
and due date, accompanied by a report showing any discount, allowance, credit, authorized return or
dispute with respect to such Accounts, and if Agent shall so request, proof of delivery, copies of
invoices and invoice registers, copies of related documents, repayment histories, status reports
and other information as Agent may reasonably request. If Accounts in an aggregate face amount of
$250,000 or more cease to be Eligible Accounts, Borrowers shall notify Agent of such occurrence
promptly (and in any event within one Business Day) after any Borrower has knowledge thereof.




          8.2.2. Taxes. If an Account of any Borrower includes a charge for any Taxes, Agent is
authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the
account of such Borrower and to charge Borrowers therefor; provided, however, that neither Agent
nor Lenders shall be liable for any Taxes that may be due from Borrowers or with respect to any
Collateral.




          8.2.3. Account Verification. Whether or not a Default or Event of Default exists,
Agent shall have the right at any time, in the name of Agent, any designee of Agent or any
Borrower, to verify the validity, amount or any other matter relating to any Accounts of Borrowers
by mail, telephone or otherwise. Borrowers shall cooperate fully with Agent in an effort to
facilitate and promptly conclude any such verification process.




          8.2.4. Maintenance of Dominion Account. Borrowers shall maintain Dominion Accounts
pursuant to lockbox or other arrangements acceptable to Agent. Borrowers shall obtain an agreement
(in form and substance satisfactory to Agent) from each lockbox servicer and Dominion Account bank,
establishing Agent’s control over and Lien in the lockbox or Dominion Account, which may be
exercised by Agent during any Dominion Trigger Period, requiring immediate deposit of all
remittances received in the lockbox to a Dominion Account, and waiving offset rights of such
servicer or bank, except for customary administrative charges. If a Dominion Account is not
maintained with Bank of America, Agent may, during any Dominion Trigger Period, require immediate
transfer of all funds in such account to a Dominion Account maintained with Bank of America. Agent
and Lenders assume no responsibility to Borrowers for any lockbox arrangement or Dominion Account,
including any claim of accord and satisfaction or release with respect to any Payment Items
accepted by any bank.




          8.2.5. Proceeds of Collateral. Borrowers shall request in writing and otherwise take
all necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are
made directly to a Dominion Account (or a lockbox relating to a Dominion



52









 






Account). If any Borrower or Subsidiary receives cash or Payment Items with respect to any
Collateral, it shall hold same in trust for Agent and promptly (not later than the next Business
Day) deposit same into a Dominion Account.




     8.3. Administration of Inventory.



          8.3.1. [Reserved].


          8.3.2. [Reserved].




          8.3.3. Acquisition, Sale and Maintenance. No Borrower shall acquire or accept any
Inventory on consignment or approval, and shall take all steps to assure that all Inventory is
produced in accordance with Applicable Law, including the FLSA. No Borrower shall sell any
Inventory on consignment or approval or any other basis under which the customer may return or
require a Borrower to repurchase such Inventory. Borrowers shall use, store and maintain all
Inventory with reasonable care and caution, in accordance with applicable standards of any
insurance and in conformity with all Applicable Law, and shall make current rent payments (within
applicable grace periods provided for in leases) at all locations where any Collateral is located.




     8.4. Administration of Equipment.



          8.4.1. Records and Schedules of Equipment. Each Borrower shall keep accurate and
complete records of its Equipment, including kind, quantity, cost, acquisitions and dispositions
thereof, and shall submit to Agent, on such periodic basis as Agent may request, a current schedule
thereof, in form satisfactory to Agent. Promptly upon request, Borrowers shall deliver to Agent
evidence of their ownership or interests in any Equipment.




          8.4.2. Dispositions of Equipment. No Borrower shall sell, lease or otherwise dispose
of any Equipment, without the prior written consent of Agent, other than (a) a Permitted Asset
Disposition; and (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of
like function and value, if the replacement Equipment is acquired substantially contemporaneously
with such disposition and is free of Liens (other than Permitted Liens).




          8.4.3. Condition of Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements and repairs have been made so that the value and operating
efficiency of the Equipment is preserved at all times, reasonable wear and tear excepted. Each
Borrower shall ensure that the Equipment is mechanically and structurally sound, and capable of
performing the functions for which it was designed, in accordance with manufacturer specifications.




     8.5. Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit Accounts
maintained by Borrowers, including all Dominion Accounts. Each Borrower shall take all actions
necessary to establish Agent’s control of each such Deposit Account (other than an account
exclusively used for payroll, payroll taxes or employee benefits, or an account containing not more
that $10,000 at any time). Each Borrower shall be the sole account holder of each Deposit Account
and shall not allow any other Person (other than Agent) to have control over a Deposit Account or
any Property deposited therein. Each Borrower shall promptly notify



53









 




Agent of any opening or closing of a Deposit Account and, with the consent of Agent, will
amend Schedule 8.5 to reflect same.




     8.6. General Provisions.



          8.6.1. Location of Collateral. All tangible items of Collateral in excess of $100,000
at any location, other than Inventory in transit or Equipment being repaired or in transit, shall
at all times be kept by Borrowers at the business locations set forth in Schedule 8.6.1, except
that Borrowers may (a) make sales or other dispositions of Collateral in accordance with Section
10.2.6; and (b) move Collateral to another location in the United States.




          8.6.2. Insurance of Collateral; Condemnation Proceeds.




          (a) Each Borrower shall maintain insurance with respect to the Collateral, covering casualty,
hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with
insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to
Agent. All proceeds under each policy shall be payable to Agent. Within 30 days of the Closing
Date and from time to time upon request, Borrowers shall deliver to Agent authentic copies of its
insurance policies and updated flood plain searches. Unless Agent shall agree otherwise, each
policy shall include satisfactory endorsements (i) showing Agent as loss payee; (ii) requiring 30
days prior written notice to Agent in the event of cancellation of the policy for any reason
whatsoever; and (iii) specifying that the interest of Agent shall not be impaired or invalidated by
any act or neglect of any Borrower or the owner of the Property, nor by the occupation of the
premises for purposes more hazardous than are permitted by the policy. If any Borrower fails to
provide and pay for any insurance, Agent may, at its option, following notice to Company, but shall
not be required to, procure the insurance and charge Borrowers therefor. Each Borrower agrees to
deliver to Agent, promptly as rendered, copies of all reports made to insurance companies. While
no Event of Default exists, Borrowers may settle, adjust or compromise any insurance claim, as long
as the proceeds are delivered to Agent. If an Event of Default exists, only Agent shall be
authorized to settle, adjust and compromise such claims.




          (b) During any Dominion Trigger Period, any proceeds of insurance (other than proceeds from
workers’ compensation or D&O insurance) and any awards arising from condemnation of any Collateral
shall be paid to Agent. During any Dominion Trigger Period, any such proceeds or awards that
relate to Inventory shall be applied to payment of the Loans, and then to any other Obligations
outstanding. During any Dominion Trigger Period, subject to clause (c) below, any proceeds or
awards that relate to Equipment shall be applied first to Loans and then to other Obligations.




          (c) After Agent’s receipt of any insurance proceeds or condemnation awards relating to any
loss or destruction of Property, (i) during any Dominion Trigger Period, if requested by Borrowers
in writing within 15 days of such receipt, Borrowers may use such proceeds or awards to repair or
replace such Property (and until so used, the proceeds shall be held by Agent as Cash Collateral)
as long as (A) no Default or Event of Default exists; (B) such repair or replacement is promptly
undertaken and concluded on terms and conditions satisfactory to Agent; (C) the repaired or
replaced Property is free of Liens, other than Permitted Liens that are not Purchase Money Liens;
(D) Borrowers comply with disbursement procedures for such



54









 






repair or replacement as Agent may reasonably require; and (E) the aggregate amount of such
proceeds or awards from any single casualty or condemnation does not exceed $1,000,000 and (ii)
during any other time, Borrowers may use such proceeds or awards to repair or replace such Property
(and until so used, the proceeds shall be held by Agent as Cash Collateral) as long as (A) no
Default or Event of Default exists; (B) the repaired or replaced Property is free of Liens, other
than Permitted Liens that are not Purchase Money Liens; and (C) the aggregate amount of such
proceeds or awards from any single casualty or condemnation does not exceed $2,500,000.




          8.6.3. Protection of Collateral. All expenses of protecting, storing, warehousing,
insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to any
Collateral (including any sale thereof), and all other payments required to be made by Agent to any
Person to realize upon any Collateral, shall be borne and paid by Borrowers. Agent shall not be
liable or responsible in any way for the safekeeping of any Collateral, for any loss or damage
thereto (except for reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be at
Borrowers’ sole risk.




          8.6.4. Defense of Title to Collateral. Each Borrower shall at all times defend its
title to Collateral and Agent’s Liens therein against all Persons, claims and demands whatsoever,
except Permitted Liens.




     8.7. Power of Attorney. Each Borrower hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Borrower’s true and lawful attorney (and
agent-in-fact) for the purposes provided in this Section. Agent, or Agent’s designee, may, without
notice and in either its or a Borrower’s name, but at the cost and expense of Borrowers:



          (a) Endorse a Borrower’s name on any Payment Item or other proceeds of Collateral (including
proceeds of insurance) that come into Agent’s possession or control; and




          (b) During an Event of Default, (i) notify any Account Debtors of the assignment of their
Accounts, demand and enforce payment of Accounts by legal proceedings or otherwise, and generally
exercise any rights and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise,
discharge or release any Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for
such amounts and at such times as Agent deems advisable; (iv) collect, liquidate and receive
balances in Deposit Accounts or investment accounts, and take control, in any manner, of proceeds
of Collateral; (v) prepare, file and sign a Borrower’s name to a proof of claim or other document
in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or
similar document; (vi) receive, open and dispose of mail addressed to a Borrower, and notify postal
authorities to deliver any such mail to an address designated by Agent; (vii) endorse any Chattel
Paper, Document, Instrument, bill of lading, or other document or agreement relating to any
Accounts, Inventory or other Collateral; (viii) use a Borrower’s stationery and sign its name to
verifications of Accounts and notices to Account Debtors; (ix) use information contained in any
data processing, electronic or information systems relating to Collateral; (x) make and adjust
claims under insurance policies; (xi) take any action as may be necessary or appropriate to obtain
payment under any letter of credit, banker’s



55









 






acceptance or other instrument for which a Borrower is a beneficiary; and (xii) take all other
actions as Agent deems appropriate to fulfill any Borrower’s obligations under the Loan Documents.




