exv10w7



 



Exhibit 10.7


MASTER LOAN AND SECURITY AGREEMENT



dated as of October 17, 2003,



by and among



OXFORD FINANCE CORPORATION,



NATIONAL CITY BANK



as Administrative Agent



and



the other Lenders named herein















 


TABLE OF CONTENTS



Page



	 	 	 	 	 	 	 	 	 
	SECTION 1. GENERAL PROVISIONS	 	1	 
	 	1.1	 	 	Defined Terms
	 	 	1	 
	 	1.2	 	 	Line of Credit
	 	 	1	 
	 	1.3	 	 	Advances
	 	 	1	 
	 	1.4	 	 	Swingline Loans
	 	 	3	 
	 	1.5	 	 	Interest Rate
	 	 	5	 
	 	1.6	 	 	Loan Payments
	 	 	7	 
	 	1.7	 	 	Late Charges
	 	 	7	 
	 	1.8	 	 	Required Prepayments
	 	 	8	 
	 	1.9	 	 	Voluntary Prepayments
	 	 	8	 
	 	1.10	 	 	Collateral
	 	 	9	 
	 	1.11	 	 	Closing Requirements and the Initial Advance
	 	 	10	 
	SECTION 2. REPRESENTATIONS AND WARRANTIES	 	13	 
	 	2.1	 	 	Organization; Power; Qualification
	 	 	14	 
	 	2.2	 	 	Authorization
	 	 	14	 
	 	2.3	 	 	Litigation
	 	 	14	 
	 	2.4	 	 	Ownership; Management and Subsidiaries; etc
	 	 	14	 
	 	2.5	 	 	Financial Condition
	 	 	15	 
	 	2.6	 	 	Taxes
	 	 	15	 
	 	2.7	 	 	Title to Properties and Collateral
	 	 	15	 
	 	2.8	 	 	Borrower’s Name, Business Locations, etc
	 	 	15	 
	 	2.9	 	 	Compliance with Laws
	 	 	16	 
	 	2.10	 	 	Burdensome Provisions
	 	 	16	 
	 	2.11	 	 	Solvency
	 	 	16	 
	 	2.12	 	 	Material Agreements
	 	 	16	 
	 	2.13	 	 	Absence of Defaults
	 	 	16	 
	 	2.14	 	 	Liens
	 	 	16	 
	 	2.15	 	 	ERISA
	 	 	16	 
	 	2.16	 	 	[Reserved]
	 	 	17	 
	 	2.17	 	 	Labor Matters
	 	 	17	 
	 	2.18	 	 	Margin Stock
	 	 	17	 
	 	2.19	 	 	Government Regulation
	 	 	17	 
	 	2.20	 	 	Environmental Matters
	 	 	17	 
	 	2.21	 	 	Accuracy of Information
	 	 	18	 
	 	2.22	 	 	Purpose of Loan
	 	 	18	 
	 	2.23	 	 	Intellectual Property Matters
	 	 	18	 
	 	2.24	 	 	The Obligor Loans
	 	 	18	 
	SECTION 3. AFFIRMATIVE COVENANTS	 	19	 
	 	3.1	 	 	Payment of Obligations
	 	 	19	 
	 	3.2	 	 	Financial Statements and Other Reports
	 	 	19	 
	 	3.3	 	 	Conduct of Business and Maintenance of Existence
	 	 	20	 
	 	3.4	 	 	Compliance with Laws
	 	 	20	 



(i)






 




	 	 	 	 	 	 	 	 	 
	 	3.5	 	 	Payment of Liabilities and Taxes
	 	 	20	 
	 	3.6	 	 	Contractual Obligations
	 	 	20	 
	 	3.7	 	 	Maintenance of Properties
	 	 	20	 
	 	3.8	 	 	Insurance
	 	 	20	 
	 	3.9	 	 	Inspection
	 	 	21	 
	 	3.10	 	 	Collection of Loan Receivables
	 	 	22	 
	 	3.11	 	 	Loan Undertakings
	 	 	22	 
	 	3.12	 	 	Accounting Methods and Financial Records
	 	 	22	 
	 	3.13	 	 	Further Assurances
	 	 	22	 
	 	3.14	 	 	Environmental Laws
	 	 	23	 
	 	3.15	 	 	Compliance with ERISA
	 	 	23	 
	 	3.16	 	 	Notice
	 	 	24	 
	 	3.17	 	 	Collections
	 	 	24	 
	 	3.18	 	 	Use of Proceeds
	 	 	25	 
	 	3.19	 	 	Obligor Loan Documents
	 	 	25	 
	 	3.20	 	 	Business Checking Account
	 	 	25	 
	 	3.21	 	 	Hedging Agreement
	 	 	25	 
	 	3.22	 	 	Senior Management
	 	 	25	 
	 	3.23	 	 	Additional Subsidiaries
	 	 	25	 
	 	3.24	 	 	Landlord or Mortgagee Waiver
	 	 	25	 
	SECTION 4. NEGATIVE COVENANTS	 	25	 
	 	4.1	 	 	Financial Covenants
	 	 	25	 
	 	4.2	 	 	Limitations on Indebtedness
	 	 	26	 
	 	4.3	 	 	Limitations on Liens
	 	 	26	 
	 	4.4	 	 	Mergers, Acquisitions, Etc
	 	 	27	 
	 	4.5	 	 	Investments
	 	 	27	 
	 	4.6	 	 	Sale of Assets and Liquidation
	 	 	27	 
	 	4.7	 	 	Transactions with Affiliates
	 	 	28	 
	 	4.8	 	 	Change of Control
	 	 	28	 
	 	4.9	 	 	Change of Business
	 	 	28	 
	 	4.10	 	 	Change of Name, Location, Etc
	 	 	28	 
	 	4.11	 	 	Certain Accounting Changes; Organizational Documents
	 	 	28	 
	 	4.12	 	 	Capital Stock
	 	 	28	 
	 	4.13	 	 	Amendments
	 	 	28	 
	 	4.14	 	 	ERISA
	 	 	29	 
	SECTION 5. DEFAULT	 	29	 
	 	5.1	 	 	Payment of Obligations
	 	 	29	 
	 	5.2	 	 	Perform, etc. Certain Provisions of this Agreement
	 	 	29	 
	 	5.3	 	 	Perform, etc. Other Provisions of this Agreement
	 	 	29	 
	 	5.4	 	 	Representations and Warranties
	 	 	29	 
	 	5.5	 	 	Default Under Other Financing Documents
	 	 	29	 
	 	5.6	 	 	Liquidation, Termination, Dissolution, etc
	 	 	29	 
	 	5.7	 	 	Default Under Other Indebtedness
	 	 	30	 
	 	5.8	 	 	Attachment
	 	 	30	 
	 	5.9	 	 	Judgments
	 	 	30	 



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	 	5.10	 	 	Inability to Pay Debts, etc
	 	 	30	 
	 	5.11	 	 	Bankruptcy
	 	 	30	 
	 	5.12	 	 	Receiver, etc
	 	 	30	 
	 	5.13	 	 	Financial Condition
	 	 	30	 
	 	5.14	 	 	Default; Security Interest
	 	 	31	 
	 	5.15	 	 	Change of Control
	 	 	31	 
	 	5.16	 	 	Insecure
	 	 	31	 
	 	5.17	 	 	Prospect of Payment
	 	 	31	 
	SECTION 6. RIGHTS AND REMEDIES	 	31	 
	 	6.1	 	 	Rights and Remedies
	 	 	31	 
	 	6.2	 	 	Default Rate
	 	 	33	 
	 	6.3	 	 	Liens, Set-Off
	 	 	34	 
	 	6.4	 	 	Enforcement Costs
	 	 	34	 
	 	6.5	 	 	Application of Proceeds
	 	 	34	 
	 	6.6	 	 	Remedies, etc. Cumulative
	 	 	35	 
	 	6.7	 	 	No Waiver, Etc
	 	 	35	 
	SECTION 7. THE ADMINISTRATIVE AGENT	 	35	 
	 	7.1	 	 	Appointment
	 	 	35	 
	 	7.2	 	 	Delegation of Duties
	 	 	36	 
	 	7.3	 	 	Exculpatory Provisions
	 	 	36	 
	 	7.4	 	 	Reliance by the Administrative Agent
	 	 	36	 
	 	7.5	 	 	Notice of Default
	 	 	37	 
	 	7.6	 	 	Non-Reliance on the Administrative Agent and Other Lenders
	 	 	37	 
	 	7.7	 	 	Indemnification
	 	 	37	 
	 	7.8	 	 	The Administrative Agent in Its Individual Capacity
	 	 	38	 
	 	7.9	 	 	Resignation of the Administrative Agent, Successor Administrative Agent
	 	 	38	 
	SECTION 8. MISCELLANEOUS	 	38	 
	 	8.1	 	 	Course of Dealing; Amendment
	 	 	38	 
	 	8.2	 	 	Waivers of Default
	 	 	39	 
	 	8.3	 	 	Circumstances Where Consent of all of the Lenders is Required
	 	 	39	 
	 	8.4	 	 	Notices
	 	 	40	 
	 	8.5	 	 	Right to Perform
	 	 	41	 
	 	8.6	 	 	Fee; Costs and Expenses
	 	 	41	 
	 	8.7	 	 	Consent to Jurisdiction
	 	 	42	 
	 	8.8	 	 	Assignment and Participations
	 	 	42	 
	 	8.9	 	 	Definitions; Certain Definitional Provisions
	 	 	43	 
	 	8.10	 	 	Entire Agreement; Severability
	 	 	53	 
	 	8.11	 	 	Confession of Judgment
	 	 	53	 
	 	8.12	 	 	Survival
	 	 	53	 
	 	8.13	 	 	Successors and Assigns
	 	 	53	 
	 	8.14	 	 	Applicable Law
	 	 	53	 
	 	8.15	 	 	Time of Essence
	 	 	54	 
	 	8.16	 	 	Duplicate Originals and Counterparts
	 	 	54	 
	 	8.17	 	 	Headings
	 	 	54	 



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EXHIBITS




	A.	 	Advance Request
	 
	B.	 	Form of Promissory Note
	 
	C.	 	Notice of Assignment
	 
	D.	 	Form of Borrowing Base Certificate
	 
	E.	 	Form of Allonge to Promissory Notes
	 
	F.	 	Form of Joinder Agreement



SCHEDULES




	 	 	 
	2.1	 	
Jurisdictions
	 	 	
 
	2.4(a)	 	
Stockholders
	 	 	
 
	2.4(b)	 	
Senior Management
	 	 	
 
	2.8	 	
List of Other Locations
	 	 	
 
	2.16	 	
List of Plans
	 	 	
 
	2.25	 	
List of Prepaid Amounts Under Eligible Loan
	 	 	
 
	4.2(f)	 	
Indebtedness
	 	 	
 
	4.3(h)	 	
Liens
	 	 	
 
	4.4	 	
Permitted Investments




(iv)










 



MASTER LOAN AND SECURITY AGREEMENT



     THIS MASTER LOAN AND SECURITY AGREEMENT (this “Agreement”) is made as of
the 17th day of October, 2003, by and among OXFORD FINANCE CORPORATION, a
Maryland corporation, its successors and permitted assigns (“Borrower”), the
lenders who are or may become a party to this Agreement, as Lenders and
NATIONAL CITY BANK, as Administrative Agent for the Lenders (“Administrative
Agent”).


     Borrower has heretofore entered into, or hereafter will enter into,
certain Master Loan and Security Agreements with the borrowers specified
therein (each a “Loan Obligor” and collectively, “Loan Obligors”) and receive
certain promissory notes executed by such Loan Obligors, pursuant to which
Borrower has made, or hereafter will make, loans (the “Obligor Loans”) to the
Loan Obligors, secured by the collateral specified therein.


     Borrower has requested, and the Lenders have agreed, to extend certain
credit facilities to the Borrower on the terms and conditions specified herein.


     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:


SECTION 1. GENERAL PROVISIONS.



     1.1 Defined Terms. Capitalized terms not otherwise
defined herein, shall have the meanings given to such terms in Section 8.8
hereof.


     1.2 Line of Credit. From time to time, Borrower may
request that the Lenders lend to Borrower certain sums (not to exceed the
lesser of (i) $35,000,000 or (ii) the Borrowing Base (the “Maximum Loan
Amount”) at any time outstanding) on the terms and conditions set forth herein,
by submitting to the Administrative Agent a written request therefor executed
by a Responsible Officer, in substantially the form attached hereto as Exhibit
A (an “Advance Request”), in accordance with Section 1.11(b). Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations and warranties set forth herein, each Lender severally agrees
to provide its Loan Commitment Percentage of each Advance (as defined below) to
the Borrower from time to time from the Closing Date through, but not
including, the Maturity Date. The availability of Advances under this line of
credit shall expire on May 31, 2005 unless earlier terminated pursuant to
Section 6.1 (the “Maturity Date”). Advances may be borrowed, repaid, and
reborrowed from time to time until the Maturity Date subject to the Borrowing
Base requirements of Section 1.3 and the voluntary repayment requirements of
Section 1.9.


     1.3 Advances.


          (a) Each advance hereunder is referred to as an “Advance” and all Advances
together with all Swingline Loans hereunder are collectively referred to as the
“Loan.”



          (b) Each LIBOR Advance hereunder shall be an aggregate principal amount of
$1,000,000 or a multiple of $500,000 in excess thereof and each Base Rate
Advance shall be



 






 





an aggregate principal amount of $500,000 or a multiple of $250,000 in
excess thereof. The maximum aggregate amount of the Loan at any one time shall
not exceed the Maximum Loan Amount, based on the then applicable Borrowing Base
Certificate delivered to the Administrative Agent pursuant to Section 1.11(b)
or Section 3.2 hereof, as the case may be.


          (c) Each Lender’s Loan Commitment and the obligation of the Borrower to
repay such amount of the Loan hereunder shall be evidenced by a separate
Promissory Note payable by Borrower to the order of such Lender in
substantially the form attached hereto as Exhibit B-1 (each, a “Loan Commitment
Note” and collectively, the “Loan Commitment Notes”).



          (d) Disbursement of Advance. Provided each Lender receives a request for
an Advance not later than (i) 11:00 a.m. (Philadelphia time) on the Business
Day before the date a LIBOR Advance is to be made and (ii) not later than 1:00
p.m. on the date a Base Rate Advance is to be made, each Lender, not later than
3:00 p.m. (Philadelphia time) on the proposed borrowing date, (i) will make
available to the Administrative Agent, for the account of the Borrower, at the
office of the Administrative Agent in funds immediately available to the
Administrative Agent, such Lender’s Loan Commitment Percentage of the Advance
to be made on such borrowing date. The Borrower hereby irrevocably authorizes
the Administrative Agent to disburse each Advance requested pursuant to this
Section 1.3 in immediately available funds by crediting or wiring such proceeds
to the deposit account of the Borrower identified in the most recent Advance
Request delivered by the Borrower to the Administrative Agent or as may be
otherwise agreed upon by the Borrower and the Administrative Agent from time to
time. Subject to Section 1.3(e) below, the Administrative Agent shall not be
obligated to disburse the portion of the proceeds of any Advance requested
pursuant to this Section 1.3 to the extent that any Lender has not made
available to the Administrative Agent its Loan Commitment Percentage of such
Advance.



          (e) Nature of Obligations of Lenders Regarding Advances; Assumption by the
Administrative Agent. The obligations of the Lenders under this Agreement to
make the Advances are several and are not joint or joint and several. Unless
the Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 1.3(d), and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in
accordance with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section
1.3(e) shall be conclusive, absent manifest



2






 





error. If such Lender’s Loan Commitment Percentage of such borrowing is
not made available to the Administrative Agent by such Lender within three (3)
Business Days after such borrowing date, the Administrative Agent shall be
entitled to recover such amount made available by the Administrative Agent with
interest thereon at the Base Rate, on demand, from the Borrower. The failure
of any Lender to make available its Loan Commitment Percentage of any Advance
requested by the Borrower shall not relieve it or any other Lender of its
obligation, if any, hereunder to make its Loan Commitment Percentage of such
Advance available on the borrowing date, but no Lender shall be responsible for
the failure of any other Lender to make its Loan Commitment Percentage of such
Advance available on the borrowing date.


          (f) Commencing on the Closing Date, the Borrower shall pay to the
Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum equal to .25% on the average daily unused
portion of the aggregate Loan Commitment. The commitment fee shall be payable
in arrears on the last Business Day of each calendar quarter during the term of
this Agreement commencing December 31, 2003, and on the Maturity Date. Such
commitment fee shall be distributed by the Administrative Agent to the Lenders
pro rata in accordance with the Lenders’ respective Loan Commitment
Percentages. For purposes hereof, the aggregate principal amount of all
outstanding Swingline Loans shall be deemed an unused portion of the aggregate
Loan Commitment.




     1.4 Swingline Loans.


          (a) Availability. Subject to the terms and conditions
of this Agreement, the Borrower may from time to time from the Closing Date
through, but not including, the Swingline Termination Date, request that the
Swingline Lender make Swingline Loans to the Borrower by submitting to the
Administrative Agent a written request therefor executed by a Responsible
Officer, in substantially the form attached hereto as Exhibit A (a “Swingline
Loan Request” and together with an Advance Request each, a “Request”), in
accordance with Section 1.11(b); provided, that (i) each Swingline Loan
hereunder shall be an aggregate principal amount of $250,000 or a whole
multiple of $250,000 in excess thereof and (ii) the aggregate principal amount
of all outstanding Swingline Loans (after giving effect to any amount
requested), shall not exceed the lesser of (A) the Maximum Loan Amount less the
aggregate outstanding principal amount of the Loan and (B) $5,000,000. A
Swingline Loan Request received after 11:00 a.m. (Philadelphia time) shall be
deemed received on the next Business Day. The Administrative Agent shall
promptly notify the Swingline Lender of each Swingline Loan Request.



