Exhibit
10.32




 





$80,000,000


 


CREDIT AGREEMENT


among


LABOR READY, INC.,

as Borrower,


The Several Lenders from Time to Time Parties
Hereto, and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Documentation Agent, Syndication Agent and

Administrative Agent


Dated as of December 13, 2005


 




 





WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Arranger and Sole Book Runner





















 


TABLE
OF CONTENTS


	
  1.

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Defined Terms

  	
   

  
	
   

  	
  1.2

  	
  Other
  Definitional Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  AMOUNT AND
  TERMS OF REVOLVING COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Revolving
  Commitments

  	
   

  
	
   

  	
  2.2

  	
  Procedure for
  Revolving Loan Borrowing

  	
   

  
	
   

  	
  2.3

  	
  Unused
  Commitment Fees, etc.

  	
   

  
	
   

  	
  2.4

  	
  Termination or
  Reduction of Revolving Commitments

  	
   

  
	
   

  	
  2.5

  	
  Optional
  Prepayments

  	
   

  
	
   

  	
  2.6

  	
  Mandatory
  Prepayments and Commitment Reductions

  	
   

  
	
   

  	
  2.7

  	
  Conversion and
  Continuation Options

  	
   

  
	
   

  	
  2.8

  	
  Limitations on
  LIBOR Tranches

  	
   

  
	
   

  	
  2.9

  	
  Interest Rates
  and Payment Dates

  	
   

  
	
   

  	
  2.10

  	
  Computation of
  Interest and Fees

  	
   

  
	
   

  	
  2.11

  	
  Inability to
  Determine Interest Rate

  	
   

  
	
   

  	
  2.12

  	
  Pro Rata
  Treatment and Payments

  	
   

  
	
   

  	
  2.13

  	
  Requirements
  of Law

  	
   

  
	
   

  	
  2.14

  	
  Taxes

  	
   

  
	
   

  	
  2.15

  	
  Indemnity

  	
   

  
	
   

  	
  2.16

  	
  Change
  of Lending Office

  	
   

  
	
   

  	
  2.17

  	
  Replacement
  of Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  LETTERS
  OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  L/C
  Commitment

  	
   

  
	
   

  	
  3.2

  	
  Procedure for
  Issuance of Letter of Credit

  	
   

  
	
   

  	
  3.3

  	
  Fees
  and Other Charges

  	
   

  
	
   

  	
  3.4

  	
  L/C
  Participations

  	
   

  
	
   

  	
  3.5

  	
  Reimbursement
  Obligation of the Borrower

  	
   

  
	
   

  	
  3.6

  	
  Obligations
  Absolute

  	
   

  
	
   

  	
  3.7

  	
  Letter
  of Credit Payments

  	
   

  
	
   

  	
  3.8

  	
  Applications

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Financial
  Condition

  	
   

  
	
   

  	
  4.2

  	
  No Change

  	
   

  
	
   

  	
  4.3

  	
  Existence;
  Compliance with Law

  	
   

  
	
   

  	
  4.4

  	
  Power;
  Authorization; Enforceable Obligations

  	
   

  
	
   

  	
  4.5

  	
  No Legal Bar

  	
   

  
	
   

  	
  4.6

  	
  Litigation

  	
   

  
					



 


i





















 


	
   

  	
  4.7

  	
  No Default

  	
   

  
	
   

  	
  4.8

  	
  Ownership
  of Property; Liens

  	
   

  
	
   

  	
  4.9

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  4.10

  	
  Taxes

  	
   

  
	
   

  	
  4.11

  	
  Federal
  Regulations

  	
   

  
	
   

  	
  4.12

  	
  Labor
  Matters

  	
   

  
	
   

  	
  4.13

  	
  ERISA

  	
   

  
	
   

  	
  4.14

  	
  Investment
  Company Act; Other Regulations

  	
   

  
	
   

  	
  4.15

  	
  Subsidiaries

  	
   

  
	
   

  	
  4.16

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
  4.17

  	
  Environmental
  Matters

  	
   

  
	
   

  	
  4.18

  	
  Accuracy of
  Information, etc.

  	
   

  
	
   

  	
  4.19

  	
  Security
  Documents

  	
   

  
	
   

  	
  4.20

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions to
  Initial Extension of Credit

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Credit
  Agreement; Guarantee and Collateral Agreement

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Receivables
  Funding Transaction

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Due Diligence

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Absence
  of Litigation

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Absence of
  Material Adverse Effect

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Lien Searches

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Fees

  	
   

  
	
   

  	
   

  	
  (h)

  	
  Closing
  Certificate; Certified Articles of Incorporation; Good Standing Certificates

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Legal
  Opinions

  	
   

  
	
   

  	
   

  	
  (j)

  	
  Pledged Stock;
  Stock Powers; Pledged Notes

  	
   

  
	
   

  	
   

  	
  (k)

  	
  Filings,
  Registrations and Recordings

  	
   

  
	
   

  	
   

  	
  (l)

  	
  Insurance

  	
   

  
	
   

  	
   

  	
  (m)

  	
  Notes

  	
   

  
	
   

  	
  5.2

  	
  Conditions to
  Each Extension of Credit

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Representations
  and Warranties

  	
   

  
	
   

  	
   

  	
  (b)

  	
  No Default

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Absence of
  Material Adverse Effect

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Absence
  of Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Financial
  Statements

  	
   

  
	
   

  	
  6.2

  	
  Certificates;
  Other Information

  	
   

  
	
   

  	
  6.3

  	
  Payment
  of Obligations

  	
   

  
	
   

  	
  6.4

  	
  Maintenance of
  Existence; Compliance

  	
   

  
	
   

  	
  6.5

  	
  Maintenance of
  Property; Insurance

  	
   

  
	
   

  	
  6.6

  	
  Inspection of
  Property; Books and Records; Discussions

  	
   

  



 


ii





















 


	
   

  	
  6.7

  	
  Notices

  	
   

  
	
   

  	
  6.8

  	
  Environmental
  Laws

  	
   

  
	
   

  	
  6.9

  	
  Additional
  Collateral, etc.

  	
   

  
	
   

  	
  6.10

  	
  Further
  Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Financial
  Condition Covenants

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Consolidated
  Leverage Ratio

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Consolidated
  Fixed Charge Coverage Ratio

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Asset
  Coverage Ratio

  	
   

  
	
   

  	
  7.2

  	
  Indebtedness

  	
   

  
	
   

  	
  7.3

  	
  Liens

  	
   

  
	
   

  	
  7.4

  	
  Fundamental
  Changes

  	
   

  
	
   

  	
  7.5

  	
  Disposition
  of Property

  	
   

  
	
   

  	
  7.6

  	
  Restricted
  Payments

  	
   

  
	
   

  	
  7.7

  	
  Investments

  	
   

  
	
   

  	
  7.8

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
  7.9

  	
  Sales
  and Leasebacks

  	
   

  
	
   

  	
  7.10

  	
  Swap
  Agreements

  	
   

  
	
   

  	
  7.11

  	
  Changes
  in Fiscal Periods

  	
   

  
	
   

  	
  7.12

  	
  Negative
  Pledge Clauses

  	
   

  
	
   

  	
  7.13

  	
  Clauses
  Restricting Subsidiary Distributions

  	
   

  
	
   

  	
  7.14

  	
  Lines
  of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  EVENTS
  OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  THE AGENTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Appointment

  	
   

  
	
   

  	
  9.2

  	
  Delegation
  of Duties

  	
   

  
	
   

  	
  9.3

  	
  Exculpatory
  Provisions

  	
   

  
	
   

  	
  9.4

  	
  Reliance by
  Administrative Agent

  	
   

  
	
   

  	
  9.5

  	
  Notice
  of Default

  	
   

  
	
   

  	
  9.6

  	
  Non-Reliance
  on Agents and Other Lenders

  	
   

  
	
   

  	
  9.7

  	
  Indemnification

  	
   

  
	
   

  	
  9.8

  	
  Agent in Its
  Individual Capacity

  	
   

  
	
   

  	
  9.9

  	
  Successor
  Administrative Agent

  	
   

  
	
   

  	
  9.10

  	
  Documentation
  Agent and Syndication Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Amendments
  and Waivers

  	
   

  
	
   

  	
  10.2

  	
  Notices

  	
   

  
	
   

  	
  10.3

  	
  No Waiver;
  Cumulative Remedies

  	
   

  
	
   

  	
  10.4

  	
  Survival of
  Representations and Warranties

  	
   

  



 


iii





















 


	
   

  	
  10.5

  	
  Payment of
  Expenses and Taxes

  	
   

  
	
   

  	
  10.6

  	
  Successors and
  Assigns; Participations and Assignments

  	
   

  
	
   

  	
  10.7

  	
  Adjustments;
  Set-off

  	
   

  
	
   

  	
  10.8

  	
  Counterparts

  	
   

  
	
   

  	
  10.9

  	
  Severability

  	
   

  
	
   

  	
  10.10

  	
  Integration

  	
   

  
	
   

  	
  10.11

  	
  GOVERNING
  LAW

  	
   

  
	
   

  	
  10.12

  	
  Submission To
  Jurisdiction; Waivers

  	
   

  
	
   

  	
  10.13

  	
  Acknowledgements

  	
   

  
	
   

  	
  10.14

  	
  Releases of
  Guarantees and Liens

  	
   

  
	
   

  	
  10.15

  	
  Confidentiality

  	
   

  
	
   

  	
  10.16

  	
  WAIVERS
  OF JURY TRIAL

  	
   

  
	
   

  	
  10.17

  	
  Statutory
  Notice

  	
   

  



 


iv





















 


 


SCHEDULES:


 


	
  1.1A

  	
  Margin Value of Liquid Assets

  
	
  1.1B

  	
  Revolving Commitments

  
	
  4.4

  	
  Consents,
  Authorizations, Filings and Notices

  
	
  4.15

  	
  Subsidiaries

  
	
  4.19

  	
  UCC
  Filing Jurisdictions

  
	
  7.2(d)

  	
  Existing
  Indebtedness

  
	
  7.3(f)

  	
  Existing
  Liens

  



EXHIBITS:


 


	
  A

  	
  Form
  of Assignment and Assumption

  
	
  B

  	
  Form
  of Compliance Certificate

  
	
  C

  	
  Form
  of Guarantee and Collateral Agreement

  
	
  D

  	
  Form
  of Exemption Certificate

  
	
  E

  	
  Form
  of Closing Certificate

  
	
  F

  	
  Form
  of Legal Opinion of Lane Powell

  



 


 


i





















 


CREDIT AGREEMENT


 


THIS
CREDIT AGREEMENT, dated as of December 13, 2005 (this “Agreement”),
among LABOR READY, INC., a Washington corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the “Lenders”), WELLS FARGO BANK, NATIONAL
ASSOCIATION, as documentation agent (in such capacity, the “Documentation
Agent”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as syndication agent (in
such capacity, the “Syndication Agent”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as administrative agent (the “Administrative Agent”).


The
parties hereto agree as follows:


1.                                      DEFINITIONS


1.1                               Defined Terms


As
used in this Agreement, the terms listed in this Section 1.1 shall have
the respective meanings set forth in this Section 1.1.


“Adjustment
Date”:  as defined in the definition
of “Applicable Margin”.


“Administrative
Agent”:  Wells Fargo Bank, National
Association as the administrative agent for the Lenders under this Agreement
and the other Loan Documents, together with any of its successors.


“Affiliate”:  as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person.  For purposes
of this definition, “control” of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities having ordinary
voting power for the election of directors (or persons performing similar
functions) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.


“Agents”:  the collective reference to the Syndication
Agent, the Documentation Agent and the Administrative Agent.


“Aggregate
Exposure”:  with respect to any
Lender at any time, an amount equal to (a) until the Closing Date, the
aggregate amount of such Lender’s Revolving Commitments at such time and (b)
thereafter, the sum of the amount of such Lender’s Revolving Commitment then in
effect or, if the Revolving Commitments have been terminated, the amount of
such Lender’s Revolving Extensions of Credit then outstanding.


“Aggregate
Exposure Percentage”:  with respect
to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s
Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at
such time.


 


1





















 


“Agreement”:  as defined in the preamble hereto.


“Applicable
Margin”:  for each Type of Revolving Loan,
the number of basis points (“bps”) set forth under the relevant column
heading in the pricing grid below:




	
  

  

  Tier

  	
   

  	
  

  Consolidated Leverage Ratio

  	
   

  	
  LIBOR Margin/Annual Letter of
  Credit Fee

  	
   

  	
  

  Base Rate Margin

  	
   

  	
  Unused

  Commitment Fee Rate

  	
   

  
	
  I

  	
   

  	
  Less
  than 1.00:1.00

  	
   

  	
  50.0 bps

  	
   

  	
  -100.0 bps

  	
   

  	
  15.0 bps

  	
   

  
	
  II

  	
   

  	
  Greater
  than or equal to 1.00:1.00 and less than 1.750:1.00

  	
   

  	
  75.0 bps

  	
   

  	
  -50.0 bps

  	
   

  	
  20.0 bps

  	
   

  
	
  III

  	
   

  	
  Greater
  than or equal to 1.750:1.00

  	
   

  	
  100.0 bps

  	
   

  	
  -25.0 bps

  	
   

  	
  25.0 bps

  	
   

  



For
the purposes of the pricing grid set forth above, changes in the Applicable
Margin resulting from changes in the Consolidated Leverage Ratio shall become
effective on the date (the “Adjustment Date”) that is three Business
Days after the date on which financial statements are delivered to the Lenders
pursuant to Section 6.1 and shall remain in effect until the next change
to be effected pursuant to this paragraph. 
From the date of this Agreement until the first Adjustment Date,
Tier I shall apply for the Applicable Margin, Annual Letter of Credit Fee
and Unused Commitment Fee Rate.  If any
financial statements referred to above are not delivered within the time
periods specified in Section 6.1, then, until the date that is three
Business Days after the date on which such financial statements are delivered,
the highest rate set forth in each column of the pricing grid shall apply.  In addition, at all times while an Event of
Default shall have occurred and be continuing, the highest rate set forth in
each column of the pricing grid shall apply, and if applicable, the default
rate of interest provided for in Section 2.9(c) shall apply.  Each determination of the Consolidated
Leverage Ratio pursuant to the pricing grid shall be made in a manner consistent
with the determination thereof pursuant to Section 7.1.


“Application”:  an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to issue a
Letter of Credit.


“Approved
Fund”:  as defined in Section 10.6(b).


“Arranger”:  Wells Fargo Bank, National Association, in
its capacities as arranger with respect to the Revolving Facility.


“Asset
Coverage Ratio”:  as defined in
Section 7.1(c).


“Asset
Sale”:  any Disposition of property
or series of related Dispositions of property (excluding any such Disposition
permitted by clause (a), (b), (c) or (d) of 


 


2





















 


Section 7.5) that yields gross proceeds to any Group Member
(valued at the initial principal amount thereof in the case of non-cash
proceeds consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash proceeds) in excess of $5,000,000.


“Assignee”:  as defined in Section 10.6(b).


“Assignment
and Assumption”:  an Assignment and
Assumption, substantially in the form of Exhibit A.


“Available
Revolving Commitment”:  as to any
Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s
Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions
of Credit then outstanding.


“Base
Rate”:  for any day, a rate per annum
equal to the Prime Rate in effect on such day. 
For purposes hereof:  “Prime
Rate” shall mean the rate of interest per annum most recently announced within
Wells Fargo Bank, National Association at its principal office in San Francisco,
California as its Prime Rate, with the understanding that Wells Fargo Bank,
National Association’s Prime Rate is one of its base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Wells Fargo Bank,
National Association may designate.  Any
change in the Base Rate due to a change in the Prime Rate shall be effective as
of the opening of business on the effective day of such change in the Prime
Rate.