SECTION 9. REPRESENTATIONS AND WARRANTIES




     9.1. General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Commitments, Loans and Letters of Credit, each
Borrower represents and warrants that:



          9.1.1. Organization and Qualification. Each Borrower and Subsidiary is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization. Each Borrower and Subsidiary is duly qualified, authorized to do business and in
good standing as a foreign corporation in each jurisdiction where failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.




          9.1.2. Power and Authority. Each Obligor is duly authorized to execute, deliver and
perform its Loan Documents. The execution, delivery and performance of the Loan Documents have
been duly authorized by all necessary action, and do not (a) require any consent or approval of any
holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the
Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or
Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted
Liens) on any Property of any Obligor.




          9.1.3. Enforceability. Each Loan Document is a legal, valid and binding obligation of
each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights
generally and equitable principles (regardless of whether such enforcement is sought in a
proceeding in equity or at law).




          9.1.4. Capital Structure. Schedule 9.1.4 shows, for each Borrower and Subsidiary, its
name, its jurisdiction of organization, its authorized and issued Equity Interests, the holders of
its Equity Interests (other than the holders of Company’s Equity Interests), and all agreements
binding on such holders with respect to their Equity Interests. Except as disclosed on Schedule
9.1.4, in the five years preceding the Closing Date, no Borrower or Subsidiary has acquired any
substantial assets from any other Person nor been the surviving entity in a merger or combination.
Each Borrower has good title to its Equity Interests in its Subsidiaries, subject only to Agent’s
Lien, and all such Equity Interests are duly issued, fully paid and non-assessable. Except as
disclosed in documents filed with the SEC as of the Closing Date or as may be approved and issued
by Company’s shareholders at any subsequent date, there are no outstanding purchase options,
warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights
or powers of attorney relating to Equity Interests of any Borrower or Subsidiary, except as may be
issued as part of equity compensation plans in accordance with any vote of shareholders of Company.




          9.1.5. Title to Properties; Priority of Liens. Each Borrower and Subsidiary has good
and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title




56









 







to all of its personal Property, including all Property reflected in any financial statements
(other than consigned Inventory) delivered to Agent or Lenders, in each case free of Liens except
Permitted Liens. Each Borrower and Subsidiary has paid and discharged all lawful claims that, if
unpaid, could become a Lien on its Properties, other than Permitted Liens. Except as set forth on
Schedule 9.1.5, all Liens of Agent in the Collateral are duly perfected, first priority Liens,
subject only to Permitted Liens that are expressly allowed to have priority over Agent’s Liens.




          9.1.6. Accounts. Agent may rely, in determining which Accounts are Eligible Accounts,
on all statements and representations made by Borrowers with respect thereto. Borrowers warrant,
with respect to each Account at the time it is shown as an Eligible Account in a Borrowing Base
Certificate, that:




          (a) it is genuine and in all respects what it purports to be, and is not evidenced by a
judgment;




          (b) it arises out of a completed, bona fide sale and delivery of goods or rendition of
services in the Ordinary Course of Business, and substantially in accordance with any purchase
order, contract or other document relating thereto;




          (c) it is for a sum certain, maturing as stated in the invoice covering such sale
or rendition of services, a copy of which has been furnished or is available to Agent on
request;




          (d) it is not subject to any offset, Lien (other than Agent’s Lien), deduction, defense,
dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of
Business and disclosed to Agent; and it is absolutely owing by the Account Debtor, without
contingency in any respect;




          (e) no purchase order, agreement, document or Applicable Law restricts assignment of the
Account to Agent (regardless of whether, under the UCC, the restriction is ineffective), and the
applicable Borrower is the sole payee or remittance party shown on the invoice;




          (f) no extension, compromise, settlement, modification, credit, deduction or return has been
authorized with respect to the Account, except discounts or allowances granted in the Ordinary
Course of Business for prompt payment that are reflected on the face of the invoice related thereto
and in the reports submitted to Agent hereunder; and




          (g) to the best of Borrowers’ knowledge, (i) there are no facts or circumstances that are
reasonably likely to impair the enforceability or collectibility of such Account; (ii) the Account
Debtor had the capacity to contract when the Account arose, continues to meet the applicable
Borrower’s customary credit standards, is Solvent, is not contemplating or subject to an Insolvency
Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there are no
proceedings or actions threatened or pending against any Account Debtor that could reasonably be
expected to have a material adverse effect on the Account Debtor’s financial condition.




          9.1.7. Financial Statements. The consolidated and consolidating balance sheets, and
related statements of income, cash flow and shareholder’s equity, of Borrowers and




57









 







Subsidiaries that have been and are hereafter delivered to Agent and Lenders, are prepared in
accordance with GAAP, except that all financial statements other than annual financial statements
shall be subject to normal year-end adjustments and footnotes, and fairly present the financial
positions and results of operations of Borrowers and Subsidiaries at the dates and for the periods
indicated. All projections delivered from time to time to Agent and Lenders have been prepared in
good faith, based on reasonable assumptions in light of the circumstances at such time. Since
March 31, 2008, there has been no change in the condition, financial or otherwise, of any Borrower
or Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial
statement delivered to Agent or Lenders in accordance with Section 10.1.2 at any time contains any
untrue statement of a material fact, nor fails to disclose any material fact necessary to make such
statement not materially misleading. Each Borrower and Subsidiary is Solvent.




          9.1.8. Surety Obligations. No Borrower or Subsidiary is obligated as surety or
indemnitor under any bond or other contract that assures payment or performance of any obligation
of any Person, except as permitted hereunder.




          9.1.9. Taxes. Each Borrower and Subsidiary has filed all federal, state and material
local tax returns and other reports that it is required by law to file, and has paid, or made
provision for the payment of, all federal, state and other material taxes upon it, its income and
its Properties that are due and payable, except to the extent being Properly Contested. The
provision for Taxes on the books of each Borrower and Subsidiary is adequate for all years not
closed by applicable statutes, and for its current Fiscal Year.




          9.1.10. Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the Loan Documents.




          9.1.11. Intellectual Property. Each Borrower and Subsidiary owns or has the lawful
right to use all Intellectual Property necessary for the conduct of its business, without conflict
with any rights of others. There is no pending or, to any Borrower’s knowledge, threatened
Intellectual Property Claim with respect to any Borrower, any Subsidiary or any of their Property
(including any Intellectual Property) that could reasonably be expected to have a Material Adverse
Effect. Except as disclosed on Schedule 9.1.11, no Borrower or Subsidiary pays or owes any Royalty
or other compensation to any Person with respect to any Intellectual Property. All Intellectual
Property owned, used or licensed by, or otherwise subject to any interests of, any Borrower or
Subsidiary is shown on Schedule 9.1.11, which schedule shall be revised on a quarterly basis to
reflect the addition of Intellectual Property acquired after the Closing Date.




          9.1.12. Governmental Approvals. Each Borrower and Subsidiary has, is in compliance
with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its
business and to own, lease and operate its Properties, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. All necessary import, export or other
licenses, permits or certificates for the import or handling of any goods or other Collateral have
been procured and are in effect, and Borrowers and Subsidiaries have complied with all foreign and
domestic laws with respect to the shipment and importation of any goods or




58









 







Collateral, except where noncompliance could not reasonably be expected to have a Material
Adverse Effect.




          9.1.13. Compliance with Laws. Each Borrower and Subsidiary has duly complied, and its
Properties and business operations are in compliance, in all material respects with all Applicable
Law, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
There have been no citations, notices or orders of material noncompliance issued to any Borrower
or Subsidiary under any Applicable Law. No Inventory has been produced in violation of the FLSA.




          9.1.14. Compliance with Environmental Laws. Except as disclosed on Schedule 9.1.14,
no Borrower’s or Subsidiary’s past or present operations, Real Estate or other Properties are
subject to any federal, state or local investigation to determine whether any remedial action is
needed to address any environmental pollution, hazardous material or environmental clean-up. No
Borrower or Subsidiary has received any Environmental Notice, except where the claims in such
Environmental Notice could not reasonably be expected to have a Material Adverse Effect. No
Borrower or Subsidiary has any contingent liability with respect to any Environmental Release,
environmental pollution or hazardous material on any Real Estate now or previously owned, leased or
operated by it, except where such liability could not reasonably be expected to have a Material
Adverse Effect.




          9.1.15. Burdensome Contracts. No Borrower or Subsidiary is a party or subject to any
contract, agreement or charter restriction that could reasonably be expected to have a Material
Adverse Effect. No Borrower or Subsidiary is party or subject to any Restrictive Agreement, except
as shown on Schedule 9.1.15. No such Restrictive Agreement prohibits the execution, delivery or
performance of any Loan Document by an Obligor.




          9.1.16. Litigation. Except as shown on Schedule 9.1.16, there are no proceedings or
investigations pending or, to any Borrower’s knowledge, threatened against any Borrower or
Subsidiary, or any of their businesses, operations, Properties, prospects or conditions, that (a)
relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be
expected to have a Material Adverse Effect if determined adversely to any Borrower or Subsidiary.
No Borrower or Subsidiary is in default with respect to any order, injunction or judgment of any
Governmental Authority, except for any default that could not reasonably be expected to have a
Material Adverse Effect.




          9.1.17. No Defaults. No event or circumstance has occurred or exists that constitutes
a Default or Event of Default. No Borrower or Subsidiary is in default, and no event or
circumstance has occurred or exists that with the passage of time or giving of notice would
constitute a default, under any Material Contract or in the payment of any Borrowed Money, except
as could not reasonably be expected to have a Material Adverse Effect. There is no basis upon
which any party (other than a Borrower or Subsidiary) could terminate a Material Contract prior to
its scheduled termination date.