          (b) Disbursement of Swingline Loans. The Swingline
Lender, not later than 2:00 p.m. (Philadelphia time) on the proposed borrowing
date, (i) will make available to the Administrative Agent, for the account of
the Borrower, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, the Swingline Loans to be made on such
borrowing date. The Borrower hereby irrevocably authorizes the Administrative
Agent to disburse each Swingline Loan requested pursuant to this Section 1.4 in
immediately available funds by crediting or wiring such proceeds to the deposit
account of the Borrower identified in the most recent Swingline Loan Request
delivered by the Borrower to the Administrative Agent or as may be otherwise
agreed upon by the Borrower and the Administrative Agent from time to time.



3






 





          (c) Refunding.



               (i) Swingline Lender shall make demand on each Lender to fund its
respective Loan Commitment Percentage of outstanding Swingline Loans by
delivering notice thereof not later than 1:00 p.m. (Philadelphia time) on any
Business Day and each Lender shall fund its respective Loan Commitment
Percentage as required to repay Swingline Loans outstanding to the Swingline
Lender not later than 4:00 p.m. (Philadelphia time) on the Business Day such
demand is made; provided that any demand notice delivered by Swingline Lender
after 1:00 p.m. shall be deemed delivered on the next succeeding Business Day.
Such funding of the Swingline Loans by the Lenders shall thereafter be
reflected as Advances of the Lenders on the books and records of the
Administrative Agent. No Lender’s obligation to fund its respective Loan
Commitment Percentage of a Swingline Loan shall be affected by any other
Lender’s failure to fund its Loan Commitment Percentage of a Swingline Loan,
nor shall any Lender’s Loan Commitment Percentage be increased as a result of
any such failure of any other Lender to fund its Loan Commitment Percentage of
a Swingline Loan.



               (ii) The Borrower shall pay to the Swingline Lender on demand the amount
of such Swingline Loans to the extent amounts received from the Lenders are not
sufficient to repay in full the outstanding Swingline Loans requested or
required to be refunded. In addition, the Borrower hereby authorizes the
Administrative Agent to charge any account maintained by the Borrower with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. If any
portion of any such amount paid to the Swingline Lender shall be recovered by
or on behalf of the Borrower from the Swingline Lender in bankruptcy or
otherwise, the loss of the amount so recovered shall be ratably shared among
all the Lenders in accordance with their respective Loan Commitment Percentages
(unless the amounts so recovered by or on behalf of the Borrower pertain to a
Swingline Loan extended after the occurrence and during the continuance of an
Event of Default of which the Administrative Agent has received notice in the
manner required pursuant to Section 8.4 and which such Event of Default has not
been waived by the Required Lenders or the Lenders, as applicable).



               (iii) Each Lender acknowledges and agrees that its obligation to refund
Swingline Loans in accordance with the terms of this Section 1.4 is absolute
and unconditional and shall not be affected by any circumstance whatsoever.
Further, each Lender agrees and acknowledges that if prior to the refunding of
any outstanding Swingline Loans pursuant to this Section 1.4, one of the events
described in Section 5.11 shall have occurred, each Lender will, on the date
the applicable Advance would have been made, purchase an undivided
participating interest in the Swingline Loan to be refunded in an amount equal
to its Loan Commitment Percentage of the aggregate amount of such Swingline
Loan. Each Lender will immediately transfer to the Swingline Lender, in
immediately available funds, the amount of its participation and upon receipt
thereof the Swingline Lender will deliver to such Lender a certificate
evidencing such participation dated the date of receipt of such funds and for
such amount. Whenever, at any time after the Swingline Lender has received from
any Lender such Lender’s participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Lender its participating interest in



4






 





such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s participating interest
was outstanding and funded).


          (d) Conversion. Provided that no Default or Event of
Default has occurred and is then continuing, the Borrower shall have the option
to convert outstanding Swingline Loans (i) in an aggregate principal amount of
$1,000,000 or any whole multiple of $500,000 in excess thereof into one or more
LIBOR Advances, by delivering an Advance Request not later than 11:00 a.m.
three (3) Business Days before the Swingline Loan is to be so converted and
(ii) in an aggregate principal amount of $500,000 or any multiple of $250,000
in excess thereof into one or more Base Rate Advances, by delivering an Advance
Request not later than 2:00 p.m. on the date the Swingline Loan is to be so
converted.



          (e) Swingline Notes. The Swingline Loans and the
obligation of the Borrower to repay such Swingline Loans shall be evidenced by
a Swingline Note executed by the Borrower payable to the order of the Swingline
Lender in substantially the form attached hereto as Exhibit B-2 (the “Swingline
Note”).



     1.5 Interest Rate.


          (a) Each Advance shall bear interest from the funding date to maturity
(whether by acceleration, stated maturity, or otherwise) at either (a) the Base
Rate or (b) the sum of LIBOR plus 3.25% per annum (“LIBOR Rate”) as selected by
Borrower in the Advance Request for such Advance. Interest on each Swingline
Loan shall bear interest at the Base Rate from the date the Swingline Loan is
made through but not including the date the Swingline Loan is refunded as an
Advance pursuant to Section 1.4 hereof, at which time the Advance shall bear
interest at the Interest Rate set forth in the applicable Swingline Loan
Request.



          (b) Interest on each Base Rate Advance and each Swingline Loan, as the
case may be, shall be payable in arrears on the last Business Day of each
calendar month, commencing on October 31, 2003. Interest on each LIBOR Advance
shall be payable in arrears on the last Business Day of the applicable LIBOR
Period. Interest shall be computed on the basis of a three hundred sixty (360)
day year consisting of twelve (12) 30-day months and assessed for the actual
number of days elapsed. Administrative Agent shall, upon Borrower’s request
prior to 9:00 a.m., (Philadelphia time) on any Request Day, advise Borrower of
the then-current LIBOR for loans for a LIBOR Period. Borrower shall then have
the right to fix the rate of interest to be charged by Lenders during one or
more of such LIBOR Periods on any LIBOR Amount (provided that Borrower may not
have outstanding at any time more than five LIBOR Amounts). Borrower shall,
prior to 12:00 noon (Philadelphia time) on the Request Day, advise
Administrative Agent (a) whether (and, if so, for what LIBOR Period or Periods)
Borrower elects to fix the rate of interest to be charged as aforesaid and (b)
the LIBOR Amount with respect to which the rate of interest will so be fixed
during the LIBOR Period or Periods. Each LIBOR Period, if any, elected by
Borrower shall commence on the third Business Day following the Request Day.



          (c) Not later than three (3) Business Days prior to the expiration of a
LIBOR Period, with respect to any LIBOR Amount, Borrower shall advise
Administrative Agent whether Borrower elects to continue the Interest Rate at
the LIBOR Rate for the next succeeding LIBOR Period. If at any time there is
any portion of the outstanding principal balance of the



5






 





Loan that has not been so designated by Borrower as a LIBOR Amount for a
LIBOR Period, interest on such portion shall be charged at the Base Rate.


          (d) If Borrower requests that all or any portion of the principal balance
hereof bear interest at the LIBOR Rate, and Administrative Agent or any Lender
reasonably determines that, by reason of circumstances affecting the interbank
Eurodollar market generally, deposits in U.S. Dollars (in the applicable
amounts) are not being offered to banks in the interbank Eurodollar market,
then Administrative Agent shall forthwith give notice thereof to Borrower,
whereupon until Administrative Agent notifies Borrower that the circumstances
giving rise to such suspension no longer exist, (a) the obligation of Lenders
to permit any portion of the principal balance of the Loan to bear interest
with reference to the LIBOR shall be suspended so long as such circumstances
exist, and (b) Borrower shall convert the interest rates on the applicable
portions of the principal balance hereof to the Base Rate on the last day of
the then current LIBOR Period.



          (e) If, after the date hereof, the adoption of or any change in Rules, or
change in the interpretation or administration thereof, by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Lenders to make or maintain or fund loans at the LIBOR, the interest rate on
the applicable portions of the principal balance hereof shall be deemed to have
been converted to the Base Rate on either (i) the last day of the then current
LIBOR Period if any Lenders may lawfully continue to maintain loans at the
LIBOR to such day, or (ii) immediately if such Lender may not lawfully continue
to maintain loans at the LIBOR to such day.



          (f) If any governmental authority, central bank or other comparable
authority shall at any time impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), any tax (including without limitation, any United
States interest equalization tax or similar tax however named applicable to the
acquisition or holding of debt obligations and any interest or penalties with
respect thereto), duty, charge, fee, deduction, withholding special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender, or shall impose on any Lender or the interbank
Eurodollar market any other condition affecting loans at the LIBOR, and the
result of any of the foregoing is to increase the cost to any Lender of making
or maintaining the interest rate at the LIBOR or to reduce the amount of any
sum received or receivable by such Lender under a Promissory Note by an amount
deemed by such Lender to be material, then within five days after demand
Administrative Agent, Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender for the increased cost or reduction.
Administrative Agent will promptly notify Borrower of any event of which it has
knowledge occurring after the date hereof, which will entitle any Lender to
compensation pursuant to this Section. A certificate of any Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to such Lender hereunder shall be conclusive in the absence
of manifest error.



          (g) Failure on the part of Administrative Agent to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on



6






 





capital with respect to any period shall not constitute a waiver of such
Lender’s right to demand such compensation with respect to such period or any
other period. The protection of this Section shall be available to all Lenders
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.


     1.6 Loan Payments.


          (a) Subject to Section 1.8 below, the Borrower shall repay the outstanding
principal amount of the Loan, together with interest accrued and unpaid thereon
and all other Obligations relating thereto on the Maturity Date.



          (b) Each payment by the Borrower on account of the principal of or
interest on the Loan or of any fee, commission or other amounts payable to the
Lenders under this Agreement or any Promissory Note shall be made not later
than 1:00 p.m. (Philadelphia time) on the date specified for payment under this
Agreement to the Administrative Agent at the Administrative Agent’s Office for
the account of the Lenders (other than as set forth below) pro rata in
accordance with their respective Loan Commitment Percentages (except as
specified below), in Dollars, in immediately available funds and shall be made
without any set-off, counterclaim or deduction whatsoever. Any payment received
after such time but before 2:00 p.m. (Philadelphia time) on such day shall be
deemed a payment on such date for the purposes of Section 5, but for all other
purposes shall be deemed to have been made on the next succeeding Business Day.
Any payment received after 2:00 p.m. (Philadelphia time) shall be deemed to
have been made on the next succeeding Business Day for all purposes. On the
Business Day it has received or is deemed to have received, as the case may be,
each such payment, the Administrative Agent shall distribute to each Lender at
its address for notices set forth herein its pro rata share of such payment in
accordance with such Lender’s Loan Commitment Percentage. If such amount is
distributed to a Lender on a date after the Business Day the Administrative
Agent has received or is deemed to have received payment from the Borrower, the
Administrative Agent shall pay such Lender an amount, until paid, equal to the
product of (a) the amount not paid to the Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by Administrative Agent and such Lender, times (c) a fraction the
numerator of which is the number of days that elapse from and including the
Business Day of Administrative Agent’s receipt or deemed receipt, as the case
may be, of payment to the date Administrative Agent pays such Lender in
accordance with the terms hereof and the denominator of which is 360.



          (c) In the event that any payment of principal, interest, fees, expense or
other amounts due to any Lender(s) under any of the Financing Documents is not
paid when due, the Administrative Agent is hereby authorized to effect such
payment, after providing notice to Borrower, by debiting any account of the
Borrower now or in the future maintained with the Administrative Agent. The
right of debiting accounts of the Borrower is in addition to any right of
setoff accorded the Administrative Agent and any Lender hereunder or by
operation of law.



     1.7 Late Charges. If the Borrower fails to make any
payment of principal, interest, prepayments, fees or any other amount becoming
due pursuant to the provisions of this Agreement, within five (5) days of the
date due and payable, the Borrower shall pay to the


7






 


Administrative Agent for the account of the Lenders a
late charge equal to five (5) percent of the amount of such payment. Such five
(5) day period shall not be construed in any way to extend the due date of any
such payment. Late charges are imposed for the purpose of defraying the
Lenders’ expenses incident to the handling of delinquent payments, and are in
addition to, and not in lieu of, the exercise by the Lenders of any rights and
remedies hereunder or under applicable laws and any fees and expenses of any
agents or attorneys which the Lenders may employ upon Default.


     1.8 Required Prepayments. The Borrower shall prepay
the Loan as and to the extent that the outstanding balance of the Loan exceeds
the Maximum Loan Amount. Notwithstanding the foregoing, in lieu of such
prepayment, Borrower may provide to the Administrative Agent an updated
Borrowing Base Certificate satisfactory to the Required Lenders, which shall
include additional Eligible Loans sufficient to increase the Borrowing Base to
an amount equal to the then outstanding principal balance of the Loan.


     1.9 Voluntary Prepayments.


          (a) Notice; Application of Payments. Within the limitations set forth
herein and subject to the provisions of this Agreement, the Borrower may repay
the Loan at any time in whole or in part from time to time without premium or
penalty, and any such repayment need not be accompanied by payment of interest
on the amount repaid except that any repayment of the Loan which constitutes a
final payment of the entire principal balance of the Loan shall be accompanied
by payment of all interest thereon accrued through the date of repayment.
Borrower shall provide written notice to the Administrative Agent (i) not less
than five (5) Business Days prior to any proposed repayment, in whole or in
part, of a LIBOR Advance, (ii) not less than three (3) Business Days’ prior to
any proposed repayment, in whole or in part, of a Base Rate Advance; and (iii)
not later than 11:00 a.m. on the same Business Day of any proposed repayment,
in whole or in part, of a Swingline Loan. Unless the Borrower requests
otherwise, such repayments shall be applied first to accrued and unpaid
interest on the principal amount to be repaid and then to the unpaid balance of
the principal amount in the inverse order of maturity.



          (b) Prepayment Premiums for LIBOR Amounts. LIBOR Amounts may be prepaid
prior to the expiration date of the LIBOR Period applicable thereto only upon
payment to Administrative Agent, for the account of the Lenders, of a
prepayment premium determined as follows: (i) on the prepayment date, the
remaining payments of principal and interest that would otherwise have become
payable at the expiration of the LIBOR Period pertaining to the principal being
prepaid shall be discounted to a present value at a rate per annum equal to the
“Prepayment Yield to Maturity”, as hereinafter defined, plus any costs for
reserves or assessments or for reinvesting the amount being prepaid, and if
such discounted value shall exceed the unpaid principal amount being prepaid,
then the prepayment premium shall be an amount equal to such excess; otherwise
no prepayment premium shall be payable; (ii) the “Prepayment Yield to Maturity”
shall mean the yield to maturity of the debt obligation of the United States
Treasury (excluding those commonly known as “Flower Bonds”) maturing nearest in
time to the expiration of the relevant LIBOR Period. The maturity date and
yield to maturity of such United States Treasury obligation shall be determined
on the basis of quotations published in the Wall Street Journal on the
prepayment date. If there shall be more than one such debt obligation of the



8






 





United States Treasury maturing nearest in time to the expiration of the
relevant LIBOR Period, the Prepayment Yield to Maturity shall be the arithmetic
average of the yields to maturity of all such obligations.


     1.10 Collateral.


          (a) In order to secure the full and punctual payment of the Obligations in
accordance with the terms thereof, and to secure the performance of this
Agreement and the other Financing Documents, both now in existence and
hereafter created (as the same may be renewed, extended or modified), the
Borrower hereby pledges, assigns and grants to the Administrative Agent, for
the benefit of the Lenders, with respect to all of the following property of
the Borrower, both now owned and existing and hereafter created, acquired and
arising and regardless of where located (all such property being herein called
the “Collateral”):



               (i) a continuing perfected first lien on and security interest in and to
(A) all of the Borrower’s Loan Receivables relating to each Contract of
Borrower (except for Contracts that are F&M Collateral); (B) all of the
Borrower’s interest in and to the assets now or hereafter securing the Eligible
Loan Documents, including any and all Liquid Collateral, together with all
embedded software, additions, parts, accessories, attachments, and accessions
now and hereafter affixed thereto and/or used in connection therewith, and all
replacements thereof and substitutions therefor as are now or hereafter subject
to any Eligible Loan Documents whether or not specified as Collateral in the
applicable Advance Request; (C) all right, title and interest (including,
without limitation, any security interest) of the Borrower in and to the
Eligible Loan Documents; (D) all equipment, inventory and goods purchased or
leased with the proceeds of all Eligible Loan Documents; (E) all debt
securities, warrants and other equity interests in an Eligible Loan Obligor or
other issuer received by the Borrower in connection with each Eligible Loan,
and the capital stock and other equity interests issuable upon the exercise
thereof, including without limitation, all additions, exchanges, replacements,
substitutions, and the proceeds thereof together with all rights of Borrower in
and to any distribution or issuance of additional shares of the issuer, whether
by stock dividend, stock split, recapitalization or otherwise (collectively
with the Liquid Collateral, the “Pledged Securities”), and any certificate
representing any Pledged Securities (each a “Certificate”);



               (ii) a continuing perfected second lien on and security interest in and to
(A) all of the Borrower’s Loan Receivables relating to each loan by Borrower to
a third party for which an advance has been made by F&M (each, an “F&M
Advance”); (B) all of the Borrower’s interest in and to the assets now or
hereafter securing the F&M Advances, together with all embedded software,
additions, parts, accessories, attachments, and accessions now and hereafter
affixed thereto and/or used in connection therewith, and all replacements
thereof and substitutions therefor as are now or hereafter subject to any F&M
Loan Documents whether or not specified as collateral for such F&M Advance; (C)
all right, title and interest (including, without limitation, any security
interest) of the Borrower in and to the F&M Loan Documents which shall be
specified as collateral for F&M Advances; (D) all equipment, inventory and
goods purchased or leased with the proceeds of the F&M Advances; (E) all
warrants and other equity interests received by the Borrower in connection with
each loan made with the proceeds of an F&M Advance, and the capital stock and
other equity interests issuable upon the exercise thereof, including without
limitation, all additions, exchanges, replacements, substitutions, and



9






 





the proceeds thereof together with all rights of Borrower in and to any
distribution or issuance of additional shares of the issuer, whether by stock
dividend, stock split, recapitalization or otherwise and any certificate
representing such securities (the Collateral described in this Section
1.10(a)(ii) may be separately referred to as the “F&M Collateral”);


               (iii) a continuing perfected first lien on and security interest in and to
all other property of Borrower, wherever located and whether now owned by
Borrower or hereafter acquired, including but not limited to: (A) all
Inventory; (B) all General Intangibles; (C) all Accounts; (D) all Chattel
Paper; (E) all Instruments and Documents and any other instrument or intangible
representing payment for goods or services; (F) all Equipment; (G) all
Investment Property; (H) all Deposit Accounts and funds on deposit therein; (I)
all Fixtures; and (J) all parts, replacements, substitutions, profits,
products, Accessions and cash and non-cash proceeds and Supporting Obligations
of any of the foregoing (including insurance proceeds payable by reason of loss
or damage thereto) in any form and wherever located. The foregoing fixtures
collateral is located at or affixed to the real property commonly known as 133
North Fairfax Street, Alexandria, Virginia.