“Base
Rate Loans”:  Revolving Loans the
rate of interest applicable to which is based upon the Base Rate.


“Benefited
Lender”:  as defined in Section 10.7(a).


“Board”:  the Board of Governors of the Federal Reserve
System of the United States (or any successor).


“Borrower”:  as defined in the preamble hereto.


“Borrowing
Date”:  any Business Day specified by
the Borrower as a date on which the Borrower requests the Lenders to make Revolving
Loans hereunder.


“Business”:  as defined in Section 4.17(b).


“Business
Day”:  a day other than a Saturday,
Sunday or other day on which commercial banks in San Francisco, California are
authorized or required by law to close, provided, that with respect to
notices and determinations in connection with, and payments of principal and
interest on, LIBOR Loans, such day is also a day for trading by and between
banks in Dollar deposits in the interbank eurodollar market.


 


3





















 


“Capital
Expenditures”:  for any period, with
respect to any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) that should be
capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.


“Capital
Lease Obligations”:  as to any
Person, the obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time determined
in accordance with GAAP.


“Capital
Stock”:  any and all shares,
interests, participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options to
purchase any of the foregoing.


“Cash
Equivalents”:  (a) marketable direct
obligations issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the
date of acquisition; or (b) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial
paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services
(“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”),
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of
acquisition; (d) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than 30 days, with respect to securities issued or fully guaranteed or
insured by the United States government; (e) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as
the case may be) are rated at least A by S&P or A by Moody’s; (f)
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; (g) money market
mutual or similar funds that invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition; (h) money market
funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the
Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and
Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000; or
(i) other short-term liquid assets approved in writing by the Administrative
Agent.


 


4





















 


“Change
of Control”:  the occurrence of any
of the following:


(i)            the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties
or assets of the Borrower and its Subsidiaries taken as a whole to any “person”
(as that term is used in Section 13(d) of the Securities Exchange Act of
1934, as amended);


(ii)           the adoption of a plan relating to the liquidation or
dissolution of the Borrower; or


(iii)          the Borrower consolidates with, or merges with or into, any
Person.


“Closing
Date”:  the date on which the
conditions precedent set forth in Section 5.1 shall have been satisfied,
which date is December 13, 2005.


“Code”:  the Internal Revenue Code of 1986, as amended
from time to time.


“Collateral”:  all property of the Loan Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any Security
Document.


“Commonly
Controlled Entity”:  an entity,
whether or not incorporated, that is under common control with the Borrower
within the meaning of Section 4001 of ERISA or is part of a group that
includes the Borrower and that is treated as a single employer under
Section 414 of the Code.


“Compliance
Certificate”:  a certificate duly
executed by a Responsible Officer substantially in the form of Exhibit B.


“Consolidated
Adjusted EBITDA”:  for any period,
Consolidated EBITDA for such period, minus the sum of (a) income tax
expense, determined on a consolidated basis in accordance with GAAP, (b) dividends
and distributions paid to the Borrower’s shareholders, (c) cash paid for
the redemption, repurchase or retirement of Capital Stock of the Borrower and
(d) Consolidated Unfinanced Capital Expenditures.


“Consolidated
EBITDA”:  for any period,
Consolidated Net Income for such period plus, without duplication and to the
extent reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (a) income tax expense, (b) interest expense
(including fees for Letters of Credit payable pursuant to Section 3.3, but
net of capitalized interest expense), (c) depreciation and amortization expense,
(d) non-cash expenses resulting from the grant of stock options or the issuance
of restricted stock to employees of any Group Member and (e) any extraordinary
or non-recurring non-cash expenses or losses, and minus, (a) to the extent
included in the statement of such Consolidated Net Income for such period, the
sum of any extraordinary, unusual or non-recurring income or gains and (b) any
cash payments made during such period in respect of items described in clause (e)
above subsequent to the fiscal quarter in which the relevant non-cash expenses
or losses were reflected as a charge in the statement of Consolidated Net 


 


5





















 


Income, all as determined on a consolidated basis.  For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a “Reference
Period”), (i) if at any time during such Reference Period any of the Group
Members shall have made any Material Disposition, the Consolidated EBITDA for
such Reference Period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) attributable to the property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the Consolidated EBITDA (if negative) attributable thereto for such Reference
Period and (ii) if during such Reference Period any of the Group Members shall
have made a Material Acquisition, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect thereto as if such Material
Acquisition occurred on the first day of such Reference Period, such pro forma
calculations subject to the Administrative Agent’s approval.


“Consolidated
Fixed Charge Coverage Ratio”:  the
ratio of (a) Consolidated Adjusted EBITDA to (b) Consolidated Fixed
Charges.


“Consolidated
Fixed Charges”:  for any four fiscal
quarter period, the sum of the following, determined on a consolidated basis in
accordance with GAAP:  (a) interest
expense of the Borrower (including fees for Letters of Credit payable pursuant
to Section 3.3) and (b) the aggregate amount of all required principal
payments (including the principal component of payments on Capital Lease
Obligations) on Indebtedness of the Group Members.


“Consolidated
Leverage Ratio”:  the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.


“Consolidated
Net Income”:  for any period, the
consolidated net income (or loss) of the Borrower, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a)
the income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.


“Consolidated
Total Debt”:  at any date, (a) the
aggregate principal amount of all Indebtedness of the Borrower at such date,
determined on a consolidated basis in accordance with GAAP plus, without
duplication of the Indebtedness in clause (a), (b) the L/C Obligations and
the undrawn and unexpired amount of any letters of credit other than the
Letters of Credit; provided that as to clause (b), there shall be excluded any (i) Letter
of Credit with respect to which the Reimbursement Obligations thereunder are fully
secured by cash or Cash Equivalents pledged to the Administrative Agent for the
benefit of the Lenders 


 


6





















 


and the Issuing Lender to secure only the Reimbursement Obligations with
respect to such specific Letter of Credit and (ii) letter of credit issued
for the account of WAHI or LRAC with respect to which the reimbursement
obligations thereunder are fully secured by cash or Cash Equivalents pledged to
the issuer thereof or collateral agent for such issuer to secure only the
reimbursement obligations with respect to such specific letter of credit.


“Consolidated
Unfinanced Capital Expenditures”: 
Capital Expenditures of the Borrower, determined on a consolidated basis
in accordance with GAAP (other than Permitted Acquisitions) that are not
financed by Capital Lease Obligations or with the proceeds of interest bearing,
amortizing Indebtedness.


“Contractual
Obligation”:  as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.


“Default”:  any of the events specified in Section 8,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.


“Disposition”:  with respect to any property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof.  The terms “Dispose”
and “Disposed of” shall have correlative meanings.


“Documentation
Agent”:  as defined in the preamble
hereto.


“Dollars”
and “$”:  dollars in lawful
currency of the United States.


“Domestic
Subsidiary”:  any Subsidiary of the
Borrower organized under the laws of any jurisdiction within the United States.


“Environmental
Laws”:  any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.


“ERISA”:  the Employee Retirement Income Security Act
of 1974, as amended from time to time.


“Eurocurrency
Reserve Requirements”:  for any day
as applied to a LIBOR Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) to be applied in determining the reserve
requirements in effect on such day (including basic, supplemental, marginal and
emergency reserves) under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.


 


7





















 


“Event
of Default”:  any of the events
specified in Section 8, provided that any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.


“Excluded
Foreign Subsidiary”:  any Foreign
Subsidiary in respect of which either (a) the pledge of all of the Capital
Stock of such Subsidiary as Collateral or (b) the guaranteeing by such
Subsidiary of the Obligations could reasonably be expected to result in adverse
tax consequences to the Borrower.


“Existing
Indebtedness”:  as defined in
Section 7.2(d).


“Federal
Funds Effective Rate”:  for any day,
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for the day of such transactions
received by Wells Fargo Bank, National Association from three federal funds
brokers of recognized standing selected by it.


“Fee
Payment Date”:  (a) the third
Business Day following the last day of each March, June, September and December,
(b) the last day of the Revolving Commitment Period and (c) any date that
the Borrower terminates the Revolving Commitments pursuant to Section 2.4.


“Foreign
Subsidiary”:  any Subsidiary of the
Borrower that is not a Domestic Subsidiary.


“Funding
Office”:  the office of the
Administrative Agent specified in Section 10.2 or such other office as may
be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.


“GAAP”:  generally accepted accounting principles in
the United States as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation of
the most recent audited financial statements referred to in Section 4.1.  In the event that any “Accounting Change” (as
defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to reflect equitably
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower’s financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred.  “Accounting
Changes” refers to changes in generally accepted accounting principles in the
United States.


 


8





















 


“Governmental
Authority”:  any nation or
government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization.


“Group
Members”:  the collective reference
to the Borrower and its Subsidiaries.


“Guarantee
and Collateral Agreement”:  the
Guarantee and Collateral Agreement to be executed and delivered by the Borrower
and each Subsidiary Guarantor, substantially in the form of Exhibit C.


“Guarantee
Obligation”:  as to any Person (the “guaranteeing
person”), any obligation, including a reimbursement, counterindemnity or
similar obligation, of the guaranteeing person that guarantees or in effect
guarantees, or which is given to induce the creation of a separate obligation
by another Person (including any bank under any letter of credit) that
guarantees or in effect guarantees, any Indebtedness, leases, dividends,
obligations to assure or hold harmless the owner of any primary obligation
against loss in respect thereof, purchase or payment obligations, working
capital or equity capital obligations or other obligations of any other third
Person in any manner, whether directly or indirectly; provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (x) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (y) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.


“Guarantors”:  the collective reference to the Subsidiary
Guarantors and any other guarantor of the Obligations.


“Indebtedness”:  of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
such Person’s business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party or applicant under or in respect of acceptances,
letters of credit or similar arrangements (excluding surety bonds), (g) the
liquidation value of all mandatorily 


 


9





















 


redeemable preferred Capital Stock of such Person, (h) all Guarantee
Obligations of such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above, (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such obligation, and (j) for the purposes of Section 8(e) only, all
obligations of such Person in respect of Swap Agreements.  Indebtedness does not include the amount of
any holdback or reserve established by agreement with the sellers in connection
with Borrower’s acquisition of Contractor’s Labor Pool, Inc. to the extent the
amount of such holdback or reserve is held in escrow for the payment of
Borrower’s obligations under such agreement. 
The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness expressly provide that such Person
is not liable therefor.


“Insolvency”:  with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.


“Insolvent”:  pertaining to a condition of Insolvency.


“Intellectual
Property”:  the collective reference
to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.


“Interest
Payment Date”:  (a) as to any Base
Rate Loan, the last day of each calendar month to occur while such Revolving
Loan is outstanding and the final maturity date of such Revolving Loan, (b) as
to any LIBOR Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any LIBOR Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Revolving Loan (other than any Revolving Loan
that is an Base Rate Loan), the date of any repayment or prepayment made in
respect thereof.


“Interest
Period”:  as to any LIBOR Loan, (a)
initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such LIBOR Loan and ending one, two or three
months thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Loan and ending one, two, three or six
months thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not later than 11:00 A.M., San Francisco, California time,
on the date that is three Business Days prior to 


 


10





















 


the last day of the then current Interest Period with respect thereto; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:


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


(ii)           the Borrower may not select an Interest Period under the Revolving
Facility that would extend beyond the Revolving Termination Date; and


(iii)          any 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) shall end on the
last Business Day of a calendar month.


“Investments”:  as defined in Section 7.7.


“Issuing
Lender”:  Wells Fargo Bank, National
Association or any affiliate thereof, in its capacity as issuer of any Letter
of Credit.


“L/C
Commitment”:  $80,000,000.


“L/C
Obligations”:  at any time, an amount
equal to the sum of (a) the aggregate then undrawn and unexpired amount of the
then outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit that have not then been reimbursed pursuant to
Section 3.5.


“L/C
Participants”:  with respect to any
Letter of Credit, the collective reference to all the Lenders other than the
Issuing Lender of such Letter of Credit.


“Lenders”:  as defined in the preamble hereto.


“Letters
of Credit”:  as defined in
Section 3.1(a).


“LIBOR
Base Rate”:  with respect to each day
during each Interest Period pertaining to a LIBOR Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period equal
to such Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time,
two Business Days prior to the beginning of such Interest Period.  In the event that such rate does not appear
on Page 3750 of the Telerate screen (or otherwise on such screen), the “LIBOR
Base Rate” shall be determined by reference to such other comparable
publicly available service for displaying LIBOR rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which the Administrative Agent is offered Dollar deposits at or
about 11:00 A.M., San Francisco, California time, two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar 


 


11





















 


market where its eurodollar and foreign currency and exchange
operations are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein.


“LIBOR
Loans”:  Revolving Loans the rate of
interest applicable to which is based upon the LIBOR Rate.


“LIBOR
Rate”:  with respect to each day
during each Interest Period pertaining to a LIBOR Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):






	
  LIBOR Base Rate

  
	
  1.00
  - Eurocurrency Reserve Requirements

  






“LIBOR
Tranche”:  the collective reference
to LIBOR Loans under a particular Revolving Facility whose then current
Interest Periods begin on the same date and end on the same later date (whether
or not such Revolving Loans shall originally have been made on the same day).


“Lien”:  any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).


“Loan
Documents”:  this Agreement, the
Security Documents, the Notes and any amendment, waiver, supplement or other
modification to any of the foregoing.


“Loan
Parties”:  each Group Member that is
a party to a Loan Document.


“LRAC”:  Labor
Ready Assurance Company, an entity organized under the laws of the Cayman
Islands.


“Majority
Lenders”:  at any time, the holders
of 51% or more of (a) until the Closing Date, the Revolving Commitments then in
effect and (b) thereafter, the Total Revolving Commitments then in effect or,
if the Revolving Commitments have been terminated, the Total Revolving Extensions
of Credit then outstanding.


“Margined
Value of Liquid Collateral”:  the
margined value of cash and other liquid assets owned by the Borrower described
in Schedule 1.1A in which the Administrative Agent, for the benefit of the
Lenders, has an exclusive, perfected security interest pursuant to collateral
documentation required by the Administrative Agent, applying the loan to value
percentages applicable to each type of liquid asset as set forth in
Schedule 1.1A; provided that there shall be excluded from Margined Value
of Liquid Collateral cash and Cash Equivalents pledged to the Administrative
Agent to secure only the Reimbursement Obligations with respect to specific
Letter of Credit as referred to in clause (b) of the definition of “Consolidated
Total Debt”.


 


12





















 


“Material
Acquisition” means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by Group Members in excess of $5,000,000.


“Material
Adverse Effect”:  a material adverse
effect on (a) the business, property, operations, condition (financial or
otherwise) or prospects of the Borrower or the Group Members taken as a whole
or (b) the validity or enforceability of this Agreement or any of the
other Loan Documents or the rights or remedies of the Administrative Agent or
the Lenders hereunder or thereunder.


“Material
Disposition” means any Disposition of property or series of related
Dispositions of property that yields gross proceeds to Group Members in excess
of $5,000,000.


“Materials
of Environmental Concern”:  any
gasoline or petroleum (including crude oil or any fraction thereof) or
petroleum products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law, including
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.


“Multiemployer
Plan”:  a Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.