59









 








          9.1.18. ERISA. Except as disclosed on Schedule 9.1.18:




          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code, and other federal and state laws. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect thereto and, to
the knowledge of Borrowers, nothing has occurred which would prevent, or cause the loss of, such
qualification. Each Obligor and ERISA Affiliate has made all required contributions to each Plan
subject to Section 412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.




          (b) There are no pending or, to the knowledge of Borrowers, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably
be expected to have a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan that has resulted in or
could reasonably be expected to have a Material Adverse Effect.




          (c) Except as could not reasonably be expected to have a Material Adverse Effect, (i) no ERISA
Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) no Obligor or ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) no Obligor or ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) no Obligor or ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.




          (d) With respect to any Foreign Plan, except as could not reasonably be expected to have a
Material Adverse Effect, (i) all employer and employee contributions required by law or by the
terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal
accounting practices; (ii) the fair market value of the assets of each funded Foreign Plan, the
liability of each insurer for any Foreign Plan funded through insurance, or the book reserve
established for any Foreign Plan, together with any accrued contributions, is sufficient to procure
or provide for the accrued benefit obligations with respect to all current and former participants
in such Foreign Plan according to the actuarial assumptions and valuations most recently used to
account for such obligations in accordance with applicable generally accepted accounting
principles; and (iii) it has been registered as required and has been maintained in good standing
with applicable regulatory authorities.




          9.1.19. Trade Relations. There exists no actual or threatened termination, limitation
or modification of any business relationship between any Borrower or Subsidiary and any customer or
supplier, or any group of customers or suppliers, who individually or in the aggregate are material
to the business of such Borrower or Subsidiary. There exists no condition or circumstance that
could reasonably be expected to impair the ability of any Borrower or Subsidiary to conduct its
business at any time hereafter in substantially the same manner as



60









 






conducted on the Closing Date, except for any condition or circumstance that could not
reasonably be expected to have a Material Adverse Effect.




          9.1.20. Labor Relations. Except as described on Schedule 9.1.20, no Borrower or
Subsidiary is party to or bound by any collective bargaining agreement, management agreement or
consulting agreement. There are no material grievances, disputes or controversies with any union
or other organization of any Borrower’s or Subsidiary’s employees, or, to any Borrower’s knowledge,
any asserted or threatened strikes, work stoppages or demands for collective bargaining.




          9.1.21. Payable Practices. No Borrower or Subsidiary has made any material change in
its historical accounts payable practices from those in effect on the Closing Date.




          9.1.22. Not a Regulated Entity. No Obligor is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an investment company” within
the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal
Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.




          9.1.23. Margin Stock. No Borrower or Subsidiary is engaged, principally or as one of
its important activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No Loan proceeds or Letters of Credit will be used by Borrowers to
purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin
Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.




          9.2. Complete Disclosure. No Loan Document contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make the statements contained
therein not materially misleading. There is no fact or circumstance that any Obligor has failed to
disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.




SECTION 10. COVENANTS AND CONTINUING AGREEMENTS




     10.1. Affirmative Covenants. As long as any Commitments or Obligations (other than
contingent indemnity obligations with respect to then unasserted claims) are outstanding, each
Borrower shall, and shall cause each Subsidiary to:



          10.1.1. Inspections; Appraisals.




          (a) Permit Agent from time to time, subject (except when a Default or Event of Default exists)
to reasonable notice and normal business hours, to visit and inspect the Properties of any Borrower
or Subsidiary, inspect, audit and make extracts from any Borrower’s or Subsidiary’s books and
records, and discuss with its officers, employees, agents, advisors and independent accountants
such Borrower’s or Subsidiary’s business, financial condition, assets, prospects and results of
operations. Lenders may participate in any such visit or inspection, at their own expense.
Neither Agent nor any Lender shall have any duty to any Borrower to make any inspection, nor to
share any results of any inspection, appraisal or report with any Borrower.




61









 







Borrowers acknowledge that all inspections, appraisals and reports are prepared by Agent and
Lenders for their purposes, and Borrowers shall not be entitled to rely upon them.



          (b) Reimburse Agent for all charges, costs and expenses of Agent in connection with
examinations of any Obligor’s books and records or any other financial or Collateral matters as
Agent deems appropriate, up to two times per Loan Year; provided, however, that if
the average daily amount of Availability for any 30 day period in such Loan Year is less than
$35,000,000, up to three times in such Loan Year; provided, however, that if an
examination or appraisal is initiated during a Default or Event of Default, all charges, costs and
expenses therefor shall be reimbursed by Borrowers without regard to such limits. Subject to and
without limiting the foregoing, Borrowers specifically agree to pay Agent’s then standard charges
for each day that an examiner of Agent or its Affiliates is engaged in any examination activities,
not to exceed $1,000 per examiner per diem. This Section shall not be construed to limit Agent’s
right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use
third parties for such purposes.



          10.1.2. Financial and Other Information. Keep adequate records and books of account
with respect to its business activities, in which proper entries are made in accordance with GAAP
reflecting all financial transactions; and furnish to Agent and Lenders:



          (a) as soon as available in final form, and in any event within 90 days after the close of
each Fiscal Year, balance sheets as of the end of such Fiscal Year and the related statements of
income, cash flow and shareholders’ equity for such Fiscal Year, on consolidated and consolidating
bases for Borrowers and Subsidiaries, which consolidated statements shall be audited and certified
(without qualification) by a firm of independent certified public accountants of recognized
standing selected by Borrowers and acceptable to Agent, and shall set forth in comparative form
corresponding figures for the preceding Fiscal Year and other information acceptable to Agent;



          (b) as soon as available in final form, and in any event within 45 days after the end of each
Fiscal Quarter, unaudited balance sheets as of the end of such Fiscal Quarter and the related
statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year
then elapsed, on consolidated and consolidating bases for Borrowers and Subsidiaries, setting forth
in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief
financial officer of Company as prepared in accordance with GAAP and fairly presenting the
financial position and results of operations for such Fiscal Quarter and period, subject to normal
year-end adjustments and the absence of footnotes;



          (c) as soon as available in final form, and in any event within 30 days after the end of each
month, unaudited balance sheets as of the end of such month and the related statements of income
and cash flow for such month and for the portion of the Fiscal Year then elapsed, on a consolidated
basis for Borrowers and Subsidiaries, setting forth in comparative form corresponding figures for
the preceding Fiscal Year and certified by the chief financial officer of Company as prepared in
accordance with GAAP and fairly presenting the financial position and results of operations for
such month and period, subject to normal year-end adjustments and the absence of footnotes;




62









 







          (d) concurrently with delivery of financial statements under clauses (a), (b) and (c) above,
or more frequently if requested by Agent while a Default or Event of Default exists, a Compliance
Certificate executed by the chief financial officer of Company;



          (e) concurrently with delivery of financial statements under clause (a) above, copies of all
management letters and other material reports submitted to Borrowers by their accountants in
connection with such financial statements;



          (f) not later than 60 days after the beginning of each Fiscal Year, projections of Borrowers’
consolidated balance sheets, results of operations, cash flow and Availability for such Fiscal
Year, (i) on a month by month basis for Fiscal Year 2011 and (ii) on a Fiscal Quarter by Fiscal
Quarter basis for each Fiscal Year thereafter through the Termination Date;



          (g) at Agent’s reasonable request, a listing of each Borrower’s trade payables, specifying the
trade creditor and balance due, and a detailed trade payable aging, all in form satisfactory to
Agent;



          (h) simultaneously with the sending or filing thereof, notification of any proxy statements,
financial statements or reports that any Borrower has made generally available to its shareholders;
notification of any regular, periodic and special reports or registration statements or
prospectuses that any Borrower files with the Securities and Exchange Commission or any other
Governmental Authority, or any securities exchange; and notification of any press releases or other
statements made available by a Borrower to the public concerning material changes to or
developments in the business of such Borrower;



          (i) simultaneously with the sending or filing thereof, notification of any annual report to be
filed in connection with each Plan or Foreign Plan; and



          (j) such other reports and information (financial or otherwise, including updated schedules to
this Agreement) as Agent may reasonably request from time to time in connection with any Collateral
or any Borrower’s, Subsidiary’s or other Obligor’s financial condition or business.



          10.1.3. Notices. Notify Agent and Lenders in writing, promptly after a Borrower’s
obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or
commencement of any proceeding or investigation, whether or not covered by insurance, if an adverse
determination could reasonably be expected to have a Material Adverse Effect; (b) any pending or
threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c)
any default under or termination of a Material Contract (other than the termination of such
Material Contract on its scheduled expiry date); (d) the existence of any Default or Event of
Default; (e) any judgment in an amount exceeding $1,000,000; (f) the assertion of any Intellectual
Property Claim, if an adverse resolution could have a Material Adverse Effect; (g) any violation or
asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws),
if an adverse resolution could have a Material Adverse Effect; (h) any Environmental Release by an
Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental
Notice, except for any such Environmental Release that could not reasonably be expected to have a
Material Adverse Effect;




63









 







(i) the occurrence of any ERISA Event, except for any such ERISA Event that could not
reasonably be expected to have a Material Adverse Effect; (j) the discharge of or any withdrawal or
resignation by Borrowers’ independent accountants; or (k) any opening of a new office or place of
business, at least 10 Business Days following such opening.




          10.1.4. Landlord and Storage Agreements. Upon reasonable request, provide Agent with
copies of all existing agreements, and promptly after execution thereof provide Agent with copies
of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper,
bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise
may possess or handle any Collateral.




          10.1.5. Compliance with Laws. Comply with all Applicable Laws, including ERISA,
Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of
Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or
conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism
Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, if any Environmental Release occurs at or on any
Properties of any Borrower or Subsidiary, it shall act promptly and diligently to investigate and
report to Agent and all appropriate Governmental Authorities the extent of, and to make appropriate
remedial action to eliminate, such Environmental Release, whether or not directed to do so by any
Governmental Authority.




