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Exhibit 10.47  


 LOAN AND SECURITY AGREEMENT

by and among

AEGIS COMMUNICATIONS GROUP, INC.

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, INC.

as the Arranger and Administrative Agent

Dated as of January 26, 2004  





 
  
 

    TABLE OF CONTENTS    
    



	1.	 	DEFINITIONS AND CONSTRUCTION	 	1
	1.1	 	Definitions	 	1
	1.2	 	Accounting Terms	 	21
	1.3	 	Code	 	21
	1.4	 	Construction	 	21
	1.5	 	Schedules and Exhibits	 	22
	2.	 	LOAN AND TERMS OF PAYMENT	 	22
	2.1	 	Revolver Advances.	 	22
	2.2	 	RESERVED.	 	22
	2.3	 	Borrowing Procedures and Settlements	 	22
	2.4	 	Payments	 	27
	2.5	 	Overadvances	 	29
	2.6	 	Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations	 	29
	2.7	 	Cash Management	 	31
	2.8	 	Crediting Payments; Float Charge	 	32
	2.9	 	Designated Account	 	32
	2.10	 	Maintenance of Loan Account; Statements of Obligations	 	32
	2.11	 	Fees	 	33
	2.12	 	Letters of Credit	 	33
	2.13	 	LIBOR Option	 	36
	2.14	 	Capital Requirements	 	38
	2.15	 	Joint and Several Liability of Borrowers.	 	38
	3.	 	CONDITIONS; TERM OF AGREEMENT	 	41
	3.1	 	Conditions Precedent to the Initial Extension of Credit	 	41
	3.2	 	Conditions Subsequent to the Initial Extension of Credit	 	43
	3.3	 	Conditions Precedent to all Extensions of Credit	 	44
	3.4	 	Term	 	44
	3.5	 	Effect of Termination	 	44
	3.6	 	Early Termination by Borrowers	 	44
	4.	 	CREATION OF SECURITY INTEREST	 	45
	4.1	 	Grant of Security Interest	 	45
	4.2	 	Negotiable Collateral	 	45
	4.3	 	Collection of Accounts, General Intangibles, and Negotiable Collateral	 	45
	4.4	 	Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional Documentation Required.	 	46
	4.5	 	Power of Attorney	 	46
	4.6	 	Right to Inspect	 	47
	4.7	 	Control Agreements	 	47
	 	 	 	 	 





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	5.	 	REPRESENTATIONS AND WARRANTIES	 	47
	5.1	 	No Encumbrances	 	47
	5.2	 	Eligible Accounts	 	47
	5.3	 	RESERVED	 	48
	5.4	 	Equipment	 	48
	5.5	 	Location of Inventory and Equipment	 	48
	5.6	 	RESERVED	 	48
	5.7	 	State of Incorporation; Location of Chief Executive Office; FEIN; Organizational ID Number; Commercial Tort Claims.	 	48
	5.8	 	Due Organization and Qualification; Subsidiaries	 	48
	5.9	 	Due Authorization; No Conflict	 	49
	5.10	 	Litigation	 	50
	5.11	 	No Material Adverse Change	 	50
	5.12	 	Fraudulent Transfer	 	50
	5.13	 	Employee Benefits	 	50
	5.14	 	Environmental Condition	 	50
	5.15	 	Brokerage Fees	 	51
	5.16	 	Intellectual Property	 	51
	5.17	 	Leases	 	51
	5.18	 	DDAs	 	51
	5.19	 	Complete Disclosure	 	51
	5.20	 	Indebtedness	 	51
	6.	 	AFFIRMATIVE COVENANTS	 	52
	6.1	 	Accounting System	 	52
	6.2	 	Collateral Reporting	 	52
	6.3	 	Financial Statements, Reports, Certificates	 	53
	6.4	 	Guarantor Reports	 	54
	6.5	 	Returns	 	54
	6.6	 	Maintenance of Properties	 	55
	6.7	 	Taxes	 	55
	6.8	 	Insurance	 	55
	6.9	 	Location of Equipment	 	56
	6.10	 	Compliance with Laws	 	56
	6.11	 	Leases	 	56
	6.12	 	Existence	 	56
	6.13	 	Environmental	 	56
	6.14	 	Disclosure Updates	 	56
	6.15	 	Formation of Subsidiaries	 	56
	6.16	 	Conversion of Excluded Subsidiaries	 	57
	6.17	 	Surviving Preferred Shares	 	57
	 	 	 	 	 



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	7.	 	NEGATIVE COVENANTS	 	57
	7.1	 	Indebtedness	 	57
	7.2	 	Liens	 	58
	7.3	 	Restrictions on Fundamental Changes	 	58
	7.4	 	Disposal of Assets	 	58
	7.5	 	Change Name	 	58
	7.6	 	Nature of Business	 	58
	7.7	 	Prepayments and Amendments	 	59
	7.8	 	Change of Control	 	59
	7.9	 	Consignments	 	59
	7.10	 	Distributions	 	59
	7.11	 	Accounting Methods	 	59
	7.12	 	Investments	 	59
	7.13	 	Transactions with Affiliates	 	59
	7.14	 	Suspension	 	59
	7.15	 	Compensation	 	59
	7.16	 	Use of Proceeds	 	60
	7.17	 	Inventory and Equipment with Bailees	 	60
	7.18	 	Financial Covenants	 	60
	7.19	 	Billing Practices	 	62
	7.20	 	Change of Officers	 	62
	7.21	 	Investor Security Documents	 	62
	7.22	 	Excluded Subsidiaries	 	62
	7.23	 	Minimum Availability	 	62
	8.	 	EVENTS OF DEFAULT	 	62
	9.	 	THE LENDER GROUP'S RIGHTS AND REMEDIES	 	64
	9.1	 	Rights and Remedies	 	64
	9.2	 	Remedies Cumulative	 	65
	10.	 	TAXES AND EXPENSES	 	65
	11.	 	WAIVERS; INDEMNIFICATION	 	66
	11.1	 	Demand; Protest; etc.	 	66
	11.2	 	The Lender Group's Liability for Borrower Collateral	 	66
	11.3	 	Indemnification	 	66
	12.	 	NOTICES.	 	67
	13.	 	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.	 	67
	14.	 	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.	 	68
	14.1	 	Assignments and Participations	 	68
	14.2	 	Successors	 	70
	15.	 	AMENDMENTS; WAIVERS	 	70
	15.1	 	Amendments and Waivers	 	70
	15.2	 	Replacement of Holdout Lender.	 	71
	15.3	 	No Waivers; Cumulative Remedies	 	72
	 	 	 	 	 





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	16.	 	AGENT; THE LENDER GROUP	 	73
	16.1	 	Appointment and Authorization of Agent	 	73
	16.2	 	Delegation of Duties	 	73
	16.3	 	Liability of Agent	 	73
	16.4	 	Reliance by Agent	 	74
	16.5	 	Notice of Default or Event of Default	 	74
	16.6	 	Credit Decision	 	74
	16.7	 	Costs and Expenses; Indemnification	 	75
	16.8	 	Agent in Individual Capacity	 	75
	16.9	 	Successor Agent	 	76
	16.10	 	Lender in Individual Capacity	 	76
	16.11	 	Withholding Taxes	 	76
	16.12	 	Collateral Matters	 	78
	16.13	 	Restrictions on Actions by Lenders; Sharing of Payments	 	79
	16.14	 	Agency for Perfection	 	79
	16.15	 	Payments by Agent to the Lenders	 	79
	16.16	 	Concerning the Collateral and Related Loan Documents	 	79
	16.17	 	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	 	79
	16.18	 	Several Obligations; No Liability	 	80
	16.19	 	Legal Representation of Agent	 	81
	17.	 	GENERAL PROVISIONS	 	81
	17.1	 	Effectiveness	 	81
	17.2	 	Section Headings	 	81
	17.3	 	Interpretation	 	81
	17.4	 	Severability of Provisions	 	81
	17.5	 	Amendments in Writing	 	81
	17.6	 	Counterparts; Telefacsimile Execution	 	81
	17.7	 	Revival and Reinstatement of Obligations	 	81
	17.8	 	Confidentiality	 	81
	17.9	 	Integration	 	82
	17.10	 	Parent as Agent for Borrowers	 	82




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EXHIBITS AND SCHEDULES    




	

Exhibit A-1	
 	

Form of Assignment and Acceptance
	

Exhibit C-1	
 	

Form of Compliance Certificate
	

Exhibit L-1	
 	

Form of LIBOR Notice
	

Schedule A-1	
 	

Agent's Account
	

Schedule C-1	
 	

Commitments
	

Schedule D-1	
 	

Designated Account
	

Schedule P-1	
 	

Permitted Liens
	

Schedule 2.7(a)	
 	

Cash Management Banks
	

Schedule 5.5	
 	

Locations of Inventory and Equipment
	

Schedule 5.7(a)	
 	

States of Organization
	

Schedule 5.7(b)	
 	

Chief Executive Offices
	

Schedule 5.7(c)	
 	

FEINS
	

Schedule 5.7(d)	
 	

Commercial Tort Claims
	

Schedule 5.8(b)	
 	

Capitalization of Borrowers
	

Schedule 5.8(c)	
 	

Capitalization of Borrowers' Subsidiaries
	

Schedule 5.10	
 	

Litigation
	

Schedule 5.14	
 	

Environmental Matters
	

Schedule 5.16	
 	

Intellectual Property
	

Schedule 5.18	
 	

Deposit Accounts and Securities Accounts
	

Schedule 5.20	
 	

Permitted Indebtedness




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LOAN AND SECURITY AGREEMENT    
    


        THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of January 26, 2004, by and among, on the one hand, the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns,
are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"),  WELLS FARGO FOOTHILL,
 INC., a California corporation, as the arranger and administrative agent for the Lenders ("Agent"), and, on the other hand,  AEGIS COMMUNICATIONS GROUP, INC., a
Delaware corporation ("Parent"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries, together with Parent, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the "Borrowers"). 


        The
parties agree as follows: 


1.     DEFINITIONS AND CONSTRUCTION.  



        1.1 Definitions.    As used in this Agreement, the following terms shall have
the following definitions: 


        "Account" means an account (as that term is defined in the Code), and any and all supporting obligations in respect thereof. 


        "Account Debtor" means any Person who is obligated under, with respect to, or on account of, an Account, chattel paper, or a General
Intangible. 


        "ACH Transactions" means any cash management or related services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank Product Provider for the account of Administrative Borrower or its Subsidiaries. 


        "Additional Documents" has the meaning set forth in Section 4.4(c). 


        "Adjustment Date" means, in any year, the first day of the calendar month immediately following the month in which the date of
determination of the Applicable Base Rate Margin and the Applicable LIBOR Rate Margin for such year occurs. 


        "Administrative Borrower" has the meaning set forth in Section 17.10. 


        "Advances" has the meaning set forth in Section 2.1(a). 



        "Affiliate" means, as applied to any Person, any other Person who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly through one or more intermediaries, of the power to
direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, for purposes
of the definition of Eligible Accounts and Section 7.13 hereof: (a) any Person which owns directly or indirectly 10% or more of the Stock
having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as
a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and
(c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed an Affiliate of such Person. 


        "Agent" means WFF, in its capacity as arranger and administrative agent hereunder, and any successor thereto. 



        "Agent Advances" has the meaning set forth in Section 2.3(e)(i). 


        "Agent-Related Persons" means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents. 





 



        "Agent's Account" means the Deposit Account of Agent identified on  Schedule A-1. 



        "Agent's Liens" means the Liens granted by Borrowers or their Subsidiaries to Agent under this Agreement or the other Loan Documents. 


        "Agreement" has the meaning set forth in the preamble to this Agreement. 


        "Allserve Reserve" means a reserve in the amount of $1,100,000, or such other amount as Agent may determine in its sole discretion,
established in contemplation of the potential liability of Parent or any other Borrower to AllServe Systems PLC and AllServe Systems, Inc. in connection with a lawsuit styled as  AllServe PLC et al. v. Aegis Communications
Group, Inc., filed in the New Castle County Chancery Court, New Castle County, Delaware, on
November 12, 2003 or any other claim against any Borrower in connection with the proposed acquisition of Parent by AllServe Systems PLC. 


        "Applicable Base Rate Margin" means (a) 1.5% for the period from the Closing Date until the initial Adjustment Date, and
(b) the following margin based upon Borrower's EBITDA for its preceding fiscal year as determined from the most recent audited annual financial statements received by Lender commencing with
such financial statements for the fiscal year ending December 31, 2004, for the period from the applicable Adjustment Date to the next Adjustment Date: 



	EBITDA Measurement
 
	 	Applicable Base Rate Margin

	Up to $10,000,000	 	1.50%
	$10,000,001 to $15,000,000	 	1.25%
	$15,000,001 to $20,000,000	 	.50
	$20,000,001 or more	 	.25%






        "Applicable LIBOR Rate Margin" means (a) 3.5% for the period from the Closing Date until the initial Adjustment Date, and
(b) the following margin based upon Borrower's EBITDA for its preceding fiscal year, as determined from the most recent audited annual financial statements received by Lender commencing with
such financial statements for the fiscal year ending December 31, 2004, for the period from the applicable Adjustment Date to the next Adjustment Date: 



	EBITDA Measurement
 
	 	Applicable LIBOR Rate Margin

	Up to $10,000,000	 	3.5%
	$10,000,001 to $15,000,000	 	3.25%
	$15,000,001 to $20,000,000	 	3.00%
	$20,000,001 or more	 	2.75%






        "Applicable
Prepayment Premium" means, as of any date of determination, an amount equal to (a) during the period from and after the date of the execution and delivery of this
Agreement up to the date immediately preceding the first anniversary of the Closing Date, 3% times the Maximum Revolver Amount in effect at that date, (b) during the period from and including
the date that is the first anniversary of the Closing Date up to the date immediately preceding the second anniversary of the Closing Date, 2% times the Maximum Revolver Amount in effect at that date,
and (c) during the period from and including the date that is the second anniversary of the Closing Date up to the date immediately preceding the Maturity Date, 1% times the Maximum Revolver
Amount in effect at that date; provided, however, that if the outstanding principal balance of Advances is prepaid and the Commitments are terminated
with the proceeds of a refinancing made available to Borrowers by a commercial banking unit of Wells Fargo, then the Applicable Prepayment Premium shall be an amount equal to 0% times the Maximum
Revolver Amount in effect on the date immediately preceding the date of such repayment and termination. 


        "Assignee" has the meaning set forth in Section 14.1(a). 


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        "Assignment and Acceptance" means an Assignment and Acceptance Agreement substantially in the form of  Exhibit A-1. 


        "ATC" means Advanced Telemarketing Corporation, a Nevada corporation. 


        "Authorized Person" means any officer or employee of Administrative Borrower. 



        "Availability" means, as of any date of determination, the amount that Borrowers are entitled to borrow as Advances hereunder (after
giving effect to all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and reserves then applicable hereunder). 


        "Bank Product" means any financial accommodation extended to Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or (g) transactions under Hedge Agreements. 


        "Bank Product Agreements" means those agreements entered into from time to time by Administrative Borrower or its Subsidiaries with a Bank
Product Provider in connection with the obtaining of any of the Bank Products. 


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


        "Bank Product Provider" means Wells Fargo or any of its Affiliates. 


        "Bank Product Reserve" means, as of any date of determination, the amount of reserves that Agent has established (based upon the Bank
Product Providers' reasonable determination of the credit exposure in respect of then extant Bank Products) in respect of Bank Products then provided or outstanding. 


        "Bankruptcy Code" means title 11 of the United States Code, as in effect from time to time. 


        "Base LIBOR Rate" means the rate per annum, determined by Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate at which Dollar deposits (for delivery on the first day of the requested
Interest Period) are offered to major banks in the London interbank market 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as a conversion of a Base Rate Loan to a
LIBOR Rate Loan) by Administrative Borrower in accordance with this Agreement, which determination shall be conclusive in the absence of manifest error. 


        "Base Rate" means, the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its
"prime rate", with the understanding that the "prime rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest
are calculated for those loans making reference thereto and is 


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evidenced
by the recording thereof after its announcement in such internal publications as Wells Fargo may designate. 


        "Base Rate Loan" means the portion of the Advances that bears interest at a rate determined by reference to the Base Rate. 



        "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years. 


        "Board of Directors" means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on
behalf of the board of directors (or comparable managers). 


        "Books" means all of Administrative Borrower's and its Subsidiaries' now owned or hereafter acquired books and records (including all of
their Records indicating, summarizing, or evidencing their assets (including the Collateral) or liabilities, all of Administrative Borrower's and its Subsidiaries' Records relating to their business
operations or financial condition, and all of their goods or General Intangibles related to such information). 


        "Borrower" and "Borrowers" have the respective meanings set forth in the preamble to this
Agreement. 


        "Borrower Collateral" means all of each Borrower's now owned or hereafter acquired right, title, and interest in and to each of the
following: 



        (a)   all
of its Accounts, 


        (b)   all
of its Books, 


        (c)   all
of its commercial tort claims, 


        (d)   all
of its Deposit Accounts, 


        (e)   all
of its Equipment, 


        (f)    all
of its General Intangibles, 


        (g)   all
of its Inventory, 


        (h)   all
of its Investment Property (including all of its securities and Securities Accounts), 


        (i)    all
of its Negotiable Collateral, 


        (j)    money
or other assets of such Borrower that now or hereafter come into the possession, custody, or control of any member of the Lender Group, and 


        (k)   the
proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all
Accounts, Books, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real Property, money, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof. 




        "Borrowing" means a borrowing hereunder consisting of Advances made on the same day by the Lenders (or Agent on behalf thereof), or by
Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance, in each case, to Administrative Borrower. 


        "Borrowing Base" means, as of any date of determination, the result of: 



        (a)   the lesser of



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          (i)  the
sum of (A) 85% of the amount of Eligible Billed Accounts other than Trilegiant Accounts, (B) 80% of the amount of Eligible Unbilled Accounts other
than Trilegiant Accounts, and (C) the Trilegiant Base up to a maximum amount of $1,000,000, in each case less the amount, if any, of the Dilution
Reserve, and 


         (ii)  an
amount equal to Borrowers' Collections with respect to Accounts for the immediately preceding 60-day period, 




        minus


        (b)   the
sum of (i) the Bank Product Reserve, (ii) the Payroll Reserve, (iii) the Allserve Reserve, and (iv) the aggregate amount of reserves, if
any, established by Agent under Section 2.1(b); 




provided that at no time shall the aggregate amount of outstanding Advances and Letters of Credit made in respect of Eligible Unbilled Accounts exceed
(i) $5,000,000 as of and at each calendar month-end (after the completion of billing for such month-end) or (ii) $15,000,000 during any month prior to the
calendar month-end date of determination. 


        "Business Day" means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state
of New York, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which banks are closed for dealings in Dollar
deposits in the London interbank market. 


        "Capital Expenditures" means, with respect to any Person for any period, the sum of (a) the aggregate of all expenditures by such
Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed, and (b) to the extent
not covered by clause (a), the aggregate of all expenditures by such Person and its Subsidiaries during such period to acquire by purchase or otherwise the business or capitalized assets of, or
the Capital Stock of, any other Person. 


        "Capital Lease" means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. 


        "Capitalized Lease Obligation" means that portion of the obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP. 


        "Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or issued by
any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P
or at least P-1 from Moody's, (d) certificates of deposit or bankers' acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized
under the laws of the United States or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) demand Deposit Accounts
maintained with any bank organized under the laws of the United States or any state thereof so long as the amount maintained with any individual bank is less than or equal to $100,000 and is insured
by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses
(a) through (e) above. 


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        "Cash Management Account" has the meaning set forth in Section 2.7(a). 