               (iv) (A) a continuing perfected first lien on and security interest in and
to all of the Borrower’s books and records pertaining to any of the Collateral
described in clauses (i) and (iii) immediately above and (B) a continuing
perfected second lien on and security interest in and to all of the Borrower’s
books and records pertaining to any of the Collateral described in clause (ii)
immediately above; and



               (v) a continuing perfected first lien on and security interest in and to
all cash and noncash proceeds of the Collateral described in clauses (i), (iii)
and (iv)(A) immediately above and a continuing perfected second lien on and
security interest in and to all cash and noncash proceeds of the Collateral
described in clauses (ii) and (iv)(B) immediately above, including, without
limitation, all cash and noncash proceeds deposited in any deposit account, all
chattel paper, instruments, inventory, equipment, general intangibles and goods
(as such terms are defined by the UCC) or other property purchased or acquired
with cash or noncash proceeds of such Collateral and all securities
entitlements with respect to any Pledged Securities now or hereafter deposited
into any securities account.



     1.11 Closing Requirements and the Initial Advance.


          (a) The obligation of the Lenders to make an initial Advance hereunder is
subject to the satisfaction, on or before the Closing Date, of the following
conditions:



               (i) Executed Financing Documents. This Agreement, each Promissory Note,
together with any other applicable Financing Documents, shall have been duly
authorized, executed and delivered to the Administrative Agent and each Lender
by Borrower, shall be in full force and effect and no Default or Event of
Default shall exist thereunder, and Borrower shall have delivered original
counterparts thereof to Administrative Agent.



               (ii) Closing Certificates; etc.



                    (A) Officer’s Certificate of Borrower. The Administrative Agent shall
have received a certificate from a Responsible Officer, in form and substance



10






 





satisfactory to the Administrative Agent, to the effect that all
representations and warranties of Borrower contained in this Agreement and the
other Financing Documents are true, correct and complete; that Borrower is not
in violation of any of the covenants contained in this Agreement and the other
Financing Documents; that, after giving effect to the transactions contemplated
by this Agreement, no Default or Event of Default has occurred and is
continuing; that Borrower has satisfied each of the closing conditions; and
that the Borrower has elected to be regulated as a Business Development Company
(as defined under Section 2(a)(48) of the Investment Company Act of 1940, as
amended).


                    (B) Certificate of Secretary of Borrower. The Administrative Agent shall
have received a certificate of the secretary or assistant secretary of Borrower
certifying as to the incumbency and genuineness of the signature of each
officer of Borrower executing Financing Documents and certifying that attached
thereto is a true, correct and complete copy of (1) the Articles of
Incorporation and all amendments thereto, certified as of a recent date by the
Secretary of State of the State of Maryland, (2) the Bylaws of the Borrower as
in effect on the date of such certifications, (3) resolutions duly adopted by
the Board of Directors of the Borrower authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of this Agreement and the
other Financing Documents.



                    (C) Certificates of Good Standing. The Administrative Agent shall have
received long-form certificates as of a recent date of the good standing of
Borrower under the laws of its jurisdiction of organization and, to the extent
requested by the Administrative Agent, each other jurisdiction where Borrower
is qualified to do business.



                    (D) Opinion of Counsel. The Administrative Agent shall have received a
favorable opinion of counsel to Borrower addressed to the Administrative Agent
and the Lenders with respect to Borrower, the Financing Documents and such
other matters as the Administrative Agent and the Lenders shall request,
including without limitation, the perfection of Lenders’ security interest in
the Collateral.



               (iii) Collateral.



                    (A) Filings and Recordings. All filings and recordations that are
necessary to perfect the security interests of the Lenders in the Collateral
shall have been received by the Administrative Agent and the Administrative
Agent shall have received evidence satisfactory to the Administrative Agent
that upon such filings and recordations such security interests constitute
valid and perfected first priority Liens therein.



                    (B) Lien Search. The Administrative Agent shall have received the results
of a lien search (including a search as to judgments, pending litigation and
tax matters) made against Borrower under the UCC (or applicable judicial
docket) as in effect in any state in which any of its assets are located or in
which Borrower conducts any business, indicating among other things that its
assets are free and clear of any lien on assets of Borrower that constitute
Collateral.



                    (C) Hazard and Liability Insurance. The Administrative Agent shall have
received certificates of insurance, evidence of payment of all insurance
premiums for the current policy year of each, and, if requested by the
Administrative Agent, copies (certified



11






 





by a Responsible Officer) of insurance policies in form and substance
reasonably satisfactory to the Administrative Agent.


                    (D) Delivery of Collateral. The Administrative Agent shall have received
written confirmation from the Custodian that all Collateral which is to be
delivered to the Custodian upon Borrower’s receipt of each Advance has been
received by the Custodian.



               (iv) Consents, Defaults.



                    (A) Governmental and Third Party Approvals. The Borrower shall have
obtained all necessary approvals, authorizations and consents of any Person
with respect to the transactions contemplated by this Agreement and the other
Financing Documents.



                    (B) No Injunction, No Material Adverse Change. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any governmental authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which is related to or
arises out of this Agreement or the other Financing Documents or the
consummation of the transactions contemplated hereby or thereby, or which, in
the Administrative Agent’s sole discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement and such other
Financing Documents. Since December 31, 2002, there shall not have been a
material adverse change in the properties, business, operations, or condition
(financial or otherwise) of the Borrower and no event shall have occurred and
no condition shall have arisen that could have a material adverse effect on the
properties, business operations, or condition (financial or otherwise) of the
Borrower or the ability of the Borrower to perform its obligations under the
Financing Documents (a “Material Adverse Effect”).



                    (C) No Event of Default. No Default or Event of Default shall have
occurred and be continuing.



               (v) Financial Matters.



                    (A) Financial Statements. The Administrative Agent shall have received an
audited balance sheet dated as of December 31, 2002, and related statements of
income, shareholders’ equity and changes in cash flows of Borrower, all in form
and substance satisfactory to the Administrative Agent and prepared in
accordance with generally accepted accounting principles consistently applied
(“GAAP”).



                    (B) Payment of Fees. Borrower shall have paid to the Administrative Agent
and the Lenders the fees set forth in Section 8.5 hereof and such other fees as
set forth in any separate fee letters to any Lender.



               (vi) Other Documents. (a) Borrower shall deliver to the Administrative
Agent on the Closing Date such other documents, agreements, waivers and other
items reasonably requested by the Administrative Agent or any Lender. All
opinions, certificates and other instruments and all proceedings in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Administrative Agent and each Lender. The
Administrative Agent shall have received copies of all other documents,
certificates



12






 





and instruments reasonably requested thereby, with respect to the
transactions contemplated by this Agreement.


          (b) On or before each date on which (i) the Lenders make an Advance
hereunder, including, without limitation, the Closing Date, and (ii) the
Swingline Lender provides a Swingline Loan hereunder, the Borrower shall cause
to be done or provided to the Administrative Agent, as the case may be, and the
Administrative Agent shall immediately provide to each Lender or the Swingline
Lender, as the case may be, or confirm the receipt of, the following: (1) a
duly completed and signed (i) Advance Request (which shall be delivered (A) not
later than 11:00 a.m. three (3) Business Days before the date on which a LIBOR
Advance is to be made and (B) not later than 11:00 a.m. on the date on which a
Base Rate Advance is to be made) or (ii) a Swingline Loan Request (which shall
be delivered not later than 2:00 p.m. on the date on which a Swingline Loan is
to be made), as the case may be; (2) in the event that after giving effect to
the amount of the borrowing under the applicable Request, the outstanding
principal balance of the Loan would exceed the Borrowing Base, receipt of a
Borrowing Base Certificate dated the date of the applicable Request, which
evidences a sufficient Borrowing Base; (3) a certificate executed by a
Responsible Officer, certifying that: (i) the representations and warranties of
the Borrower contained herein remain true and correct as of such date; (ii) no
Event of Default or Default has then occurred hereunder; (iii) there has not
been a material adverse change in the properties, business, operations, or
condition (financial or otherwise) of the Borrower and no event has occurred
and no condition has arisen that could have a Material Adverse Effect, and (iv)
no default or event which, with the giving of notice, or the lapse of time, or
both, would become a default thereunder, has then occurred with respect to the
Eligible Loan to which such Advance relates; (4) a Notice of Assignment, in the
form of Exhibit C attached hereto, with respect to the Eligible Loan (each, a
“Notice of Assignment”) shall be deposited with the Custodian as agent for the
Administrative Agent and the Lenders; (5) the original Eligible Loan Documents
(including, without limitation, the promissory note endorsed by the Borrower to
the order of the Administrative Agent) comprising the Eligible Loan to which
such Advance relates and any Pledged Securities received by Borrower in
connection therewith shall be deposited with the Custodian as agent for the
Administrative Agent and the Lenders; (6) with respect to any letter of credit
which constitutes a portion of the Collateral, the Borrower shall cause to be
executed and deposited with the Custodian as agent for the Administrative Agent
and the Lenders an assignment of proceeds of such letter of credit in favor of
the Administrative Agent for the ratable benefit of the Lenders as collateral
security hereunder; and (7) such documents shall have been delivered, and such
filings shall have been made and other actions taken, as reasonably may be
required by the Administrative Agent and its counsel to perfect a valid (i)
perfected first priority security interest granted by the Borrower to the
Administrative Agent with respect to the Collateral securing such Advance; and
(ii) second priority security interest granted by the Borrower to the
Administrative Agent with respect to the F&M Collateral, which shall be
delivered solely on the Closing Date.



SECTION 2. REPRESENTATIONS AND WARRANTIES.



     The Borrower represents and warrants to the Administrative Agent and each
Lender that the following statements are true, correct and complete as of the
date hereof and as of the date on which each Advance is made hereunder:


13






 



     2.1 Organization; Power; Qualification. The Borrower
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland and has the power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. The Borrower is duly qualified to do business in the
Commonwealth of Virginia and all other states where the Borrower conducts
business, except where the failure to qualify could not have a Material Adverse
Effect. The jurisdictions in which the Borrower is qualified to business as of
the Closing Date are set forth on Schedule 2.1 attached hereto.



     2.2 Authorization. The Borrower has the full power and
authority to execute, deliver and perform this Agreement and the other
Financing Documents to which the Borrower is a party. Neither such execution,
delivery and performance, nor compliance by the Borrower with the provisions of
this Agreement and of the other Financing Documents to which the Borrower is a
party (i) will conflict with or result in a breach or violation of the
Borrower’s Articles of Incorporation or Bylaws or any judgment, order,
regulation, ruling or law to which the Borrower is subject or any indenture,
agreement or other instrument to which the Borrower is a party or to which any
of the Borrower’s assets and properties is subject, or constitute a default
thereunder or (ii) result in or require the creation or imposition of any lien
upon or with respect to any Collateral other than Liens arising under the
Financing Documents. The execution, delivery and performance of this Agreement
and all other Financing Documents to which the Borrower is a party have been
duly authorized and approved by all necessary corporate action by the Borrower
and do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal, state or foreign governmental authority or agency, except as
contemplated herein. This Agreement and all other Financing Documents to which
the Borrower is a party constitute (or, upon execution, will constitute) the
legal, valid and binding obligations of the Borrower enforceable in accordance
with their terms except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally and the availability of equitable remedies.



     2.3 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
in any way relating adversely to or affecting the Borrower which could have a
Material Adverse Effect.



     2.4 Ownership; Management and Subsidiaries; etc.


          (a) The authorized capital stock of the Borrower consists of (i)
[40,000,000] shares of the Borrower’s common stock, of which [5,200,000] shares
are issued and outstanding and (ii) [10,000,000] shares of the Borrower’s
preferred stock, none of which are issued and outstanding. The name of each
record and beneficial owner of shares of common stock and the number of shares
owned by each record and beneficial owner are set forth on Schedule 2.4(a)
attached hereto.



          (b) The name of each executive officer of the Borrower that is employed in
a Senior Management position and the office held by such executive officer is
set forth on Schedule 2.4(b) attached hereto.



          (c) The Borrower does not directly or indirectly own or control securities
or other ownership interests in any corporation, partnership, association,
organization or other



14






 





business entity representing more than fifty percent
(50%) of the equity ownership or the ordinary voting power thereof.


     2.5 Financial Condition. The Borrower has heretofore
furnished to the Administrative Agent and each Lender an audited balance sheet
dated as of December 31, 2002, and related statements of income, shareholders’
equity and changes in cash flows. Such financial statements and all other
financial statements and information furnished or to be furnished to the
Administrative Agent and each Lender hereunder have been and will be prepared
in accordance with GAAP and fairly present the financial condition of the
Borrower as of the dates thereof and the results of the Borrower’s operations
for the periods covered thereby. No material adverse change in the business,
financial condition, prospects or operations of the Borrower has occurred since
the date of such financial statements. The Borrower has no Indebtedness or
liabilities other than that reflected on such financial statements or expressly
permitted by the provisions of this Agreement.



     2.6 Taxes. The Borrower has filed or caused to be
filed all federal, state and local income, excise, property and other tax
returns which are required to be filed and has paid all federal, sate, local
and other taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets as shown on such returns or assessments
received by the Borrower (including, without limitation, all FICA payments and
withholding taxes, if appropriate), except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided.
No governmental authority has asserted any lien or other claim against the
Borrower with respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of the Borrower in
respect of federal, state, local and other taxes for all fiscal years and
portions thereof since the organization of the Borrower are in the judgment of
the Borrower adequate, and the Borrower does not anticipate any additional
taxes or assessments for any of such years.



     2.7 Title to Properties and Collateral. The Borrower
has good title to all of its properties, including, without limitation, the
Collateral, the Eligible Loan Documents and Pledged Securities and has a first
priority perfected security interest in, and lien on, all of the Collateral
underlying the Obligor Loan Documents, subject to no Liens, security interests
or other encumbrances or interests except for Liens and interests permitted
hereunder. Upon the last to occur of: (a) the making of the Advance by the
Lenders to the Borrower relating to an Eligible Loan, (b) delivery of the
original Eligible Loan Documents and any Certificates or other writings
representing the Pledged Securities relating to such Collateral and each
Eligible Loan, and (c) filing in the office of the State Department of
Assessments and Taxation of Maryland of UCC financing statements naming the
Borrower, as debtor, and the Administrative Agent, as secured party, and
describing the Collateral relating to such Advance, the Lenders will have a
valid, perfected first priority security interest in the Collateral, except for
the F&M Collateral in which the Lenders will have a valid, second priority
security interest.


     2.8 Borrower’s Name, Business Locations, etc. The
correct legal name of the Borrower is that specified on the signature page of
this Agreement. Within twelve (12) years previous to the date hereof, the
Borrower has not changed its legal name, been
the surviving corporation in a merger or changed the location of its chief
executive office other than within Alexandria, Virginia. The Borrower does not
do business under any trade or fictitious names.


15






 


The chief executive office of
the Borrower and the place where its records concerning Eligible Loans, Loan
Receivables and other Collateral are kept is 133 North Fairfax Street,
Alexandria, Virginia 22314. Each other location at which the Borrower conducts
business or keeps any of the Collateral is listed on Schedule 2.8 attached
hereto. The Organizational Number of the Borrower is D06508667.



     2.9 Compliance with Laws. The Borrower is not in
violation of any applicable federal, state or local law, statute, rule,
regulation or ordinance, except for violations that could not have a Material
Adverse Effect, and has not received any notice nor is the subject of any
investigation to the effect that the Borrower’s operations are not in material
compliance with any such law, statute, rule, regulation or ordinance,
including, without limitation, applicable environmental, health and safety laws
and regulations.



     2.10 Burdensome Provisions. The Borrower is not a
party to any indenture, agreement, lease or other instrument, or subject to any
corporate, partnership, governmental or regulatory restriction, which is so
unusual or burdensome as in the foreseeable future could have a Material
Adverse Effect. The Borrower does not presently anticipate that future
expenditures needed to meet the provisions of any statutes, orders, rules or
regulations of a governmental authority will be so burdensome as to have a
Material Adverse Effect.



     2.11 Solvency. As of the Closing Date and after giving
effect to each Advance made hereunder, the Borrower will be Solvent.



     2.12 Material Agreements. The Borrower is not in
default or breach in the performance, observance or fulfillment of any of the
terms, conditions or provisions of any instrument, agreement or document to
which the Borrower is a party (including, without limitation, any instrument or
agreement evidencing or made in connection with any Indebtedness or
liabilities) which default or breach could have a Material Adverse Effect.



     2.13 Absence of Defaults. No Default or Event of
Default has occurred and is continuing.



     2.14 Liens. None of the Collateral is subject to any
lien, except Liens permitted hereunder. No financing statement under the UCC
of any state which names the Borrower as debtor and which has not been
terminated, has been filed in any state or other jurisdiction and the Borrower
has not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement,
except to perfect those Liens permitted hereunder.



