exv10w25






Exhibit 10.25




EXECUTION COPY




REVOLVING CREDIT




AND



SECURITY AGREEMENT



PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)



WITH



RAND WORLDWIDE U.S. HOLDINGS, INC.



RAND A TECHNOLOGY CORPORATION



RAND TECHNOLOGIES OF MICHIGAN, INC.



AND



RAND IMAGINIT TECHNOLOGIES, INC.



(BORROWERS)



August 14, 2009



 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	I. DEFINITIONS

	 	 	1	 
	 
	 	 	 	 
	1.1. Accounting Terms

	 	 	1	 
	1.2. General Terms

	 	 	1	 
	1.3. Uniform Commercial Code Terms

	 	 	26	 
	1.4. Certain Matters of Construction

	 	 	26	 
	 
	 	 	 	 
	II. ADVANCES, PAYMENTS

	 	 	28	 
	 
	 	 	 	 
	2.1. Revolving Advances

	 	 	28	 
	2.2. Procedure for Revolving Advances Borrowing

	 	 	30	 
	2.3. Disbursement of Advance Proceeds

	 	 	32	 
	2.4. Reserved

	 	 	32	 
	2.5. Maximum Advances

	 	 	32	 
	2.6. Repayment of Advances

	 	 	32	 
	2.7. Repayment of Excess Advances

	 	 	33	 
	2.8. Statement of Account

	 	 	33	 
	2.9. Letters of Credit

	 	 	33	 
	2.10. Issuance of Letters of Credit

	 	 	34	 
	2.11. Requirements For Issuance of Letters of Credit

	 	 	34	 
	2.12. Disbursements, Reimbursement

	 	 	35	 
	2.13. Repayment of Participation Advances

	 	 	36	 
	2.14. Documentation

	 	 	36	 
	2.15. Determination to Honor Drawing Request

	 	 	37	 
	2.16. Nature of Participation and Reimbursement Obligations

	 	 	37	 
	2.17. Indemnity

	 	 	38	 
	2.18. Liability for Acts and Omissions

	 	 	39	 
	2.19. Additional Payments

	 	 	40	 
	2.20. Manner of Borrowing and Payment

	 	 	40	 
	2.21. Mandatory Prepayments

	 	 	42	 
	2.22. Use of Proceeds

	 	 	42	 
	2.23. Defaulting Lender

	 	 	42	 
	 
	 	 	 	 
	III. INTEREST AND FEES

	 	 	43	 
	 
	 	 	 	 
	3.1. Interest

	 	 	43	 
	3.2. Letter of Credit Fees

	 	 	44	 
	3.3. Closing Fee and Facility Fee

	 	 	45	 
	3.4. Collateral Evaluation Fee and Collateral Monitoring Fee

	 	 	45	 
	3.5. Computation of Interest and Fees

	 	 	46	 
	3.6. Maximum Charges

	 	 	46	 
	3.7. Increased Costs

	 	 	46	 
	3.8. Basis For Determining Interest Rate Inadequate or Unfair

	 	 	47	 
	3.9. Capital Adequacy

	 	 	47	 
	3.10. Gross Up for Taxes

	 	 	48	 






i









 






	 	 	 	 	 
	 	 	Page
	3.11. Withholding Tax Exemption

	 	 	48	 
	 
	 	 	 	 
	IV. COLLATERAL: GENERAL TERMS

	 	 	49	 
	 
	 	 	 	 
	4.1. Security Interest in the Collateral

	 	 	49	 
	4.2. Perfection of Security Interest

	 	 	50	 
	4.3. Disposition of Collateral

	 	 	50	 
	4.4. Preservation of Collateral

	 	 	50	 
	4.5. Ownership of Collateral

	 	 	51	 
	4.6. Defense of Agent’s and Lenders’ Interests

	 	 	51	 
	4.7. Books and Records

	 	 	52	 
	4.8. Financial Disclosure

	 	 	52	 
	4.9. Compliance with Laws

	 	 	52	 
	4.10. Inspection of Premises

	 	 	53	 
	4.11. Insurance

	 	 	53	 
	4.12. Failure to Pay Insurance

	 	 	54	 
	4.13. Payment of Taxes

	 	 	54	 
	4.14. Payment of Leasehold Obligations

	 	 	54	 
	4.15. Receivables

	 	 	54	 
	4.16. Inventory

	 	 	57	 
	4.17. Maintenance of Equipment

	 	 	57	 
	4.18. Exculpation of Liability

	 	 	57	 
	4.19. Environmental Matters

	 	 	57	 
	4.20. Financing Statements

	 	 	60	 
	4.21. Canadian Attachment

	 	 	60	 
	 
	 	 	 	 
	V. REPRESENTATIONS AND WARRANTIES

	 	 	60	 
	 
	 	 	 	 
	5.1. Authority

	 	 	60	 
	5.2. Formation and Qualification

	 	 	60	 
	5.3. Survival of Representations and Warranties

	 	 	61	 
	5.4. Tax Returns

	 	 	61	 
	5.5. Financial Statements

	 	 	61	 
	5.6. Entity Names

	 	 	62	 
	5.7. O.S.H.A. and Environmental Compliance

	 	 	62	 
	5.8. Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance

	 	 	62	 
	5.9. Patents, Trademarks, Copyrights and Licenses

	 	 	64	 
	5.10. Licenses and Permits

	 	 	64	 
	5.11. Default of Indebtedness

	 	 	64	 
	5.12. No Default

	 	 	64	 
	5.13. No Burdensome Restrictions

	 	 	64	 
	5.14. No Labor Disputes

	 	 	65	 
	5.15. Margin Regulations

	 	 	65	 
	5.16. Investment Company Act

	 	 	65	 
	5.17. Disclosure

	 	 	65	 
	5.18. Delivery of Subordinated Loan Documents

	 	 	65	 
	5.19. Swaps

	 	 	65	 
	5.20. Conflicting Agreements

	 	 	66	 
	5.21. Application of Certain Laws and Regulations

	 	 	66	 






ii









 






	 	 	 	 	 
	 	 	Page
	5.22. Business and Property of Borrowers

	 	 	66	 
	5.23. Section 20 Subsidiaries

	 	 	66	 
	5.24. Anti-Terrorism Laws

	 	 	66	 
	5.25. Trading with the Enemy

	 	 	67	 
	5.26. Federal Securities Laws

	 	 	67	 
	5.27. Equity Interests. The authorized and outstanding Equity Interests of each Borrower is as
shown on Schedule 5.27 hereto

	 	 	67	 






	 	 	 	 	 

	VI. AFFIRMATIVE COVENANTS

	 	 	67	 
	 
	 	 	 	 
	6.1. Payment of Fees

	 	 	67	 
	6.2. Conduct of Business and Maintenance of Existence and Assets

	 	 	68	 
	6.3. Violations

	 	 	68	 
	6.4. Government Receivables

	 	 	68	 
	6.5. Fixed Charge Coverage Ratio

	 	 	68	 
	6.6. Execution of Supplemental Instruments

	 	 	68	 
	6.7. Payment of Indebtedness

	 	 	68	 
	6.8. Standards of Financial Statements

	 	 	69	 
	6.9. Federal Securities Laws

	 	 	69	 
	6.10. Post Closing Conditions. Cause to be delivered to Agent:

	 	 	69	 
	 
	 	 	 	 
	VII. NEGATIVE COVENANTS

	 	 	70	 
	 
	 	 	 	 
	7.1. Merger, Consolidation, Acquisition and Sale of Assets

	 	 	70	 
	7.2. Creation of Liens

	 	 	70	 
	7.3. Guarantees

	 	 	70	 
	7.4. Investments

	 	 	70	 
	7.5. Loans

	 	 	71	 
	7.6. Capital Expenditures

	 	 	71	 
	7.7. Dividends

	 	 	71	 
	7.8. Indebtedness

	 	 	72	 
	7.9. Nature of Business

	 	 	72	 
	7.10. Transactions with Affiliates

	 	 	72	 
	7.11. Leases

	 	 	72	 
	7.12. Subsidiaries

	 	 	72	 
	7.13. Fiscal Year and Accounting Changes

	 	 	72	 
	7.14. Pledge of Credit

	 	 	72	 
	7.15. Amendment of Articles of Incorporation,
By-Laws, Certificate of Formation, Operating
Agreement

	 	 	73	 






	 	 	 	 	 

	7.16. Compliance with ERISA

	 	 	73	 
	7.17. Prepayment of Indebtedness

	 	 	73	 
	7.18. Anti-Terrorism Laws

	 	 	73	 
	7.19. Trading with the Enemy Act

	 	 	74	 
	7.20. Subordinated Indebtedness

	 	 	74	 
	7.21. Other Agreements

	 	 	74	 
	 
	 	 	 	 
	VIII. CONDITIONS PRECEDENT

	 	 	74	 
	 
	 	 	 	 
	8.1. Conditions to Initial Advances

	 	 	74	 
	8.2. Conditions to Each Advance

	 	 	77	 






iii









 






	 	 	 	 	 
	 	 	Page

	IX. INFORMATION AS TO BORROWERS

	 	 	78	 
	 
	 	 	 	 
	9.1. Disclosure of Material Matters

	 	 	78	 
	9.2. Schedules

	 	 	78	 
	9.3. Environmental Reports

	 	 	79	 
	9.4. Litigation

	 	 	79	 
	9.5. Material Occurrences

	 	 	79	 
	9.6. Government Receivables

	 	 	79	 
	9.7. Annual Financial Statements

	 	 	80	 
	9.8. Quarterly Financial Statements

	 	 	80	 
	9.9. Monthly Financial Statements

	 	 	80	 
	9.10. Other Reports

	 	 	80	 
	9.11. Additional Information

	 	 	80	 
	9.12. Projected Operating Budget

	 	 	81	 
	9.13. Variances From Operating Budget

	 	 	81	 
	9.14. Notice of Suits, Adverse Events

	 	 	81	 
	9.15. ERISA Notices and Requests

	 	 	81	 
	9.16. Additional Documents

	 	 	82	 
	 
	 	 	 	 
	X. EVENTS OF DEFAULT

	 	 	82	 
	 
	 	 	 	 
	10.1. Nonpayment

	 	 	82	 
	10.2. Breach of Representation

	 	 	82	 
	10.3. Financial Information

	 	 	82	 
	10.4. Judicial Actions

	 	 	82	 
	10.5. Noncompliance

	 	 	82	 
	10.6. Judgments

	 	 	83	 
	10.7. Bankruptcy

	 	 	83	 
	10.8. Inability to Pay

	 	 	83	 
	10.9. Intentionally Omitted;

	 	 	83	 
	10.10. Material Adverse Effect. The occurrence of any Material Adverse Effect;

	 	 	83	 
	10.11. Lien Priority

	 	 	83	 
	10.12. Subordinated Loan Default

	 	 	83	 
	10.13. Cross Default

	 	 	83	 
	10.14. Breach of Guaranty

	 	 	84	 
	10.15. Change of Ownership

	 	 	84	 
	10.16. Invalidity

	 	 	84	 
	10.17. Licenses

	 	 	84	 
	10.18. Seizures

	 	 	84	 
	10.19. Pension Plans

	 	 	84	 
	10.20. Intercreditor Default

	 	 	84	 
	10.21. Fixed Charge Coverage Cure Right

	 	 	85	 
	 
	 	 	 	 
	XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

	 	 	85	 
	 
	 	 	 	 
	11.1. Rights and Remedies

	 	 	85	 
	11.2. Agent’s Discretion

	 	 	87	 
	11.3. Setoff

	 	 	87	 
	11.4. Rights and Remedies not Exclusive

	 	 	87	 






iv









 






	 	 	 	 	 
	 	 	Page

	11.5. Allocation of Payments After Event of Default

	 	 	87	 
	 
	 	 	 	 
	XII. WAIVERS AND JUDICIAL PROCEEDINGS

	 	 	88	 
	 
	 	 	 	 
	12.1. Waiver of Notice

	 	 	88	 
	12.2. Delay

	 	 	89	 
	12.3. Jury Waiver

	 	 	89	 
	 
	 	 	 	 
	XIII. EFFECTIVE DATE AND TERMINATION

	 	 	89	 
	 
	 	 	 	 
	13.1. Term

	 	 	89	 
	13.2. Termination

	 	 	89	 
	 
	 	 	 	 
	XIV. REGARDING AGENT

	 	 	90	 
	 
	 	 	 	 
	14.1. Appointment

	 	 	90	 
	14.2. Nature of Duties

	 	 	90	 
	14.3. Lack of Reliance on Agent and Resignation

	 	 	91	 
	14.4. Certain Rights of Agent

	 	 	91	 
	14.5. Reliance

	 	 	91	 
	14.6. Notice of Default

	 	 	92	 
	14.7. Indemnification

	 	 	92	 
	14.8. Agent in its Individual Capacity

	 	 	92	 
	14.9. Delivery of Documents

	 	 	92	 
	14.10. Borrowers’ Undertaking to Agent

	 	 	92	 
	14.11. No Reliance on Agent’s Customer Identification Program

	 	 	93	 
	14.12. Other Agreements

	 	 	93	 
	 
	 	 	 	 
	XV. BORROWING AGENCY

	 	 	93	 
	 
	 	 	 	 
	15.1. Borrowing Agency Provisions; Several Nature of Foreign Borrower

	 	 	93	 
	15.2. Waiver of Subrogation

	 	 	94	 
	15.3. Limitation on Liability of Foreign Borrowers

	 	 	94	 
	 
	 	 	 	 
	XVI. MISCELLANEOUS

	 	 	94	 
	 
	 	 	 	 
	16.1. Governing Law

	 	 	95	 
	16.2. Entire Understanding

	 	 	95	 
	16.3. Successors and Assigns; Participations; New Lenders

	 	 	97	 
	16.4. Application of Payments

	 	 	100	 
	16.5. Indemnity

	 	 	100	 
	16.6. Currency Indemnity

	 	 	100	 
	16.7. Notice

	 	 	101	 
	16.8. Survival

	 	 	103	 
	16.9. Severability

	 	 	103	 
	16.10. Expenses

	 	 	103	 
	16.11. Injunctive Relief

	 	 	103	 
	16.12. Consequential Damages

	 	 	103	 
	16.13. Captions

	 	 	104	 
	16.14. Counterparts; Facsimile Signatures

	 	 	104	 
	16.15. Construction

	 	 	104	 
	16.16. Confidentiality; Sharing Information

	 	 	104	 






v









 






	 	 	 	 	 
	 	 	Page

	16.17. Publicity

	 	 	105	 
	16.18. Certifications From Banks and Participants; USA PATRIOT Act

	 	 	105	 






vi









 






LIST OF EXHIBITS AND SCHEDULES




	 	 	 

	Exhibits
	 	 
	 
	 	 
	Exhibit 1.2

	 	Borrowing Base Certificate
	Exhibit 2.1(a)

	 	Revolving Credit Note
	Exhibit 8.1(k)

	 	Financial Condition Certificate
	Exhibit 16.3

	 	Commitment Transfer Supplement
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 1.2

	 	Permitted Encumbrances
	Schedule 4.5

	 	Locations
	Schedule 4.15(h)

	 	Deposit and Investment Accounts
	Schedule 4.19

	 	Real Property
	Schedule 4.19A

	 	Leased Interests
	Schedule 5.1

	 	Consents
	Schedule 5.2(a)

	 	States of Qualification and Good Standing
	Schedule 5.2(b)

	 	Subsidiaries
	Schedule 5.4

	 	Federal Tax Identification Number
	Schedule 5.5

	 	Financial Statements
	Schedule 5.6

	 	Prior Names
	Schedule 5.8(b)

	 	Litigation; Indebtedness
	Schedule 5.8(d)

	 	Plans
	Schedule 5.9

	 	Intellectual Property, Source Code Escrow Agreements
	Schedule 5.10

	 	Licenses and Permits
	Schedule 5.13

	 	Material Contracts
	Schedule 5.14

	 	Labor Disputes
	Schedule 5.27

	 	Equity Interests
	Schedule 6.10

	 	Post-Closing Items
	Schedule 7.3

	 	Guarantees







vii











 





REVOLVING CREDIT




AND



SECURITY AGREEMENT



     Revolving Credit and Security Agreement dated as of August 14, 2009 among RAND WORLDWIDE U.S.
HOLDINGS, INC., a corporation organized under the laws of the State of Delaware (“Rand Worldwide
U.S.”), RAND IMAGINIT TECHNOLOGIES, INC., a corporation organized under the laws of the State of
Delaware (“Rand Imaginit”), RAND TECHNOLOGIES OF MICHIGAN, INC., a corporation organized under the
laws of the State of Michigan (“Rand Michigan”) (Rand Worldwide U.S., Rand Imaginit and Rand
Michigan, each a “US Borrower” and collectively the “US Borrowers”) and RAND A TECHNOLOGY
CORPORATION, a corporation organized under the laws of the Province of Ontario (“Foreign Borrower”)
(US Borrowers and Foreign Borrower, each a “Borrower” and collectively the “Borrowers”), the
financial institutions which are now or which hereafter become a party hereto (collectively, the
“Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent
for Lenders (PNC, in such capacity, the “Agent”).



     IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders
and Agent hereby agree as follows:


I. DEFINITIONS.




     1.1. Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this Agreement, accounting
terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined
in Section 1.2 to the extent not defined, shall have the respective meanings given to them under
GAAP; provided, however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms shall be defined in
accordance with GAAP as applied in preparation of the unaudited financial statements of Holdings
and its Subsidiaries for the fiscal year ended October 31, 2008.



     1.2. General Terms. For purposes of this Agreement the following terms shall have
the following meanings:



     “Accountants” shall have the meaning set forth in Section 9.7 hereof.



     “Advance Rates” shall have the meaning set forth in Section 2.1(c)(y)(i).



     “Advances” shall mean and include the Revolving Advances and Letters of Credit.



     “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with such Person, or (b) any Person who
is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of directors of such



 









 




Person or other Persons performing similar functions for any such Person, or (y) to direct or
cause the direction of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.




     “Agent” shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.



     “Agreement” shall mean this Revolving Credit and Security Agreement, as the same may
be amended, restated, supplemented or otherwise modified from time to time.



     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the higher of
(i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day
plus one half of one-percent (1/2 of 1%), and (iii) the sum of the Daily LIBOR Rate in effect on
such day plus one percent (1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful.



     “Ampersand 2001 Limited” shall mean Ampersand 2001 Limited Partnership, a Delaware
limited partnership.



     “Ampersand 2001 Companion” shall mean Ampersand 2001 Companion Fund Limited
Partnership, a Delaware limited partnership.



     “Ampersand 2006 Limited” shall mean Ampersand 2006 Limited Partnership, a Delaware
limited partnership.



     “Ampersand Guarantors” shall mean, collectively, Ampersand 2001 Limited, Ampersand
2001 Companion and Ampersand 2006 Limited.



     “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, the Applicable Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control, and the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) (as any of the foregoing Applicable Laws may from
time to time be amended, renewed, extended, or replaced).



     “Applicable Law” shall mean all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Other Document or contract in question, including all applicable
common law and equitable principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.



     “Applicable Margin” for Revolving Advances and the facility fee under Section 3.3(b)
hereof (herein referred to as the “Facility Fee”) shall mean, as of the Closing Date and through
the delivery of the quarterly financial statements of Borrowers on a Consolidated Basis for the
fiscal quarter ending July 31, 2010, the applicable percentage specified below:



2









 





	 	 	 	 	 
	APPLICABLE MARGINS	 	APPLICABLE MARGINS	 	 
	FOR REVOLVING	 	FOR REVOLVING	 	 
	ADVANCES THAT ARE	 	ADVANCES THAT ARE	 	APPLICABLE MARGINS
	DOMESTIC RATE LOANS	 	EURODOLLAR RATE LOANS	 	FOR FACILITY FEE
	2.75%
	 	3.50%	 	0.50%






     Thereafter, effective as of the first Business Day following receipt by Agent of the annual
financial statements of Borrowers on a Consolidated Basis for the fiscal quarter ending July 31,
2010 required under Section 9.8, and thereafter upon the receipt of the quarterly financial
statements of Borrowers on a Consolidated Basis required under Section 9.8 for the previous fiscal
quarter (each day of such delivery, an “Adjustment Date”), the Applicable Margin for the
Revolving Advances or the Facility Fee, as applicable, shall be adjusted, if necessary, to the
applicable percent per annum set forth in the pricing table set forth below corresponding to the
Fixed Charge Coverage Ratio (as determined in accordance with Section 6.5) ending on the last day
of the most recently completed fiscal quarter prior to the applicable Adjustment Date (each such
period, a “Calculation Period”):



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	APPLICABLE MARGINS	 	 	 	 
	 	 	APPLICABLE MARGINS	 	 	FOR REVOLVING	 	 	 	 
	 	 	FOR REVOLVING	 	 	ADVANCES THAT ARE	 	 	 	 
	FIXED CHARGE COVERAGE	 	ADVANCES THAT ARE	 	 	EURODOLLAR RATE	 	 	APPLICABLE MARGINS	 
	RATIO	 	DOMESTIC RATE LOANS	 	 	LOANS	 	 	FOR FACILITY FEE	 
	Less than 1.25 to 1.00
	 	 	3.00	%	 	 	3.75	%	 	 	0.50	%
	Greater than or equal
to 1.25 to 1.00 but
less than 1.50 to
1.00
	 	 	2.75	%	 	 	3.50	%	 	 	0.50	%
	Greater than or equal
to 1.50 to 1.00
	 	 	2.25	%	 	 	3.00	%	 	 	0.375	%






     If the Borrowers shall fail to deliver the financial statements, certificates and/or other
information required under Sections 9.7 or 9.8 by the dates required pursuant to such sections,
each Applicable Margin shall be conclusively presumed to equal the highest Applicable Margin
specified in the pricing table set forth above until the date of delivery of such financial
statements, certificates and/or other information, at which time the rate will be adjusted based
upon the Fixed Charge Coverage Ratio reflected in such statements.



     If, as a result of any restatement of, or other adjustment to, the financial statements of
Borrowers on a Consolidated Basis or for any other reason, the Agent determines that (a) the Fixed
Charge Coverage Ratio as previously calculated as of any applicable date was inaccurate, and (b)
the proper calculation of the Fixed Charge Coverage Ratio would have resulted in different pricing
for any period, then (i) if the proper calculation of the Fixed Charge Coverage Ratio would have
resulted in higher pricing for such period, the Borrowers shall automatically and retroactively be
obligated to pay to the Agent, promptly upon demand by the Agent, an amount equal to the excess of
the amount of interest that should have been paid for such period over the amount of interest
actually paid for such period; and (ii) if the proper calculation of the



3









 




Fixed Charge Coverage Ratio would have resulted in lower pricing for such period, Lenders
shall have no obligation to repay interest to the Borrowers; provided, that, if as a result of any
restatement or other event a proper calculation of the Fixed Charge Coverage Ratio would have
resulted in higher pricing for one or more periods and lower pricing for one or more other periods
(due to the shifting of income or expenses from one period to another period or any similar
reason), then the amount payable by the Borrowers pursuant to clause (i) above shall be based upon
the excess, if any, of the amount of interest that should have been paid for all applicable periods
over the amounts of interest actually paid for such periods.




     “Authority” shall have the meaning set forth in Section 4.19(d).