        "Cash Management Agreements" means those certain cash management agreements, in form and substance satisfactory to Agent, each of which is
among Administrative Borrower or one of its Subsidiaries, Agent, and one of the Cash Management Banks. 


        "Cash Management Bank" has the meaning set forth in Section 2.7(a). 



        "Change of Control" means that (a) any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act),
other than Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 25%, or more, of the Stock of Parent having
the right to vote for the election of members of the Board of Directors, or (b) the Investors cease to own, directly or indirectly, and control Stock and Investor Warrants of Parent
representing (if such warrants were exercised) in the aggregate 65% of the outstanding Stock of Parent, or (c) a majority of the members of the Board of Directors do not constitute Continuing
Directors, or (d) Parent ceases to own, directly or indirectly, and control not less than 98.76% of the outstanding stock of ATC, or any Borrower ceases to own, directly or indirectly, and
control 100% of the outstanding Stock of each of its Subsidiaries (other than ATC) extant as of the Closing Date. 


        "Closing Date" means the date of the making of the initial Advance (or other extension of credit) hereunder or the date on which Agent
sends Administrative Borrower a written notice that each of the conditions precedent set forth in Section 3.1 either have been satisfied or have
been waived. 


        "Closing Date Business Plan" means the set of Projections of Borrowers for the 3 year period following the Closing Date (on a year
by year basis, and for the 1 year period following the Closing Date, on a month by month basis), in form and substance (including as to scope and underlying assumptions) satisfactory to Agent. 


        "Code" means the New York Uniform Commercial Code, as in effect from time to time. 


        "Collateral" means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by Administrative Borrower or
its Subsidiaries in or upon which a Lien is granted under any of the Loan Documents. 


        "Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having rights or interests in Administrative Borrower's or its Subsidiaries' Books, Equipment or, Inventory, in each case, in form
and substance satisfactory to Agent. 


        "Collateral Trustee" means Wilmington Trust Company in its capacity as collateral trustee for the Investors. 


        "Collections" means all cash, checks, notes, instruments, and other items of payment
(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds). 


        "Commercial Tort Claim Assignments" has the meaning set forth in Section 4.4(b). 



        "Commitment" means, with respect to each Lender, its Commitment, and, with respect to all Lenders, their Commitments, in each case as such
Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. 


        "Compliance Certificate" means a certificate substantially in the form of  Exhibit C-1 delivered by the chief financial officer of Parent to Agent. 


6





 



        "Concentration Limit" means: 



        (a)   with
respect to Eligible Accounts of which the account debtors are AT&T Corporation and its affiliates, 30% (provided
that (i) such Eligible Accounts are subject to 25% cross-aging and (ii) such Eligible Accounts are limited to Eligible Billed Accounts less than 60 days from invoice date and
30 days from due date and Eligible Unbilled Accounts); 


        (b)   with
respect to Eligible Accounts of which the account debtors are American Express Company and its affiliates, 25% (provided that (i) such Eligible Accounts are
subject to 25% cross-aging, and (ii) such Eligible Accounts are limited to Eligible Billed Accounts less than 60 days from invoice date and 30 days from due date and Eligible
Unbilled Accounts); and 


        (c)   with
respect to Eligible Accounts of which the account debtor is any other party, 10%. 




        "Continuing Director" means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the
Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors
by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof. 



        "Control Agreement" means a control agreement, in form and substance satisfactory to Agent, executed and delivered by the Administrative
Borrower or one of its Subsidiaries, Agent, and the applicable securities intermediary (with respect to a Securities Account) or a bank (with respect to a Deposit Account). 


        "Copyright Security Agreement" means a copyright security agreement executed and delivered by each Borrower and Agent, the form and
substance of which is satisfactory to Agent. 


        "Customer Contract" means a contract for the provision of services by the Parent of any of its Subsidiaries. 


        "Daily Balance" means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end
of such day. 


        "DB" means Deutsche Bank AG—London, a German aktiengesellschaft, acting through DB Advisors, LLC as investment advisor. 



        "Default" means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of
Default. 


        "Defaulting Lender" means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder
on the date that it is required to do so hereunder. 


        "Defaulting Lender Rate" means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate,
and (b) thereafter, the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto). 


        "Deposit Account" means any deposit account (as that term is defined in the Code) other than the payroll account of any Borrower or any
account maintained by a Borrower out of which payroll or related taxes (but not other operating expenses) are payable. 


        "Designated Account" means the Deposit Account of Administrative Borrower identified on  Schedule D-1. 



        "Designated Account Bank" has the meaning ascribed thereto on Schedule D-1. 


7





 



        "Dilution" means, as of any date of determination, a percentage (based upon, as between (i) the experience of the immediately prior
three consecutive months and (ii) the experience of the immediately
prior twelve consecutive months, whichever produces a greater percentage), that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items with respect to Borrowers' Accounts during such period, by (b) Borrowers' billings with respect to Accounts during such period prior to any such dilutive items
being taken into account in determining the amount of those billing during such period. 


        "Dilution Reserve" means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by
1 percentage point for each percentage point by which Dilution is in excess of 5%. 


        "Disbursement Letter" means an instructional letter executed and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent. 


        "Dollars" or "$" means United States dollars. 


        "Due Diligence Letter" means the due diligence letter sent by Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent. 



        "EBITDA" means, with respect to any fiscal period, Parent's and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, depreciation and amortization and extraordinary non-cash losses for such period, as determined in accordance with GAAP. 


        "Eligible Accounts" means those Accounts created by one of Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue
of one or more of the excluding criteria set forth below; provided, however, that such criteria may be
revised from time to time by Agent in Agent's Permitted Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be
included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash. Eligible Accounts shall not include the following: 



        (a)   Accounts
that otherwise are neither Eligible Billed Accounts nor Eligible Unbilled Accounts in accordance with the definitions of those terms, 



        (b)   Accounts
owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under
clause (a) above, 


        (c)   Accounts
with respect to which the Account Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower, 


        (d)   Accounts
arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and
hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, 


        (e)   Accounts
that are not payable in Dollars, 


        (f)    Accounts
with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States, or (ii) is not organized
under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Account is supported by an 



8





 




irrevocable
letter of credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the
Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent, 


        (g)   Accounts
with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive,
however, of Accounts with respect to which the applicable Borrower has complied, to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC § 3727), or
(ii) any state of the United States, 


        (h)   Accounts
with respect to which the Account Debtor is a creditor of any Borrower, has or has asserted a right of setoff, or has disputed its obligation to pay all or any
portion of the Account, to the extent of such claim, right of setoff, or dispute, 


        (i)    Accounts
with respect to an Account Debtor whose total obligations owing to Borrower exceed the applicable Concentration Limit (such Concentration Limit, as applied to a
particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, to the extent of the
obligations owing by such Account
Debtor in excess of such percentage; provided, however, that, in each case, the amount of Eligible
Accounts that are excluded because they exceed the foregoing Concentration Limit shall be determined by Agent based on all of the otherwise Eligible Accounts of the same Account Debtor prior to giving
effect to any eliminations based upon the foregoing Concentration Limit, 


        (j)    Accounts
with respect to which (i) the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, or has gone out of business,  provided that inclusion of any such ineligible Account in any
determination of the Borrowing Base reported by a Borrower to Agent shall not be deemed a
misrepresentation under this Agreement if (x) at the time such determination is reported to Agent no Borrower had notice or knowledge of such cause of ineligibility, and (y) promptly
after receipt of such notice or knowledge, Borrowers correct such determination and reduce the balance of Loans outstanding in accordance with  Section 2.5 or as otherwise required under this
Agreement, or (ii) as to which a Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account Debtor, 


        (k)   Accounts
with respect to which the Account Debtor is located in a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that requires, as a condition to
access to the courts of such jurisdiction, that a creditor qualify to transact business, file a business activities report or other report or form, or take one or more other actions, unless the
applicable Borrower has so qualified, filed such reports or forms, or taken such actions (and, in each case, paid any required fees or other charges), except to the extent that the applicable Borrower
may qualify subsequently as a foreign entity authorized to transact business in such state or jurisdiction and gain access to such courts, without incurring any cost or penalty viewed by Agent to be
significant in amount, and such later qualification cures any access to such courts to enforce payment of such Account, 



        (l)    Accounts,
the collection of which, Agent, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor's financial condition, 


        (m)  Accounts
that are not subject to a valid and perfected first priority Agent's Lien, 


        (n)   Accounts
with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account Debtor, or 



9





 




        (o)   Accounts
that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower
of the subject contract for goods or services. 




        "Eligible Billed Accounts" means (a) Eligible Accounts of Borrowers, other than Trilegiant Accounts that are otherwise Eligible
Accounts, that have been invoiced and are not more than 90 days from invoice date and 60 days from due date and (b) Eligible Accounts of Borrowers that are also Trilegiant
Accounts that have been invoiced and are not more than 120 days from invoice date and 90 days from due date. 


        "Eligible Transferee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having
total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a
political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States, (c) a
finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and
having (together with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so long as no Event of Default has occurred and
is continuing, any other Person approved by Agent and Administrative Borrower (which approval of Administrative Borrower shall not be unreasonably, withheld, delayed, or conditioned), and
(f) during the continuation of an Event of Default, any other Person approved by Agent. 


        "Eligible Unbilled Accounts" means Eligible Accounts of Borrowers that have not yet been invoiced but represent services rendered or work
completed within 15 days before the end of the current (as of any date of determination) billing cycle. 


        "Environmental Actions" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials
from (a) any assets, properties, or businesses of any Borrower, any Subsidiary of a Borrower, or any of their predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by any Borrower, any Subsidiary of a Borrower, or any of their predecessors in interest. 


        "Environmental Law" means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on any Borrower or any Subsidiary of a Borrower, relating to the environment, employee health
and safety (to the extent it regulates occupational exposure to Hazardous Materials), or Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251  et seq;
the Toxic Substances Control Act, 15 USC § 2601 et seq; the Clean Air Act, 42 USC
§ 7401 et seq.; the Safe Drinking Water Act, 42 USC § 3803 et seq.; the Oil
Pollution Act of 1990, 33 USC § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
USC § 11001 et seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et
seq.; and the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or equivalents, in each case as amended from time to time. 


        "Environmental Liabilities and Costs" means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of 


10





 



any
claim or demand by any Governmental Authority or any third party, and which relate to any Environmental Action. 


        "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. 


        "Equipment" means equipment (as that term is defined in the Code), and includes machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), computer hardware, tools, parts, and goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. 


        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto. 


        "ERISA Affiliate" means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the
employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as
the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of which a Borrower or a Subsidiary of a Borrower is a member under IRC Section 414(m), or (d) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement with a Borrower or a Subsidiary of a Borrower and whose
employees are aggregated with the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(o). 


        "Essar" means Essar Global Limited, a company organized under the laws of Mauritius. 



        "Event of Default" has the meaning set forth in Section 8. 


        "Excess Availability" means, as of any date of determination, the amount equal to Availability  minus the aggregate amount, if any, of all trade payables of Borrowers and
their Subsidiaries aged in excess of their historical levels with respect
thereto and all book overdrafts of Borrowers and their Subsidiaries in excess of their historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion. 



        "Exchange Act" means the Securities Exchange Act of 1934, as in effect from time to time. 


        "Excluded Subsidiary" means any Subsidiary of a Borrower or Guarantor that (i) has an aggregate book value, for all of its assets,
of less than $25,000, (ii) owns no registered intellectual property, (iii) has annual revenues of less than $25,000, and (iv) has been designated an "Excluded Subsidiary" by
Parent with the consent of Agent in its Permitted Discretion. Parent may withdraw such designation at any time in its discretion. As of the Closing Date, EBA Direct, Inc., a Canadian
corporation and wholly owned Subsidiary of IQI, Inc., is the sole Excluded Subsidiary. 



        "Fee Letter" means that certain fee letter, dated as of even date herewith, between Borrowers and Agent, in form and substance
satisfactory to Agent. 


        "FEIN" means Federal Employer Identification Number. 


        "Funded Capital Expenditures" means Capital Expenditures permitted under  Section 7.18(b)(i) without the incorporation by reference of Section 7.18(b)(ii) set forth
therein. 


        "Financed Capital Expenditures" means Capital Expenditures permitted under  Section 7.18(b)(ii) without the incorporation by reference of Section 7.18(b)(i) set forth
therein. 


        "Funding Date" means the date on which a Borrowing occurs. 


11









   
        "Funding Losses" has the meaning set forth in Section 2.13(b)(ii). 


        "GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied. 



        "General Intangibles" means general intangibles (as that term is defined in the Code), including payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trade secrets, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, insurance premium rebates, tax refunds, and tax refund claims, and
any and all supporting obligations in respect thereof, and any other personal property other than Accounts, Deposit Accounts, goods, Investment Property, and Negotiable Collateral. 


        "Governing Documents" means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other
organizational documents of such Person. 


        "Governmental Authority" means any federal, state, local, or other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body. 



        "Guarantor" means each Material Subsidiary of each Borrower that is not itself a Borrower. 


        "Guarantor Security Agreement" means one or more security agreements executed and delivered by each Guarantor in favor of Agent, in each
case, in form and substance satisfactory to Agent. 


        "Guaranty" means that certain general continuing guaranty executed and delivered by each Guarantor in favor of Agent, for the benefit of
the Lender Group and the Bank Product Providers, in form and substance satisfactory to Agent. 



        "Hazardous Materials" means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws
or regulations as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic substances," or any other formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of 50 parts per million. 


        "Hedge Agreement" means any and all agreements, or documents now existing or hereafter entered into by Administrative Borrower or its
Subsidiaries that provide 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 combination of, or option with respect to, these or similar transactions, for the purpose of hedging Administrative Borrower's or its Subsidiaries' exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity prices. 


        "Holdout Lender" has the meaning set forth in Section 15.2(a). 


        "Indebtedness" means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations
as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien 


12





 



on
any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (f) all obligations owing under Hedge Agreements, and (g) any obligation
guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above. 


        "Indemnified Liabilities" has the meaning set forth in Section 11.3. 


        "Indemnified Person" has the meaning set forth in Section 11.3. 



        "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief. 


        "Intangible Assets" means, with respect to any Person, such Person's assets that would be treated as intangibles under GAAP. 



        "Intercompany Subordination Agreement" means a subordination agreement executed and delivered by Borrowers and each of their Subsidiaries
and Agent, the form and substance of which is satisfactory to Agent. 


        "Intercreditor Agreement" means that certain Intercreditor and Subordination Agreement of even date herewith by and among Agent, the
Investors, and the Collateral Trustee. 


        "Interest Expense" means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP. 


        "Interest Period" means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or
the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter;  provided, however, that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day,
(d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end
of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, or 3 months after the date on which the Interest Period began, as
applicable, and (e) Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which will end after the Maturity Date. 



        "Inventory" means inventory (as that term is defined in the Code). 


        "Investment" means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of
loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts arising in the ordinary course of business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. 


13





 



        "Investment Documents" means, collectively, the Purchase Agreement, the Investor Notes, the Investor Warrants, the Investor Guaranty, the
Stockholder Agreement, the Noteholder Agreements, the Registration Rights Agreement, the Investor Security Documents, and all other instruments, agreements, and documents executed and delivered by the
Investors and Parent in connection with the Purchase and all amendments to any of the foregoing. 


        "Investment Property" means investment property (as that term is defined in the Code), and any and all supporting obligations in respect
thereof. 


        "Investor" means, individually, DB or Essar and "Investors" means, collectively, DB and
Essar. 


        "Investor Guaranty" means that certain Subsidiary Guaranty in favor of the Investors dated as of November 5, 2003 executed by the
Subsidiaries of Parent. 


        "Investor Notes" means, collectively, the promissory notes issued by Parent and purchased by the Investors pursuant to the Purchase
Agreement. 


        "Investor Security Documents" means, collectively, all security agreements, pledge agreements, financing statements, and other
instruments, agreements, and documents executed and delivered by Parent to the Investors or the Collateral Trustee or filed or recorded for the benefit of the Investors or the Collateral Trustee
evidencing, governing, or otherwise securing a Lien on assets of Borrowers and/or Guarantors securing the Investor Notes. 


        "Investor Warrants" means, collectively, the warrants issued by Parent and purchased by the Investors pursuant to the Purchase Agreement. 


        "IRC" means the Internal Revenue Code of 1986, as in effect from time to time. 



        "Issuing Lender" means WFF or any other Lender that, at the request of Administrative Borrower and with the consent of Agent, agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12. 


        "L/C" has the meaning set forth in Section 2.12(a). 


        "L/C Disbursement" means a payment made by an Issuing Lender pursuant to a Letter of Credit. 



        "L/C Undertaking" has the meaning set forth in Section 2.12(a). 


        "Lender" and "Lenders" have the respective meanings set forth in the preamble to this
Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions of Section 14.1. 


        "Lender Group" means, individually and collectively, each of the Lenders (including the Issuing Lender) and Agent. 



        "Lender Group Expenses" means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Borrower
or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in connection with the Lender Group's
transactions with Borrowers or their Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) costs and expenses incurred by Agent in the disbursement of funds to or for the account of Borrowers or other members of
the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining 


14





 



possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations of the Books to the extent of the fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or the Lender Group's relationship with any Borrower or any Subsidiary of a Borrower, (h) Agent's and each Lender's reasonable costs and expenses
(including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents, and (i) Agent's and each Lender's reasonable costs
and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning any Borrower or any Subsidiary of a Borrower or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral. 



        "Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, officers, directors,
employees, attorneys, and agents. 


        "Letter of Credit" means an L/C or an L/C Undertaking, as the context requires. 


        "Letter of Credit Usage" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit. 



        "LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i). 


        "LIBOR Notice" means a written notice in the form of Exhibit L-1.


        "LIBOR Option" has the meaning set forth in Section 2.13(a). 


        "LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage. 


        "LIBOR Rate Loan" means each portion of an Advance that bears interest at a rate determined by reference to the LIBOR Rate. 


        "Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset,
irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term "Lien" includes the lien or
security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases,
and other title exceptions and encumbrances affecting Real Property. 


        "Loan Account" has the meaning set forth in Section 2.10. 


        "Loan Documents" means this Agreement, the Bank Product Agreements, the Cash Management Agreements, the Control Agreements, the Copyright
Security Agreement, the Disbursement Letter, the Due Diligence Letter, the Fee Letter, the Guarantor Security Agreement, the Guaranties, the Intercreditor Agreement, the Intercompany Subordination
Agreement, the Letters of Credit, the Officers' Certificate, the Stock Pledge Agreement, the Trademark Security Agreement, any note or 


15





 



notes
executed by a Borrower in connection with this Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by a Borrower and the Lender
Group in connection with this Agreement. 


        "Material Adverse Change" means (a) a material adverse change in the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of Borrowers and their Subsidiaries, taken as a whole, (b) a material impairment of a Borrower's or a Subsidiary of a Borrower's
ability to perform its obligations under the Loan Documents to which it is a party or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect to the Collateral as a result of an action or failure to act on the part of a Borrower or a Subsidiary of a Borrower. 


        "Material Subsidiary" means any Subsidiary of a Borrower or Guarantor that is not an Excluded Subsidiary. 



        "Maturity Date" has the meaning set forth in Section 3.4. 


        "Maximum Revolver Amount" means $25,000,000. 


        "Minimum Availability" has the meaning set forth in Section 7.23. 


        "Negotiable Collateral" means letters of credit, letter of credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any and all supporting obligations in respect thereof. 


        "Noteholder Agreements" means, collectively, those certain Noteholder Agreements dated as of November 5, 2003 executed by each of
Thayer Equity Investors, III, L.P., and the Edward Blank 1995 Grantor Retained Annuity Trust. 