“Net
Cash Proceeds”:  (a) in connection
with any Asset Sale or any Recovery Event, the proceeds thereof in the form of
cash and Cash Equivalents (including any such proceeds received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received), net of attorneys’ fees, accountants’ fees, investment banking fees,
amounts required to be applied to the repayment of Indebtedness secured by a
Lien expressly permitted hereunder on any asset that is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance or
sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds
received from such issuance or incurrence, net of attorneys’ fees, investment
banking fees, accountants’ fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred in connection therewith.


“Net
Domestic Accounts Receivable”:  the
accounts receivable of the Borrower and the Subsidiary Guarantors owed by
account debtors located in the United States and Puerto Rico in which the Administrative
Agent, for the benefit of the Lenders, has an exclusive, perfected security
interest, less:  (a) bad debt
reserves for such accounts receivable established by the Borrower based upon
historical collection of such accounts receivable, which bad debt reserves are
subject to approval and adjustment by the Agent from time to time should the
Agent determine adjustment is appropriate in the exercise of its reasonable 


 


13





















 


credit judgment, (b) accounts receivable due from officers,
employees or Affiliates of the Borrower or any of the Subsidiary Guarantors and
(c) accounts receivable in which any Person other than the Agent for the
benefit of the Lenders has a security interest.


“Non-Excluded
Taxes”:  as defined in Section 2.14(a).


“Non-U.S.
Lender”:  as defined in Section 2.14(d).


“Notes”:  the collective reference to any promissory
note evidencing Revolving Loans.


“Obligations”:  the unpaid principal of and interest on
(including interest accruing after the maturity of the Revolving Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the Revolving
Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent or to any Lender (or, in the case of Specified Swap
Agreements, any affiliate of any Lender), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, this Agreement, any other
Loan Document, the Letters of Credit, any Specified Swap Agreement or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to
the Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.


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


“Participant”:  as defined in Section 10.6(c).


“PBGC”:  the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any successor).


“Permitted
Acquisition”:  an acquisition of all
or substantially all of the assets or of the assets constituting a line of
business or substantially all of the Capital Stock of any Person where (a) no
Default or Event of Default shall have occurred and be continuing on the date
such Permitted Acquisition is consummated, before or after giving effect
thereto, (b) the business acquired (or Person acquired) is principally engaged
in the same line of business (or a business reasonably related thereto) as the
Borrower, (c) the Borrower shall have demonstrated to the Administrative Agent
compliance with the covenants set forth in Section 7.1 (i) on a pro forma
basis (calculated for the relevant period as if such acquisition had occurred
on the first day of the relevant period), for the most recent full fiscal
quarter immediately preceding such consummation date for which the relevant
financial information has been delivered pursuant to Section 6.1 and (ii)
on a projected basis, for each of the four 


 


14





















 


fiscal quarters following the quarter referred to in the preceding
clause (i), (d) the Borrower shall have delivered to the Administrative Agent
for itself and for distribution to each Lender copies of the most recent
audited financial statements (or if unavailable, the most recent unaudited
financial statements) of the acquired Person together with such other
information that the Administrative Agent may reasonably request, (e) the fair
market value of the consideration paid (including the amount of any
Indebtedness or other obligations or liabilities assumed or acquired) in
connection with such Permitted Acquisition together with that for other
Permitted Acquisitions during 12-month period, shall not be in excess of $30,000,000,
(f) the acquired Person shall have generated positive EBITDA (calculated in the
same manner as the calculation of Consolidated EBITDA) during the most recent
12-month period ended immediately prior to the consummation of the acquisition and
(g) a Responsible Officer of the Borrower shall have delivered to the
Administrative Agent a Pro Forma Compliance Certificate.  “Pro Forma Compliance Certificate”
means a certificate to the Administrative Agent certifying as to the accuracy
of clauses (a) through (e) above and providing a detailed computation of
compliance with clause (c) above.


“Person”:  an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.


“Plan”:  at a particular time, any employee benefit
plan that is covered by ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.


“Projections”:  as defined in Section 6.2(c).


“Properties”:  as defined in Section 4.17(a).


“Receivables
Funding Documents”: 
(a) Receivables Funding Agreement dated as of March 1, 2001,
among Labor Ready Funding Corporation, Redwood Receivables Corporation, the
Borrower and General Electric Capital Corporation, (b) Letter of Credit
Agreement dated as of March 1, 2001, between the Borrower and General
Electric Capital Corporation, (c) Receivables Sale and Contribution
Agreement dated as of March 1, 2001, between the Borrower  and Labor Ready Funding Corporation,
(c) Receivables Sale Agreement dated as of March 1, 2001, among the
Borrower and the entities from time to time a party thereto as selling
subsidiaries and (d) all other agreements, instruments and documents
arising out of or related to the foregoing, together with all amendments and
modifications to the documents described in clauses (a) through (d) of this
definition.


“Receivables
Funding Transaction”:  all of the
transactions contemplated by the Receivables Funding Documents.


“Recovery
Event”:  any settlement of or payment
in respect of any property or casualty insurance claim, other than a worker’s
compensation claim, or any condemnation proceeding relating to any asset of any
Group Member.


 


15










 













“Register”:  as defined in Section 10.6(b).


“Regulation U”:  Regulation U of the Board as in effect from
time to time.


“Reimbursement Obligation”:  the obligation of the Borrower to reimburse
the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters
of Credit.


“Reinvestment Deferred Amount”:  with respect to any Reinvestment Event, the
aggregate Net Cash Proceeds received by any Group Member in connection
therewith that are not applied to reduce the Revolving Loans pursuant to
Section 2.6(b) as a result of the delivery of a Reinvestment Notice.


“Reinvestment Event”:  any Asset Sale or Recovery Event in respect
of which the Borrower has delivered a Reinvestment Notice.


“Reinvestment Notice”:  a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an Asset
Sale or Recovery Event to acquire or repair assets useful in its business.


“Reinvestment Prepayment Amount”:  with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to
the relevant Reinvestment Prepayment Date to acquire or repair assets useful in
the Borrower’s business.


“Reinvestment Prepayment Date”:  with respect to any Reinvestment Event, the
earlier of (a) the date occurring 360 days after such Reinvestment Event and
(b) the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire or repair assets useful in the Borrower’s business
with all or any portion of the relevant Reinvestment Deferred Amount.


“Reorganization”:  with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.


“Reportable Event”:  any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty
day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34
or .35 of PBGC Reg. § 4043.


“Required Lenders”:  at any time, the holders of 67% or more of
(a) until the Closing Date, the Revolving Commitments then in effect and (b)
thereafter, the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Total Revolving Extensions of Credit then
outstanding.


“Requirement of Law”:  as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental 


 


16





















 


Authority,
in each case applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.


“Responsible Officer”:  the chief executive officer, president, chief
financial officer or vice president of finance of the Borrower.


“Restricted Payments”:  as defined in Section 7.6.


“Revolving Commitment”:  as to any Lender, the obligation of such
Lender, to make Revolving Loans and participate in Letters of Credit in an
aggregate principal and/or face amount not to exceed the amount set forth under
the heading “Revolving Commitment” opposite such Lender’s name on Schedule 1.1B
or in the Assignment and Assumption pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the
terms hereof.  The original amount of the
Total Revolving Commitments is $80,000,000.


“Revolving Commitment Period”:  the period from and including the Closing
Date to the Revolving Termination Date.


“Revolving Extensions of Credit”:  as to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Revolving Loans held by
such Lender then outstanding and (b) the amount equal to such Lender’s
Revolving Percentage of the L/C Obligations then outstanding.


“Revolving Facility”:  the Revolving Commitments and the extensions
of credit made thereunder.


“Revolving Loans”:  as defined in Section 2.1(a).


“Revolving Percentage”:  as to any Lender at any time, the percentage
which such Lender’s Revolving Commitment then constitutes of the Total
Revolving Commitments or, at any time after the Revolving Commitments shall
have expired or terminated, the percentage which the aggregate principal amount
of such Lender’s Revolving Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Loans then outstanding, provided,
that, in the event that the Revolving Loans are paid in full prior to the
reduction to zero of the Total Revolving Extensions of Credit, the Revolving
Percentages shall be determined in a manner designed to ensure that the other
outstanding Revolving Extensions of Credit shall be held by the Lenders on a
comparable basis.


“Revolving Termination Date”:  November 1, 2008.


“SEC”: 
the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.


“Security Documents”:  the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered to
the Administrative Agent 


 


17





















 


granting
a Lien on any property of any Person to secure the obligations and liabilities
of any Loan Party under any Loan Document.


“Single Employer Plan”:  any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.


“Solvent”:  when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the “present fair
saleable value” of the assets of such Person will, as of such date, exceed the
amount of all “liabilities of such Person, contingent or otherwise”, as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its
debts as they mature.  For purposes of
this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.


“Specified Swap Agreement”:  any Swap Agreement entered into by the
Borrower and any Lender or affiliate thereof in respect of interest rates or
currency exchange rates that is approved by the Required Lenders.


“Subsidiary”:  as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.


“Subsidiary Guarantor”:  each Subsidiary of the Borrower other than
any Excluded Foreign Subsidiary, LRAC, WAHI, Labor Ready Funding Corporation,
Labor Ready, Inc. PAC and Labor Ready GEO/ALA, LLP.


“Swap Agreement”:  any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions; provided
that no 


 


18





















 


phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.


“Syndication Agent”:  as defined in the preamble hereto.


“Total Revolving Commitments”:  at any time, the aggregate amount of the
Revolving Commitments then in effect.


“Total Revolving Extensions of Credit”:  at any time, the aggregate amount of the
Revolving Extensions of Credit of the Lenders outstanding at such time.


“Transferee”:  any Assignee or Participant.


“Type”:  as to any Revolving Loan, its nature as a
Base Rate Loan or a LIBOR Loan.


“Unused Commitment Fee Rate”:  the Unused Commitment Fee Rate determined
pursuant to the pricing grid set forth in the definition of “Applicable Margin”.


“United States”:  the United States of America.


“WAHI”:  Workers Assurance of Hawaii, Inc., a Hawaii
corporation.


“Wholly Owned Subsidiary”:  as to any Person, any other Person all of the
Capital Stock of which (other than directors’ qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.


“Wholly Owned Subsidiary Guarantor”:  any Subsidiary Guarantor that is a Wholly
Owned Subsidiary of the Borrower.


1.2                               Other
Definitional Provisions


(a)           Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.


(b)           As
used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP, (ii) the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”, (iii) the word “incur” shall be construed
to mean incur, create, issue, assume, become liable in respect of or suffer to
exist (and the words “incurred” and “incurrence” shall have correlative
meanings), (iv) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
revenues, accounts, leasehold interests and contract rights, and
(v) references to agreements or other Contractual 


 


19





















 


Obligations
shall, unless otherwise specified, be deemed to refer to such agreements or
Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time.


(c)           The
words “hereof”, “herein” and “hereunder” and words of similar import, when used
in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.


(d)           The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.


2.                                      AMOUNT AND TERMS OF
REVOLVING COMMITMENTS


2.1                               Revolving
Commitments


(a)           Subject
to the terms and conditions hereof, each Lender severally agrees to make
revolving credit loans (“Revolving Loans”) to the Borrower from time to
time during the Revolving Commitment Period in an aggregate principal amount at
any one time outstanding which, when added to the amount equal to such Lender’s
Revolving Percentage of the L/C Obligations then outstanding, does not exceed
the amount of such Lender’s Revolving Commitment.  During the Revolving Commitment Period the
Borrower may use the Revolving Commitments by borrowing, prepaying the
Revolving Loans in whole or in part, and reborrowing, all in accordance with
the terms and conditions hereof.  The
Revolving Loans may from time to time be LIBOR Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.7.


(b)           The
Borrower shall repay all outstanding Revolving Loans on the Revolving
Termination Date.


2.2                               Procedure for Revolving Loan
Borrowing


The Borrower may borrow under the Revolving
Commitments during the Revolving Commitment Period on any Business Day, provided
that the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 11:00 A.M., San
Francisco, California time, (a) three Business Days prior to the requested
Borrowing Date, in the case of LIBOR Loans, or (b) one Business Day prior to
the requested Borrowing Date, in the case of Base Rate Loans) (provided
that any such notice of a borrowing of Base Rate Loans under the Revolving
Facility to finance payments required by Section 3.5 may be given not
later than 10:00 A.M., San Francisco, California time, on the date of the
proposed borrowing), specifying (i) the amount and Type of Revolving Loans to
be borrowed, (ii) the requested Borrowing Date and (iii) in the case of LIBOR
Loans, the respective amounts of each Type of Revolving Loan and the respective
lengths of the initial Interest Period therefor.  Any letters of credit that the Borrower has
outstanding prior to the Closing Date may be replaced by Letters of Credit
issued hereunder.  Each borrowing under
the Revolving Commitments shall be in an amount 


 


20





















 


equal
to $1,000,000 or a greater multiple of $500,000 (or, if the then aggregate
Available Revolving Commitments are less than $1,000,000, such lesser
amount).  Upon receipt of any such notice
from the Borrower, the Administrative Agent shall promptly notify each Lender
thereof.  Each Lender will make the
amount of its pro rata share of each borrowing available to the Administrative
Agent for the account of the Borrower at the Funding Office prior to 12:00
Noon, San Francisco, California time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent.  Such borrowing will then be made available to
the Borrower by the Administrative Agent crediting the account of the Borrower
on the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.


2.3                               Unused
Commitment Fees, etc.


(a)           The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender an unused commitment fee for the period from and including the date
hereof to the last day of the Revolving Commitment Period, computed at the
Unused Commitment Fee Rate on the average daily amount of the Available
Revolving Commitment of such Lender during the period for which payment is
made, payable quarterly in arrears on each Fee Payment Date, commencing on the
first such date to occur after the date hereof.


(b)           The
Borrower agrees to pay to the Administrative Agent the fees in the amounts and
on the dates as set forth in any fee agreements with the Administrative Agent
and to perform any other obligations contained therein.


2.4                               Termination or Reduction of
Revolving Commitments


The Borrower shall have the right, upon not
less than three Business Days’ notice to the Administrative Agent, to terminate
the Revolving Commitments or, from time to time, to reduce the amount of the
Revolving Commitments; provided that no such termination or reduction of
Revolving Commitments shall be permitted if, after giving effect thereto and to
any prepayments of the Revolving Loans made on the effective date thereof, the
Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments.  Any such reduction shall be
in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Commitments then in effect.


2.5                               Optional
Prepayments


The Borrower may at any time and from time to
time prepay the Revolving Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent no later
than 11:00 A.M., San Francisco, California time, three Business Days prior
thereto, in the case of LIBOR Loans, and no later than 11:00 A.M., San
Francisco, California time, one Business Day prior thereto, in the case of Base
Rate Loans, which notice shall specify the date and amount of prepayment and
whether the prepayment is of LIBOR Loans or Base Rate Loans; provided,
that if a LIBOR Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any amounts
owing pursuant to Section 2.15. 
Upon receipt of any such notice the 


 


21





















 


Administrative
Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of Revolving Loans that are Base Rate Loans)
accrued interest to such date on the amount prepaid.  Partial prepayments of a LIBOR Loan shall be
in an aggregate principal amount of not less than $1,000,000 or a greater
multiple of $500,000 (or if the then aggregate amount of the outstanding LIBOR
Loans is less than $1,000,000, such lesser amount).