     “Availability Block” shall mean, initially, an amount equal to $958,782.30,
representing the sum of (a) $418,782.30, representing the Borrowers estimation of the amount that
will be required to settle certain one-time employee severance arrangements and lease modification
and termination costs; (b) $400,000, representing the estimated amount necessary to settle a
dispute with the Internal Revenue Service, and (c) $140,000, representing the estimated amount
necessary to settle a tax dispute with the State of New York. Such amount shall be reduced on a
dollar-for-dollar basis by (i) cash payments made in respect of that portion of the Availability
Block accrued on the balance sheet(s) of the Borrowers at the Closing Date ($760,000 of the total
Availability Block, representing $300,000 of the amount under (a) above, $400,000 of the amount
under (b) above, and $60,000 of the amount under (c) above); (ii) cash payments made in respect of
that portion of the Availability Block projected to be accrued and paid subsequent to the Closing
Date (the remainder of the total Availability Block); and (iii) any reductions of accruals in (i)
above, or projected costs in (ii) above, in each case subject to documentation satisfactory to
Agent, in the event that such cash payments are not ultimately required to be made.



     “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced
to be in effect from time to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest is determined from time to time
by PNC as a means of pricing some loans to its customers and is neither tied to any external rate
of interest or index nor does it necessarily reflect the lowest rate of interest actually charged
by PNC to any particular class or category of customers of PNC.



     “Blocked Accounts” shall have the meaning set forth in Section 4.15(h).



     “Blocked Account Bank” shall have the meaning set forth in Section 4.15(h).



     “Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.



     “Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such Persons.



     “Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with
GAAP of the accounts or other items of the Borrowers and their respective Subsidiaries.



     “Borrowers’ Account” shall have the meaning set forth in Section 2.8.



4









 





     “Borrowing Agent” shall mean Rand Worldwide U.S.



     “Borrowing Base Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the Chief Executive Officer, Chief Financial Officer or Controller of
the Borrowing Agent and delivered to the Agent, appropriately completed, by which such officer
shall certify to Agent the Formula Amount and calculation thereof as of the date of such
certificate.



     “Borrowing Group” shall mean, as the context indicates, the US Borrowers taken as a
whole and/or Foreign Borrower.



     “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in East
Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans,
such day must also be a day on which dealings are carried on in the London interbank market.



     “Canadian Borrower” shall mean any Borrower existing pursuant to the laws of Canada or
any province or territory thereof.



     “Canadian Dollars” shall mean lawful money of Canada.



     “Canadian Stock Pledge Agreement” shall mean the agreement, dated as of the Closing
Date, pursuant to which Rand Worldwide U.S. pledged to Agent as Collateral for the Obligations 65%
of the issued and outstanding shares of the Equity Interests of Foreign Borrower.



     “Capital Expenditures” shall mean expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital
expenditures.



     “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented
by obligations under a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.



     “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.



     “Change of Control” shall mean (a) the occurrence of any event (whether in one or more
transactions) which results in a transfer of control of any Borrower to a Person who is not an
Original Owner or (b) any merger or consolidation of or with any Borrower or sale of all or
substantially all of the property or assets of any Borrower in which a Borrower is not the
surviving entity. For purposes of this definition, “control of Borrower” shall mean the power,
direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for
the election of directors (or the individuals performing similar functions) of any Borrower or (y)
to direct or cause the direction of the management and policies of any Borrower by contract or
otherwise.



5









 





     “Change of Ownership” shall mean (a) 100% of the Equity Interests of Rand Worldwide
U.S. is no longer owned or controlled by a Person who is an Original Owner, (b) 100% of the Equity
Interests of any Borrower (other than Rand Worldwide U.S.) is no longer owned or controlled by a
Person who is an Original Owner, (c) 51% of the Equity Interests of Holdings is no longer owned or
controlled by a Person who is an Original Owner, or (c) any merger, consolidation or sale of
substantially all of the property or assets of any Borrower unless such Borrower is merged or
consolidated with and into another Borrower or such sale of property or assets is to another
Borrower.



     “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including all net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other
authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any
environmental agency or superfund), upon the Collateral or any Borrower.



     “Closing Date” shall mean August 14, 2009 or such other date as may be agreed to by
the parties hereto.



     “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.



     “Collateral” shall mean and include:



          (a) all Receivables;



          (b) all Equipment;



          (c) all General Intangibles;



          (d) all Inventory;



          (e) all Investment Property;



          (f) all Domestic Subsidiary Stock and 65% of the Equity Interests of Foreign Borrower;



          (g) all of each Borrower’s right, title and interest in and to, whether now owned or
hereafter acquired and wherever located; (i) its respective goods and other property including, but
not limited to, all merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims, relating to any goods
securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment



6









 




which have been earned under a contract right, instruments (including promissory notes),
documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or
hereafter arising); (vii) if and when obtained by any Borrower, all real and personal property of
third parties in which such Borrower has been granted a lien or security interest as security for
the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the
respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x)
any other goods, personal property or real property now owned or hereafter acquired in which any
Borrower has expressly granted a security interest or may in the future grant a security interest
to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other
agreement between Agent and any Borrower;




          (h) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by any Borrower or in which
it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d),
(e), (f) or (g) of this paragraph; and



          (i) all proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h) in whatever
form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.



     “Commitment Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender
pursuant to Section 16.3(c) or (d) hereof.



     “Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3
hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the
Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances
under this Agreement.



     “Compliance Certificate” shall mean a compliance certificate to be signed by the Chief
Executive Officer, Chief Financial Officer or Controller of Borrowing Agent, which shall state
that, based on an examination sufficient to permit such officer to make an informed statement, no
Default or Event of Default exists, or if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such default and, such certificate shall have appended thereto
calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by
Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11.



     “Consents” shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic
or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a
conflict or breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the Other



7









 




Documents or the Subordinated Loan Documents, including any Consents required under all
applicable federal, state or other Applicable Law.




     “Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.



     “Customer” shall mean and include the account debtor with respect to any Receivable
and/or the prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any contract or other
arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property
or perform any services.



     “Customs” shall have the meaning set forth in Section 2.11(b) hereof.



     “Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by
the Agent by dividing (x) the Published Rate by (y) a number equal to 1.00, minus the
Reserve Percentage.



     “Debt Payments” shall mean and include (a) all cash actually expended by any Borrower
to make interest payments on any Advances hereunder, plus (b) accrued but unpaid interest
on account of Eurodollar Rate Loans, plus (c) to the extent not already deducted in the
calculation of EBITDA, all cash actually expended by any Borrower to make payments for all fees,
commissions and charges set forth herein and with respect to any Advances, plus (d) all
cash actually expended by any Borrower to make payments on Capitalized Lease Obligations,
plus (e) all cash actually expended by any Borrower to make payments with respect to any
other Indebtedness for borrowed money.



     “Default” shall mean an event, circumstance or condition which, with the giving of
notice or passage of time or both, would constitute an Event of Default.



     “Default Rate” shall have the meaning set forth in Section 3.1 hereof.



     “Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof.



     “Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof.



     “Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof.



     “Documents” shall have the meaning set forth in Section 8.1(c) hereof.



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



     “Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.



8









 





     “Domestic Subsidiary Stock” shall mean all of the issued and outstanding shares of the
Equity Interests owned by Holdings of Rand Worldwide U.S. and by Rand Worldwide U.S. of Rand
Michigan and Rand Imaginit.



     “Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof.



     “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.



     “Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net
income (or loss) of Borrowers on a Consolidated Basis for such period (excluding extraordinary
gains or losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis for
such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for
such period for federal, state and local taxes.



     “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes
for such period, plus (ii) depreciation expenses for such period, plus (iii)
amortization expenses for such period.



     “Eligible Foreign Receivables” shall mean and include with respect to Foreign
Borrower, the invoice amount, net of all goods and services, harmonized taxes and sales taxes
(which shall be the US Dollar Equivalent at such time of any amount denominated in currency other
than Dollars) owing on each account of such Person (after deducting any credit balance, returns,
trade discounts, unapplied cash, unbilled amounts or retention or finance charges), of each
Receivable of Foreign Borrower, arising in the Ordinary Course of Business (which are not rendered
ineligible by any of the criteria contained in this definition) and which Agent, in its Permitted
Discretion, shall deem to be an Eligible Foreign Receivable, based on such considerations as Agent
may from time to time deem appropriate. A Receivable of Foreign Borrower shall not be deemed
eligible unless such Receivable is subject to Agent’s first priority perfected security interest
and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other
documentary evidence satisfactory to Agent. In addition, no Receivable shall be an Eligible
Foreign Receivable if:



          (a) it arises out of a sale made by Foreign Borrower to an Affiliate of Foreign Borrower
or to a Person controlled by an Affiliate of Foreign Borrower;



          (b) it is due or unpaid more than ninety (90) days after the original invoice date;



          (c) fifty percent (50%) or more of the Receivables from such Customer are not deemed
Eligible Foreign Receivables hereunder. Such percentage may, in Agent’s Permitted Discretion, be
increased or decreased from time to time;



          (d) any covenant, representation or warranty contained in this Agreement with respect to
such Receivable has been breached;



          (e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or call a meeting of its creditors, (ii) admit in writing its
inability,



9









 




or be generally unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary
case or proceeding under any Canadian bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other
law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any
petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;




          (f) the sale is to a Customer outside Canada;



          (g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale
on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;



          (h) Reserved.



          (i) the Customer is the federal government of Canada, the government of any province or
territory of Canada or any department, agency or instrumentality of any of them, unless Foreign
Borrower assigns its right to payment of such Receivable to Agent pursuant to the Financial
Administration Act (Canada) or has otherwise complied with other applicable statutes or ordinances
(if any);



          (j) the goods giving rise to such Receivable have not been delivered to and accepted by
the Customer or the services giving rise to such Receivable have not been performed by Foreign
Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;



          (k) Reserved.



          (l) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim,
the Customer is also a creditor or supplier of a Borrower or the Receivable is contingent in any
respect or for any reason (but only to the extent of such offset, deduction, defense, dispute,
counterclaim or contingency);



          (m) Foreign Borrower has made any agreement with any Customer for any deduction therefrom,
except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all
of which discounts or allowances are reflected in the calculation of the face value of each
respective invoice related thereto;



          (n) any return, rejection or repossession of the merchandise has occurred or the rendition
of services has been disputed in writing or Foreign Borrower has knowledge of such dispute;



          (o) such Receivable is not payable to Foreign Borrower; or



          (p) such Receivable is not otherwise satisfactory to Agent as determined in its Permitted
Discretion.



10









 





     “Eligible US Receivables” shall mean and include with respect to each US Borrower,
each Receivable of such US Borrower arising in the Ordinary Course of Business and which Agent, in
its Permitted Discretion, shall deem to be an Eligible US Receivable, based on such considerations
as Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible unless
such Receivable is subject to Agent’s first priority perfected security interest and no other Lien
(other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible US Receivable if:



          (q) it arises out of a sale made by any US Borrower to an Affiliate of any US Borrower or
to a Person controlled by an Affiliate of any US Borrower; provided however Receivables arising out
of sales to Rand North America shall be eligible to the extent it otherwise constitutes an Eligible
US Receivable);



          (r) it is due or unpaid more than ninety (90) days after the original invoice date;



          (s) fifty percent (50%) or more of the Receivables from such Customer are not deemed
Eligible US Receivables hereunder. Such percentage may, in Agent’s Permitted Discretion, be
increased or decreased from time to time;



          (t) any covenant, representation or warranty contained in this Agreement with respect to
such Receivable has been breached;



          (u) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a
voluntary case or proceeding under any state, federal or Canadian bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to
take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, any petition which is filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;



          (v) the sale is to a Customer outside the United States of America or Canada, unless the
sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its
Permitted Discretion;



          (w) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale
on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;



          (x) Reserved.



          (y) the Customer is the United States of America, any state, the federal government of
Canada, the government of any province or territory of Canada or any department, agency or
instrumentality of any of them, unless the applicable US Borrower assigns



11









 




its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or the
Financial Administration Act (Canada) or has otherwise complied with other applicable statutes or
ordinances (if any);




          (z) the goods giving rise to such Receivable have not been delivered to and accepted by
the Customer or the services giving rise to such Receivable have not been performed by the
applicable US Borrower and accepted by the Customer or the Receivable otherwise does not represent
a final sale;



          (aa) Reserved.



          (bb) the Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of a US Borrower or the Receivable is
contingent in any respect or for any reason (but only to the extent of such offset, deduction,
defense, dispute, counterclaim or contingency);



          (cc) the applicable US Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt
payment, all of which discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto;



          (dd) any return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed in writing or if such Borrower has knowledge of such
dispute;



          (ee) such Receivable is not payable to a US Borrower; or



          (ff) such Receivable is not otherwise satisfactory to Agent as determined in its Permitted
Discretion.



     “Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof.



     “Environmental Laws” shall mean all federal, Canadian, state, provincial and local
environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions,
orders and directives of federal, state and local governmental agencies and authorities with
respect thereto.



     “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods
(other than Inventory) whether now owned or hereafter acquired and wherever located including all
equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions thereto.



     “Equity Interests” of any Person shall mean any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests, member interests,



12









 




participation or other equivalents of or interest in (regardless of how designated) equity of
such Person, whether voting or nonvoting, including common stock, preferred stock, convertible
securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).




     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder.



     “Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the interest rate per annum determined by Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that
displays rates at which US dollar deposits are offered by leading banks in the London interbank
deposit market), or the rate which is quoted by another source selected by Agent which has been
approved by the British Bankers’ Association as an authorized information vendor for the purpose of
displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank
deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business
Days prior to the commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and
a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable
replacement rate determined by Agent at such time (which determination shall be conclusive absent
manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage. The Eurodollar Rate may
also be expressed by the following formula:



	 	 	 

	 

	 	Average of London interbank offered rates quoted
by Bloomberg or appropriate successor as shown on
Bloomberg Page BBAM1
	 
	Eurodollar Rate =

	 	1.00 — Reserve Percentage






     The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is
outstanding on the effective date of any change in the Reserve Percentage as of such effective
date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as
determined or adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.



     “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on
the Eurodollar Rate.



     “Event of Default” shall have the meaning set forth in Article X hereof.



     “Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended.



     “Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.



13









 





     “Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day,
the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.



     “Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year
of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP
North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day
opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate),
or as set forth on such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on
the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall
at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or
any Alternate Source, a comparable replacement rate determined by PNC at such time (which
determination shall be conclusive absent manifest error); provided, however; that if such day is
not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of
interest with respect to any advance to which the Federal Funds Open Rate applies will change
automatically without notice to the Borrowers, effective on the date of any such change.



     “Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA, minus Unfunded Capital Expenditures made during such
period, minus distributions (including tax distributions made during such period) and
dividends, minus cash taxes paid during such period to (b) all Debt Payments made during
such period.



     “Foreign Blocked Accounts” shall mean any lockbox account, dominion account or other
“blocked account” of a Borrower which are established at a Blocked Account Bank in Canada.



     “Foreign Borrower” shall have the meaning set forth in the preamble to this Agreement
and shall extend to all permitted successors and assigns of such Person.



     “Foreign Formula Amount” shall have the meaning set forth in Section 2.1(c).



     “Foreign Obligations” shall mean the aggregate of (a) the Obligations of Foreign
Borrower and (b) the Obligations of the Guarantors, to the extent they relate to the Obligations of
Foreign Borrower, each as they may exist from time to time.



     “Foreign Receivables Advance Rates” shall have the meaning set forth in Section
2.1(c)(y)(i).



14









 





     “Foreign Security Agreements” shall mean and include the Canadian Stock Pledge
Agreement and any other security documents executed and or delivered by Foreign Borrower to Agent.



     “Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is
not organized or incorporated in the United States or any State or territory thereof.



     “Formula Amount” shall have the meaning set forth in Section 2.1(a).



     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.



     “General Intangibles” shall mean and include as to each Borrower all of such
Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment
intangibles, all choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations, manufacturing
procedures, quality control procedures, trademarks, trademark applications, service marks, trade
secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes,
records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or other security held
by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other
than to the extent covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).



     “Governmental Acts” shall have the meaning set forth in Section 2.17.



     “Governmental Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining to a government.



     “Guarantor” shall mean the Ampersand Guarantors, Holdings and any other Person who may
hereafter guarantee payment or performance of the whole or any part of the Obligations and
“Guarantors” means collectively all such Persons.



     “Guarantor Security Agreement” shall mean any security agreement executed by any
Guarantor in favor of Agent securing the Obligations or the Guaranty of such Guarantor.



     “Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders.



     “Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof.



     “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of



15









 




the New York State Environmental Conservation Law or any other applicable Environmental Law
and in the regulations adopted pursuant thereto.




     “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws or Canadian and
provincial laws now in force or hereafter enacted relating to hazardous waste disposal.



     “Hedge Liabilities” shall have the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.



     “Holdings” shall mean Rand Worldwide, Inc., a Delaware corporation.



     “Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations
of such Person whether direct or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually shall have been created, assumed or incurred
by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of
any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually
so created, assumed or incurred.



     “Ineligible Security” shall mean any security which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.



     “Intellectual Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret
or license or other right to use any of the foregoing.



     “Intellectual Property Claim” shall mean the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property
or other property or asset is violative of any ownership of or right to use any Intellectual
Property of such Person.



     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement between
Autodesk, Inc. and Agent.



     “Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant
to Section 2.2(b).



     “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered into by any
Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such
Borrower, any



16









 




Guarantor and/or their respective Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.




     “Inventory” shall mean and include as to each Borrower all of such Borrower’s now
owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower’s business or used in selling
or furnishing such goods, merchandise and other personal property, and all documents of title or
other documents representing them.



     “Investment Property” shall mean and include as to each Borrower, all of such
Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and commodities accounts.



     “Issuer” shall mean any Person who issues a Letter of Credit and/or accepts a draft
pursuant to the terms hereof.



     “Leasehold Interests” shall mean all of each Borrower’s right, title and interest in
and to, and as lessee, of the premises identified on Schedule 4.19(A) hereto.



     “Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a transferee, successor or
assign of any Lender.



     “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which Agent confirms meets the following requirements:
such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association
Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s
credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather
than speculative) purposes. The liabilities of any Borrower to the provider of any Lender-Provided
Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed
obligations under any Guaranty and secured obligations under any Guarantor Security Agreement and
otherwise treated as Obligations for purposes of each of the Other Documents. The Liens securing
the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this
Agreement and the Other Documents.



     “Letter of Credit Fees” shall have the meaning set forth in Section 3.2.



     “Letter of Credit Borrowing” shall have the meaning set forth in Section 2.12(d).



     “Letter of Credit Sublimit” shall mean $100,000.



     “Letters of Credit” shall have the meaning set forth in Section 2.9.



     “License Agreement” shall mean any agreement between any Borrower and a Licensor
pursuant to which such Borrower is authorized to use any Intellectual Property in connection



17









 




with the manufacturing, marketing, sale or other distribution of any Inventory of such
Borrower or otherwise in connection with such Borrower’s business operations.




     “Licensor” shall mean any Person from whom any Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such
Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in
connection with such Borrower’s business operations.



     “Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor, in
form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis
such Licensor, to enforce Agent’s Liens with respect to and to dispose of any Borrower’s Inventory
with the benefit of any Intellectual Property applicable thereto, irrespective of such Borrower’s
default under any License Agreement with such Licensor.



     “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.



     “Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises at which any Collateral may be located from time to time and
by which such Person shall waive any Lien that such Person may ever have with respect to any of the
Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or
remove the Collateral from such premises or to use such premises to store or dispose of such
Inventory.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, or properties of the Borrowers
and Guarantors (excluding the Ampersand Guarantors), taken as a whole, (b) the ability of the
Borrowers and Guarantors (excluding the Ampersand Guarantors) taken as a whole, to duly and
punctually pay or perform the Obligations in accordance with the terms thereof, (c) the aggregate
value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d)
the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under
this Agreement and the Other Documents.



     “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit,
the face amount of such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become effective.



     “Maximum Foreign Revolving Advance Amount” shall mean, subject to Section 2.1(d)
hereof, $2,000,000.



     “Maximum Loan Amount” shall mean $12,500,000.



18









 





     “Maximum Revolving Advance Amount” shall mean $12,500,000; provided,
however, that when such term is used with respect solely to US Borrowers it shall mean the
Maximum US Revolving Advance Amount and when used with respect solely to Foreign Borrower it shall
mean the Maximum Foreign Revolving Advance Amount.



     “Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit,
the amount of such Letter of Credit that is or may become available to be drawn, including all
automatic increases provided for in such Letter of Credit, whether or not any such automatic
increase has become effective.



     “Maximum US Revolving Advance Amount” shall mean $12,500,000.



     “Modified Commitment Transfer Supplement” shall have the meaning set forth in Section
16.3(d).



     “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) or
4001(a)(3) of ERISA to which contributions are required by any Borrower or any member of the
Controlled Group.



     “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of whom are not under
common control, as such a plan is described in Section 4064 of ERISA.



     “Note” shall mean the Revolving Credit Note.



     “Obligations” shall mean and include any and all loans (including without limitation,
all Advances) debts, liabilities, obligations, covenants and duties owing by any Borrower to
Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender
of any kind or nature, present or future (including any interest or other amounts accruing thereon,
and any costs and expenses of any Person payable by any Borrower and any indemnification
obligations payable by any Borrower arising or payable after maturity, or after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding
relating to any Borrower, whether or not a claim for post-filing or post-petition interest or other
amounts is allowable or allowed in such proceeding), whether or not evidenced by any note, guaranty
or other instrument, whether arising under any agreement, instrument or document, (including this
Agreement and the Other Documents) whether or not for the payment of money, whether arising by
reason of an extension of credit, opening of a letter of credit, loan, equipment lease or
guarantee, under any interest or currency swap, future, option or other similar agreement, or in
any other manner, whether arising out of overdrafts or deposit or other accounts or electronic
funds transfers (whether through automated clearing houses or otherwise) or out of Agent’s or any
Lenders non-receipt of or inability to collect funds or otherwise not being made whole in
connection with depository transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what
agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of any Borrower’s Indebtedness and/or



19









 




liabilities under this Agreement, the Other Documents or under any other agreement between
Agent or Lenders and any Borrower and any amendments, extensions, renewals or increases and all
costs and expenses of Agent and any Lender incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of the foregoing,
including but not limited to reasonable attorneys’ fees and expenses and all obligations of any
Borrower to Agent or Lenders to perform acts or refrain from taking any action.




     “Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary
course of such Borrower’s business as conducted on the Closing Date.



     “Original Owners” shall mean with respect: (i) to Holdings, the Ampersand Guarantors;
(ii) to Rand Worldwide U.S. or Rand A, Holdings, and (iii) to any other Borrower, Rand Worldwide
U.S.



     “Other Documents” shall mean the Note, the Perfection Certificates, the Pledge
Agreements, any Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate
Hedge, the Intercreditor Agreement, the Subordination Agreement(s), each of the Foreign Security
Agreements and any and all other agreements, instruments and documents, including intercreditor
agreements, guaranties, pledges, powers of attorney, consents, interest or currency swap agreements
or other similar agreements and all other writings heretofore, now or hereafter executed by any
Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.



     “Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b).



     “Parent” of any Person shall mean a corporation or other entity owning, directly or
indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons performing similar
functions for any such Person.



     “Participant” shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.



     “Participation Advance” shall have the meaning set forth in Section 2.12(d).



     “Participation Commitment” shall mean each Lender’s obligation to buy a participation
of the Letters of Credit issued hereunder.



     “Payee” shall have the meaning set forth in Section 3.10.



     “Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New
Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to
Borrowing Agent and to each Lender to be the Payment Office.



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



20









 





     “Perfection Certificates” shall mean collectively, the Perfection Certificates and the
responses thereto provided by each Borrower and delivered to Agent.