     2.15 ERISA. Schedule 2.15 attached hereto contains a
true and complete list of each pension, employee benefit, multi-employer,
profit sharing, savings, stock bonus, 401(k) or other deferred compensation
plan (“Plan”) subject to the requirements of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), which is now or previously has been
sponsored or maintained by the Borrower, or to which the Borrower has made
contributions or is required to make contributions. The Borrower satisfied all
termination
and distribution requirements of the PBGC (as hereinafter defined) with
respect to any Plan terminated by the Borrower prior to the date hereof. No
lien exists against the Borrower in favor of the Pension Benefit Guaranty
Corporation (“PBGC”), and no “reportable event” (as such term is defined in


16






 


ERISA) has occurred with respect to any Plan. The Borrower has not incurred
any “accumulated funding deficiency” within the meaning of ERISA or any
liability to the PBGC in connection with any Plan. The Borrower has no
withdrawal or other liability (absolute, contingent or otherwise) with respect
to any multi-employer plan as defined by Section 3(37) of ERISA. Since
September 2, 1974, the Borrower has complied in all material respects with all
provisions of ERISA and with all provisions of each Plan.



     2.16 [Reserved]



     2.17 Labor Matters. The Borrower is not subject to any
collective bargaining agreements or any agreements, contracts, decrees or
orders requiring the Borrower to recognize, deal with or employ any persons
organized as a collective bargaining unit or other form of organized labor.
There are no strikes or other material labor disputes pending or threatened
against the Borrower. The Borrower has complied in all material respects with
the Fair Labor Standards Act.



     2.18 Margin Stock. The Borrower is not engaged
principally or as one of its activities in the business of extending credit for
the purpose of “purchasing” or “carrying” any “margin stock” (as each such term
is defined or used, directly or indirectly, in Regulation U of the Board of
Governors of the Federal Reserve System). No part of the proceeds of any
Advance will be used for purchasing or carrying margin stock or for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation G, T, U or X of such Board of Governors.



     2.19 Government Regulation. The Borrower has satisfied
the requirements to be qualified as a Business Development Company and a
Regulated Investment Company and the Borrower is not, nor after giving effect
to any Advance will be, subject to regulation under the Public Utility Holding
Company Act of 1935 or the Interstate Commerce Act, each as amended, or any
other applicable law which limits its ability to incur or consummate the
transactions contemplated hereby.



     2.20 Environmental Matters. Except for conditions
which could not reasonably be expected to result in liabilities in excess of
$100,000 in the aggregate:


          (a) The properties owned, leased or operated by the Borrower now or in the
past do not contain, and to its knowledge have not previously contained, any
Hazardous Materials in amounts or concentrations which (A) constitute or
constituted a violation of applicable Environmental Laws or (B) could
reasonably be expected to give rise to liability under applicable Environmental
Laws;



          (b) The Borrower’s properties and operations are in compliance, and have
been in compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about such properties or such operations which could
reasonably be expected to interfere with the continued operation of such
properties or impair the fair salable value thereof,



          (c) The Borrower has not received any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental
Laws, nor does the Borrower have knowledge or reason to believe that any such
notice will be received or is being threatened;



17






 





          (d) Hazardous Materials have not been transported or disposed of to or
from the properties owned, leased or operated by the Borrower in violation of,
or in a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such properties in violation of,
or in a manner that could give rise to liability under, any applicable
Environmental Laws;



          (e) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which Borrower is or will be named as a potentially
responsible party with respect to such properties or operations conducted in
connection therewith, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect
to the Borrower, and to the knowledge of the Borrower or such operations; and



          (f) There has been no release, or to the knowledge of the Borrower, threat
of release, of Hazardous Materials at or from properties owned, leased or
operated by the Borrower, now or in the past, in violation of or in amounts or
in a manner that could reasonably be expected to give rise to liability under
Environmental Laws.




     2.21 Accuracy of Information. No information, exhibit,
report, statement, certificate or document furnished by the Borrower or any
other Person to any Lender in connection with the Loan, this Agreement or the
other Financing Documents or the negotiation thereof contains any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained herein or therein not misleading.



     2.22 Purpose of Loan. The proceeds of the Loan shall
be used by the Borrower only for the purposes permitted under Section 3.18.



     2.23 Intellectual Property Matters. The Borrower owns
or possesses all material rights to use all franchises, licenses, permits,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, service mark, service mark rights,
trade names, trade name rights, copyrights and rights with respect to the
foregoing which are required to conduct its business (collectively,
“Intellectual Property”). No event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such rights, and the Borrower is not liable in amounts
exceeding $100,000 in the aggregate to any Person for infringement under
applicable law with respect to any such rights as a result of its business
operations.



     2.24 The Obligor Loans. (a) The originals of the
Obligor Loan Documents and Certificates in the Borrowing Base Certificate are
true, correct and complete; (b) all signatures, names, addresses, amounts and
other statements and facts contained in the Obligor Loan Documents are true,
accurate and complete; (c) the Obligor Loan Documents constitute the
legal, valid and binding obligation of the parties thereto, enforceable in
accordance with the terms thereof; (d) the Obligor Loan Documents conform to
all applicable laws and regulations, and constitute a valid, perfected first
priority security interest in the Collateral thereunder; (e) the Collateral is
free from all defenses, setoffs and counterclaims; (f) there are no agreements
or understandings with respect to the Obligor Loans, verbal or written, between
the Borrower and


18






 


Obligor Loan Obligors other than those disclosed in writing to
the Lenders; (g) to Borrower’s knowledge, no default or event which, with the
passage of time or the giving of notice, or both, would become a default under
any Obligor Loan, has occurred; (h) except as set forth on Schedule 2.24
attached hereto, no Obligor Loans have been prepaid and no deposits have been
made by the Obligor Loan Obligors thereunder except for prepayments of up to
three months by Obligor Loan Obligors in the ordinary course of Borrower’s
business; and (i) with respect to any Obligor Loan, the principal and interest
then outstanding will be due and payable in accordance with the terms of the
Obligor Loan Documents.



SECTION 3. AFFIRMATIVE COVENANTS.



     The Borrower covenants and agrees with the Administrative Agent and each
Lender that so long as any of the Obligations (or commitments therefor) shall
be outstanding, the Borrower shall:



     3.1 Payment of Obligations. Punctually pay when due
the principal of and interest on the Loan and the other Obligations, at the
times and places, in the manner and in accordance with the terms of this
Agreement and the other Financing Documents.



     3.2 Financial Statements and Other Reports. Maintain
at all times a system of accounting established and administered in accordance
with sound business practices, and will deliver, or cause to be delivered, to
each Lender (a) as soon as available but in no event more than forty-five (45)
days after the end of each quarter in each fiscal year of the Borrower, the
balance sheet of the Borrower as of the end of such quarter and the related
statements of income and retained earnings for such quarter internally prepared
and in form and content satisfactory to the Administrative Agent, (b) as soon
as available, but in no event more than ninety (90) days after the end of each
fiscal year of the Borrower, the balance sheet of the Borrower as of the end of
such year and the related statements of income, retained earnings and cash
flows for such year certified by independent certified public accountants
selected by the Borrower and satisfactory to the Administrative Agent, (c)
concurrently with the delivery of the financial statements described in clause
(a) above, a certificate of a Responsible Officer setting forth the
computations in reasonable detail and satisfactory to each Lender demonstrating
compliance with the covenants contained in Section 4.1 hereof for the fiscal
quarter to which such financial statements relate, (d) within twenty (20) days
after the end of each month (and at any other time upon request by the
Administrative Agent), (i) a Borrowing Base Certificate, (ii) an accounts
receivable aging report with respect to all of the Borrower’s accounts
receivable, (iii) no more than thirty (30) days prior to the end of each fiscal
year of the Borrower, updated projections of Borrower’s financial statements
and Eligible Loan portfolio for Borrower’s next fiscal year, and (iv) a
contractual and receivable aging for the Loan Receivables of Eligible Loans for
which an Advance was provided, in each case certified by a Responsible Officer,
(e) at such reasonable intervals as the Administrative Agent may require, such
assignments, schedules, statements, reports, certifications, records and other
documents with respect to the Collateral in
such form and detail satisfactory to the Administrative Agent, (f) upon
the request of the Administrative Agent, a copy of the most recently filed
annual report for each Plan, and (g) promptly upon request of the
Administrative Agent such other information, reports or documents respecting
the business, properties, operation or financial condition of the Borrower as
the Administrative Agent may at any time and from time to time reasonably
request.


19






 



     3.3 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now being conducted
by the Borrower, preserve and maintain its separate corporate existence and all
rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation and
authorized to do business in each jurisdiction where the nature and scope of
its activities require it to so qualify under applicable law except where the
failure to so qualify could not have a Material Adverse Effect. Continue at
all times to satisfy the requirements necessary to be qualified as a Business
Development Company and a Regulated Investment Company.



     3.4 Compliance with Laws. Observe and remain in
compliance with all laws, rules, regulations and decrees to which the Borrower
may be subject, a violation of which could have a Material Adverse Effect.



     3.5 Payment of Liabilities and Taxes. Pay, when due,
all of its Indebtedness, and pay and discharge promptly all taxes, assessments
and governmental charges and levies (including, without limitation, FICA
payments and withholding taxes) upon the Borrower or upon the Borrower’s
income, profits or property (including, without limitation, the Collateral),
except to the extent the amount or validity thereof is contested in good faith
by appropriate proceedings so long as adequate reserves have been set aside
therefor.



     3.6 Contractual Obligations. Comply in all respects
with each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business; provided that the
Borrower may contest any such lease, agreement or other instrument in good
faith through applicable proceedings so long as adequate reserves are
maintained in accordance with GAAP.



     3.7 Maintenance of Properties. Do all things
necessary, and cause each Loan Obligor to do all things necessary, to perform,
observe and comply, to maintain, preserve, protect and keep its properties in
good repair, working order and condition, and make all necessary and proper
repairs, renewals and replacements so that the Borrower’s business may be
properly conducted at all times, unless the failure to do so could not have a
Material Adverse Effect. The Borrower shall promptly notify the Administrative
Agent and each Lender of any event causing deterioration, loss or depreciation
in value of any substantial portion of the Collateral and the amount of such
loss or depreciation. The Borrower shall perform, observe, and comply, and
cause each Loan Obligor to do all things necessary, to perform, observe and
comply, with all of the terms and provisions to be performed, observed or
complied with by it under the Contracts, and each other contract, agreement or
obligation relating to the Collateral. Neither the Administrative Agent nor
any Lender shall have any duty to, and the Borrower hereby releases the
Administrative Agent and each Lender from all claims for loss or damage caused
by the failure of the Administrative Agent or any Lender to, collect, protect,
preserve or
enforce any of the Collateral or preserve rights against account debtors
and prior parties to the Collateral, except as may be caused by the
Administrative Agent’s or any Lender’s willful misconduct or gross negligence.



     3.8 Insurance.


          (a) Maintain with financially sound, well rated and reputable insurance
companies insurance in such amounts and covering such risks as is consistent
with sound




20










 



business practice, and in any event as is ordinarily and customarily
carried by companies similarly situated and in the same or similar businesses
as the Borrower. The Borrower will pay, when due, all premiums on such
insurance and will furnish to the Administrative Agent, upon request, evidence
of payment of such premiums and other information as to the insurance carried
by the Borrower.


          (b) In addition, the Borrower will use its best efforts to cause (either
by its own actions or by enforcing the obligations of the Loan Obligor) each
Loan Obligor to insure the Collateral securing such Obligor Loan and to list
Borrower as additional loss payee as its interests may appear with not less
than 30 days prior notice of cancellation or change on each such policy.



          (c) Each policy of such insurance covering the Collateral shall contain a
provision or endorsement satisfactory to the Administrative Agent naming the
Administrative Agent as loss payee or mortgagee and providing that (A) such
policy may not be cancelled or altered without at least thirty (30) days’ prior
written notice to the Administrative Agent, and (B) no act or default of the
Borrower or any other person shall affect the right of the Administrative Agent
to recover under such policy. The Borrower hereby irrevocably (x) assigns and
grants to the Administrative Agent for the ratable benefit of the Lenders a
security interest in any and all proceeds of each such insurance policy
covering the Collateral, (y) directs each insurance company to pay all such
proceeds directly to the Administrative Agent, and (z) constitutes and appoints
the Administrative Agent (and all officers, employees or agents designated by
the Administrative Agent ) as the Borrower’s true and lawful attorney-in-fact
(coupled with an interest) with authority and power on behalf of the Borrower
to make, adjust, settle or compromise all claims under each such insurance
policy, to collect and receive all proceeds payable under each such insurance
policy and to endorse any check, draft or instrument for such proceeds.
Notwithstanding the foregoing, so long as no Event of Default or Default has
occurred and is continuing, the Required Lenders may elect not to adjust any
such claim, in which case the Borrower will adjust such claim, or, if the
Required Lenders elect to adjust such claim, it will not settle or compromise
the same without the Borrower’s prior approval, which shall not be unreasonably
withheld. Until such time as an Event of Default or Default has occurred and
is continuing, the Administrative Agent and the Borrower will mutually agree
upon a reasonable application of the net proceeds of any such insurance to
replace or restore the damaged or destroyed Collateral or to the payment of the
Obligations, whether matured or unmatured, but, if the Administrative Agent and
the Borrower cannot agree upon a reasonable application of such net proceeds
within fifteen (15) days of receipt thereof, such proceeds shall be applied as
determined by the Administrative Agent in its sole discretion. If an Event of
Default or Default has occurred and is continuing, the net proceeds of any such
insurance shall be applied, as the Administrative Agent shall determine in its
sole discretion, to replace or restore the damaged or
destroyed Collateral, in a manner and on terms satisfactory to the
Administrative Agent, or to payment of the Obligations (whether matured or
unmatured) in such manner and at such times as the Administrative Agent may
determine in its sole discretion.




     3.9 Inspection. Permit the Administrative Agent, by
its representatives and agents, at the expense of the Borrower, to inspect any
of the properties, books and financial records of the Borrower, to examine and
make copies of the books of accounts and other financial records of the
Borrower, and to discuss the affairs, finances and accounts of the Borrower
with, and to be


21






 


advised as to the same by, the Borrower (or its
representatives) at such reasonable times and intervals as the Administrative
Agent may designate. In connection with the foregoing, the Administrative
Agent and its representatives and agents, at the expense of the Borrower, shall
have the right, during normal business hours with reasonable advance notice to
Borrower, to conduct a field audit and (a) enter any business premises of the
Borrower or any other premises where the Collateral and the records relating
thereto may be located and to audit, appraise, examine and inspect the
Collateral and all records related thereto and to make extracts therefrom and
copies thereof, and (b) verify under reasonable procedures the validity,
amount, quality, quantity, value and condition of, and any other matter
relating to, the Collateral, including contacting account debtors or any person
possessing any of the Collateral at the expense of the Borrower (each a “Field
Audit”) Field Audits will be conducted no more frequently than annually;
provided, however, that if a Default or an Event of Default has occurred, and
is continuing, the Administrative Agent shall have the right, in its sole
discretion, to conduct Field Audits quarterly at the expense of the Borrower.
An independent certified public accounting firm, acceptable to the
Administrative Agent, will perform each such Field Audit.



     3.10 Collection of Loan Receivables. Collect the Loan
Receivables relating to Contracts only in the ordinary course of business, and
shall not, without the Required Lenders’ prior written consent, compromise or
adjust the amount of any Loan Receivable.



     3.11 Loan Undertakings. Without the prior written
consent of the Required Lenders, the Borrower shall not consent to, approve or
otherwise acquiesce in any modification of the terms of the Obligor Loan
Documents, except such amendments that are immaterial and made in the ordinary
course of Borrower’s business, or waive any material term or condition of the
Obligor Loan Documents, or take any enforcement or other action whatsoever with
respect to the Eligible Loans (other than collection of the Loan Receivables or
exercising rights with respect to Pledged Securities in accordance with the
provisions of Sections 3.10 and 3.17(a) hereof).



     3.12 Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete in all material respects) as may be required
or as may be necessary to permit the preparation of financial statements in
accordance with GAAP and in compliance with the regulations of any governmental
authority having jurisdiction over it or any of its properties.



     3.13 Further Assurances. Defend the interest of the
Borrower to the Collateral and the security interest and lien thereon of the
Lenders against all persons and
against all security interests and Liens on the Collateral adverse to
those of the Lenders. The Borrower will, from time to time, at the expense of
the Borrower, execute, deliver, acknowledge and cause to be duly filed,
recorded or registered any statement, assignment, instrument, paper, agreement
or other document and take any other action that from time to time may be
necessary or desirable, or that the Administrative Agent may reasonably
request, in order to create, preserve, continue, perfect, confirm or validate
the security interest and lien of the Lenders on the Collateral or to enable
the Lenders to obtain the full benefits of this Agreement or to exercise and
enforce any of its rights, powers and remedies hereunder or under applicable
laws. The Borrower shall pay all costs of, and incidental to, the filing,
recording or registration of any such document as well as any recordation,
transfer or other tax required to be paid in connection with any such filing,
recordation or registration. The Borrower hereby covenants to save harmless and
indemnify the


22






 


Lenders from and against any liability resulting from the failure
to pay any required documentary stamps, recordation and transfer taxes and
recording costs incurred by the Lenders in connection with this Agreement or
the Collateral which covenant shall survive the termination of this Agreement
and the payment of all other Obligations. If, in the reasonable opinion of the
Administrative Agent, any Collateral is or may become a part of any real estate
owned or leased by the Borrower or any Eligible Loan Obligor, the Borrower will
or will use its best efforts to cause such Eligible Loan Obligor’s landlord,
upon the request of the Administrative Agent, to furnish to the Administrative
Agent in form and content satisfactory to the Administrative Agent, a
landlord’s waiver by the record owner of such real estate and a mortgagee’s
waiver by any person who has a security interest or lien on such real estate
which is or may be superior to the security interest and lien of the Lenders on
such Collateral. In the event Borrower takes any further action beyond the
filing of a UCC financing statement to perfect its security interest in the
assets purchased with the proceeds of an Eligible Loan, Borrower agrees
promptly to assign to Lenders any such other action to perfect in form and
substance satisfactory to Administrative Agent.