        "Obligations" means (a) all loans, Advances, debts, principal, interest (including any interest that, but for the commencement of
an Insolvency Proceeding, would have accrued), contingent reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities (including all amounts charged to Borrowers'
Loan Account pursuant hereto), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees
or expenses that, but for the commencement of an Insolvency Proceeding, would have accrued), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrowers to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that Borrowers are required to pay or reimburse by the Loan Documents, by law, or otherwise, and
(b) all Bank Product Obligations. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all extensions, modifications, renewals, or alterations thereof, both
prior and subsequent to any Insolvency Proceeding. 


        "Officers' Certificate" means the representations and warranties of officers form submitted by Agent to Administrative Borrower, together
with Borrowers' completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent. 


        "Originating Lender" has the meaning set forth in Section 14.1(e). 



        "Overadvance" has the meaning set forth in Section 2.5. 


        "Parent" has the meaning set forth in the preamble to this Agreement. 


        "Participant" has the meaning set forth in Section 14.1(e). 


        "Payroll Reserve" means, as of any date of determination, a reserve in an amount equal to Borrower's payroll obligations for a
two-week payroll period as shown on Borrowers' Books, the amount of which reserve shall be determined by Agent in its sole discretion. 


16





 



        "Permitted Discretion" means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment. 


        "Permitted Dispositions" means (a) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the
ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited
by the terms of this Agreement or the other Loan Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights
in the ordinary course of business, (e) transfers of assets between Borrowers, between Guarantors, or from a Guarantor to a Borrower, and (f) the sale of assets having an aggregate book
value on Borrowers' Books not exceeding $100,000 in any twelve-month period. 


        "Permitted Holders" means the Investors and the Prior Stockholders. 


        "Permitted Investments" means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for
collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to a Borrower or
any Material Subsidiary of a Borrower effected in the ordinary course of business or owing to a Borrower or any Material Subsidiary of a Borrower as a result of Insolvency Proceedings involving an
Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a Borrower or any Material Subsidiary of a Borrower, and (e) Investments in de
minimis amounts in Excluded Subsidiaries that are necessary to maintain the corporate existence of such Excluded Subsidiaries under applicable law. 


        "Permitted Investor Indebtedness" means Indebtedness evidenced by the Investor Notes, subordinated to the Obligations on terms and
conditions satisfactory to Agent in its sole discretion, in an outstanding principal amount, as of the Closing Date and after giving effect to the application of the proceeds of the initial Advances
under this Agreement to the repayment of certain amounts owing on or about the Closing Date under the Investor Notes, of not less than (i) $20,231,167  less (ii) any prepayments permitted under
Section 7.7(a). 


        "Permitted Liens" means (a) Liens held by Agent, (b) Liens for unpaid taxes that either (i) are not yet delinquent,
or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on  Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrowers'
business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or other unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business and not in connection with the borrowing of money, (i) Liens granted as security for surety or appeal bonds in connection with obtaining such bonds in the
ordinary course of business, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, (k) with respect to any Real Property, easements, rights of way,
and zoning restrictions that do not materially interfere with or impair the use or operation thereof, and (l) Liens securing the Permitted Investor Indebtedness which are fully subordinated to
the Agent's Liens on terms and conditions satisfactory to Agent in its sole discretion. 


        "Permitted Protest" means the right of Administrative Borrower or any of its Subsidiaries to protest any Lien (other than any Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Administrative Borrower or any 


17





 



of
its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority
of any of the Agent's Liens. 


        "Permitted Purchase Money Indebtedness" means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing
Date in an aggregate amount outstanding at any one time not in excess of $10,000,000.00. 


        "Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, statutory trusts or other organizations, irrespective of whether they are legal entities, and governments and agencies and political
subdivisions thereof. 



        "Prior Stockholders" means Questor Partners Fund II, L.P.; Questor Side-by-Side Partners II, L.P.; Questor
Side-by-Side Partners II 3(c)(1), L.P.; TC Co-Investors, LLC; and Thayer Equity Investors III, L.P. 


        "Projections" means Parent's forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a consistent basis with Parent's historical financial statements, together with appropriate supporting details and a statement of underlying assumptions. 



        "Pro Rata Share" means, as of any date of determination: 



        (a)   with
respect to a Lender's obligation to make Advances and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to
the Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender's Commitment, by (z) the aggregate Commitments of all Lenders, and
(ii) from and after the time that the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount of such
Lender's Advances by (z) the aggregate outstanding principal amount of all Advances, 



        (b)   with
respect to a Lender's obligation to participate in Letters of Credit, to reimburse the Issuing Lender, and to receive payments of fees with respect thereto,
(i) prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender's Commitment, by (z) the aggregate Commitments of all
Lenders, and (ii) from and after the time that the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount
of such Lender's Advances by (z) the aggregate outstanding principal amount of all Advances, and 


        (c)   with
respect to all other matters as to a particular Lender (including the indemnification obligations arising under  Section 16.7), the percentage obtained by dividing (i) such Lender's Commitment,
by (ii) the aggregate amount of Commitments of all
Lenders; provided, however, that in the event the Commitments have been terminated or reduced to zero,
Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender's Advances plus such Lender's ratable portion of the Risk
Participation Liability with respect to outstanding Letters of Credit, by (B) the outstanding principal amount of all Advances plus the aggregate amount of the Risk Participation Liability with
respect to outstanding Letters of Credit. 




        "Purchase" means the purchase of the Investor Notes and the Investor Warrants described in the Purchase Agreement. 


        "Purchase Agreement" means that certain Note and Warrant Purchase Agreement by and between Parent and the Investors dated as of
November 5, 2003. 


18





 



        "Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at
the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof. 


        "Qualified Cash" means, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of Borrowers and their
Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and which such Deposit Account or Securities Account is the subject of a Control Agreement and is
maintained by a branch office of the bank or securities intermediary located within the United States. 


        "Real Property" means any estates or interests in real property now owned or hereafter acquired by any Borrower or a Subsidiary of any
Borrower and the improvements thereto. 


        "Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable
in perceivable form. 


        "Registration Rights Agreement" means that certain Registration Rights Agreement by and between Parent and the Investors dated as of
November 5, 2003. 


        "Remedial Action" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any
way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedial operation and
maintenance activities, or (d) conduct any other actions authorized by 42 USC § 9601. 


        "Replacement Lender" has the meaning set forth in Section 15.2(a). 


        "Report" has the meaning set forth in Section 16.17. 



        "Required Availability" means that the sum of (a) Excess Availability on the Closing Date,  plus (b) Qualified Cash, on the Closing Date, exceeds $5,500,000.00.



        "Required Lenders" means, at any time, Lenders whose aggregate Pro Rata Shares (calculated under clause (c) of the definition of
Pro Rata Shares) equal or exceed 662/3%. 


        "Reserve Percentage" means, on any day, for any Lender, the maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with
respect to eurocurrency funding (currently referred to as "eurocurrency liabilities") of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain
such reserves, the Reserve Percentage shall be zero. 


        "Revolver Usage" means, as of any date of determination, the sum of (a) the then extant amount of outstanding Advances,  plus (b) the then extant amount of the
Letter of Credit Usage. 



        "Risk Participation Liability" means, as to each Letter of Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be drawn or which may become available to be drawn, (b) all amounts that have been paid by the Issuing Lender to
the Underlying Issuer to the extent not reimbursed by Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable with
respect thereto. 


        "Scotiabank Collateral Agreement" means that certain Cash Collateral Agreement by and among IQI, Inc., Credit Suisse First Boston,
and The Bank of Nova Scotia dated as of November 5, 2003, pursuant to which IQI, Inc. deposited certain funds in an account with The Bank of Nova Scotia as cash collateral for certain
letters of credit issued by The Bank of Nova Scotia. 


        "SEC" means the United States Securities and Exchange Commission and any successor thereto. 


19





 



        "Securities Account" means a "securities account" as that term is defined in the Code. 



        "Settlement" has the meaning set forth in Section 2.3(f)(i). 


        "Settlement Date" has the meaning set forth in Section 2.3(f)(i). 


        "Solvent" means, with respect to any Person on a particular date, that, at fair valuations, the sum of such Person's assets is greater
than all of such Person's debts. 


        "Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act). 


        "Stockholders Agreement" means that certain Stockholders Agreement by and among Parent, the Prior Stockholders, and the Investors dated as
of November 5, 2003. 


        "Stock Pledge Agreement" means a stock pledge agreement, in form and substance satisfactory to Agent, executed and delivered by each
Borrower that owns Stock of a Subsidiary of Parent. 


        "Sources and Uses" has the meaning set forth in Section 3.1(p). 


        "Subsidiary" of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership,
limited liability company, or other entity. 


        "Surviving Preferred Shares" means, collectively, the Surviving Series B Shares and the Surviving Series F Shares. 


        "Surviving Series B Shares" means 29,778 shares of the Series B Preferred Stock, par value $.01 per share, of Parent. 



        "Surviving Series F Shares" means 23,875 shares of the Series F Preferred Stock, par value $.01 per share, of Parent. 


        "Swing Lender" means WFF or any other Lender that, at the request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender under Section 2.3(d). 


        "Swing Loan" has the meaning set forth in Section 2.3(d)(i). 



        "Taxes" has the meaning set forth in Section 16.11. 


        "Trademark Security Agreement" means a trademark security agreement executed and delivered by each Borrower and Agent, the form and
substance of which is satisfactory to Agent. 


        "Trilegiant Account" means an Account arising from the sale of goods or services to Trilegiant Corporation, a Delaware corporation, or any
of its Subsidiaries. 


        "Trilegiant Base" means: 



        (a)   for
the period from the Closing Date through and including the date occurring thirty (30) days after the Closing Date, 50% of the amount of Trilegiant Accounts
that are either Eligible Billed Accounts or Eligible Unbilled Accounts as of the date of determination, 


        (b)   for
the period from the date occurring thirty-one (31) days after the Closing Date through and including the date occurring sixty (60) days
after the Closing Date, 40% of the amount of Trilegiant Accounts that are either Eligible Billed Accounts or Eligible Unbilled Accounts as of the date of determination, 



20





 




        (c)   for
the period from the date occurring sixty-one (61) days after the Closing Date through and including the date occurring ninety (90) days
after the Closing Date, 30% of the amount of Trilegiant Accounts that are either Eligible Billed Accounts or Eligible Unbilled Accounts as of the date of determination, and 


        (d)   at
all times thereafter, 20% of the amount of Trilegiant Accounts that are either Eligible Billed Accounts or Eligible Unbilled Accounts as of the date of determination. 




        "UCC Filing Authorization Letter" means a letter duly executed by each Borrower and each Guarantor authorizing Agent to file appropriate
financing statements on Form UCC-1 without the signature of such Borrower or Guarantor, as applicable, in such office or offices as may be necessary or, in the opinion of Agent, desirable
to perfect the security interests purported to be created by the Loan Documents. 


        "Underlying Issuer" means a third Person which is the beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers. 


        "Underlying Letter of Credit" means a letter of credit that has been issued by an Underlying Issuer. 


        "United States" means the United States of America. 


        "Voidable Transfer" has the meaning set forth in Section 17.7. 


        "Wells Fargo" means Wells Fargo Bank, National Association, a national banking association. 



        "WFF" means Wells Fargo Foothill, Inc., a California corporation. 


        1.2 Accounting Terms.    All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrowers" or the term "Parent" is used
in respect of a financial covenant or a related definition, it shall be understood to mean Parent and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise. 



        1.3 Code.    Any terms used in this Agreement that are defined in the Code
shall
be construed and defined as set forth in the Code unless otherwise defined herein. 


        1.4 Construction.    Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except
where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement,
instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to the repayment in full of the Obligations shall mean the repayment in full in cash of all Obligations other than contingent indemnification Obligations and other than any Bank
Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and are not required to be repaid or cash collateralized pursuant to the provisions of
this Agreement. Any reference herein to any Person shall be construed to include such Person's successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents
shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein. 


21









           1.5 Schedules and Exhibits.    All of the
schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference. 



2.     LOAN AND TERMS OF PAYMENT.  


        2.1 Revolver Advances.    



        (a)   Subject
to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender agrees (severally, not jointly or jointly and severally) to
make advances ("Advances") to Borrowers in an amount at any one time outstanding not to exceed such Lender's Pro Rata Share of an amount equal to  the lesser of (i) the Maximum Revolver Amount in effect at the date such Advance is to be made  less the Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage.
 


        (b)   Anything
to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish reserves in
such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate, against the Borrowing Base, including reserves with respect to (i) sums
that Borrowers are required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by Borrowers or their Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the
Collateral (other than any existing Permitted Lien set forth on Schedule P-1 which is specifically identified thereon as entitled to
have priority over the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent's Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the Collateral. 



        (c)   The
Lenders shall have no obligation to make additional Advances hereunder to the extent such additional Advances would cause the Revolver Usage to exceed the Maximum
Revolver Amount at the date of any such Advance. 


        (d)   Amounts
borrowed pursuant to this Section 2.1 may be repaid, without any penalty or premium, except as provided in Section 2.13(c), at any time and,
subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. 




        2.2 RESERVED.    



        2.3 Borrowing Procedures and Settlements.    



        (a)   Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request by an Authorized Person delivered
to Agent (which notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date specifying (i) the
amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day; provided,  however, that in the case of a request for
Swing Loan in an amount of $5,000,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date). At Agent's election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within
24 hours of the giving of such notice and the failure to provide such written confirmation shall not affect the validity of the request. 


        (b)   Agent's Election. Promptly after receipt of a request for a Borrowing pursuant to  Section 2.3(a), Agent shall elect, in its discretion, (i) to have the terms
of  Section 2.3(c) apply to such requested Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender to
 



22





 




make
a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of the requested Borrowing;  provided, however, that if Swing Lender declines in its sole discretion to make a Swing Loan pursuant to  Section 2.3(d), Agent shall elect to have the terms of Section 2.3(c) apply to such
requested Borrowing. 


        (c)   Making of Loans. 



          (i)  In
the event that Agent shall elect to have the terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a request for a Borrowing pursuant to  Section 2.3(a), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds, to Agent's Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to Administrative Borrower's Designated Account; provided, however,
that, subject to the provisions of Section 2.3(i), Agent shall not
request any Lender to make, and no Lender shall have the obligation to make, any Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or
(2) the requested Borrowing would exceed the Availability on such Funding Date. 


         (ii)  Unless
Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, prior to 9:00 a.m.
(California time) on the date of such Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall
pay such amount to Agent for Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance on
such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date. 



        (iii)  Agent
shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender's benefit, and, in the absence of
such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other 




23





 





non-Defaulting
Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender's Advance was funded by the other members
of the Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender's Advance was not
funded by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting
Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due
and payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to
refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed
and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations, but including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups' or Borrowers' rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund. 




        (d)   Making of Swing Loans.



          (i)  In
the event Agent shall elect, with the consent of Swing Lender, as a Lender, to have the terms of this  Section 2.3(d) apply to a requested Borrowing as described in Section 2.3(b), Swing Lender
as a Lender shall make such Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender as a Lender pursuant to this  Section 2.3(d) being referred to as a "Swing Loan" and such Advances being referred to
collectively as "Swing Loans") available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds to
Administrative Borrower's Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that
no such Swing Loan shall be eligible to be a LIBOR Rate Loan and all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account (and for the account of the
holder of any participation interest with respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan if Agent has actual knowledge that (i) one or 




24





 


more
of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to
making, in its sole discretion, any Swing Loan. 


         (ii)  The
Swing Loans shall be secured by the Agent's Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are
Base Rate Loans. 




        (e)   Agent Advances.



          (i)  Agent
hereby is authorized by Borrowers and the Lenders, from time to time in Agent's sole discretion, (1) after the occurrence and during the continuance of a
Default or an Event of Default, or (2) at any time that any of the other applicable conditions precedent set forth in Section 3 have not
been satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations), or (C) to pay any other amount chargeable to Borrowers pursuant
to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances
described in this Section 2.3(e) shall be referred to as "Agent Advances"). Each Agent Advance
shall be deemed to be an Advance hereunder, except that no such Agent Advance shall be eligible to be a LIBOR Rate Loan and all payments thereon shall be payable to Agent solely for its own account. 


         (ii)  The
Agent Advances shall be repayable on demand, secured by the Agent's Liens granted to Agent under the Loan Documents, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate Loans. 




        (f)    Settlement. It is agreed that each Lender's funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of or
enforceable by Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Advances, the Swing Loans, and the Agent
Advances shall take place on a periodic basis in accordance with the following provisions: 



          (i)  Agent
shall request settlement ("Settlement") with the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect to
Borrowers' or their Subsidiaries' Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than
2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the "Settlement
Date"). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of the
Advances (including Swing Loans and Agent Advances) exceeds such Lender's Pro Rata Share of the Advances (including Swing Loans and Agent Advances) as of a Settlement Date, then Agent shall, by no
later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may 




25





 


designate),
an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Agent Advances), and
(z) if a Lender's balance of the Advances (including Swing Loans and Agent Advances) is less than such Lender's Pro Rata Share of the Advances (including Swing Loans and Agent Advances) as of a
Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Agent Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Agent Advances and, together with the portion of such Swing Loans or
Agent Advances representing Swing Lender's Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate. 


         (ii)  In
determining whether a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than, equal to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by
Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.
To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement. 



        (iii)  Between
Settlement Dates, Agent, to the extent no Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender's Pro Rata Share of the Advances other than to Swing
Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent Advances, and each Lender (subject to the effect of letter agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or
the Lenders, as applicable. 




        (g)   Notation. Agent shall record on its books the principal amount of the Advances owing to each Lender, including the Swing
Loans owing to Swing Lender, and Agent Advances owing to Agent, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to
be correct and accurate. In addition, each Lender is authorized, at such Lender's option, to note the date and amount of each payment or prepayment of principal of such Lender's Advances in its books
and records, including computer records. 


        (h)   Lenders' Failure to Perform. All Advances (other than Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to 



26





 




perform
its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to
perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder. 


        (i)    Optional Overadvances. Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize Agent or
Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so long as (i) after giving effect to such Advances, the outstanding Revolver Usage does not exceed the Borrowing Base by
more than $2,000,000, (ii) after giving effect to such Advances, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) does not exceed the Maximum Revolver Amount on the date on which the last such Advance was made, and (iii) at the time of the making of any such Advance, Agent does not
believe, in good faith, that the Overadvance created by such Advance will be outstanding for more than 90 days. The foregoing provisions are for the exclusive benefit of Agent, Swing Lender,
and the Lenders and are not intended to benefit Borrowers in any way. The Advances and Swing Loans, as applicable, that are made pursuant to this  Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that they shall not be
eligible for the LIBOR Option and the rate of interest applicable thereto shall be the rate applicable to Advances that are Base Rate Loans under  Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default. 



        A.
In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the preceding paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value), and the Lenders with Revolver Commitments thereupon shall,
together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Advances
to Borrowers to an amount permitted by the preceding paragraph. In the event Agent or any Lender disagrees over the terms of reduction or repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the determination of the Required Lenders. 



        B.
Each Lender with a Revolver Commitment shall be obligated to settle with Agent as provided in Section 2.3(f) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this  Section 2.3(i), and any Overadvances
resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses. 





2.4   Payments.  



        (a)   Payments by Borrowers. 



          (i)  Except
as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent's Account for the account of the Lender Group and shall be made in
immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time), shall be
deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day. 




27





 


         (ii)  Unless
Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full
as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid. 




        (b)   Apportionment and Application. 