     “Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the Code or is a pension
benefit plan within the meaning of the Pension Benefits Act (Ontario) and either (i) is maintained
or to which contributions are required by any member of the Controlled Group for employees of any
member of the Controlled Group; or (ii) has at any time within the preceding five years been
maintained or to which contributions have been required by any entity which was at such time a
member of the Controlled Group for employees of any entity which was at such time a member of the
Controlled Group.



     “Permitted Discretion” shall mean, with respect to Agent, the exercise in good faith
of its reasonable business judgment from the perspective of an asset based lender.



     “Permitted Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or
being Properly Contested; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the
rendition, entry or issuance against any Borrower or any Subsidiary, or any property of any
Borrower or any Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien
(x) is in existence for less than 20 consecutive days after it first arises or is being Properly
Contested and (y) is at all times junior in priority to any Liens in favor of Agent; (g)
mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business
with respect to obligations which are not due or which are being Properly Contested; (h) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any other property of any Borrower and (y) the
aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases
during any fiscal year shall not exceed the amount provided for in Section 7.6; (i) other Liens
incidental to the conduct of any Borrower’s business or the ownership of its property and assets
which were not incurred in connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from Agent’s or Lenders’ rights in and
to the Collateral or the value of any Borrower’s property or assets or which do not materially
impair the use thereof in the operation of any Borrower’s business; and (j) Liens disclosed on
Schedule 1.2.



     “Permitted Overadvance” shall mean, at any time of determination, an amount equal to
$2,500,000 to be reduced on the first day of each November, February, May and August following the
Closing Date by $208,334 (by way of example, on November 1, 2009, the Permitted Overadvance shall
be reduced by $208,334 to $2,291,666, on February 1, 2010 the Permitted Overadvance shall be
reduced by $208,334 to $2,083,332 and so on until the Permitted Overadvances reaches $0).



21









 





     “Person” shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit corporation, joint
venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).



     “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA or within the meaning of the Pension Benefits Act (Ontario) (including a Pension Benefit Plan
and a Multiemployer Plan), maintained for employees of any Borrower or any member of the Controlled
Group or any such Plan to which any Borrower or any member of the Controlled Group is required to
contribute on behalf of any member of the Controlled Group.



     “Pledge Agreements” shall mean that certain (i) Pledge Agreement executed by Holdings
in favor of Agent dated as of even date herewith and (ii) Pledge Agreement executed by Rand
Worldwide U.S. in favor of Agent dated as of even date herewith.



     “PNC” shall have the meaning set forth in the preamble to this Agreement and shall
extend to all of its successors and assigns.



     “Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof.



     “Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b)
hereof.



     “Properly Contested” shall mean, in the case of any Indebtedness or Lien, as
applicable, of any Person (including any taxes) that is not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the
amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good
faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has
established appropriate reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Indebtedness could not reasonably be expected to have a Material Adverse Effect
and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon
any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times
junior and subordinate in priority to the Liens in favor of Agent (except only with respect to
property taxes that have priority as a matter of applicable state law) and enforcement of such Lien
is stayed during the period prior to the final resolution or disposition of such dispute; (v) if
such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or
issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of
such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review;
and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to
such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other
amounts due in connection therewith.



     “Projections” shall have the meaning set forth in Section 5.5(b) hereof.



     “Published Rate” shall mean the rate of interest published each Business Day in the
Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for
a one month period (or, if no such rate is published therein for any reason, then the Published



22









 




Rate shall be the Eurodollar Rate for a one month period as published in another publication
selected by the Agent in its reasonable discretion).




     “Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.



     “Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.



     “Rand North America” shall mean Rand North America, Inc., a Delaware corporation.



     “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time.



     “Real Property” shall mean all of each Borrower’s right, title and interest in and to
the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or
leased by any Borrower.



     “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s
accounts, contract rights, instruments (including those evidencing indebtedness owed to such
Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general
intangibles relating to accounts, drafts and acceptances, credit card receivables and all other
forms of obligations owing to such Borrower arising out of or in connection with the sale or lease
of Inventory or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.



     “Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.



     “Register” shall have the meaning set forth in Section 16.3(e).



     “Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b)hereof.



     “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.



     “Replacement Letter of Credit” shall mean that certain Letter of Credit to be issued
by Issuer for the benefit of 61 Broadway Owner, LLC on behalf of Rand Imaginit in the approximate
amount of $20,000.



     “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.



     “Required Lenders” shall mean Lenders holding at least sixty six and two-thirds
percent (66-2/3%) of the Advances and, if no Advances are outstanding, shall mean Lenders holding
sixty six and two-thirds percent (66-2/3%) of the Commitment Percentages; provided, however, if
there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders.



     “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or any



23









 




successor) for determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”.




     “Revolving Advances” shall mean Advances made other than Letters of Credit.



     “Revolving Credit Note” shall mean, collectively, the promissory notes referred to in
Section 2.1(a) hereof.



     “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum
of the Alternate Base Rate plus the Applicable Margin with respect to Domestic Rate Loans
and (b) the sum of the Applicable Margin plus the greater of (i) the Eurodollar Rate and
(ii) two percent (2.00%) with respect to Eurodollar Rate Loans.



     “SEC” shall mean the Securities and Exchange Commission or any successor thereto.



     “Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to
underwrite and deal in certain Ineligible Securities.



     “Securities Act” shall mean the Securities Act of 1933, as amended.



     “Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of
each week or more frequently if Agent deems appropriate unless such day is not a Business Day in
which case it shall be the next succeeding Business Day.



     “Subordinated Indebtedness” shall mean all obligations of the Holdings and its
Subsidiaries pursuant to the Subordinated Loan Documents.



     “Subordinated Loan Documents” shall mean (i) that certain Second Amended and Restated
Term Loan Agreement dated as of the date hereof, among Holdings and the Ampersand Guarantors, (ii)
any notes issued in favor of Ampersand 2001 Limited, Ampersand 2001 Companion and Ampersand 2006
Limited by Holdings in connection therewith, (iii) that certain Security Agreement dated as of
October 31, 2007, by and among Rand Delaware LLC, Rand Worldwide U.S., Rand Michigan, Rand
Development LLC, Rand Imaginit and Ampersand 2006 Limited, as agent, (iv) that certain Security
Agreement dated as of October 31, 2007, by and between Holdings and Ampersand 2006 Limited, as
agent, (v) that certain Guaranty dated as of October 31, 2007 by and among Rand Delaware LLC, Rand
Worldwide U.S., Rand Michigan, Rand Development LLC, Rand Imaginit and Ampersand 2006 Limited, as
agent, (vi) that certain Pledge Agreement dated as of October 31, 2007 by and among Holdings, Rand
Worldwide U.S. and Ampersand 2006 Limited, as agent, (vii) the Subordination Agreement dated as of
October 31, 2007 by and among Autodesk, Inc., Rand Imaginit and Ampersand 2006 Limited, as agent,
and (viii) and any other documents, agreements and instruments delivered in connection therewith,
as any of the foregoing may be amended, modified, restated or supplemented from time to time.



     “Subordination Agreement” shall mean that certain Intercreditor Agreement by and among
Ampersand Guarantors, Borrowers, Holdings and the Agent.



24









 





     “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other Persons performing similar functions for such entity, are owned, directly or indirectly,
by such Person.



     “Term” shall have the meaning set forth in Section 13.1 hereof.



     “Termination Event” shall mean (i) a Reportable Event with respect to any Plan; (ii)
the withdrawal of any Borrower or any member of the Controlled Group from a Plan during a plan year
in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii)
the providing of notice of intent to terminate a Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan; (v)
any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Section 4203 or 4205 of ERISA, of any Borrower or any
member of the Controlled Group from a Multiemployer Plan.



     “Toxic Substance” shall mean and include any material present on the Real Property or
the Leasehold Interests which has been shown to have significant adverse effect on human health or
which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et
seq., applicable state law, or any other applicable Federal or state laws or Canadian or provincial
laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.



     “Trading with the Enemy Act” shall mean the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.



     “Transactions” shall have the meaning set forth in Section 5.5(a) hereof.



     “Transferee” shall have the meaning set forth in Section 16.3(d) hereof.



     “Undrawn Availability” at a particular date shall mean an amount equal to (a) the
lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount less the
Maximum Undrawn Amount, minus (b) the sum of (i) the outstanding amount of Advances,
minus (ii) cash on hand in an account subject to a Foreign Blocked Account in favor of
Agent, plus (iii) all amounts due and owing to any Borrower’s trade creditors which are
outstanding beyond sixty (60) days, plus (iv) fees and expenses for which Borrowers are
liable but which have not been paid or charged to Borrowers’ Account.



     “Undrawn Availability/Closing Date” on the Closing Date, shall mean an amount equal to
(a) the lesser of (i) the Formula Amount (without giving effect to the Permitted Overadvance, the
Availability Block or rent reserves established pursuant to Section 6.10), or (ii) the Maximum
Revolving Advance Amount, less the Maximum Undrawn Amount, minus (b) the sum of (i)
the outstanding amount of Advances, minus (ii) cash on hand held by Rand A in a Canadian
bank



25









 




account, plus (iii) all amounts due and owing to any Borrower’s trade creditors which
are outstanding beyond sixty (60) days, plus (iv) fees and expenses for which Borrowers are
liable but which have not been paid or charged to Borrowers’ Account.




     “Unfunded Capital Expenditures” shall mean Capital Expenditures made through Revolving
Advances or out of Borrowers’ own funds other than through equity contributed subsequent to the
Closing Date or purchase money or other financing or lease transactions permitted hereunder.



     “Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.



     “US Borrowers” shall have meaning set forth in the preamble to this Agreement and sall
extend to all permitted successors and assigns of such Persons.



     “US Dollar Equivalent” shall mean, at the date of determination, the amount of Dollars
that the Agent could purchase, in accordance with its normal practice, with a specified amount of
Canadian Dollars based on the Bank of Canada noon spot rate on such date.



     “US Formula Amount” shall have the meaning set forth in Section 2.1(b).



     “US Obligations” shall mean the aggregate of the Obligations of each of the US
Borrowers as they may exist from time to time other than the Foreign Obligations.



     “USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.



     “Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.



     1.3. Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform Commercial Code as adopted in the State of Illinois from time to time (the “Uniform
Commercial Code”) shall have the meaning given therein unless otherwise defined herein. Without
limiting the foregoing, the terms “accounts,” “chattel paper,” “commercial tort claims,”
“instruments,” “general intangibles,” “goods,” “payment intangibles,” “proceeds,” “supporting
obligations,” “securities,” “investment property,” “documents,” “deposit accounts,” “software,”
“letter of credit rights,” “inventory,” “equipment” and “fixtures,” as and when used in the
description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the
Uniform Commercial Code. To the extent the definition of any category or type of collateral is
expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded
definition will apply automatically as of the date of such amendment, modification or revision.
With respect to Foreign Borrower, any reference to the Uniform Commercial Code shall be deemed to
mean the Personal Property Security Act of the relevant province.



     1.4. Certain Matters of Construction.



          (a) General. The terms “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular section, paragraph



26









 




or subdivision. All references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any
pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used
herein in the singular also include the plural and vice versa. All references to statutes and
related regulations shall include any amendments of same and any successor statutes and
regulations. Unless otherwise provided, all references to any instruments or agreements to which
Agent is a party, including references to any of the Other Documents, shall include any and all
modifications, supplements or amendments thereto, any and all restatements or replacements thereof
and any and all extensions or renewals thereof. All references herein to the time of day shall
mean the time in New York, New York. Unless otherwise provided, all financial calculations shall
be performed with Inventory valued on a first-in, first-out basis. Whenever the words “including”
or “include” shall be used, such words shall be understood to mean “including, without limitation”
or “include, without limitation”. A Default or Event of Default shall be deemed to exist at all
times during the period commencing on the date that such Default or Event of Default occurs to the
date on which such Default or Event of Default is waived in writing pursuant to this Agreement or,
in the case of a Default, is cured within any period of cure expressly provided for in this
Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default
has been waived in writing by the Required Lenders or all Lenders, as applicable. Any Lien
referred to in this Agreement or any of the Other Documents as having been created in favor of
Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other
Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by
this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent,
shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or
omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of
Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness of any
Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the
actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer
would have obtained if he had engaged in good faith and diligent performance of his duties,
including the making of such reasonably specific inquiries as may be necessary of the employees or
agents of such Borrower and a good faith attempt to ascertain the existence or accuracy of the
matter to which such phrase relates. All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such covenants, the fact that
it would be permitted by an exception to, or otherwise within the limitations of, another covenant
shall not avoid the occurrence of a default if such action is taken or condition exists. In
addition, all representations and warranties hereunder shall be given independent effect so that if
a particular representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter is correct or is
not breached will not affect the incorrectness of a breach of a representation or warranty
hereunder.




          (b) Canadian Terms. In this Agreement, (i) any term defined in this Agreement by
reference to the “Uniform Commercial Code” shall also have any extended, alternative or analogous
meaning given to such term in applicable Canadian personal property security and other laws
(including, without limitation, the Personal Property Security Act (Ontario), the Bills of Exchange
Act (Canada) and the Depository Bills and Notes Act (Canada)), in all cases for the extension,
preservation or betterment of the security and rights of the Agent, (ii) all references in this
Agreement to “Article 8 of the Code” or “Article 8 of the Uniform



27









 




Commercial Code” shall be deemed to refer also to applicable Canadian securities transfer laws
(including, without limitation, the Securities Transfer Act, 2006 (Ontario)), (iii) all references
in this Agreement to the United States Copyright Office or the United States Patent and Trademark
Office shall be deemed to refer also to the Canadian Intellectual Property Office, (iv) all
references in this Agreement to a financing statement, continuation statement, amendment or
termination statement shall be deemed to refer also to the analogous documents used under
applicable Canadian personal property security laws, (v) all references to the United States of
America, or to any subdivision, department, agency or instrumentality thereof shall be deemed to
refer also to Canada, or to any subdivision, department, agency or instrumentality thereof, (vi)
all references to federal or state securities law of the United States shall be deemed to refer
also to analogous federal and provincial securities laws in Canada, (vii) all references to “state
or federal bankruptcy laws” shall be deemed to refer also to any insolvency proceeding occurring in
Canada or under Canadian law, and (viii) all calculations of Dollar amounts which utilize amounts
expressed in Canadian Dollars shall be made using the US Dollar Equivalent of such Canadian Dollar
amounts in a manner reasonably calculated by the Agent.



II. ADVANCES, PAYMENTS.




     2.1. Revolving Advances.



          (a) Revolving Advances. Subject to the terms and conditions set forth in this
Agreement including, without limitation, Sections 2.1(b), (c), (d) and (e), each Lender, severally
and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any
time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount minus the aggregate Maximum Undrawn Amount and (y) the Formula Amount. The
“Formula Amount” shall at all times be an amount equal to the Dollar Equivalent of the sum of the
following:



               (i) up to 85%, subject to adjustment pursuant to the provisions of Section 2.1(d) hereof
(“Receivables Advance Rate”), of Eligible US Receivables and Eligible Foreign Receivables,
plus



               (ii) the Permitted Overadvance, minus



               (iii) the Availability Block, minus



               (iv) the aggregate Maximum Undrawn Amount, minus



               (v) such reserves as Agent may deem proper and necessary from time to time in its
Permitted Discretion.



     The Revolving Advances shall be evidenced by secured promissory notes (which may be amended
and restated promissory notes), issued by the US Borrowers with respect to their Revolving Advances
and issued by the Foreign Borrower with respect to its Revolving Advances (collectively, the
“Revolving Credit Note”) substantially in the form attached hereto as Exhibits
2.1-US and 2.1-F



28









 





          (b) US Borrowing Group Sublimit. Notwithstanding the provisions of Section
2.1(a), and in addition to the discretionary rights set forth in Section 2.1(d) with respect to
further limitations on any particular Borrower or Borrowers and the limitations in Section 2.1(e),
in no event may the Revolving Advances to US Borrowers exceed the lesser of (x) the sum of (A) the
Maximum US Revolving Advance Amount minus (B) the sum of (1) the aggregate Maximum Undrawn
Amount plus (2) the aggregate outstanding Revolving Advances to Foreign Borrower, or (y) an
amount equal to the sum of:



               (i) up to the Receivables Advance Rate of Eligible US Receivables, plus



               (ii) the Permitted Overadvance, minus



               (iii) the Availability Block, minus



               (iv) the aggregate Maximum Undrawn Amount, minus



               (v) the aggregate outstanding Revolving Advances to Foreign Borrower, minus



               (vi) such reserves as Agent may deem proper and necessary from time to time in its
Permitted Discretion.



     The amount derived from the sum of (x) Sections 2.1(b)(y)(i) and (ii), minus (y)
Sections 2.1(b)(y)(iii), (iv), (v) and (vi) at any time and from time to time shall be referred to
as the “US Formula Amount”.



          (c) Foreign Borrowing Group Sublimit. Notwithstanding the provisions of Section
2.1(a), and in addition to the discretionary rights set forth in Section 2.1(d) with respect to
further limitations on any particular Borrower or Borrowers and the limitations in Section 2.1(e),
in no event may the Revolving Advances to Foreign Borrower exceed the lesser of (x) the Maximum
Foreign Revolving Advance Amount or (y) the US Dollar Equivalent of an amount equal to the sum of:



               (i) up to 85%, subject to the provisions of Sections 2.1(d) and (e) hereof (“Foreign
Receivables Advance Rate” and together with the Receivables Advance Rate, the “Advance Rates”), of
Eligible Foreign Receivables, minus



               (ii) such reserves as Agent may deem proper and necessary from time to time in its
Permitted Discretion.



     The amount derived from (x) Section 2.1(c)(y)(i) minus (y) Section 2.1(c)(y)(ii) at
any time and from time to time shall be referred to as the “Foreign Formula Amount”.



          (d) Discretionary Rights. The Advance Rates may be increased or decreased by
Agent at any time and from time to time in the exercise of its Permitted Discretion with five (5)
Business Day’s prior written notice to the Borrowing Agent. Each Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or increasing



29









 




or imposing reserves may limit or restrict Advances requested by Borrowing Agent. The rights
of Agent under this subsection are subject to the provisions of Section 16.2(b).From time to time
Agent may, upon five (5) Business Days prior written notice to Borrowing Agent of its intention to
do so, but only after the occurrence and during the continuation of a Default or Event of Default
or if Agent reasonably believes that an event or condition has occurred which is likely to result
in or have a Material Adverse Effect, impose any other maximum revolving advance amount for any
particular Borrower or group of Borrowers and/or limit the maximum Dollar amount of Revolving
Advances which may be extended to any individual Borrower or group of Borrowers.




          (e) Sublimit for Rand North America. Advances against Eligible US Receivables on
account of Rand North America shall not exceed One Million Dollars ($1,000,000) in the aggregate at
any one time.



     2.2. Procedure for Revolving Advances Borrowing.



          (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. (New
York time) on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance
hereunder, and specifying which Borrower, or Borrowing Group, is to incur such Revolving Advance.
Should any amount required to be paid as interest hereunder, or as fees or other charges under this
Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate
Loan as of the date such payment is due, in the amount required to pay in full such interest, fee,
charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.



          (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower
desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no
later than 10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar
Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a
Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be
borrowed, which amount shall be in a minimum amount of $200,000 and in integral multiples of
$50,000 thereafter, and (iii) the duration of the first Interest Period therefor. Interest Periods
for Eurodollar Rate Loans shall be for one, two or three months; provided, if an Interest Period
would end on a day that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the Interest Period shall
end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to any
Borrower during the continuance of a Default or an Event of Default. After giving effect to each
requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under
Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar Rate Loans, in the
aggregate.



          (c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth
in subsection (b)(iii) above provided that the exact length of each Interest Period shall be
determined in accordance with the practice of the interbank market for offshore Dollar deposits and
no Interest Period shall end after the last day of the Term. Borrowing Agent shall



30









 




elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of
borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent
pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later
than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely
notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.




          (d) Provided that no Event of Default shall have occurred and be continuing, Borrowing
Agent may, on the last Business Day of the then current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans,
convert any such loan into a loan of another type in the same aggregate principal amount provided
that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires
to convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i)
on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur
with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the
day which is one (1) Business Day prior to the date on which such conversion is to occur with
respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each
case, the date of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.



          (e) At its option and upon written notice given prior to 10:00 a.m. (New York time) at
least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the
Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on
the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of
prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the
event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than
the last Business Day of the then current Interest Period with respect thereto, such Borrower shall
indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.



          (f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless
from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.



          (g) Notwithstanding any other provision hereof, if any Applicable Law or any change
therein or in the interpretation or application thereof, shall make it unlawful for any



31









 




Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and
the office or branch where any Lender or any corporation or bank controlling such Lender makes or
maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation
of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers
shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is
made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate
Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary
to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such
Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any
interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to
make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.




     2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from
whichever office or other place Agent may designate from time to time and, together with any and
all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on
Agent’s books. In no event, however, shall Agent disburse Advances other than to an account located
in the United States of America. During the Term, Borrowers may use the Revolving Advances by
borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed
to have been requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested
Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the
applicable Borrower on the day so requested by way of credit to such Borrower’s operating account
at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or, with respect to
Revolving Advances deemed to have been requested by any Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.



     2.4. Reserved.



     2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding at
any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount less the
Maximum Undrawn Amount or (b) the Formula Amount.



     2.6. Repayment of Advances.



          (a) The Revolving Advances shall be due and payable in full on the last day of the Term
subject to earlier prepayment as herein provided.



          (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any
other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on
the date received. In consideration of Agent’s agreement to conditionally credit Borrowers’
Account as of the next Business Day following Agent’s receipt



32









 




of those items of payment, each Borrower agrees that, in computing the charges under this
Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day following Agent’s receipt of such payments via check, wire
transfer, electronic depository check or in any other manner. Agent is not, however, required to
credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent
and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned to
Agent unpaid.




          (c) All payments of principal, interest and other amounts payable hereunder, or under any
of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (New
York time) on the due date therefor in lawful money of the United States of America in federal
funds or other funds immediately available to Agent. Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by
making Advances as provided in Section 2.2 hereof.



          (d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or
under any related agreement, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.



     2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding
at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately
due and payable without the necessity of any demand, at the Payment Office, whether or not a
Default or Event of Default has occurred.



     2.8. Statement of Account. Agent shall maintain, in accordance with its customary
procedures, a loan account for the US Borrowers and a loan account for the Foreign Borrower (each a
“Borrowers’ Account”), each in the name of Borrowing Agent, in which shall be recorded the
date and amount of each Advance made by Agent and the date and amount of each payment in respect
thereof; provided, however, the failure by Agent to record the date and amount of
any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send Borrowing
Agent a statement showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Agent and the respective Borrowing Group, during
such month. The monthly statements shall be deemed correct and binding upon Borrowers in the
absence of manifest error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’ specific exceptions thereto within thirty
(30) days after such statement is received by Borrowing Agent. The records of Agent with respect
to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances
and other charges thereto and of payments applicable thereto.



     2.9. Letters of Credit. Subject to the terms and conditions hereof, Agent shall
issue or cause the issuance of standby and/or trade Letters of Credit (“Letters of Credit”) for the
account of any US Borrower; provided, however, that Agent will not be required to issue or cause to
be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of
(i) the outstanding Revolving Advances to all US Borrowers plus (ii) the Maximum Undrawn
Amount plus (iii) the outstanding Revolving Advances to Foreign Borrower to exceed the
lesser of (x) the Maximum US Revolving Advance Amount or (y) the US Formula Amount. All



33









 




disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate
Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for
Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest.