     3.14 Environmental Laws. In addition to and without
limiting the generality of Section 3.4, (a) comply in all material respects
with, and ensure such compliance by all tenants and subtenants with all
applicable Environmental Laws including, without limitation, CERCLA and obtain
and comply with and maintain, and ensure that all tenants and subtenants, if
any, obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws, and promptly comply in all material respects with all
lawful orders and directives of any governmental authority regarding
Environmental Laws, and (c) defend, indemnify and hold harmless, and cause each
Loan Obligor to defend, indemnify and hold harmless the Administrative Agent,
its Affiliates, employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the presence of Hazardous Materials,
or the violation of, noncompliance with or liability under any Environmental
Laws applicable to the operations of the Borrower or any orders, requirements
or demands of governmental authorities related thereto, including, without
limitation, reasonable attorneys’ and consultants’ fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor.



     3.15 Compliance with ERISA. In addition to and without
limiting the generality of Section 3.4, (a) comply with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Plans, (b) not take any action or fail to take
action the result of which could be a liability to the PBGC or to a Plan, (c)
not participate in any prohibited transaction that could result in any civil
penalty under ERISA or tax under the Code, (d) operate each Plan in such a
manner that will not incur any tax liability under Section 4980B of the Code or
any liability to any qualified beneficiary as defined in Section 4980B of the
Code and (e) furnish to the Administrative Agent upon the Administrative
Agent’s request such additional information about any Plan as may be reasonably
requested by the Administrative Agent.


23






 



     3.16 Notice. Promptly give written notice to the
Administrative Agent (a) of the occurrence of any Default or any event,
development or circumstance which could have a Material Adverse Effect, (b) of
any litigation instituted or threatened against the Borrower or any judgment
against the Borrower where claims against the Borrower exceed $100,000 and are
not covered in full by insurance, (c) of any notice of a claim against or
investigation of the Borrower or any of the Borrower’s properties with respect
to any applicable Federal, state or local environmental, health or safety laws,
statutes, rules or regulations, (d) of the occurrence of any “reportable event”
within the meaning of ERISA or any assertion of liability of the Borrower by
the PBGC, (e) thirty (30) days prior to any contemplated change in the name or
address of the Borrower, and (f) of the occurrence of any default under an
Obligor Loan or of a casualty with respect to any of the Collateral.



     3.17 Collections.


          (a) Until the Borrower’s authority to do so is terminated by the
Administrative Agent pursuant to subsection (b) below, enforce and collect at
the Borrower’s cost and expense in accordance with the collection practices
customary in the Borrower’s business payment of all amounts due and payable on
or in respect of Loan Receivables relating to Collateral on the Lenders’ behalf
and for the Lenders’ account as the Lenders’ property in trust for the Lenders,
and use the proceeds of all such payments for the Borrower’s general business
purposes so long as such use is not inconsistent with the provisions of this
Agreement.



          (b) At any time after a Default, the Administrative Agent may terminate
the authority given to the Borrower in subsection (a) above whereupon (i) the
Administrative Agent shall have the right to send to the borrowers of Eligible
Loans for which an Advance has been made, the Notices of Assignment executed
and delivered by the Borrower concurrently herewith to be held by the
Administrative Agent hereunder, or otherwise to notify and direct, and/or
require the Borrower to notify and direct, all account debtors to make all
payments on or in respect of Loan Receivables relating to Eligible Loans
directly to the Administrative Agent for deposit into a special Administrative
Agent account maintained by the Administrative Agent, for the benefit of the
Lenders, over which the Administrative Agent has exclusive dominion, control
and power of access and withdrawal (the “Collection Account”), (ii) unless
otherwise agreed by the Administrative Agent, any cash, checks, drafts, money
orders, instruments or other remittances on or with respect to Loan Receivables
relating to Eligible Loans received by the Borrower shall be delivered to the
Administrative Agent within one (1) day of receipt thereof by the Borrower for
deposit to the Collection Account in precisely the form in which received,
except for the addition thereto of the endorsement of the Borrower where
required for collection of any checks, drafts, money orders, instruments or
other remittances which endorsement the Borrower agrees to make and with
respect thereto the Borrower hereby waives notice of presentment, protest and
non-payment, (iii) pending such deposit, the Borrower will not commingle any
such cash, checks, drafts, money orders, instruments or other remittances with
other funds or property but will hold them separate and apart and in trust for
the Lenders subject to the security interest and lien of the Lenders on the
Collateral hereunder, and (iv) the Administrative Agent shall apply funds held
by it in the Collection Account to the payment of all or any part of the
Obligations, whether matured or unmatured, in accordance with Section 1.6(c)
hereof.



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     3.18 Use of Proceeds. The Borrower shall use the
proceeds of each Advance and each Swingline Loan for the sole purpose of
providing Eligible Loans.



     3.19 Obligor Loan Documents. All Obligor Loan
Documents shall contain representations, warranties and covenants substantially
similar to those set forth in this Agreement.



     3.20 Business Checking Account. Establish and maintain
an operating account with the Administrative Agent.



     3.21 Hedging Agreement. Not later than fifteen (15)
days after the date hereof, execute and keep in effect one or more Hedging
Agreements with respect to interest rate exposure under this Agreement with an
aggregate notional principal amount thereunder equal to at least seventy-five
percent (75%) of the sum of (i) the aggregate Loan balance, at any time and
(ii) the aggregate outstanding Indebtedness owed by Borrower to F&M with a
Lender or other counterparty reasonably satisfactory to the Administrative
Agent and otherwise in form and substance reasonably satisfactory to the
Administrative Agent.



     3.22 Senior Management. Until such time as all
Obligations are paid in full and the Lenders are no longer under any obligation
to provide Advances hereunder, J. Alden Philbrick IV shall continue to be
employed by the Borrower in a Senior Management position and shall continue to
have day-to-day management responsibility for the activities of Borrower;
provided that if Mr. Philbrick dies, becomes disabled or is otherwise not
actively involved in the day-to-day management of Borrower, Borrower shall hire
a replacement senior executive reasonably satisfactory to the Required Lenders
within ninety (90) days after his death, disability or cessation or reduction
of management duties.



     3.23 Additional Subsidiaries. Within ten (10) days
after any Subsidiary of the Borrower, which is created or acquired after the
Closing Date, cause to be executed and delivered to the Administrative Agent
(a) a duly executed joinder agreement and (b) favorable legal opinions
addressed to the Administrative Agent and Lenders in form and substance
satisfactory thereto with respect to such joinder agreement and such other
documents and closing certificates as may be requested by the Administrative
Agent.



     3.24 Landlord or Mortgagee Waiver. Not later than
thirty (30) days after the Closing Date, the Administrative Agent shall have
received a landlord or
mortgagee waiver satisfactory to Administrative Agent executed by the
landlord or mortgagee of each premises occupied by Borrower in which any of the
Collateral is located.



SECTION 4. NEGATIVE COVENANTS



     The Borrower covenants and agrees with the Lenders that so long as any of
the Obligations shall be outstanding, the Borrower shall not, directly or
indirectly:



     4.1 Financial Covenants. The following financial
covenants shall be tested quarterly upon submission of Borrower’s quarterly and
annual financial statements pursuant to Section 3.2 hereof:


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          (a) Asset Coverage Ratio. Permit its Asset Coverage Ratio to be less than
200%.



          (b) Interest Coverage Ratio. Permit its Interest Coverage Ratio to be
less than 1.5:1.0.



          (c) Net Worth. Permit its Net Worth to be less than $42,000,000.




     4.2 Limitations on Indebtedness. Create, incur, assume
or suffer to exist any Indebtedness except:


          (a) the Obligations;



          (b) Indebtedness incurred in connection with a Hedging Agreement (i) with
a counterparty and upon terms and conditions (including interest rate)
reasonably satisfactory to the Administrative Agent or (ii) required pursuant
to Section 3.21; provided that any counterparty that is a Lender shall be
deemed satisfactory to the Administrative Agent;



          (c) Indebtedness in favor of F&M pursuant to those documents evidencing
F&M Advances not to exceed $7,500,000;



          (d) Indebtedness of the Borrower incurred in connection with capital
leases in an aggregate amount not to exceed $100,000 on any date of
determination; and



          (e) purchase money Indebtedness of the Borrower in an aggregate amount not
to exceed $100,000 on any date of determination; and



          (f) Indebtedness existing on the Closing Date and not otherwise permitted
under this Section 4.2, as set forth on Schedule 4.2(f) and
the renewal and refinancing (but not the increase in the aggregate principal
amount) thereof.




     4.3 Limitations on Liens. Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets or properties
(including, without limitation, shares of capital stock or other ownership
interests), real or personal, whether now owned or hereafter acquired, except:


          (a) Liens for taxes, assessments and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;



          (b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;



26






 





          (c) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under
workers’ compensation, unemployment insurance or similar legislation;



          (d) Liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property,
which in the aggregate are not substantial in amount and which do not, in any
case, detract from the value of such property or impair the use thereof in the
ordinary conduct of business;



          (e) Liens of Lenders securing the Obligations;



          (f) Liens of F&M securing the F&M Advances;



          (g) Liens of the Borrower on the goods subject to Contracts;



          (h) Liens not otherwise permitted by this Section 4.3 and in existence on
the Closing Date and described on Schedule 4.3(h); and



          (i) Liens securing Indebtedness permitted under Sections 4.2(d) and
4.2(e); provided that (i) such Liens shall be created substantially
simultaneously with the acquisition or lease of the related asset, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased, and (iv) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed one hundred percent (100%) of the original
purchase price or lease payment amount of such property at the time it was
acquired.




     4.4 Mergers, Acquisitions, Etc. Without the Required
Lenders’ prior written consent, enter into any merger or consolidation or
acquire or purchase all or substantially all of the assets, properties or stock
of any other person.



     4.5 Investments. Except in the ordinary course of
business and as set forth on Schedule 4.5 attached hereto, purchase, acquire or
own any stock, bonds, notes, or
securities of, or any partnership interest in, or make any capital
contribution to, any other Person, or become a joint venture partner in any
joint venture, or repurchase any of its capital stock, or agree, or become
liable to do any of the foregoing.



     4.6 Sale of Assets and Liquidation. Without the prior
written consent of the Required Lenders, during any 12-month period, sell,
lease, assign, transfer or otherwise dispose of more than ten percent (10%) of
the value its property, business or assets, except for the sale, lease, pledge,
assignment or other disposition of Eligible Loan Documents in the ordinary
course of Borrower’s business; provided that in connection with any such
disposition (i) no Default or Event of Default has occurred and is continuing
(ii) the aggregate value of all Eligible Loan Documents sold, leased, pledged,
assigned or otherwise disposed of does not exceed $10,000,000 during any
12-month period, (iii) the Borrower does not grant, permit or incur any
additional Liens on its assets, except for Liens permitted hereunder, (iv)
within ten (10) days of such sale, lease, pledge, assignment, or other
disposition, Borrower delivers an updated Borrowing Base Certificate to
Administrative Agent, (v) the proceeds are used to repay the outstanding
balance of the Loan, and (vi) after giving effect to such transaction, the
outstanding


27






 


balance of the Loan does not exceed the Borrowing Base as set forth
in the Borrowing Base Certificate giving effect to such disposition. Without
the prior written consent of the Required Lenders, the Borrower will not take
any action to liquidate, dissolve or wind up the Borrower or its business.



     4.7 Transactions with Affiliates. Directly or
indirectly (a) make any loan or advance to, or purchase or assume any note or
other obligation to or from, any of its officers, directors, shareholders or
other Affiliates, or to or from any member of the immediate family of any of
its officers, directors, shareholders or other Affiliates, or subcontract any
operations to any of its Affiliates or (b) enter into, or be a party to, any
other transaction not described in clause (a) above with any of its Affiliates,
except pursuant to the reasonable requirements of its business and upon fair
and reasonable terms that are fully disclosed to and approved in writing by the
Required Lenders prior to the consummation thereof and are no less favorable to
it than it would obtain in a comparable arm’s length transaction with a Person
not its Affiliate.



     4.8 Change of Control. Effect or permit a Change of
Control.



     4.9 Change of Business. Enter into any business other
than the business as conducted by the Borrower on the date hereof.



     4.10 Change of Name, Location, Etc. (a) Change its
legal name, identity or business structure, (b) change the location of its
chief executive office or its chief place of business, (c) change the location
where it keeps its records concerning the Collateral, (d) change the location
of any Collateral under its direct control, or (e) open a new place of
business, unless the Borrower shall have given the Administrative Agent prior
written notice thereof and shall at its cost and expense have executed,
delivered, acknowledged, filed, recorded or registered all financing statements
and other documents as may be required by the Administrative Agent in order to
create, perfect, continue, preserve, confirm or validate the security interest
and lien of the Administrative Agent on the Collateral and its priority;
provided, that the Borrower shall not in any event change the location of any
Collateral if such change
would cause the security interest and lien of the Administrative Agent on
the Collateral (or the perfection thereof) to lapse, or if required to be
perfected prior to such change, to cease to be perfected.



     4.11 Certain Accounting Changes; Organizational
Documents. (a) Change its fiscal year end, or make any change in its
accounting treatment and reporting practices except as required by GAAP or (b)
amend, modify or change its Articles of Incorporation or amend, modify or
change its Bylaws (or other similar documents) in any manner adverse in any
respect to the rights or interests of the Lenders.



     4.12 Capital Stock. Repurchase, redeem, retire or
otherwise acquire any of Borrower’s outstanding capital stock for any purpose.



     4.13 Amendments. Amend or terminate any of the Obligor
Loan Documents, except, with respect to Eligible Loans, such amendments that
would not cause an Eligible Loan to fail to satisfy the criteria set forth
herein for an Eligible Loan, or settle or compromise any amounts payable under
an Obligor Loan.


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     4.14 ERISA. Engage in any “prohibited transaction” (as
such term is defined by ERISA), incur any “accumulated funding deficiency” (as
such term is defined by ERISA) whether or not waived, or terminate any Plan in
a manner which could result in the imposition of a lien on any property of the
Borrower pursuant to the provisions of ERISA.



SECTION 5. DEFAULT



     The occurrence of any one or more of the following events shall constitute
a default under the provisions of this Agreement, and the term “Default” shall
mean, whenever it is used in this Agreement, any one or more of the following
events (and the term “Event of Default” as used herein means one or more of the
following events, whether or not any requirement for the giving of notice, the
lapse of time, or both has been satisfied):



     5.1 Payment of Obligations. The failure of the
Borrower to pay any of the Obligations as and when due and payable in
accordance with the provisions of this Agreement, any Promissory Note and/or
any of the other Financing Documents, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise;



     5.2 Perform, etc. Certain Provisions of this Agreement.
The failure of the Borrower to perform, observe or comply with any of the
provisions of Sections 3.3, 3.8(a) or (c), 3.10, 3.14, 3.15, 3.17 and 3.18 of
this Agreement (Affirmative Covenants) or of Section 4 (Negative Covenants) of
this Agreement; and solely with respect to Section 3.22, such failure is not
cured to the satisfaction of the Required Lenders within a period of sixty (60)
days after the expiration of the time period set forth in Section 3.22;
provided, however, that the Loan
Commitment shall be suspended immediately upon breach of Section 3.22;



     5.3 Perform, etc. Other Provisions of this Agreement.
The failure of the Borrower to perform, observe or comply with any of the
provisions of this Agreement other than those covered by Sections 5.1 and 5.2
above, and such failure is not cured
to the satisfaction of the Administrative Agent within a period of thirty
(30) days after the date of written notice thereof by the Administrative Agent
to the Borrower;



     5.4 Representations and Warranties. If any
representation and warranty contained herein or any statement or representation
made in any certificate or any other information at any time given by or on
behalf of the Borrower or furnished in connection with this Agreement or any of
the other Financing Documents shall prove to be false, incorrect or misleading
in any material respect on the date as of which made;



     5.5 Default Under Other Financing Documents. The
occurrence of a default (as defined and described therein) under the provisions
of any of the other Financing Documents, including, without limitation, the
termination of any hedge or swap agreement which is not cured within applicable
cure periods, if any or the Custodial Agreement ceases to be in full force and
effect for any reason unless Administrative Agent shall have made alternative
custodial arrangements for the Collateral or taken direct possession thereof;



     5.6 Liquidation, Termination, Dissolution, etc. If the
Borrower shall liquidate, dissolve or terminate its existence;


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     5.7 Default Under Other Indebtedness. If the Borrower
shall default in any payment of any Indebtedness (a) owing to any Lender (other
than the Obligations under the Financing Documents), or (b) to any other Person
or Persons, in an aggregate amount of not less than $100,000, beyond the
period(s) of grace, if any, provided in the instrument(s) or agreement(s) under
which such Indebtedness was created, or default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur the effect of which default
or other event is to cause or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause, with the giving of notice, if required, such Indebtedness to become
due prior to its stated maturity;



     5.8 Attachment. The issuance of any attachment or
garnishment against property of the Borrower serving as Collateral, or the
issuance of any attachment or garnishment against any other property of the
Borrower for an amount in excess, singly or in the aggregate, of $20,000, which
shall not have been vacated, discharged, stayed or bonded pending appeal within
thirty (30) days after the issuance thereof;



     5.9 Judgments. One or more judgments or decrees shall
be entered against the Borrower involving in the aggregate a liability in
excess of $20,000, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within thirty (30) days
after the entry thereof;



     5.10 Inability to Pay Debts, etc. If the Borrower
shall admit its inability to pay its debts as they mature or shall make any
assignment for the benefit of any of its creditors;



     5.11 Bankruptcy. If proceedings in bankruptcy, or for
reorganization of the Borrower, or for the readjustment of any of the
Borrower’s debts, under the
United States Bankruptcy Code (as amended) or any part thereof, or under
any other applicable laws, whether state or federal, for the relief of debtors,
now or hereafter existing, shall be commenced against or by the Borrower and,
except with respect to any such proceedings instituted by the Borrower, shall
not be discharged within ninety (90) days of their commencement;



     5.12 Receiver, etc. A receiver or trustee shall be
appointed for the Borrower or for any substantial part of the Borrower’s
assets, or any proceedings shall be instituted for the dissolution or the full
or partial liquidation of the Borrower and, except with respect to any such
appointments requested or instituted by the Borrower, such receiver or trustee
shall not be discharged within ninety (90) days of his or her appointment, and,
except with respect to any such proceedings instituted by the Borrower, such
proceedings shall not be discharged within ninety (90) days of their
commencement;



     5.13 Financial Condition. The occurrence of any
material adverse change or change in the financial condition of the Borrower
which in the good faith judgment of the Administrative Agent could have a
Material Adverse Effect, and any such change is not cured to the satisfaction
of the Required Lenders thirty (30) days after the date of written notice
thereof by the Administrative Agent to the Borrower;


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     5.14 Default; Security Interest. Any Financing
Document shall, at any time, cease to be in full force and effect (unless
released by the Administrative Agent in accordance with this Agreement) or
shall be declared null and void, or the validity or enforceability thereof
shall be contested by the Borrower or the Administrative Agent shall not have
or shall cease to have valid, perfected security interests in the Collateral
for the benefit of all of the Lenders, subject to no other Liens whatsoever,
except Liens permitted hereunder.