          (i)  Except
as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments
relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent's separate account, after giving effect to any letter agreements between Agent and
individual Lenders) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee relates. All payments shall be remitted to
Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows: 


        A.
first, to pay any Lender Group Expenses then due to Agent under the Loan Documents, until paid in full, 



        B.  second, to pay any Lender Group Expenses then due to the Lenders under the Loan Documents, on a ratable basis, until paid in full,



        C.
third, to pay any fees then due to Agent (for its separate accounts, after giving effect to any letter agreements between Agent and the
individual Lenders) under the Loan Documents until paid in full, 


        D.
fourth, to pay any fees then due to any or all of the Lenders (after giving effect to any letter agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis, until paid in full, 


        E.  fifth, to pay interest due in respect of all Agent Advances, until paid in full, 


        F.
sixth, ratably to pay interest due in respect of the Advances (other than Agent Advances) and the Swing Loans, until paid in full, 


        G.
seventh, to pay the principal of all Agent Advances until paid in full, 



        H.  eighth, to pay the principal of all Swing Loans until paid in full, 


        I.
ninth, so long as no Event of Default has occurred and is continuing, and at Agent's election (which election Agent agrees will not be
made if an Overadvance would be created thereby), to pay amounts then due and owing by Administrative Borrower or its Subsidiaries in respect of Bank Products, until paid in full, 


        J.
tenth, so long as no Event of Default has occurred and is continuing, to pay the principal of all Advances until paid in full, 



        K.  eleventh, if an Event of Default has occurred and is continuing, ratably (i) to pay the principal of all Advances until paid in
full, (ii) to Agent, to be held by Agent, for the ratable 




28





 





benefit
of Issuing Lender and the Lenders, as cash collateral in an amount up to 105% of the then extant Letter of Credit Usage until paid in full, and (iii) to Agent, to be held by Agent, for
the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation of, the subject
Event of Default until Administrative Borrower's and its Subsidiaries' obligations in respect of the then extant Bank Products have been paid in full or the cash collateral amount has been exhausted, 


        L.
twelfth, if an Event of Default has occurred and is continuing, to pay any other Obligations (including the provision of amounts to
Agent, to be held by Agent, for the benefit of the Bank Product
Providers, as cash collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the amount necessary to secure Administrative Borrower's and its Subsidiaries'
obligations in respect of the then extant Bank Products), and 


        M.  thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.



         (ii)  Agent
promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided in Section 2.3(f). 


        (iii)  In
each instance, so long as no Event of Default has occurred and is continuing, this Section 2.4(b) shall not
be deemed to apply to any payment by Borrowers specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement. 


        (iv)  For
purposes of the foregoing, "paid in full" means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. 



         (v)  In
the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to
be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this  Section 2.4 shall control and govern.






        2.5 Overadvances.    If, at any time or for any
reason,
the amount of Obligations (other than Bank Product Obligations) owed by Borrowers to the Lender Group pursuant to Section 2.1 or Section 2.12 is greater than either the Dollar or
percentage limitations set forth in Section 2.1 or Section 2.12, as applicable (an "Overadvance"), Borrowers immediately (or within five (5) days, with respect solely to any
Overadvance resulting from a revision in the criteria for Eligible Accounts announced by Agent in accordance with the definition of Eligible Accounts as applied to Accounts outstanding on the
effective date of such revision) shall pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the Obligations by the amount of the Overadvance in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrowers hereby promise to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as
and when due and payable under the terms of this Agreement and the other Loan Documents. 


        2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.    



        (a)   Interest Rates. Except as provided in clause (c) below, all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the 



29





 

Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the Applicable LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to the Applicable Base Rate plus the Base Rate Margin. 



        The
foregoing notwithstanding, at no time shall any portion of the Obligations (other than Bank Product Obligations) bear interest on the Daily Balance thereof at a per annum rate less
than 4%. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate. 


        (b)   Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the Lenders with a Revolver Commitment,
subject to any letter agreement between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in  Section 2.12(e)) which shall
accrue at a rate equal to 2.75% per annum times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit. 


        (c)   Default Rate. Upon the occurrence and during the continuation of an Event of Default (and at the election of Agent or the
Required Lenders), 



          (i)  all
Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate equal to 4 percentage points above the per annum rate otherwise applicable hereunder, and 



         (ii)  the
Letter of Credit fee provided for above shall be increased to 4 percentage points above the per annum rate otherwise applicable hereunder. 




        (d)   Payment. Except as provided to the contrary in Section 2.12(a), interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Borrowers hereby authorize Agent, from time to
time, without prior notice to Borrowers, to charge such interest and fees, all Lender Group
Expenses (as and when incurred), the charges, commissions, fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), the
fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan
Document (including any amounts due and payable to the Bank Product Providers in respect of Bank Products up to the amount of the then extant Bank Product Reserve) to Borrowers' Loan Account, which
amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when due shall be compounded by being charged
to Borrowers' Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans hereunder. 


        (e)   Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day
year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately
shall be increased or decreased by an amount equal to such change in the Base Rate. 



30











  



        (f)    Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it;  provided,
however, that, anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess and, to the extent that the principal balance of the Obligations is less than such excess, shall be returned to the Borrowers unless
an Event of Default has occurred and is continuing. 




        2.7 Cash Management.    



        (a)   Borrowers
shall and shall cause each of their Subsidiaries to (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at
one or more of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all of their and their Subsidiaries' Account Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including
those sent directly by their Account Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash Management Account") at one of the Cash Management Banks. 


        (b)   Each
Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and Borrowers, in form and substance acceptable to Agent. Each such Cash
Management Agreement shall provide, among other things, that (i) all items of payment deposited in such Cash Management Account and proceeds thereof are held by such Cash Management Bank agent
or bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account,
other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and
(iii) it immediately will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent's Account. 


        (c)   So
long as no Default or Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) or
(b) to add or replace a Cash Management Account Bank or Cash Management Account; provided,  however, that (i) such prospective
Cash Management Bank shall be satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such Cash Management Account with the prospective Cash Management Bank, and (ii) prior to the time of the opening of such Cash Management Account, a Borrower or a Subsidiary of a
Borrower, as applicable, and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. A Borrower or a Subsidiary of a Borrower, as applicable,
shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of
notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days of
notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent's liability
under any Cash Management 



31





 




Agreement
with such Cash Management Bank is no longer acceptable in Agent's reasonable judgment. 


        (d)   The
Cash Management Accounts shall be cash collateral accounts, with all cash, checks and similar items of payment in such accounts securing payment of the Obligations,
and in which Borrowers are hereby grants a Lien to Agent. 




        2.8 Crediting Payments; Float Charge.    The
receipt of
any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made to the Agent's Account or unless and until such payment item is honored when presented for payment. Should any payment
item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent's Account on a Business Day on or before 11:00 a.m. (California time). If any payment
item is received into the Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after the Closing Date, Agent shall be entitled to charge Borrowers for two Business Days of "clearance' or "float' at the rate
then applicable under Section 2.6 to Advances that are Base Rate Loans on all Collections that are received by Borrowers and their Subsidiaries
(regardless of whether forwarded by the Cash Management Banks to Agent). This across-the-board two Business Day clearance or float charge on all Collections of Borrowers and
their Subsidiaries is acknowledged by the parties to constitute an integral aspect of the pricing of the financing of Borrowers and shall apply irrespective of whether or not there are any outstanding
monetary Obligations; the effect of such clearance or float charge being the equivalent of charging interest on such Collections through the completion of a period ending two Business Days after the
receipt thereof. The parties acknowledge and agree that the economic benefit of the foregoing provisions of this Section 2.8 shall be for the
exclusive benefit of Agent. 


        2.9 Designated Account.    Agent is authorized to make the Advances, and
Issuing
Lender is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.6(d). Administrative Borrower agrees to establish and maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account. 



        2.10 Maintenance of Loan Account; Statements of Obligations.    Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account") on which Borrowers will be charged with, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing Lender for Borrowers' account, and with all other
payment Obligations hereunder or under the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with  Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless, within 30 days after receipt thereof by 


32





 



Administrative
Borrower, Administrative Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements. 



        2.11 Fees.    Borrowers shall pay to Agent the following fees and charges,
which
fees and charges shall be non-refundable when paid (irrespective of whether this Agreement is terminated thereafter) and shall be apportioned among the Lenders in accordance with the terms
of letter agreements between Agent and individual Lenders: 



        (a)   Unused Line Fee. On the first day of each month during the term of this Agreement, an unused line fee in the amount equal
to 0.5% per annum times the result of (i) the average daily Maximum Revolver Amount for the immediately preceding month, less (ii) the sum of (A) the average Daily Balance of
Advances that were outstanding during the immediately preceding month, plus (B) the average Daily Balance of the Letter of Credit Usage during the immediately preceding month, 


        (b)   Fee Letter Fees. As and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter, and 


        (c)   Audit, Appraisal, and Valuation Charges. Audit, appraisal, and valuation fees and charges as follows (i) a fee of
$850 per day, per auditor, plus out-of-pocket expenses for each financial audit of Borrower performed by personnel employed by Agent, (ii) if implemented, a fee of $850
per day, per applicable individual, plus out-of-pocket expenses for the establishment of electronic collateral reporting systems, (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral, or any portion thereof, performed by personnel employed by Agent, and (iv) the actual
charges paid or incurred by Agent if it elects to employ the services of one or more third Persons to perform financial audits of Borrowers or their Subsidiaries, to establish electronic collateral
reporting systems, to appraise the Collateral, or any portion thereof, or to assess Borrowers' and their Subsidiaries' business valuation. 




        2.12 Letters of Credit    



        (a)   Subject
to the terms and conditions of this Agreement, the Issuing Lender may, in its discretion, agree to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account
of Borrowers. The Issuing Lender's agreement to provide any particular Letter of Credit shall in no way obligate or commit the Issuing Lender to provide any other Letter of Credit. To request the
issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or extension of an outstanding L/C or L/C Undertaking), Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the requested date of issuance, amendment,
renewal, or extension) a notice requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be amended, renewed, or extended, the date of issuance, amendment,
renewal, or extension, the date on which such L/C or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name and address of the beneficiary thereof (or of the Underlying
Letter of Credit, as applicable), and such other information as shall be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrowers also
shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the requested Letter of Credit: 



          (i)  the
Letter of Credit Usage would exceed the Borrowing Base less the then extant amount of outstanding Advances, or 




33





 


         (ii)  the
Letter of Credit Usage would exceed $5,000,000, or 


        (iii)  the
Letter of Credit Usage would exceed the Maximum Revolver Amount at the time of issuance less the then extant amount
of outstanding Advances. 




        Borrowers
and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may be issued to support letters of credit that already are outstanding as of the Closing
Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such L/C
Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the next Business Day after the date on which Administrative Borrower receives such
notice, if such notice is received after 10:00 a.m., California time, on the date of receipt, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall
be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances that are Base Rate Loans under  Section 2.6. To the extent an L/C Disbursement is
deemed to be an Advance hereunder, Borrowers' obligation to reimburse such L/C Disbursement
shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interest may appear. 


        (b)   Promptly
following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender agrees to fund
its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrowers had requested such Advance and Agent shall promptly pay to Issuing
Lender the amounts so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have granted to each Lender, and each Lender shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the date due as
provided in clause (a) of this Section, or of any reimbursement payment required to be refunded to Borrowers for any reason. Each Lender acknowledges and agrees that its obligation to deliver
to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender pursuant to this  Section 2.12(b) shall be
absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event
of Default or Default or the failure to satisfy any condition set forth in Section 3 hereof. If any Lender fails to make available to Agent the
amount of such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall be deemed to be a
Defaulting Lender and 



34





 




Agent
(for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full. 


        (c)   Each
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees
incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided,  however, that no Borrower shall be obligated hereunder to
indemnify for any loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or for such Borrower's account, even though this interpretation may be different from such
Borrower's own, and each Borrower understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrowers'
instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Each Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender
Group's indemnification of any Underlying Issuer; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender
Group or the Underlying Issuer. 


        (d)   Each
Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received
by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender's instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application. 


        (e)   Any
and all charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of
this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of the Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date, the
usage charge imposed by the prospective Underlying Issuer is .825% per annum times the face amount of each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and
that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals. 


        (f)    If
by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto): 



          (i)  any
reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or 


         (ii)  there
shall be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any Letter of Credit issued
pursuant hereto; 




35





 





and
the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is
reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent may specify to be necessary to compensate the Lender Group for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of any amount due
pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. 





        2.13 LIBOR Option.    



        (a)   Interest and Interest Payment Dates. In lieu of having interest charged at the rate based upon the Base Rate, Borrowers
shall have the option (the "LIBOR Option") to have interest on all or a portion of the Advances be charged at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto, (ii) acceleration of the maturity of all or any portion
of the Obligations, or (iii) termination of this Agreement pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same
type hereunder. At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Advances bear interest at the LIBOR Rate and Agent shall
have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder. 


        (b)   LIBOR
Election. 



          (i)  Administrative
Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the "LIBOR
Deadline"). Notice of Administrative Borrower's election of the LIBOR Option for a permitted portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a
LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the
Lenders. 


         (ii)  Each
LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the
Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount 




36





 





of
such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period therefor), minus
(ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting forth any
amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive absent manifest error. 


        (iii)  Borrowers
shall have not more than 5 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least
$1,000,000 and integral multiples of $500,000 in excess thereof. 




        (c)   Prepayments. Borrowers may prepay LIBOR Rate Loans at any time; provided,  however, that in the event that LIBOR Rate
Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including
as a result of any automatic prepayment through the required application by Agent of proceeds of Borrowers' and their Subsidiaries' Collections in accordance with  Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or acceleration of all or any portion of the
Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with
clause (b) above. 


        (d)   Special Provisions Applicable to LIBOR Rate.



          (i)  The
LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased costs due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes
in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing
interest at the LIBOR Rate. In any such event, the affected Lender shall give Administrative Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from the affected Lender, Administrative Borrower may, by notice to such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans with
respect to which such adjustment is made (together with any amounts due under clause (b)(ii) above). 


         (ii)  In
the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof,
shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender's notice shall be deemed to be the
last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and
(z) Borrowers shall not be entitled to elect 




37





 





the
LIBOR Option until such Lender determines that it would no longer be unlawful or impractical for the Lender to fund or maintain LIBOR Advances. 




        (e)   No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Agent, nor any
Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions
of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans. 




        2.14 Capital Requirements.    If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or
application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender's or such holding company's capital as a
consequence of such Lender's Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies with respect to capital adequacy and assuming the full utilization of such entity's capital) by any amount deemed by such
Lender to be material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in reasonable
detail such Lender's calculation thereof and the assumptions upon which such calculation
was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods. 


2.15 Joint and Several Liability of Borrowers.  



        (a)   Each
Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by
the Agent and the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations. 


        (b)   Each
Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this  Section 2.15), it being
the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Person
composing Borrowers without preferences or distinction among them. 


        (c)   If
and to the extent that any of Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in
accordance with the terms thereof, then in each such event the other Persons composing Borrowers will make such payment with respect to, or perform, such Obligation. 


        (d)   The
Obligations of each Person composing Borrowers under the provisions of this Section 2.15 constitute the
absolute and unconditional, full recourse Obligations of each Person composing Borrowers enforceable against each such Borrower to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Agreement or any other circumstances whatsoever. 



38





 




        (e)   Except
as otherwise expressly provided in this Agreement, each Person composing Borrowers hereby waives notice of acceptance of its joint and several liability, notice
of any Advances or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement,
notice of any action at any time taken or
omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands,
notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Person composing Borrowers hereby assents to, and waives notice of,
any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Person composing Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Person composing Borrowers. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging
or relieving any Person composing Borrowers, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of
each Person composing Borrowers that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of such Person composing Borrowers under this  Section 2.15 shall not be
discharged except by performance and then only to the extent of such performance. The Obligations of each Person
composing Borrowers under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person composing Borrowers or any Agent or Lender. The joint and several liability of the Persons composing Borrowers hereunder
shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender. 


        (f)    Each
Person composing Borrowers represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all
other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Person composing Borrowers further represents and warrants to Agent and
Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Person composing Borrowers hereby covenants that such Borrower will continue to keep informed
of Borrowers' financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations. 


        (g)   Each
of the Persons composing Borrowers waives all rights and defenses arising out of an election of remedies by the Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the Agent's or such Lender's rights of subrogation and reimbursement against such
Borrower by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise. 



39





 




        (h)   RESERVED.



        (i)    The
provisions of this Section 2.15 are made for the benefit of the Agent, the Lenders and their respective
successors and assigns, and may be enforced by it or them from time to time against any or all of the Persons composing Borrowers as often as occasion therefor may arise and without requirement on the
part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Persons composing Borrowers or to
exhaust any remedies available to it or them against any of the other Persons composing Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or
to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender
upon the insolvency, bankruptcy or reorganization of any of the Persons composing Borrowers, or otherwise, the provisions of this Section 2.15
will forthwith be reinstated in effect, as though such payment had not been made. 


        (j)    Each
of the Persons composing Borrowers hereby agrees that it will not enforce any of its rights of contribution or subrogation against the other Persons composing
Borrowers with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to the Agent or the Lenders with respect to any of the Obligations or
any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments
to any Agent or Lender hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment
or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor. 


        (k)   Each
of the Persons composing Borrowers hereby agrees that, after the occurrence and during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations. Each Borrower hereby agrees
that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower
owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of
such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for the Agent, and such Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b). 