     2.10. Issuance of Letters of Credit.



          (a) Borrowing Agent, on behalf of US Borrowers, may request Agent to issue or cause the
issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m.
(New York time), at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s
form of Letter of Credit Application (the “Letter of Credit Application”) completed to the
satisfaction of Agent; and, such other certificates, documents and other papers and information as
Agent may reasonably request. Borrowing Agent, on behalf of US Borrowers, also has the right to
give instructions and make agreements with respect to any application, any applicable letter of
credit and security agreement, any applicable letter of credit reimbursement agreement and/or any
other applicable agreement, any letter of credit and the disposition of documents, disposition of
any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any
Letter of Credit.



          (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances of usance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the documents described
therein and (ii) have an expiry date not later than twelve (12) months after such Letter of
Credit’s date of issuance and in no event later than the last day of the Term; provided that the
Replacement Letter of Credit may be issued with an expiry date later than twelve (12) months but
not later than the Term. Each standby Letter of Credit shall be subject either to the Uniform
Customs and Practice for Documentary Credits as most recently published by the International
Chamber of Commerce at the time the Letter of Credit is issued (“UCP”) or the International Standby
Practices (ISP98-International Chamber of Commerce Publication Number 590) (“ISP98 Rules”), and any
subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by
Agent, and each trade Letter of Credit shall be subject to the UCP.



          (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing
Agent for a Letter of Credit hereunder.



     2.11. Requirements For Issuance of Letters of Credit.



          (a) Borrowing Agent shall authorize and direct any Issuer to name the applicable US
Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the
Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to
Agent all instruments, documents, and other writings and property received by the Issuer pursuant
to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with
respect to all matters arising in connection with the Letter of Credit or the application therefor.



          (b) In connection with all Letters of Credit issued or caused to be issued by Agent under
this Agreement, each US Borrower hereby appoints Agent, or its designee, as its



34









 




attorney, with full power and authority if an Event of Default shall have occurred and be
continuing, (i) to sign and/or endorse such US Borrower’s name upon any warehouse or other
receipts, letter of credit applications and acceptances, (ii) to sign such US Borrower’s name on
bills of lading; (iii) to clear Inventory through the United States of America Customs Department
(“Customs”) in the name of such US Borrower or Agent or Agent’s designee, and to sign and deliver
to Customs officials powers of attorney in the name of such US Borrower for such purpose; and (iv)
to complete in such US Borrower’s name or Agent’s, or in the name of Agent’s designee, any order,
sale or transaction, obtain the necessary documents in connection therewith, and collect the
proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for Agent’s or its attorney’s willful
misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of
Credit remain outstanding.




     2.12. Disbursements, Reimbursement.



          (a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in
such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment
Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing,
respectively.



          (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent
shall have received such notice, the US Borrowers shall reimburse (such obligation to reimburse
Agent shall sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 Noon,
New York time on each date that an amount is paid by Agent under any Letter of Credit (each such
date, a “Drawing Date”) in an amount equal to the amount so paid by Agent. In the event US
Borrowers fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by
12:00 Noon, New York time, on the Drawing Date, Agent will promptly notify each Lender thereof, and
US Borrowers shall be deemed to have requested that a Revolving Advance maintained as a Domestic
Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such Letter of Credit,
subject to the amount of the unutilized portion of the lesser of the Maximum Revolving Advance
Amount less the Maximum Undrawn Amount, or the Formula Amount and subject to Section 8.2 hereof.
Any notice given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.



          (c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent
an amount in immediately available funds equal to its Commitment Percentage of the amount of the
drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to
have made a Revolving Advance maintained as a Domestic Rate Loan to US Borrowers in that amount.
If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment
Percentage of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to
the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds
Rate during the first three



35









 




days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to a
Revolving Advance maintained as Domestic Rate Loans on and after the fourth day following the
Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure
of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its obligation under this
Section 2.12(c), provided that such Lender shall not be obligated to pay interest as provided in
Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of
a drawing.




          (d) With respect to any unreimbursed drawing that is not converted into a Revolving
Advance maintained as a Domestic Rate Loan to US Borrowers in whole or in part as contemplated by
Section 2.12(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2
(other than any notice requirements) or for any other reason, US Borrowers shall be deemed to have
incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at the rate per annum applicable to a Revolving Advance
maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.12(c)
shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing
and shall constitute a “Participation Advance” from such Lender in satisfaction of its
Participation Commitment under this Section 2.12.



          (e) Each Lender’s Participation Commitment shall continue until the last to occur of any
of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of
Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and
uncancelled; and (z) all Persons (other than the applicable US Borrower) have been fully reimbursed
for all payments made under or relating to Letters of Credit.



     2.13. Repayment of Participation Advances.



          (a) Upon (and only upon) receipt by Agent for its account of immediately available funds
from US Borrowers (i) in reimbursement of any payment made by the Agent under the Letter of Credit
with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of
interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each
Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment
Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such
funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.



          (b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments
made by US Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith
return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.



     2.14. Documentation. Each Borrower agrees to be bound by the terms of the Letter
of Credit Application and by Agent’s interpretations of any Letter of Credit issued on behalf of



36









 




such Borrower and by Agent’s written regulations and customary practices relating to letters
of credit, though Agent’s interpretations may be different from such Borrower’s own. In the event
of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall
govern. It is understood and agreed that, except in the case of gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment),
Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or
commission, in following the Borrowing Agent’s or any Borrower’s instructions or those contained in
the Letters of Credit or any modifications, amendments or supplements thereto.




     2.15. Determination to Honor Drawing Request. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be
responsible only to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face with the requirements
of such Letter of Credit and that any other drawing condition appearing on the face of such Letter
of Credit has been satisfied in the manner so set forth.



     2.16. Nature of Participation and Reimbursement Obligations. Each Lender’s
obligation in accordance with this Agreement to make the Revolving Advances or Participation
Advances as a result of a drawing under a Letter of Credit, and the obligations of US Borrowers to
reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16
under all circumstances, including the following circumstances:



          (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may
have against Agent, any Borrower or any other Person for any reason whatsoever;



          (b) the failure of any Borrower or any other Person to comply, in connection with a Letter
of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving
Advance, it being acknowledged that such conditions are not required for the making of a Letter of
Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section
2.12;



          (c) any lack of validity or enforceability of any Letter of Credit;



          (d) any claim of breach of warranty that might be made by Borrower or any Lender against
the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which any Borrower or any Lender may have at any
time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or
the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any
Lender or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying transaction between any
Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit
was procured);



          (e) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,



37









 




enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provisions of services
relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been
notified thereof;




          (f) payment by Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such Letter of Credit;



          (g) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;



          (h) any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in
the form requested by Borrowing Agent, unless the Agent has received written notice from Borrowing
Agent of such failure within three (3) Business Days after the Agent shall have furnished Borrowing
Agent a copy of such Letter of Credit and such error is material and no drawing has been made
thereon prior to receipt of such notice;



          (i) any Material Adverse Effect on any Borrower or any Guarantor;



          (j) any breach of this Agreement or any Other Document by any party thereto;



          (k) the occurrence or continuance of an insolvency proceeding with respect to any Borrower
or any Guarantor;



          (l) the fact that a Default or Event of Default shall have occurred and be continuing;



          (m) the fact that the Term shall have expired or this Agreement or the Obligations
hereunder shall have been terminated; and



          (n) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.



     2.17. Indemnity. In addition to amounts payable as provided in Section 16.5, each
US Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s
Affiliates that have issued a Letter of Credit from and against any and all claims, demands,
liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the
gross negligence or willful misconduct of the Agent as determined by a final and non-appealable
judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of
Agent’s Affiliates of a proper demand for payment made under any Letter of



38









 




Credit, except if such dishonor resulted from any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body (all such acts or
omissions herein called “Governmental Acts”).




     2.18. Liability for Acts and Omissions. As between Borrowers and Agent and
Lenders, each US Borrower assumes all risks of the acts and omissions of, or misuse of the Letters
of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter
of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully
with any conditions required in order to draw upon such Letter of Credit or any other claim of any
US Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any
dispute between or among any US Borrower and any beneficiary of any Letter of Credit or any such
transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such Letter of Credit or of
the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of
the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from
causes beyond the control of Agent, including any governmental acts, and none of the above shall
affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder. Nothing in
the preceding sentence shall relieve Agent from liability for Agent’s gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment)
in connection with actions or omissions described in such clauses (i) through (viii) of such
sentence. In no event shall Agent or Agent’s Affiliates be liable to any US Borrower for any
indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any change in the value of
any property relating to a Letter of Credit.



     Without limiting the generality of the foregoing, Agent and each of its Affiliates: (i) may
rely on any oral or other communication believed in good faith by Agent or such Affiliate to have
been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor
any presentation if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored
presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to
settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to
reimbursement to the same extent as if such presentation had initially been honored, together with
any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt of such statement (even
if such statement indicates that a draft or other document is being delivered separately), and
shall not be liable for any failure of any such draft or other document to arrive, or to conform



39









 




in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place where such bank is
located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any
way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee
or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing
in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any
drafts or other documents presented in connection with such Letter of Credit fail to conform in any
way with such Letter of Credit.




     In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it
or any documents and certificates delivered thereunder, if taken or omitted in good faith and
without gross negligence or willful misconduct (as determined by a court of competent jurisdiction
in a final non-appealable judgment), shall not put Agent under any resulting liability to any
Borrower or any Lender.



     2.19. Additional Payments. Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1
hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations.



     2.20. Manner of Borrowing and Payment.



          (a) Each borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.



          (b) Each payment (including each prepayment) by any Borrower on account of the principal
of and interest on the Revolving Advances, shall be applied to the Revolving Advances of the
relevant Borrowing Group pro rata according to the applicable Commitment Percentages of Lenders.
Except as expressly provided herein, all payments (including prepayments) to be made by any
Borrower on account of principal, interest and fees shall be made without set off or counterclaim
and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior
to 1:00 P.M., New York time, in Dollars and in immediately available funds.



          (c) (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b)
hereof, commencing with the first Business Day following the Closing Date, each borrowing of
Revolving Advances shall be advanced by Agent and each payment by any Borrower on account of
Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or
before 1:00 P.M., New York time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the
aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds
the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding
Week, then each Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments
and (II) if the



40









 




aggregate amount of repayments applied to outstanding Revolving Advances during such Week
exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall
provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving Advances.




               (ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest
Rate on outstanding Advances which it has funded.



               (iii) Promptly following each Settlement Date, Agent shall submit to each Lender a
certificate with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.



          (d) If any Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such
payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is
not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other
Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such
other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral
or proceeds ratably with each of the other 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. Each Lender so purchasing a portion of another Lender’s Advances
may exercise all rights of payment (including rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion.



          (e) Unless Agent shall have been notified by telephone, confirmed in writing, by any
Lender that such Lender will not make the amount which would constitute its applicable Commitment
Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next Settlement Date and, in
reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate
(computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii)
such amount, times (iii) the number of days from and including such Settlement Date to the date on
which such amount becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent by such Lender
within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such
an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances
hereunder, on demand from the applicable Borrowing Group; provided, however, that Agent’s right to
such recovery shall not prejudice or otherwise adversely affect Borrowers’ rights (if any) against
such Lender.



41









 





     2.21. Mandatory Prepayments. Subject to Section 4.3 hereof, when any Borrower
sells or otherwise disposes of any Collateral other than (i) Inventory in the Ordinary Course of
Business and (ii) other Collateral (excluding Receivables) having a market value in the aggregate
not to exceed $250,000 per annum, Borrowers shall repay the Advances in an amount equal to the net
proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other
dispositions), such repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent. The foregoing shall not be deemed to be implied consent to any such sale
otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied to, in
the case of US Borrowers, the Advances extended to US Borrowers and in the case of Foreign
Borrower, the Advances extended to Foreign Borrower, in such order as Agent may determine, subject
to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof.



     2.22. Use of Proceeds.



          (a) Borrowers shall apply the proceeds of Advances to (i) repay existing Indebtedness owed
to the Ampersand Guarantors, (ii) pay fees and expenses relating to this transaction and costs and
expenses incurred by the Ampersand Guarantors in connection with the transactions involving
Holdings and its Subsidiaries prior to the date hereof, and (iii) provide for its general corporate
purposes, including but not limited to working capital needs, capital expenditures and
reimbursement of drawings under Letters of Credit.



          (b) Without limiting the generality of Section 2.22(a) above, neither the Borrowers, the
Guarantors, nor any other Person which may in the future become party to this Agreement or the
Other Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the
proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with
the Enemy Act.



     2.23. Defaulting Lender.



          (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x)
has refused (which refusal constitutes a breach by such Lender of its obligations under this
Agreement) to make available its portion of any Advance or (y) notifies either Agent or Borrowing
Agent that it does not intend to make available its portion of any Advance (if the actual refusal
would constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which
a Lender Default is in effect and of the other parties hereto shall be modified to the extent of
the express provisions of this Section 2.23 while such Lender Default remains in effect.



          (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which
are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Advances required to be advanced by any
Lender shall be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender
(other than any Defaulting Lender) pro rata based on the aggregate of




42











 




the outstanding Advances of that type of all Lenders at the time of such application;
provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments
received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to
the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, re-lend to a Borrower the amount of such payments received or retained by it for the
account of such Defaulting Lender.




          (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.
All amendments, waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances
outstanding or a Commitment Percentage.



          (d) Other than as expressly set forth in this Section 2.23, the rights and obligations of
a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto
shall remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting
Lender from its obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender
as a result of any default by such Defaulting Lender hereunder.



          (e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer
be a Defaulting Lender and shall be treated as a Lender under this Agreement.


III. INTEREST AND FEES.




     3.1. Interest.



          (a) Interest on Advances shall be payable by each Borrowing Group with respect to its
Advances in arrears on the first day of each month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar Rate Loans
with an Interest Period in excess of three months, at the earlier of (a) each three months from the
commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during the month at a rate
per annum equal to, with respect to Revolving Advances, the applicable Revolving Interest Rate.
Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or
decreased, the Revolving Interest Rate for Domestic Rate Loans shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base
Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the
effective date of any change in the Reserve Percentage as of such effective date. Upon and after
the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent
or at the direction of Required Lenders,



43









 




the Obligations shall bear interest at the applicable Revolving Interest Rate plus two
(2%) percent per annum (the “Default Rate”).




          (b) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any
interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis
of a 360-day year, the yearly rate of interest to which the rate used in such calculation is
equivalent is the rate so used multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by 360. The rates of interest under this Agreement
are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of
interest does not apply to any interest calculation under this Agreement.



          (c) Any provision of this Agreement that would oblige a Canadian Borrower to pay any fine,
penalty or rate of interest on any arrears of principal or interest secured by a mortgage on real
property or hypothec on immovables that has the effect of increasing the charge on arrears beyond
the rate of interest payable on principal money not in arrears shall not apply to such Canadian
Borrower, which shall be required to pay interest on money in arrears at the same rate of interest
payable on principal money not in arrears.



          (d) If any provision of this Agreement would oblige a Canadian Borrower to make any
payment of interest or other amount payable to any Lender in an amount or calculated at a rate
which would be prohibited by law or would result in a receipt by that Lender of “interest” at a
“criminal rate” (as such terms are construed under the Criminal Code (Canada)), then,
notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be
so prohibited by applicable law or so result in a receipt by that Lender of “interest” at a
“criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent
necessary), as follows:



               (i) first, by reducing the amount or rate of interest; and



               (ii) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other
amounts required to be paid which would constitute interest for purposes of section 347 of the
Criminal Code (Canada).



     3.2. Letter of Credit Fees.



          (a) US Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each
Letter of Credit for the period from and excluding the date of issuance of same to and including
the date of expiration or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by the Applicable Margin for Eurodollar Rate Loans then in effect, such
fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to
be payable quarterly in arrears on the first day of each quarter and on the last day of the Term,
and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together
with any and all administrative, issuance, amendment, payment and negotiation charges with respect
to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent
in connection with any Letter of Credit, including in connection with the opening, amendment or
renewal of any such Letter of Credit created thereunder and shall



44









 




reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of
the foregoing fees, the “Letter of Credit Fees”). All such charges shall be deemed earned in full
on the date when the same are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the
time of a particular transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of
Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this
Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of
Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two
percent (2%) per annum.




          (b) At the option of the Agent or at the direction of the Required Lenders, at any time
following the occurrence of an Event of Default or the expiration of the Term, US Borrowers will
cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an
amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount, and each
Borrower hereby irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and in
such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an
account opened by such Borrower, in the amounts required to be made by such Borrower, out of the
proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into
any Lender’s possession at any time. Agent will invest such cash collateral (less applicable
reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree
and the net return on such investments shall be credited to such account and constitute additional
cash collateral. No Borrower may withdraw amounts credited to any such account except upon waiver
by Agent in writing of all existing Events of Default or upon the occurrence of all of the
following: (x) payment and performance in full of all Obligations; (y) expiration of all Letters of
Credit; and (z) termination of this Agreement.



     3.3. Closing Fee and Facility Fee.



          (a) Upon the execution of this Agreement, Borrowers shall pay to Agent for the ratable
benefit of Lenders a closing fee of $100,000 less that portion of the deposit fee of
$70,000, heretofore paid by Borrowers to Agent remaining after application of such fees to out of
pocket costs and expenses.



          (b) If, for any calendar quarter during the Term, the average daily unpaid balance of the
Revolving Advances and Maximum Undrawn Amount for each day of such calendar quarter does not equal
the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable benefit of
Lenders a fee at a per annum rate equal to the Applicable Margin For Facility Fee corresponding to
the Fixed Charge Coverage Ratio. Such fee shall be payable at such Applicable Margin on the amount
by which the Maximum Revolving Advance Amount exceeds the average daily unpaid balance and shall be
payable to Agent in arrears on the first day of each calendar quarter with respect to the previous
calendar quarter.



     3.4. Collateral Evaluation Fee and Collateral Monitoring Fee.



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          (a) Borrowers shall pay Agent a collateral monitoring fee equal to $1,500 per month
commencing on the first day of the month following the Closing Date and on the first day of each
month thereafter during the Term. The collateral monitoring fee shall be deemed earned in full on
the date when same is due and payable hereunder and shall not be subject to rebate or proration
upon termination of this Agreement for any reason.



          (b) Borrowers shall pay to Agent on the first day of each month following any month in
which Agent performs any collateral evaluation — namely any field examination, collateral analysis,
the need for which is to be determined by Agent and which evaluation is undertaken by Agent or for
Agent’s benefit — a collateral evaluation fee in an amount equal to $850 per day for each person
employed to perform such evaluation, plus all reasonable out of pocket costs and disbursements
incurred by Agent in the performance of such examination or analysis.



     3.5. Computation of Interest and Fees. Subject to, in the case of Foreign
Borrower, to Section 3.1(b) hereof, interest and fees hereunder shall be computed on the basis of a
year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder
becomes due and payable on a day other than a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the Revolving Interest
Rate for Domestic Rate Loans during such extension.



     3.6. Maximum Charges. In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under law. In the event interest and other
charges as computed hereunder would otherwise exceed the highest rate permitted under law, such
excess amount shall be first applied to any unpaid principal balance owed by Borrowers, and if the
then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the provisions hereof shall be deemed amended
to provide for such permissible rate.



     3.7. Increased Costs. In the event that any Applicable Law or any change therein
or in the interpretation or application thereof, or compliance by any Lender (for purposes of this
Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined)
makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having
the force of law) from any central bank or other financial, monetary or other authority, shall:



          (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender
of principal, fees, interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);



          (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of
the Board of Governors of the Federal Reserve System;



46









 





          (c) impose on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;



     and the result of any of the foregoing is to increase the cost to Agent or any Lender of
making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems
to be material or to reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the Advances by an amount that Agent or such Lender deems to be material,
then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional cost or such
reduction, as the case may be, provided that the foregoing shall not apply to increased costs which
are reflected in the Eurodollar Rate, as the case may be. Agent or such Lender shall certify the
amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall
be conclusive absent manifest error.



     3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that
Agent or any Lender shall have determined that:



          (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant
to Section 2.2 hereof for any Interest Period; or



          (b) Dollar deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a
proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar
Rate Loan,



     then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic notice of such
determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made
as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. (New
York City time) two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an
affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan,
or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New
York City time) two (2) Business Days prior to the last Business Day of the then current Interest
Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type
of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected
Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.



     3.9. Capital Adequacy.



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          (a) In the event that Agent or any Lender shall have determined that any Applicable Law or
guideline regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of
this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined)
makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s
capital as a consequence of its obligations hereunder to a level below that which Agent or such
Lender could have achieved but for such adoption, change or compliance (taking into consideration
Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent
or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such Lender may use any reasonable
averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent
and each Lender regardless of any possible contention of invalidity or inapplicability with respect
to the Applicable Law or condition.



          (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be
necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrowing Agent shall be conclusive absent manifest error.



     3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of
the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each,
individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or
Payees, as the case may be, shall be increased as may be necessary so that, after making all
required withholding or deductions, the applicable Payee or Payees receives an amount equal to the
sum it would have received had no such withholding or deductions been made (the “Gross-Up
Payment”), (b) such Borrower shall make such withholding or deductions, and (c) such Borrower shall
pay the full amount withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall be obligated to
make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that
would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete
exemption with respect thereto pursuant to Section 3.11 hereof.



     3.11. Withholding Tax Exemption.



          (a) Each Payee that is not incorporated under the Laws of the United States of America or
a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”))
certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty



48









 




or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9; a
Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required
under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of
the Regulations; or any other certificates under the Code or Regulations that certify or establish
the status of a payee or beneficial owner as a U.S. or foreign person.




          (b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as
follows: (i) each Payee which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by any Borrower hereunder for the account of such Payee; (ii) each
Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole discretion shall
permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by Agent). Each Payee which so
delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent
two (2) additional copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent Withholding Certificate so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing
Agent or Agent.



          (c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of
or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be
entitled to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under
§1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any
tax it deducts and withholds in accordance with regulations under §1441 of the Code.


IV. COLLATERAL: GENERAL TERMS




     4.1. Security Interest in the Collateral.



          (a) To secure the prompt payment and performance to Agent and each Lender of the
Obligations, each US Borrower hereby assigns, pledges and grants to Agent for its benefit and for
the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its
Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located;
provided, however, that the grant of the security interest in Collateral consisting
of 65% of the Equity Interest of Foreign Borrower shall have been granted pursuant to the
respective Foreign Security Agreements and shall not be deemed granted hereunder.



          (b) To secure the prompt payment and performance to Agent and each Lender of the Foreign
Obligations, Foreign Borrower hereby assigns, pledges and grants to Agent for its benefit and for
the ratable benefit of each Lender a continuing security interest in and to and Lien



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on all of its Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located.




          (c) Each Borrower shall mark its books and records as may be necessary or appropriate to
evidence, protect and perfect Agent’s security interest and shall cause its financial statements to
reflect such security interest. Each Borrower shall promptly provide Agent with written notice of
all commercial tort claims, such notice to contain the case title together with the applicable
court and a brief description of the claim(s). Upon delivery of each such notice, such Borrower
shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial
tort claims and all proceeds thereof.