          10.1.6. Taxes. Pay and discharge all federal, state and other material taxes prior to
the date on which they become delinquent or penalties attach, unless such Taxes are being Properly
Contested.




          10.1.7. Insurance. In addition to the insurance required hereunder with respect to
Collateral, maintain insurance with insurers (with a Best Rating of at least A7, unless otherwise
approved by Agent), (a) with respect to the Properties and business of Borrowers and Subsidiaries
of such type (including product liability, workers’ compensation, larceny, embezzlement, or other
criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as
are customary for companies similarly situated; and (b) business interruption insurance in an
amount not less than $15,000,000, with deductibles satisfactory to Agent.




          10.1.8. Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material Property of Borrowers
and Subsidiaries in full force and effect, except where failure to do so could not reasonably be
expected to have a Material Adverse Effect; promptly notify Agent of any proposed modification to
any such License, or entry into any new License, in each case at least 30 days prior to its
effective date, except where failure to do so could not reasonably be expected to have a Material
Adverse Effect; pay all Royalties when due, except where failure to do so could not reasonably be
expected to have a Material Adverse Effect; and notify Agent of any default or breach asserted by
any Person to have occurred under any License.




          10.1.9. Future Subsidiaries. Promptly notify Agent upon any Person organized under
the laws of the United States becoming a Subsidiary, setting forth information in



64









 






reasonable detail describing all of the assets of such Person and, if the value of such
assets, either individually or when aggregated with the assets of other Subsidiaries formed or
acquired after the Closing Date (which Subsidiaries have not yet become Obligors) equal or exceed
the amount of $1,000,000, cause such Person to guaranty the Obligations in a manner satisfactory to
Agent (or at the election of Agent, cause such Person to become a Borrower hereunder), and to
execute and deliver such documents, instruments and agreements and to take such other actions as
Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured
Parties) on all assets of such Person (including 100% of the Equity Interests of such Person),
including delivery of such legal opinions, in form and substance satisfactory to Agent, as it shall
deem appropriate.




          10.1.10. Pledge of Stock of Foreign Subsidiaries. Within ten (10) days following the
commencement of a Dominion Trigger Period, deliver to Agent an executed Pledge Agreement, together
with all original stock certificates, stock powers or endorsements and related documentation
thereto (including all documentation needed to properly perfect Agent’s first priority security
interest with respect to 65% of the voting Equity Interests (and 100% of the non-voting Equity
Interests) of Agilysys Europe Limited, Agilysys Singapore Pte, Ltd, Agilysys HK Limited, Agilysys
MC Limited and each other Foreign Subsidiary formed or acquired after the date hereof, each in form
and substance satisfactory to Agent, as it shall deem appropriate.




          10.1.11. Post Closing Covenant.




          (a) Within two (2) Business Days following the Closing Date, deliver to Agent the original
stock certificate and stock power required to properly perfect Agent’s first priority security
interest in 65% of the Equity Interests of Agilysys Canada, Inc.




          (b) Within ten (10) Business Days following the Closing Date, deliver to Agent a
fully-executed Lien Waiver for Company’s chief executive office located at 28925 Fountain Parkway,
Solon, OH, 44139.




     10.2. Negative Covenants. As long as any Commitments or Obligations (other than
contingent indemnity obligations with respect to then unasserted claims) are outstanding, no
Borrower shall, nor shall any Borrower permit any Subsidiary to:



          10.2.1. Permitted Debt. Create, incur, guarantee or suffer to exist any Debt, except:




          (a) the Obligations;




          (b) Subordinated Debt;




          (c) Permitted Purchase Money Debt;




          (d) Borrowed Money (other than the Obligations, Subordinated Debt and Permitted Purchase Money
Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of
the initial Loans;




          (e) Bank Product Debt;




65









 








          (f) Debt that is in existence when a Person becomes a Subsidiary or that is secured by an
asset when acquired by an Obligor or Subsidiary, as long as such Debt was not incurred in
contemplation of such Person becoming a Subsidiary or such acquisition, and does not exceed
$3,500,000 in the aggregate at any time;




          (g) Permitted Contingent Obligations;




          (h) Refinancing Debt as long as each Refinancing Condition is satisfied;




          (i) Debt of any Obligor owed to any other Obligor, and guarantees by any Obligor of the
obligations of any other Obligor;




          (j) (i) unsecured Debt of any Obligor or Non-Obligor Subsidiary arising after the Closing Date
owed to any Non-Obligor Subsidiary, so long as the aggregate amount of all such Debt shall not
exceed $3,500,000; provided, however, that additional unsecured Debt of any Obligor
or Non-Obligor Subsidiary arising after the Closing Date owed to any Non-Obligor Subsidiary shall
be permitted so long as (A) Company shall deliver pro forma financial statements which demonstrate,
on a pro forma basis (1) the average daily amount of Availability for the 30 day period immediately
preceding the incurrence of such additional Debt and (2) Availability on the date of the incurrence
of such additional Debt shall, in each case after giving effect to such additional Debt, be at
least $25,000,000, (B) before and after giving effect to such additional Debt, no Default or Event
of Default shall have occurred and be continuing and (C) the aggregate amount of all such
additional Debt incurred pursuant to this proviso shall not exceed $1,500,000 or (ii) guarantees by
any Non-Obligor Subsidiary of unsecured Debt of any Obligor; provided, however,
that any Debt or guarantee referred to in clause (i) or (ii) above is Subordinated Debt;




          (k) Debt relating to normal and customary indemnification claims in connection with any
Permitted Asset Dispositions;




          (l) Debt constituting borrowings against life insurance policies owned by Company incurred to
pay premiums thereunder; and




          (m) Debt that is not included in any of the preceding clauses of this Section, is not secured
by a Lien and does not exceed $2,000,000 in the aggregate at any time.




          10.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its Property,
except the following (collectively, “Permitted Liens”):




          (a) Liens in favor of Agent;




          (b) Purchase Money Liens securing Permitted Purchase Money Debt;




          (c) Liens for Taxes not yet due or being Properly Contested;




          (d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in the
Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet
due or is being Properly Contested, and (ii) such Liens do not materially impair




66









 







the value or use of the Property or materially impair operation of the business of any
Borrower or Subsidiary;




          (e) Liens incurred or deposits made in the Ordinary Course of Business to secure the
performance of tenders, bids, leases, contracts (except those relating to Borrowed Money),
statutory obligations and other similar obligations, or arising as a result of progress payments
under government contracts, as long as such Liens are at all times junior to Agent’s Liens;




          (f) Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;




          (g) Liens arising by virtue of a judgment or judicial order against any Borrower or
Subsidiary, or any Property of a Borrower or Subsidiary, as long as such Liens are (i) in existence
for less than 20 consecutive days or being Properly Contested, and (ii) at all times junior to
Agent’s Liens;




          (h) easements, rights-of-way, restrictions, covenants or other agreements of record, and other
similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do
not interfere with the Ordinary Course of Business;




          (i) normal and customary rights of setoff upon deposits in favor of depository institutions,
and Liens of a collecting bank on Payment Items in the course of collection;




          (j) any Lien existing on any property or asset (other than Accounts and Inventory) prior to
the acquisition thereof by an Obligor or any Subsidiary or existing on any property or asset (other
than Accounts and Inventory) of any Person that becomes a Subsidiary after the date hereof prior to
the time such Person becomes a Subsidiary; provided, however, that such Lien (i)
was not created in contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) shall not apply to any other property or assets of such
Person and (iii) shall secure only the Debt permitted pursuant to Section 10.2.1(f), which it
secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case
may be;




          (k) existing Liens shown on Schedule 10.2.2;




          (l) Liens of a collecting bank arising in the Ordinary Course of Business under Section 4-208
of the UCC in effect in the relevant jurisdiction covering only the items being collected upon; and




          (m) Liens granted by a Non-Obligor Subsidiary in favor of an Obligor in respect of Debt owed
by such Non-Obligor Subsidiary to such Obligor.




          10.2.3. Capital Expenditures. Make Capital Expenditures in excess of $10,000,000 in
the aggregate during any Fiscal Year.




          10.2.4. Distributions; Upstream Payments.




67









 








          (a) Declare or make any Distributions, except: (i) Upstream Payments; (ii) no more frequently
than once during the term of this Agreement, a purchase, redemption, or other acquisition or
retirement for value of any Equity Interest of Company not to exceed $25,000,000 so long as (A) as
soon as available, but not less than fifteen (15) Business Days prior to such Distribution, Company
shall submit to Agent notice of its intent to make such Distribution, (B) Company shall deliver pro
forma financial statements which demonstrate, on a pro forma basis (1) the average daily amount of
Availability for the 30 day period immediately preceding such Distribution and (2) Availability on
the date of such Distribution shall, in each case after giving effect to such Distribution, be at
least $40,000,000, (C) Company shall deliver a certificate of the chief financial officer of
Company certifying that such pro forma financial statements present fairly in all material respects
the financial condition of Company and its Subsidiaries on a consolidated basis as of the date
thereof after giving effect to such Distribution and setting forth reasonably detailed calculations
demonstrating compliance with the minimum Availability calculation set forth in clause (B) above
and (C) before and after giving effect to such distribution, no Default or Event of Default shall
have occurred and be continuing; and (iii) no more frequently than every Fiscal Quarter, ordinary
dividends so long as (A) Company shall deliver pro forma financial statements which demonstrate, on
a pro forma basis (1) the average daily amount of Availability for the 30 day period immediately
preceding such Distribution and (2) Availability on the date of such Distribution shall, in each
case after giving effect to such Distribution, be at least $15,000,000, (B) the pro forma Fixed
Charge Coverage Ratio for the most recent consecutive four Fiscal Quarters ended immediately prior
to such Distribution shall, after giving effect to such Distribution, be at least 1.15 to 1.00, (C)
Company shall deliver a certificate of the chief financial officer of Company certifying that such
pro forma financial statements present fairly in all material respects the financial condition of
Company and its Subsidiaries on a consolidated basis as of the date thereof after giving effect to
such Distribution and setting forth reasonably detailed calculations demonstrating compliance with
the minimum Availability and Fixed Charge Coverage Ratio calculations set forth in clauses (A) and
(B) above, (D) the aggregate amount of dividends paid per Fiscal Year shall not exceed $5,000,000
and (E) before and after giving effect to such distribution, no Default or Event of Default shall
have occurred and be continuing; or




          (b) Create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to
make any Upstream Payment, except for restrictions under the Loan Documents, under Applicable Law
or in effect on the Closing Date as shown on Schedule 9.1.15.