2.6                               Mandatory Prepayments and
Commitment Reductions


(a)           If
any Capital Stock or Indebtedness shall be issued or incurred by any Group
Member (excluding any Indebtedness incurred in accordance with Section 7.2
and the Net Cash Proceeds received by the Borrower from the exercise of stock
options) an amount equal to 100% of the Net Cash Proceeds in respect of the
issuance of such Capital Stock and the incurrence of such Indebtedness, in each
case, shall be applied on the date of such issuance or incurrence toward the
prepayment of the Revolving Loans to the extent Revolving Loans are then
outstanding.


(b)           If
on any date any Group Member shall receive Net Cash Proceeds from any Asset
Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in
respect thereof, such Net Cash Proceeds shall be applied on such date toward
the prepayment of the Revolving Loans to the extent Revolving Loans are then
outstanding; provided, that, notwithstanding the foregoing, (i) the
aggregate Net Cash Proceeds of Asset Sales and Recovery Events that may be
excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed $5,000,000 in any fiscal year of the Borrower and (ii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied toward
the prepayment of the Revolving Loans to the extent Revolving Loans are then
outstanding.


(c)           Amounts
to be applied in connection with prepayments made pursuant to Section 2.6
shall be applied to the prepayment of the Revolving Loans.  The application of any prepayment pursuant to
Section 2.6 shall be made, first, to Base Rate Loans and, second, to LIBOR
Loans.  Each prepayment of the Revolving
Loans under Section 2.6 shall be accompanied by accrued interest to the
date of such prepayment on the amount prepaid.


2.7                               Conversion and Continuation
Options


(a)           The
Borrower may elect from time to time to convert LIBOR Loans to Base Rate Loans
by giving the Administrative Agent prior irrevocable notice of such election no
later than 11:00 A.M., San Francisco, California time, on the Business Day
preceding the proposed conversion date, provided that any such
conversion of LIBOR Loans may only be made on the last day of an Interest
Period with respect thereto.  The
Borrower may elect from time to time to convert Base Rate Loans to LIBOR Loans
by giving the Administrative Agent prior irrevocable notice of such election no
later than 11:00 A.M., San Francisco, California time, on the third Business
Day preceding the proposed conversion date (which notice shall specify the
length of the initial Interest Period therefor), provided that no Base 


 


22





















 


Rate
Loan under the Revolving Facility may be converted into a LIBOR Loan when any
Event of Default has occurred and is continuing and the Administrative Agent or
any Lender in respect of the Revolving Facility has determined in its sole
discretion not to permit such conversions. 
Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof.


(b)           Any
LIBOR Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice
to the Administrative Agent, in accordance with the applicable provisions of
the term “Interest Period” set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Revolving Loans, provided
that no LIBOR Loan under the Revolving Facility may be continued as such when
any Event of Default has occurred and is continuing and the Administrative
Agent has or any Lender in respect of the Revolving Facility has determined in
its sole discretion not to permit such continuations, and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Revolving Loans shall be automatically
converted to Base Rate Loans on the last day of such then expiring Interest
Period.  Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.


2.8                               Limitations on
LIBOR Tranches


Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of LIBOR Loans
and all selections of Interest Periods shall be in such amounts and be made
pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the LIBOR Loans comprising each LIBOR Tranche
shall be equal to $1,000,000 or a whole multiple of $500,000 in excess thereof
and (b) no more than ten LIBOR Tranches shall be outstanding at any one
time.


2.9                               Interest Rates
and Payment Dates


(a)           Each
LIBOR Loan shall bear interest during the Interest Period with respect thereto
at a rate per annum equal to the LIBOR Rate determined for such day plus the
Applicable Margin.


(b)           Each
Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate
plus the Applicable Margin.


(c)           (i) If
all or a portion of the principal amount of any Revolving Loan or Reimbursement
Obligation shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all outstanding Revolving Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
equal to (x) in the case of the Revolving Loans, the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this Section plus
2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base
Rate Loans under the Revolving Facility plus 2%, and (ii) if all or a portion
of any interest payable on any Revolving Loan or Reimbursement Obligation or
any commitment fee (including any unused commitment fee) or other amount 


 


23





















 


payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans under the
Revolving Facility plus 2% (or, in the case of any such other amounts that do
not relate to the Revolving Facility, the rate then applicable to Base Rate
Loans under the Revolving Facility plus 2%), in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such
amount is paid in full (as well after as before judgment).


(d)           Interest
shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to paragraph (c) of this Section shall be payable
from time to time on demand.


2.10                        Computation of Interest and
Fees


(a)           Interest
and fees payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed.  The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a LIBOR Rate.  Any change in the interest rate on a
Revolving Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on
the day on which such change becomes effective. 
The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate. 
Notwithstanding anything to the contrary in this Section, the Borrower
shall not be required to compensate a Lender pursuant to this Section for any
change in Eurocurrency Reserve Requirement that occurs more than three months
prior to the date that such Lender notifies the Borrower of such change;
provided that, if the change in Eurocurrency Reserve Requirement has a
retroactive effect, then such three-month period shall be extended to
include the period of such retroactive effect.


(b)           Each
determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. 
The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 2.9(a).


2.11                        Inability to Determine
Interest Rate


If prior to the first day of any Interest
Period:


(a)           the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the LIBOR Rate for such Interest Period, or


(b)           the Administrative Agent shall have received notice from
any Lender in respect of the Revolving Facility that the LIBOR Rate determined
or to be determined for such Interest Period will not adequately and fairly
reflect the cost to 


 


24





















 


such Lender (as conclusively certified by such Lender) of making or
maintaining their affected Revolving Loans during such Interest Period,


the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any LIBOR Loans
under the Revolving Facility requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Revolving Loans
under the Revolving Facility that were to have been converted on the first day
of such Interest Period to LIBOR Loans shall be continued as Base Rate Loans
and (z) any outstanding LIBOR Loans under the Revolving Facility shall be
converted, on the last day of the then-current Interest Period, to Base Rate
Loans.  Until such notice has been
withdrawn by the Administrative Agent, no further LIBOR Loans under the
Revolving Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Revolving Loans under the Revolving Facility to LIBOR
Loans.


2.12                        Pro Rata
Treatment and Payments


(a)           Each
borrowing by the Borrower from the Lenders hereunder, each payment by the
Borrower on account of any unused commitment fee and any reduction of the
Revolving Commitments of the Lenders shall be made pro rata according to the
respective Revolving Percentages of the Lenders.


(b)           Each
payment (including each prepayment) by the Borrower on account of principal of
and interest on the Revolving Loans shall be made pro rata according to the
respective outstanding principal amounts of the Revolving Loans then held by
the Lenders.


(c)           All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without
setoff or counterclaim and shall be made prior to 12:00 Noon, San Francisco,
California time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds.  The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received.  If any payment
hereunder (other than payments on the LIBOR Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day.  If any payment
on a LIBOR Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day unless
the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.  In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.


(d)           Unless
the Administrative Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its share of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent, 


 


25





















 


and
the Administrative Agent may, in reliance upon such assumption in its sole
discretion, make available to the Borrower a corresponding amount.  If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds
Effective Rate and (ii) a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, for the
period until such Lender makes such amount immediately available to the
Administrative Agent.  A certificate of
the Administrative Agent submitted to any Lender with respect to any amounts
owing under this paragraph shall be conclusive in the absence of manifest
error.  If such Lender’s share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days after such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to such borrowing under the Revolving Facility, on demand,
from the Borrower.  Nothing herein shall
be deemed to limit the rights of the Administrative Agent or the Borrower against
any Lender.


(e)           Unless
the Administrative Agent shall have been notified in writing by the Borrower
prior to the date of any payment due to be made by the Borrower hereunder that
the Borrower will not make such payment to the Administrative Agent, the Administrative
Agent may assume that the Borrower is making such payment, and the
Administrative Agent may, but shall not be required to, in reliance upon such
assumption in its sole discretion, make available to the Lenders their
respective pro rata shares of a corresponding amount.  If such payment is not made to the
Administrative Agent by the Borrower within three Business Days after such due
date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights
of the Administrative Agent or any Lender against the Borrower.


2.13                        Requirements of
Law


(a)           If
the adoption of or any change in any Requirement of Law of general application
or in the interpretation or application thereof or compliance by any Lender
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date
hereof:


(i)            shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any LIBOR Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 2.14 and changes in the rate of tax on the overall net
income of such Lender);


(ii)           shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or 


 


26





















 


any other acquisition of funds by, any office of such Lender that is
not otherwise included in the determination of the LIBOR Rate; or


(iii)          shall impose on such Lender any other condition;


and
the result of any of the foregoing is to increase the cost to such Lender, by
an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or issuing or participating in Letters of
Credit, or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay such Lender, upon its demand,
any additional amounts necessary to compensate such Lender for such increased
cost or reduced amount receivable.  If
any Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled.


(b)           If
any Lender shall have reasonably determined that the adoption of or any change
in any Requirement of Law of general application regarding capital adequacy or
in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender’s or such corporation’s capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction.


(c)           A
certificate as to any additional amounts payable pursuant to this Section
submitted by any Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error.  Notwithstanding anything to the contrary in
this Section, the Borrower shall not be required to compensate a Lender
pursuant to this Section for any amounts incurred more than three months prior
to the date that such Lender notifies the Borrower of such Lender’s intention
to claim compensation therefor; provided that, if the circumstances
giving rise to such claim have a retroactive effect, then such three-month
period shall be extended to include the period of such retroactive effect.  Borrower shall not have any obligation under
this Section to the extent any increased cost, reduction in the rate of return
on capital of a Lender or any increased requirements regarding capital adequacy
applicable to a Lender are directly attributable to any willful misconduct of
the Lender or any alleged unsafe, unsound or illegal practice engaged in by the
Lender.  The obligations of the Borrower
pursuant to this Section shall survive the termination of this Agreement and
the payment of the Revolving Loans and all other amounts payable hereunder.


 


27





















 


2.14                        Taxes


(a)           All
payments made by the Borrower under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding income, gross
receipts, franchise and any similar taxes imposed on the Administrative Agent
or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document).  If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender’s failure to comply with the requirements of paragraph (d) or (e) of
this Section, (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender’s assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph, or
(iii) that are attributable to such Lender’s failure to provide Borrower
with the taxpayer identification information necessary to avoid mandatory
withholding.


(b)           In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.


(c)           Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly
as possible thereafter the Borrower shall send to the Administrative Agent for
its own account or for the account of the relevant Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof.  If the Borrower
fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as
a result of any such failure.


(d)           Each
Lender (or Transferee) that is not a “U.S. Person” as defined in Section
7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the
Borrower and the 


 


28





















 


Administrative
Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of “portfolio interest”,
a statement substantially in the form of Exhibit D and a Form W-8BEN, or
any subsequent versions thereof or successors thereto, properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from,
or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents.  Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases the
related participation).  In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender.  Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose).  Notwithstanding any other
provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is
not legally able to deliver.


(e)           A
Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender’s judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.


(f)            If
the Administrative Agent or any Lender determines, in the exercise of its
reasonable business judgment, that it has received a refund of any Non-Excluded
Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.14, it shall pay over such refund to the Borrower (but only to
the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 2.14 with respect to the Non-Excluded Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.


 


29





















 


(g)           The agreements in this Section shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.


2.15                        Indemnity


The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of LIBOR
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower in making
any prepayment of or conversion from LIBOR Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of LIBOR Loans on a day that is not the last day of an
Interest Period with respect thereto. 
Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of
such prepayment or of such failure to borrow, convert or continue to the last
day of such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Revolving
Loans provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) that would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market.  A
certificate as to any amounts payable pursuant to this Section submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest error.  This covenant shall survive the termination
of this Agreement and the payment of the Revolving Loans and all other amounts
payable hereunder.


2.16                        Change of
Lending Office


Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 2.13 or 2.14(a) with
respect to such Lender, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Revolving Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this
Section shall affect or postpone any of the obligations of the Borrower or the
rights of any Lender pursuant to Section 2.13 or 2.14(a).


2.17                        Replacement of
Lenders


The Borrower shall be permitted to replace
any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.13 or 2.14(a) or (b) defaults in its obligation to make
Revolving Loans hereunder, with a replacement financial institution; provided
that (i) such replacement does not conflict with any Requirement of Law,
(ii) no 


 


30





















 


Event
of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.16 so as to eliminate the continued need for
payment of amounts owing pursuant to Section Sections 2.13 or 2.14(a),
(iv) the replacement financial institution shall purchase, at par (or such
lesser amount agreed to by the Lender being replaced), all Revolving Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.15 if any LIBOR Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions
of Section 10.6 (provided that the Borrower shall be obligated to
pay the registration and processing fee referred to therein), (viii) until such
time as such replacement shall be consummated, the Borrower shall pay all
additional amounts (if any) required pursuant to Section 2.13 or 2.14(a),
as the case may be, and (ix) any such replacement shall not be deemed to
be a waiver of any rights that the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.


3.                                      LETTERS OF
CREDIT


3.1                               L/C Commitment


(a)           Subject
to the terms and conditions hereof, the Issuing Lender, in reliance on the
agreements of the other Lenders set forth in Section 3.4(a), agrees to
issue letters of credit (“Letters of Credit”) for the account of the
Borrower on any Business Day during the Revolving Commitment Period in such
form as may be approved from time to time by the Issuing Lender; provided
that the Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations would exceed
the L/C Commitment or (ii) the aggregate amount of the Available Revolving
Commitments would be less than zero. 
Each Letter of Credit shall (i) be denominated in Dollars and (ii)
expire no later than the earlier of (x) the first anniversary of its date of
issuance and (y) the date that is five Business Days prior to the Revolving
Termination Date, provided that any Letter of Credit with a one-year
term may provide for the renewal thereof for additional one-year periods (which
shall in no event extend beyond the date referred to in clause (y) above)
unless the Issuing Lender provides notice of non-renewal to the beneficiary of
such Letter of Credit.


(b)           The
Issuing Lender shall not at any time be obligated to issue any Letter of Credit
if such issuance would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any applicable Requirement of
Law.  In the event the Issuing Lender
refuses to issue a Letter of Credit based solely upon the provisions of this
Section 3.1(b), the obligation of the Borrower to pay any unused
commitment fee payable pursuant to Section 2.3 shall abate, which
abatement shall be effective as of the date of such refusal, and shall continue
until such time as the Issuing Lender notifies the Borrower in writing that it
is able to issue Letters of Credit as provided herein.


 


31





















 


3.2                               Procedure for Issuance of
Letter of Credit


The Borrower may from time to time request
that the Issuing Lender issue a Letter of Credit by delivering to the Issuing
Lender at its address for notices specified herein an Application therefor,
completed to the satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may
request.  Upon receipt of any
Application, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
the Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Borrower.  The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance
thereof.  The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to
the Lenders, notice of the issuance of each Letter of Credit (including the
amount thereof).


3.3                               Fees and Other
Charges


(a)           The
Borrower will pay a fee on all outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in effect with respect to LIBOR Loans
under the Revolving Facility, shared ratably among the Lenders and payable in
arrears on each Fee Payment Date.  In
addition, the Borrower shall pay to the Issuing Lender for its own account a
fronting fee in a per annum amount agreed upon by the Borrower and the Issuing
Lender on the undrawn and unexpired amount of each Letter of Credit issued by
the Issuing Lender, payable concurrently with the issuance, renewal or
extension of the such Letter of Credit.


(b)           In
addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing
Lender for such normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, negotiating, effecting payment under,
amending or otherwise administering any Letter of Credit.