40











   3.     CONDITIONS; TERM OF AGREEMENT.  


        3.1 Conditions Precedent to the Initial Extension of Credit.    The obligation
of the Lender Group (or any member thereof) to make the initial Advance (or otherwise to extend any credit provided for hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each
of the conditions precedent set forth below: 



        (a)   the
Closing Date shall occur on or before January 30, 2004; 


        (b)   Agent
shall have received a UCC Filing Authorization Letter, duly executed by each Borrower and each Guarantor, together with appropriate financing statements on Form
UCC-1 duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent's Liens in and to the Collateral, and Agent shall have received
searches reflecting the filing of all such financing statements; 


        (c)   Agent
shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and
effect: 



          (i)  the
Cash Management Agreements, 


         (ii)  the
Control Agreements, 


        (iii)  the
Copyright Security Agreement, 


        (iv)  the
Disbursement Letter, 


         (v)  the
Due Diligence Letter, 


        (vi)  the
Fee Letter, 


       (vii)  the
Intercreditor Agreement, 


      (viii)  the
Officers' Certificate, 


        (ix)  UCC
termination statements and other documentation evidencing the termination of any Liens in and to the properties and assets of Borrowers and their Subsidiaries other
than Permitted Liens, 


         (x)  the
Stock Pledge Agreement, together with all certificates representing the shares of Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in
blank, and 


        (xi)  the
Trademark Security Agreement; 




        (d)   Agent
shall have received a certificate from the Secretary of each Borrower attesting to the resolutions of such Borrower's Board of Directors authorizing its execution,
delivery, and performance of this Agreement and the other Loan Documents to which such Borrower is a party and authorizing specific officers of such Borrower to execute the same; 


        (e)   Agent
shall have received copies of each Borrower's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such
Borrower; 


        (f)    Agent
shall have received a certificate of status with respect to each Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the
appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction; 


        (g)   Agent
shall have received certificates of status with respect to each Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by
the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Borrower) in which its failure to 



41





 




be
duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Borrower is in good standing in such jurisdictions; 


        (h)   Agent
shall have received a certificate of insurance, together with the endorsements thereto, as are required by  Section 6.8, the form and substance of which shall be satisfactory to Agent; 



        (i)    [RESERVED]; 


        (j)    Agent
shall have received opinions of counsel to Borrowers in form and substance satisfactory to Agent; 


        (k)   Agent
shall have received satisfactory evidence (including a certificate of the chief financial officer of Parent) that all tax returns required to be filed by Borrowers
and their Subsidiaries have been filed and all taxes upon Borrowers and their Subsidiaries or their properties, assets, income, and franchises (including Real Property taxes, sales taxes, and payroll
taxes), including any interest and penalties thereon have been paid, except such taxes that are the subject of a Permitted Protest; 


        (l)    Borrowers
shall have the Required Availability after giving effect to the initial extensions of credit hereunder and the payment of all fees and expenses required to be
paid by Borrowers on the Closing Date under this Agreement or the other Loan Documents; 


        (m)  Agent
shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Borrowers' books and records
(including, without limitation, with respect to unbilled Accounts) and verification of Borrowers' representations and warranties to the Lender Group, the results of which shall be satisfactory to
Agent in its sole discretion, (ii) a review of all bonding arrangements and customer contracts of Borrowers, the results of which shall be satisfactory to Agent in its sole discretion, and
(iii) a review of Borrowers' corporate structure, which shall be satisfactory to Agent in its sole discretion; the results of which shall be satisfactory to Agent; 


        (n)   Agent
shall have received completed reference checks with respect to the Investors' and Borrowers' senior management, the results of which are satisfactory to Agent in
its sole discretion; 



        (o)   Agent
shall have received UCC, tax lien, and judgment searches for all domestic jurisdictions in which Borrowers and Collateral may be located, the results of which
searches shall be satisfactory to Agent in its Permitted Discretion; 


        (p)   Agent
shall have received (i) Borrowers' statement of sources and uses of funds with respect to the initial Advances hereunder and the consummation of the
transactions contemplated to occur on or about the Closing Date (the "Sources and Uses"), and (ii) Borrowers' Closing Date Business Plan; 


        (q)   Agent
shall have received all cash to be received from sources other than the Lenders pursuant to the Sources and Uses; 



        (r)   Borrowers
shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement; 


        (s)   Agent
shall have received copies of each of the executed Investment Documents in form and substance satisfactory to Agent, certified as true and correct and in full
force and effect by an authorized officer of Parent; 


        (t)    Agent
shall have received evidence satisfactory to Agent in its Permitted Discretion that the Purchase shall have been consummated for aggregate cash consideration of
not less than $28,231,167; 



42





 




        (u)   Agent
shall have received amendments, in form and substance satisfactory to Agent in its sole discretion and certified as true and correct and in full force and effect
by an appropriate officer of Parent, to (i) each Investor Note, providing that the maturity date of the Investor Notes shall occur on a date not less than three months after the Maturity Date,
and (ii) the Investor Guaranty, providing that no Excluded Subsidiary is a guarantor of Borrowers' obligations to the Investors; 



        (v)   Agent
shall have received such Investor Security Documents as have been executed, filed, or recorded as of the Closing Date, in form and substance satisfactory to Agent
in its sole discretion and certified as true and correct and in full force and effect by an appropriate officer of Parent; 


        (w)  Agent
shall have received satisfactory evidence that all preferred stock of Parent and any other Borrower, if any, existing prior to the consummation of the Purchase
shall have been or shall be cancelled on terms and conditions satisfactory to Agent in its sole discretion other than the Surviving Preferred Shares; 



        (x)   Agent
shall have received satisfactory evidence that all senior and subordinated Indebtedness of Parent and any other Borrower outstanding prior to the Closing Date
(other than Permitted Investor Indebtedness and Indebtedness set forth on Schedule 5.20) shall have been cancelled on terms and conditions
satisfactory to Agent in its sole discretion; 


        (y)   Borrowers'
procedure for reporting unbilled Accounts to Agent shall be satisfactory to Agent in its sole discretion; 



        (z)   Agent
shall have received and reviewed all material contracts of Borrowers, the results of which review shall be satisfactory to Agent in its sole discretion; 


        (aa) Borrowers
and each of their Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers or their Subsidiaries of the Loan Documents or with the consummation of the transactions contemplated thereby; and 



        (bb) all
other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be
in form and substance satisfactory to Agent. 




        3.2 Conditions Subsequent to the Initial Extension of Credit.    The
obligation
of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of the
conditions subsequent set forth below: 



        (a)   within
30 days of the Closing Date, deliver to Agent Collateral Access Agreements with respect to all locations where any Borrower maintains its chief executive
office and Equipment maintaining Books and Records or keeps its Books and Records for its business or operations and from all of Borrowers' information technology lessors,  provided that, in the event
any such Collateral Access Agreement is not delivered by such date, Agent shall establish an appropriate reserve with
respect to the applicable rent for the premises to be subject to such undelivered Collateral Access Agreement in accordance with Section 2.1(b)
until such time as it is delivered to Agent and such failure to perform under this Section 3.2(a) shall not constitute an Event of Default; and 


        (b)   within
30 days of the Closing Date, deliver to Agent certified copies of the policies of insurance, together with the endorsements thereto, as are required by  Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel (the failure by Borrowers to so deliver or cause to
be delivered constituting an Event of Default). 



43





 





        3.3 Conditions Precedent to all Extensions of Credit.    The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder at any time (or to extend any other credit hereunder) shall be subject to the following conditions precedent: 



        (a)   the
representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of
such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); 


        (b)   no
Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; 


        (c)   no
injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been
issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any of their Affiliates; and 


        (d)   no
Material Adverse Change shall have occurred. 




        3.4 Term.    This Agreement shall continue in full force and effect for a term
ending on January 26, 2007 (the "Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default. 


        3.5 Effect of Termination.    On the date of termination of this Agreement,
all
Obligations (including contingent reimbursement obligations of Borrowers with respect to any outstanding Letters of Credit and including all Bank Products Obligations) immediately shall become due and
payable without notice or demand (including (a) either (i) providing cash collateral to be held by Agent for the benefit of the Lenders in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be
held by Agent for the benefit of the Bank Product Providers with respect to the then extant Bank Products Obligations). No termination of this Agreement, however, shall relieve or discharge Borrowers
or their Subsidiaries of their duties, Obligations, or covenants hereunder and the Agent's Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender
Group's obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group's
obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any UCC termination statements, lien
releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as
are reasonably necessary to release, as of record, the Agent's Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations. 


        3.6 Early Termination by Borrowers.    Borrowers have the option, at any time
upon 90 days prior written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of the Lenders in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for
the benefit of the Bank Product Providers with respect to the then extant Bank Products Obligations), in full, together with the Applicable Prepayment Premium (to be allocated based upon letter
agreements between Agent and individual Lenders). If Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then the 


44





 



Commitments
shall terminate and Borrowers shall be obligated to repay the Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of the
Lenders in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the
then extant Bank Products Obligations), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior to the Maturity Date, for any other reason, including (a) termination upon the election of the Required Lenders
to terminate after the occurrence and during the continuation of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or
(d) restructure, reorganization or compromise of the Obligations by the confirmation of a plan of reorganization, or any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender Group, Borrowers shall pay the Applicable Prepayment
Premium to Agent (to be allocated among Agent and the Lenders based upon letter agreements between Agent and individual Lenders), measured as of the date of such termination. 


4.     CREATION OF SECURITY INTEREST.  


        4.1 Grant of Security Interest.    Each Borrower hereby grants to Agent, for
the
benefit of the Lender Group and the Bank Product Providers, a continuing security interest in all of its right, title, and interest in all currently existing and hereafter acquired or arising Borrower
Collateral in order to secure prompt repayment of any and all of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by
Borrowers of each of their covenants and duties under the Loan Documents. The Agent's Liens in and to the Borrower Collateral shall attach to all Borrower Collateral without further act on the part of
Agent or Borrowers. Anything contained in this Agreement or any other Loan Document to the contrary notwithstanding, except for Permitted Dispositions, Borrowers and their Subsidiaries have no
authority, express or implied, to dispose of any item or portion of the Collateral. 



        4.2 Negotiable Collateral.    In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if and to the extent that Agent determines that perfection or priority of Agent's security interest is dependent on or
enhanced by possession, the applicable Borrower, immediately upon the request of Agent, shall endorse and deliver physical possession of such Negotiable Collateral to Agent. 


        4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral.    At any time after the occurrence and during the continuation of an Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Borrowers' Accounts, chattel paper, or General Intangibles have been assigned to Agent or that Agent has a security interest therein, or (b) collect the Borrowers' Accounts,
chattel paper, or General Intangibles directly and charge the collection costs and expenses to the Loan Account. Each Borrower agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any of its or its Subsidiaries' Collections that it receives and immediately will deliver such Collections to Agent or a Cash Management Bank in their original form as received by
such Borrower or its Subsidiaries. 


45





 



        4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional Documentation
Required.    



        (a)   Borrowers
authorize Agent to file any financing statement necessary or desirable to effectuate the transactions contemplated by the Loan Documents, and any continuation
statement or amendment with respect thereto, in any appropriate filing office without the signature of Borrowers where permitted by
applicable law. Borrowers hereby ratify the filing of any financing statement filed without the signature of Borrowers prior to the date hereof. 


        (b)   If
Borrowers or their Subsidiaries acquire any commercial tort claims after the date hereof, Borrowers shall promptly (but in any event within 3 Business Days after such
acquisition) deliver to Agent a written description of such commercial tort claim and shall deliver a written agreement, in form and substance satisfactory to Agent, pursuant to which the applicable
Borrower or its Subsidiary shall pledge and collaterally assign all of its right, title and interest in and to such commercial tort claim to Agent, as security for the Obligations (a
"Commercial Tort Claim Assignment"). 


        (c)   At
any time upon the request of Agent, Borrowers shall execute or deliver to Agent and shall cause their Subsidiaries to execute or deliver to Agent any and all
financing statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments, Commercial Tort Claim Assignments, endorsements of
certificates of title, and all other documents (collectively, the "Additional Documents") that Agent may request in its Permitted Discretion, in form
and substance satisfactory to Agent, to create, perfect, and continue perfected or to better perfect the Agent's Liens in the assets of Borrowers and their Subsidiaries (whether now owned or hereafter
arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, each Borrower authorizes Agent to execute any such Additional Documents
in the applicable Borrower's name and authorizes Agent to file such executed Additional Documents in any appropriate filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (i) provide Agent with a report of all new material patentable, copyrightable, or trademarkable materials acquired or generated by any Borrower or its Subsidiaries during the
prior period, (ii) cause all material patents, copyrights, and trademarks acquired or generated by Borrowers or their Subsidiaries that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to be registered with such appropriate filing office in a manner sufficient to impart constructive notice of a Borrower's
or a Subsidiary of a Borrower's ownership thereof, and (iii) cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests created thereunder. 




        4.5 Power of Attorney.    Each Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated by Agent) as such Borrower's true and lawful attorney, with power to (a) if such Borrower refuses to, or fails
timely to execute and deliver any of the documents described in Section 4.4, sign the name of such Borrower on any of the documents described in  Section 4.4 for the purposes provided for in Section 4.4, (b) at any time that an Event of Default has occurred and is continuing,
sign such Borrower's name on any invoice or bill of lading relating to the Borrower Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) send requests for verification
of Borrowers' or their Subsidiaries' Accounts, (d) endorse such Borrower's name on any of its payment items (including all of its Collections) that may come into the Lender Group's possession,
(e) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under such Borrower's policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that an 


46





 

Event
of Default has occurred and is continuing, settle and adjust disputes and claims respecting Borrowers' or their Subsidiaries' Accounts, chattel paper, or General Intangibles directly with
Account Debtors, for amounts and upon terms that Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines to be necessary.
The appointment of Agent as each Borrower's attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit hereunder are terminated. 


        4.6 Right to Inspect.    Agent and each Lender (through any of their
respective
officers, employees, or agents) shall have the right, from time to time hereafter to inspect the Books and make copies or abstracts thereof and to check, test, and appraise the Collateral, or any
portion thereof, in order to verify Borrowers' and their Subsidiaries' financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral. 


        4.7 Control Agreements.    Borrowers agree that they will not, and will not
permit their Subsidiaries to, transfer assets out of any of their Deposit Accounts (other than any Deposit Account that is a payroll account for any Borrower or the account from which any payroll or
other similar taxes are payable by any Borrower to the extent of the payment of payrolls and such payroll and taxes) or Securities Accounts; provided,  however, that so long as no Event of Default has occurred and is continuing or would result therefrom, Borrowers and their Subsidiaries may use such
assets (and the proceeds thereof) to the extent not prohibited by this Agreement or the other Loan Documents and, if the transfer is to another bank or securities intermediary, so long as the
applicable Borrower or Subsidiary, Agent, and the substitute bank or securities intermediary have entered into a Control Agreement. Borrowers agree that they will and will cause their Subsidiaries to
take any or all reasonable steps that Agent requests in order for Agent to obtain control in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of
the Code with respect to any of its or their Securities Accounts, Deposit Accounts, electronic chattel paper, Investment Property, and letter-of-credit rights. No arrangement
contemplated hereby or by any Control Agreement in respect of any Securities Accounts or other Investment Property shall be modified by Borrowers without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent may notify any bank or securities intermediary to liquidate the applicable Deposit Account (other than any Deposit Account
that is a payroll account for any Borrower or the account from which any payroll or other similar taxes are payable by any
Borrower to the extent of the payment of payrolls and such payroll and taxes) or Securities Account or any related Investment Property maintained or held thereby and remit the proceeds thereof to the
Agent's Account. 


5.     REPRESENTATIONS AND WARRANTIES.  


        In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall
be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date
of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 


        5.1 No Encumbrances.    Each Borrower and its Subsidiaries has good and
indefeasible title to their personal property assets and good and marketable title to their Real Property, in each case, free and clear of Liens except for Permitted Liens. 


        5.2 Eligible Accounts.    The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the rendition of services to such Account Debtors in the ordinary course of 


47





 



Borrowers'
business, owed to Borrowers without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation. As to each Account that is identified by Administrative
Borrower as an Eligible Account in a borrowing base report submitted to Agent, such Account is not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition
of Eligible Accounts. 


        5.3 RESERVED    



        5.4 Equipment.    All of the Equipment of Borrowers and their Subsidiaries is
used or held for use in their business and is fit for such purposes. 


        5.5 Location of Inventory and Equipment.    The Inventory and Equipment of
Borrowers and their Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or
in-transit between, the locations identified on Schedule 5.5 (as such Schedule may be updated pursuant to  Section 6.9). 



        5.6 RESERVED    


        5.7 State of Incorporation; Location of Chief Executive Office; FEIN; Organizational ID Number; Commercial Tort
Claims.    



        (a)   The
jurisdiction of organization of each Borrower and each of its Subsidiaries is set forth on Schedule 5.7(a). 



        (b)   The
chief executive office of each Borrower and each of its Subsidiaries is located at the address indicated on  Schedule 5.7(b) (as such Schedule may be updated pursuant to Section 6.9). 


        (c)   Each
Borrower's and each of its Subsidiaries' FEIN and organizational identification number, if any, are identified on  Schedule 5.7(c). 



        (d)   As
of the Closing Date, Borrowers and their Subsidiaries do not hold any commercial tort claims, except as set forth on  Schedule 5.7(d). 




        5.8 Due Organization and Qualification; Subsidiaries    



        (a)   Each
Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state where
the failure to be so qualified reasonably could be expected to have a Material Adverse Change. 



        (b)   Set
forth on Schedule 5.8(b), is a complete and accurate description of the authorized capital Stock of each
Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. There are no subscriptions, options, warrants, or calls
relating to any shares of each Borrower's capital Stock, including any right of conversion or exchange under any outstanding security or other instrument except as set forth in Schedule 5.8(b).
No Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any
of its capital Stock. 


        (c)   Set
forth on Schedule 5.8(c), is a complete and accurate list of each Borrower's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their organization; (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries; and (iii) the
number and the percentage of the outstanding shares of each such class owned directly or indirectly by the applicable Borrower. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable. 


        (d)   There
are no subscriptions, options, warrants, or calls relating to any shares of any Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any 



48





 




outstanding
security or other instrument. No Borrower or any of its respective Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of any Borrower's Subsidiaries' capital Stock or any security convertible into or exchangeable for any such capital Stock. 




        5.9 Due Authorization; No Conflict.    



        (a)   As
to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of such Borrower. 


        (b)   As
to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material
contractual obligation of any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of any Borrower's interestholders or any approval or consent of any Person under any material contractual obligation of any Borrower, other than
consents or approvals that have been obtained and that are still in force and effect. 



        (c)   Other
than the filing of financing statements, the execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to which such
Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals
that have been obtained and that are still in force and effect. 


        (d)   As
to each Borrower, this Agreement and the other Loan Documents to which such Borrower is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by such Borrower, will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. 


        (e)   The
Agent's Liens are validly created, perfected, and first priority Liens, subject only to Permitted Liens 


        (f)    The
execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of
such Guarantor. 


        (g)   The
execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on
such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, or (iv) require
any approval of such Guarantor's interestholders or any approval or consent of any Person under any material contractual obligation of such Guarantor, other than consents or approvals that have been
obtained and that are still in force and effect. 



49





 




        (h)   Other
than the filing of financing statements the execution, delivery, and performance by each Guarantor of the Loan Documents to which such Guarantor is a party do not
and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and
that are still in force and effect. 


        (i)    The
Loan Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor, will be
the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. 




        5.10 Litigation.    Other than those matters disclosed on  Schedule 5.10, there are no actions, suits, or proceedings pending or, to the best knowledge of Borrowers, threatened against Borrowers, or any
of their Subsidiaries, as applicable, except for (a) matters that are fully covered by insurance (subject to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable, reasonably could not be expected to result in a Material Adverse Change. 


        5.11 No Material Adverse Change.    All financial statements relating to
Borrowers and their Subsidiaries or Guarantors that have been delivered by Borrowers to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrowers' and their Subsidiaries' (or Guarantors', as
applicable) financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Borrowers and their
Subsidiaries (or Guarantors, as applicable) since the date of the latest financial statements submitted to the Lender Group on or before the Closing Date. 


        5.12 Fraudulent Transfer.    



        (a)   Each
Borrower and each Subsidiary of a Borrower is Solvent. 


        (b)   No
transfer of property is being made by any Borrower or any Subsidiary of a Borrower and no obligation is being incurred by any Borrower or any Subsidiary of a Borrower
in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrowers or their
Subsidiaries. 




        5.13 Employee Benefits.    None of Borrowers, any of their Subsidiaries, or
any
of their ERISA Affiliates maintains or contributes to any Benefit Plan. 


        5.14 Environmental Condition.    Except as set forth on  Schedule 5.14, (a) to Borrowers' knowledge, none of Borrowers' or their Subsidiaries' properties or assets has ever been used by
Borrowers, their Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such production,
storage, handling, treatment, release or transport was in violation, in any material respect, of applicable Environmental Law, (b) to Borrowers' knowledge, none of Borrowers' nor their
Subsidiaries' properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) none of
Borrowers nor any of their Subsidiaries have received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Borrowers or
their Subsidiaries, and (d) none of Borrowers nor any of their Subsidiaries have received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal
or state governmental agency concerning any action or omission 


50





 



by
any Borrower or any Subsidiary of a Borrower resulting in the releasing or disposing of Hazardous Materials into the environment. 


        5.15 Brokerage Fees.    Borrowers and their Subsidiaries have not utilized the
services of any broker or finder in connection with obtaining financing from the Lender Group under this Agreement and no brokerage commission or finders fee is payable by Borrowers or their
Subsidiaries in connection herewith. 


        5.16 Intellectual Property.    Each Borrower and each Subsidiary of a Borrower
owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted. Attached hereto as  Schedule 5.16 (as updated from time to time) is a true, correct, and complete listing of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which each Borrower or one of its Subsidiaries is the owner or is an exclusive licensee. 



        5.17 Leases.    Borrowers and their Subsidiaries enjoy peaceful and
undisturbed
possession under all leases material to their business and to which they are parties or under which they are operating. All of such leases are valid and subsisting and no material default by Borrowers
or their Subsidiaries exists under any of them. 


        5.18 DDAs.    Set forth on  Schedule 5.18 are all of Borrowers' and their Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (i) the name and address of such Person, and (ii) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person. 


        5.19 Complete Disclosure.    All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes
of or in connection with this Agreement, the other Loan Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrowers or their Subsidiaries in writing to the Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which
such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections shall
represent Borrowers' good faith best estimate of their and their Subsidiaries' future performance for the periods covered thereby. 