     5.15 Change of Control. Any Change of Control shall
occur.



     5.16 Insecure. If the Required Lenders deem themselves
insecure and provide written notice thereof to Borrower; or



     5.17 Prospect of Payment. If the Required Lenders in
good faith determine that the prospect of payment of any of the Obligations is
impaired for any reason and provide written notice thereof to Borrower.



SECTION 6. RIGHTS AND REMEDIES




     6.1 Rights and Remedies. If any Default shall occur
and be continuing, the Loan Commitment shall automatically terminate and the
Administrative Agent may with the consent of the Required Lenders, and shall at
the request of the Required Lenders, declare the unpaid principal amount of the
Loan, together with accrued and unpaid interest thereon, and all other
Obligations then outstanding to be immediately due and payable, whereupon the
same shall become and be forthwith due and payable by the Borrower to the
Lenders, without presentment, demand, protest or notice of any kind, all of
which are expressly waived by the Borrower; provided, that, in the case of any
Default referred to in Sections 5.10, 5.11 or 5.12 above, the unpaid principal
amount of the Loan, together with accrued and unpaid interest thereon, and all
other Obligations then outstanding shall be automatically and
immediately due and payable by the Borrower to the Lenders without notice,
presentment, demand, protest or other action of any kind, all of which are
expressly waived by the Borrower. Upon the occurrence and during the
continuation of any Default, then in each and every case, the Administrative
Agent shall, upon the prior written consent of the Required Lenders, be
entitled to exercise in any jurisdiction in which enforcement thereof is
sought, the following rights and remedies, in addition to the rights and
remedies available to the Administrative Agent under the other provisions of
this Agreement and the other Financing Documents, the rights and remedies of a
secured party under the UCC and all other rights and remedies available to the
Administrative Agent under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:


          (a) The Administrative Agent shall have the right to take possession of
any Collateral not in its direct possession or the possession of the Custodian
for the benefit of the Lenders, and for that purpose, so far as the Borrower
may give authority therefor or to the extent permitted under applicable laws,
to enter upon any premises on which the Collateral or any part thereof may be
situated, temporarily exclude the Borrower therefrom only as and to the extent
necessary to permit the Administrative Agent to take possession of the
Collateral (if the Administrative Agent has reason to believe that the Borrower
has misappropriated funds, committed a fraud or materially misrepresented any
representation or warranty made by it herein), and remove therefrom all or any
of the Collateral without any liability for suit, action or



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other proceeding.
THE BORROWER IS HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO
JUDICIAL HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL, and require the
Borrower, at the Borrower’s expense, to assemble and deliver all or any of the
Collateral to such place or places as the Administrative Agent may designate.


          (b) The Administrative Agent shall have the right to operate, manage and
control all or any of the Collateral (including use of the Collateral and any
other property or assets of the Borrower in order to continue or complete
performance of the Borrower’s obligations under any contracts of Borrower) in
accordance with the written instructions of the Required Lenders, or permit the
Collateral or any portion thereof to remain idle or store the same, and collect
all rents and revenues therefrom and sell, lease or otherwise dispose of any or
all of the Collateral upon such terms and under such conditions as the Required
Lenders may determine, and, upon the prior written consent of the Required
Lenders, purchase or acquire any of the Collateral at any such sale or other
disposition, all to the extent permitted by applicable law. Any purchaser or
lessor of any of the Collateral so sold or leased shall hold the property so
sold or leased free from any claim or right of the Borrower and the Borrower
hereby waives (to the extent permitted by law) all rights of redemption, stay
or appraisal with respect thereto. The Administrative Agent and the Borrower
agree that commercial reasonableness and good faith require the Administrative
Agent to give to the Borrower no more than ten (10) days’ prior written notice
of any public sale or other disposition of the Collateral or of the time after
which any private sale or other disposition of the Collateral is to be made.



          (c) The Administrative Agent shall have the right, and the Borrower hereby
irrevocably designates and appoints the Administrative Agent and its designees
as the attorney-in-fact of the Borrower, with power of substitution and with
power and authority in the Borrower’s name, the Administrative Agent’s name or
otherwise and for the use and benefit of the Lenders (i) to send to the
Eligible Loan Obligors, the Notices of Assignment executed and
delivered by the Borrower to the Administrative Agent concurrently
herewith, or otherwise to notify account debtors and other persons obligated to
make payments or other remittances on or with respect to the Collateral to make
such payments and other remittances directly to the Administrative Agent, (ii)
to demand, collect, sue for, take control of, compromise, settle, change the
terms of, release, exchange, substitute, extend, renew or otherwise deal with,
the Collateral or any account debtor or other person obligated on or under the
Collateral in any manner as the Administrative Agent may deem advisable, (iii)
to remove from any place of business of the Borrower all records in respect of
the Collateral and, at the cost and expense of the Borrower, to make use of any
place of business of the Borrower as may be necessary or desirable to
administer, control, collect, sell or otherwise dispose of the Collateral, (iv)
to receive and endorse the Borrower’s name on any checks, drafts, money orders
or other instruments of payment relating to any of the Collateral, (v) to sign
and send verifications of Loan Receivables relating to Eligible Loans specified
as Collateral on the applicable Advance Request or other Collateral and sign
any proofs of claim or loss, (vi) to commence, prosecute or defend any action,
suit or proceeding relating to the Collateral or the collection, enforcement or
realization upon the Collateral, (vii) to adjust and compromise any claims
under insurance policies relating to the Collateral, and (viii) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with any or all of the Collateral and to do all other acts and things necessary
to carry out this Agreement as though the Administrative Agent were absolute
owner of the Collateral. This power of attorney, being coupled with an
interest, is irrevocable and all acts by



32






 





the Administrative Agent and its
designees pursuant thereto are hereby ratified and confirmed by the Borrower.
Neither the Administrative Agent or any of its designees nor the Lenders shall
be liable for any acts of commission or omission, nor for any error of judgment
or mistake of fact or law other than acts of actual fraud, willful misconduct
or gross negligence. The provisions of this subsection shall not (A) be
construed as requiring or obligating the Administrative Agent, the Lenders or
any designee to take any action authorized hereunder and any action taken or
any action not taken hereunder shall not give rise to any liability on the part
of the Administrative Agent, its designees or any of the Lenders or to any
defense, claim, counterclaim or offset in favor of the Borrower, (B) be
construed to mean the Administrative Agent or any Lender has assumed any of the
obligations of the Borrower under any instrument or agreement as neither the
Administrative Agent nor any Lender shall be responsible in any way for the
performance of the Borrower of any of the provisions thereof, and (C) relieve
the Borrower of any of its obligations hereunder or in any way limit the
exercise by the Administrative Agent or any Lender of any other or further
rights it or they may have hereunder, under the other Financing Documents, by
law or otherwise.


          (d) The Borrower recognizes that the Administrative Agent and the Lenders
may be unable to effect, or to do so only after delay which would adversely
affect the value that might be realized from the Pledged Securities, a public
sale of all or part of the Pledged Securities by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and may be compelled to
resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof. The Borrower agrees that any such private sale may be at
prices and on terms less favorable to the Lenders than if sold at public sales,
and therefore recognizes and confirms that such private sales shall be deemed
to have been made in a commercially reasonable manner. The Borrower agrees
that the Lenders have no obligation to delay sale of any such securities for
the period of time necessary
to permit the issuer of such securities to register such securities for
public sale under the Securities Act of 1933, as amended.



          (e) The Lenders shall have no obligation to take any steps to preserve the
rights of the Borrower in the Pledged Securities against prior parties. The
Lenders shall have no obligation to sell or otherwise deal with the Pledged
Securities, whether or not upon request of the Borrower, if at such time the
value of the Pledged Securities, in the opinion of the Administrative Agent, is
less than the aggregate amount of the Indebtedness secured hereby, and such
refusal or inaction by the Lenders shall not be deemed a breach of any duty
which the Lenders may have under law to preserve the Pledged Securities.



          (f) If, in the enforcement of such rights, the Administrative Agent shall
propose to dispose of all or any portion of the Pledged Securities, the
Borrower agrees that ten (10) days prior written notice, sent to the Borrower
shall be adequate and reasonable notice.



          (g) The Borrower waives diligence, presentment, demand, protest and notice
of any kind except for any notice expressly provided for herein.




     6.2 Default Rate. Notwithstanding the entry of any
decree, order, judgment or other judicial action, upon the occurrence of a
Default hereunder, the unpaid principal amount of the


33






 


Loan and all other
monetary Obligations outstanding or becoming outstanding while such Default
exists shall bear interest from the date on which the Administrative Agent
notifies the Borrower of such Default (unless the Administrative Agent is
legally precluded from providing such notice to the Borrower then from the date
of such Default), until such Default has been cured to the satisfaction of the
Administrative Agent, at a rate of interest equal at all times to the Base Rate
plus three (3) percent per annum (the “Default Rate”), irrespective of whether
or not as a result thereof, any Promissory Note or any of the Obligations has
been declared due and payable or the maturity thereof accelerated. The
Administrative Agent shall provide to Borrower written notice that the Default
Rate became applicable. The Borrower shall on demand from time to time pay
such interest to the Administrative Agent, for the account of the Lenders and
the same shall be a part of the Obligations hereunder.



     6.3 Liens, Set-Off. As security for the payment of the
Obligations and the performance of the Financing Documents, the Borrower hereby
grants to the Lenders a continuing Lien on, in and upon all Indebtedness owing
to, and all deposits (general or special), credits, balances, monies,
securities and other property of, the Borrower and all proceeds thereof, both
now and hereafter held or received by, in transit to, or due by, the Lenders.
In addition to, and without limitation of, any rights of the Lenders under
applicable laws, if the Borrower becomes insolvent, however evidenced, or any
Default occurs, the Lenders may at any time and from time to time thereafter,
without notice to the Borrower, set-off, hold, segregate, appropriate and apply
at any time and from time to time thereafter all such Indebtedness, deposits,
credits, balances (whether provisional or final and whether or not collected or
available), monies, securities and other property toward the payment of all or
any part of the Obligations in such order and manner as the Administrative
Agent in its sole discretion may determine and whether or not the Obligations
or any part thereof shall then be due or demand for payment thereof made by the
Administrative Agent.



     6.4 Enforcement Costs. The Borrower agrees to pay to
the Administrative Agent, for the account of the Lenders, on demand (a) all
reasonable enforcement costs paid, incurred or advanced by or on behalf of the
Lenders and (b) interest on such enforcement costs from the date paid, incurred
or advanced until paid in full at a per annum rate of interest equal at all
times to the Default Rate. As used herein, the term “enforcement costs” shall
mean and include collectively all expenses, charges, recordation or other
taxes, costs and fees (including attorneys’ fees and expenses) of any nature
whatsoever advanced, paid or incurred by or on behalf of the Lenders in
connection with (1) the collection or enforcement of this Agreement or any of
the other Financing Documents, (2) the creation, perfection, maintenance,
preservation, defense, protection, realization upon, disposition, collection,
sale or enforcement of all or any part of the Collateral, and (3) the exercise
by the Lenders of any rights or remedies available to it under the provisions
of this Agreement, or any of the other Financing Documents. All enforcement
costs, with interest as above provided, shall be a part of the Obligations
hereunder.



     6.5 Application of Proceeds. Any proceeds of the
collection of the Obligations and/or the sale or other disposition of the
Collateral will be applied by the Administrative Agent to the payment of each
Lender’s enforcement costs, and any balance of such proceeds (if any) will be
applied by the Administrative Agent to the payment of the remaining Obligations
(whether then due or not), in accordance with Section 1.6(c). If the sale or
other disposition of the Collateral


34






 


fails to satisfy all of the Obligations,
the Borrower shall remain liable to the Lenders for any deficiency.



     6.6 Remedies, etc. Cumulative. Each right, power and
remedy of the Administrative Agent and the Lenders as provided for in this
Agreement or in the other Financing Documents or now or hereafter existing
under applicable laws or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in this
Agreement or in the other Financing Documents or now or hereafter existing
under applicable laws or otherwise, and the exercise or beginning of the
exercise by the Administrative Agent and the Lenders of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later
exercise by the Administrative Agent and the Lenders of any or all such other
rights, powers or remedies.



     6.7 No Waiver, Etc. No failure or delay by the
Administrative Agent or any Lender to insist upon the strict performance of any
term, condition, covenant or agreement of this Agreement or of the other
Financing Documents, or to exercise any right, power or remedy consequent upon
a breach thereof, shall constitute a waiver of any such term, condition,
covenant or agreement or of any such breach, or preclude the Administrative
Agent or any Lender from exercising any such right, power or remedy at any
later time or times. By accepting payment after the due date of any amount
payable under this Agreement or under any of the other Financing Documents,
neither the Administrative Agent nor any Lender shall be deemed to waive the
right either to require prompt payment when due of all other amounts payable
under this Agreement or under any of the other Financing Documents, or to
declare a Default for failure to effect such prompt payment of any such other
amount. The payment by the Borrower or any other person and the acceptance by
the Administrative Agent and the Lenders of any amount due and payable under
the provisions of this Agreement or the other Financing Documents at any time
during which a Default exists shall not in any way or manner be
construed as a waiver of such Default by the Administrative Agent or any
Lender or preclude the Administrative Agent or any Lender from exercising any
right, power or remedy consequent upon such Default.



SECTION 7. THE ADMINISTRATIVE AGENT




     7.1 Appointment. Each of the Lenders hereby
irrevocably designates and appoints National City Bank as Administrative Agent
of such Lender under this Agreement and the other Financing Documents for the
term hereof and each such Lender irrevocably authorizes National City Bank, as
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Financing Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and such other Financing
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Financing Documents, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein
and therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or the other Financing Documents or otherwise
exist against the Administrative Agent. Any reference to the Administrative
Agent in


35






 


this Section 7 shall be deemed to refer to the Administrative Agent
solely in its capacity as Administrative Agent and not in its capacity as a
Lender.



     7.2 Delegation of Duties. The Administrative Agent may
execute any of its respective duties under this Agreement and the other
Financing Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by the Administrative
Agent with reasonable care.



     7.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Financing Documents (except for actions occasioned
solely by its or such Person’s own gross negligence or willful misconduct), or
(b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or the other Financing Documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or the other Financing Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Financing Documents or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower.



     7.4 Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may
deem and treat the payee of any Promissory Note as the owner thereof for all
purposes unless such Promissory Note shall have been transferred in accordance
with Section 8.7. The Administrative Agent shall be fully justified in failing
or refusing to take any action under this Agreement and the other Financing
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by the relevant other
Financing Documents, all the Lenders) as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action except for its own gross negligence or willful misconduct.
The Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the Promissory Notes in
accordance with a request of the Required Lenders (or, when expressly required
hereby, all the Lenders), and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Promissory Notes.


36






 



     7.5 Notice of Default. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless it has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be directed by the
Required Lenders (or, when expressly required hereby, all the Lenders);
provided that unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders, except to the extent that other provisions of this Agreement
expressly require that any such action be taken or not be taken only with the
consent and authorization or the request of all the Lenders or Required
Lenders, as applicable.



     7.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its respective officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates has made any
representations or warranties to it and that no act by the Administrative Agent
hereafter taken, including any review of the affairs of the Borrower or any of
its Subsidiaries, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to
make its Advances hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Financing Documents, and
to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Financing Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower which may come into the possession of the Administrative Agent or any
of its respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.



     7.7 Indemnification. The Lenders agree to indemnify
the Administrative Agent in its capacity as such and (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to the respective amounts of their Loan Commitment
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Promissory Notes be imposed on, incurred
by or asserted against the Administrative Agent in any way relating to or
arising out of this Agreement or the other Financing Documents, or any


37






 


documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Administrative Agent’s bad faith, gross negligence or willful misconduct. The
agreements in this Section 7.7 shall survive the payment of the Promissory
Notes and all other amounts payable hereunder and the termination of this
Agreement.



     7.8 The Administrative Agent in Its Individual Capacity.
The Administrative Agent and its respective Subsidiaries
and Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrower as though the Administrative Agent were
not the Administrative Agent hereunder. With respect to any Advances made or
renewed by it and any Promissory Note issued to it, the Administrative Agent
shall have the same rights and powers under this Agreement and the other
Financing Documents as any Lender and may exercise the same as though it were
not the Administrative Agent, and the terms “Lender” and “Lenders” shall
include the Administrative Agent in its individual capacity.



     7.9 Resignation of the Administrative Agent, Successor Administrative Agent.
Subject to the appointment and acceptance of a
successor as provided below, the Administrative Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the
Administrative Agent’s giving of notice of resignation, then the
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Section
7.9 shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.



SECTION 8. MISCELLANEOUS




     8.1 Course of Dealing; Amendment. No course of dealing
between the Administrative Agent or any Lender and the Borrower shall be
effective to amend, modify or change any provision of this Agreement or the
other Financing Documents. The Administrative Agent and each Lender shall have
the right at all times to enforce the provisions of this Agreement and the
other Financing Documents in strict accordance with the provisions hereof and
thereof, notwithstanding any conduct or custom on the part of the
Administrative Agent or any Lender in refraining from so doing at any time or
times. The failure of the Administrative Agent or any Lender at any time or
times to enforce its rights under such provisions, strictly in accordance with
the same, shall not be construed as having created a custom in any way or


38






 


manner contrary to specific provisions of this Agreement or the other Financing
Documents or as having in any way or manner modified or waived the same. This
Agreement and the other Financing Documents to which the Borrower is a party
may not be amended, modified, or changed in any respect except by an agreement
in writing signed by the Administrative Agent and the Borrower.