     4.2. Perfection of Security Interest. Each Borrower shall take all action that
may be necessary or desirable, or that Agent may reasonably request, so as at all times to maintain
the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on
the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, including, but not limited to, (i) immediately discharging all Liens other than
Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, with respect to the chief executive
officer of the Borrowers, (iii) delivering to Agent, endorsed or accompanied by such instruments of
assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any
and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing
or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial
arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and
substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or
continuation of Agent’s security interest and Lien under the Uniform Commercial Code or other
Applicable Law (subject to any limitations expressly stated herein or in any Other Document). By
its signature hereto, each Borrower hereby authorizes Agent to file against such Borrower, one or
more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in
form and substance satisfactory to Agent (which statements may have a description of collateral
which is broader than that set forth herein). All charges, expenses and fees Agent may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrowers’
Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s
option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately
upon demand.



     4.3. Disposition of Collateral. Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or
otherwise except (a) the sale of Inventory in the Ordinary Course of Business and (b) the
disposition or transfer of obsolete and worn out Equipment in the Ordinary Course of Business
during any fiscal year having an aggregate fair market value of not more than $250,000 and only to
the extent that (i) the proceeds of any such disposition are used to acquire replacement Equipment
which is subject to Agent’s first priority security interest or (ii) the proceeds of which are
remitted to Agent to be applied pursuant to and to the extent required by Section 2.21 and (c) the
disposition of Collateral by any Borrower to any other Borrower.



     4.4. Preservation of Collateral. Following the occurrence and during the
continuance of an Event of Default in addition to the rights and remedies set forth in Section 11.1
hereof,



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Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s
interest in and to preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b) may employ and
maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts
necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to
which Agent may move all or part of the Collateral; (d) may use any Borrower’s owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral;
and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the
Collateral is located, and may proceed over and through any of Borrowers’ owned or leased property.
Each Borrower shall cooperate fully with all of Agent’s efforts to preserve the Collateral and
will take such actions to preserve the Collateral as Agent may direct. All of Agent’s expenses of
preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be
charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added
to the Obligations.




     4.5. Ownership of Collateral.



          (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to
sell, transfer, pledge and/or grant a first priority security interest in each and every item of
the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement
executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower
that appear on such documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (iv) each Borrower’s Equipment and Inventory shall be located as set
forth on Schedule 4.5 and shall not be removed from such location(s) (it being understood that
Borrowers may move such Equipment and Inventory among such locations) without the prior written
consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business
and Equipment to the extent permitted in Section 4.3 hereof. Borrowers, Agent and Lenders
acknowledge and agree that Schedule 4.5 shall be deemed to be updated to include any additional
locations that Agent is notified of in accordance with Section 9.11.



          (b) (i) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of
(A) each place of business of each Borrower and (B) the chief executive office of each Borrower;
and (ii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the
location, by state and street address, of all Real Property owned or leased by each Borrower.



     4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance
in full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the
Collateral shall continue in full force and effect. During such period no Borrower shall, without
Agent’s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business
and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to



51









 




exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for
Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend Agent’s interests
in the Collateral against any and all Persons whatsoever. At any time following demand by Agent
for payment of all Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including: labels, stationery,
documents, instruments and advertising materials. If Agent exercises this right to take possession
of the Collateral, Borrowers shall, upon demand, assemble it and make it available to Agent at a
place reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and further provided
by the Uniform Commercial Code or other Applicable Law. Each Borrower shall, and Agent may, at its
option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding
cash, checks, Inventory, documents or instruments in which Agent holds a security interest to
deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrower’s
possession, they, and each of them, shall be held by such Borrower in trust as Agent’s trustee, and
such Borrower will immediately deliver them to Agent in their original form together with any
necessary endorsement.




     4.7. Books and Records. Each Borrower shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or transactions of or
in relation to its business and affairs; (b) set up on its books accruals with respect to all
taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its
books, from its earnings, allowances against doubtful Receivables, advances and investments and all
other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business. All determinations
pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently
applied in the opinion of such independent public accountant as shall then be regularly engaged by
Borrowers.



     4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by such Borrower at any time during the Term to
exhibit and deliver to Agent and each Lender copies of any of such Borrower’s financial statements,
trial balances or other accounting records of any sort in the accountant’s or auditor’s possession,
and to disclose to Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations. Each Borrower hereby authorizes all
Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating
to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will
attempt to obtain such information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or Governmental Bodies.



     4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws
with respect to the Collateral or any part thereof or to the operation of such Borrower’s business
the non-compliance with which could reasonably be expected to have a Material Adverse Effect. The
assets of Borrowers at all times shall be maintained in accordance with the requirements of all
insurance carriers which provide insurance with respect to the assets of Borrowers so that such
insurance shall remain in full force and effect.



52









 





     4.10. Inspection of Premises. At all reasonable times Agent and each Lender shall
have full access to and the right to audit, check, inspect and make abstracts and copies from each
Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business. Agent, any Lender and their agents may enter upon
any premises of any Borrower at any time during business hours and at any other reasonable time,
and from time to time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower’s business.



     4.11. Insurance. The assets and properties of each Borrower at all times shall be
maintained in accordance with the requirements of all insurance carriers which provide insurance
with respect to the assets and properties of such Borrower so that such insurance shall remain in
full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Borrower’s own cost and expense in amounts and with
carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and
properties in which such Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and
for such amounts, as is customary in the case of companies engaged in businesses similar to such
Borrower’s; (b) maintain a bond in such amounts as is customary in the case of companies engaged in
businesses similar to such Borrower insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or jointly with others
at any time have access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such assets; (c)
maintain public and product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in which such Borrower is
engaged in business; (e) reserved; (f) furnish Agent with (i) copies of all policies and evidence
of the maintenance of such policies by the renewal thereof no more than thirty (30) days following
any expiration date, provided that such Borrower’s failure to provide such policies and evidence
shall not constitute an Event of Default unless such Borrower continues to fail to provide the same
within ten (10) days after receipt of written notice from Agent, and (ii) appropriate loss payable
endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage referred to in clauses (a)
and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent. In
the event of any loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable Borrower to make payment for such loss to Agent and not to such Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument payable to any
Borrower and Agent jointly, Agent may endorse such Borrower’s name thereon and do such other things
as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized to adjust and
compromise claims under insurance coverage referred to in clauses (a), and (b) above. All loss
recoveries received by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its reasonable discretion shall determine. Any surplus shall be paid by Agent
to Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid
by Borrowers to Agent, on demand.



53









 





     4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such
insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account
therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of
the Obligations.



     4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments
and other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including
real and personal property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes, provided that no such tax, assessment or
charge need be paid if it is being Properly Contested. If any tax by any Governmental Body is or
may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender
which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other
Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which,
in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrowers pay the taxes, assessments or other Charges and the relevant Borrowing
Group hereby indemnifies and holds Agent and each Lender harmless in respect thereof. Agent will
not pay any taxes, assessments or Charges to the extent that such taxes, assessments or Charges are
being Properly Contested. The amount of any payment by Agent under this Section 4.13 shall be
charged to the relevant Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate
Loan and added to the Obligations and, until Borrowers shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment
thereof has been made), Agent may hold without interest any balance standing to Borrowers’ credit
and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.



     4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay,
when and as due, its rental obligations under all leases under which it is a tenant, and shall
otherwise comply, in all material respects, with all other terms of such leases and keep them in
full force and effect and, at Agent’s request will provide evidence of having done so.



     4.15. Receivables.



          (a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid
account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed
sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered
by a Borrower as of the date each Receivable is created. Same shall be due and owing in accordance
with the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim
except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent.



          (b) Solvency of Customers. Each Customer, to the Borrowers’ knowledge, as of the
date each Receivable is created, is solvent and able to pay all Receivables on which the Customer
is obligated in full when due or with respect to such Customers of any Borrower who



54









 




are known to such Borrower not to be solvent such Borrower has set up on its books and in its
financial records bad debt reserves adequate to cover such Receivables.




          (c) Location of Borrowers. Each Borrower’s chief executive office is located at
1601 Trapelo Road, Suite 162, Waltham, Massachusetts 02451 and 5285 Solar Drive, Mississauga,
Ontario, Canada L4W5B8. Until written notice is given to Agent by Borrowing Agent of any other
office at which any Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.



          (d) Collection of Receivables. Each Borrower shall instruct its Customers to
deliver all remittances upon Receivables to such lockbox account or Blocked Account as Agent shall
designate from time to time as contemplated by Section 4.15(h) or as otherwise agreed to from time
to time by Agent. Notwithstanding the foregoing, to the extent any Borrower directly receives any
remittances upon Receivables, such Borrower will, at its sole cost and expense, but on Agent’s
behalf and for Agent’s account, collect as Agent’s property and in trust for Agent such amounts
received on Receivables, and shall not commingle such collections with any Borrower’s or use the
same except to pay Obligations. Each Borrower shall, upon request, deliver to Agent, or deposit in
a Blocked Account, in original form and on the date of receipt thereof, all checks, drafts, notes,
money orders, acceptances, cash and other evidences of Indebtedness.



          (e) Notification of Assignment of Receivables. At any time following the
occurrence and during the continuance of an Event of Default or when Agent in its Permitted
Discretion deems it to be in the Lenders’ best interest to do so, Agent shall have the right to
send notice of Agent’s security interest in, and Lien on, the Receivables to any and all Customers
and directing such Customer to pay such Receivable to Borrowers’ Blocked Account for the benefit of
Agent. Upon the occurrence and during the continuance of an Event of Default, Agent shall have the
sole right to collect the Receivables, take possession of the Collateral, or both. Agent’s actual
collection expenses, including, but not limited to, stationery and postage, telephone and
telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrowers’ Account and added to the Obligations.



          (f) Power of Agent to Act on Borrowers’ Behalf. Agent shall have the right to
receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks,
drafts and other instruments for the payment of money relating to the Receivables, and each
Borrower hereby waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney
with power (i) at any time: (A) to endorse such Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (B) to sign such
Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (C) to send verifications of Receivables
to any Customer as provided in Section 9.2 hereof; (D) to sign such Borrower’s name on all
financing statements or any other documents or instruments deemed necessary or appropriate by Agent
to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; and (ii) at
any time following the occurrence and during the continuance of an Event of Default: (A) to demand
payment of the Receivables; (B) to enforce payment of the Receivables by legal proceedings or
otherwise; (C) to exercise all of such Borrower’s rights and remedies



55









 




with respect to the collection of the Receivables and any other Collateral; (D) to settle,
adjust, compromise, extend or renew the Receivables; (E) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (F) to prepare, file and sign such Borrower’s name on a
proof of claim in bankruptcy or similar document against any Customer; (G) to prepare, file and
sign such Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (H) to do all other acts and things necessary to
carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved,
and said attorney or designee shall not be liable for any acts of omission or commission nor for
any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not
mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable
judgment); this power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence and during the
continuance of an Event of Default, to change the address for delivery of mail addressed to any
Borrower to such address as Agent may designate and to receive, open and dispose of all mail
addressed to any Borrower.




          (g) No Liability. Neither Agent nor any Lender shall, under any circumstances or
in any event whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof, or for any damage resulting therefrom. Following the occurrence and
during the continuance of an Event of Default, Agent may, without notice or consent from any
Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for
cash, credit or upon any terms any of the Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor thereof. Agent is authorized and empowered
to accept following the occurrence and during the continuance of an Event of Default the return of
the goods represented by any of the Receivables, without notice to or consent by any Borrower, all
without discharging or in any way affecting any Borrower’s liability hereunder.



          (h) Establishment of a Lockbox Account, Dominion Account. All proceeds of
Collateral shall be deposited by Borrowers into either (i) a lockbox account, dominion account or
such other “blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a
“Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be
selected by Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at the Agent for the deposit of such proceeds. Each applicable Borrower,
Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form
and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so
deposited to Agent, (i) to any account maintained by Agent at said Blocked Account Bank, (ii) by
wire transfer to appropriate account(s) of Agent or (iii) with respect to the Foreign Blocked
Accounts, in accordance with the instructions given by Agent to such Blocked Account Bank following
the delivery of any revocation notice; provided that, with respect to any Foreign Blocked Accounts,
prior to the occurrence of an Event of Default, the respective Borrower may, from time to time,
transfer funds from a Foreign Blocked Account (into which collections of Receivables are directed
to be paid) to an operating account at the same bank (which, to the extent practicable in the
respective jurisdiction, shall also constitute a Blocked Account), and utilize such funds for
general operating needs and for loans and investments to the extent permitted under this Agreement,
and deliver to Agent an accounting



56









 




thereof no less frequently then on a monthly basis. Agent reserves the right, however, to
notify the respective bank with respect to any Blocked Account, at any time, that funds may only be
transferred thereafter from the collection account to the operating account with the written
approval of Agent. All funds deposited in such Blocked Accounts shall immediately become the
property of Agent (except as otherwise provided in agreements entered into by Agent with respect to
Blocked Accounts located outside of the United States) and Borrowing Agent shall obtain the
agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited.
Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement,
including any claim of accord and satisfaction or release with respect to deposits accepted by any
Blocked Account Bank thereunder. All deposit accounts and investment accounts of each Borrower and
its Subsidiaries are set forth on Schedule 4.15(h).




          (i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust
any material amount of the Receivables (or materially extend the time for payment thereof) or
accept any material returns of merchandise or grant any additional discounts, allowances or credits
thereon except for those compromises, adjustments, returns, discounts, credits and allowances as
have been heretofore customary in the business of such Borrower.



     4.16. Inventory. To the extent Inventory held for sale or lease has been produced
by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal
Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.



     4.17. Maintenance of Equipment. The Equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all necessary replacements
of and repairs thereto shall be made so that the value and operating efficiency of the Equipment
shall be maintained and preserved. No Borrower shall use or operate the Equipment in violation of
any law, statute, ordinance, code, rule or regulation. Each Borrower shall have the right to sell
Equipment to the extent permitted in Section 4.3 hereof.



     4.18. Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent
or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume
any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.



     4.19. Environmental Matters.



          (a) Borrowers shall ensure that the Real Property and all operations and businesses
conducted thereon remains in compliance with all Environmental Laws and they shall not place or
permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable
Law or appropriate governmental authorities.



57









 





          (b) Borrowers shall establish and maintain a system to assure and monitor continued
compliance with all applicable Environmental Laws which system shall include periodic reviews of
such compliance.



          (c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose
of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers
that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers
shall use their commercially reasonable efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or
operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste
generated at the Real Property.



          (d) In the event any Borrower obtains, gives or receives notice of any Release or threat
of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such
event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of
violation, request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous Discharge or
violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any
of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including
any state agency responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection Agency (any such person
or entity hereinafter the “Authority”), then Borrowing Agent shall, within five (5) Business Days,
give written notice of same to Agent detailing facts and circumstances of which any Borrower is
aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the Real Property and the
Collateral and is not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.



          (e) Borrowing Agent shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential responsibility with
respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated
or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to Agent until the
claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and
reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file
under any Environmental Laws. Such information is to be provided solely to allow Agent to protect
Agent’s security interest in and Lien on the Real Property and the Collateral.



          (f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint
and take all necessary action in order to safeguard the health of any Person and to avoid
subjecting the Collateral or Real Property to any Lien. If any Borrower shall fail to respond
promptly to any Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply
with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without
the obligation to do so, for the sole purpose of protecting



58









 




Agent’s interest in the Collateral: (i) give such notices or (ii) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take such actions as
Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean
up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or such third parties)
in the exercise of any such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with interest thereon
from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances
shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the
Obligations secured by the Liens created by the terms of this Agreement or any other agreement
between Agent, any Lender and any Borrower.




          (g) Promptly upon the reasonable written request of Agent from time to time, Borrowers
shall provide Agent, at Borrowers’ expense, with an environmental site assessment or environmental
audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of
Agent, to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and
the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances
found on, under, at or within any Real Property owned by the Borrowers. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that
is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent. If
such estimates, individually or in the aggregate, exceed $100,000, Agent shall have the right to
require Borrowers to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.



          (h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and
their respective employees, agents, directors and officers harmless from and against all loss,
liability, damage and expense, claims, costs, fines and penalties, including attorney’s fees,
suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including
the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same originates or emerges
from the Real Property or any contiguous real estate, including any loss of value of the Real
Property as a result of the foregoing except to the extent such loss, liability, damage and expense
is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any
Lender. Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with the presence of
any Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive
the termination of this Agreement.



          (i) For purposes of Section 4.19 and 5.7, except as otherwise expressly indicated, all
references to Real Property shall be deemed to include all of each Borrower’s right, title and
interest in and to its owned and leased premises.



          (j) For purposes of Section 4.19 and 5.7, all references to Borrower shall be deemed to
refer to the applicable Borrowing Group.



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     4.20. Financing Statements. Except as respects the financing statements filed by
Agent and the financing statements described on Schedule 1.2, no financing statement covering any
of the Collateral or any proceeds thereof is on file in any public office.



     4.21. Canadian Attachment. The security interests granted herein shall not attach
to (i) any consumer goods of a Canadian Borrower, or (ii) the last day of any real property lease,
or any agreement to lease, to which a Canadian Borrower is now or becomes a party as lessee,
provided that any such last day shall be held in trust by a Canadian Borrower for the Agent and, on
the exercise by the Agent of it rights and remedies hereunder, shall be assigned by a Canadian
Borrower as directed by the Agent. Notwithstanding Section 4.1 hereof, the Agent shall only have a
security interest in, and not a present assignment of, any Canadian trademarks forming part of the
Collateral.


V. REPRESENTATIONS AND WARRANTIES.




     Each Borrower represents and warrants as follows:



     5.1. Authority. Each Borrower has full power, authority and legal right to enter
into this Agreement and the Other Documents to which such Borrower is party and to perform all its
respective Obligations hereunder and thereunder. This Agreement, the Subordination Agreement and
the Other Documents have been duly executed and delivered by each Borrower to the extent a party
thereto and this Agreement, the Subordination Agreement and such Other Documents constitute the
legal, valid and binding obligation of such Borrower enforceable in accordance with their terms,
except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium
or similar laws affecting creditors’ rights generally. The execution, delivery and performance of
this Agreement and of such Other Documents (a) are within such Borrower’s corporate/limited
liability company powers, have been duly authorized by all necessary corporate/company action, are
not in contravention of law or the terms of such Borrower’s by-laws, certificate or articles of
incorporation, operating agreement, certificate of formation or other applicable documents relating
to such Borrower’s formation or to the conduct of such Borrower’s business or of any material
agreement or undertaking to which such Borrower is a party or by which such Borrower is bound,
including the Subordinated Loan Documents, (b) will not conflict with or violate any law or
regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the
Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule
5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date
and which are in full force and effect and (d) will not conflict with, nor result in any breach in
any of the provisions of or constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement,
charter document, instrument, by-law, operating agreement or other instrument to which such
Borrower is a party or by which it or its property is a party or by which it may be bound,
including under the provisions of the Subordinated Loan Documents.



     5.2. Formation and Qualification.



          (a) Each Borrower is duly incorporated or formed and in good standing under the laws of
the jurisdiction listed on Schedule 5.2(a) and is qualified to do business and is in



60









 




good standing in the jurisdictions listed on Schedule 5.2(a) which constitute all
jurisdictions in which qualification and good standing are necessary for such Borrower to conduct
its business and own its property and where the failure to so qualify could reasonably be expected
to have a Material Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and
complete copies of its certificate of incorporation and by-laws or certificate of formation and
operating agreement, as applicable, and will promptly notify Agent of any amendment or changes
thereto.




          (b) The only Subsidiaries of each Borrower are listed on Schedule 5.2(b).



     5.3. Survival of Representations and Warranties. All representations and
warranties of such Borrower contained in this Agreement and the Other Documents shall be true at
the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive
the execution, delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.



     5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth
on Schedule 5.4. Except as set forth on Schedule 5.4, each Borrower has filed all federal, state,
Canadian, provincial and local tax returns and other reports each is required by law to file and
has paid all taxes, assessments, fees and other governmental charges that are due and payable. The
provision for taxes on the books of Borrowers on a Consolidated Basis is adequate for all years not
closed by applicable statutes, and for their current fiscal year, and except as set forth on
Schedule 5.4, no Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.



     5.5. Financial Statements.



          (a) The pro forma financial statements of the Borrowers on a Consolidated Basis for the
periods ended October 31, 2008 and October 31, 2009 (“Pro Forma Financial Statements”) included in
Schedule 5.5(a)(i) reflect the consummation of the transactions contemplated under this Agreement
(collectively, the “Transactions”) and are accurate, complete and materially correct and fairly
reflect the financial condition of the Borrowers on a Consolidated Basis as of June 30, 2009 after
giving effect to the Transactions and (ii) have been prepared in accordance with GAAP, unless
otherwise noted.



          (b) The twelve-month financial statement projections included in the Pro Forma Financial
Statements (the “Projections”) were prepared by the Chief Financial Officer of Borrowing Agent and
are based on underlying assumptions which provide a reasonable basis for the Projections contained
therein.



          (c) The unaudited company prepared consolidated and consolidating balance sheet of
Holdings and its Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of
October 31, 2008, and the related statements of income, changes in stockholder’s equity, and
changes in cash flow for the period ended on such date, copies of which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied except for changes in
application, and present fairly the financial position of Holdings and its



61









 




Subsidiaries at such date and the results of their operations for such period. Except as set
forth on Schedule 5.5, since October 31, 2008 there has been no change in the condition, financial
or otherwise, of Holdings and its Subsidiaries as shown on the consolidated balance sheet as of
such date and no change in the aggregate value of machinery, equipment and Real Property owned by
Holdings and its Subsidiaries, except changes in the Ordinary Course of Business, none of which
individually or in the aggregate could reasonably be expected to cause a Material Adverse Effect.




     5.6. Entity Names. Except as set forth on Schedule 5.6, no Borrower has been
known by any other corporate name in the past five years and does not sell Inventory under any
other name nor has any Borrower been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person during the preceding five (5) years.



     5.7. O.S.H.A. and Environmental Compliance.



          (a) Each Borrower has materially complied with, and its facilities, business, assets,
property, leaseholds, Real Property and Equipment are in compliance in all material respects with,
the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws; there are no outstanding citations, notices or orders of
non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.



          (b) Each Borrower has been issued all required federal, state, Canadian, provincial and
local licenses, certificates or permits relating to all applicable Environmental Laws.



          (c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real
Property including any premises leased by any Borrower; (ii) to such Borrowers’ knowledge, there
are no underground storage tanks or polychlorinated biphenyls on the Real Property including any
premises leased by any Borrower; (iii) to such Borrowers’ knowledge, the Real Property including
any premises leased by any Borrower has never been used as a treatment, storage or disposal
facility of Hazardous Waste; and (iv) to such Borrowers’ knowledge, no Hazardous Substances are
present on the Real Property including any premises leased by any Borrower, excepting such
quantities as are handled in accordance with all applicable manufacturer’s instructions and
governmental regulations and in proper storage containers and as are necessary for the operation of
the commercial business of any Borrower or of its tenants.



     5.8. Solvency; No Litigation, Violation, Indebtedness or Default; ERISA
Compliance.



          (a) After giving effect to the Transactions, Borrowers, taken as a whole, will be solvent,
able to pay their debts as they mature, will have capital sufficient to carry on their business and
all businesses in which they are about to engage, and (i) as of the Closing Date, the fair present
saleable value of their assets, calculated on a going concern basis, are in excess of the amount of
their liabilities and (ii) subsequent to the Closing Date, the fair saleable value of their assets
(calculated on a going concern basis) will be in excess of the amount of their liabilities.