        5.20 Indebtedness.    Set forth on  Schedule 5.20 is a true and complete list of all Indebtedness of each Borrower and each Subsidiary of a Borrower outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately reflects the aggregate principal amount of such Indebtedness and the principal terms thereof. 


51









   6.     AFFIRMATIVE COVENANTS.  


        Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers shall and shall cause each
of their respective Subsidiaries to do all of the following: 



        6.1 Accounting System.    Maintain a system of accounting that enables
Borrowers
to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. 


        6.2 Collateral Reporting.    Provide Agent (and if so requested by Agent, with
copies for each Lender) with the following documents at the following times in form satisfactory to Agent: 



	

Weekly	
 	

(a) a calculation of the Borrowing Base as of such date, and
	

 	
 	

(b) notice of all claims, offsets, or disputes asserted by Account Debtors with respect to Borrowers' and their Subsidiaries' Accounts.
	

 	
 	

(c) Accounts reports (including unbilled Accounts) including a sales journal, collection journal, and credit register since the last such schedule, a report regarding credit memoranda that have been issued since the last such report, and
	

 	
 	

(d) a reconciliation of unbilled Accounts to billed Accounts
	

Monthly (not later than the 10th day of each month)	
 	

(e) a detailed calculation of the Borrowing Base (including detail regarding those Accounts of Borrowers that are not Eligible Accounts),
	

 	
 	

(f) a detailed aging, by total, of the Accounts of Borrowers, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Agent,
	

 	
 	

(g) a detailed aging, by vendor, of Borrowers' and their Subsidiaries' accounts payable and any book overdraft,
	

 	
 	

(h) evidence of payment of all applicable payroll and property taxes then due
	

 	
 	

(i) a detailed report regarding Borrowers' and their Subsidiaries' cash and Cash Equivalents including an indication of which amounts constitute Qualified Cash, and
	

 	
 	

(j) a calculation of Dilution for the month most recently ended.
	

Quarterly	
 	

(k) detailed list of each Borrower's and each Subsidiary of a Borrower's customers and the Contracts with such customers, and
	

 	
 	

(l) a report regarding each Borrower's and each Subsidiary of a Borrower's accrued, but unpaid, ad valorem taxes.
	 	 	 



52





 

	

Upon request by Agent	
 	

(m) copies of invoices in connection with Borrowers' and their Subsidiaries' Accounts, credit memos, remittance advices, deposit slips, shipping and delivery documents in connection with Borrowers' and their Subsidiaries' Accounts and, for Inventory
and Equipment acquired by Borrowers or their Subsidiaries, purchase orders and invoices, and
	

 	
 	

(n) such other reports as to the Collateral or the financial condition of Borrowers and their Subsidiaries, as Agent may request.





        In
addition, each Borrower agrees to cooperate fully with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each
of the items set forth above. 


        6.3 Financial Statements, Reports, Certificates.    Deliver to Agent, with
copies to each Lender: 



        (a)   as
soon as available, but in any event within 30 days (45 days in the case of a month that is the end of one of Parent's fiscal quarters) after the end of each month
during each of Parent's fiscal years, 



          (i)  a
company prepared consolidated balance sheet, income statement, and statement of cash flow covering Parent's and its Subsidiaries' operations during such period, 


         (ii)  a
certificate signed by the chief financial officer of Parent to the effect that: 



        A.    the
financial statements delivered hereunder have been prepared in accordance with GAAP (except for the lack of footnotes and being subject to year-end audit adjustments)
and fairly present in all material respects the financial condition of Parent and its Subsidiaries, 


        B.    the
representations and warranties of Borrowers contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date), and 



        C.    there
does not exist any condition or event that constitutes a Default or Event of Default (or, to the extent of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers have taken, are taking, or propose to take with respect thereto), and 




        (iii)  for
each month, quarter, or year that is a month, quarter, or year as to which a financial covenant in Section 7.18 is
to be tested, a Compliance Certificate demonstrating, in reasonable detail, compliance at the end of such period with the applicable financial covenants contained in Section
7.18, 




        (b)   as
soon as available, but in any event within 90 days after the end of each of Parent's fiscal years, 



          (i)  financial
statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent and
certified, without any qualifications, by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management), and 



         (ii)  a
certificate of such accountants addressed to Agent and the Lenders stating that such accountants do not have knowledge of the existence of any Default or Event of
Default under Section 7.18, 




53





 






        (c)   as
soon as available, but in any event within 30 days prior to the start of each of Parent's fiscal years, copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Parent as being such officer's good faith best estimate of the financial performance of Parent and its Subsidiaries during the period covered thereby, 


        (d)   if
and when filed by any Borrower, 



          (i)  quarterly
reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K, 


         (ii)  any
other filings made by any Borrower with the SEC, 


        (iii)  copies
of Borrowers' federal income tax returns, and any amendments thereto, filed with the Internal Revenue Service, and 


        (iv)  any
other information that is provided by Parent to its shareholders generally, 




        (e)   if
and when filed by any Borrower or any Subsidiary of a Borrower and as requested by Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdiction in which (i) any Borrower or any Subsidiary of a Borrower conducts business or is required to pay any such excise tax, (ii) where any Borrower's or any Subsidiary of a Borrower's failure
to pay any such applicable excise tax would result in a Lien on the properties or assets of such Borrower or such Subsidiary, or (iii) where any Borrower's or any Subsidiary of a Borrower's failure to
pay any such applicable excise tax reasonably could be expected to result in a Material Adverse Change, 


        (f)    as
soon as a Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, notice thereof and a statement of the curative action
that Borrowers propose to take with respect thereto, 


        (g)   promptly
after the commencement thereof, but in any event within 5 days after the service of process with respect thereto on any Borrower or any Subsidiary of a
Borrower, notice of all actions, suits, or proceedings brought by or against any Borrower or any Subsidiary of a Borrower before any Governmental Authority which, if determined adversely to such
Borrower or such Subsidiary, reasonably could be expected to result in a Material Adverse Change, and 


        (h)   upon
the request of Agent, any other report reasonably requested relating to the financial condition of Borrowers or their Subsidiaries. 


        In
addition to the financial statements referred to above, Borrowers agree to deliver financial statements prepared on both a consolidated and consolidating basis and agree that no
Subsidiary of
Parent will have a fiscal year different from that of Parent. Borrowers agree to cooperate with Agent to allow Agent to consult with their independent certified public accountants if Agent reasonably
requests the right to do so and that, in such connection, their independent certified public accountants are authorized to communicate with Agent and to release to Agent whatever financial information
concerning Borrowers or their Subsidiaries that Agent reasonably may request. 




        6.4 Guarantor Reports.    Cause each Guarantor to deliver its annual financial
statements at the time when Parent provides its audited financial statements to Agent, but only to the extent such Guarantor's financial statements are not consolidated with Parent's financial
statements, and copies of all federal income tax returns as soon as the same are available and in any event no later than 30 days after the same are required to be filed by law. 


        6.5 Returns.    Cause returns and allowances as between Borrowers and their
Subsidiaries and their Account Debtors, to be on the same basis and in accordance with the usual customary practices of 


54





 



Borrowers
and their Subsidiaries, as they exist at the time of the execution and delivery of this Agreement. 



        6.6 Maintenance of Properties.    Maintain and preserve all of their
properties
which are necessary or useful in the proper conduct to their business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to
which it is a party as lessee, so as to prevent any loss or forfeiture thereof or thereunder. 


        6.7 Taxes.    Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers, their Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration
of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrowers will and will cause their Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating that the applicable Borrower or Subsidiary of a Borrower has made such payments or deposits. 



        6.8 Insurance    



        (a)   At
Borrowers' expense, maintain insurance respecting their and their Subsidiaries' assets wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall
maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance
shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrowers shall deliver copies of all such policies to Agent with a satisfactory lender's loss
payable endorsement naming Agent as sole loss payee or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30
days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever. 


        (b)   Administrative
Borrower shall give Agent prompt notice of any loss covered by such insurance. Agent shall have the exclusive right to adjust any losses claimed under any
such insurance policies in excess of $50,000 (or in any amount after the occurrence and during the continuation of an Event of Default), without any liability to Borrowers whatsoever in respect of
such adjustments. Any monies received as payment for any loss under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Agent to be applied at the option of the Required Lenders either to the prepayment of the Obligations or shall be disbursed to
Administrative Borrower under staged payment terms reasonably satisfactory to the Required Lenders for application to the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items or property destroyed prior to such damage or destruction. 



        (c)   Borrowers
shall not, and shall not suffer or permit their Subsidiaries to, take out separate insurance concurrent in form or contributing in the event of loss with that
required to be maintained under this Section 6.8, unless Agent is included thereon as named insured with the loss payable to Agent under a lender's loss
payable endorsement or its equivalent. Administrative Borrower immediately shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as
to the policies evidencing the same, and copies of such policies promptly shall be provided to Agent. 



55





 





        6.9 Location of Equipment.    Keep Borrowers' and their Subsidiaries'
Equipment
only at the locations identified on Schedule 5.5 and their chief executive offices only at the locations identified on Schedule 5.7(b);  provided,
however, that Administrative Borrower may amend Schedule
5.5 and Schedule 5.7 so long as such amendment occurs by written notice to Agent not less than 30 days prior to the date on
which such Inventory or Equipment is moved to such new location or such chief executive office is relocated, so long as such new location is within the continental United States, and so long as, at
the time of such written notification, the applicable Borrower provides Agent a Collateral Access Agreement with respect thereto. 


        6.10 Compliance with Laws.    Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including the Fair Labor Standards Act and the Americans With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change. 


        6.11 Leases.    Pay when due all rents and other amounts payable under any
leases to which any Borrower or any Subsidiary of a Borrower is a party or by which any Borrower's or any Subsidiary of a Borrower's properties and assets are bound, unless such payments are the
subject of a Permitted Protest. 


        6.12 Existence.    Except as permitted under Section 7.3, at all times
preserve
and keep in full force and effect each Borrower's and each Subsidiary of a Borrower's valid existence and good standing and any rights and franchises material to their businesses. 


        6.13 Environmental.    



        (a)   Keep
any property either owned or operated by any Borrower or any Subsidiary of a Borrower free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such
compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material of any reportable quantity from or onto property owned or operated by any Borrower or any
Subsidiary of a Borrower and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within
5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of any
Borrower or any Subsidiary of a Borrower, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Borrower or any Subsidiary of a Borrower, and
(iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change. 




        6.14 Disclosure Updates.    Promptly and in no event later than 5 Business
Days
after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to
the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the affect of amending
or modifying this Agreement or any of the Schedules hereto. 


        6.15 Formation of Subsidiaries.    At the time that any Borrower or any
Subsidiary of a Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Borrower or such existing Subsidiary shall (a) if such new
Subsidiary is a Material 


56





 



Subsidiary,
cause such new Subsidiary to provide to Agent a joinder to this Agreement or executed originals of the Guaranty and the Guarantor Security Agreement or joinders thereto, as appropriate,
together with such other security documents, as well as appropriate UCC-1 financing statements, all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or UCC-1
financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Agent, and (c) provide to Agent all other
documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this
Section 6.15 shall be a Loan Document. 


        6.16 Conversion of Excluded Subsidiaries.    At the time that any Excluded
Subsidiary becomes a Material Subsidiary, Parent shall (a) cause such Subsidiary to provide to Agent a joinder to this Agreement or executed originals of the Guaranty and the Guarantor Security
Agreement, as appropriate, together with such other security documents (including Mortgages with respect to any Real Property of such Subsidiary), as well as appropriate UCC-1 financing statements
(and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such Subsidiary), and (b) provide to Agent all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is
appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property
subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 6.16 shall be a Loan Document. 


        6.17 Surviving Preferred Shares.    Cause the Surviving Series F Shares to be
either converted to common Stock or cancelled as soon as practicable after the Closing Date but in any event not later than the later to occur of (a) March 31, 2004 and (b) the date occurring thirty
(30) days after the SEC approves Parent's registration statement or other filings in respect of such conversion or cancellation. 


7.     NEGATIVE COVENANTS.  


        Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers will not and will not
permit any of their respective Material Subsidiaries to do any of the following: 



        7.1 Indebtedness.    Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness without the prior consent of the Required Lenders, except: 



        (a)   Indebtedness
evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit; 



        (b)   Indebtedness
set forth on Schedule 5.20; 


        (c)   Permitted
Purchase Money Indebtedness; 


        (d)   refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do not, in Agent's judgment, materially
impair the prospects of repayment of the Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii) such refinancings, renewals, or extensions do not 



57





 




result
in an increase in the then extant principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended or add one or more Borrowers as liable with respect
thereto if such additional Borrowers were not liable with respect to the original Indebtedness, (iii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to the applicable Borrower,
(iv) if the Indebtedness that is refinanced, renewed, or extended were subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must be include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness,
and (v) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect
to the Indebtedness that was refinanced, renewed, or extended; 


        (e)   endorsement
of instruments or other payment items for deposit; 


        (f)    Indebtedness
composing Permitted Investments; and 


        (g)   Permitted
Investor Indebtedness, provided that, during the term of this Agreement, all interest on Permitted Investor Indebtedness shall be capitalized. 




        7.2 Liens.    Create, incur, assume, or suffer to exist, directly or
indirectly,
any Lien on or with respect to any of its assets, of any kind (expressly including, without limitation, Real Property), whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under  Section 7.1(d) and so long as
the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness). 


        7.3 Restrictions on Fundamental Changes.    



        (a)   Enter
into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock; provided, that (i)
any Borrower may be merged with or into or consolidated into a wholly-owned direct or indirect Subsidiary of Parent if the surviving entity is a Borrower; (ii) any Guarantor may be merged with or into
or consolidated into a wholly-owned direct or indirect Subsidiary of Parent that is not a Borrower if the surviving entity is a Guarantor; (iii) any Material Subsidiary may be merged with or into or
consolidated into an Excluded Subsidiary if the surviving entity is a Material Subsidiary; and (iv) any Subsidiary may be merged into Parent. 



        (b)   Liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution). 


        (c)   Other
than in Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets. 




        7.4 Disposal of Assets.    Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of any Borrower or any Subsidiary of a Borrower. 



        7.5 Change Name.    Change any Borrower's or any Subsidiary of a Borrower's
name, FEIN, organizational identification number, state of organization, or organizational identity; provided,  however, that a Borrower or a Subsidiary of
a Borrower may change its name upon at least 30 days prior written notice by Administrative Borrower to
Agent of such change and so long as, at the time of such written notification, such Borrower or such Subsidiary provides any financing statements necessary to perfect and continue perfected Agent's
Liens. 


        7.6 Nature of Business.    Make any change in the principal nature of their
business. 


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        7.7 Prepayments and Amendments.    Except in connection with a refinancing
permitted by Section 7.1(d), 



        (a)   prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of any Borrower or any Subsidiary of a Borrower, other than the Obligations in accordance with
this Agreement, provided, however, that, upon the release by The Bank of Nova Scotia of any cash
collateral held pursuant to the Scotiabank Collateral Agreement, Parent may prepay Permitted Investor Indebtedness from such released cash collateral so long as (i) no Default or Event of Default has
occurred and is continuing and (ii) such released cash collateral is delivered to Agent with appropriate directions for disbursement to the Investors; or 



        (b)   directly
or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Section 7.1(b), (c), or  (g). 




        7.8 Change of Control.    Cause, permit, or suffer, directly or indirectly,
any
Change of Control. 


        7.9 Consignments.    Consign any of their Inventory or sell any of their
Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale. 


        7.10 Distributions.    Other than distributions or declaration and payment of
dividends by a Borrower to another Borrower or by a Subsidiary of a Borrower to a Borrower, make any distribution or declare or pay any dividends (in cash or other property, other than common Stock)
on, or purchase, acquire, redeem, or retire any of any Borrower's Stock, of any class, whether now or hereafter outstanding. 


        7.11 Accounting Methods.    Modify or change their fiscal year or their method
of accounting (other than as may be required to conform to GAAP) or as required by applicable law) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the preparation or storage of Borrowers' or their Subsidiaries' accounting records without said accounting firm or service
bureau agreeing to provide Agent information regarding Borrowers' and their Subsidiaries' financial condition. 



        7.12 Investments.    Except for Permitted Investments, directly or indirectly,
make or acquire any Investment, or incur any liabilities (including contingent obligations) for or in connection with any Investment; provided,  however,
that Administrative Borrower and its Subsidiaries shall not have Permitted Investments (other than in the Cash Management Accounts) in Deposit
Accounts or Securities Accounts in an aggregate amount in excess of $100,000 outstanding at any one time unless Administrative Borrower or its Subsidiary, as applicable, and the applicable securities
intermediary or bank have entered into Control Agreements or similar arrangements governing such Permitted Investments in order to perfect (and further establish) the Agent's Liens in such Permitted
Investments. Subject to the foregoing proviso, Borrowers shall not, and shall not permit their Subsidiaries to, establish or maintain any Deposit Account or Securities Account unless Agent shall have
received a Control Agreement in respect of such Deposit Account or Securities Account. 


        7.13 Transactions with Affiliates.    Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except for transactions that are in the ordinary course of Borrowers' business, upon fair and reasonable terms, that are fully
disclosed to Agent, and that are no less favorable to Borrowers than would be obtained in an arm's length transaction with a non-Affiliate. 


        7.14 Suspension.    Suspend or go out of a substantial portion of their
business. 


        7.15 Compensation.    Increase the annual fee or per-meeting fees paid to the
members of its Board of Directors during any year by more than 15% over the prior year; pay or accrue total cash 


59





 



compensation,
during any year, to its officers and senior management employees in an aggregate amount in excess of 115% of that paid or accrued in the prior year. 


        7.16 Use of Proceeds.    Use the proceeds of the Advances for any purpose
other
than (a) on the Closing Date, (i) to repay Indebtedness in respect of the Investor Notes in an amount not in excess of $8,000,000, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes. 


        7.17 Inventory and Equipment with Bailees.    Store the Inventory or Equipment
of Borrowers or their Subsidiaries at any time now or hereafter with a bailee, warehouseman, or similar party without Agent's prior written consent. 



        7.18 Financial Covenants.    



        (a)   Fail
to maintain or achieve: 



          (i)  Minimum of EBITDA at least the required amount set forth in the following table for the applicable period ending in the
month set forth opposite thereto: 




	Applicable Amount
 
	 	Applicable Period (Month-end)

	$	165,000	 	January 2004
	$	421,000	 	February 2004
	$	741,000	 	March 2004
	$	1,098,000	 	April 2004
	$	1,570,000	 	May 2004
	$	2,158,000	 	June 2004
	$	2,806,000	 	July 2004
	$	3,542,000	 	August 2004
	$	4,336,000	 	September 2004
	$	5,139,000	 	October 2004
	$	5,746,000	 	November 2004
	$	6,341,000	 	December 2004






        EBITDA
shall be calculated on a cumulative twelve-month basis building through the first twelve calendar months ending after the Closing Date (commencing with January of 2004) and
thereafter on a rolling twelve-month basis. EBITDA shall be measured on a month-end basis. Agent shall establish
required minimum EBITDA amounts for periods ending after December 31, 2004 on the basis of projections and business plans for such periods prepared and delivered by Borrowers and accepted by Agent in
its Permitted Discretion, but in any event in amounts not less than the amount required for the period ending December 31, 2004. 