3.4                               L/C
Participations


(a)           The
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from the Issuing Lender, on the terms and conditions set forth
below, for such L/C Participant’s own account and risk an undivided interest
equal to such L/C Participant’s Revolving Percentage in the Issuing Lender’s
obligations and rights under and in respect of each Letter of Credit and the
amount of each draft paid by the Issuing Lender thereunder.  Each L/C Participant agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing 


 


32





















 


Lender’s
address for notices specified herein an amount equal to such L/C Participant’s
Revolving Percentage of the amount of such draft, or any part thereof, that is
not so reimbursed.  Each L/C Participant’s
obligation to pay such amount shall be absolute and unconditional and shall not
be affected by any circumstance, including (i) any setoff, counterclaim,
recoupment, defense or other right that such L/C Participant may have against
the Issuing Lender, the Borrower or any other Person for any reason whatsoever,
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 5,
(iii) any adverse change in the condition (financial or otherwise) of the
Borrower, (iv) any breach of this Agreement or any other Loan Document by the
Borrower, any other Loan Party or any other L/C Participant or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing


(b)           If
any amount required to be paid by any L/C Participant to the Issuing Lender
pursuant to Section 3.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (i) such amount, times (ii) the daily average Federal Funds
Effective Rate during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360.  If any such amount required to be paid by any
L/C Participant pursuant to Section 3.4(a) is not made available to the
Issuing Lender by such L/C Participant within three Business Days after the
date such payment is due, the Issuing Lender shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum applicable to Base Rate Loans under
the Revolving Facility.  A certificate of
the Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.


(c)           Whenever,
at any time after the Issuing Lender has made payment under any Letter of
Credit and has received from any L/C Participant its pro rata share of such
payment in accordance with Section 3.4(a), the Issuing Lender receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing
Lender), or any payment of interest on account thereof, the Issuing Lender will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing Lender
shall be required to be returned by the Issuing Lender, such L/C Participant
shall return to the Issuing Lender the portion thereof previously distributed
by the Issuing Lender to it.


3.5                               Reimbursement Obligation of
the Borrower


If any draft is paid under any Letter of
Credit, the Borrower shall reimburse the Issuing Lender for the amount of (a)
the draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment, not later than
12:00 Noon, San Francisco, California time, on (i) the Business Day that the
Borrower 


 


33





















 


receives
notice of such draft, if such notice is received on such day prior to 10:00
A.M., San Francisco, California time, or (ii) if clause (i) above does not
apply, the Business Day immediately following the day that the Borrower
receives such notice.  Each such payment
shall be made to the Issuing Lender at its address for notices referred to
herein in Dollars and in immediately available funds.  Interest shall be payable on any such amounts
from the date on which the relevant draft is paid until payment in full at the
rate set forth in (x) until the Business Day next succeeding the date of the
relevant notice, Section 2.9(b) and (y) thereafter, Section 2.9(c).


3.6                               Obligations
Absolute


The Borrower’s obligations under this
Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment that the Borrower may have or have had against the Issuing Lender, any
beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with the Issuing
Lender that, absent the gross negligence or willful misconduct of the Issuing
Lender, the Issuing Lender shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.  The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions resulting from the gross
negligence or willful misconduct of the Issuing Lender.  The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct, shall be binding on the Borrower and shall not result in
any liability of the Issuing Lender to the Borrower.


3.7                               Letter of
Credit Payments


If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. 
The responsibility of the Issuing Lender to the Borrower in connection
with any draft presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are
substantially in conformity with such Letter of Credit.


3.8                               Applications


To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.


 


34





















 


4.                                      REPRESENTATIONS AND
WARRANTIES


To induce the Administrative Agent and the
Lenders to enter into this Agreement and to make the Revolving Loans and issue
or participate in the Letters of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and each Lender that:


4.1                               Financial
Condition


The audited consolidated balance sheets of
the Borrower as at December 31, 2004, and the related consolidated statements
of income and of cash flows for the fiscal year ended on such date, present fairly
the consolidated financial condition of the Borrower, as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
fiscal year then ended.  The unaudited
consolidated balance sheet of the Borrower as at September 30, 2005, and
the related unaudited consolidated statements of income and consolidated cash
flows for the three-month period ended on such date, present fairly the
consolidated financial condition of the Borrower, as at such date, and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments).  All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
firm of accountants preparing such financial statements and disclosed
therein).  No Group Member has any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term
commitments, including any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this
paragraph.  During the period from
September 30, 2005 to and including the date hereof there has been no
Disposition by any Group Member of any material part of its business or
property.


4.2                               No Change


Since December 31, 2004, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.


4.3                               Existence;
Compliance with Law


Each Group Member (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation or other organization and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.


 


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4.4                               Power; Authorization;
Enforceable Obligations


Each Loan Party has the power and authority,
and the legal right, to make, deliver and perform the Loan Documents to which
it is a party and, in the case of the Borrower, to obtain extensions of credit
hereunder.  Each Loan Party has taken all
necessary organizational action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of
the Borrower, to authorize the extensions of credit on the terms and conditions
of this Agreement.  No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan Documents,
except (i) consents, authorizations, filings and notices described in Schedule
4.4, which consents, authorizations, filings and notices have been obtained or
made and are in full force and effect and (ii) the filings referred to in
Section 4.19.  Each Loan Document
has been duly executed and delivered on behalf of each Loan Party party
thereto.  This Agreement constitutes, and
each other Loan Document upon execution will constitute, a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against each
such Loan Party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).


4.5                               No Legal Bar


The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of any Group Member and
will not result in, or require, the creation or imposition of any Lien on any
of their respective properties or revenues pursuant to any Requirement of Law
or any such Contractual Obligation (other than the Liens created by the
Security Documents).  No Requirement of
Law or Contractual Obligation applicable to the Borrower or any of its
Subsidiaries could reasonably be expected to have a Material Adverse Effect.


4.6                               Litigation


No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against any Group Member or against
any of their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or
(b) that could reasonably be expected to have a Material Adverse Effect.


4.7                               No Default


No Group Member is in default under or with
respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred
and is continuing.


 


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4.8                               Ownership of
Property; Liens


Each Group Member has title in fee simple to,
or a valid leasehold interest in, all its real property, and good title to, or
a valid leasehold interest in, all its other property, and none of such
property is subject to any Lien except as permitted by Section 7.3.


4.9                               Intellectual
Property


Each Group Member owns, or is licensed to
use, all Intellectual Property necessary for the conduct of its business as
currently conducted.  No material claim
has been asserted and is pending by any Person challenging or questioning the
use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim.  The use of Intellectual
Property by each Group Member does not infringe on the rights of any Person in
any material respect.


4.10                        Taxes


Each Group Member has filed or caused to be filed
all Federal, state and other material tax returns that are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
relevant Group Member); no tax Lien has been filed, and, to the knowledge of
the Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.


4.11                        Federal
Regulations


No part of the proceeds of any Revolving
Loans, and no other extensions of credit hereunder, will be used (a) for “buying”
or “carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in
effect for any purpose that violates the provisions of the regulations of the
Board or (b) for any purpose that violates the provisions of the regulations of
the Board.  If requested by any Lender or
the Administrative Agent, the Borrower will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.


4.12                        Labor Matters


Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor
disputes against any Group Member pending or, to the knowledge of the Borrower,
threatened; (b) hours worked by and payment made to employees of each Group
Member have not been in violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters; and (c) all payments
due from any Group Member on account of employee health and welfare 


 


37





















 


insurance
have been paid or accrued as a liability on the books of the relevant Group
Member.


4.13                        ERISA


Neither a Reportable Event nor an “accumulated
funding deficiency” (within the meaning of Section 412 of the Code or
Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to
any Plan, and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. 
No termination of a Single Employer Plan has occurred, and no Lien in
favor of the PBGC or a Plan has arisen, during such five-year period.  The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by a material amount.  Neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made.  No such Multiemployer Plan is in
Reorganization or Insolvent.


4.14                        Investment Company Act;
Other Regulations


No Loan Party is an “investment company”, or
a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. 
No Loan Party is subject to regulation under any Requirement of Law
(other than Regulation X of the Board) that limits its ability to incur
Indebtedness.


4.15                        Subsidiaries


Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 4.15 sets forth the name and jurisdiction of incorporation of each
Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors’ qualifying shares and commitments to issue restricted stock to
employees or directors) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as created by the Loan Documents.


4.16                        Use of Proceeds


The proceeds of the Revolving Loans and the
Letters of Credit, shall be used for general corporate purposes.


 


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4.17                        Environmental
Matters


Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:


(a)           the facilities and properties owned,
leased or operated by any Group Member (the “Properties”) do not
contain, and have not previously contained, any Materials of Environmental
Concern in amounts or concentrations or under circumstances that constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law;


(b)           no Group Member has received or is
aware of any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the business
operated by any Group Member (the “Business”), nor does the Borrower
have knowledge or reason to believe that any such notice will be received or is
being threatened;


(c)           Materials of Environmental Concern
have not been transported or disposed of from the Properties in violation of,
or in a manner or to a location that could give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;


(d)           no judicial proceeding or
governmental or administrative action is pending or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which any Group Member is
or will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the
Business;


(e)           there has been no release or threat
of release of Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of any Group Member in connection
with the Properties or otherwise in connection with the Business, in violation
of or in amounts or in a manner that could give rise to liability under
Environmental Laws;


(f)            the Properties and all operations at
the Properties are in compliance, and have in the last five years been in
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business; and


(g)           no Group Member has assumed any
liability of any other Person under Environmental Laws.


 


39





















 


4.18                        Accuracy of
Information, etc.


No statement or information contained in this
Agreement, any other Loan Document or any other document, certificate or
statement furnished by or on behalf of any Loan Party to the Administrative
Agent or the Lenders, or any of them, for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading.  There is no fact known to
any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.


4.19                        Security
Documents


The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. 
In the case of the Pledged Stock described in the Guarantee and Collateral
Agreement, when stock certificates representing such Pledged Stock are
delivered to the Administrative Agent, and in the case of the other Collateral
described in the Guarantee and Collateral Agreement, when financing statements
and other filings specified on Schedule 4.19 in appropriate form are filed in
the offices specified on Schedule 4.19, the Guarantee and Collateral
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Obligations (as defined in the Guarantee
and Collateral Agreement), in each case prior and superior in right to any
other Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).


4.20                        Solvency


Each Loan Party is, and after giving effect
to the incurrence of all Indebtedness and obligations being incurred in
connection herewith and therewith will be and will continue to be, Solvent.


5.                                      CONDITIONS
PRECEDENT


5.1                               Conditions to Initial
Extension of Credit


The agreement of each Lender to make the
initial extension of credit requested to be made by it is subject to the
satisfaction, prior to or concurrently with the making of such extension of
credit on the Closing Date, of the following conditions precedent:


 


40





















 


(a)                                  Credit Agreement; Guarantee
and Collateral Agreement


The Administrative Agent shall have received
(i) this Agreement executed and delivered by the Administrative Agent, the
Borrower and each Person listed on Schedule 1.1B, (ii) the Guarantee and
Collateral Agreement, executed and delivered by the Borrower and each
Subsidiary Guarantor and (iii) an Acknowledgement and Consent in the form attached
to the Guarantee and Collateral Agreement, executed and delivered by each
Issuer (as defined therein), if any, that is not a Loan Party.


(b)                                  Receivables
Funding Transaction


The Administrative Agent shall have received
satisfactory evidence that: (i) the Receivables Funding Transaction and
all of the Receivables Funding Documents shall have been terminated,
(ii) all obligations of any of the Group Members under the Receivables
Funding Documents shall have been paid in full, (iii) all letters of
credit issued pursuant to the Receivables Funding Documents shall have been
cancelled or backed by Letters of Credit issued by the Issuing Lender,
(iv) all Liens granted in connection with Receivables Funding Transaction
shall have been terminated and (v) all accounts receivable generated by
the Group Members and outstanding as of the Closing Date shall have been
transferred to the Group Members that generated such accounts receivable in a
manner satisfactory to the Administrative Agent.


(c)                                  Due Diligence


The Administrative Agent shall have completed
and approved its due diligence review of the Group Members, including a
Collateral examination conducted by the Administrative Agent (at the Borrower’s
sole cost) deemed acceptable to the Administrative Agent in its sole discretion.


(d)                                  Absence of
Litigation


There shall not exist any action, suit,
investigation, litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental authority that have or could reasonably
be expected to have a Material Adverse Effect on the Borrower or any of the
transactions contemplated by this Agreement, and the Administrative Agent shall
have received an executed certificate in a form acceptable to the
Administrative Agent from a Responsible Officer of the Borrower so certifying.


(e)                                  Absence of
Material Adverse Effect


There shall not have occurred any Material
Adverse Effect since December 31, 2004, or material decline (as determined
by the Administrative Agent) in the market value of the Collateral or any material
portion of the assets of the Group Members, and the Administrative Agent shall
have received an executed certificate in a form acceptable to the
Administrative Agent from a Responsible Officer of the Borrower so certifying.


 


41





















 


(f)                                    Lien Searches


The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions where assets
of each the Loan Parties are located and in the Loan Parties’ respective
jurisdiction of organization, and such search shall reveal no liens on any of
the assets of the Loan Parties except for liens permitted by Section 7.3
or discharged on or prior to the Closing Date pursuant to documentation
satisfactory to the Administrative Agent.


(g)                                 Fees


The Lenders and the Administrative Agent
shall have received all fees required to be paid, and all expenses for which
invoices have been presented (including the reasonable fees and expenses of
legal counsel), on or before the Closing Date. 
All such amounts may be paid with proceeds of Revolving Loans made on
the Closing Date and will be reflected in the funding instructions given by the
Borrower to the Administrative Agent on or before the Closing Date.


(h)                                 Closing Certificate;
Certified Articles of Incorporation; Good Standing Certificates


The Administrative Agent shall have received
(i) a certificate of each Loan Party, dated the Closing Date, substantially in
the form of Exhibit E, with appropriate insertions and attachments,
including the articles or certificate of incorporation of each Loan Party that
is a corporation certified by the relevant authority of the jurisdiction of
organization of such Loan Party, and (ii) a good standing certificate or
equivalent certificate for each Loan Party from its jurisdiction of
organization.


(i)                                    Legal Opinions


The Administrative Agent shall have received
the executed legal opinion of the firm of Lane Powell, counsel to the Loan
Parties, substantially in the form of Exhibit F.


(j)                                    Pledged Stock; Stock Powers;
Pledged Notes


The Administrative Agent shall have received
(i) the certificates representing the shares of Capital Stock pledged pursuant
to the Guarantee and Collateral Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of the
pledgor thereof, (ii) control agreement with respect to each pledge by any Loan
Party of any uncertificated Capital Stock of any Person that is not a
corporation in a form acceptable to the Administrative Agent and (iii) each
promissory note (if any) pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed in blank (or accompanied by an
executed transfer form in blank) by the pledgor thereof.


 


42





















 


(k)                                Filings, Registrations and
Recordings


Each document (including any Uniform
Commercial Code financing statement) required by the Security Documents or
under law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Liens expressly permitted by Section 7.3), shall be in proper
form for filing, registration or recordation.


(l)                                    Insurance


The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.2(b) of
the Guarantee and Collateral Agreement.


(m)                              Notes


The Administrative Agent shall have received,
executed and delivered by the Borrower, a Note for the benefit of any Lender
requesting a Note to further evidence the Borrower’s obligations to such
Lender.


5.2                               Conditions to Each Extension
of Credit


The agreement of each Lender to make any
extension of credit requested to be made by it on any date (including its
initial extension of credit) is subject to the satisfaction of the following
conditions precedent:


(a)                                  Representations
and Warranties


Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made on and as of
such date.