62









 





          (b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened
litigation, arbitration, actions or proceedings which could reasonably be expected to have a
Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the
Obligations and the Subordinated Indebtedness.



          (c) No Borrower is in violation of any applicable statute, law, rule, regulation or
ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor
is any Borrower in violation of any order of any court, Governmental Body or arbitration board or
tribunal.



          (d) No Borrower nor any member of the Controlled Group maintains or is required to
contribute to any Plan other than those listed on Schedule 5.8(d) hereto. (i) No Plan has incurred
any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA or Section 412(a) of
the Code, whether or not waived, each Borrower and each member of the Controlled Group has met all
applicable minimum funding requirements under Section 302 of ERISA and Section 412 of the Code in
respect of each Plan, and each Plan is in compliance with Sections 412, 430 and 436 of the Code and
Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances; (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the
Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the
Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability
to the PBGC other than for the payment of premiums, and there are no premium payments which have
become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor
by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each
Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and
neither any Borrower nor any member of the Controlled Group knows of any facts or circumstances
which would materially change the value of such assets and accrued benefits and other liabilities;
(vi) neither any Borrower nor any member of the Controlled Group has breached in any material
respect any of the responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan; (vii) neither any Borrower nor any member of the Controlled Group has incurred any
liability for any excise tax arising under Section 4971, 4972 or 4980B of the Code, and no fact
exists which could give rise to any such liability; (viii) neither any Borrower nor any member of
the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a
“prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor
taken any action nor omitted to take any action which would constitute or result in a Termination
Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower and each member
of the Controlled Group has made all contributions due and payable with respect to each Plan; (x)
there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice
period has not been waived; (xi) neither any Borrower nor any member of the Controlled Group has
any fiduciary responsibility for investments with respect to any plan existing for the benefit of
persons other than employees or former employees of any Borrower or any member of the Controlled
Group; (xii) except as listed on Schedule 5.8(d) hereto, neither any Borrower nor any member of the
Controlled Group maintains or is required to contribute to any Plan which provides health, accident
or life insurance benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code; (xiii) neither



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any Borrower nor any member of the Controlled Group has withdrawn, completely or partially,
within the meaning of Section 4203 or 4205 of ERISA, from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact
which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any
failure in connection with the administration or investment of the assets of a Plan; in each case
(i) — (xiv) with respect to any member of the Controlled Group other than the Borrowers or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect.




     5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, tradenames, assumed names, trade secrets and
licenses owned or utilized by any Borrower are set forth on Schedule 5.9, are valid and have been
duly registered or filed with all appropriate Governmental Bodies and constitute all of the
intellectual property rights which are necessary for the operation of its business; there is no
objection to or pending challenge to the validity of any such patent, trademark, copyright, design
rights, tradename, trade secret or license and no Borrower is aware of any grounds for any
challenge, except as set forth in Schedule 5.9 hereto. Except as set forth in Schedule 5.9 hereto,
each patent, patent application, patent license, trademark, trademark application, trademark
license, service mark, service mark application, service mark license, design rights, copyright,
copyright application and copyright license owned or held by any Borrower and all trade secrets
used by any Borrower consist of original material or property developed by such Borrower or was
lawfully acquired by such Borrower from the proper and lawful owner thereof. Each of such items
has been maintained so as to preserve the value thereof from the date of creation or acquisition
thereof.



     5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower
(a) is in compliance with and (b) has procured and is now in possession of, all material licenses
or permits required by any applicable federal, state, provincial or local law, rule or regulation
for the operation of its business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to procure such licenses or permits could reasonably be
expected to have a Material Adverse Effect.



     5.11. Default of Indebtedness. No Borrower is in default in the payment of the
principal of or interest on any Indebtedness or under any instrument or agreement under or subject
to which any Indebtedness has been issued and no event has occurred under the provisions of any
such instrument or agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.



     5.12. No Default. No Borrower is in default in the payment or performance of any
of its contractual obligations except where such default could not reasonably be expected to have a
Material Adverse Effect.



     5.13. No Burdensome Restrictions. No Borrower is party to any contract or
agreement the performance of which could reasonably be expected to have a Material Adverse Effect.
Each Borrower has heretofore delivered to Agent true and complete copies of all material contracts
to



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which it is a party or to which it or any of its properties is subject that, as of the Closing
Date, provide for payments to or from the Borrowers in excess of $250,000 per year, all
Subordinated Loan Documents, all executive employment agreements and all equity financing
agreements between Holdings and its Affiliates, all of which are set forth on Schedule 5.13. No
Borrower has agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.




     5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are
no strikes or walkouts or union organization of any Borrower’s employees threatened in writing or
in existence and no labor contract is scheduled to expire during the Term other than as set forth
on Schedule 5.14 hereto.



     5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally
or as one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.



     5.16. Investment Company Act. No Borrower is an “investment company” registered
or required to be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.



     5.17. Disclosure. No representation or warranty made by any Borrower in this
Agreement, the Subordinated Loan Documents or in any financial statement, report or certificate
furnished in connection herewith or therewith contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements herein or therein not misleading.
There is no fact known to any Borrower or which reasonably should be known to such Borrower which
such Borrower has not disclosed to Agent in writing with respect to the transactions contemplated
or evidenced by this Agreement or the Subordinated Loan Documents which could reasonably be
expected to have a Material Adverse Effect.



     5.18. Delivery of Subordinated Loan Documents. Agent has received complete copies
of the Subordinated Loan Documents (including all exhibits, schedules and disclosure letters
referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers
relating thereto and other side letters or agreements affecting the terms thereof. None of such
documents and agreements has been amended or supplemented, nor have any of the provisions thereof
been waived, except pursuant to a written agreement or instrument which has heretofore been
delivered to Agent.



     5.19. Swaps. No Borrower is a party to, nor will it be a party to, any swap
agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies
unless same provides that damages upon termination following an event of default thereunder are
payable on an unlimited “two-way basis” without regard to fault on the part of either party.



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     5.20. Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the Other Documents.



     5.21. Application of Certain Laws and Regulations. The Borrowers are not subject
to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness (other
than applicable fraudulent transfer laws), including laws, statutes, rules or regulations relative
to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.



     5.22. Business and Property of Borrowers. Upon and after the Closing Date,
Borrowers do not propose to engage in any business other than providing professional services and
technology to the engineering community, activities necessary to conduct the foregoing and
activities reasonably related to such business. On the Closing Date and at all times thereafter,
each Borrower owns all the property and possess all of the rights and Consents as required by this
Agreement.



     5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a
Section 20 Subsidiary.



     5.24. Anti-Terrorism Laws.



          (a) General. Neither any Borrower nor any Affiliate of any Borrower is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.



          (b) Executive Order No. 13224. Neither any Borrower nor any Affiliate of any
Borrower or their respective agents acting or benefiting in any capacity in connection with the
Advances or other transactions hereunder, is any of the following (each a “Blocked Person”):



               (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;



               (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that
is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No.
13224;



               (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;



               (iv) a Person or entity that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order No. 13224;



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               (v) a Person or entity that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset Control at its
official website or any replacement website or other replacement official publication of such list,
or



               (vi) a Person or entity who is affiliated or associated with a Person or entity listed
above.



     Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any
capacity in connection with the Advances or other transactions hereunder (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked pursuant to the Executive Order No. 13224.



     5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to
engage, in any business or activity prohibited by the Trading with the Enemy Act.



     5.26. Federal Securities Laws. Neither any Borrower nor any of its Subsidiaries
(i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered
under the Exchange Act or (iii) has filed a registration statement that has not yet become
effective under the Securities Act.



     5.27. Equity Interests. The authorized and outstanding Equity Interests of each
Borrower is as shown on Schedule 5.27 hereto. All of the Equity Interests of each Borrower have
been duly and validly authorized and issued and are fully paid and non-assessable and have been
sold and delivered to the holders thereof in compliance with, or under valid exemption from, all
federal and state laws and the rules and regulations of each Governmental Body governing the sale
and delivery of securities. Except for the rights and obligations shown on Schedule 5.27, there
are no subscriptions, warrants, options, calls, commitments, rights or agreements by which any
Borrower or any of the shareholders of any Borrower is bound relating to the issuance, transfer,
voting or redemption of shares of its Equity Interests or any pre-emptive rights held by any Person
with respect to the Equity Interests of Borrowers. Except as shown on Schedule 5.27, Borrowers
have not issued any securities convertible into or exchangeable for shares of its Equity Interests
or any options, warrants or other rights to acquire such shares or securities convertible into or
exchangeable for such shares.


VI. AFFIRMATIVE COVENANTS.




     Each Borrower shall, until payment in full of the Obligations and termination of this
Agreement:



     6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the
establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such fees and
expenses.



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     6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business practices and maintain
all of its properties useful or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of
this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade
secrets and trademarks and take all actions necessary to enforce and protect the validity of any
intellectual property right or other right included in the Collateral; (b) keep in full force and
effect its existence and comply in all material respects with the laws and regulations governing
the conduct of its business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes
and license fees and do all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United States or its
jurisdiction of organization or any political subdivision thereof where the failure to do so could
reasonably be expected to have a Material Adverse Effect.



     6.3. Violations. Promptly after becoming aware thereof, notify Agent in writing
of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could reasonably be expected to have a Material
Adverse Effect.



     6.4. Government Receivables. To the extent that any Receivables from a
Governmental Body are included in the Formula Amount, take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act, the Financial Administration
Act (Canada), the Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected
with any Receivable arising out of contracts between any Borrower and the United States, any state,
Canada, any province or any department, agency or instrumentality of any of them.



     6.5. Fixed Charge Coverage Ratio. Commencing as of April 30, 2010, cause to be
maintained as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio as follows: (a) for
the three month period ending April 30, 2010, of not less than 1.0 to 1.0; (b) for the six month
period ending July 31, 2010, of not less than 1.0 to 1.0; (c) for the nine month period ending
October 31, 2010, of not less than 1.0 to 1.0; and (d) for the twelve month period ending January
31, 2011 and at the end of each fiscal quarter thereafter calculated on a rolling four quarter
basis, of not less than 1.15 to 1.0.



     6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from
time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or
instructions or documents relating to the Collateral, and such other instruments as Agent may
reasonably request, in order that the full intent of this Agreement may be carried into effect.



     6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case of the trade
payables, to normal payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a Material Adverse



68









 





Effect or when the amount or validity thereof is being Properly Contested subject at all times to any applicable
subordination arrangement in favor of Lenders.




     6.8. Standards of Financial Statements. Cause all financial statements referred
to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is applicable to be
complete and correct in all material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).



     6.9. Federal Securities Laws. Promptly notify Agent in writing if any Borrower or
any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii)
registers any securities under the Exchange Act or (iii) files a registration statement under the
Securities Act.



     6.10. Post Closing Conditions. Cause to be delivered to Agent:



          (a) On or before September 30, 2009, audited financial statements of Holding and its
subsidiaries on a consolidating and consolidated basis including, but not limited to, statements of
income and stockholders’ equity, cash flow and the balance sheet for fiscal year ending October 31,
2008, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and
in reasonable detail and reported upon without qualification by the Accountants, such statements to
be in form and substance acceptable to Agent and shall not contain any material changes from the
financial statements described in Section 5.5 hereof, except as disclosed in Schedule 5.5;



          (b) Within 30 days of the Closing Date, good standing and foreign qualification
certificates for the entities and the jurisdictions listed on Schedule 6.10;



          (c) Within 30 days of the Closing Date, Foreign Blocked Accounts for each of Borrowers’
collection and/or disbursement accounts;



          (d) Within 30 days of the Closing Date, use commercially reasonable efforts to obtain a
Lien Waiver Agreement for each of the following premises (each to be in form and substance
satisfactory to Agent): (i) 1601 Trapelo Road, Suite 162, Waltham, Massachusetts, and (ii) 5285
Solar Drive, Mississauga, Ontario, Canada; provided, that, as of the Closing Date,
Agent has the right to impose a three (3) month rent reserve for each location listed in subsection
(i) and (ii) above for which Agent does not have a Lien Waver Agreement; and provided further, that
the failure to obtain a Lien Waiver Agreement shall not be an Event of Default hereunder;



          (e) Within 30 days of the Closing Date, cause Silicon Valley Bank to execute and deliver
to Agent a springing blocked account agreement with respect to Holdings’ bank account number
3300578963; and



          (f) For the period from the Closing Date through August 28, 2009, cause on a daily basis
all Excess Funds held or deposited in the Borrowers’ Deposit Account numbers 118-339-745 and
118-339-524 (collectively, the “HSBC Accounts”) maintained with HSBC Bank USA, National Association
(“HSBC”) to be wire transferred to Borrowers’ collection account maintained with Agent. For
purposes of this Section 6.10(f), “Excess Funds” shall mean all



69









 




funds in the HSBC Accounts in excess of the amount of checks written on the HSBC Accounts,
which have not yet cleared HSBC. Borrowers’ acknowledge that on August 27, 2009 or such later date
that may be agreed to by Borrowers and Agent, Agent shall have the right to cause HSBC to
automatically wire transfer all funds in the HSBC Accounts to Borrowers’ collection account
maintained with Agent.



VII. NEGATIVE COVENANTS.




     No Borrower shall, until satisfaction in full of the Obligations and termination of this
Agreement:



     7.1. Merger, Consolidation, Acquisition and Sale of Assets.



          (a) Enter into any merger, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or
permit any other Person to consolidate with or merge with it; provided that (i) a Borrower shall be
permitted to merge with and into another Borrower and (ii) a Borrower shall be permitted to acquire
up to $250,000 of assets per year outside of the Ordinary Course of Business so long as such assets
are free of all Liens; provided that, in each case, both before and after giving effect to such
transaction no Default or Event of Default is continuing or would occur after giving pro forma
effect to such transaction.



          (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Inventory and Equipment to the extent expressly permitted by Section 4.3 and
(ii) any other sales or dispositions expressly permitted by this Agreement.



     7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except Permitted
Encumbrances.



     7.3. Guarantees. Become liable upon the obligations or liabilities of any Person
by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) the
endorsement of checks in the Ordinary Course of Business, (b) as disclosed on Schedule 7.3, (c)
guarantees in the Ordinary Course of Business up to an aggregate amount for all such guarantees of
$100,000 and (d) guarantees of the obligations of another Borrower.



     7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a
published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if (i) such bank has
a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of
a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely
in obligations issued or guaranteed by the United States of America or an agency thereof, (e) so
long as no Default or Event of Default has occurred or would occur after giving effect to such
investments, purchases or redemptions of Equity Interests of Holdings owned by former employees of
the Borrowers or Holdings in connection with the



70









 




termination of such employment not in excess of $100,000 in any fiscal year; (f) investments
in Subsidiaries (other than Borrowers) so long as after giving effect to such investments: (i) such
investments together with the amount of any loans made under Section 7.5(iv) hereof during such
period and distributions made under Section 7.7(ii) hereof during such period do not exceed
$250,000 in any fiscal year; (ii) no Event of Default or Default is continuing or would occur after
giving pro forma effect to such loan and (iii) at the time of and after giving effect to such
distribution, Borrowers would have Undrawn Availability of not less than $3,000,000; and (g)
investments by a Borrower in another Borrower.




     7.5. Loans. Make advances, loans or extensions of credit to any Person, including
any Parent, Subsidiary or Affiliate except (i) with respect to the extension of commercial trade
credit in connection with the sale of Inventory in the Ordinary Course of Business, (ii) loans to
another Borrower, (iii) loans to employees and officers of Holdings and its Subsidiaries in an
aggregate amount not to exceed $25,000 at any time, and (iv) loans to their Affiliates
(subsidiaries of Holdings other than the Borrowers) so long as after giving effect to such loans:
(A) such loans together with the amount of any investments made under Section 7.4(f) hereof during
such period and distributions made under Section 7.7(ii) hereof during such period do not exceed
$250,000 in any fiscal year; (B) no Event of Default or Default is continuing or would occur after
giving pro forma effect to such loan; (C) at the time of and after giving effect to such
distribution, Borrowers would have Undrawn Availability of not less than $3,000,000; and (D) such
loans are made pursuant to documents in form and substance satisfactory to Agent.



     7.6. Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Unfunded Capital Expenditures in any fiscal year in an aggregate amount for all
Borrowers in excess of $1,000,000.



     7.7. Dividends. Declare, pay or make any dividend or distribution on any Equity
Interests of any Borrower (other than dividends or distributions payable in its stock, or split-ups
or reclassifications of its stock) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any Equity Interest, or of any options to purchase or acquire any
Equity Interest of any Borrower; provided however, Borrowers may make a (i) distribution(s) to
Holdings on or after the one year anniversary of the Closing Date (payable on and after the
15th day after delivery of the financial statements required to be delivered pursuant to
Section 9.8 hereof for the quarters ending October 31 and April 30 of each year through and
including the 30th day after delivery of such financial statements) to enable Holdings
to make regularly scheduled payments of interest and principal due on the Subordinated Indebtedness
so long as: (A) at the time of and after giving pro forma effect to such distribution(s), no Event
of Default or Default has occurred or would occur, (B) at the time of and after giving effect to
such distribution, Borrowers would have Undrawn Availability of not less than $3,000,000 and (C)
after giving pro forma effect to such distribution(s), Borrowers would have achieved as of the end
of the prior fiscal quarter, and will achieve on a pro-forma basis at the end of the current and
the projected quarter thereafter, a Fixed Charge Coverage Ratio, on a trailing twelve month basis,
of not less than 1.15 to 1.0, and (ii) distribution(s) to Holdings so long as after giving effect
to the making of such distributions (A) such distributions together with the amount of any
investments made under Section 7.4(f) hereof during such period and loans made under Section
7.5(iv) hereof during such period do not exceed $250,000 in any fiscal year; (B) no Event of
Default or Default has occurred or would occur after giving pro forma effect to such distribution,



71









 




and (C) at the time of and after giving effect to such distribution, Borrowers would have
Undrawn Availability of not less than $3,000,000.




     7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt) except in respect of: (i) Indebtedness to Lenders; (ii) Indebtedness
incurred for Capital Expenditures permitted under Section 7.6 hereof; (iii) Indebtedness incurred
by one Borrower to another Borrower as permitted under Section 7.5 hereof; (iv) Indebtedness due
under the Subordinated Loan Documents; (v) unsecured Indebtedness in aggregate principal amount not
to exceed $250,000; and (vi) other Indebtedness set forth on Schedule 5.8(b).



     7.9. Nature of Business. Substantially change the nature of the business in which
it is presently engaged or reasonable extensions thereof, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property other than in the
Ordinary Course of Business for assets or property which are useful in, necessary for and are to be
used in its business as presently conducted.



     7.10. Transactions with Affiliates. Directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or otherwise enter into any
transaction or deal with, any Affiliate, except: (a) transactions disclosed to the Agent, which are
in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less
favorable than terms and conditions which would have been obtainable from a Person other than an
Affiliate, and (b) transactions permitted under Section 7.1, 7.3, 7.4, 7.5, 7.7 or 7.8 hereof.



     7.11. Leases. Enter as lessee into any lease arrangement for real or personal
property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed $2,500,000 in any
one fiscal year in the aggregate for all Borrowers.



     7.12. Subsidiaries.



          (a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a
borrower and becomes jointly and severally liable for the obligations of Borrowers hereunder, under
the Notes, and under any other agreement between any Borrower and Lenders and (ii) Agent shall have
received all documents, including legal opinions, it may reasonably require to establish compliance
with each of the foregoing conditions.



          (b) Enter into any partnership, joint venture or similar arrangement.



     7.13. Fiscal Year and Accounting Changes. Change its fiscal year from October 31
without the consent of the Agent (such consent not to be unreasonably withheld) or make any
material change (i) in accounting treatment and reporting practices except as required by GAAP or
(ii) in tax reporting treatment except as required by law.



     7.14. Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on
any purchases or for any purpose whatsoever or use any portion of any Advance in or for any
business other than such Borrower’s business as conducted on the date of this Agreement.



72









 





     7.15. Amendment of Articles of Incorporation, By-Laws, Certificate of Formation,
Operating Agreement. Amend, modify or waive any term or material provision of its Articles of
Incorporation, By-Laws, Certificate of Formation or Operating Agreement, as applicable, unless
required by law.



     7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the
Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed
on Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any
non-exempt “prohibited transaction”, as that term is defined in Section 406 of ERISA or Section
4975 of the Code, (iii) incur, or permit any Plan to incur, any “accumulated funding deficiency”,
as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or
permit any member of the Controlled Group to terminate, any Plan where such event could result in
any liability of any Borrower or any member of the Controlled Group or the imposition of a lien on
the property of any Borrower or any member of the Controlled Group pursuant to Section 4068 of
ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to
contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan, (vii)
fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or
permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of
the Controlled Group to fail to meet, all minimum funding requirements under ERISA and the Code,
without regard to any waivers or variances, or postpone or delay or allow any member of the
Controlled Group to postpone or delay any funding requirement with respect of any Plan, or (x)
cause, or permit any member of the Controlled Group to cause, a representation or warranty in
Section 5.8(d) to cease to be true and correct; in each case (i) — (x) with respect to any member
of the Controlled Group other than Borrowers or any Subsidiary that could reasonably be expected to
have a Material Adverse Effect.



     7.17. Prepayment of Indebtedness. Except to the extent permitted under Section
7.20, at any time, directly or indirectly, prepay any Indebtedness (other than to Lenders), or
repurchase, redeem, retire or otherwise acquire any Indebtedness of any Borrower.



     7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:



          (a) Conduct any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person.



          (b) Deal in, or otherwise engage in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order No. 13224.



          (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law.



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Borrower shall deliver to Lenders any certification or other evidence requested from time to
time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section.




     7.19. Trading with the Enemy Act. Engage in any business or activity in violation
of the Trading with the Enemy Act.



     7.20. Subordinated Indebtedness. At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on account of any
principal of, interest on or premium payable in connection with the repayment or redemption of any
Subordinated Indebtedness except to the extent expressly permitted in the applicable Subordination
Agreement.



     7.21. Other Agreements. Enter into any material amendment, waiver or modification
of any Subordinated Loan Documents, or any related agreements except as expressly permitted in the
Subordination Agreement.


VIII. CONDITIONS PRECEDENT.




     8.1. Conditions to Initial Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by
Agent, immediately prior to or concurrently with the making of such Advances, of the following
conditions precedent:



          (a) Note. Agent shall have received the Notes duly executed and delivered by an
authorized officer of each Borrower;



          (b) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related agreement or under law
or reasonably requested by the Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;



          (c) Company Proceedings of Borrowers. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors,
Management Committee, Managing Member or Manager of each Borrower, as applicable, authorizing (i)
the execution, delivery and performance of this Agreement, the Notes, and any related agreements
(collectively the “Documents”) and (ii) the granting by each Borrower of the security interests in
and liens upon the Collateral in each case certified by the Secretary, an Assistant Secretary, or
Manager, as applicable, of each Borrower as of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;



          (d) Incumbency Certificates of Borrowers. Agent shall have received a certificate
of the Secretary, an Assistant Secretary or the Manager, as applicable, of each



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Borrower, dated the Closing Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, the Other Documents, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary;




          (e) Company Proceedings of each Guarantor. Agent shall have received a copy of
the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors,
Management Committee, Managing Member, Manager or General Partner of each Guarantor, as applicable,
authorizing (i) the execution, delivery and performance of the Guaranty and each Other Document to
which it is a party; and (ii) the granting by such Guarantor (excluding the Ampersand Guarantors)
of any security interests in and liens upon any assets of such Guarantor, to the extent applicable,
in each case certified by the Secretary, an Assistant Secretary, Manager or General Partner, as
applicable, of each Guarantor as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date
of such certificate.