        (b)   Make:




          (i)  Funded Capital Expenditures. Except as permitted under Section
7.18(b)(ii), Capital Expenditures in any period in excess of the amount set forth in the following table for the applicable period: 




	Fiscal Year 2004

	$	1,000,000







         (ii)  Financed Capital Expenditures. Except as permitted under Section
7.18(b)(i), Capital Expenditures in any period in excess of the amount set forth in the following table for the applicable period,  provided that any such Capital Expenditures
permitted hereunder in excess 




60





 


of
the amounts set forth in Section 7.18(b)(i) shall be financed by Borrowers externally and shall not be made with the proceeds of Advances: 




	Fiscal Year 2004
 
	 	Fiscal Year 2005

	$	7,000,000	 	$	7,000,000






        Cumulative
Capital Expenditures for the applicable period shall be tested and reported monthly on the Compliance Certificate. Agent shall establish required maximum Funded Capital
Expenditure amounts for periods ending after December 31, 2004 and required maximum Financed Capital Expenditure amounts for periods ending after December 31, 2005 on the basis of projections
and business plans for such periods prepared and delivered by Borrowers and accepted by Agent in its Permitted Discretion. 


61









           7.19 Billing Practices.    Modify or change
their billing practices. 


        7.20 Change of Officers.    Permit any change in the holders of the offices of
President and Chief Executive Officer and Chief Financial Officer unless the individual named to any such office is satisfactory to Agent in its Permitted Discretion. 


        7.21 Investor Security Documents.    Execute or otherwise enter into or
authorize any Investor Security Document or the filing or recording thereof unless the terms and conditions of such Investor Security Document, expressly including, without limitation, the terms set
forth therein subordinating the Lien of the Investors to the Agent's Liens, have been consented to by Agent in its sole discretion. Borrowers shall provide Agent with drafts of such Investor Security
Documents for purposes of review and shall deliver copies of such Investor Security Documents as are consented to by Agent, certified as true and correct and in full force and effect by an appropriate
officer of Parent, promptly upon execution, filing, or recording, as appropriate. 


        7.22 Excluded Subsidiaries.    Except as permitted under Section 7.13,
transfer
any capital or assets to an Excluded Subsidiary or incur any Indebtedness to an Excluded Subsidiary. 


        7.23 Minimum Availability.    Fail to maintain at all times Availability of
not
less than $1,000,000 ("Minimum Availability"). 


8.     EVENTS OF DEFAULT.  


        Any one or more of the following events shall constitute an event of default (each, an "Event of Default") under
this Agreement: 


        8.1    If Borrowers fail to pay when due and payable or when declared due and payable, all or any
portion of the Obligations (whether of principal, interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations); 


        8.2    If (a) Borrowers fail to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in Sections 6.1, 6.2, 6.3, 6.4,  6.5,
6.6, 6.7, or  6.11 hereof and such failure continues for a period of 5 days after the date on which such
failure first occurs, or (b) Borrowers fail to perform, keep,
or observe any other term, provision, condition, covenant, or agreement contained in this Agreement or in any of the other Loan Documents; 


        8.3    If any material portion of any Borrower's or any Subsidiary of a Borrower's assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the possession of any third Person; 


        8.4    If an Insolvency Proceeding is commenced by any Borrower or any Subsidiary of a Borrower; 



        8.5    If an Insolvency Proceeding is commenced against any Borrower or any Subsidiary of a Borrower,
and any of the following events occur: (a) the applicable Borrower or Subsidiary consents to the institution of the Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the pendency of the period during which the petition may be and has not been converted, each member of the Lender Group shall be
relieved of its obligations to extend credit hereunder, (c) the petition commencing the Insolvency Proceeding is not dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, each member of the Lender Group shall be relieved of its obligation to extend credit hereunder, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the 


62





 



business
of, any Borrower or any Subsidiary of a Borrower, or (e) an order for relief shall have been entered therein; 


        8.6    If any Borrower or any Subsidiary of a Borrower is enjoined, restrained, or in any way prevented
by court order from continuing to conduct all or any material part of its business affairs; 


        8.7    If a notice of Lien, levy, or assessment is filed of record with respect to any Borrower's or any
Subsidiary of a Borrower's assets by the United States, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a Lien, whether choate or otherwise, upon any Borrower's or any Subsidiary of a Borrower's assets and the same is not paid
before such payment is delinquent or the same is not subject to a Permitted Protest; 


        8.8    If a judgment or other claim becomes a Lien or encumbrance upon any material portion of any
Borrower's or any Subsidiary of a Borrower's properties or assets and the same is not subject to a Permitted Protest; 


        8.9    If there is a default in any material agreement to which any Borrower or any Subsidiary of a
Borrower is a party and such default (a) occurs at the final maturity of the obligations thereunder, or (b) results in a right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Borrower's or Subsidiary's obligations thereunder, or to terminate such agreement; 


        8.10    If any Borrower or any Subsidiary of a Borrower makes any payment on account of Indebtedness
that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable
to such Indebtedness; 


        8.11    If any representation, warranty, statement or Record fails to be true and accurate in all
material respects on the date as of which such information is dated or certified and or omits to state any fact necessary to make such representation, warranty, statement or Record (taken as a whole)
not misleading in any material respect at such time in light of the circumstances in which it was made to the Lender Group by any Borrower, any Subsidiary of a Borrower, or any officer, employee,
agent, or director of any Borrower or any Subsidiary of a Borrower; 


        8.12    If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of
law or by such Guarantor thereunder; 


        8.13    If this Agreement or any other Loan Document that purports to create a Lien, shall, for any
reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby
or thereby; or 


        8.14    Any provision of any Loan Document shall at any time for any reason be declared to be null and
void, or the validity or enforceability thereof shall be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding shall be commenced by any Borrower or any Subsidiary of a Borrower,
or by any Governmental Authority having jurisdiction over any Borrower or any Subsidiary of a Borrower, seeking to establish the invalidity or unenforceability thereof, or any Borrower or any
Subsidiary of a Borrower shall deny that it has any liability or obligation purported to be created under any Loan Document. 


63





 



9.     THE LENDER GROUP'S RIGHTS AND REMEDIES.  


        9.1 Rights and Remedies.    Upon the occurrence, and during the continuation,
of
an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf
of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers: 



        (a)   Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable; 


        (b)   Cease
advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between
Borrowers and the Lender Group; 


        (c)   Terminate
this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent's Liens
in the Collateral and without affecting the Obligations; 


        (d)   Settle
or adjust disputes and claims directly with Borrowers' Account Debtors for amounts and upon terms which Agent considers advisable, and in such cases, Agent will
credit the Loan Account with only the net amounts received by Agent in payment of such disputed Accounts after deducting all Lender Group Expenses incurred or expended in connection therewith; 



        (e)   Cause
Borrowers to hold all of their returned Inventory in trust for the Lender Group and segregate all such Inventory from all other assets of Borrowers or in
Borrowers' possession; 


        (f)    Without
notice to or demand upon any Borrower, make such payments and do such acts as Agent considers necessary or reasonable to protect its security interests in the
Collateral. Each Borrower agrees to assemble the Collateral if Agent so requires, and to make the Collateral available to Agent at a place that Agent may designate which is reasonably convenient to
both parties. Each Borrower authorizes Agent to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens in and to the Collateral and to pay all expenses incurred in connection therewith and to charge Borrowers' Loan Account therefor. With
respect to any of Borrowers' owned or leased premises, each Borrower hereby grants Agent a license to enter into possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided herein, at law, in equity, or otherwise; 


        (g)   Without
notice to any Borrower (such notice being expressly waived), and without constituting an acceptance of any collateral in full or partial satisfaction of an
obligation (within the meaning of the Code), set off and apply to the Obligations any and all (i) balances and deposits of any Borrower held by the Lender Group (including any amounts received in the
Cash Management Accounts) (other than payroll accounts of any Borrower or any Subsidiary of a Borrower and accounts from which payroll taxes or other similar taxes are paid by a Borrower or any
Subsidiary of a Borrower to the extent of such taxes), or (ii) Indebtedness at any time owing to or for the credit or the account of any Borrower held by the Lender Group; 


        (h)   Hold,
as cash collateral, any and all balances and deposits of any Borrower held by the Lender Group, and any amounts received in the Cash Management Accounts, to secure
the full and final repayment of all of the Obligations; 



        (i)    Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Borrower Collateral. Each
Borrower hereby 



64





 




grants
to Agent a license or other right to use, without charge, such Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Borrower Collateral, in completing production of, advertising for sale, and selling any Borrower Collateral and such Borrower's rights under all
licenses and all franchise agreements shall inure to the Lender Group's benefit; 


        (j)    Sell
the Borrower Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at
such places (including Borrowers' premises) as Agent determines is commercially reasonable. It is not necessary that the Borrower Collateral be present at any such sale; 


        (k)   Agent
shall give notice of the disposition of the Borrower Collateral as follows: 



          (i)  Agent
shall give Administrative Borrower (for the benefit of the applicable Borrower) a notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition
other than a public sale is to be made of the Borrower Collateral, the time on or after which the private sale or other disposition is to be made; and 


         (ii)  The
notice shall be personally delivered or mailed, postage prepaid, to Administrative Borrower as provided in Section
12, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Borrower
Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market; 




        (l)    Agent,
on behalf of the Lender Group, may credit bid and purchase at any public sale; 


        (m)  Agent
may seek the appointment of a receiver or keeper to take possession of all or any portion of the Borrower Collateral or to operate same and, to the maximum extent
permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing; and 



        (n)   The
Lender Group shall have all other rights and remedies available to it at law or in equity pursuant to any other Loan Documents;  provided, however, that
upon the occurrence of any Event of Default described in  Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to
Borrowers
or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon, and all
fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Borrowers. 




        9.2 Remedies Cumulative.    The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver.
No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it. 


10.   TAXES AND EXPENSES.  


        If any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in
its sole discretion and without prior notice to any Borrower, may do any or all of the following: (a) make payment of the same or any part 


65





 



thereof,
(b) set up such reserves in Borrowers' Loan Account as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by
the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. 


11.   WAIVERS; INDEMNIFICATION.  


        11.1 Demand; Protest; etc.    Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and
guarantees at any time held by the Lender Group on which any such Borrower may in any way be liable. 


        11.2 The Lender Group's Liability for Borrower Collateral.    Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its obligations, if any, under the Code, Agent shall not in any way or manner be liable or responsible for: (i) the safekeeping of the
Borrower Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Borrower Collateral shall be borne by Borrowers. 


        11.3 Indemnification.    Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Borrowers' and their Subsidiaries' compliance with the terms of the Loan Documents, and (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified
Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.


66





 



12.   NOTICES.  


        Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to the other relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or
certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Administrative Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below: 



	If to Administrative

Borrower:	 	AEGIS COMMUNICATIONS GROUP, INC.

7880 Bent Branch Drive

Suite 150

Irving, Texas 75063

Attn: Chief Financial Officer

Fax No. 678.433.6502
	

with copies to:	
 	
HUGHES & LUCE, LLP

1717 Main Street

Suite 2800

Dallas, Texas 75201

Attn: David G. Luther, Esq.

Fax No. 214.939.5849
	

If to Agent:	
 	
WELLS FARGO FOOTHILL, INC.

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attn: Business Finance Manager

Fax No. 617.523.1697
	

with copies to:	
 	
OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.

230 Park Avenue

New York, New York 10169

Attn: Andrew M. Kramer, Esq.

Fax No. 212.682.6104






        Agent
and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands
sent in accordance with this Section 12, other than notices by Agent in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Borrower
acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Borrower Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above. 


13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  



        (a)   THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF
SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,  



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 INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  


         (b)   THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
BORROWER COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF  FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).  


        (c)   BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.  




 14.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.  


        14.1 Assignments and Participations.    



        (a)   Any
Lender may assign and delegate to one or more assignees (each an "Assignee") that are Eligible Transferees all, or
any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000;  provided,
 however, that Borrowers and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance, and (iii) the assignor Lender or Assignee has paid to Agent for Agent's separate account a processing fee in the amount of $5,000. Anything contained herein to the contrary
notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if such assignment is in connection with any merger, consolidation, sale, transfer,
or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender. 



        (b)   From
and after the date that Agent notifies the assignor Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant 



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to
such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section
11.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation
between Borrowers and the Assignee; provided, however, that such novation shall not be deemed to result
in any representation or warranty of any Borrower hereunder being made or reaffirmed as of the date of such novation and provided further that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement, including such assigning Lender's obligations under Article 16 and  Section 17.8 of
this Agreement. 


        (c)   By
executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms that it has received a copy of
this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (4) such
Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (6) such Assignee agrees that it will perform all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender. 


        (d)   Immediately
upon Agent's receipt of the required processing fee payment and the fully executed Assignment and Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the Assignee, the assumption by the Assignee of the portion of the assigning Lender's Commitment assigned to the Assignee and
the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro
tanto. 


        (e)   Any
Lender may at any time, with the written consent of Agent, sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of such
Lender (a "Participant") participating interests in its Obligations, the Commitment, and the other rights and interests of that Lender (the
"Originating Lender") hereunder and under the other Loan Documents (provided that no written consent of Agent shall be required in connection with any
sale of any such participating interests by a Lender to an Eligible Transferee); provided, however, that
(i) the Originating Lender shall remain a "Lender" for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a "Lender" hereunder or under the other Loan Documents and the 



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Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date
of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant
is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums; and (v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as
a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights
under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. 


        (f)    In
connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 17.8, disclose all
documents and information which it now or hereafter may have relating to Borrowers and their Subsidiaries and their respective businesses. 



        (g)   Any
other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or
U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 




        14.2 Successors.    This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however, that Borrowers may not
assign this Agreement or any rights or duties hereunder without the Lenders' prior written consent and any prohibited assignment shall be absolutely void ab
initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights
and duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as expressly required pursuant to Section
14.1 hereof, no consent or approval by any Borrower is required in connection with any such assignment. 


15.   AMENDMENTS; WAIVERS.  


        15.1 Amendments and Waivers.    No amendment or waiver of any provision of
this
Agreement or any other Loan Document, and no consent with respect to any departure by Borrowers therefrom, shall 


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be
effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided,  however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders affected thereby and Administrative
Borrower (on behalf of all Borrowers) and acknowledged by Agent, do any of the following: 



        (a)   increase
or extend any Commitment of any Lender, 


        (b)   postpone
or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any
other Loan Document, 


        (c)   reduce
the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any
other Loan Document, 


        (d)   change
the percentage of the Commitments that is required to take any action hereunder, 


        (e)   amend
or modify this Section or any provision of the Agreement providing for consent or other action by all Lenders, 


        (f)    release
Collateral other than as permitted by Section 16.12, 


        (g)   change
the definition of "Required Lenders" or "Pro Rata Share", 



        (h)   contractually
subordinate any of the Agent's Liens, 


        (i)    release
any Borrower or Guarantor from any obligation for the payment of money, or 


        (j)    change
the definition of "Borrowing Base" or the definitions of "Eligible Accounts," "Eligible Inventory," "Maximum Revolver Amount," or change  Section 2.1(b); or 


        (k)   amend
any of the provisions of Section 16. 




and,  provided further, however, that no amendment, waiver or consent shall, unless in writing and signed
by Agent, Issuing Lender, or Swing Lender, affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing
notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers. 



        15.2 Replacement of Holdout Lender.    If any action to be taken by the Lender
Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its consent, authorization, or agreement, then Agent,
upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a "Replacement Lender"), and the
Holdout Lender shall have not right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given. 


        Prior
to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance Agreement, subject only to the
Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to
have executed 


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and
delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 14.1. Until
such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan
Documents, the Holdout Lender shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit. 


        15.3 No Waivers; Cumulative Remedies.    No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or
any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any provision of this Agreement. Agent's and each Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any Lender may have. 


72







   16.   AGENT; THE LENDER GROUP.  


        16.1 Appointment and Authorization of Agent.    Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on
its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 16. The provisions of this Section 16 (other than the proviso to  Section 16.11(d))
are solely for the benefit of Agent, and the Lenders, and Borrowers and their Subsidiaries shall have no rights as a third party
beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the
use of the word "Agent" is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in
this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that
Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, and related
matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrowers
and their Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management accounts as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of
the Lender Group with respect to Borrowers, the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, or otherwise related to any of same as provided in the Loan Documents,
and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents. 



        16.2 Delegation of Duties.    Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not
be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. 


        16.3 Liability of Agent.    None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or 


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any
officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by
Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Books or properties of
Borrowers or the books or records or properties of any of Borrowers' Subsidiaries or Affiliates. 


        16.4 Reliance by Agent.    Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or
counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan
Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it
deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of
taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 


        16.5 Notice of Default or Event of Default.    Agent shall not be deemed to
have
knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the
account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower
referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default
of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender
shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 16.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9;  provided, however, that unless and until Agent has received any such request, 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. 


        16.6 Credit Decision.    Each Lender acknowledges that none of the
Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrowers and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own
decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such
documents and 


74





 



information
as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers
and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrowers and
any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. 



        16.7 Costs and Expenses; Indemnification.    Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including
court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to the
Loan Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrowers and their Subsidiaries received by Agent to reimburse Agent for
such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Borrowers and their
Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of
such Lender's Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities;  provided,
however, that no Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender's Pro Rata Share of any costs or
out-of-pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or replacement of Agent. 


        16.8 Agent in Individual Capacity.    WFF and its Affiliates may make loans to,

issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business
with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates may receive information regarding Borrowers or their
Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under 


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any
obligation to provide such information to them. The terms "Lender" and "Lenders" include WFF in its individual capacity. 


        16.9 Successor Agent.    Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation
of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law,
the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above. 


        16.10 Lender in Individual Capacity.    Any Lender and its respective
Affiliates
may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or
other business with Borrowers and their Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though such Lender were not a Lender hereunder
without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates
may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations,
which waiver such Lender will use its reasonable best efforts to obtain), such Lender not shall be under any obligation to provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of the Agent. 



        16.11 Withholding Taxes.    



        (a)   If
any Lender is a "foreign person" within the meaning of the IRC and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and Administrative Borrower: 



          (i)  if
such Lender claims an exemption from withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury,
that it is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of a Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled
foreign corporation related to a Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or Administrative Borrower; 


         (ii)  if
such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before the
first 




76





 





payment
of any interest under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower; 


        (iii)  if
such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before the first payment of any interest is due under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower; 


        (iv)  such
other form or forms as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States
withholding tax. 




Such
Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. 


        (b)   If
any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender, such Lender agrees to notify Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrowers to such Lender. To the extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid. 


        (c)   If
any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to Agent, then Agent may withhold
from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. 


        (d)   If
the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent as
tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent. 


        (e)   All
payments made by Borrowers hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense, except as required by
applicable law other than for Taxes (as defined below). All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction (other than the United States) or by any political subdivision or taxing authority thereof or
therein (other than of the United States) with respect to such payments (but excluding, any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (i)
measured by or based on the gross receipts, income, net income or net profits of a Lender, or (ii) to the extent that such tax results from a change in the circumstances of the Lender, including a
change in the residence, place of organization, or principal place of business of the Lender, or a change in the branch or lending office of the Lender participating in the transactions set forth
herein) and 



77





 




all
interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, each Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to this Section 16.11(e) after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein; provided, however, that
Borrowers shall not be required to increase any such amounts payable to Agent or any Lender (i) that is not organized under the laws of the United States, if such Person fails to comply with the other
requirements of this Section 16.11, or (ii) if the increase in such amount payable results from Agent's or such Lender's own willful misconduct or gross
negligence. Borrowers will furnish to Agent as promptly as possible after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment
by Borrowers. 




        16.12 Collateral Matters.    



        (a)   The
Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and
if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 7.4 of this Agreement or the other Loan Documents
(and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Borrower or its Subsidiaries owned any interest at the time the Agent's Lien
was granted nor at any time thereafter, or (iv) constituting property leased to a Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially
all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent's authority
to release any such Liens on particular types or items of Collateral pursuant to this Section 16.12;  provided, however, that (1) Agent shall not be required to execute any document necessary to evidence
such release on terms that, in Agent's opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation,
or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers, including, the proceeds of any sale, all of which shall continue to constitute part of
the Collateral. 