     8.2 Waivers of Default. This Agreement and the other
Financing Documents (other than any Hedging Agreement) may only be amended,
modified, or changed in any respect by an agreement in writing signed by the
Administrative Agent, the Required Lenders and the Borrower, and, to the extent
provided in Section 8.3, by an agreement in writing signed by the
Administrative Agent, all of the Lenders and the Borrower. No waiver of any
provision of this Agreement or of any of the other Financing Documents, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing signed by the Required Lenders.
No course of dealing between the Borrower and the Administrative Agent and/or
any of the Lenders and no act or failure to act from time to time on the part
of the Administrative Agent and/or any of the Lenders shall constitute a
waiver, amendment or modification of any provision of this Agreement or any of
the other Financing Documents or any right or remedy under this Agreement,
under any of the other Financing Documents or under applicable Laws. Without
implying any limitation on the foregoing, and subject to the provisions of
Section 8.3:


          (a) Any waiver or consent shall be effective only in the specific
instance, for the terms and purpose for which given, subject to such conditions
as the Administrative Agent and Lenders may specify in any such instrument.



          (b) No waiver of any Default or Event of Default shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereto.



          (c) No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in the same, similar or other
circumstance.



          (d) No failure or delay by the Lenders to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement or
of any of the other Financing Documents, or to exercise any right, power or
remedy consequent upon a breach thereof, shall constitute a waiver, amendment
or modification of any such term, condition, covenant or agreement or of any
such breach or preclude the Lenders from exercising any such right, power or
remedy at any time or times.



          (e) By accepting payment after the due date of any amount payable under
this Agreement or under any of the other Financing Documents, the Lenders shall
not be deemed to waive the right either to require prompt payment when due of
all other amounts payable under this Agreement or under any of the other
Financing Documents, or to declare a default for failure to effect such prompt
payment of any such other amount.




     8.3 Circumstances Where Consent of all of the Lenders is Required.
Notwithstanding anything to the contrary contained herein,
no amendment, modification, change or waiver shall be effective without the
consent of all of the Lenders to:


39






 


          (a) extend the maturity of the principal of, or interest on, any Note or
of any of the other Obligations;



          (b) reduce the principal amount of any Note or of any of the other
Obligations, the rate of interest thereon or the fees due to the Lenders,
except as expressly permitted therein;



          (c) change the Loan Commitment or the Loan Commitment Percentage;



          (d) change the amount or date of payment of principal of, or interest on,
any Note or of any of the other Obligations;



          (e) change the method of calculation utilized in connection with the
computation of interest and fees;



          (f) change the manner of pro rata application by the Administrative Agent
of payments made by the Borrower, or any other payments required hereunder or
under the other Financing Documents;



          (g) modify this Section, Sections 3.2, 4.1, 5.1, the definition of
“Required Lenders” or any provision of this Agreement requiring the consent of
the Required Lenders, which would permit a consent of less than the Required
Lenders;



          (h) release or agree to subordinate any material portion of any Collateral
or Financing Document (except to the extent provided herein or therein);



          (i) amend the Custodial Agreement; or



          (j) change the definitions of “Borrowing Base” or “Eligible Loans”.




     8.4 Notices. All notices, requests and demands to or
upon the parties to this Agreement shall be deemed to have been given or made
when delivered by hand, or when deposited in the mail, postage prepaid by
certified mail, return receipt requested, or, in the case of notice by
facsimile transmission, when properly transmitted, addressed as follows or to
such other address as may be hereafter designated in writing by one party to
the other:



	 	 	 
	Borrower:	 	
Oxford Finance Corporation
	 	 	
133 North Fairfax Street
	 	 	
Alexandria, Virginia 22314
	 	 	
Attention: Mr. Mike Altenburger
	 	 	
Facsimile: (703) 519-4910
	 	 	 
	with a copy to:	 	
McGuire Woods LLP
	 	 	
1750 Tysons Boulevard
	 	 	
Suite 1800
	 	 	
McLean, Virginia 22102-4215
	 	 	
Attention: Tom O’Grady, Esquire
	 	 	
Facsimile: (703) 712-5248



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	Administrative Agent	 	
National City Bank
	 	 	
629 Euclid Avenue, 2nd Floor
	 	 	
Loc 01-3028
	 	 	
Cleveland, Ohio 44114
	 	 	
Attention: Agent Services
	 	 	
Facsimile: (216) 222-0103
	 	 	 
	with a copy to:	 	
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
	 	 	
260 South Broad Street
	 	 	
Philadelphia, Pennsylvania 19102
	 	 	
Attention: Jeffrey O. Greenfield, Esquire
	 	 	
Facsimile: (215) 568-6603
	 	 	 
	If to any Lender:	 	
To the address set forth on such Lender’s signature page.



except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed.



     8.5 Right to Perform. If the Borrower shall fail to
make any payment or to otherwise perform, observe or comply with the provisions
of this Agreement or any of the other Financing Documents, then and in each
such case, the Administrative Agent may (but shall be under no obligation
whatsoever to) without notice to or demand upon the Borrower remedy any such
failure by advancing funds or taking such action as it deems appropriate for
the account and at the expense of the Borrower. The advance of any such funds
or the taking of any such action by the Administrative Agent shall not be
deemed or construed to cure a Default or waive performance by the Borrower of
any provisions of this Agreement. The Borrower shall pay to the Administrative
Agent on demand, together with interest thereon from the date advanced or
incurred until paid in full at a per annum rate of interest equal at all times
to the Default Rate, any such funds so advanced by the Administrative Agent and
any costs and expenses advanced or incurred by or on behalf of the
Administrative Agent in taking any such action, all of which shall be a part of
the Obligations hereunder.



     8.6 Fee; Costs and Expenses.


          (a) Concurrently with execution of this Agreement, the Borrower shall pay
to the Lenders the costs and fees associated with the preparation of this
Agreement and the other Financing Documents, including, without limitation,
fees of counsel for each Lender.



          (b) The Borrower agrees to pay to the Lenders on demand all fees,
recordation and other taxes, costs and expenses of whatever kind and nature,
including attorneys’ fees and disbursements, which the Lenders may incur or
which are payable in connection with the administration of the Loan, including,
without limitation, the recording, filing or modification of any and all of the
Financing Documents and obtaining lien searches, the expense of any inspection
made by the Lenders with respect to the Borrower and/or the Collateral, and the
expense of the Field Audit to be performed by the Administrative Agent. All
such fees, costs, recordation and other taxes shall be a part of the
Obligations hereunder.




41










 




     8.7 Consent to Jurisdiction. The Borrower irrevocably
(a) consents and submits to the jurisdiction and venue of any state or Federal
court sitting in the Commonwealth of Pennsylvania over any suit, action or
proceeding arising out of or relating to this Agreement or any of the other
Financing Documents, (b) waives, to the fullest extent permitted by law, any
objection that the Borrower may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum, and (c) consents to the service of
process in any such suit, action or proceeding in any such court by the mailing
of copies of such process to the Borrower by certified mail at the Borrower’s
address set forth herein for the purpose of giving notice.



     8.8 Assignment and Participations.


          (a) Each Lender may, subject to the consent of the Borrower unless there
is an Event of Default, in which case no consent shall be required, which
consent shall not be unreasonably withheld, conditioned or delayed, sell,
assign or transfer to any Person or Persons, all or any part of the Obligations
or all or any part of the Financing Documents and each such Person or Persons
shall execute a Joinder Agreement and upon such execution shall have the right
to enforce the provisions of the Financing Documents and any of the Obligations
as fully as such Lender, provided that such Lender shall continue to have the
unimpaired right to enforce the provisions of the Financing Documents and any
of the Obligations as to so much of the Financing Documents and/or the
Obligations that it has not sold, assigned or transferred. Additionally, each
Lender may sell or grant to any other person or persons participations in all
or any part of the Obligations or all or any part of the Financing Documents
(provided that such person is not a direct competitor of the Borrower).



          (b) In connection with and prior to and after any such sale, transfer,
assignment or participation, the assigning Lender may disclose and furnish to
any prospective or actual purchaser, transferee, assignee or participant, any
and all reports, financial statements and other information obtained by the
assigning Lender at any time and from time to time in connection with the
Obligations, any of the Financing Documents or otherwise. Each of the
Administrative Agent, the Lenders and the Borrower hereby agrees (for itself
and its affiliates) that unless otherwise required by applicable laws, it will
maintain the confidentiality of the transaction contemplated hereby and will
not disclose, or cause to be disclosed, the same to any person, except (1) to
prospective purchasers, transferees, assignees or participants who shall also
maintain the confidentiality of all such information so received, (2) to its
affiliates and its affiliates’ agents, directors, officers, employees,
accountants, counsel or other professional advisors that have, in each such
case, been instructed or otherwise bound by professional rules of conduct to
keep such information confidential, (3) as may be requested pursuant to
applicable laws by any governmental authority (including Internal Revenue
Service auditors or state taxing and regulatory authorities), (4) to the extent
required in connection with the performance by it of its obligations and the
exercise by it of its rights under this Agreement and the other Financing
Documents, (5) to any nationally recognized rating agency that requires access
to information about such person’s investment portfolio, (6) in response to any
subpoena or other legal process or in connection with any litigation to which
such person is a party (provided that prior notice shall have been provided to
the non-disclosing party), (7) to the extent, but only to the extent, that
prior to such disclosure, such information is in the public domain or has been
provided to



42






 





such party by a person not a party to this Agreement and the other
Financing Documents (other than by reason of a breach by such person of the
confidentiality provisions hereof or as expressly contemplated hereby), or (8)
with the prior written consent of the other party hereto (which consent shall
not be unreasonably withheld).


          (c) The Borrower will fully cooperate with each Lender in connection with
any such assignment and will execute and deliver such consents and acceptances
to any such assignment, amendments to this Agreement in order to effect any
such assignment (including, without limitation, the appointment of the
Administrative Agent as agent for itself and all assignees) and a new or a
replacement Promissory Note for any Promissory Note in conjunction with any
such assignment; provided, that the Borrower’s Indebtedness, obligations and
liabilities under this Agreement and the other Financing Documents will not be
increased by reason of any such assignment.



     8.9 Definitions; Certain Definitional Provisions.


          (a) As used herein, the following terms shall have the following meanings:



               (i) “Administrative Agent” means National City Bank in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 7.9.



               (ii) “Affiliate” shall mean any Person which, directly or indirectly, owns
or controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, at least ten
percent (10%) of the outstanding capital stock (or membership interest) having
ordinary voting power to elect the Board of Directors (or other governing body)
(irrespective of whether, at the time, stock of any other class
or classes of such corporation, limited liability company or other entity,
shall have or might have voting power by reason of the happenings of any
contingency) of the Borrower, or which otherwise controls, is controlled by or
is under common control with the Borrower, or any stockholder or member of the
Borrower or any Person which controls any stockholder or member of the
Borrower. For the purpose of this definition, “control” means the possession,
directly or indirectly, of the power to direct or to cause the direction of
management and policies, whether through the ownership of voting securities, by
contract or otherwise.



               (iii) “Asset Coverage Ratio” shall mean, the ratio which the value of
total assets, less all liabilities and funded Indebtedness not represented by
senior securities (all as determined pursuant to the Investment Company Act of
1940, as amended and any orders of the Securities and Exchange Commission
issued to Borrower thereunder), bears to the aggregate amount of senior
securities representing funded Indebtedness of Borrower.



               (iv) “Base Rate” means the sum of the Prime Rate plus one and one-half
percent (1.50%) per annum.



               (v) “Base Rate Advance” means an Advance that is requested by Borrower in
the applicable Advance Request to accrue interest at the Base Rate.



               (vi) “Borrowing Base” means that amount which is equal to the sum of (a)
fifty percent (50%) of that portion of the aggregate principal amount
outstanding at any time



43






 





of all Eligible Loans which is not secured by Liquid
Collateral, plus (b) eighty percent (80%) of that portion of the aggregate
principal amount outstanding at any time of all Eligible Loans which is secured
by Liquid Collateral of equal or greater value. Notwithstanding anything set
forth herein to the contrary, the Administrative Agent will exclude from the
calculation of the Borrowing Base all amounts which exceed the Contract Cap
with respect to any Eligible Loan.


               (vii) “Borrowing Base Certificate” means a fully completed certificate in
the form attached hereto as Exhibit D, which mathematical calculations used to
determine the Borrowing Base are certified to be true by a Responsible Officer.



               (viii) “Business Day” as used herein means any day other than Saturday,
Sunday or other day on which commercial banks in the Commonwealth of
Pennsylvania are authorized to close.



               (ix) “Business Development Company” shall have the meaning given to such
term in Section 1.11(a)(ii)(A).



               (x) “CERCLA” shall mean the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. §9601 et seq., as amended from time
to time, including all regulations thereunder and published interpretations
thereof and any successor or replacement statute and/or regulations.



               (xi) “Certificate” shall have the meaning given to such term in Section
1.10.



               (xii) “Change of Control” means an event or series of events by which any
“person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder), other than J. Alden Philbrick, IV and/or Michael
Altenburger, is or becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under such Exchange Act, except that a Person shall be deemed to have
“beneficial ownership” of all shares that any such Person has the right to
acquire without condition, other than passage of time, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the then outstanding
voting capital stock of the Borrower.



               (xiii) “Closing Date” means the date of this Agreement or, if later, the
Business Day upon which the Lenders provide the initial Advance to the Borrower
hereunder.



               (xiv) “Contract” shall have the meaning given to such term in Section
8.9(xx) below.



               (xv) “Contract Cap” means Two Million Dollars ($2,000,000) for an Eligible
Loan which is not secured by Liquid Collateral, and Four Million Dollars
($4,000,000) for an Eligible Loan which is partially or fully secured by Liquid
Collateral.



               (xvi) “Custodial Agreement” means the Amended and Restated Custodial
Agreement dated October      , 2003 between Administrative Agent and Riggs Bank,



44






 





N.A., among other things, appointing Riggs Bank, N.A. as Custodian and agent
for Administrative Agent’s possession of the Collateral.


               (xvii) “Custodian” means Riggs Bank, N.A. or such other person or entity
designated by Administrative Agent to be its agent for perfection by possession
of its security interest in the Collateral.



               (xviii) “Debt” means the total liabilities of the Borrower which, in
accordance with GAAP, would be included on the liability side of a balance
sheet.



               (xix) “Default” shall have the meaning given to such term in Section 5



               (xx) “Eligible Loans” means loans made by Borrower to Eligible Loan
Obligors pursuant to those documents or instruments executed and/or delivered
by Borrower and a Loan Obligor (including, but not limited to, any loan
agreement, promissory note, security agreement, pledge agreement, mortgage,
lease, certificates representing Pledged Securities and UCC-1 Financing
Statements) and satisfying the following criteria (collectively the “Eligible
Loan Documents”): (1) such documents or instruments are written agreements
satisfactory to the Administrative Agent, which have not expired or been
terminated (collectively, the “Contract”) and pursuant to which the Borrower
agrees to lend amounts to a Loan Obligor which is organized under the laws of
the United States or any state thereof and which Loan Obligor is not an agency
or instrumentality of the United States of America or of any state, county,
municipality or any department, agency or instrumentality thereof and the
equipment, goods or inventory, if any, purchased with the proceeds from the
Contract are located in the United States, (2) the initial stated term of the
Contract is not more than forty-eight (48) months and has a stated maturity
date, (3) the Contract arose in the ordinary course of the Borrower’s business
and the Contract is enforceable against all parties thereto, (4) the amount of
periodic installments required to be paid under the remaining term of the
documents or instruments shall be sufficient fully to amortize the Advance made
with respect to such documents or instruments, (5) no payment of principal or
interest, or other fees and expenses due and owing under the Contract, is or
has been, past due more than forty-five (45) days, except for fees and expenses
disputed in good faith, (6) the Loan Obligor is in compliance with all material
terms of the Contract, (7) the Contract shall not be subject to any lien,
security interest or prior assignment, including, without limitation, any lien,
security interest or prior assignment in favor of F&M, (8) all equipment, goods
or inventory purchased with the proceeds from the Contract shall have been
delivered to the Loan Obligor and shall be subject to a Lien to secure the
payment obligations under the Contract, (9) the Borrower’s right, title and
interest to the Contract, all amounts due and owing thereunder, and the assets
securing the payment obligations of any Loan Obligor is absolute and is
lawfully in the Borrower and is subject to no other assignment, claim, lien or
security interest except that of the Lenders, and the Borrower has the right of
assignment thereof and the power to grant the Lenders a security interest
therein, (10) the Contract is a valid and enforceable Contract, representing an
undisputed Indebtedness to the Borrower, is not subject to any claim or
reduction, counterclaim, set-off, recoupment, or any claim for credits,
allowances or adjustments by any party thereto, (11) no proceedings in
bankruptcy, or for reorganization, or for the readjustment of any of its debts,
under the United States Bankruptcy Code (as amended) or any part thereof, or
under any other applicable laws, whether state or federal, for the relief of
debtors, now or hereafter existing, shall be commenced against or by any Loan
Obligor and there shall



45






 





not have been a material adverse change in the
properties, business, operations, or condition (financial or otherwise) of any
such Loan Obligor and no event shall have occurred and no condition shall have
arisen that could have a material adverse effect on the properties, business
operations, or condition (financial or otherwise) on the ability of any such
Loan Obligor to perform its obligations under the Contract, (12) the Contract
shall not have been modified, amended, restated or otherwise extended such that
a default or breach existing prior to such modification, amendment, restatement
or extension no longer exists, (13) no Loan Obligor is an Affiliate of the
Borrower, (14) the Borrower is not obligated to perform services, maintenance
or other related obligations under the Contract (except obligations in the
ordinary course and consistent with prior Contracts), (15) if the Contract is
with a governmental authority, the Contract shall have been assigned to the
Lenders under the Assignment of Claims Act, (16) the Contract shall have been
delivered to and in the possession of the Custodian, (17) the Contract shall be
specified on the applicable Borrowing Base Certificate, and (18) such document
or instrument meets all other criteria now or hereafter established (provided
that any change in such criteria shall be applied prospectively only and shall
not be applicable to those documents or instruments which have previously
qualified as Eligible Loans specified as collateral on the written request by
Borrower for the Loan) by the Administrative Agent in order for a document or
instrument to be an Eligible Loan; provided, that any document or instrument
which is at any time an Eligible Loan, but which subsequently fails to meet the
criteria for an Eligible Loan specified as collateral on the written request by
Borrower for the Loan shall immediately cease to be an Eligible Loan


               (xxi) “Eligible Loan Documents” shall have the meaning given to such term
in Section 8.9(xx) above.