(b)                                  No Default


No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.


(c)                                  Absence of
Material Adverse Effect


There shall not have occurred and be
continuing any Material Adverse Effect since December 31, 2004, or
material decline (as determined by the Administrative Agent) in the market
value of the Collateral or any material portion of the assets of the Group
Members.


 


43





















 


(d)                                  Absence of
Litigation


There shall not exist any action, suit,
investigation, litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental authority that have or could reasonably
be expected to have a Material Adverse Effect.


Each borrowing by and
issuance of a Letter of Credit on behalf of the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of such
extension of credit that the conditions contained in this Section 5.2 have
been satisfied.


6.                                      AFFIRMATIVE
COVENANTS


The Borrower hereby agrees that, so long as
the Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Revolving Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, the Borrower shall and shall cause each of its
Subsidiaries to:


6.1                               Financial
Statements


Furnish to the Administrative Agent and each
Lender:


(a)           as soon as available, but in any
event within the earlier of (i) 90 days after the end of each fiscal year
of the Borrower and (ii) the date following the end of each fiscal year of the
Borrower on which the Borrower is required to file its audited annual financial
statements with the SEC, (A) a copy of the audited consolidated balance
sheet of the Group Members as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by the Borrower’s
certified public accountants as of the date of this Agreement or other
independent certified public accountants of nationally recognized standing and
(B) the unaudited consolidating balance sheet of the Group Members as at
the end of such year and the related unaudited consolidating statement of
income for such year, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects;


(b)           as soon as available, but in any
event within 180 days after the end of each fiscal year of WAHI, a copy of
the audited consolidated balance sheet of WAHI as at the end of such year and
the related audited consolidated statements of income and of cash flows of WAHI
for such year, setting forth in each case in comparative form the figures for
the previous year, reported on without a “going concern” or like qualification
or exception, or qualification arising out of the scope of the audit, by WAHI’s
certified public accountants as of the date of this Agreement or other
independent certified public accountants of nationally recognized standing;


 


44





















 


(c)           as soon as available, but in any
event not later than the earlier of (i) 45 days after the end of each of
the first three quarterly periods of each fiscal year of the Borrower and (ii)
the date following the end of each of the first three quarterly periods of each
fiscal year of the Borrower on which the Borrower is required to file its
unaudited interim financial statements with the SEC, the unaudited consolidated
and consolidating balance sheet of the Group Members as at the end of such
quarter and the related unaudited consolidated and consolidating statements of
income and consolidated statement of cash flows for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments); and


(d)           promptly upon request of the
Administrative Agent, the financial statement referred to in clauses (a), (b)
and (c) above on a consolidating basis.


All such financial statements shall be complete and
correct in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP applied (except as approved by such accountants or officer,
as the case may be, and disclosed in reasonable detail therein) consistently
throughout the periods reflected therein and with prior periods.


6.2                               Certificates;
Other Information


Furnish to the Administrative Agent and each
Lender (or, in the case of clause (f), to the relevant Lender):


(a)           concurrently with the delivery of the
financial statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;


(b)           concurrently with the delivery of any
financial statements pursuant to Section 6.1, (i) a certificate of a Responsible
Officer stating that, to the best of each such Responsible Officer’s knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition contained in this
Agreement and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) in the case of quarterly or annual financial statements,
(x) a Compliance Certificate containing all information and calculations
necessary for determining compliance by each Group Member with the provisions
of this Agreement referred to therein as of the last day of the fiscal quarter
or fiscal year of the Borrower, as the case may be, and (y) to the extent not
previously disclosed to the Administrative Agent, a description of any change
in the jurisdiction of organization of any Loan Party and a list of any
Intellectual Property acquired by any Loan Party 


 


45





















 


since
the date of the most recent report delivered pursuant to this clause (y) (or,
in the case of the first such report so delivered, since the Closing Date);


(c)           as soon as available, and in any
event no later than March 31 of each year, a detailed consolidated budget
for all fiscal years commencing on January 1 of such fiscal year through
the last day of the fiscal year in which the Revolving Termination Date occurs
(including a projected consolidated balance sheet of the Group Members, the
related consolidated statements of projected cash flow, projected changes in
financial position and projected income and a description of the underlying
assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such fiscal
year (collectively, the “Projections”), which Projections shall in each
case be accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions and
that such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;


(d)           within 20 days of the end of
each calendar month, a report in a form acceptable to the Administrative Agent,
dated as of the end of the previous month, reflecting the balance and aging of
the Net Domestic Accounts Receivable, together with a certificate of a
Responsible Officer reflecting compliance with the Asset Coverage Ratio;


(e)           within five days after the same are
sent, copies of all financial statements and reports that the Borrower sends to
the holders of any class of its debt securities or public equity securities
and, within five days after the same are filed, copies of all financial
statements and reports that the Borrower may make to, or file with, the SEC
(10-K and 10-Q reports filed with the SEC shall be deemed to have been
furnished to the Administrative Agent and each Lender upon the filing thereof;
other reports filed with the SEC shall be deemed to have been furnished to the
Administrative Agent and each Lender upon the Borrower’s written notice to the
Administrative Agent of the filing thereof); and


(f)            promptly, such additional financial
and other information as any Lender may from time to time reasonably request.


6.3                               Payment of
Obligations


Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member.


 


46





















 


6.4                               Maintenance of Existence;
Compliance


(a)           (i) Preserve,
renew and keep in full force and effect its organizational existence and (ii)
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.


6.5                               Maintenance of Property;
Insurance


(a) Keep all property useful and
necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.


6.6                               Inspection of Property;
Books and Records; Discussions


(a) Keep proper books of records and
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities and (b) permit representatives of any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial
and other condition of the Group Members with officers and employees of the
Group Members and with their independent certified public accountants.


6.7                               Notices


Promptly give notice to the Administrative
Agent and each Lender of:


(a)           the occurrence of any Default or
Event of Default;


(b)           any (i) default or event of default
under any Contractual Obligation of any Group Member or (ii) litigation,
investigation or proceeding that may exist at any time between any Group Member
and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have
a Material Adverse Effect;


(c)           any litigation or proceeding
affecting any Group Member (i) in which the amount involved is $2,000,000 or
more and not covered by insurance, (ii) in which injunctive or similar relief
is sought or (iii) which relates to any Loan Document;


 


47





















 


(d)           the following events, as soon as
possible and in any event within 30 days after the Borrower knows or has
reason to know thereof:  (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Plan; and


(e)           any development or event that has had
or could reasonably be expected to have a Material Adverse Effect.


Each notice pursuant to this Section 6.7 shall
be accompanied by a statement of a Responsible Officer setting forth details of
the occurrence referred to therein and stating what action the relevant Group
Member proposes to take with respect thereto.


6.8                               Environmental
Laws


(a)           Comply
in all material respects with, and ensure compliance in all material respects
by all tenants and subtenants, if any, with, all applicable Environmental Laws,
and obtain and comply in all material respects with and maintain, and ensure
that all tenants and subtenants obtain and comply in all material respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.


(b)           Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.


6.9                               Additional
Collateral, etc.


(a)           With
respect to any property acquired after the Closing Date by any Group Member
(other than (x) any property described in paragraph (b) or (c) below, (y) any
property subject to a Lien expressly permitted by Section 7.3(g) and (z)
property acquired by any Excluded Foreign Subsidiary) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such amendments
to the Guarantee and Collateral Agreement or such other documents as the
Administrative Agent reasonably deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such property, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required
by the Guarantee and Collateral Agreement or by law or as may be reasonably
requested by the Administrative Agent.


 


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(b)           With
respect to any new Subsidiary (other than an Excluded Foreign Subsidiary)
created or acquired after the Closing Date by any Group Member (which, for the
purposes of this paragraph (b), shall include any existing Subsidiary that
ceases to be an Excluded Foreign Subsidiary), promptly (i) cause such new Subsidiary
(A) to become a party to the Guarantee and Collateral Agreement, (B) to
take such actions necessary or advisable to grant to the Administrative Agent
for the benefit of the Lenders a perfected first priority security interest in
the Collateral described in the Guarantee and Collateral Agreement with respect
to such new Subsidiary, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, in a form reasonable to the Administrative Agent, and (ii) if
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.


(c)           With
respect to any new Excluded Foreign Subsidiary created or acquired after the
Closing Date by any Group Member (other than by any Group Member that is an
Excluded Foreign Subsidiary), promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Excluded Foreign
Subsidiary that is owned by any such Group Member (provided that in no
event shall more than 65% of the total outstanding voting Capital Stock of any
such new Excluded Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the relevant Group Member, and take such other action as
may be necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Administrative Agent’s security interest therein, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.


6.10                        Further
Assurances


Within ten days of request by the
Administrative Agent, duly execute and deliver or cause to be duly executed and
delivered to the Administrative Agent such further instruments, agreements and
documents and do or cause to be done such further acts as may be necessary or
proper in the reasonable opinion of the Administrative Agent to carry out more
effectively the provisions and purpose of this Agreement and the other Loan
Documents.


7.                                      NEGATIVE COVENANTS


The Borrower agrees that, so long as the
Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Revolving Loan or other amount is owing to 


 


49





















 


any
Lender or the Administrative Agent hereunder, the Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, without the
prior written consent of the Administrative Agent and the Required Lenders:


7.1                               Financial
Condition Covenants


(a)                                  Consolidated
Leverage Ratio


Permit the Consolidated Leverage Ratio as at
the last day of any fiscal quarter of the Borrower for the four fiscal quarters
then ended to exceed 2.50:1.00.


(b)                                  Consolidated Fixed Charge
Coverage Ratio


Permit the Consolidated Fixed Charge Coverage
Ratio as at the last day of any fiscal quarter of the Borrower for the four
fiscal quarters then ended to be less than 1.50:1.00.


(c)                                  Asset Coverage
Ratio


Permit the Total Revolving Extensions of
Credit at any time to exceed an amount equal to the sum of (a) 75% of Net
Domestic Accounts Receivable and (b) the Margined Value of Liquid
Collateral (“Asset Coverage Ratio”). 
If at any time the Borrower is in violation of the Asset Coverage Ratio,
the Borrower may cure such violation within 15 days of the earlier of
(i) the date that a certificate of a Responsible Officer regarding
compliance with the Asset Coverage Ratio is due pursuant to Section 6.2(d)
during the month immediately following such violation or (ii) that a
Responsible Officer has knowledge of the occurrence of the violation, by
increasing the amount of Margined Value of Liquid Collateral and/or reducing
the Total Revolving Extensions of Credit by an amount sufficient to satisfy the
Asset Coverage Ratio.


7.2                               Indebtedness


Create, issue, incur, assume, become liable
in respect of or suffer to exist any Indebtedness, except:


(a)           Indebtedness of any Loan Party
pursuant to any Loan Document;


(b)           Indebtedness of the Borrower to any
Wholly Owned Subsidiary Guarantor and of any Wholly Owned Subsidiary Guarantor
to the Borrower or any other Subsidiary;


(c)           Guarantee Obligations incurred in the
ordinary course of business by the Borrower and/or its Subsidiaries of
obligations of any Wholly-Owned Subsidiary Guarantor;


(d)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.2(d) and any refinancings, refundings,
renewals or extensions thereof 


 


50





















 


(without
increasing, or shortening the maturity of, the principal amount thereof) (“Existing
Indebtedness”);


(e)           Indebtedness (including, without
limitation, Capital Lease Obligations) secured by Liens permitted by Section
7.3(g) and in an aggregate principal amount not to exceed $10,000,000 at any
one time outstanding;


(f)            Indebtedness of a Subsidiary
acquired pursuant to a Permitted Acquisition (or Indebtedness assumed by the
Borrower or any of its Wholly Owned Subsidiaries pursuant to a Permitted
Acquisition as a result of a merger or consolidation or the acquisition of an
asset securing such Indebtedness) (the “Permitted Acquired Debt”), so
long as (A) such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition and (B) the sum of
all such Indebtedness under this clause (f) shall not exceed an aggregate
amount equal to $30,000,000 at any one time outstanding;


(g)           additional Indebtedness of the
Borrower or any of its Subsidiaries in an aggregate principal amount (for the
Borrower and all Subsidiaries) not to exceed $1,000,000 at any one time
outstanding;


(h)           Reimbursement obligations under
letters of credit issued for the account of WAHI or LRAC to the extent such
letters of credit are secured by cash or Cash Equivalents pledged to secure
only the reimbursement obligations with respect to such letters of credit; and


(i)            Until January 31, 2006,
Indebtedness of Borrower in an amount not to exceed $8,125,000 evidenced by
that certain Revolving Reducing Note in the initial principal amount of
$10,000,000, dated as of January 4, 2002, and payable to Wells Fargo Bank,
National Association.


7.3                               Liens


Create, incur, assume or suffer to exist any
Lien upon any of its property, whether now owned or hereafter acquired, except:


(a)           Liens for taxes not yet due or that
are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;


(b)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business that are not overdue for a period of more than 30 days or that are
being contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;


 


51





















 


(c)           pledges or deposits of cash and Cash
Equivalents to secure obligations under workers’ compensation, unemployment
insurance and other social security legislation or to secure reimbursement
obligations under letters of credit that secure obligations under workers’
compensation, unemployment insurance and other social security legislation;


(d)           deposits to secure the performance of
bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;


(e)           easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business that, in the aggregate, are not substantial in amount and that do not
in any case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries;


(f)            Liens in existence on the date
hereof listed on Schedule 7.3(f), securing Indebtedness permitted by Section
7.2(d) or 7.2(i), provided that no such Lien is spread to cover any
additional property after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;


(g)           Liens securing Indebtedness of the
Borrower or any other Subsidiary incurred pursuant to Section 7.2(e) to finance
the acquisition of fixed or capital assets, provided that (i) such Liens
shall be created substantially simultaneously with the acquisition of such
fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (iii) the
amount of Indebtedness secured thereby is not increased;


(h)           Liens created pursuant to the
Security Documents;


(i)            Liens on property or assets of an
acquired Subsidiary of the Borrower pursuant to a Permitted Acquisition, which
liens were in existence at the time such Subsidiary is acquired pursuant to the
Permitted Acquisition; provided that (i) any Indebtedness that is
secured by such Liens is permitted to exist under Section 7.2(f), (ii) such
Liens are not incurred in connection with, or in contemplation or anticipation
of, such Permitted Acquisition and do not attach to any asset of the Borrower
or any of its other Subsidiaries and (iii) the encumbered assets continue
to be owned by the acquired Subsidiary;


(j)            any interest or title of a lessor
under any lease entered into by the Borrower or any other Subsidiary in the
ordinary course of its business and covering only the assets so leased; and


(k)           Liens not otherwise permitted by this
Section so long as the aggregate outstanding principal amount of the
obligations secured does not exceed (as to the Borrower and all Subsidiaries)
$1,000,000 at any one time.


 


52





















 


7.4                               Fundamental
Changes


Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:


(a)           any Subsidiary of the Borrower may be
merged or consolidated with or into the Borrower (provided that the
Borrower shall be the continuing or surviving corporation) or with or into any
Wholly Owned Subsidiary Guarantor (provided that the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving Person);


(b)           any Subsidiary of the Borrower may
Dispose of any or all of its assets (i) to the Borrower or any Wholly Owned
Subsidiary Guarantor (upon voluntary liquidation or otherwise) or (ii) pursuant
to a Disposition permitted by Section 7.5; and


(c)           any Investment expressly permitted by
Section 7.7 may be structured as a merger, consolidation or amalgamation.