        (b)   Agent
shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrowers or is cared for, protected, or insured or
has been encumbered, or that the Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at
all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein. 



78





 

        16.13 Restrictions on Actions by Lenders; Sharing of Payments.    



        (a)   Each
of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the
written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers or any deposit accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral. 


        (b)   If,
at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the
Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender's ratable portion
of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately
available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without
recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. 




        16.14 Agency for Perfection.    Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent's Liens in assets which, in accordance with Article 9 of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver possession or control
of such Collateral to Agent or in accordance with Agent's instructions. 


        16.15 Payments by Agent to the Lenders.    All payments to be made by Agent to
the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest of the Obligations. 



        16.16 Concerning the Collateral and Related Loan Documents.    Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. 


        16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information.    By becoming a party to this Agreement, each Lender: 



        (a)   is
deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a
"Report" and collectively, "Reports") prepared by Agent, and Agent shall so furnish each Lender with
such Reports, 



79





 

        (b)   expressly
agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report, 


        (c)   expressly
agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will
inspect only specific information
regarding Borrowers and will rely significantly upon the Books, as well as on representations of Borrowers' personnel, 



        (d)   agrees
to keep all Reports and other material, non-public information regarding Borrowers and their Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner in accordance with Section 17.8, and 


        (e)   without
limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender. 




In
addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent that
has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such request, Agent shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled,
under any provision of the Loan Documents, to request additional reports or information from Borrowers, any Lender may, from time to time, reasonably request Agent to exercise such right as specified
in such Lender's notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof
from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent
shall send a copy of such statement to each Lender. 


        16.18 Several Obligations; No Liability.    Notwithstanding that certain of
the
Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments,
to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant
of any other Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts or any other member of the
Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for
it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein. 


80





 



        16.19 Legal Representation of Agent.    In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or
enforcement of remedies, Otterbourg, Steindler, Houston & Rosen, P.C. ("OSH&R") only has represented and only shall represent WFF in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that OSH&R does not represent it in connection with any such matters. 


17.   GENERAL PROVISIONS.  


        17.1 Effectiveness.    This Agreement shall be binding and deemed effective
when
executed by Borrowers, Agent, and each Lender whose signature is provided for on the signature pages hereof. 



        17.2 Section Headings.    Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement. 


        17.3 Interpretation.    Neither this Agreement nor any uncertainty or
ambiguity
herein shall be construed or resolved against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. 


        17.4 Severability of Provisions.    Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 


        17.5 Amendments in Writing.    This Agreement only can be amended by a writing
in accordance with Section 15.1. 



        17.6 Counterparts; Telefacsimile Execution.    This Agreement may be executed
in
any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together,
shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. 



        17.7 Revival and Reinstatement of Obligations.    If the incurrence or payment
of the Obligations by any Borrower or Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or
elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or Guarantor automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made. 


        17.8 Confidentiality.    The Agent and the Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information regarding Borrowers and their Subsidiaries, their operations, assets, and existing and contemplated business plans shall
be treated by Agent and the 


81





 



Lenders
in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 17.8, (c) as may be required by
statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Administrative Borrower or its Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, provided however, that the delivery of that information pursuant to a subpoena or other legal process shall not change the
confidential nature of the information for purposes of this Agreement or permit Agent or any other Lender to disclose or make any use of the information except in compliance with this Section 17.8,
(e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection with any assignment,
prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender's interest under this Agreement, provided that any such
assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 17.8 shall
survive for 2 years after the payment in full of the Obligations. Anything contained herein or in any other Loan Document to the contrary notwithstanding, the obligations of confidentiality contained
herein and therein, as they relate to the transactions contemplated hereby, shall not apply to the federal tax structure or federal tax treatment of such transactions, and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and all Persons, without limitation of any kind, the federal tax structure and federal tax treatment of such transactions
(including all written materials related to such tax structure and tax treatment). The preceding sentence is intended to cause the transactions contemplated hereby to not be treated as having been
offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the IRC, and shall be
construed in a manner consistent with such purpose. In addition, each party hereto acknowledges that it has no proprietary or exclusive rights to the tax structure of the transactions contemplated
hereby or any tax matter or tax idea related thereto. 


        17.9 Integration.    This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the
date hereof or oral agreements made contemporaneously herewith. 


        17.10 Parent as Agent for Borrowers    Each Borrower hereby irrevocably
appoints
Parent as the borrowing agent and attorney-in-fact for all Borrowers (the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and
Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and
Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the
most efficient and economical manner and at their request, and 


82





 



that
Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and
in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all
liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) the Lender Group's relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder
or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section
17.9 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct
of such Agent-Related Person or Lender-Related Person, as the case may be. 


[Signature
page to follow] 


83







   
        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written. 



	 	 	AEGIS COMMUNICATIONS GROUP, INC.

a Delaware corporation, as a Borrower and Administrative Borrower
	

 	
 	

By:	
 	

/s/  HERMAN M. SCHWARZ      

	 	 	Title:	 	President and Chief Executive Officer

	

 	
 	
ADVANCED TELEMARKETING CORPORATION

a Nevada corporation, as a Borrower
	

 	
 	

By:	
 	

/s/  HERMAN M. SCHWARZ      

	 	 	Title:	 	President and Chief Executive Officer

	

 	
 	
IQI, INC.

a New York corporation, as a Borrower
	

 	
 	

By:	
 	

/s/  HERMAN M. SCHWARZ      

	 	 	Title:	 	President and Chief Executive Officer

	

 	
 	
LEXI INTERNATIONAL, INC.

a California corporation, as a Borrower
	

 	
 	

By:	
 	

/s/  HERMAN M. SCHWARZ      

	 	 	Title:	 	President and Chief Executive Officer

	

 	
 	
INTERSERV SERVICE CORPORATION

a Delaware corporation, as a Borrower
	

 	
 	

By:	
 	

/s/  STEVEN ALRED HOUGH MARSHALL      

	 	 	Title:	 	Vice President and Secretary

	

 	
 	
WELLS FARGO FOOTHILL, INC.

a California corporation, as Agent and as a Lender
	

 	
 	

By:	
 	

/s/  STEPHEN CARLL      

	 	 	Title:	 	Vice President





84





 


	STATE OF GEORGIA	 	)	 	 
	 	 	)	 	ss.:
	COUNTY OF FULTON	 	)	 	 





        On
this        day of December, 2003, before me personally came                        , to
me known, who being duly sworn, did depose and say, that he is the                        of AEGIS
COMMUNICATIONS GROUP, INC., the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. 



	 	 	/s/  MARC ALLARD      
 Notary Public





	

STATE OF GEORGIA	
 	

)	
 	

 
	 	 	)	 	ss.:
	COUNTY OF FULTON	 	)	 	 





        On
this        day of December, 2003, before me personally came                        , to
me known, who being duly sworn, did depose and say, that he is the                        of ADVANCED
TELEMARKETING CORPORATION, the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. 



	 	 	/s/  MARC ALLARD      
 Notary Public





	

STATE OF GEORGIA	
 	

)	
 	

 
	 	 	)	 	ss.:
	COUNTY OF FULTON	 	)	 	 





        On
this        day of December, 2003, before me personally came                        , to
me known, who being duly sworn, did depose and say, that he is the                        of IQI,
INC., the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. 



	 	 	/s/  MARC ALLARD      
 Notary Public




85





 


	STATE OF GEORGIA	 	)	 	 
	 	 	)	 	ss.:
	COUNTY OF FULTON	 	)	 	 





        On
this        day of December, 2003, before me personally came                        , to
me known, who being duly sworn, did depose and say, that he is the                        of LEXI
INTERNATIONAL, INC., the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. 



	 	 	/s/  MARC ALLARD      
 Notary Public





	

STATE OF TEXAS	
 	

)	
 	

 
	 	 	)	 	ss.:
	COUNTY OF DALLAS	 	)	 	 





        On
this        day of December, 2003, before me personally came Steven Alred Hough Marshall, to me known, who being duly sworn, did depose and say, that he is the Vice President
and Secretary of INTERSERV SERVICES CORPORATION, the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of
said corporation. 



	 	 	/s/  MARY L. HARADER      
 Notary Public




86





 


	STATE OF MASSACHUSETTS	 	)	 	 
	 	 	)	 	ss.:
	COUNTY OF SUFFOLK	 	)	 	 





        On
this 22nd day of January, 2004, before me personally came Stephen Carll, to me known, who being duly sworn, did depose and say, that he is the Vice President of WELLS FARGO FOOTHILL,
INC., the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. 



	 	 	/s/  TRACY L. CARBONE      
 Notary Public




87






  



 
 

EXHIBIT A-1
  
    FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT    
    


        This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment Agreement") is entered into as
of                        between
                        ("Assignor")
and                        ("Assignee"). Reference is made to the Agreement described in Item 2 of Annex I annexed hereto (the
"Loan Agreement"). Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement. 


	1.
	In
accordance with the terms and conditions of Section 14 of the Loan Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes
from the Assignor, that interest in and to the Assignor's rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor's
portion of the Commitments as specified in Item 4.b and Item 4.c of Annex I. After giving effect to such sale and assignments, the Assignee's portion of the Commitments will be as set forth in Item
4.b of Annex I. After giving effect to such sale and assignment the Assignor's amount and portion of the Commitments will be as set forth in Item 4.d and Item 4.e of Annex I.



	2.
	The
Assignor (a) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; and (c) makes no
representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant thereto.



	3.
	The
Assignee (a) confirms that it has received copies of the Loan Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such
other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without
reliance, as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (c) confirms that it is eligible as an assignee
under the terms of the Loan Agreement; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent
by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender [and (f) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Loan Agreement or such other documents as are
necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.]



	4.
	Following
the execution of this Assignment Agreement by the Assignor and Assignee, it will be delivered by the Assignor to the Agent for recording by the Agent. The effective date of
this Assignment (the "Settlement Date") shall be the later of (a) the date of the execution hereof by the Assignor and the Assignee, the payment by Assignor or Assignee to Agent for Agent's sole and
separate account a processing fee in the amount of $5,000, and the receipt of any required consent of the Agent, and (b) the date specified in item 5 of Annex I. 


1





 
	5.
	Upon
recording by the Agent, as of the Settlement Date (a) the Assignee shall be a party to the Loan Agreement and, to the extent of the interest assigned pursuant to this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment
Agreement, relinquish its rights and be released from its obligations under the Loan Agreement and the other Loan Documents.



	6.
	Upon
recording by the Agent, from and after the Settlement Date, the Agent shall make all payments under the Loan Agreement and the other Loan Documents in respect of the interest
assigned hereby (including, without limitation, all payments or principal, interest and commitment fees (if applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor the Assigned Share (as set forth in Item 4.b of Annex I) of the principal amount of any outstanding loans under the Loan Agreement and the other Loan Documents. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Loan Agreement and the other Loan Documents for periods prior to the Settlement Date directly between themselves on the
Settlement Date.



	7.
	THIS
ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 


[Remainder
of page left intentionally blank.] 


2





 

        IN
WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers thereunto duly authorized, as of the first
date above written. 



	 	 	[NAME OF ASSIGNOR]
	

 	
 	

  as Assignor
	

 	
 	

By	

 
	

 	
 	

Title:	

 
	

 	
 	

[NAME OF ASSIGNEE]
	

 	
 	

  as Assignee
	

 	
 	

By	

 
	

 	
 	

Title:	

 





	ACCEPTED THIS      DAY OF

                        
	

WELLS FARGO FOOTHILL, INC.,

as Agent
	

By:	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 
	 	 	
	 	 




3





 
 
 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE
  
    ANNEX I    



	1.
	Borrower:
AEGIS COMMUNICATIONS GROUP, INC. and certain of its Subsidiaries.



	2.
	Name
and Date of Loan Agreement: 




Loan
and Security Agreement, dated as of January 26, 2004, among Borrower, the lenders signatory thereto as the Lenders, and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and
administrative agent for the Lenders. 




	3.
	Date
of Assignment Agreement:



	4.
	Amounts:







	a.	 	Assignor's Commitment	 	$	 	 
	

b.	
 	

Assigned Share of Commitment	
 	
 	

 	
%
	

c.	
 	

Assigned Amount of Commitment	
 	
$	

 	
 
	

d	
 	

Resulting Amount of Assignor's Commitment after giving effect to the sale and Assignment to Assignee	
 	
$	

 	
 
	

e.	
 	

Assignor's Resulting Share of Commitment after giving effect to the Assignment to Assignee	
 	
 	

 	
%





	5.
	Settlement
Date:



	6.
	Notice
and Payment Instructions, etc. 






	Assignee:	 	Assignor:





	7.
	Agreed
and Accepted: 






	[ASSIGNOR]	 	[ASSIGNEE]
	

By:	
 	

By:
	

Title:	
 	

Title:






	Accepted:

WELLS FARGO FOOTHILL, INC., as Agent
	

By:	
 	

 	
 	

 
	 	 	
	 	 
	

Title:	
 	

 	
 	

 
	 	 	
	 	 




4






  



 
 

EXHIBIT C-1
  (Form of Compliance Certificate)    
    


[on
Administrative Borrower's letterhead] 



	To:	 	WELLS FARGO FOOTHILL, INC., as Agent

One Boston Place

18th Floor

Boston, Massachusetts 02108
	

 	
 	

Re: Compliance Certificate dated ____________
	

 	
 	

 





Ladies
and Gentlemen: 


        Reference
is made to that certain Loan and Security Agreement, dated as of January 26, 2004 (the "Loan Agreement") among AEGIS COMMUNICATIONS GROUP, INC. a Delaware Corporation, and
certain of its Subsidiaries (collectively,"Borrowers"), the lenders signatory thereto (the "Lenders"),
and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative
agent for the Lenders ("Agent"). Capitalized terms used in this Compliance Certificate have the meanings set forth in the Loan Agreement unless
specifically defined herein. 


        Pursuant
to Section 6.3 of the Loan Agreement, the undersigned officer of Borrower hereby certifies that: 


        1.     The
financial information of Borrowers furnished in Schedule 1 attached hereto, has been prepared in accordance with GAAP
(except for year-end adjustments and the lack of footnotes, in the case of financial statements delivered under Section 6.3(b) of the Loan
Agreement) and fairly presents the financial condition of Borrower. 



        2.     Such
officer has reviewed the terms of the Loan Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions
and condition of Borrower during the accounting period covered by the financial statements delivered pursuant to Section 6.3 of the Loan
Agreement. 


        3.     Such
review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event
or condition that constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2 attached hereto,
specifying the nature and period of existence thereof and what action Borrower has taken, is taking, or proposes to take with respect thereto. 


        4.     Borrowers
are in timely compliance with all representations, warranties, and covenants set forth in the Loan Agreement and the other Loan Documents, except as set forth
on Schedule 2 attached hereto. Without limiting the generality of the foregoing, Borrower is in compliance with the covenants contained in  Section 7.18 of the Loan Agreement as demonstrated on Schedule 3 hereof. 



        IN
WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this            day of            ,
            . 



	

 	
 	
AEGIS COMMUNICATIONS GROUP, INC.,

a Delaware corporation, as Administrative Borrower
	

 	
 	

By:	

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:






1





 
 
 

SCHEDULE 3


        1.     Minimum EBITDA.


        (a)   Borrowers'
EBITDA for the            ending            ,            is
$                  , which amount [is/is
not] greater than or equal to the amount set forth in Section 7.18(a) of the Loan Agreement for the corresponding period. 


        2.     Maximum Capital Expenditures.



        (a)   The
aggregate amount of Funded Capital Expenditures made or committed to be made to date in the current fiscal year is $                  . 



        (b)   The
aggregate amount set forth above [is/is not] less than or equal to the amount set forth in
Section 7.18(b)(i) of the Loan Agreement for the corresponding period. 


        (c)   The
aggregate amount of Financed Capital Expenditures made or committed to be made to date in the current fiscal year is $                  . 


        (d)   The
aggregate amount set forth above [is/is not] less than or equal to the amount set forth in
Section 7.18(b)(ii) of the Loan Agreement for the corresponding period. 



2










  



 
 

EXHIBIT L-1    
    


 
 

FORM OF LIBOR NOTICE    
    


WELLS
FARGO FOOTHILL, INC., as Agent

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: 


Ladies
and Gentlemen: 


        Reference
hereby is made to that certain Loan and Security Agreement, dated as of January 26, 2004 (the "Loan Agreement"), AMONG AEGIS
COMMUNICATIONS GROUP, INC., a Delaware corporation, and certain of its Subsidiaries (collectively, "Borrowers"), the lenders signatory thereto (the
"Lenders"), and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders
("Agent"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. 


        This
LIBOR Notice represents Administrative Borrower's request to elect the LIBOR Option with respect to outstanding Advances in the amount of $                  
(the "LIBOR Rate Advance"),
and is a written confirmation of the telephonic notice of such election given to Agent. 


        Such
LIBOR Rate Advance will have an Interest Period of 1, 2, or 3 month(s) commencing on                       . 


        This
LIBOR Notice further confirms Borrower's acceptance, for purposes of determining the rate of interest based on the LIBOR Rate under the Loan Agreement, of the LIBOR Rate as
determined pursuant to the Loan Agreement. 


        Administrative
Borrower represents and warrants that (i) as of the date hereof, each representation or warranty contained in or pursuant to any Loan Document, any agreement, instrument,
certificate, document or other writing furnished at any time under or in connection with any Loan Document, and as of the effective date of any advance, continuation or conversion requested above is
true and correct in all material respects (except to the extent any representation or warranty expressly related to an earlier date), (ii) each of the covenants and agreements contained in any Loan
Document have been performed (to the extent required to be performed on or before the date hereof or each such effective date), and (iii) no Default or Event of Default has occurred and is continuing
on the date hereof, nor will any thereof occur after giving effect to the request above. 


1









  





Dated: 


AEGIS COMMUNICATIONS GROUP, INC., a Delaware Corporation, as Administrative Borrower 


By

Name:

Title: 


Acknowledged
by: 


WELLS FARGO FOOTHILL, INC.

as Agent 


By:

Name:

Title: 


1





 
 

Schedule A-1
  Agent's Account
    
    


        An account at a bank designated by Agent from time to time as the account into which Borrowers shall make all payments to Agent for the benefit of the Lender
Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent notifies Administrative Borrower and the Lender Group
to the contrary, Agent's Account shall be that certain deposit account bearing account number 323-266193 and maintained by Agent with JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New
York 10004, ABA #021000021. 





 
 

Schedule C-1
  Commitments
    
    



	Lender
 
	 	Total Commitment

	Wells Fargo Foothill, Inc.	 	$	25,000,000
	 	 	 	 
	 	 	 	 
	 	 	 	 
	All Lenders	 	$	25,000,000







 
 

Schedule D-1
  Designated Account    
    


        Account number 4129830626 of Administrative Borrower maintained with Administrative Borrower's Designated Account Bank, or such other deposit account of
Administrative Borrower (located within the United States) that has been designed as such, in writing, by Administrative Borrower to Agent. 


        "Designated Account Bank" means Wells Fargo Bank, N.A., whose office is located at 1445 Ross Avenue, 3d Floor, Dallas, Texas 75202, and
whose ABA number is 121000248. 











QuickLinks


TABLE OF CONTENTS

EXHIBITS AND SCHEDULES



LOAN AND SECURITY AGREEMENT


EXHIBIT A-1 FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

ANNEX FOR ASSIGNMENT AND ACCEPTANCE ANNEX I


EXHIBIT C-1 (Form of Compliance Certificate)

SCHEDULE 3



EXHIBIT L-1

FORM OF LIBOR NOTICE



Schedule A-1 Agent's Account

Schedule C-1 Commitments

Schedule D-1 Designated Account