          10.2.5. Restricted Investments. Make any Restricted Investment.




          10.2.6. Disposition of Assets. Make any Asset Disposition, except a Permitted Asset
Disposition, a disposition of Equipment under Section 8.4.2, or a transfer of Property by a
Subsidiary or Obligor to a Borrower.




          10.2.7. Loans. Make any loans or other advances of money to any Person, except (a)
advances to an officer or employee for salary, travel expenses, commissions and similar items in
the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the
Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d)
intercompany loans by an Obligor to another Obligor; and (e) intercompany loans by an Obligor or
Non-Obligor Subsidiary to a Non-Obligor Subsidiary so long as the aggregate




68









 







amount of all such intercompany loans does not exceed $3,500,000; provided,
however, that additional intercompany loans by an Obligor or Non-Obligor Subsidiary to a
Non-Obligor Subsidiary shall be permitted so long as (i) Company shall deliver pro forma financial
statements which demonstrate, on a pro forma basis (A) the average daily amount of Availability for
the 30 day period immediately preceding the making of such additional intercompany loan and (B)
Availability on the date of the making of such additional intercompany loan shall, in each case
after giving effect to such additional intercompany loan, be at least $25,000,000, (ii) before and
after giving effect to such additional intercompany loan, no Default or Event of Default shall have
occurred and be continuing and (iii) the aggregate amount of all such additional intercompany loans
made pursuant to this proviso shall not exceed $1,500,000.




          10.2.8. Restrictions on Payment of Certain Debt. Make any payments (whether voluntary
or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to
any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but
only to the extent permitted under any subordination agreement relating to such Debt; (b) Borrowed
Money (other than the Obligations and intercompany Debt permitted hereunder (subject to the
subordination provisions thereof)) prior to its due date under the agreements evidencing such Debt
as in effect on the Closing Date (or as incurred or amended thereafter with the consent of Agent);
or (c) Debt owed to holders of Equity Interests of any Obligor (other than intercompany Debt
permitted hereunder (subject to the subordination provisions thereof)).




          10.2.9. Fundamental Changes. Merge, combine or consolidate with any Person, or
liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or
in a series of related transactions, except for mergers or consolidations of (i) a wholly-owned
Subsidiary with another wholly-owned Subsidiary or (ii) a wholly-owned Subsidiary with an Obligor;
provided, however, that such Obligor shall be the continuing or surviving Person;
change its name or conduct business under any fictitious name; change its tax, charter or other
organizational identification number; or change its form or state of organization.




          10.2.10. Subsidiaries. Form or acquire any Subsidiary after the Closing Date, except
in accordance with Sections 10.1.9 and 10.2.5; or permit any existing Subsidiary to issue any
additional Equity Interests except director’s qualifying shares.




          10.2.11. Organic Documents. Amend, modify or otherwise change any of its Organic
Documents as in effect on the Closing Date, to the extent that such change could adversely affect
the Lenders or could reasonably be expected to have a Material Adverse Effect.




          10.2.12. Tax Consolidation. File or consent to the filing of any consolidated income
tax return with any Person other than Company.




          10.2.13. Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its
Fiscal Year.




          10.2.14. Restrictive Agreements. Become a party to any Restrictive Agreement, except
a Restrictive Agreement (a) in effect on the Closing Date; (b) relating to secured Debt




69









 







permitted hereunder, as long as the restrictions apply only to collateral for such Debt; or
(c) constituting customary restrictions on assignment in leases and other contracts.




          10.2.15. Hedging Agreements. Enter into any Hedging Agreement, except to hedge risks
arising in the Ordinary Course of Business and not for speculative purposes.




          10.2.16. Conduct of Business. Engage in any business, other than its business as
conducted on the Closing Date and any activities reasonably related thereto.




          10.2.17. Affiliate Transactions. Enter into or be party to any transaction with an
Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable
compensation to officers and employees for services actually rendered, and loans and advances
permitted by Section 10.2.7; (c) payment of customary directors’ fees and indemnities; (d)
transactions solely among Borrowers; (e) transactions with Affiliates that were consummated prior
to the Closing Date, as shown on Schedule 10.2.17; and (f) transactions with Affiliates in the
Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent and no less
favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate.




          10.2.18. Plans. Become party to any Multiemployer Plan or Foreign Plan, other than
any in existence on the Closing Date.




          10.2.19. Amendments to Subordinated Debt. Amend, supplement or otherwise modify any
document, instrument or agreement relating to any Subordinated Debt, if such modification (a)
increases the principal balance of such Debt, or increases any required payment of principal or
interest; (b) accelerates the date on which any installment of principal or any interest is due, or
adds any additional redemption, put or prepayment provisions; (c) shortens the final maturity date
or otherwise accelerates amortization; (d) increases the interest rate; (e) increases or adds any
fees or charges; (f) modifies any covenant in a manner or adds any representation, covenant or
default that is more onerous or restrictive in any material respect for any Borrower or Subsidiary,
or that is otherwise materially adverse to any Borrower, any Subsidiary or Lenders; or (g) results
in the Obligations not being fully benefited by the subordination provisions thereof.




     10.3. Financial Covenant. As long as any Commitments or Obligations are outstanding,
at all times during a Financial Covenant Trigger Period, Borrowers shall maintain a Fixed Charge
Coverage Ratio of at least 1.1 to 1.0 for each period of four Fiscal Quarters ending during or
immediately before such Financial Covenant Trigger Period.



SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT




     11.1. Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:



          (a) A Borrower fails to pay any Obligations when due (whether at stated maturity, on demand,
upon acceleration or otherwise);




70









 








          (b) Any representation, warranty or other written statement of an Obligor made in connection
with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any
material respect when given;




          (c) A Borrower breaches or fails to perform any covenant contained in Section 7.2, 7.4, 7.6,
8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.1.3, 10.2 or 10.3;




          (d) An Obligor breaches or fails to perform any other covenant contained in any Loan
Documents, and such breach or failure is not cured within 15 days after a Senior Officer of such
Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner; provided,
however, that such notice and opportunity to cure shall not apply if the breach or failure to
perform is not capable of being cured within such period;




          (e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligor or third
party denies or contests the validity or enforceability of any Loan Documents or Obligations, or
the perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full
force or effect for any reason (other than a waiver or release by Agent and Lenders);




          (f) Any breach or default of an Obligor occurs under any document, instrument or agreement to
which it is a party or by which it or any of its Properties is bound, relating to any Debt (other
than the Obligations) in excess of $2,000,000, if the maturity of or any payment with respect to
such Debt may be accelerated or demanded due to such breach;




          (g) Any judgment or order for the payment of money is entered against an Obligor in an amount
that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all
Obligors, $2,000,000 (net of any insurance coverage therefor acknowledged in writing by the
insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a
pending appeal or otherwise;




          (h) A loss, theft, damage or destruction occurs with respect to any Collateral if the amount
not covered by insurance exceeds $2,000,000;




          (i) An Obligor is enjoined, restrained or in any way prevented by any Governmental Authority
from conducting any material part of its business; an Obligor suffers the loss, revocation or
termination of any material license, permit, lease or agreement necessary to its business, except
as could not reasonably be expected to have a Material Adverse Effect; there is a cessation of any
material part of an Obligor’s business for a material period of time; any material Collateral or
Property of an Obligor is taken or impaired through condemnation; an Obligor agrees to or commences
any liquidation, dissolution or winding up of its affairs; or an Obligor is not Solvent;




          (j) An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an offer of
settlement, extension or composition to its unsecured creditors generally; a trustee is appointed
to take possession of any substantial Property of or to operate any of the business of an Obligor;
or an Insolvency Proceeding is commenced against an Obligor and: the Obligor consents to
institution of the proceeding, the petition commencing the proceeding is not




71









 







timely contested by the Obligor, the petition is not dismissed within 30 days after filing, or
an order for relief is entered in the proceeding;




          (k) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has
resulted or could reasonably be expected to result in liability of an Obligor to a Pension Plan,
Multiemployer Plan or PBGC, or that constitutes grounds for appointment of a trustee for or
termination by the PBGC of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate
fails to pay when due any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan; or any event similar to the foregoing occurs or
exists with respect to a Foreign Plan, to the extent that any of the foregoing events results in
damages exceeding $2,000,000;




          (l) An Obligor or any of its Senior Officers is criminally indicted or convicted for (i) a
felony committed in the conduct of the Obligor’s business, or (ii) violating any state or federal
law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal
Exportation of War Materials Act) that could lead to forfeiture of any material Property or any
Collateral; or




          (m) A Change of Control occurs.