          (f) Incumbency Certificates of each Guarantor. Agent shall have received a
certificate of the Secretary, an Assistant Secretary, (or, with respect to the Ampersand
Guarantors, the General Partner), as applicable, of each Guarantor, dated the Closing Date, as to
the incumbency and signature of the officers or other authorized persons of each Guarantor
executing the Guaranty and each Other Document to which it is a party together with evidence of the
incumbency of such Secretary or Assistant Secretary (or, with respect to the General Partner of the
Ampersand Guarantor, the authorized person signing on behalf of the General Partner);



          (g) Certificates. Agent shall have received a copy of the Articles or Certificate
of Incorporation or Certificate of Formation of each US Borrower and Holdings and all amendments
thereto, and the corresponding documents for Foreign Borrower, certified by the Secretary of State
or other appropriate official of its jurisdiction of incorporation, if applicable, together with
copies of the By-Laws (or similar foreign document) of each Borrower and Holdings and all
agreements of each Borrower’s and Holdings’ shareholders certified as accurate and complete by the
respective Secretary of each Borrower and Holdings;



          (h) Good Standing Certificates. Agent shall have received good standing
certificates (or similar foreign document, where applicable) for each Borrower and each Guarantor
dated not more than 20 days prior to the Closing Date, issued by the Secretary of State or other
appropriate official of each Borrower’s and each Guarantor’s jurisdiction of incorporation and each
jurisdiction where the conduct of each Borrower’s and each Guarantor’s business activities or the
ownership of its properties necessitates qualification (except such jurisdictions in which the
failure to be so qualified could not reasonably be expected to result in a Material Adverse
Effect);



          (i) Legal Opinion. Agent shall have received the executed legal opinions of
Edwards Angell Palmer & Dodge LLP and Blake Cassels & Graydon LLP, each in form and substance
satisfactory to Agent which shall cover such matters incident to the transactions contemplated by
this Agreement, the Note, the Other Documents, and related agreements as Agent may reasonably
require and each Borrower hereby authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;



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          (j) No Litigation. (i) No litigation, investigation or proceeding before or by
any arbitrator or Governmental Body shall be continuing or threatened against any Borrower or
against the officers or directors of any Borrower (A) in connection with this Agreement, the Other
Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, be expected to
have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of
any nature materially adverse to any Borrower or the conduct of its business or inconsistent with
the due consummation of the Transactions shall have been issued by any Governmental Body;



          (k) Financial Condition Certificates. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(k);



          (l) Collateral Examination. Agent shall have completed Collateral examinations,
the results of which shall be satisfactory in form and substance to Lenders, of the Receivables of
each Borrower and all books and records in connection therewith;



          (m) Fees. Agent shall have received all fees payable to Agent and Lenders on or
prior to the Closing Date hereunder, including pursuant to Article III hereof;



          (n) Financial Statements. Agent shall have received a copy of the Borrowers’
Financial Statements, including projections and pro forma financial statements to the extent
requested by Agent, which shall be satisfactory in all respects to Lenders;



          (o) Subordinated Loan Documents. Agent shall have received final executed copies
of the Subordinated Loan Documents and all related agreement, documents and instruments as in
effect on the Closing Date all of which shall be satisfactory in form and substance to Agent;



          (p) Subordination Agreement and Intercreditor Agreement. Agent shall have received
fully executed copies of the Subordination Agreement and the Intercreditor Agreement;



          (q) Insurance. Agent shall have received in form and substance satisfactory to
Agent, certified copies of Borrowers’ casualty insurance policies, together with lender loss
payable endorsements on Agent’s standard form of loss payee endorsement naming Agent as loss payee,
and certified copies of Borrowers’ liability insurance policies, together with endorsements naming
Agent as an additional insured;



          (r) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this
Agreement;



          (s) Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to
Agent for the collection or servicing of the Receivables and proceeds of the Collateral;



          (t) Consents. Agent shall have received any and all Consents necessary to permit
the effectuation of the transactions contemplated by this Agreement and the Other



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Documents; and, Agent shall have received such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as Agent and its counsel shall reasonably deem
necessary;




          (u) No Adverse Material Change. (i) since October 31, 2008, there shall not have
occurred any event, condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and (ii) no representations made or information supplied to Agent or
Lenders shall have been proven to be inaccurate or misleading in any material respect;



          (v) Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to the chief executive offices leased by
Borrowers;



          (w) Contract Review. Agent shall have reviewed all material contracts of
Borrowers set forth on Schedule 5.13 and any other contracts requested by Agent, and such contracts
and agreements shall be satisfactory in all respects to Agent;



          (x) Closing Certificate. Agent shall have received a closing certificate signed
by the Chief Executive Officer or Chief Financial Officer of each Borrower dated as of the date
hereof, stating that (i) all representations and warranties set forth in this Agreement and the
Other Documents are true and correct on and as of such date, (ii) Borrowers are on such date in
compliance with all the terms and provisions set forth in this Agreement and the Other Documents
and (iii) on such date no Default or Event of Default has occurred or is continuing;



          (y) Borrowing Base. Agent shall have received evidence from Borrowers that the
aggregate amount of Eligible US Receivables and Eligible Foreign Receivables, is sufficient in
value and amount to support Advances in the amount requested by Borrowers on the Closing Date;



          (z) Undrawn Availability. After giving effect to the initial Advances hereunder,
Borrowers shall have Undrawn Availability/Closing Date of at least $3,000,000;



          (aa) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower
is in compliance with all pertinent federal, state, Canadian, provincial, local or territorial
regulations, including those with respect to the Federal Occupational Safety and Health Act, the
Environmental Protection Act, ERISA and the Trading with the Enemy Act; and



          (bb) Other. All corporate and other proceedings, and all documents, instruments
and other legal matters in connection with the Transactions shall be satisfactory in form and
substance to Agent and its counsel.



     8.2. Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to the satisfaction of
the following conditions precedent as of the date such Advance is made:



          (a) Representations and Warranties. Each of the representations and warranties
made by any Guarantor and any Borrower in or pursuant to this Agreement, the Other Documents and
any related agreements to which it is a party, and each of the representations and



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warranties contained in any certificate, document or financial or other statement furnished at
any time under or in connection with this Agreement, the Other Documents or any related agreement
shall be true and correct in all material respects on and as of such date as if made on and as of
such date (except to the extent such representations and warranties expressly relate to an earlier
date);




          (b) No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances requested to be made,
on such date; provided, however that Agent, in its sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and



          (c) Maximum Advances. In the case of any type of Advance requested to be made,
after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the
maximum amount of such type of Advance permitted under this Agreement.



     Each request for an Advance by any Borrower hereunder shall constitute a representation and
warranty by each Borrower as of the date of such Advance that the conditions contained in this
subsection shall have been satisfied.


IX. INFORMATION AS TO BORROWERS.




     Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on
its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement:



     9.1. Disclosure of Material Matters. Promptly upon learning thereof, report to
Agent all matters materially affecting the value, enforceability or collectability of any portion
of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any
Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other
obligor.



     9.2. Schedules. Deliver to Agent on or before the twenty first (21st)
day of the first calendar month following the Closing Date, and on or before the fifteenth
(15th) day of each month thereafter, as and for the prior month (a) accounts receivable
ageings inclusive of reconciliations to the general ledger, (b) accounts payable schedules
inclusive of reconciliations to the general ledger, (c) a Borrowing Base Certificate in form and
substance satisfactory to Agent (which shall be calculated as of the last day of such month and
which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement;
provided that monetary entries for Foreign Borrower on each Borrowing Base Certificate shall be
translated into the US Dollar Equivalent of Canadian Dollars), and (e) report evidencing Borrowers’
deferred revenue compared to Borrowers’ receivables in form and substance acceptable to Agent.
Borrowers shall deliver to Agent on Wednesday of each week as for the prior week, sales reports.
In addition, each Borrower will deliver to Agent at such intervals as Agent may require: (i)
confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment
or delivery, and (iv) such further schedules, documents and/or information regarding the Collateral
as Agent may require including trial balances and test verifications. Agent shall have the right
to confirm



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and verify all Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests hereunder; provided that, so
long as no Event of Default is continuing, Agent shall work and cooperate with the Borrowers to
conduct such confirmation and verification in a manner designed to minimize interruption of the
Borrowers’ business and keep confidential the transactions contemplated hereby. The items to be
provided under this Section are to be in form satisfactory to Agent and executed by each Borrower
and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of
the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect,
terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.




     9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8, with a certificate signed by the
President of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in
compliance in all material respects with all federal, state and local Environmental Laws. To the
extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth
with specificity all areas of non-compliance and the proposed action such Borrower will implement
in order to achieve full compliance.



     9.4. Litigation. Promptly notify Agent in writing upon becoming aware of any
claim, litigation, suit or administrative proceeding affecting any Borrower or any Guarantor,
whether or not the claim is covered by insurance, and of any litigation, suit or administrative
proceeding, which in any such case affects the Collateral or which could reasonably be expected to
have a Material Adverse Effect.



     9.5. Material Occurrences. Promptly notify Agent in writing upon becoming aware
of the occurrence of (a) any Event of Default or Default; (b) any event which with the giving of
notice or lapse of time, or both, would constitute an event of default under the Subordinated Loan
Documents, (d) any event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any Borrower as of the date
of such statements; (d) any accumulated retirement plan funding deficiency which, if such
deficiency continued for two plan years and was not corrected as provided in Section 4971 of the
Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (e) each and every
default by any Borrower which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with respect to which there
is a default existing or with respect to which the maturity has been or could be accelerated, and
the amount of such Indebtedness; and (f) any other development in the business or affairs of any
Borrower or Guarantor, which could reasonably be expected to have a Material Adverse Effect; in
each case describing the nature thereof and the action Borrowers propose to take with respect
thereto.



     9.6. Government Receivables. Notify Agent promptly (which may be by a separate
notification or by inclusion of a notation in the Borrowing Base Certificates delivered hereunder)
if any of its Receivables arise out of contracts between any Borrower and the United States, any
state, Canada, any province or any department, agency or instrumentality of any of them.



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     9.7. Annual Financial Statements. Furnish Agent and Lenders within one hundred
twenty (120) days after the end of each fiscal year of Borrowers, financial statements of Holdings
and its Subsidiaries on a consolidating and consolidated basis including, but not limited to,
statements of income and stockholders’ equity and cash flow from the beginning of the current
fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year,
all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in
reasonable detail and reported upon without qualification by an independent certified public
accounting firm selected by Borrowers and satisfactory to Agent (the “Accountants”). The report of
the Accountants shall be accompanied by a statement of the Accountants certifying that (i) they
have caused this Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge constituted an
Event of Default or a Default under this Agreement or any related agreement or, if such information
came to their attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have appended thereto
calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by
Sections 6.5, 7.4, 7.5,7.6, 7.7, 7.8 and 7.11 hereof. In addition, the reports shall be
accompanied by a Compliance Certificate.



     9.8. Quarterly Financial Statements. Furnish Agent and Lenders within forty-five
(45) days after the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a
consolidated and consolidating basis and unaudited statements of income and stockholders’ equity
and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually and in the
aggregate are not material to Borrowers’ business. The reports shall be accompanied by a
Compliance Certificate.



     9.9. Monthly Financial Statements. Furnish Agent and Lenders within forty-five
(45) days after the end of each month for the first six months following the Closing Date and
within thirty (30) days after the end of each month thereafter (other than for the months of
January, April, July and October which shall be delivered in accordance with Sections 9.7 and 9.8
as applicable), an unaudited balance sheet of Borrowers on a consolidated and consolidating basis
and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a
consolidated and consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis consistent with prior
practices and complete and correct in all material respects, subject to normal and recurring year
end adjustments that individually and in the aggregate are not material to Borrowers’ business.
The reports shall be accompanied by a Compliance Certificate.



     9.10. Other Reports. Furnish Agent as soon as available, but in any event within
ten (10) days after the issuance thereof, with copies of such financial statements, reports and
returns as each Borrower shall send to its stockholders or members, as applicable.



     9.11. Additional Information. Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Notes have been complied with by



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Borrowers including, without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of the
closing or relocation of any Borrower’s chief executive office, (c) promptly upon the request of
Agent, an updated list of Real Property, and (d) promptly upon any Borrower’s learning thereof,
notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any labor contract to
which any Borrower is a party or by which any Borrower is bound.




     9.12. Projected Operating Budget. Furnish Agent and Lenders, no later than thirty
(30) days following the beginning of Borrowers 2010 fiscal year and thirty (30) days prior to the
beginning of each Borrower’s fiscal year thereafter, a month by month projected operating budget
and cash flow of Borrowers on a consolidated and consolidating basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end of the last month
in each fiscal quarter), such projections to be accompanied by a certificate signed by the
President or Chief Financial Officer of each Borrower to the effect that such projections have been
prepared consistent with past practices (except to the extent otherwise indicated) and are based on
assumptions that were reasonable when made.



     9.13. Variances From Operating Budget. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Section 9.7 and each quarterly and monthly
report, a written report summarizing all material variances from budgets submitted by Borrowers
pursuant to Section 9.12 and a discussion and analysis by management with respect to such
variances.



     9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt written notice
of (i) any lapse or other termination of any Consent issued to any Borrower by any Governmental
Body or any other Person that is material to the operation of any Borrower’s business, (ii) any
refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii)
copies of any periodic or special reports filed by any Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business, operations, affairs or
condition of any Borrower, or if copies thereof are requested by Lender, and (iv) copies of any
material notices and other communications from any Governmental Body or Person which specifically
relate to any Borrower.



     9.15. ERISA Notices and Requests. Furnish Agent with prompt written notice in the
event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that
a Termination Event has occurred, together with a written statement describing such Termination
Event and the action, if any, which such Borrower or any member of the Controlled Group has taken,
is taking, or proposes to take with respect thereto and, when known, any action taken or threatened
by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any
Borrower or any member of the Controlled Group knows or has reason to know that a prohibited
transaction (as defined in Sections 406 of ERISA or 4975 of the Code) has occurred together with a
written statement describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding
waiver request has been filed with respect to any Plan together with all communications received by
any Borrower or any member of the Controlled Group with respect to such request, (iv) any increase
in the benefits of any existing Plan or the establishment



81









 




of any new Plan or the commencement of contributions to any Plan to which any Borrower or any
member of the Controlled Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a
Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice,
(vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower or any
member of the Controlled Group shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii) any Borrower or any member of the
Controlled Group shall fail to make a required installment or any other required payment to a Plan
on or before the due date for such installment or payment; (ix) any Borrower or any member of the
Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or
plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer
Plan.




     9.16. Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.


X. EVENTS OF DEFAULT.




     The occurrence of any one or more of the following events shall constitute an “Event of
Default”:



     10.1. Nonpayment. Failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any
other liabilities or make any other payment, fee or charge provided for herein when due or in any
Other Document;



     10.2. Breach of Representation. Any representation or warranty made or deemed
made by any Borrower or any Guarantor in this Agreement, any Other Document or any related
agreement or in any certificate, document or financial or other statement furnished at any time in
connection herewith or therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;



     10.3. Financial Information. Failure by any Borrower to (i) furnish financial
information when due or promptly following any request for additional information for which a
specified delivery time is not set forth in this Agreement or (ii) permit the inspection of its
books or records;



     10.4. Judicial Actions. Issuance of a notice of a Lien (other than a Permitted
Encumbrance), levy, assessment, injunction or attachment against any Borrower’s Receivables or
against a material portion of any Borrower’s other property;



     10.5. Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3 and
10.5(ii), (i) failure or neglect of any Borrower, any Guarantor or any Person to perform, keep or



82









 




observe any term, provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement (beyond any applicable grace or cure), now or
hereafter entered into between such Borrower, such Guarantor or such Person on the one hand, and
Agent or any Lender on the other hand in connection with this Agreement or the Other Documents, or
(ii) failure or neglect of any Borrower to perform, keep or observe any term, provision, condition
or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not
cured within ten (10) days from the occurrence of such failure or neglect;




     10.6. Judgments. Any judgment or judgments are rendered against any Borrower or
any Guarantor (excluding the Ampersand Guarantors) for an aggregate amount in excess of $250,000
(or the US Dollar Equivalent) or against all Borrowers or Guarantors (excluding the Ampersand
Guarantors) for an aggregate amount in excess of $250,000 (or the US Dollar Equivalent) and (i)
enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there
shall be any period of forty (40) consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such
judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted
Encumbrance);



     10.7. Bankruptcy. Any Borrower or any Guarantor (excluding the Ampersand
Guarantors) shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all
or a substantial part of its property, (ii) make a general assignment for the benefit of creditors,
(iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage
of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed,
within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the foregoing;



     10.8. Inability to Pay. Any Borrower or any Guarantor (excluding the Ampersand
Guarantors) shall admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;



     10.9. Intentionally Omitted;



     10.10. Material Adverse Effect. The occurrence of any Material Adverse Effect;



     10.11. Lien Priority. Any Lien created hereunder or provided for hereby or under
any related agreement for any reason ceases to be or is not a valid and perfected Lien having a
first priority interest;



     10.12. Subordinated Loan Default. An event of default has occurred under the
Subordinated Loan Documents or the Subordination Agreement, which default shall not have been cured
or waived within any applicable grace period;



     10.13. Cross Default. A default of the obligations of any Borrower under any
other agreement to which it is a party shall occur which causes a Material Adverse Effect which
default is not cured within any applicable grace period;



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     10.14. Breach of Guaranty. Termination or breach of any Guaranty or Guaranty
Security Agreement or any provision or term contained therein or similar agreement executed and
delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor attempts
to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty
Security Agreement or similar agreement;



     10.15. Change of Ownership. Any Change of Ownership or Change of Control shall
occur;



     10.16. Invalidity. Any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on any Borrower or any Guarantor, or any
Borrower or any Guarantor shall so claim in writing to Agent or any Lender;



     10.17. Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any Borrower or any
Guarantor (excluding the Ampersand Guarantors), or (B) commence proceedings to suspend, revoke,
terminate or adversely modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (C) schedule or conduct
a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the
continuation of any Borrower’s or any Guarantor’s business and the staff of such Governmental Body
issues a report recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent, and any of (A) through (C)
above could reasonably be expected to have a Material Adverse Effect; (ii) any agreement which is
necessary or material to the operation of any Borrower’s or any Guarantor’s (excluding the
Ampersand Guarantors) business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected to have a Material
Adverse Effect;



     10.18. Seizures. Any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or any Guarantor (excluding the Ampersand Guarantors) or the
title and rights of any Borrower, any Guarantor or any Original Owner which is the owner of any
material portion of the Collateral shall have become the subject matter of claim, litigation, suit
or other proceeding which might, in the opinion of Agent, upon final determination, result in
impairment or loss of the security provided by this Agreement or the Other Documents;



     10.19. Pension Plans. An event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such event or condition,
together with all other such events or conditions, any Borrower or any member of the Controlled
Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan
or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse
Effect; or



     10.20. Intercreditor Default. Termination or breach of the Intercreditor
Agreement by any Person party thereto (other than Agent).



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     10.21. Fixed Charge Coverage Cure Right. Notwithstanding anything to the contrary
contained in this Article X, in the event that any Borrower fails to comply with any of the
financial covenants set forth in Section 6.5 (the “Financial Covenants”), then on or before sixty
(60) days following the end of the applicable quarter in which Borrowers failed to satisfy the
requirements of Section 6.5, Holdings or its Affiliates may irrevocably commit solely at its option
to (i) purchase Equity Interests of any Borrower for cash or (ii) make subordinated loans to
Borrowers pursuant to documents in form and substance satisfactory to Agent and make payment for
such Equity Interests or subordinated loans within five (5) Business Days of such commitment
(collectively the “Cure Right”), and upon the receipt by such Borrower of such cash (the “Specified
Equity/Debt Contribution” and the amount of such Specified Equity/Debt Contribution, the “Cure
Amount”) pursuant to the exercise by Holdings or its Affiliates of such Cure Right, such Borrower
shall pay the Cure Amount to Agent on account of the Advances (to be applied in the sole discretion
of Agent), and thereafter the applicable Financial Covenant(s) shall be recalculated giving effect
to the following pro forma adjustments:



          (a) EBITDA shall be increased by the Cure Amount, for the purpose of determining
compliance with the Financial Covenants for such period; and



          (b) if after giving effect to the foregoing recalculations Borrowers would have satisfied
such Financial Covenants, Borrowers shall then be in compliance with the requirements of such
Financial Covenants, Borrowers shall be deemed to have complied with such Financial Covenants as to
the relevant date of determination with the same effect as though there had been no failure to
comply therewith at such date, and the applicable breach or default of such Financial Covenants
that had occurred shall not be deemed an Event of Default; and



          (c) Notwithstanding anything set forth herein, Holdings or its Affiliates may not exercise
such Cure Right in more than three consecutive quarters.


XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.




     11.1. Rights and Remedies.



          (a) Upon the occurrence and during the continuance of (i) an Event of Default pursuant to
Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter during the continuance thereof, at the option of
Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and
(iii) a filing of a petition against any Borrower in any involuntary case under any state or
federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of
Lenders to make Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over such Borrower. Upon the
occurrence and during the continuance of any Event of Default, Agent shall have the right to
exercise any and all rights and remedies provided for herein, under the Other Documents (including
the Foreign Security Agreements), under the Uniform Commercial Code and at law or equity generally,
including the right to foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take



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possession of and sell any or all of the Collateral with or without judicial process. Agent
may enter any of any Borrower’s premises or other premises without legal process and without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter,
in its discretion without notice or demand, take the Collateral and remove the same to such place
as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to
Agent at a convenient place. With or without having the Collateral at the time or place of sale,
Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit
or future delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it
being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days
prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may
bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever
kind, including any equity of redemption and all such claims, rights and equities are hereby
expressly waived and released by each Borrower. In connection with the exercise of the foregoing
remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free,
nonexclusive license and Agent is granted permission to use all of each Borrower’s (a) trademarks,
trade styles, trade names, patents, patent applications, copyrights, service marks, licenses,
franchises and other proprietary rights which are used or useful in connection with Inventory for
the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished goods. The cash
proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order
set forth in Section 11.5 hereof. Noncash proceeds will only be applied to the Obligations as they
are converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and
Lenders therefor.




          (b) To the extent that Applicable Law imposes duties on the Agent to exercise remedies in
a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially
unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent
to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against
Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Customers and other Persons
obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Borrower, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail



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markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss,
collection or disposition of Collateral or to provide to the Agent a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to
obtain the services of other brokers, investment bankers, consultants and other professionals to
assist the Agent in the collection or disposition of any of the Collateral. Each Borrower
acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of
what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s
exercise of remedies against the Collateral and that other actions or omissions by the Agent shall
not be deemed commercially unreasonable solely on account of not being indicated in this Section
11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be
construed to grant any rights to any Borrower or to impose any duties on Agent that would not have
been granted or imposed by this Agreement or by Applicable Law in the absence of this Section
11.1(b).




          (c) Without limiting any right or remedy of the Agent in this Agreement, upon the
occurrence and during the continuance of any Event of Default, the Agent may by instrument in
writing appoint any person as a receiver of all or any part of the Collateral of any Canadian
Borrower. The Agent may from time to time remove or replace a receiver, or make application to any
court of competent jurisdiction for the appointment of a receiver. Any receiver appointed by the
Agent shall (for purposes relating to responsibility for the receiver’s acts or omissions) be
considered to be the agent of the applicable Canadian Borrower. The Agent may from time to time
fix the receiver’s remuneration and the Borrowers shall pay the amount of such remuneration to the
Agent. The Agent shall not be liable to any Canadian Borrower or any other person in connection
with appointing or not appointing a receiver or in connection with the receiver’s actions or
omissions.