7.5                               Disposition of
Property


Dispose of any of its property, whether now
owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell
any shares of such Subsidiary’s Capital Stock to any Person, except:


(a)           the Disposition of obsolete or worn
out property in the ordinary course of business;


(b)           the sale of inventory in the ordinary
course of business;


(c)           Dispositions permitted by clause (i)
of Section 7.4(b);


(d)           the sale or issuance of any
Subsidiary’s Capital Stock to the Borrower or any Wholly Owned Subsidiary
Guarantor; and


(e)           the Disposition of other property
having a fair market value not to exceed $1,000,000 in the aggregate for any
fiscal year of the Borrower.


7.6                               Restricted
Payments


Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of any Group Member, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
any Group Member (collectively, “Restricted Payments”) until the
Borrower shall have demonstrated to the Administrative Agent 


 


53





















 


compliance
with the covenants set forth in Section 7.1 on a pro forma basis
(calculated for the relevant period as if such proposed event had occurred on
the last day of the relevant period), for the most recent full fiscal quarter
immediately preceding such proposed event for which the relevant financial
information has been delivered pursuant to Section 6.1 .  Notwithstanding the foregoing and without
regard to the calculation of covenants set forth in Section 7.1 on a pro
forma basis, any Subsidiary may make Restricted Payments to the Borrower or any
Wholly Owned Subsidiary Guarantor.


7.7                               Investments


Make any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
Person (all of the foregoing, “Investments”), except:


(a)           extensions of trade credit in the
ordinary course of business;


(b)           investments in Cash Equivalents;


(c)           Guarantee Obligations permitted by
Section 7.2;


(d)           loans and advances to employees of
any Group Member in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount for all Group
Members not to exceed $500,000 at any one time outstanding;


(e)           Investments in assets useful in the
business of the Group Members made by the Borrower or any of its Subsidiaries
with the proceeds of any Reinvestment Deferred Amount;


(f)            intercompany Investments by any
Group Member in the Borrower or any Person that, prior to such investment, is a
Wholly Owned Subsidiary Guarantor;


(g)           Investments in Excluded Foreign
Subsidiaries in an amount not exceeding $15,000,000 in any fiscal year of the
Borrower;


(h)           So long as WAHI is a Subsidiary of
the Borrower, investments in WAHI in an aggregate amount not to exceed 110% of
the aggregate amount of workers’ compensation liabilities transferred by the
Group Members to WAHI;


(i)            So long as LRAC is a Subsidiary of
the Borrower, investments in LRAC in an aggregate amount not to exceed 110% of
the aggregate amount of workers’ compensation liabilities transferred by the
Group Members to LRAC.


(j)            Permitted Acquisitions (including
any Investments owned by a Person acquired in a Permitted Acquisition); and


 


54





















 


(k)           in addition to Investments otherwise
expressly permitted by this Section, Investments by the Borrower or any of its
Subsidiaries in an aggregate amount (valued at cost) not to exceed $1,000,000
in the aggregate during the term of this Agreement.


7.8                               Transactions
with Affiliates


Enter into any transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the relevant Group Member, and (c) upon fair
and reasonable terms no less favorable to the relevant Group Member than it
would obtain in a comparable arm’s length transaction with a Person that is not
an Affiliate.


7.9                               Sales and
Leasebacks


Enter into any arrangement with any Person
providing for the leasing by any Group Member of personal property that has
been or is to be sold or transferred by such Group Member to such Person or to
any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member.


7.10                        Swap Agreements


Enter into any Swap Agreement, except (a)
Swap Agreements entered into to hedge or mitigate risks to which the Borrower
or any Subsidiary has actual exposure (other than those in respect of Capital
Stock) and (b) Swap Agreements entered into in order to effectively cap, collar
or exchange interest rates (from fixed to floating rates, from one floating
rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any Subsidiary.


7.11                        Changes in
Fiscal Periods


Permit the fiscal year of the Borrower to end
on a day other than the Friday closest to December 31 or change the Borrower’s
method of determining fiscal quarters.


7.12                        Negative Pledge
Clauses


Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group
Member to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired other than (a)
this Agreement and the other Loan Documents and (b) any agreements governing
any purchase money Liens or Capital Lease Obligations otherwise permitted
hereby (in which case, any prohibition or limitation shall only be effective
against the assets financed thereby).


 


55





















 


7.13                        Clauses Restricting
Subsidiary Distributions


Enter into or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the
Borrower or any other Subsidiary of the Borrower, (b) make loans or advances
to, or other Investments in, the Borrower or any other Subsidiary of the
Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.


7.14                        Lines of
Business


Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Group Members
are engaged on the date of this Agreement or that are reasonably related
thereto.


8.                                      EVENTS OF
DEFAULT


If any of the following events shall occur
and be continuing:


(a)           the Borrower shall fail to pay any
principal of any Revolving Loan or Reimbursement Obligation when due in
accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Revolving Loan or Reimbursement Obligation, or any other amount
payable hereunder or under any other Loan Document, within five days after any
such interest or other amount becomes due in accordance with the terms hereof;
or


(b)           any representation or warranty made
or deemed made by any Loan Party herein or in any other Loan Document or that
is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been inaccurate in any material
respect on or as of the date made or deemed made; or


(c)           any Loan Party shall default in the
observance or performance of any agreement contained in clause (i) or (ii) of
Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or
Section 7 of this Agreement or Sections 5.5 and 5.7(b) of the
Guarantee and Collateral Agreement; or


(d)           any Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section), and such default shall continue unremedied for a period of 30
days after notice to the Borrower from the Administrative Agent or the Required
Lenders; or


 


56










 













(e)           any Group Member shall (i) default in
making any payment of any principal of any Indebtedness (including any
Guarantee Obligation, but excluding the Revolving Loans) on the scheduled or
original due date with respect thereto; or (ii) default in making any payment
of any interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided, that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default unless, at
such time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $3,000,000; or


(f)            (i) any Group Member shall commence
any case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or any Group Member shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Group
Member any case, proceeding or other action of a nature referred to in clause
(i) above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed or undischarged for a
period of 60 days; or (iii) there shall be commenced against any Group Member
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) any Group Member
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) any Group Member shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or


(g)           (i) any Person shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined
in Section 302 of ERISA), whether or 


 


57





















 


not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of any Group Member or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) any Group Member or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected to
have a Material Adverse Effect; or


(h)           one or more judgments or decrees
shall be entered against any Group Member involving in the aggregate a
liability (not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage) of $1,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or


(i)            any of the Security Documents shall
cease, for any reason, to be in full force and effect, or any Loan Party or any
Affiliate of any Loan Party shall so assert, or any Lien created by any of the
Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or


(j)            the guarantee contained in the
Guarantee and Collateral Agreement shall cease, for any reason, to be in full
force and effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or


(k)           (i) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) shall become, or obtain rights (whether by means or
warrants, options or otherwise) to become, the “beneficial owner” (as defined
in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934,
as amended), directly or indirectly, of more than 35% of the outstanding common
stock of the Borrower; or (ii) a Change of Control shall occur.


then, and in
any such event, (A) if such event is an Event of Default specified in clause
(i) or (ii) of paragraph (f) above with respect to the Borrower, automatically
the Revolving Commitments shall immediately terminate and the Revolving Loans
(with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) shall 


 


58





















 


immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken:  (i) with the consent of the Majority Lenders,
the Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving
Commitments to be terminated forthwith, whereupon the Revolving Commitments
shall immediately terminate; and (ii) with the consent of the Majority Lenders,
the Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Revolving
Loans (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.  With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of
an acceleration pursuant to this paragraph, the Borrower shall at such time
deposit in a cash collateral interest bearing account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of
such Letters of Credit.  Amounts held in
such cash collateral account shall be applied by the Administrative Agent to
the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been
fully drawn upon, if any, shall be applied to repay other obligations of the
Borrower hereunder and under the other Loan Documents.  After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower (or such other Person
as may be lawfully entitled thereto). 
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived by the
Borrower.


9.                                      THE
AGENTS


9.1                               Appointment


Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto.   Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, or 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 the Administrative Agent.


 


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9.2                               Delegation
of Duties


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


9.3                               Exculpatory
Provisions


Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person’s own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder.  The
Agents shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party.


9.4                               Reliance by
Administrative Agent


The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent.  The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof shall have been filed
with the Administrative Agent.  The
Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders (or, if so
specified by this Agreement, all Lenders) as it deems appropriate or it shall
first be indemnified to its 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.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request 


 


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and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Revolving Loans.


9.5                               Notice
of Default


The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders (or, if so specified by
this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.


9.6                               Non-Reliance on Agents
and Other Lenders


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


 


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9.7                               Indemnification


The Lenders agree to indemnify
each Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Revolving Commitments
shall have terminated and the Revolving Loans shall have been paid in full,
ratably in accordance with such Aggregate Exposure Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever that may at any time (whether before or
after the payment of the Revolving Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Revolving Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent’s gross
negligence or willful misconduct.  The
agreements in this Section shall survive the payment of the Revolving Loans and
all other amounts payable hereunder.


9.8                               Agent
in Its Individual Capacity


Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent.  With respect to its Revolving Loans made or
renewed by it and with respect to any Letter of Credit issued or participated
in by it, each Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Agent, and the terms “Lender” and “Lenders” shall include each
Agent in its individual capacity.


9.9                               Successor
Administrative Agent


The Administrative Agent may
resign as Administrative Agent upon 10 days’ notice to the Lenders and the
Borrower.  If the Administrative Agent
shall resign as Administrative Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event
of Default under Section 8(a) or Section 8(f) with respect to the
Borrower shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties
of the Administrative Agent, and the term “Administrative Agent” shall mean
such successor agent effective upon such appointment and approval, and the
former Administrative Agent’s rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders 


 


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of the Revolving Loans.  If no
successor agent has accepted appointment as Administrative Agent by the date
that is 10 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective, and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.  After any retiring Administrative Agent’s
resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.


9.10                        Documentation Agent and
Syndication Agent


Neither the Documentation Agent
nor the Syndication Agent shall have any duties or responsibilities hereunder
in its capacity as such.


10.                               MISCELLANEOUS


10.1                        Amendments
and Waivers


Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1.  The Required Lenders
and each Loan Party party to the relevant Loan Document may, or, with the
written consent of the Required Lenders, the Administrative Agent and each Loan
Party party to the relevant Loan Document may, from time to time, (a) enter
into written amendments, supplements or modifications hereto and to the other
Loan Documents for the purpose of adding any provisions to this Agreement or
the other Loan Documents or changing in any manner the rights of the Lenders or
of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) forgive or reduce the principal
amount or extend the final scheduled date of maturity of any Revolving Loan,
reduce the stated rate of any interest or fee payable hereunder (except in
connection with the waiver of applicability of any post-default increase in
interest rates (which waiver shall be effective with the consent of the
Required Lenders)) or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Lender’s Revolving
Commitment, in each case without the written consent of each Lender directly
affected thereby;  (ii) eliminate or reduce
the voting rights of any Lender under this Section 10.1 without the written
consent of such Lender; (iii) reduce any percentage specified in the definition
of Required Lenders, consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; (iv) amend, modify or waive any provision of
Section 2.12 without the written consent of the Required Lenders; (v)
reduce the amount of the Net Cash Proceeds 


 


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required to be applied to prepay Revolving Loans under the Agreement
without the written consent of the Required Lenders; (vi) amend, modify or
waive any provision of Section 9 without the written consent of the
Administrative Agent; (vii) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Lender.  Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Revolving Loans. 
In the case of any waiver, the Loan Parties, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.


10.2                        Notices


All notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or
three Business Days after being deposited in the mail, postage prepaid, or, in
the case of telecopy notice, when received, addressed as follows in the case of
the Borrower and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto:


Borrower:                                                                                                                                            Labor
Ready, Inc.

1015 A Street

Tacoma, Washington 98402

Attention:  Vice President, Finance

Telecopy:  (800) 587-9257

Telephone:  (800) 991-4991


Administrative
Agent:                                                                         Wells
Fargo Bank, National Association

Commercial Banking Office

1201 Pacific Avenue, Third Floor

Tacoma, Washington 98402

Attention:  John Cantalupo

Email Address:  cantalou@wellsfargo.com

Telecopy:  (253) 593-5215

Telephone:  (253) 593-5780


provided that any notice, request or demand to
or upon the Administrative Agent or the Lenders shall not be effective until
received.


Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Section 2 unless otherwise agreed by the Administrative Agent and the
applicable Lender.


 


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The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.


10.3                        No Waiver;
Cumulative Remedies


No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.


10.4                        Survival of Representations and
Warranties


All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of
the Revolving Loans and other extensions of credit hereunder.


10.5                        Payment of
Expenses and Taxes


(a)           The Borrower agrees (i) to pay or reimburse the
Administrative Agent for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable fees and disbursements of counsel to the
Administrative Agent, collateral examination costs and filing and recording
fees and expenses, with statements with respect to the foregoing to be
submitted to the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as the Administrative Agent shall deem
appropriate, (ii) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including the reasonable fees and disbursements
of counsel (including the allocated fees and expenses of in-house counsel) to
each Lender and of counsel to the Administrative Agent, (iii) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay by the Borrower in paying, stamp, excise and other
taxes, if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (iv) to pay, 


 


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indemnify, and hold each Lender and the Administrative Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an “Indemnitee”) harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including any of the foregoing relating to the use of proceeds of the Revolving
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of any Group Member or any of
the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any
Loan Party under any Loan Document (all the foregoing in this clause (iv),
collectively, the “Indemnified Liabilities”), provided, that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified Liabilities resulted
from the gross negligence or willful misconduct of such Indemnitee.  Without limiting the foregoing, and to the
extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee.  All
amounts due under this Section 10.5 shall be payable not later than 10
days after written demand therefor.  The
agreements in this Section 10.5 shall survive repayment of the Revolving
Loans and all other amounts payable hereunder.


(b)           If any claim,
action or proceeding shall be brought or asserted against any Indemnitee in
respect of which the indemnity provided in this Section 10.5 may be sought from
the Borrower, each such Indemnitee or a representative of the Indemnitees shall
promptly notify the Borrower in writing of its claim of indemnification with
respect to such claim, action or proceeding. 
In such event, the Indemnitees shall keep the Borrower apprised of the
status of any such matter and shall provide the Borrower with a reasonable
opportunity to consult with the Indemnitees as to the defense or settlement of
such matter.  An Indemnitee’s failure to
so notify the Borrower promptly following its receipt of notice or actual
knowledge of any claim, action or proceeding shall relieve the Borrower from
any liability under this Section 10.5 to such Indemnitee in connection
with the defense or indemnity with respect to such claim, action or proceeding
to the extent the Borrower has been prejudiced by such delay in notification.
The Borrower shall, at its expense, have the right to employ separate counsel
in any action or proceeding and to participate in the defense thereof except to
the extent that counsel for an Indemnitee determines that such participation
could reasonably be prejudicial to such Indemnitee.  The Lenders agree to cooperate with the
Borrower in connection with any claim, action, suit or proceeding brought by or
against them in connection with the indemnification granted hereunder.


10.6                        Successors and Assigns;
Participations and Assignments


(a)           The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby 


 


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(including any affiliate of the Issuing Lender that issues any Letter
of Credit), except that (i) the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.


(b)           (i)            Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees (each, an “Assignee”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Revolving Commitments and the Revolving Loans at the time owing to it) with the
prior written consent of:


                (A)          the
Borrower (such consent not to be unreasonably withheld), provided that
no consent of the Borrower shall be required for an assignment to a Lender, an
affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of
Default has occurred and is continuing, any other Person;


                (B)           the
Administrative Agent; and


                (C)           the
Issuing Bank.