     11.2. Remedies upon Default. If an Event of Default described in Section 11.1(j)
occurs with respect to any Borrower, then to the extent permitted by Applicable Law, all
Obligations shall become automatically due and payable and all Commitments shall terminate, without
any action by Agent or notice of any kind. In addition, or if any other Event of Default exists,
Agent may, with the consent of Required Lenders and shall, upon written direction of Required
Lenders, do any one or more of the following from time to time:



          (a) declare any Obligations immediately due and payable, whereupon they shall be due and
payable without diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrowers to the fullest extent permitted by law;




          (b) terminate, reduce or condition any Commitment, or make any adjustment to the Borrowing
Base;




          (c) require Obligors to Cash Collateralize LC Obligations, Bank Product Debt and other
Obligations that are contingent or not yet due and payable, and, if Obligors fail promptly to
deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance
the required Cash Collateral as Loans (whether or not an Overadvance exists or is created thereby,
or the conditions in Section 6 are satisfied); and




          (d) exercise any other rights or remedies afforded under any agreement, by law, at equity or
otherwise, including the rights and remedies of a secured party under the UCC. Such rights and
remedies include the rights to (i) take possession of any Collateral; (ii) require Borrowers to
assemble Collateral, at Borrowers’ expense, and make it available to Agent at a place designated by
Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises
until sold (and if the premises are owned or leased by a Borrower, Borrowers agree not to charge
for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or
after any further manufacturing or processing thereof, at public




72









 







or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at
such locations, all as Agent, in its discretion, deems advisable. Each Borrower agrees that 10
days notice of any proposed sale or other disposition of Collateral by Agent shall be reasonable.
Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and
such sales may be adjourned from time to time in accordance with Applicable Law. Agent shall have
the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination
thereof, and Agent may purchase any Collateral at public or, if permitted by law, private sale and,
in lieu of actual payment of the purchase price, may set off the amount of such price against the
Obligations.




     11.3. License. Agent is hereby granted an irrevocable, non-exclusive license or other
right to use, license or sub-license (without payment of royalty or other compensation to any
Person) any or all Intellectual Property of Borrowers, computer hardware and software, trade
secrets, brochures, customer lists, promotional and advertising materials, labels, packaging
materials and other Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral.
Each Borrower’s rights and interests under Intellectual Property shall inure to Agent’s benefit.



     11.4. Setoff. At any time during an Event of Default, Agent, Issuing Bank, Lenders,
and any of their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to
set off and apply any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever currency) at any time
owing by Agent, Issuing Bank, such Lender or such Affiliate to or for the credit or the account of
an Obligor against any Obligations, irrespective of whether or not Agent, Issuing Bank, such Lender
or such Affiliate shall have made any demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or are owed to a branch or office of
Agent, Issuing Bank, such Lender or such Affiliate different from the branch or office holding such
deposit or obligated on such indebtedness. The rights of Agent, Issuing Bank, each Lender and each
such Affiliate under this Section are in addition to other rights and remedies (including other
rights of setoff) that such Person may have.



     11.5. Remedies Cumulative; No Waiver.



          11.5.1. Cumulative Rights. All agreements, warranties, guaranties, indemnities and
other undertakings of Borrowers under the Loan Documents are cumulative and not in derogation of
each other. The rights and remedies of Agent and Lenders are cumulative, may be exercised at any
time and from time to time, concurrently or in any order, and are not exclusive of any other rights
or remedies available by agreement, by law, at equity or otherwise. All such rights and remedies
shall continue in full force and effect until Full Payment of all Obligations.




          11.5.2. Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by Borrowers with any terms
of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or
otherwise; (b) the making of any Loan or issuance of any Letter of Credit during a Default, Event
of Default or other failure to satisfy any conditions precedent; or (c) acceptance by Agent or any
Lender of any payment or performance by an Obligor under any Loan Documents in a manner other than
that specified therein. It is expressly acknowledged by Borrowers that any failure to



73









 






satisfy a financial covenant on a measurement date shall not be cured or remedied by
satisfaction of such covenant on a subsequent date.




SECTION 12. AGENT




     12.1.  Appointment, Authority and Duties of Agent.



          12.1.1. Appointment and Authority. Each Lender appoints and designates Bank of
America as Agent hereunder. Agent may, and each Lender authorizes Agent to, enter into all Loan
Documents to which Agent is intended to be a party and accept all Security Documents, for Agent’s
benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Agent
or Required Lenders of any rights or remedies set forth therein, together with all other powers
reasonably incidental thereto, shall be authorized by and binding upon all Lenders. Without
limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a)
act as the disbursing and collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document,
including any intercreditor or subordination agreement, and accept delivery of each Loan Document
from any Obligor or other Person; (c) act as collateral agent for Secured Parties for purposes of
perfecting and administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take any Enforcement
Action or otherwise exercise any rights or remedies with respect to any Collateral under the Loan
Documents, Applicable Law or otherwise. The duties of Agent shall be ministerial and
administrative in nature, and Agent shall not have a fiduciary relationship with any Lender,
Secured Party, Participant or other Person, by reason of any Loan Document or any transaction
relating thereto. Agent alone shall be authorized to determine whether any Accounts constitute
Eligible Accounts, whether to increase or decrease advance rates or other amounts in the
definitions pertaining to the Borrowing Base herein (provided, however, that any such advance rates
or other amounts may not be increased above the original levels in effect on the Closing Date), or
whether to impose or release any reserve, which determinations and judgments, if exercised in good
faith, shall exonerate Agent from liability to any Lender or other Person for any error in
judgment.




          12.1.2. Duties. Agent shall not have any duties except those expressly set forth in
the Loan Documents. The conferral upon Agent of any right shall not imply a duty on Agent’s part
to exercise such right, unless instructed to do so by Required Lenders in accordance with this
Agreement.




          12.1.3. Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance upon, any advice
given by an Agent Professional. Agent shall not be responsible for the negligence or misconduct of
any agents, employees or Agent Professionals selected by it with reasonable care.




          12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder of any other
party, unless required by Applicable Law. Agent may request instructions from Required




74









 







Lenders with respect to any act (including the failure to act) in connection with any Loan
Documents, and may seek assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.6 against all Claims that could be incurred by Agent in connection
with any act. Agent shall be entitled to refrain from any act until it has received such
instructions or assurances, and Agent shall not incur liability to any Person by reason of so
refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender
shall have any right of action whatsoever against Agent as a result of Agent acting or refraining
from acting in accordance with the instructions of Required Lenders. Notwithstanding the
foregoing, instructions by and consent of all Lenders shall be required in the circumstances
described in Section 14.1.1, and in no event shall Required Lenders, without the prior written
consent of each Lender, direct Agent to accelerate and demand payment of Loans held by one Lender
without accelerating and demanding payment of all other Loans, nor to terminate the Commitments of
one Lender without terminating the Commitments of all Lenders. In no event shall Agent be required
to take any action that, in its opinion, is contrary to Applicable Law or any Loan Documents or
could subject any Agent Indemnitee to personal liability.




     12.2. Agreements Regarding Collateral and Field Examination Reports.



          12.2.1. Lien Releases; Care of Collateral. Lenders authorize Agent to release any
Lien with respect to any Collateral (a) upon Full Payment of the Obligations (other than contingent
indemnity obligations with respect to then unasserted claims); (b) that is the subject of an Asset
Disposition which Borrowers certify in writing to Agent is a Permitted Asset Disposition or a Lien
which Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may
rely conclusively on any such certificate without further inquiry); (c) that does not constitute a
material part of the Collateral; or (d) with the written consent of all Lenders. Agent shall have
no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by a
Borrower, or is cared for, protected, insured or encumbered, nor to assure that Agent’s Liens have
been properly created, perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.




          12.2.2. Possession of Collateral. Agent and Lenders appoint each Lender as agent (for
the benefit of Secured Parties) for the purpose of perfecting Liens in any Collateral held or
controlled by such Lender, to the extent such Liens are perfected by possession or control. If any
Lender obtains possession or control of any Collateral, it shall notify Agent thereof and, promptly
upon Agent’s request, deliver such Collateral to Agent or otherwise deal with it in accordance with
Agent’s instructions.




          12.2.3. Reports. Agent shall promptly forward to each Lender, when complete, copies
of any field audit, examination or appraisal report prepared by or for Agent with respect to any
Obligor or Collateral (“Report”). Each Lender agrees (a) that neither Bank of America nor
Agent makes any representation or warranty as to the accuracy or completeness of any Report, and
shall not be liable for any information contained in or omitted from any Report; (b) that the
Reports are not intended to be comprehensive audits or examinations, and that Agent or any other
Person performing any audit or examination will inspect only specific information regarding
Obligations or the Collateral and will rely significantly upon Borrowers’ books and records as well
as upon representations of Borrowers’ officers and employees; and (c) to keep all Reports
confidential and strictly for such Lender’s internal use, and not to distribute any Report




75









 







(or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and
accountants) or use any Report in any manner other than administration of the Loans and other
Obligations. Each Lender agrees to indemnify and hold harmless Agent and any other Person
preparing a Report from any action such Lender may take as a result of or any conclusion it may
draw from any Report, as well as from any Claims arising as a direct or indirect result of Agent
furnishing a Report to such Lender.




     12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication (including those by
telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person, and upon the advice and statements of Agent
Professionals.



     12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any Default
or Event of Default unless it has received written notice from a Lender or Borrower specifying the
occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default,
it shall promptly notify Agent and the other Lenders thereof in writing. Each Lender agrees that,
except as otherwise provided in any Loan Documents or with the written consent of Agent and
Required Lenders, it will not take any Enforcement Action, accelerate Obligations under any Loan
Documents, or exercise any right that it might otherwise have under Applicable Law to credit bid at
foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the
foregoing, however, a Lender may take action to preserve or enforce its rights against an Obligor
where a deadline or limitation period is applicable that would, absent such action, bar enforcement
of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency
Proceeding.



     12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its share of such Obligation,
determined on a Pro Rata basis or in accordance with Section 5.6.1, as applicable, such Lender
shall forthwith purchase from Agent, Issuing Bank and the other Lenders such participations in the
affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 5.6.1, as applicable. If any of such
payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but without interest. No
Lender shall set off against any Dominion Account without the prior consent of Agent.



     12.6. Indemnification of Agent Indemnitees. EACH LENDER SHALL INDEMNIFY AND HOLD
HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE
INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL
CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT INDEMNITEE, PROVIDED THE CLAIM RELATES
TO OR ARISES FROM AN AGENT INDEMNITEE ACTING AS OR FOR AGENT (IN ITS CAPACITY AS AGENT). In
Agent’s discretion, it may reserve for any such Claims made against an Agent Indemnitee, and may
satisfy any judgment, order or settlement relating thereto, from proceeds of Collateral prior to
making any distribution of Collateral proceeds to Lenders.