     11.2. Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.



     11.3. Setoff. Subject to Section 14.12, in addition to any other rights which
Agent or any Lender may have under Applicable Law, upon the occurrence and during the continuance
of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without
notice of any kind, to apply any Borrower’s property held by Agent and such Lender (excluding IRA,
Keogh and trust accounts) to reduce the Obligations.



     11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing rights
and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not
preclude the exercise of any other right or remedies provided for herein or otherwise provided by
law, all of which shall be cumulative and not alternative.



     11.5. Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by the Agent on account of the



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Obligations or any other amounts outstanding under any of the Other Documents or in respect of
the Collateral may, at Agent’s discretion, be paid over or delivered as follows:




     FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of this Document;



     SECOND, to payment of any fees owed to the Agent;



     THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of
this Agreement;



     FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;



     FIFTH, to the payment of the outstanding principal amount of the Obligations (including the
payment or cash collateralization of any outstanding Letters of Credit);



     SIXTH, to all other Obligations and other obligations which shall have become due and payable
under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH”
above; and



     SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus.



     In carrying out the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; (ii) each of the
Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata
share (based on the proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses
“FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for
distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account
and applied (A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in
this Section 11.5.


XII. WAIVERS AND JUDICIAL PROCEEDINGS.




     12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment of any
of the Receivables, demand, presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon, and all other
demands and notices of any description, except such as are expressly provided for herein.



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     12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising
any right, remedy or option shall operate as a waiver of such or any other right, remedy or option
or of any Default or Event of Default.



     12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B)
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE
AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


XIII. EFFECTIVE DATE AND TERMINATION.




     13.1. Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of each Borrower, Agent and each
Lender, shall become effective on the date hereof and shall continue in full force and effect until
August 13, 2012 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate
this Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term
(the date of such prepayment hereinafter referred to as the “Early Termination Date”), Borrowers
shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (x)
one and one-half of one percent (1.5%) of the Maximum Loan Amount if the Early Termination Date
occurs on or after the Closing Date to and including the date immediately preceding the first
anniversary of the Closing Date, (y) one percent (1%) of the Maximum Loan Amount if the Early
Termination Date occurs on or after the first anniversary of the Closing Date to and including the
date immediately preceding the second anniversary of the Closing Date, and (z) one-half of one
percent (.5%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the
second anniversary of the Closing Date to and including the date immediately preceding the third
anniversary of the Closing Date.



     13.2. Termination. The termination of the Agreement shall not affect any
Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior
to the effective date of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into, rights or interests created or Obligations have been
fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens
and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder
shall continue in full force and effect, notwithstanding the termination of this Agreement or the
fact



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that Borrowers’ Account may from time to time be temporarily in a zero or credit position,
until all of the Obligations of each Borrower have been indefeasibly paid and performed in full
after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each Borrower
waives any rights which it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be required to send such
termination statements to each Borrower, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all Obligations have
been indefeasibly paid in full in immediately available funds. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination hereof until all
Obligations are indefeasibly paid and performed in full.



XIV. REGARDING AGENT.




     14.1. Appointment. Each Lender hereby designates PNC to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement and the Other
Documents and to exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4), charges and
collections (without giving effect to any collection days) received pursuant to this Agreement, for
the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its
agents or employees. As to any matters not expressly provided for by this Agreement (including
collection of the Note) Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully protected in so acting
or refraining from acting) upon the instructions of the Required Lenders, and such instructions
shall be binding; provided, however, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent
with respect thereto.



     14.2. Nature of Duties. Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for any action taken or omitted by
them as such hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), or (ii) responsible in any manner for any recitals, statements,
representations or warranties made by any Borrower or any officer thereof contained in this
Agreement, or in any of the Other Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in connection with, this
Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for
any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to
inspect the properties, books or records of any Borrower. The duties of Agent



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as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement except as expressly set forth
herein.




     14.3. Lack of Reliance on Agent and Resignation.



          (a) Independently and without reliance upon Agent or any other Lender, each Lender has
made and shall continue to make (i) its own independent investigation of the financial condition
and affairs of each Borrower and each Guarantor in connection with the making and the continuance
of the Advances hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of each Borrower and each Guarantor. Agent shall
have no duty or responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall be provided by any
Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in any agreement,
document, certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower or any Guarantor, or
be required to make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial
condition of any Borrower, or the existence of any Event of Default or any Default.



          (b) Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing
Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent
reasonably satisfactory to Borrowers.



          (c) Any such successor Agent shall succeed to the rights, powers and duties of Agent, and
the term “Agent” shall mean such successor agent effective upon its appointment, and the former
Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or
deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of
this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.



     14.4. Certain Rights of Agent. If Agent shall request instructions from Lenders
with respect to any act or action (including failure to act) in connection with this Agreement or
any Other Document, Agent shall be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from the Required Lenders; and Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders
shall not have any right of action whatsoever against Agent as a result of its acting or refraining
from acting hereunder in accordance with the instructions of the Required Lenders.



     14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier



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message, cablegram, order or other document or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not
be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent
with reasonable care.




     14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless
Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other
Documents, describing such Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have
received such directions, 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 Lenders.



     14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by
Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion
of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to
or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable
judgment).



     14.8. Agent in its Individual Capacity. With respect to the obligation of Agent
to lend under this Agreement, the Advances made by it shall have the same rights and powers
hereunder as any other Lender and as if it were not performing the duties as Agent specified
herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may accept fees and
other consideration from any Borrower for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.



     14.9. Delivery of Documents. To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any
Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to
each Lender, Agent will promptly furnish such documents and information to Lenders.



     14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective
obligations to Lenders under the other provisions of this Agreement, each Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts from time to



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time due and payable by it for the account of Agent or Lenders or any of them pursuant to this
Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro
tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.




     14.11. No Reliance on Agent’s Customer Identification Program. Each Lender
acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or imposed under or
pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items relating to or in
connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or
the transactions hereunder or contemplated hereby: (1) any identity verification procedures; (2)
any record-keeping; (3) comparisons with government lists; (4) customer notices; or (5) other
procedures required under the CIP Regulations or such other laws.



     14.12. Other Agreements. Each of the Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so,
upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any
Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender.
Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take any action to protect or
enforce its rights arising out of this Agreement or the Other Documents, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement and the Other
Documents shall be taken in concert and at the direction or with the consent of Agent or Required
Lenders.


XV. BORROWING AGENCY.




     15.1. Borrowing Agency Provisions; Several Nature of Foreign Borrower.



          (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and
agent and in such capacity to borrow, sign and endorse notes, and execute and deliver all
instruments, documents, writings and further assurances now or hereafter required hereunder, on
behalf of such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan
proceeds hereunder in accordance with the request of Borrowing Agent.



          (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent
in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their
request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To
induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any
Lender by any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by



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Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).




          (c) All Obligations shall be joint and several, and each Borrower shall make payment upon
the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on
the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any Collateral now or
thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to
the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each
Borrower waives all suretyship defenses.



     15.2. Waiver of Subrogation. Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such
Borrower may now or hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to the other
Borrowers’ property (including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until termination of
this Agreement and repayment in full of the Obligations.



     15.3. Limitation on Liability of Foreign Borrowers. It is the intent of the
parties and the parties hereby agree that, notwithstanding any provision of this Agreement or any
Other Documents, Foreign Borrower shall not be liable for any US Obligations, the present and
future assets of Foreign Borrower shall not be subject to any Charges, claim or action by the Agent
or the Lenders to satisfy any US Obligations and neither the Agent nor the Lenders shall have any
recourse under this Agreement or any Other Documents against Foreign Borrower or its assets in
respect of any US Obligations. All amounts paid by Foreign Borrower and all value derived from its
assets shall be applied only to Obligations of Foreign Borrower. As and when the Obligations owing
in respect of Revolving Advances due and owing from Foreign Borrower have been reduced to zero, and
the agreement of Agent and Lenders to make any further Revolving Advances to Foreign Borrower shall
have been irrevocably terminated, then Foreign Borrower shall cease to be a Borrower and shall be
entitled to be released and discharged from all obligations under this Agreement and the Other
Documents, the Agent and Lenders shall have no further claim against Foreign Borrower or its assets
and all provisions of this Agreement that relate to Foreign Borrower, other than provisions which
apply generally to Subsidiaries or Foreign Subsidiaries, shall cease to have further force and
effect. Any references in this Agreement or in any Other Documents to specific statutes or to
governmental agencies of the United States of America, shall be, when applied to Foreign Borrower,
deemed to refer to the applicable provisions or governmental agencies of Canada, as the case may
be, if any, provided, however, that Sections 5.25, 7.16, 7.18 and 9.15 shall be inapplicable to
Foreign Borrower. Any reference in a financial covenant or otherwise to any Dollar figure shall be
deemed, when applied to Foreign Borrower, to refer to the U.S Dollar Equivalent of the applicable
foreign currency.


XVI. MISCELLANEOUS.







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     16.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applied to contracts to be performed wholly
within the State of Illinois. Any judicial proceeding brought by or against any Borrower with
respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may
be brought in any court of competent jurisdiction in the State of Illinois, United States of
America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by registered mail
(return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.7 and
service so made shall be deemed completed five (5) days after the same shall have been so deposited
in the mails of the United States of America, or, at the Agent’s option, by service upon Borrowing
Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of
accepting service within the State of Illinois. Nothing herein shall affect the right to serve
process in any manner permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and shall not assert any
defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower
waives the right to remove any judicial proceeding brought against such Borrower in any state court
to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender
involving, directly or indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only in a federal or state
court located in the County of Cook, State of Illinois.



     16.2. Entire Understanding.



          (a) This Agreement and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no force and effect
unless in writing, signed by each Borrower’s, Agent’s and each Lender’s respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended,
waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the execution of this Agreement
and Other Documents and is not relying upon oral representations or statements inconsistent with
the terms and provisions of this Agreement.



          (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2(b), from time to time enter into
written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to



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the extent specified in such
written agreements; provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:



               (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Loan Amount;



               (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this
Agreement;



               (iii) alter the definition of the term Required Lenders or alter, amend or modify this
Section 16.2(b);



               (iv) release any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of $500,000;



               (v) change the rights and duties of Agent;



               (vi) permit any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60)
consecutive Business Days or exceed one hundred and ten percent (110%) of the Formula Amount;



               (vii) increase the Advance Rates above the Advance Rates in effect on the Closing Date; or



               (viii) release any Guarantor.



     Any such supplemental agreement shall apply equally to each Lender and shall be binding upon
Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver,
Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event
of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event
of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of
Default is the same as the Event of Default which was waived), or impair any right consequent
thereon.



     In the event that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such Lender shall not respond or reply to Agent in writing within five (5) days of delivery of such
request, such Lender shall be deemed to have consented to the matter that was the subject of the
request. In the event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such consent is denied, then PNC may, at its option, require such Lender to assign its interest
in the Advances to PNC or to another Lender or to any other Person designated by the Agent (the
“Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid
when collected from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty
five (45) days following such Lender’s denial, and such Lender will assign its



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interest to PNC or
the Designated Lender no later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.



     Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or
(c) any other provision of this Agreement, Agent may at its discretion and without the consent of
the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed
the Formula Amount by up to ten percent (10%) of the Formula Amount for up to sixty (60)
consecutive Business Days (the “Out-of-Formula Loans”) whether with respect to Revolving Advances
made to US Borrowers, to Foreign Borrowers or to Borrowers in the aggregate. If Agent is willing
in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans
shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances
consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither
Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For
purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that the Formula Amount
was unintentionally exceeded for any reason, including, but not limited to, Collateral previously
deemed to be either “Eligible US Receivables,” or “Eligible Foreign Receivables,” as applicable,
becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are
thereafter returned for insufficient funds or overadvances are made to protect or preserve the
Collateral. In the event Agent involuntarily permits the outstanding Revolving Advances to exceed
the Formula Amount by more than ten percent (10%), whether with respect to Revolving Advances made
to US Borrowers, to Foreign Borrower or to Borrowers in the aggregate, Agent shall use its efforts
to have the applicable Borrowing Group decrease such excess in as expeditious a manner as is
practicable under the circumstances and not inconsistent with the reason for such excess.
Revolving Advances made after Agent has determined the existence of involuntary overadvances shall
be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding
sentence.



     In addition to (and not in substitution of) the discretionary Revolving Advances permitted
above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders, from time
to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a
Default or an Event of Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to
Borrowers on behalf of the Lenders which the Agent, in its reasonable business judgment, deems
necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to
enhance the likelihood of, or maximize the amount of, repayment of the Advances and other
Obligations, or (c) to pay any other amount chargeable to the applicable Borrowing Group pursuant
to the terms of this Agreement; provided, that at any time after giving effect to any such
Revolving Advances the outstanding Revolving Advances do not exceed one hundred and ten percent
(110%) of the Formula Amount with respect to US Borrowers, to Foreign Borrower or to Borrowers in
the aggregate.



     16.3. Successors and Assigns; Participations; New Lenders.



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          (a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent,
each Lender, all future holders of the Obligations and their respective successors and assigns,
except that no Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.



          (b) Each Borrower acknowledges that in the regular course of commercial banking business
one or more Lenders may at any time and from time to time sell participating interests in the
Advances to other financial institutions (each such transferee or purchaser of a participating
interest, a “Participant”). Each Participant may exercise all rights of payment (including rights
of set-off) with respect to the portion of such Advances held by it or other Obligations payable
hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers
shall not be required to pay to any Participant more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrowers be required to pay any such
amount arising from the same circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby
grants to any Participant a continuing security interest in any deposits, moneys or other property
actually or constructively held by such Participant as security for the Participant’s interest in
the Advances.



          (c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may sell, assign or transfer all or any part of its rights and obligations under or
relating to Revolving Advances under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts
of not less than $2,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing
Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such
execution, delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall
be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein,
and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this
Agreement and the Other Documents. Any and all
such sales, assignments and transfers shall be pro rata as to the Commitment Percentages of the
transferor Lender in all Advances; in no event shall any Lender hold, sell or acquire differing
percentages of Advances or commitments to fund Advances, including without limitation relating to
US Obligations versus Foreign Obligations. Each Borrower hereby consents to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this



98









 







Agreement and the Other Documents. Borrowers shall execute and
deliver such further documents and do such further acts and things in order to effectuate the
foregoing.



          (d) Any Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and
obligations under or relating to Revolving Advances under this Agreement and the
Other Documents to an entity, whether a corporation, partnership, trust, limited liability
company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is
administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a
“Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and
collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as
appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after
the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement,
(i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified
Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the
transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer
Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer
Supplement creating a novation for that purpose. Such Modified Commitment Transfer Supplement
shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect
the addition of such Purchasing CLO. Each Borrower hereby consents to the addition of such
Purchasing CLO. Borrowers shall execute and deliver such further documents and do such further
acts and things in order to effectuate the foregoing.



          (e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of each Lender and the outstanding principal, accrued and
unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in
the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein for the purposes of
this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee
in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the
effective date of each transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.



          (f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession concerning such Borrower
which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement
or in connection with such Lender’s credit evaluation of such Borrower, so long as such Transferee
is bound by a confidentiality agreement in form and substance similar to the confidentiality
agreement between Borrowers and Agent.



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     16.4. Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any
portion of the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender
receives any payment or proceeds of the Collateral for any Borrower’s benefit, which are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such payment or proceeds
had not been received by Agent or such Lender.



     16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of
their respective officers, directors, Affiliates, attorneys, employees and agents from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any
claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any transaction contemplated
by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or
not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises
out of the willful misconduct of the party being indemnified (as determined by a court of competent
jurisdiction in a final and non-appealable judgment). Without limiting the generality of the
foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever
(including fees and disbursements of counsel) asserted against or incurred by any of the
indemnitees described above in this Section 16.5 by any Person under any Environmental Laws or
similar laws by reason of any Borrower’s or any other Person’s failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous
Waste, or other Toxic Substances. Additionally, if any taxes (excluding taxes imposed upon or
measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp
tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers on account of
the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of
any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by
reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly
reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties
thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless
from and against all liability in connection therewith.



     16.6. Currency Indemnity. If, for the purposes of obtaining judgment in any court
in any jurisdiction with respect to this Agreement or any Other Document, it becomes necessary to
convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due
under this Agreement or under any Other Document in any currency other than the Judgment Currency
(the “Currency Due”), then conversion shall be made at the rate of exchange prevailing on
the Business Day before the day on which judgment is given. For this purpose “rate of exchange”
means the rate at which the Agent is able, on the relevant date, to purchase the Currency Due with
the Judgment Currency in accordance with its normal practice. In the event that there is a change
in the rate of exchange prevailing between the Business Day before the day on which the



100









 







judgment is
given and the date of receipt by the Agent of the amount due, the Borrowers will, on the date of
receipt by the Agent, pay such additional amounts, if any, or be entitled to receive reimbursement
of such amount, if any, as may be necessary to ensure that the amount received by the Agent on such
date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing
on the date of receipt by the Agent is the amount then due under this Agreement or such Other
Document in the Currency Due. If the amount of the Currency Due which the Agent is so able to
purchase is less than the amount of the Currency Due originally
due to it, the Borrowers shall indemnify and save the Agent and the Lenders harmless from and
against all loss or damage arising as a result of such deficiency. This indemnity shall constitute
an obligation separate and independent from the other obligations contained in this Agreement and
the Other Documents, shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Agent from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount
due under this Agreement or any Other Document or under any judgment or order.



     16.7. Notice. Any notice or request hereunder may be given to Borrowing Agent or
any Borrower or to Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice of change of address
under this Section. Any notice, request, demand, direction or other communication (for purposes of
this Section 16.7 only, a “Notice”) to be given to or made upon any party hereto under any
provision of this Loan Agreement shall be given or made by telephone or in writing (which includes
by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth
such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting
(including the information necessary to access such site) has previously been delivered to the
applicable parties hereto by another means set forth in this Section 16.7) in accordance with this
Section 16.7. Any such Notice must be delivered to the applicable parties hereto at the addresses
and numbers set forth under their respective names on Section 16.7 hereof or in accordance with any
subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.7.
Any Notice shall be effective:



          (a) In the case of hand-delivery, when delivered;



          (b) If given by mail, four days after such Notice is deposited with the United States or
Canadian Postal Service, with first-class postage prepaid, return receipt requested;



          (c) In the case of a telephonic Notice, when a party is contacted by telephone, if
delivery of such telephonic Notice is confirmed no later than the next Business Day by hand
delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier
delivery of a confirmatory Notice (received at or before noon on such next Business Day);



          (d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives confirmation of the delivery
thereof from its own facsimile machine;



          (e) In the case of electronic transmission, when actually received;



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          (f) In the case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in this Section 16.7; and



          (g) If given by any other means (including by overnight courier), when actually received.



     Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such
Notice.


(A) If to Agent or PNC at:



PNC Bank, National Association

200 South Wacker Drive, Suite 600

Chicago, Illinois 60606

Attention: Portfolio Manager

Telephone: (312) 454-2920

Facsimile: (312) 454-2919

with a copy to:



Blank Rome LLP



One Logan Square

130 N. 18th Street

Philadelphia, Pennsylvania 19103

Attention: Lawrence F. Flick II, Esquire

Telephone: 215-569-5556

Facsimile: 215-832-5556



(B) If to a Lender other than Agent, as specified on the signature pages hereof



(C) If to Borrowing Agent or any Borrower:



c/o Rand Worldwide U.S. Holdings, Inc.

1601 Trapelo Road, Suite 162

Waltham, Massachusetts 02451

Attention: Greg Magoon and Lori Henderson

Telephone: 781-547-8900

Facsimile: 781-547-8901



with a copy to:



Edwards Angell Palmer & Dodge LLP

111 Huntington Avenue

Boston, Massachusetts 02199

Attention: Matthew V. P. McTygue, Esquire

Telephone: 617-239-0494




102









 







Facsimile: 617-316-8287



And

Ampersand Ventures

55 William Street, Suite 240

Wellesley, MA 02481

Attention: J. David Jacobs, General Counsel

Telephone: 781-239-0700

Facsimile: 781-239-0824




     16.8. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8,
3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination
of this Agreement and the Other Documents and payment in full of the Obligations.



     16.9. Severability. If any part of this Agreement is contrary to, prohibited by,
or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to
the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given effect so far as possible.



     16.10. Expenses. All costs and expenses including reasonable attorneys’ fees
(including the allocated costs of in house counsel) and disbursements incurred by Agent on its
behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement, the Subordination Agreements, the
Intercreditor Agreement or any consents or waivers hereunder or thereunder and all related
agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing
and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining,
preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under the Subordination
Agreements, the Intercreditor Agreement, and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting
any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with
any Borrower, any Guarantor, or any Person party to the Subordination Agreement or Intercreditor
Agreement or (e) in connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement, the Subordination Agreement, the Intercreditor
Agreement and all related agreements, documents and instruments, may be charged to Borrowers’
Account and shall be part of the Obligations.



     16.11. Injunctive Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or liabilities under this
Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities,
any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so
requests, shall be entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.



     16.12. Consequential Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to any Borrower or any Guarantor (or any Affiliate of any
such Person) for indirect, punitive, exemplary or consequential damages arising from any



103









 







breach of
contract, tort or other wrong relating to the establishment, administration or collection of the
Obligations or as a result of any transaction contemplated under this Agreement or any Other
Document.



     16.13. Captions. The captions at various places in this Agreement are intended
for convenience only and do not constitute and shall not be interpreted as part of this Agreement.



     16.14. Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of and by different parties hereto on separate counterparts, all of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile or other electronic transmission shall be deemed
to be an original signature hereto.



     16.15. Construction. The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments, schedules or exhibits thereto.



     16.16. Confidentiality; Sharing Information. Agent, each Lender and each
Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such
Transferee’s customary procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such confidential information (a) to
its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent,
any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental
Body or representative thereof or pursuant to legal process; provided, further that (i) unless
specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its
reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the
applicable request for disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an examination of the
financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal
process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by any Borrower other than those documents and instruments in possession of
Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been
paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to
time financial advisory, investment banking and other services may be offered or provided to such
Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby
authorizes each Lender to share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter
into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that
any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 16.16 as if it were a Lender hereunder. Such authorization shall
survive the repayment of the other Obligations and the termination of this Agreement.



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     16.17. Publicity. Each Borrower and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among Borrowers, Agent and
Lenders, including announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.



     16.18. Certifications From Banks and Participants; USA PATRIOT Act. Each Lender
or assignee or participant of a Lender that is not incorporated under the Laws of the United States
of America or a state thereof (and is not excepted from the certification requirement contained in
Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking authority regulating
such affiliated depository institution or foreign bank) shall deliver to the Agent the
certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and
certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable
regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required
under the USA PATRIOT Act.




105












 





     Each of the parties has signed this Agreement as of the day and year first above written.




	 	 	 	 	 
	 	RAND WORLDWIDE U.S. HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	RAND A TECHNOLOGY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	RAND TECHNOLOGIES OF MICHIGAN, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	RAND IMAGINIT TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as Lender and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Commitment Percentage: 100%

 	 



[SIGNATURE PAGE TO LOAN AGREEMENT]




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