                (ii)           Assignments
shall be subject to the following additional conditions:


                (A)          except
in the case of an assignment to a Lender, an affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Revolving Commitments or Revolving Loans under the Revolving Facility,
the amount of the Revolving Commitments or Revolving Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that
(1) no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing and (2) such amounts shall be aggregated in
respect of each Lender and its affiliates or Approved Funds, if any;


                (B)           the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and


                (C)           the
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire.


For the purposes of this Section 10.6, the terms “Approved Fund”
has the following meaning:


“Approved Fund” means any Person (other than a natural person)
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions 


 


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of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.


                (iii)          Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption
the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obliga­tions under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.14, 2.15 and 10.5). 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 10.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.


                (iv)          The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Revolving Commitments of, and principal amount of the
Revolving Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.


                (v)           Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an Assignee, the Assignee’s completed administrative
questionnaire (unless the Assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section
and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


(c)           (i)            Any
Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Revolving Commitments and the
Revolving Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Administrative Agent, the
Issuing Lender and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement.  Any 


 


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agreement pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that when the sale of a participation to a
Participant is made with the Borrower’s prior written consent (which consent
shall not be required if there exists an Event of Default) the agreement may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver that (1) requires the consent of
each Lender directly affected thereby pursuant to the proviso to the second
sentence of Section 10.1 and (2) directly affects such Participant.  Subject to paragraph (c)(ii) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (b) of this
Section.  To the extent permitted by law
and when the sale of a participation to a Participant is made with the Borrower’s
prior written consent (which consent shall not be required if there exists an
Event of Default) the, Participant also shall be entitled to the benefits of
Section 10.7(b) as though it were a Lender, provided such
Participant shall be subject to Section 10.7(a) as though it were a
Lender.


                (ii)           A
Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.14 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent.  Any Participant
that is a Non-U.S. Lender shall not be entitled to the benefits of
Section 2.14 unless such Participant complies with Section 2.14(d).


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


(e)           The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (d) above.


10.7                        Adjustments;
Set-off


(a)           Except to the extent that this Agreement expressly
provides for payments to be allocated to a particular Lender or to the Lenders
under the Revolving Facility, if any Lender (a “Benefited Lender”)
shall, at any time after the Revolving Loans and other amounts payable
hereunder shall immediately become due and payable pursuant to Section 8,
receive any payment of all or part of the Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in
Section 8(f), or otherwise), in a greater proportion than any such payment
to or collateral received by any other Lender, if any, in respect of the
Obligations owing to such other Lender, such Benefited Lender shall purchase
for cash from 


 


69





















 


the other Lenders a participating interest in such portion of the
Obligations owing to each such other Lender, or shall provide such other
Lenders with the benefits of any such collateral, as shall be necessary to
cause such Benefited Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders; provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.


(b)           In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such amount any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower, as the case may
be.  Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such setoff and application.


10.8                        Counterparts


This Agreement may be executed
by one or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. 
Delivery of an executed signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.  A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.


10.9                        Severability


Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.


10.10                 Integration


This Agreement and the other
Loan Documents represent the entire agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other
Loan Documents.


 


70





















 


10.11                 GOVERNING LAW


THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF WASHINGTON, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.


10.12                 Submission To Jurisdiction; Waivers


The Borrower hereby irrevocably
and unconditionally:


(a)           submits for itself and its property
in any legal action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of Washington, the courts of the United States for the
Western District of Washington, and appellate courts from any thereof;


(b)           consents that any such action or
proceeding may be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;


(c)           agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction; and


(d)           waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal
action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.


10.13                 Acknowledgements


The Borrower hereby
acknowledges that:


(a)           it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents;


(b)           neither the Administrative Agent nor
any Lender has any fiduciary relationship with or duty to the Borrower arising
out of or in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and


(c)           no joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders or among the Borrower
and the Lenders.


 


71





















 


10.14                 Releases of Guarantees and Liens


(a)           Notwithstanding anything to the contrary contained herein
or in any other Loan Document, the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 10.1) to take any action requested
by the Borrower having the effect of releasing any Collateral or guarantee
obligations (i) to the extent necessary to permit consummation of any
transaction not prohibited by any Loan Document or that has been consented to
in accordance with Section 10.1 or (ii) under the circumstances described
in paragraph (b) below.


(b)           At such time as the Revolving Loans, the Reimbursement
Obligations and the other obligations under the Loan Documents (other than
obligations under or in respect of Swap Agreements) shall have been paid in
full, the Revolving Commitments have been terminated and no Letters of Credit
shall be outstanding, the Collateral shall be released from the Liens created
by the Security Documents, and the Security Documents and all obligations
(other than those expressly stated to survive such termination) of the
Administrative Agent and each Loan Party under the Security Documents shall
terminate, all without delivery of any instrument or performance of any act by
any Person.


10.15                 Confidentiality


Each of the Administrative
Agent and each Lender agrees to keep confidential all non-public information
provided to it by any Loan Party, the Administrative Agent or any Lender
pursuant to or in connection with this Agreement that is designated by the
provider thereof as confidential; provided that nothing herein shall
prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent, any other Lender or any affiliate
thereof, (b) subject to an agreement to comply with the provisions of this
Section, to any actual or prospective Transferee or any direct or indirect
counterparty to any Swap Agreement (or any professional advisor to such
counterparty), (c) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order
of any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been
publicly disclosed, (h) to the National Association of Insurance Commissioners
or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender’s investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.


10.16                 WAIVERS OF JURY
TRIAL


THE
BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT 


 


72





















 


OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.


10.17                 Statutory Notice


ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.


[The remainder of this page intentionally left blank.]


 


73





















 


IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above written.


 


	
   

  	
   

  	
  LABOR READY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Derrek L. Gafford

  
	
   

  	
   

  	
  Derrek L. Gafford

  
	
   

  	
   

  	
  Vice President of Finance and Accounting/Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent,
  Syndication Agent, Documentation Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Cantalupo

  
	
   

  	
   

  	
  Name: John Cantalupo

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy Holsapple

  
	
   

  	
   

  	
  Name: Timothy Holsapple

  
	
   

  	
   

  	
  Title: Senior Vice President

  



 


S-1










 













SCHEDULE
1.1A

Margin Value of Liquid Assets




Cash, U. S. Gov’t, Treasuries, Munis & Corporate Bonds




	
  Type of Security

  	
   

  	
  LTV

  	
   

  
	
  The maximum advance is not to
  exceed the lower of the face or redemption value of debt securities.

  	
   

  	
   

  	
   

  
	
  Cash

  	
   

  	
  95

  	
  %

  
	
  U.S. Government Bills,
  Notes and Bonds and U.S. Government sponsored agency securities with
  maturities =/< 5 years

  	
   

  	
  90

  	
  %

  
	
  U.S. Government Bills,
  Notes and Bonds and U.S. Government sponsored agency securities with
  maturities > 5 years, but =/< 10 years

  	
   

  	
  85

  	
  %

  
	
  U.S. Government Bills,
  Notes and Bonds and U.S. Government sponsored agency securities with
  maturities > 10 years

  	
   

  	
  80

  	
  %

  
	
  High Grade Corporate or
  Municipal Bonds/Notes (AAA/Aaa, AA/Aa, SP-1) with maturities =/< 5 years

  	
   

  	
  85

  	
  %

  
	
  High Grade Corporate or
  Municipal Bonds/Notes (AAA/Aaa, AA/Aa, SP-1) with maturities > 5 years,
  but =/< 10 years

  	
   

  	
  80

  	
  %

  
	
  High Grade Corporate or
  Municipal Bonds/Notes (AAA/Aaa, AA/Aa, SP-1) with maturities > 10 years

  	
   

  	
  75

  	
  %

  
	
  Intermediate Grade
  Corporate or Municipal Bonds/Notes (A, Baa, BBB, SP-2) with maturities =/<
  5 years

  	
   

  	
  75

  	
  %

  
	
  Intermediate Grade
  Corporate or Municipal Bonds/Notes (A, Baa, BBB, SP-2) with maturities > 5
  years, but =/< 10 years

  	
   

  	
  70

  	
  %

  
	
  Intermediate Grade
  Corporate or Municipal Bonds/Notes (A, Baa, BBB, SP-2) with maturities >
  10 years

  	
   

  	
  65

  	
  %

  



 


1





















 


 


Commercial Paper

For split ratings, apply the lower advance rate:




	
  Type of Security

  	
   

  	
  LTV

  	
   

  
	
  A1 and P1 Graded
  Commercial Paper

  	
   

  	
  85

  	
  %

  
	
  A1 or P1 Graded Commercial
  Paper

  	
   

  	
  80

  	
  %

  
	
  A2 or P2 Graded Commercial
  Paper

  	
   

  	
  70

  	
  %

  



 


2





















 


Common/Preferred Stock




	
  LISTED STOCKS

  	
   

  	
  LTV

  
	
  New York Stock Exchange

  	
   

  	
  75%

  
	
  NASDAQ, AMEX, and Other
  Regional Exchanges (Note D)

  	
   

  	
  Market
  Capitalization (Note A)

  	
   

  	
  S &
  P Rankings

  
	
   

  	
   

  	
   

  	
   

  	
  A+, A,
  A- Above Average

  	
   

  	
  B+
  Average

  	
   

  	
  B, B-, C
  Below Average

  	
   

  	
  D In
  Reorganization

  	
   

  	
  NR (Note
  C) Not Rated

  
	
   

  	
   

  	
  Large > $7.5B

  	
   

  	
  75%

  	
   

  	
  60%

  	
   

  	
  50%

  	
   

  	
  0%

  	
   

  	
  (Note
  B)

  
	
   

  	
   

  	
  Middle =/> $1B to
  =/< $7.5B

  	
   

  	
  60%

  	
   

  	
  50%

  	
   

  	
  40%

  	
   

  	
  0%

  	
   

  	
  (Note
  B)

  
	
   

  	
   

  	
  Small =/> $500MM to
  < $1B

  	
   

  	
  50%

  	
   

  	
  40%

  	
   

  	
  30%

  	
   

  	
  0%

  	
   

  	
  (Note
  B)

  
	
   

  	
   

  	
  Micro < $500MM

  	
   

  	
  (Note
  B)

  	
   

  	
  (Note
  B)

  	
   

  	
  (Note
  B)

  	
   

  	
  0%

  	
   

  	
  (Note
  B)

  











Notes:


A. Market Capitalization
equals market price times outstanding shares (common and convertible).


B. LTV to be established on
a case-by-case basis and approved by the Administrative Agent.


C. Not rated due to
insufficient data or because the stock is not amenable to S&P’s ranking
process.


D. NASDAQ, AMEX, and other
Regional exchange LTVs apply to a non-trading investment or collateral
portfolio. If trading is allowed, a composite LTV% (typically =/< the listed
maximum) is assigned based on the documented investment objective. If
undocumented, the maximum LTV is 50%.


E. Lending against and
establishing LTVs for Repurchase Agreements is handled on a case-by-case basis
and requires approval of the Administrative Agent.


 


3





















 


Mutual Funds




	
  Type of Security

  	
   

  	
  LTV

  	
   

  
	
  Listed Money Market (MM)

  	
   

  	
  95

  	
  %

  
	
  Short
  Term Taxable or Tax Exempt:

  	
   

  	
   

  	
   

  
	
  Short Term Corporate
  Taxable Bond (SB)

  	
   

  	
  90

  	
  %

  
	
  Short Term Municipal Bond
  (SM)

  	
   

  	
  90

  	
  %

  
	
  Short Term U.S. Taxable
  Bond (SG)

  	
   

  	
  90

  	
  %

  
	
  Intermediate
  Term Taxable or Tax Exempt:

  	
   

  	
   

  	
   

  
	
  Intermediate Term
  Municipal Bond (IM)

  	
   

  	
  85

  	
  %

  
	
  Intermediate Term
  Corporate Taxable Bond (IB)

  	
   

  	
  85

  	
  %

  
	
  Intermediate U.S. Taxable
  Bond (IG)

  	
   

  	
  85

  	
  %

  
	
  General
  Taxable:

  	
   

  	
   

  	
   

  
	
  General U.S. Taxable Bond
  (GT); Long Term U.S. Taxable Bond (LG)

  	
   

  	
  80

  	
  %

  
	
  Municipal
  Bond, Single State or Long Term Corporate Taxable:

  	
   

  	
   

  	
   

  
	
  Long Term Corporate
  Taxable Bond (AB)

  	
   

  	
  75

  	
  %

  
	
  Municipal
  Bond:

  	
   

  	
   

  	
   

  
	
  • General Municipal (GM), Insured All
  Maturities (NM), Single State (SS)

  	
   

  	
  75

  	
  %

  
	
  Balanced Stock and Bond
  Funds (MP) (Includes Flexible Portfolio)

  	
   

  	
  75

  	
  %

  
	
  Domestic
  Large, Multi, Medium and Small Cap Stock:

  	
   

  	
   

  	
   

  
	
  Large Cap Growth (LG)

  	
   

  	
  70

  	
  %

  
	
  Large Cap Value (LV)

  	
   

  	
  70

  	
  %

  
	
  Large Cap Core (LC)

  	
   

  	
  70

  	
  %

  
	
  Equity Income Stock (EI)

  	
   

  	
  70

  	
  %

  
	
  Mortgage Taxable Bond (MG)

  	
   

  	
  70

  	
  %

  
	
  Multi Cap Growth (XG)

  	
   

  	
  60

  	
  %

  
	
  Multi Cap Value (XV)

  	
   

  	
  60

  	
  %

  
	
  Multi Cap Core (XC)

  	
   

  	
  60

  	
  %

  
	
  Mid Cap Growth (MG)

  	
   

  	
  60

  	
  %

  
	
  Mid Cap Value (MV)

  	
   

  	
  60

  	
  %

  
	
  Mid Cap Core (MC)

  	
   

  	
  60

  	
  %

  
	
  Small Cap Growth (SG)

  	
   

  	
  50

  	
  %

  
	
  Small Cap Value (SV)

  	
   

  	
  50

  	
  %

  
	
  Small Cap Core (SC)

  	
   

  	
  50

  	
  %

  
	
  Specialty Equity (SQ)

  	
   

  	
  50

  	
  %

  
	
  Sector,
  International, High Yield Taxable & Tax Exempt:

  	
   

  	
   

  	
   

  
	
  Sector Stock (SE):
  Health/Biotech; Natural Resources; Environmental; Tech; Utility; Financial
  Services; RE; Gold Oriented funds

  	
   

  	
  50

  	
  %

  



 


4





















 


	
  Global Stock (GL)

  	
   

  	
  50

  	
  %

  
	
  International Stock (IL);
  Emerging Markets; Europe; Latin America, Pacific Ex-Japan Region; Japanese
  World Taxable Bond (WF)

  	
   

  	
  50

  	
  %

  
	
  High Yield Taxable
  Corporate Bond (HC); High Yield Municipal Bond

  	
   

  	
  50

  	
  %

  
	
  Listed NASDAQ Mutual Funds

  	
   

  	
  50

  	
  %

  



 


5





















 


SCHEDULE
1.1B

Revolving Commitments


 


 




	
  Name of Lender

  	
   

  	
  Revolving

  Commitment

  	
   

  
	
  Wells Fargo Bank, National
  Association

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  BANK OF AMERICA, N.A.

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  80,000,000.00

  	
   

  






 


1