76









 




If Agent is sued by any receiver, bankruptcy trustee, debtor-in-possession or other Person for
any alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or
satisfaction of such proceeding, together with all interest, costs and expenses (including
attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by each
Lender to the extent of its Pro Rata share.




     12.7. Limitation on Responsibilities of Agent. Agent shall not be liable to Lenders
for any action taken or omitted to be taken under the Loan Documents, except for losses directly
and solely caused by Agent’s gross negligence or willful misconduct. Agent does not assume any
responsibility for any failure or delay in performance or any breach by any Obligor or Lender of
any obligations under the Loan Documents. Agent does not make to Lenders any express or implied
warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents
or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements,
information, representations or warranties contained in any Loan Documents; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness,
enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the
validity, extent, perfection or priority of any Lien therein; the validity, enforceability or
collectibility of any Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent
Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of
any Default or Event of Default, the observance or performance by any Obligor of any terms of the
Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.



     12.8. Successor Agent and Co-Agents.



          12.8.1. Resignation; Successor Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time by giving at least 30 days written
notice thereof to Lenders and Borrowers. Upon receipt of such notice, Required Lenders shall have
the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or
(b) a commercial bank that is organized under the laws of the United States or any state or
district thereof, has a combined capital surplus of at least $200,000,000 and (provided no Default
or Event of Default exists) is reasonably acceptable to Borrowers. If no successor agent is
appointed prior to the effective date of the resignation of Agent, then Agent may appoint a
successor agent from among Lenders. Upon acceptance by a successor Agent of an appointment to
serve as Agent hereunder, such successor Agent shall thereupon succeed to and become vested with
all the powers and duties of the retiring Agent without further act, and the retiring Agent shall
be discharged from its duties and obligations hereunder but shall continue to have the benefits of
the indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s resignation,
the provisions of this Section 12 shall continue in effect for its benefit with respect to any
actions taken or omitted to be taken by it while Agent. Any successor to Bank of America by merger
or acquisition of stock or this loan shall continue to be Agent hereunder without further act on
the part of the parties hereto, unless such successor resigns as provided above.




          12.8.2. Separate Collateral Agent. It is the intent of the parties that there shall
be no violation of any Applicable Law denying or restricting the right of financial institutions to



77









 







transact business in any jurisdiction. If Agent believes that it may be limited in the
exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Agent may
appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral
agent. If Agent so appoints a collateral agent or co-collateral agent, each right and remedy
intended to be available to Agent under the Loan Documents shall also be vested in such separate
agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to
and be enforceable by it as well as Agent. Lenders shall execute and deliver such documents as
Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or
co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then
all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new agent.




     12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and based upon such
documents, information and analyses as it has deemed appropriate, made its own credit analysis of
each Obligor and its own decision to enter into this Agreement and to fund Loans and participate in
LC Obligations hereunder. Each Lender has made such inquiries concerning the Loan Documents, the
Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and
agrees that the other Lenders and Agent have made no representations or warranties concerning any
Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan
Documents or Obligations. Each Lender will, independently and without reliance upon the other
Lenders or Agent, and based upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit decisions in making Loans
and participating in LC Obligations, and in taking or refraining from any action under any Loan
Documents. Except for notices, reports and other information expressly requested by a Lender,
Agent shall have no duty or responsibility to provide any Lender with any notices, reports or
certificates furnished to Agent by any Obligor or any credit or other information concerning the
affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates)
which may come into possession of Agent or any of Agent’s Affiliates.



     12.10. Replacement of Certain Lenders. If a Lender (a) is a Defaulting Lender, (b)
proposes to charge fees, expenses or increased costs under Section 3.7 or (c) fails to give its
consent to any amendment, waiver or action for which consent of all Lenders was required and
Required Lenders consented, then, in addition to any other rights and remedies that any Person may
have, Agent may, by notice to such Lender within 120 days after such event, require such Lender to
assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s) specified
by Agent, pursuant to appropriate Assignment and Acceptance(s) and within 20 days after Agent’s
notice. Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and
Acceptance if the Lender fails to execute same. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the Loan Documents, including all
principal, interest and fees through the date of assignment (but excluding any prepayment charge)
and any amounts due to such Lender under Section 3.7.



78









 





     12.11. Remittance of Payments and Collections.



          12.11.1. Remittances Generally. All payments by any Lender to Agent shall be made by
the time and on the day set forth in this Agreement, in immediately available funds. If no time
for payment is specified or if payment is due on demand by Agent and request for payment is made by
Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender not later than 2:00 p.m. on
such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on the
next Business Day. Payment by Agent to any Lender shall be made by wire transfer, in the type of
funds received by Agent. Any such payment shall be subject to Agent’s right of offset for any
amounts due from such Lender under the Loan Documents.




          12.11.2. Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid at
the rate determined by Agent as customary in the banking industry for interbank compensation. In
no event shall Borrowers be entitled to receive credit for any interest paid by a Lender to Agent,
nor shall any Defaulting Lender be entitled to interest on any amounts held by Agent pursuant to
Section 4.2.




          12.11.3. Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor and such related
payment is not received, then Agent may recover such amount from each Lender that received it. If
Agent determines at any time that an amount received under any Loan Document must be returned to an
Obligor or paid to any other Person pursuant to Applicable Law or otherwise, then, notwithstanding
any other term of any Loan Document, Agent shall not be required to distribute such amount to any
Lender. If any amounts received and applied by Agent to any Obligations are later required to be
returned by Agent pursuant to Applicable Law, each Lender shall pay to Agent, on demand, such
Lender’s Pro Rata share of the amounts required to be returned.




     12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have the
same rights and remedies under the other Loan Documents as any other Lender, and the terms
“Lenders,” “Required Lenders” or any similar term shall include Bank of America in its capacity as
a Lender. Each of Bank of America and its Affiliates may accept deposits from, maintain deposits
or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee under
indentures of, serve as financial or other advisor to, and generally engage in any kind of business
with, Obligors and their Affiliates, as if Bank of America were any other bank, without any duty to
account therefor (including any fees or other consideration received in connection therewith) to
the other Lenders. In their individual capacity, Bank of America and its Affiliates may receive
information regarding Obligors, their Affiliates and their Account Debtors (including information
subject to confidentiality obligations), and each Lender agrees that Bank of America and its
Affiliates shall be under no obligation to provide such information to Lenders, if acquired in such
individual capacity and not as Agent hereunder.



     12.13. Agent Titles. Each Lender, other than Bank of America, that is designated (on
the cover page of this Agreement or otherwise) by Bank of America as an “Agent” or “Arranger” of
any type shall not have any right, power, responsibility or duty under any Loan Documents



79









 




other than those applicable to all Lenders, and shall in no event be deemed to have any
fiduciary relationship with any other Lender.




     12.14. No Third Party Beneficiaries. This Section 12 is an agreement solely among
Lenders and Agent, and shall survive Full Payment of the Obligations. This Section 12 does not
confer any rights or benefits upon Borrowers or any other Person. As between Borrowers and Agent,
any action that Agent may take under any Loan Documents or with respect to any Obligations shall be
conclusively presumed to have been authorized and directed by Lenders.



SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS




     13.1. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, Lenders, and their respective successors and assigns, except that (a)
no Borrower shall have the right to assign its rights or delegate its obligations under any Loan
Documents; and (b) any assignment by a Lender must be made in compliance with Section 13.3. Agent
may treat the Person which made any Loan as the owner thereof for all purposes until such Person
makes an assignment in accordance with Section 13.3. Any authorization or consent of a Lender
shall be conclusive and binding on any subsequent transferee or assignee of such Lender.



     13.2. Participations.



          13.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary course of its
business and in accordance with Applicable Law, at any time sell to a financial institution
(“Participant”) a participating interest in the rights and obligations of such Lender under any
Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such
Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for performance of such obligations, such Lender
shall remain the holder of its Loans and Commitments for all purposes, all amounts payable by
Borrowers shall be determined as if such Lender had not sold such participating interests, and
Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with
the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any
matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or
liability to any such Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in
writing.




          13.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, waiver or other modification of any Loan Documents
other than that which forgives principal, interest or fees, reduces the stated interest rate or
fees payable with respect to any Loan or Commitment in which such Participant has an interest,
postpones the Commitment Termination Date or any date fixed for any regularly scheduled payment of
principal, interest or fees on such Loan or Commitment, or releases any Borrower, Guarantor or
substantial portion of the Collateral.




          13.2.3. Benefit of Set-Off. Borrowers agree that each Participant shall have a right
of set-off in respect of its participating interest to the same extent as if such interest were



80









 






owing directly to a Lender, and each Lender shall also retain the right of set-off with
respect to any participating interests sold by it. By exercising any right of set-off, a
Participant agrees to share with Lenders all amounts received through its set-off, in accordance
with Section 12.5 as if such Participant were a Lender.




     13.3. Assignments.



          13.3.1. Permitted Assignments. A Lender may assign to an Eligible Assignee any of its
rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant,
and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan
Documents and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000
(unless otherwise agreed by Agent in its discretion) and integral multiples of $1,000,000 in excess
of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and
obligations, the aggregate amount of the Commitments retained by the transferor Lender is at least
$5,000,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording, an Assignment and
Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under
the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by
such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans;
provided, however, that any payment by Borrowers to the assigning Lender in respect
of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations
hereunder to the extent of such payment, and no such assignment shall release the assigning Lender
from its obligations hereunder.




          13.3.2. Effect; Effective Date. Upon delivery to Agent of an assignment notice in the
form of Exhibit C and a processing fee of $3,500 (unless otherwise agreed by Agent in its
discretion), the assignment shall become effective as specified in the notice, if it complies with
this Section 13.3. From such effective date, the Eligible Assignee shall for all purposes be a
Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder.
Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make
appropriate arrangements for issuance of replacement and/or new Notes, as applicable. The
transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative
questionnaire satisfactory to Agent.