               (xxii) “Eligible Loan Obligor” means any third party Loan Obligor
obligated to repay to the Borrower an Eligible Loan for which an Advance or a
Swingline Loan has been made.



               (xxiii) “Environmental Laws” means any and all federal, foreign, state,
provincial and local laws, statutes, ordinances, rules, regulations, permits,
licenses, approvals, interpretations and orders of courts or governmental
authorities, relating to the protection of human health or the environment,
including, but not limited to, CERCLA and all other requirements pertaining to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Materials.



               (xxiv) “ERISA” shall have the meaning given to such term in Section 2.16.



               (xxv) “Event of Default” shall have the meaning given to such term in
Section 5.



               (xxvi) F&M means Farmers & Mechanics Bank



               (xxvii) “F&M Advance” shall have the meaning given to such term in Section
1.10(a)(ii).



46






 





               (xxviii) “F&M Collateral” shall have the meaning given to such term in
Section 1.10(a)(ii).



               (xxix) “F&M Loan Documents” means those documents and instruments
evidencing loans made by Borrower to third parties with the proceeds of an F&M
Advance.



               (xxx) “Federal Funds Rate” means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H. 15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any
reason, such rate is not available, then “Federal Funds Rate” shall mean a
daily rate which is determined, in the opinion of the Administrative Agent to
be the rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 am. (Philadelphia time). Rates for weekends or
holidays shall be the same as the rate for the most immediate preceding
Business Day.



               (xxxi) “Field Audit” shall have the meaning given to such term in Section
3.9.



               (xxxii) “Financing Documents” means collectively and includes this
Agreement, the Promissory Notes issued pursuant hereto, the Custodial
Agreement, and any other instrument, document or agreement both now and
hereafter executed, delivered or furnished by the Borrower or any other person
(as hereinafter defined) evidencing, securing or in connection with this
Agreement or all or any part of the Obligations.



               (xxxiii) “GAAP” shall have the meaning given to such term in Section
1.11(a)(v)(A).



               (xxxiv) “Hazardous Materials” means any substances or materials (a) which
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any governmental
authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release
of which requires a permit or license under any Environmental Law or other
governmental approval, (e) which are deemed to constitute a nuisance or a
trespass which pose a health or safety hazard to Persons or neighboring
properties, (f) which consist of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.



               (xxxv) “Hedging Agreement” means any agreement between Borrower and any
Lender or any affiliate of any Lender now existing or hereafter entered into,
which provides for an interest rate, credit, commodity or equity swap, cap,
floor, collar, forward foreign exchange transaction, currency swap,
cross-currency rate swap, currency option, or any similar transaction or any
combination of, or option with respect to, these or similar transactions, for
the



47






 





purpose of hedging Borrower’s exposure to fluctuations in interest or
exchange rates, loan, credit, exchange, security or currency valuations or
commodity prices.


               (xxxvi) “Indebtedness” of any Person at any date means (without
duplication:



                    (A) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices);



                    (B) any other indebtedness which is evidenced by a note, bond, debenture
or similar instrument;



                    (C) all obligations under capital leases of such Person;



                    (D) all obligations of such Person in respect of outstanding letters of
credit, acceptances and similar obligations created for the account of such
Person;



                    (E) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof; and



                    (F) all obligations of such Person with respect to Hedging Agreements.



               (xxxvii) “Intellectual Property” shall have the meaning given to such term
in Section 2.24.



               (xxxviii) “Interest Rate” means the interest rate applicable to an Advance
selected by Borrower pursuant to Section 1.5.



               (xxxix) “Interest Coverage Ratio” means, as of any measurement date, the
ratio of (a) the sum of Borrower’s net operating income plus interest expense
for the four (4) consecutive fiscal quarters ending on or immediately prior to
such date to (b) interest expense for the four (4) consecutive fiscal quarters
ending on or immediately prior to such date.



               (xl) “Joinder Agreement” means, collectively, each joinder agreement
executed in favor of Administrative Agent for the ratable benefit of itself and
the Lenders, substantially in the form of Exhibit F.



               (xli) “Lender” means each Person executing this Agreement as a Lender
(including, without limitation, the Swingline Lender) set forth on the
signature pages hereto and each Person that hereafter becomes a party to this
Agreement as a Lender pursuant to Section 8.7.



               (xlii) “LIBOR” means the quotient resulting from dividing (i) the rate per
annum for deposits of Dollars which appears on Telerate Page 3750 at
approximately 11:00 A.M. London time, two Business Days prior to the first day
of the applicable LIBOR Period for a



48






 





period equal to the period of such LIBOR
Period, by (ii) one (1.00) minus the Reserve Percentage, if any, pertaining to
eurocurrency liabilities. If, for any reason, such rate does not appear on
Telerate Page 3750, then LIBOR shall be determined by Administrative Agent with
reference to the arithmetic average of the rate per annum at which Dollars
would be offered in the London interbank market by first class banks to
Administrative Agent at such time. If, and only if, Administrative Agent shall
be unable or shall otherwise fail to obtain such a rate or Dollar deposits are
not obtainable in the London Eurodollar interbank market on reasonable terms,
the commencement of such LIBOR Period shall be postponed to the second Business
Day after Administrative Agent is next able to obtain a fixed rate for such
LIBOR Period in Dollar deposits in the London Eurodollar interbank market on
reasonable terms, and until such date interest shall be charged at the Base
Rate. The LIBOR shall be adjusted automatically on and as of the effective day
of any change in the relevant Reserve Percentage. The Administrative Agent’s
determination of the LIBOR shall be conclusive in the absence of manifest
error.


               (xliii) “LIBOR Amount” means all or any portion of the outstanding
principal balance of a Promissory Note with respect to which Borrower has fixed
the rate of interest charged thereon at a rate of interest based on the LIBOR,
for a LIBOR Period, in accordance with the terms of this Agreement; provided
that no LIBOR Amount may be less than $500,000.00.



               (xliv) “LIBOR Period” means a period of one (1) month, the first of which
commences on the funding date of any Advance bearing interest with respect to
LIBOR and subsequent ones which commence upon the expiration of the immediately
preceding LIBOR Period, except that no LIBOR Period may end after the maturity
date of the Eligible Loan funded with the proceeds of such Advance. In the
event that a LIBOR Period would otherwise end on a day that is not a Business
Day, such LIBOR Period shall be extended to the
next following Business Day, unless by so extending the LIBOR Period would
extend to the following calendar month, in which event the LIBOR Period shall
end on the last Business Day immediately prior to the day on which the LIBOR
Period would have otherwise ended.



               (xlv) “LIBOR Rate” shall have the meaning given such term in Section
1.5(a).



               (xlvi) “LIBOR Rate Advance” means an Advance accruing interest at the
LIBOR Rate.



               (xlvii) “Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).



               (xlviii) “Liquid Collateral” means unencumbered security pledged by an
Eligible Loan Obligor to Borrower under an Eligible Loan consisting of (a)
bonds issued by states and municipalities rated A or higher, (b) bankers
acceptances, (c) commercial paper with agency ratings of A2/Ps or higher, (d)
securities issued or fully guaranteed or insured by the United States
Government or any agency thereof, (e) U.S. corporate bonds rated BAA or higher,



49






 





(f)  other public debt securities satisfactory to Administrative Agent and the
Required Lenders, (g) a letter or credit issued to Borrower by any domestic
commercial bank having capital and surplus in excess of One Hundred Million
Dollars ($100,000,000.00) or such other domestic financial institutions or
domestic brokerage houses to the extent disclosed to, and approved by, the
Lender, or (i) certificates of deposit with maturities of one (1) year or less
from the date of acquisition of, or money market accounts maintained with, any
Lender, or any other domestic commercial bank having capital and surplus in
excess of One Hundred Million Dollars ($100,000,000.00) or such other domestic
financial institutions or domestic brokerage houses to the extent disclosed to,
and approved by, the Lender, provided such Liquid Collateral is delivered to
Custodian, together with such other documents executed by Borrower as
Administrative Agent shall reasonably require in order to perfect or maintain
perfection of Lenders’ security interest therein.


               (xlix) “Loan Commitment” means (a) as to any Lender, the obligation of
such Lender to make Advances to the account of the Borrower hereunder in an
aggregate principal amount at any time outstanding not to exceed the amount set
forth opposite such Lender’s name on Schedule I hereto as such amount may be
reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Advances, as such amount may be reduced at any time or from time to time
pursuant to the terms hereof. The aggregate Loan Commitment of all Lenders on
the Closing Date shall be $35,000,000.



               (l) “Loan Commitment Note(s)” shall have the meaning given to such term in
Section 1.3(c).



               (li) “Loan Commitment Percentage” means, as to any Lender at any time, the
ratio of (a) the amount of the Loan Commitment of such Lender to (b) the Loan
Commitments of all Lenders.



               (lii) “Loan Obligors” shall have the meaning given to such term in the
Preamble of this Agreement



               (liii) “Loan Receivables” means the Borrower’s present and future general
intangibles, chattel paper, documents, supporting obligations, and instruments
(as such terms are defined in the UCC), including, without limitation, all
present and future rights of the Borrower to payment of monetary obligations
owed to the Borrower on account of Contracts, whether due or to become due.



               (liv) “Material Adverse Effect” shall have the meaning given such term in
Section 1.11(a)(iv)(B).



               (lv) “Maturity Date” shall have the meaning given such term in Section
1.2.



               (lvi) “Net Worth” means, as of a date, the sum of Borrower’s (a)
shareholders’ equity (less the value of treasury stock and debt convertible
into Borrower’s capital stock) and (b) cumulative retained earnings, as
reflected on Borrower’s balance sheet for such date.



50






 





               (lvii) “Notice of Assignment” shall have the meaning given to such term in
Section 1.11(b).



               (lviii) “Obligations” means collectively and includes all present and
future Indebtedness, liabilities and obligations of any kind and nature
whatsoever of the Borrower to the Administrative Agent or any Lender both now
existing and hereafter arising under, as a result of, on account of, or in
connection with, this Agreement and any and all amendments thereto,
restatements thereof, supplements thereto and modifications thereof made at any
time and from time to time hereafter, or the other Financing Documents,
including, without limitation, future advances, principal, interest,
indemnities, fees, late charges, enforcement costs, all obligations with
respect to any interest rate swap, collar, cap, floor or forward rate agreement
or other agreement regarding the hedging of interest rate risk exposure in
connection with hedging the interest rate exposure of Borrower and any
confirming letter executed pursuant to such hedging agreement, and other costs
and expenses whether direct, contingent, joint, several, matured or unmatured.



               (lix) “Obligor Loan Documents” means all instruments, documents,
Contracts, Liquid Collateral or other items delivered to the Borrower in
connection with any Obligor Loan.



               (lx) “Obligor Loans” shall have the meaning given to such term in the
Preamble of this Agreement



               (lxi) “Pledged Securities” shall have the meaning given to such term in
Section 1.10 hereof.



               (lxii) “Prime Rate” means that rate of interest per annum established by
the Administrative Agent from time to time as its “prime rate” which may not
represent the lowest rate charged by the Administrative Agent or any Lender to

other borrowers, or to any class of borrowers, at any time, or from time to
time.



               (lxiii) “Promissory Notes” means the collective reference to the Loan
Commitment Notes and the Swingline Notes, and Promissory Note means any of such
Notes.



               (lxiv) “Regulated Investment Company” shall have the meaning given to such
term in Section 1.10(a)(ii)(E).



               (lxv) “Request Day” means a Business Day on which Borrower requests
Administrative Agent to advise Borrower of the then-current LIBOR with respect
to one or more LIBOR Periods.



               (lxvi) “Required Lenders” means, at any date, any combination of Lenders
whose Loan Commitment Percentages aggregate at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate Loan Commitment.



               (lxvii) “Reserve Percentage” means for any day that maximum percentage
(expressed as a decimal), whether or not incurred, which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System, for
determining the reserve



51






 





requirement for a member bank of the Federal Reserve
System in Philadelphia with respect to LIBOR “Eurocurrency liabilities” (as
such term is defined in Regulation D) (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
the outstanding principal amount of the Advance is determined or any category
of extensions of credit or other assets which includes loans by a non-United
States office of Administrative Agent or any Lender to United States
residents).


               (lxviii) “Responsible Officer” means any of the following: the chief
executive officer, the president or chief financial officer of Borrower or any
other officer of Borrower reasonably acceptable to the Administrative Agent.



               (lxix) “Rule” means and includes any law, rule or regulation binding upon
any Lender as well as any guideline or similar directive issued by a
governmental agency having regulatory jurisdiction over any Lender which any
Lender observes or with which it complies, whether or not such guideline or
directive technically has the force of law.



               (lxx) “Senior Management” means the chairman of the board of directors,
chief executive officer, president and chief financial officer of the Borrower
or such other executive officer of the Borrower performing duties similar to
those performed by any of the foregoing.



               (lxxi) “Solvent” means, as to Borrower on a particular date, that Borrower
(a) has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its debts
as they mature, (b) owns property having a value, both at fair valuation and at
present fair salable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that
it will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.



               (lxxii) “Subsidiary” means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent
(50%) of the outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation, partnership, limited liability company or other
entity is at the time owned by or the management is otherwise controlled by
such Person (irrespective of whether, at the time, capital stock or other
ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified references to “Subsidiary” or “Subsidiaries” herein shall refer to
those of the Borrower.



               (lxxiii) “Swingline Facility” means the swingline facility established
pursuant to Section 1.4.



               (lxxiv) “Swingline Lender” means National City Bank in its capacity as
swingline lender hereunder.



52






 





               (lxxv) “Swingline Loan” means any swingline loan made by the Swingline
Lender to the Borrower pursuant to Section 1.4, and all such swingline loans
collectively as the context requires.



               (lxxvi) “Swingline Termination Date” means the first to occur of (a) the
resignation of National City Bank as Administrative Agent in accordance with
Section 7.9, or (b) the Maturity Date.



               (lxxvii) “UCC” shall mean the Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.



          (b) The term “person” or “Person” as used in this Agreement means and
includes any natural person, individual, company, corporation, partnership,
limited liability entity, joint venture, unincorporated association, government
or political subdivision or agency thereof, or any other entity of whatever
nature. All terms defined in this Agreement shall have such defined meanings
when used in any of the other Financing Documents. Accounting terms used in
this Agreement shall have the respective meanings given to them under generally
accepted accounting principles in effect from time to time in the United States
of America. The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. As used herein, the singular
number shall include the plural, the plural, the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the context
may require. Unless otherwise defined herein, all terms used herein which are
defined by the UCC shall have the same meanings as assigned to them by the UCC
unless and to the extent varied by this Agreement.




     8.10 Entire Agreement; Severability. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior understandings with respect
thereto. This Agreement shall not be amended except by an instrument in
writing signed by each of the parties. The invalidity, illegality or
unenforceability of any provision of this Agreement shall not affect the
validity, legality or enforceability of any of the other provisions of this
Agreement which shall remain effective.



     8.11 Confession of Judgment. In the event any Lender
confesses judgment against Borrower under a Promissory Note, such Lender shall
provide prompt notice thereof to Borrower.



     8.12 Survival. All representations, warranties and
covenants contained among the provisions of this Agreement shall survive the
execution and delivery of this Agreement and all other Financing Documents.



     8.13 Successors and Assigns. The rights and
obligations of the Borrower under this Agreement may not be assigned or
delegated. This Agreement and all other Financing Documents shall be binding
upon and inure to the benefit of the Borrower and the Administrative Agent and
each Lender and their respective successors and permitted assigns.



     8.14 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND


53






 


CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF COMMONWEALTH OF
PENNSYLVANIA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE).



     8.15 Time of Essence. Time is of the essence in
connection with all obligations of the Borrower hereunder and under any of the
other Financing Documents.



     8.16 Duplicate Originals and Counterparts. This
Agreement may be executed in any number of duplicate originals or counterparts,
each of such duplicate originals or counterparts shall be deemed to be an
original and all taken together shall constitute but one and the same
instrument.



     8.17 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only, shall not
constitute a part of this Agreement for any other purpose and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]



54






 





     IN WITNESS WHEREOF, the undersigned has executed and delivered this Master
Loan and Security Agreement, under seal, as of the day and year first written
above.



	 	 	 	 	 	 	 
	 	 	OXFORD FINANCE CORPORATION
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael J. Altenburger
	 	(SEAL)
	 	 	 	
	 	 
	 	 	 	 	Name: Michael J, Altenburger	 	 
	 	 	 	 	Title: Chief Financial Officer	 	 



 






 



     IN WITNESS WHEREOF, the undersigned has executed and delivered this Master
Loan and Security Agreement, under seal, as of the day and year first written
above.



	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BANK, as Administrative
	 	 	Agent and a Lender
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael Labrum
	 	(SEAL)
	 	 	 	
	 	 
	 	 	 	 	Name: Michael J. Labrum	 	 
	 	 	 	 	Title: Senior Vice President	 	 



 






 



     IN WITNESS WHEREOF, the undersigned has executed and delivered this Master
Loan and Security Agreement, under seal, as of the day and year first written
above.



	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael J. Radcliffe
	 	(SEAL)
	 	 	 	
	 	 
	 	 	 	 	Name: Michael J. Radcliffe	 	 
	 	 	 	 	Title: Senior Vice President	 	 
	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 	 	 	 	 	 	 
	 	 	Bank of America, N.A.	 	 
	 	 	1101 Wootton Parkway, 4th Floor	 	 
	 	 	Rockville, MD 20852	 	 
	 	 	Attention: Michael Radcliffe, SVP