SECTION 14. MISCELLANEOUS




     14.1. Consents, Amendments and Waivers.



          14.1.1. Amendment. No modification of any Loan Document, including any extension or
amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective
without the prior written agreement of Agent (with the consent of Required Lenders) and each
Obligor party to such Loan Document; provided, however, that




          (a) without the prior written consent of Agent, no modification shall be effective with
respect to any provision in a Loan Document that relates to any rights, duties or discretion of
Agent;




81









 








          (b) without the prior written consent of Issuing Bank, no modification shall be effective with
respect to any LC Obligations or Section 2.3;




          (c) without the prior written consent of each affected Lender, no modification shall be
effective that would (i) increase the Commitment of such Lender; or (ii) reduce the amount of, or
waive or delay payment of, any principal, interest or fees payable to such Lender; and




          (d) without the prior written consent of all Lenders (except a Defaulting Lender as provided
in Section 4.2), no modification shall be effective that would (i) extend the Termination Date;
(ii) alter Section 5.6, 7.1 (except to add Collateral) or 14.1.1; (iii) amend the definitions of
Borrowing Base (and the defined terms used in such definition), Pro Rata or Required Lenders; (iv)
increase any advance rate; (v) release Collateral with a book value greater than $10,000,000 during
any calendar year, except as currently contemplated by the Loan Documents; or (vi) release any
Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release.




          14.1.2. Limitations. The agreement of Borrowers shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the rights and duties
of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the parties to the
Fee Letter or any agreement relating to a Bank Product shall be required for any modification of
such agreement, and any non-Lender that is party to a Bank Product agreement shall have no right to
participate in any manner in modification of any other Loan Document. Any waiver or consent
granted by Agent or Lenders hereunder shall be effective only if in writing and only for the matter
specified.




          14.1.3. Payment for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to
any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender
with any modification of any Loan Documents, unless such remuneration or value is concurrently
paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.




     14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS
ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have
any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that
is determined in a final, non-appealable judgment by a court of competent jurisdiction to result
from the gross negligence or willful misconduct of such Indemnitee.



     14.3. Notices and Communications.



          14.3.1. Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to any Borrower, at
Company’s address shown on the signature pages hereof, and to any other Person at its address shown
on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing
Date, at the address shown on its Assignment and Acceptance), or at such other address



82









 






as a party may hereafter specify by notice in accordance with this Section 14.3. Each such
notice or other communication shall be effective only (a) if given by facsimile transmission, when
transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if
given by mail, three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly
delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no
notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2 or 4.1.1 shall be effective until actually
received by the individual to whose attention at Agent such notice is required to be sent. Any
written notice or other communication that is not sent in conformity with the foregoing provisions
shall nevertheless be effective on the date actually received by the noticed party. Any notice
received by Company shall be deemed received by all Borrowers.




          14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet websites
may be used only for routine communications, such as financial statements, Borrowing Base
Certificates and other information required by Section 10.1.2, administrative matters, distribution
of Loan Documents for execution, and matters permitted under Section 4.1.4. Agent and Lenders make
no assurances as to the privacy and security of electronic communications. Electronic and voice
mail may not be used as effective notice under the Loan Documents.




          14.3.3. Non-Conforming Communications. Agent and Lenders may rely upon any notices
purportedly given by or on behalf of any Borrower even if such notices were not made in a manner
specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by
the recipient, varied from a later confirmation. Each Borrower shall indemnify and hold harmless
each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of a Borrower.




     14.4. Performance of Borrowers’ Obligations. Agent may, in its discretion at any time
and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower
under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents
or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c)
defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any
payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or
landlord claim, or any discharge of a Lien. All payments, costs and expenses (including
Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers, on
demand, with interest from the date incurred to the date of payment thereof at the Default Rate
applicable to Base Rate Loans. Any payment made or action taken by Agent under this Section shall
be without prejudice to any right to assert an Event of Default or to exercise any other rights or
remedies under the Loan Documents.



     14.5. Credit Inquiries. Each Borrower hereby authorizes Agent and Lenders (but they
shall have no obligation) to respond to usual and customary credit inquiries from third parties
concerning any Borrower or Subsidiary.



     14.6. Severability. Wherever possible, each provision of the Loan Documents shall be
interpreted in such manner as to be valid under Applicable Law. If any provision is found to be
invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the
remaining provisions of the Loan Documents shall remain in full force and effect.



83









 





     14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents are
cumulative. The parties acknowledge that the Loan Documents may use several limitations, tests or
measurements to regulate similar matters, and they agree that these are cumulative and that each
must be performed as provided. Except as otherwise provided in another Loan Document (by specific
reference to the applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision herein shall govern and
control.



     14.8. Counterparts. Any Loan Document may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement shall become effective when Agent has received counterparts bearing the
signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or
other electronic means shall be effective as delivery of a manually executed counterpart of such
agreement.



     14.9. Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents constitute the entire contract among the parties relating to the subject matter hereof,
and supersede any and all previous agreements and understandings, oral or written, relating to the
subject matter hereof.



     14.10. Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments of any other Lender.
Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not
be necessary for Agent or any other Lender to be joined as an additional party in any proceeding
for such purposes. Nothing in this Agreement and no action of Agent or Lenders pursuant to the
Loan Documents shall be deemed to constitute Agent and Lenders to be a partnership, association,
joint venture or any other kind of entity, nor to constitute control of any Borrower.



     14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Loan Document, Borrowers acknowledge and agree that (a)(i)
this credit facility and any related arranging or other services by Agent, any Lender, any of their
Affiliates or any arranger are arm’s-length commercial transactions between Borrowers and such
Person; (ii) Borrowers have consulted their own legal, accounting, regulatory and tax advisors to
the extent they have deemed appropriate; and (iii) Borrowers are capable of evaluating and
understanding, and do understand and accept, the terms, risks and conditions of the transactions
contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger
is and has been acting solely as a principal in connection with this credit facility, is not the
financial advisor, agent or fiduciary for Borrowers, any of their Affiliates or any other Person,
and has no obligation with respect to the transactions contemplated by the Loan Documents except as
expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from those of Borrowers
and their Affiliates, and have no obligation to disclose any of such interests to Borrowers or
their Affiliates. To the fullest extent permitted by Applicable Law, each Borrower hereby waives
and releases any claims that it may have against Agent, Lenders, their Affiliates and any arranger
with respect to any breach or alleged



84









 




breach of agency or fiduciary duty in connection with any aspect of any transaction
contemplated by a Loan Document.




     14.12. Confidentiality. Each of Agent, Lenders and Issuing Bank agrees to maintain
the confidentiality of all Information (as defined below), except that Information may be disclosed
(a) to its Affiliates, and to its and their partners, directors, officers, employees, agents,
advisors and representatives (provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested by any
governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or
its Affiliates; (c) to the extent required by Applicable Law or by any subpoena or other legal
process; (d) to any other party hereto; (e) in connection with any action or proceeding, or other
exercise of rights or remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any Transferee or any
actual or prospective party (or its advisors) to any Bank Product; (g) with the consent of Company;
or (h) to the extent such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of their
Affiliates on a nonconfidential basis from a source other than Borrowers. Notwithstanding the
foregoing, Agent and Lenders may publish or disseminate general information describing this credit
facility, including the names and addresses of Borrowers and a general description of Borrowers’
businesses, and may use Borrowers’ logos, trademarks or product photographs in advertising
materials. As used herein, “Information” means all non-public information received from an
Obligor or Subsidiary relating to it or its business. Any Person required to maintain the
confidentiality of Information pursuant to this Section shall be deemed to have complied if it
exercises the same degree of care that it accords its own confidential information. Each of Agent,
Lenders and Issuing Bank acknowledges that (i) Information may include material non-public
information concerning an Obligor or Subsidiary; (ii) it has developed compliance procedures
regarding the use of material non-public information; and (iii) it will handle such material
non-public information in accordance with Applicable Law, including federal and state securities
laws.



     14.13. [Reserved].



     14.14. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE
SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).



     14.15. Consent to Forum. EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER ILLINOIS, IN ANY
PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH
PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY WAIVES ALL
CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE



85









 




MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1. Nothing herein shall limit the right of Agent
or any Lender to bring proceedings against any Obligor in any other court, nor limit the right of
any party to serve process in any other manner permitted by Applicable Law. Nothing in this
Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any
forum or jurisdiction.




     14.16. Waivers by Borrowers. To the fullest extent permitted by Applicable Law, each
Borrower waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in
any proceeding or dispute of any kind relating in any way to any Loan Documents, Obligations or
Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent on which a Borrower
may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice
prior to taking possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of
all valuation, appraisement and exemption laws; (f) any claim against Agent or any Lender, on any
theory of liability, for special, indirect, consequential, exemplary or punitive damages (as
opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations,
Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each
Borrower acknowledges that the foregoing waivers are a material inducement to Agent and Lenders
entering into this Agreement and that Agent and Lenders are relying upon the foregoing in their
dealings with Borrowers. Each Borrower has reviewed the foregoing waivers with its legal counsel
and has knowingly and voluntarily waived its jury trial and other rights following consultation
with legal counsel. In the event of litigation, this Agreement may be filed as a written consent
to a trial by the court.



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



[Remainder of page intentionally left blank; signatures begin on following page]




86









 





     IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth
above.



	 	 	 	 	 	 	 
	 

	 	BORROWERS:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AGILYSYS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Martin F. Ellis	 	 
	 

	 	Title:
	 	President and CEO

	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:
	 	28925 Fountain Parkway	 	 
	 

	 	 	 	Solon, OH, 44139	 	 
	 
	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopy:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AGILYSYS NV, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Tina Stehle	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	SVP and General Manager	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:
	 	28925 Fountain Parkway

Solon, OH, 44139	 	 
	 
	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopy:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AGILYSYS NJ, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Martin F. Ellis	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	President	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:
	 	28925 Fountain Parkway	 	 
	 

	 	 	 	Solon, OH, 44139	 	 
	 
	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopy:	 	 	 	 
	 

	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 
	 	 	AGENT AND LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as Agent and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steven Friedlander	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopy: