Exhibit
10.3


 




 





AMENDED
AND RESTATED


CREDIT
AND SECURITY AGREEMENT


 


 


among


 


 


EPIQ
SYSTEMS, INC.,


as Borrower,


 


 


THE
LENDERS NAMED HEREIN,


as Lenders,


 


 


and


 


 


KEYBANK
NATIONAL ASSOCIATION,


as Lead Arranger, Sole Book Runner and Administrative Agent


 










 


dated as
of


November
15, 2005


 










 




 
























 


TABLE OF
CONTENTS


 


	
  ARTICLE I. DEFINITIONS

  	
   

  
	
  Section
  1.1. Definitions

  	
   

  
	
  Section 1.2. Accounting Terms

  	
   

  
	
  Section 1.3. Terms Generally

  	
   

  
	
   

  	
   

  
	
  ARTICLE II. AMOUNT AND TERMS OF CREDIT

  	
   

  
	
  Section 2.1. Amount and Nature of Credit

  	
   

  
	
  Section 2.2. Revolving Credit

  	
   

  
	
  Section 2.3. Term Loan

  	
   

  
	
  Section 2.4. Interest

  	
   

  
	
  Section 2.5. Evidence of Indebtedness

  	
   

  
	
  Section 2.6. Notice of Credit Event;
  Funding of Loans

  	
   

  
	
  Section 2.7. Payment on Loans and Other
  Obligations

  	
   

  
	
  Section 2.8. Prepayment

  	
   

  
	
  Section 2.9. Commitment and Other Fees

  	
   

  
	
  Section 2.10. Modifications of Commitment

  	
   

  
	
  Section 2.11. Computation of Interest and
  Fees

  	
   

  
	
  Section 2.12. Mandatory Payments

  	
   

  
	
  Section 2.13. Extension of Commitment

  	
   

  
	
   

  	
   

  
	
  ARTICLE III. ADDITIONAL PROVISIONS RELATING
  TO EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

  	
   

  
	
  Section 3.1. Requirements of Law

  	
   

  
	
  Section 3.2. Taxes

  	
   

  
	
  Section 3.3. Funding Losses

  	
   

  
	
  Section 3.4. Change of Lending Office

  	
   

  
	
  Section 3.5. Eurodollar Rate Lending
  Unlawful; Inability to Determine Rate

  	
   

  
	
  Section 3.6. Replacement of Lenders

  	
   

  
	
  Section 3.7. Discretion of Lenders as to
  Manner of Funding

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV. CONDITIONS PRECEDENT

  	
   

  
	
  Section 4.1. Conditions to Each Credit
  Event

  	
   

  
	
  Section 4.2. Conditions to the First Credit
  Event

  	
   

  
	
  Section 4.3. Post-Closing Conditions

  	
   

  
	
   

  	
   

  
	
  ARTICLE V.
  COVENANTS

  	
   

  
	
  Section 5.1. Insurance

  	
   

  
	
  Section 5.2. Money Obligations

  	
   

  
	
  Section 5.3. Financial Statements and
  Information

  	
   

  
	
  Section 5.4. Financial Records

  	
   

  
	
  Section 5.5. Franchises; Change in Business

  	
   

  
	
  Section 5.6.
  ERISA Pension and Benefit Plan Compliance

  	
   

  
	
  Section 5.7. Financial Covenants

  	
   

  
	
  Section 5.8. Borrowing

  	
   

  
	
  Section 5.9. Liens

  	
   

  



 


i





















 


	
  Section 5.10. Regulations T, U and X

  	
   

  
	
  Section 5.11. Investments, Loans and
  Guaranties

  	
   

  
	
  Section 5.12. Merger and Sale of
  Assets

  	
   

  
	
  Section 5.13. Acquisitions

  	
   

  
	
  Section 5.14. Notice

  	
   

  
	
  Section 5.15. Capital Distributions;
  Restricted Payments

  	
   

  
	
  Section 5.16.
  Environmental Compliance

  	
   

  
	
  Section 5.17.
  Affiliate Transactions

  	
   

  
	
  Section 5.18. Use of Proceeds

  	
   

  
	
  Section 5.19. Corporate Names and Locations
  of Collateral

  	
   

  
	
  Section 5.20. Subsidiary Guaranties,
  Security Documents and Pledge of Stock or Other Ownership Interest

  	
   

  
	
  Section 5.21. Restrictive Agreements

  	
   

  
	
  Section 5.22. Other Covenants

  	
   

  
	
  Section 5.23. Note Agreement

  	
   

  
	
  Section 5.24. Collateral

  	
   

  
	
  Section 5.25. Property Acquired
  Subsequent to the Closing Date and Right to Take Additional Collateral

  	
   

  
	
  Section 5.26. Amendment of Organizational
  Documents

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI.
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  Section 6.1. Corporate Existence;
  Subsidiaries; Foreign Qualification

  	
   

  
	
  Section 6.2. Corporate Authority

  	
   

  
	
  Section 6.3. Compliance with Laws and Contracts

  	
   

  
	
  Section 6.4. Litigation and Administrative
  Proceedings

  	
   

  
	
  Section 6.5. Title to Assets

  	
   

  
	
  Section 6.6. Liens and Security Interests

  	
   

  
	
  Section 6.7. Tax Returns

  	
   

  
	
  Section 6.8. Environmental Laws

  	
   

  
	
  Section 6.9. Locations

  	
   

  
	
  Section 6.10. Employee Benefits Plans

  	
   

  
	
  Section 6.11. Consents or Approvals

  	
   

  
	
  Section 6.12. Solvency

  	
   

  
	
  Section 6.13. Financial Statements

  	
   

  
	
  Section 6.14. Regulations

  	
   

  
	
  Section 6.15. Material Agreements

  	
   

  
	
  Section 6.16. Intellectual Property

  	
   

  
	
  Section 6.17. Insurance

  	
   

  
	
  Section 6.18. Deposit Accounts

  	
   

  
	
  Section 6.19. Accurate and Complete
  Statements

  	
   

  
	
  Section 6.20. Note Agreement

  	
   

  
	
  Section 6.21. Investment Company; Holding
  Company

  	
   

  
	
  Section 6.22. Defaults

  	
   

  



 


ii





















 


	
  ARTICLE VII. SECURITY

  	
   

  
	
  Section 7.1. Security Interest in
  Collateral

  	
   

  
	
  Section 7.2. Collections and Receipt of
  Proceeds by Borrower

  	
   

  
	
  Section 7.3. Collections and Receipt of
  Proceeds by Agent

  	
   

  
	
  Section 7.4. Use of Inventory and Equipment

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII.
  EVENTS OF DEFAULT

  	
   

  
	
  Section 8.1. Payments

  	
   

  
	
  Section 8.2. Special Covenants

  	
   

  
	
  Section 8.3. Other Covenants

  	
   

  
	
  Section 8.4. Representations and Warranties

  	
   

  
	
  Section 8.5. Cross Default

  	
   

  
	
  Section 8.6. ERISA Default

  	
   

  
	
  Section 8.7. Change in Control

  	
   

  
	
  Section 8.8. Money Judgment

  	
   

  
	
  Section 8.9. Security

  	
   

  
	
  Section 8.10. Validity of Loan Documents

  	
   

  
	
  Section 8.11. Solvency

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX.
  REMEDIES UPON DEFAULT

  	
   

  
	
  Section 9.1. Optional Defaults

  	
   

  
	
  Section 9.2. Automatic Defaults

  	
   

  
	
  Section 9.3. Letters of Credit

  	
   

  
	
  Section 9.4. Offsets

  	
   

  
	
  Section 9.5. Equalization Provision

  	
   

  
	
  Section 9.6. Collateral

  	
   

  
	
  Section 9.7. Other Remedies

  	
   

  
	
  Section 9.8. Application of Proceeds

  	
   

  
	
   

  	
   

  
	
  ARTICLE X. THE AGENT

  	
   

  
	
  Section 10.1. Appointment and Authorization

  	
   

  
	
  Section 10.2. Note Holders

  	
   

  
	
  Section 10.3. Consultation With Counsel

  	
   

  
	
  Section 10.4. Documents

  	
   

  
	
  Section 10.5. Agent and Affiliates

  	
   

  
	
  Section 10.6. Knowledge of Default

  	
   

  
	
  Section 10.7. Action by Agent

  	
   

  
	
  Section 10.8. Release of Collateral or
  Guarantor of Payment

  	
   

  
	
  Section 10.9. Notice of Default

  	
   

  
	
  Section 10.10. Delegation of Duties

  	
   

  
	
  Section 10.11. Indemnification of Agent

  	
   

  
	
  Section 10.12. Successor Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE XI. MISCELLANEOUS

  	
   

  
	
  Section 11.1. Lenders’ Independent
  Investigation

  	
   

  
	
  Section 11.2. No Waiver; Cumulative
  Remedies

  	
   

  
	
  Section 11.3. Amendments, Waivers and
  Consents

  	
   

  



 


iii





















 


	
  Section 11.4. Notices

  	
   

  
	
  Section 11.5. Costs, Expenses and Taxes

  	
   

  
	
  Section 11.6. Indemnification

  	
   

  
	
  Section 11.7. Obligations Several; No
  Fiduciary Obligations

  	
   

  
	
  Section 11.8. Execution in Counterparts

  	
   

  
	
  Section 11.9. Binding Effect; Borrower’s
  Assignment

  	
   

  
	
  Section 11.10. Lender Assignments

  	
   

  
	
  Section 11.11. Sale of Participations

  	
   

  
	
  Section 11.12. Patriot Act Notice

  	
   

  
	
  Section 11.13. Severability of Provisions;
  Captions; Attachments

  	
   

  
	
  Section 11.14. Investment Purpose

  	
   

  
	
  Section 11.15. Entire Agreement

  	
   

  
	
  Section 11.16. Legal Representation of
  Parties

  	
   

  
	
  Section 11.17. Governing Law; Submission to
  Jurisdiction

  	
   

  
	
  Section 11.18. Jury Trial Waiver

  	
   

  



 


	
  Exhibit A

  	
  Form of Revolving Credit Note

  
	
  Exhibit B

  	
  Form of Swing Line Note

  
	
  Exhibit C

  	
  Form of Term Note

  
	
  Exhibit D

  	
  Form of Notice of Loan

  
	
  Exhibit E

  	
  Form of Compliance Certificate

  
	
  Exhibit F

  	
  Form of Assignment and Acceptance Agreement

  
	
  Exhibit G

  	
  Form of Request for Extension

  
	
   

  	
   

  
	
  Schedule 1

  	
  Commitments of Lenders

  
	
  Schedule 2

  	
  Guarantors of Payment

  
	
  Schedule
  3

  	
  Pledged
  Securities

  
	
  Schedule
  4

  	
  Real
  Property

  
	
  Schedule
  5.8

  	
  Indebtedness

  
	
  Schedule
  5.9

  	
  Liens

  
	
  Schedule
  5.11

  	
  Permitted
  Foreign Subsidiary Loans and Investments

  
	
  Schedule
  6.1

  	
  Corporate
  Existence; Subsidiaries; Foreign Qualification

  
	
  Schedule
  6.4

  	
  Litigation
  and Administrative Proceedings

  
	
  Schedule 6.9

  	
  Locations

  
	
  Schedule 6.10

  	
  Employee Benefits Plans

  
	
  Schedule 6.15

  	
  Material Agreements

  
	
  Schedule 6.16

  	
  Intellectual Property

  
	
  Schedule
  6.17

  	
  Insurance

  
	
  Schedule 6.18

  	
  Deposit Accounts

  



 


iv





















 


This AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this “Agreement”) is made effective as of the
15th day of November, 2005 among:


 


(a)           EPIQ SYSTEMS, INC., a Missouri
corporation (“Borrower”);


 


(b)           the lenders listed on Schedule 1
hereto and each other Eligible Transferee, as hereinafter defined, that becomes
a party hereto pursuant to Section 2.10(b) or 11.10 hereof (collectively, the “Lenders”
and, individually, each a “Lender”); and


 


(c)           KEYBANK NATIONAL ASSOCIATION, as lead
arranger, sole book runner and administrative agent for the Lenders under this
Agreement (“Agent”).


 


WITNESSETH:


 


WHEREAS, Borrower, the
lenders named therein and Agent entered into that certain Credit and Security
Agreement, dated as of July 20, 2004 (as amended, the “Original Credit
Agreement”);


 


WHEREAS,
this Agreement amends and restates in its entirety the Original Credit
Agreement and, upon the effectiveness of this Agreement, on the Closing Date,
the terms and provisions of the Original Credit Agreement shall be
superseded hereby.  All references to “Credit
Agreement” contained in the Loan Documents, as defined in the Original Credit
Agreement, delivered in connection with the Original Credit Agreement shall be
deemed to refer to this Agreement. 
Notwithstanding the amendment and restatement of the Original Credit
Agreement by this Agreement, the Obligations outstanding under the Original
Credit Agreement as of the Closing Date shall remain outstanding and constitute
Obligations hereunder.  Such outstanding
Obligations and the guaranties of payment thereof shall in all respects be
continuing, and this Agreement shall not be deemed to evidence or result in a
novation or repayment and re-borrowing of such Obligations.  In furtherance of and, without limiting the
foregoing, from and after the Closing Date and except as expressly specified
herein, the terms, conditions and covenants governing the Indebtedness
outstanding under the Original Credit Agreement shall be solely as set forth in
this Agreement, which shall supersede the Original Credit Agreement in its
entirety; and


 


WHEREAS, Borrower, Agent
and the Lenders desire to contract for the establishment of credits in the
aggregate principal amounts hereinafter set forth, to be made available to
Borrower upon the terms and subject to the conditions hereinafter set forth;


 


NOW, THEREFORE, it is
mutually agreed as follows:


 





















 


ARTICLE I.  DEFINITIONS


 


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


 


“Accelerated Maturity
Date” shall mean the date that is sixty (60) days prior to the stated maturity
(or date when scheduled principal payments are due), as in effect from time to
time, of the Convertible Subordinated Notes or any replacement notes.


 


“Acceptable
Non-Acceleration Event” shall mean any of the following events: (a) if Borrower
refinances all of the outstanding Convertible Subordinated Indebtedness with
new Subordinated Indebtedness that, by its terms, has a stated maturity (or has
scheduled principal payments due) no earlier than sixty (60) days after the
Facility Maturity Date; (b) all of the Convertible Subordinated Notes are
converted into equity; (c) for the period commencing sixty (60) days prior to
the Facility Maturity Date through the Facility Maturity Date (or, if earlier,
until the repayment or conversion of all of the outstanding Convertible
Subordinated Notes), the Available Liquidity is, at all times, no less than an
amount equal to one hundred percent (100%) of the outstanding principal amount
of the Convertible Subordinated Notes; or (d) the Convertible Subordinated
Noteholders agree in writing (in form and substance reasonably acceptable to
Agent) to extend the stated maturity (or date when scheduled principal payments
are due) of the Convertible Subordinated Notes to a date that is no earlier
than sixty (60) days after the Facility Maturity Date.


 


“Account” shall mean all
accounts, as defined in the U.C.C.


 


“Account Debtor” shall
mean any Person obligated to pay all or any part of any Account in any manner
and includes (without limitation) any Guarantor thereof.


 


“Acquisition” shall mean
any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of any Person (other than a Company), or any
business or division of any Person (other than a Company), (b) the acquisition
of in excess of fifty percent (50%) of the stock (or other equity interest) of
any Person (other than a Company), or (c) the acquisition of another Person
(other than a Company) by a merger, amalgamation or consolidation or any other
combination with such Person.


 


“Additional Commitment”
shall mean that term as defined in Section 2.10(b) hereof.


 


“Additional Lender” shall
mean an Eligible
Transferee that shall become a Revolving Lender during the Commitment
Increase Period pursuant to Section 2.10(b) hereof.


 


“Additional Lender
Assumption Agreement” shall mean an additional lender assumption agreement, in
form and substance satisfactory to Agent, wherein an Additional Lender shall
become a Revolving Lender.


 


2





















 


“Additional Lender
Assumption Effective Date” shall mean that term as defined in Section 2.10(b)
hereof.


 


“Advantage” shall mean
any payment (whether made voluntarily or involuntarily, by offset of any
deposit or other indebtedness or otherwise) received by any Lender in respect
of the Applicable Debt, if such payment results in that Lender having less than
its pro rata share (based upon its Applicable Commitment Percentage and, in the
case of an Equalization Event, based upon its Equalization Percentage of the
Obligations) of the Applicable Debt then outstanding.


 


“Affiliate” shall mean
any Person, directly or indirectly, controlling, controlled by or under common
control with a Company and “control” (including the correlative meanings, the
terms “controlling”, “controlled by” and “under common control with”) shall
mean the power, directly or indirectly, to direct or cause the direction of the
management and policies of a Company, whether through the ownership of voting
securities, by contract or otherwise.


 


“Agent”
shall mean that term as defined in the first paragraph hereof.


 


“Agent Fee Letter” shall
mean the Agent Fee Letter between Borrower and Agent, dated as of the Closing
Date, as the same may from time to time be amended, restated or otherwise
modified.


 


“Agreement”
shall mean that term as defined in the first paragraph hereof.


 


“Applicable Commitment
Fee Rate” shall mean:


 


(a)           for the period from the Closing Date
through March 31, 2006, fifty (50.00) basis points; and


 


(b)           commencing with the Consolidated
financial statements of Borrower for the fiscal quarter ending December 31,
2005, the number of basis points set forth in the following matrix, based upon
the result of the computation of the Leverage Ratio, shall be used to establish
the number of basis points that will go into effect on April 1, 2006 and
thereafter:


 


	
  Leverage Ratio

  	
   

  	
  Applicable Commitment Fee Rate

  
	
  Greater than or equal
  to 3.00 to 1.00

  	
   

  	
  50.00 basis
  points

  
	
  Greater than or equal
  to 2.00 to 1.00 but less than 3.00 to 1.00

  	
   

  	
  40.00 basis points

  
	
  Less than or equal to
  2.00 to 1.00

  	
   

  	
  30.00 basis
  points

  



 


After April 1, 2006,
changes to the Applicable Commitment Fee Rate shall be effective on the first
day of each month following the date upon which Agent should have received,
pursuant to Section 5.3(a) and (b) hereof, the Consolidated financial statements of
Borrower.  The above matrix does not
modify or waive, in any respect, the requirements of Section 5.7 hereof, the
rights of Agent and the Lenders to charge the Default Rate, or the rights and
remedies of Agent and the Lenders pursuant to Articles VIII and IX hereof.  Notwithstanding anything herein to the 


 


3





















 


contrary, during any
period when Borrower shall have failed to timely deliver the Consolidated
financial statements pursuant to Section 5.3(a) or (b) hereof, or the
Compliance Certificate pursuant to Section 5.3(c) hereof, and such failure has
continued for five Business Days, until such time as the appropriate
Consolidated financial statements and Compliance Certificate are delivered, the
Applicable Commitment Fee Rate shall be the highest rate per annum indicated in
the above pricing grid regardless of the Leverage Ratio at such time.


 


“Applicable Commitment
Percentage” shall mean, for each Lender:


 


(a)           with respect to the Revolving Credit
Commitment, the percentage, if any, set forth opposite such Lender’s name under
the column headed “Revolving Credit Commitment Percentage”, as listed in Schedule
1 hereto; and


 


(b)           with respect to the Term Loan
Commitment, the percentage, if any, set forth opposite such Lender’s name under
the column headed “Term Loan Commitment Percentage”, as listed in Schedule 1 hereto.


 


“Applicable Debt” shall
mean:


 


(a)           with respect to the Revolving Credit
Commitment, collectively, (i) all Indebtedness incurred by Borrower to the
Revolving Lenders pursuant to this Agreement and the other Loan Documents, and
includes, without limitation, the principal of and interest on all Revolving
Credit Notes and the Swing Line Note and all obligations with respect to
Letters of Credit, (ii) each extension, renewal or refinancing of the
foregoing, in whole or in part, (iii) the commitment, prepayment and other fees
and amounts payable hereunder in connection with the Revolving Credit
Commitment, and (iv) all Related Expenses incurred in connection with the
foregoing; and


 


(b)           with respect to the Term Loan
Commitment, collectively, (i) all Indebtedness incurred by Borrower to the Term
Lenders pursuant to this Agreement and the other Loan Documents, and includes,
without limitation, the principal of and interest on all Term Notes, (ii) each
extension, renewal or refinancing of the foregoing in whole or in part, (iii)
all prepayment and other fees and amounts payable hereunder in connection with
the Term Loan Commitment, and (iv) all Related Expenses incurred in connection
with the foregoing.


 


“Applicable Margin” shall
mean:


 


(a)           for the period from the Closing Date
through March 31, 2006, (i) three hundred (300.00) basis points for Eurodollar
Loans, and (ii) one hundred twenty-five (125.00) basis points for Base Rate
Loans; and


 


(b)           commencing with the Consolidated
financial statements of Borrower for the fiscal quarter ending December 31,
2005, the number of basis points (depending upon whether Loans are Eurodollar
Loans or Base Rate Loans) set forth in the following matrix, based upon the
result of the computation of the Leverage Ratio, shall be used to 


 


4





















 


establish the number of basis points that will go into
effect on April 1, 2006 and thereafter:


 


	
  Leverage Ratio

  	
   

  	
  Applicable Basis

  Points for

  Eurodollar Loans

  	
   

  	
  Applicable Basis

  Points for

  Base Rate Loans

  	
   

  
	
  Greater
  than or equal to 3.00 to 1.00

  	
   

  	
  300.00

  	
   

  	
  125.00

  	
   

  
	
  Greater
  than or equal to 2.50 to 1.00 but less than 3.00 to 1.00

  	
   

  	
  275.00

  	
   

  	
  100.00

  	
   

  
	
  Greater
  than or equal to 2.00 to 1.00 but less than 2.50 to 1.00

  	
   

  	
  250.00

  	
   

  	
  75.00

  	
   

  
	
  Greater
  than or equal to 1.50 to 1.00 but less than 2.00 to 1.00

  	
   

  	
  225.00

  	
   

  	
  50.00

  	
   

  
	
  Less
  than 1.50 to 1.00

  	
   

  	
  200.00

  	
   

  	
  0.00

  	
   

  



 


After April 1, 2006,
changes to the Applicable Margin shall be effective on the first day of each
month following the date upon which Agent should have received, pursuant to
Section 5.3(a) and (b) hereof, the Consolidated financial statements of Borrower.  The above matrix does not modify or waive, in
any respect, the requirements of Section 5.7 hereof, the rights of Agent and
the Lenders to charge the Default Rate, or the rights and remedies of Agent and
the Lenders pursuant to Articles VIII and IX hereof.  Notwithstanding anything herein to the
contrary, during any period when Borrower shall have failed to timely deliver
the Consolidated financial statements pursuant to Section 5.3(a) or (b) hereof,
or the Compliance Certificate pursuant to Section 5.3(c) hereof, and such
failure has continued for five Business Days, until such time as the
appropriate Consolidated financial statements and Compliance Certificate are
delivered, the Applicable Margin shall be the highest rate per annum indicated
in the above pricing grid regardless of the Leverage Ratio at such time.


 


“Assignment Agreement”
shall mean an Assignment and Acceptance Agreement in the form of the attached Exhibit
F.


 


“Authorized Officer”
shall mean a Financial Officer or other individual authorized by a Financial
Officer in writing (with a copy to Agent) to handle certain administrative
matters in connection with this Agreement.


 


“Available Liquidity”
shall mean, at any date, the sum of (a) cash on hand of Borrower held at
financial institutions located in the United States plus Cash Equivalents in
excess of Ten Million Dollars ($10,000,000), plus (b) Revolving Credit
Availability, plus (c) Unexercised Availability.


 


“Base Rate” shall mean a
rate per annum equal to the greater of (a) the Prime Rate or (b) one-half of
one percent (.50%) in excess of the Federal Funds Effective Rate.  Any change in the Base Rate shall be
effective immediately from and after such change in the Base Rate.


 


5





















 


“Base Rate Loan” shall
mean a Revolving Loan or a portion of the Term Loan, described in Section
2.2(a) or 2.3 hereof, that shall be denominated in Dollars and on which
Borrower shall pay interest at a rate based on the Derived Base Rate.


 


“Borrower”
shall mean that term as defined in the first paragraph hereof.


 


“Business Day” shall mean
any day that is not a Saturday, Sunday or other day on which national banks are
authorized or required to close in Cleveland, Ohio, and, if the applicable
Business Day relates to a Eurodollar Loan, a day of the year on which dealings
in deposits are carried on in the London interbank Eurodollar market.


 


“Capital Distribution”
shall mean a payment made, liability incurred or other consideration given by a
Company to any Person that is not a Company, for the purchase, acquisition,
redemption, repurchase, payment or retirement of any capital stock or other
equity interest of such Company or as a dividend, return of capital or other
distribution (other than any stock dividend, stock split or other equity
distribution payable only in capital stock or other equity of such Company) in
respect of such Company’s capital stock or other equity interest.


 


“Capitalized Lease
Obligations” shall mean obligations of the Companies for the payment of rent
for any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.


 


“Cash Collateral Account”
shall mean a commercial Deposit Account designated “cash collateral account”
and maintained by Borrower with Agent, without liability by Agent or the
Lenders to pay interest thereon, from which account Agent, on behalf of the
Lenders, subject to the provisions of Section 7.2 hereof, shall have the
exclusive right to withdraw funds until all of the Secured Obligations are paid
in full.


 


“Cash Equivalents” shall
mean, as to any Person, (a) securities issued by, or directly, unconditionally
and fully guaranteed or insured by, the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than one
year from the date of acquisition by such Person; (b) securities issued by, or
directly, unconditionally and fully guaranteed or insured by, any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s or Moody’s; (c)
time deposits, certificates of deposit or bankers’ acceptances of any
commercial bank having, or which is the principal banking subsidiary of a bank
holding company organized under the laws of the United States, any state
thereof or the District of Columbia or any United States branch of a foreign
bank having, capital and surplus aggregating in excess of Five Hundred Million
Dollars ($500,000,000) and a rating of “A” (or such other similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) with maturities
of not more than one year from the date of acquisition by such Person; (d)
repurchase obligations with a term of 


 


6





















 


not more than thirty (30) days for underlying securities of the types
described in subpart (a) above entered into with any bank meeting the
qualifications specified in subpart (c) above, which repurchase obligations are
secured by a valid perfected security interest in the underlying securities;
(e) commercial paper issued by any Person incorporated in the United States
rated at least A-2 or the equivalent thereof by Standard & Poor’s or at
least P-2 or the equivalent thereof by Moody’s, and in each case maturing not
more than one year after the date of acquisition by such Person; (f)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in subparts (a) through (e)
above; and (g) demand deposit accounts maintained in the ordinary course of
business.


 


“Cash Security” shall
mean all cash, instruments, Deposit Accounts and other cash equivalents,
whether matured or unmatured, whether collected or in the process of
collection, upon which a Company presently has or may hereafter have any claim,
wherever located, including but not limited to any of the foregoing that are
presently or may hereafter be existing or maintained with, issued by, drawn
upon, or in the possession of Agent or any Lender.


 


“Change in Control” shall
mean (a) the acquisition of, or, if earlier, the shareholder or director
approval of the acquisition of, ownership or voting control, directly or
indirectly, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the
Securities Exchange Act of 1934, as then in effect) or of record, on or after
the Closing Date, by any Person (other than Tom Olofson or Christopher Olofson)
or group (within the meaning of Sections 13d and 14d of the Securities Exchange
Act of 1934, as then in effect), of shares representing more than thirty
percent (30%) of the aggregate ordinary Voting Power represented by the issued
and outstanding capital stock of Borrower; (b) the occupation of a majority of
the seats (other than vacant seats) on the board of directors or other governing
body of Borrower by Persons who were neither (i) nominated by the board of
directors or other governing body of Borrower nor (ii) appointed or approved by
directors so nominated; or (c) the occurrence of a change in control, or other
similar provision, as defined in any Material Indebtedness Agreement.


 


“Closing Commitment
Amount” shall mean One Hundred Twenty-Five Million Dollars ($125,000,000).


 


“Closing Date” shall mean
the effective date of this Agreement as set forth in the first paragraph of
this Agreement.


 


“Closing Revolving Amount”
shall mean One Hundred Million Dollars ($100,000,000).


 


“Code” shall mean the
Internal Revenue Code of 1986, as amended, together with the rules and
regulations promulgated thereunder.


 


“Collateral” shall mean
all of Borrower’s existing and future (a) personal property; (b) Accounts,
Investment Property, instruments, contract rights, chattel paper, documents,
supporting obligations, letter-of-credit rights, commercial tort claims,
General Intangibles, Inventory and Equipment (other than the following, but
exclusive of proceeds of any of the following, (i) computer equipment provided
to bankruptcy trustees and located on their premises in the ordinary course of
Borrower’s business, (ii) fractional interests in aircraft where a pledge 


 


7





















 


is prohibited by the agreement among the holders of such interests,
(iii) equity interests in (A) any direct Foreign Subsidiary in excess of
sixty-five percent (65%) of the total outstanding equity interest of such
direct Foreign Subsidiary, and (B) any indirect Foreign Subsidiary, (iv)
licenses and contracts which by the terms of such licenses and contracts
prohibit the assignment of such agreements (to the extent such prohibition is
enforceable at law), and (v) fixed assets subject to a purchase money lien with
an underlying contract or agreement that prohibits the granting of a second
lien on such fixed assets, but only to the extent such prohibition is
enforceable at law and only as long as such liens attach to such fixed assets);
(c) funds now or hereafter on deposit in the Cash Collateral Account, if any;
(d) Cash Security (other than trust and payroll bank accounts); (e) the Real
Property; and (f) Proceeds of any of the foregoing.


 


“Commitment” shall mean
the obligation hereunder of the Lenders, during the Commitment Period, to make
Loans and to participate in the issuance of Letters of Credit pursuant to the
Revolving Credit Commitment and the Term Loan Commitment, up to the Total
Commitment Amount.


 


“Commitment Increase
Period” shall mean the period from the Closing Date to the date that is thirty (30) days prior to
the last day of the Commitment Period.


 


“Commitment Period” shall
mean the period from the Closing Date to the earlier of the Accelerated
Maturity Date or November 14, 2008 (or such earlier date on which the
Commitment shall have been terminated pursuant to Article IX hereof); provided
that there shall be no Accelerated Maturity Date if an Acceptable
Non-Acceleration Event shall occur prior to the Accelerated Maturity Date.


 


“Companies” shall mean
Borrower and all Subsidiaries.


 


“Company” shall mean
Borrower or a Subsidiary.


 


“Compliance Certificate”
shall mean a certificate, substantially in the form of the attached Exhibit E.


 


“Confirmation of Security
Documents” shall mean each Amendment and Confirmation of Security Documents,
relating to Security Documents delivered by the Credit Parties prior to the
Closing Date, executed and delivered by a Credit Party as of the Closing Date,
as the same may from time to time be amended, restated or otherwise modified.


 


“Consideration” shall
mean, in connection with an Acquisition, the aggregate consideration paid,
including borrowed funds, cash, the issuance of securities or notes, the assumption
or incurring of liabilities (direct or contingent), the payment of consulting
fees or fees for a covenant not to compete and any other consideration paid for
such Acquisition.


 


“Consolidated” shall mean
the resultant consolidation of the financial statements of Borrower and its
Subsidiaries in accordance with GAAP, including principles of consolidation
consistent with those applied in preparation of the consolidated financial
statements referred to in Section 6.13 hereof.


 


8





















 


“Consolidated Capital
Expenditures” shall mean, for any period, the amount of capital expenditures of
Borrower (specifically including software development costs, but excluding
capital expenditures directly financed through a capitalized lease (with
acceptable documentation available upon request of Agent or any Lender)), as
determined on a Consolidated basis and in accordance with GAAP.


 


“Consolidated Current
Assets” shall mean, at any date, the current assets of Borrower, as determined
on a Consolidated basis and in accordance with GAAP.


 


“Consolidated Current
Liabilities” shall mean, at any date, the current liabilities of Borrower, as
determined on a Consolidated basis and in accordance with GAAP.


 


“Consolidated
Depreciation and Amortization Charges” shall mean, for any period, the
aggregate of all depreciation and amortization charges of Borrower for such
period, as determined on a Consolidated basis and in accordance with GAAP;
provided that, notwithstanding the foregoing, Consolidated Depreciation and
Amortization Charges shall include any component of Consolidated Interest
Expense resulting from the amortization of any loan fees and Consolidated
Interest Expense resulting from imputed interest that is added to the principal
balance of the underlying Indebtedness.


 


“Consolidated EBITDA”
shall mean, for any period, as determined on a Consolidated basis and in
accordance with GAAP, Consolidated Net Earnings for such period plus the
aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (a) Consolidated Interest Expense, (b) Consolidated Income
Tax Expense, (c) Consolidated Depreciation and Amortization Charges, (d)
(i) extraordinary or unusual non-cash losses not incurred in the ordinary
course of business but that were counted in the net income calculation for such
period, minus (ii) extraordinary or unusual non-cash gains not incurred in the
ordinary course of business but that were counted in the net income calculation
for such period, (e) unamortized costs, fees and expenses incurred in
connection with the transactions contemplated by this Agreement and any
Acquisition (occurring prior to, on or subsequent to the Closing Date), up to
an aggregate amount for all Companies, with respect to Acquisition related
costs, fees and expenses, not to exceed Six Million Dollars ($6,000,000) during
any twelve (12) month period, (f) expenses and charges which will be
indemnified or reimbursed to the extent such amounts are covered by funds in a
valid escrow account or similar arrangement, and (g) any other component
of net income (or net loss) which is non-cash and will not convert to cash
within one year, including without exception any charges related to the
granting of share-based payments to employees or directors; provided, however,
that any time an Acquisition on an on-going business is made pursuant to
Section 5.13 hereof, Consolidated EBITDA shall be recalculated to include the
EBITDA of the acquired company as if such Acquisition had been completed on the
first day of the relevant measuring period.


 


“Consolidated Fixed
Charges” shall mean, for any period, as determined on a Consolidated basis and
in accordance with GAAP, without duplication, the aggregate of (a) Consolidated
Interest Expense (including, without limitation, the “imputed interest” portion
of Capitalized Lease Obligations, synthetic leases and asset securitizations,
if any, and excluding (i) 


 


9





















 


any fees (including underwriting fees) and expenses paid in connection
with the consummation of Acquisitions (occurring prior to, on or subsequent to
the Closing Date), (ii) any payments made to obtain a Hedge Agreement, and
(iii) any agent or collateral monitoring fees paid or required to be paid
pursuant to this Agreement (paid in cash), (b) Consolidated Income Tax Expense
paid in cash, (c) scheduled principal payments on Consolidated Funded
Indebtedness (other than (A) optional prepayments of the Revolving Credit
Loans, (B) scheduled payments on the Convertible Subordinated Indebtedness, and
(C) scheduled payments on the Term Loan), and (d) Capital Distributions.


 


“Consolidated
Funded Indebtedness” shall mean, at any date, all Indebtedness (including,
but not limited to, current, long-term and Subordinated Indebtedness, if any) of Borrower, as determined on a Consolidated
basis and in accordance with GAAP.


 


“Consolidated Income Tax
Expense” shall mean, for any period, all provisions for taxes based on the net
income of Borrower (including, without limitation, any additions to such taxes,
and any penalties and interest with respect thereto), and all franchise taxes
of Borrower to the extent such taxes have been imposed in lieu of income taxes,
as determined on a Consolidated basis and in accordance with GAAP.


 


“Consolidated Interest
Expense” shall mean, for any period, the interest expense of Borrower for such
period, as determined on a Consolidated basis and in accordance with GAAP;
provided that, notwithstanding the foregoing, Consolidated Interest Expense shall
exclude any interest expense resulting from the amortization of any loan fees,
and interest expense resulting from imputed interest that is added to the
principal balance of the underlying Indebtedness.


 


“Consolidated Net
Earnings” shall mean, for any period, the net income (loss) of Borrower for
such period, as determined on a Consolidated basis and in accordance with GAAP.


 


“Consolidated Net Worth”
shall mean, at any date, the stockholders’ equity of Borrower, determined as of
such date on a Consolidated basis and in accordance with GAAP.


 


“Consolidated Senior
Funded Indebtedness” shall mean, at any date, Consolidated Funded Indebtedness
less Subordinated Indebtedness of the Companies.


 


“Control Agreement” shall
mean each Control Agreement among a Credit Party, Agent and a depository
institution, dated on or after the Closing Date, as the same may from time to
time be amended, restated or otherwise modified.


 


“Controlled Group” shall
mean a Company and each Person required to be aggregated with a Company under
Code Section 414(b), (c), (m) or (o).


 


“Convertible Subordinated
Documents” shall mean the Note Agreement, the Convertible Subordinated Notes,
and any other agreement entered into or delivered in connection therewith.


 


10





















 


“Convertible Subordinated
Indebtedness” shall mean the Subordinated Indebtedness under or in respect of
the Convertible Subordinated Notes, in the original principal amount of up to
Fifty Million Dollars ($50,000,000).


 


“Convertible Subordinated
Noteholders” shall mean any Buyer, as defined in the Note Agreement, and any
holder of the Convertible Subordinated Notes.


 


“Convertible Subordinated
Notes” shall mean those certain $50,000,000 4% Contingent Convertible
Subordinated Notes due June 15, 2007, issued pursuant to the Note Agreement, as
the same may from time to time be amended, restated or otherwise modified with
the prior written consent of the Required Lenders.


 


“Credit Event” shall mean
the making by the Lenders of a Loan, the conversion by the Lenders of a Base
Rate Loan to a Eurodollar Loan, the continuation by the Lenders of a Eurodollar
Loan after the end of the applicable Interest Period, the making by the Swing
Line Lender of a Swing Loan, or the issuance by the Fronting Lender of a Letter
of Credit.


 


“Credit Party” shall mean
Borrower and any Subsidiary or other Affiliate that is a Guarantor of Payment.


 


“Current Ratio” shall
mean, at any time, as determined on a Consolidated basis and in accordance with
GAAP, the ratio of (a) Consolidated Current Assets (for the most recently
completed fiscal quarter of Borrower) to (b) Consolidated Current
Liabilities (for the most recently completed fiscal quarter of Borrower);
provided, however, that, for purposes of calculating the Current Ratio,
Consolidated Current Liabilities shall exclude the current portion of
Subordinated Indebtedness and the Revolving Credit Exposure.


 


“Default” shall mean an
event or condition that constitutes, or with the lapse of any applicable grace
period or the giving of notice or both would constitute, an Event of Default,
and that has not been waived by the Required Lenders (or, if applicable, all of
the Lenders) in writing.


 


“Default Rate” shall mean
(a) with respect to any Loan, a rate per annum equal to two percent (2%) in
excess of the rate otherwise applicable thereto, and (b) with respect to any
other amount, if no rate is specified or available, a rate per annum equal to
two percent (2%) in excess of the Derived Base Rate from time to time in effect.


 


“Deposit Account” shall
mean (a) a deposit account, as defined in the U.C.C., (b) any other deposit
account, and (c) any demand, time, savings, checking, passbook or similar
account maintained with a bank, savings and loan association, credit union, or
similar organization.


 


“Derived Base Rate” shall
mean a rate per annum equal to the sum of the Applicable Margin (from time to
time in effect) for Base Rate Loans plus the Base Rate.


 


“Derived Eurodollar Rate”
shall mean a rate per annum equal to the sum of the Applicable Margin (from
time to time in effect) for Eurodollar Loans plus the Eurodollar Rate.


 


11





















 


“Disposition” shall mean
the lease, transfer or other disposition of assets (whether in one or more transaction)
by a Company, other than a sale, lease, transfer or other disposition made by a
Company in the ordinary course of business.


 


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


 


“Domestic Subsidiary”
shall mean a Subsidiary that is not a Foreign Subsidiary.


 


“Dormant Subsidiary”
shall mean a Company that (a) is not a Credit Party, (b) has aggregate assets
of less than Two Hundred Fifty Thousand Dollars ($250,000), and (c) has no
direct or indirect Subsidiaries with aggregate assets for all such Subsidiaries
of more than Two Hundred Fifty Thousand Dollars ($250,000).


 


“EBITDA” shall mean, for
any period, in accordance with GAAP, the net earnings of a Person for such
period plus the aggregate amounts deducted in determining such net earnings in
respect of (a) interest expense of such Person, (b) income taxes of such
Person, and (c) the aggregate of all depreciation and amortization charges of
such Person, (d) (i) extraordinary or unusual non-cash losses not incurred in
the ordinary course of business of such Person but that were counted in the net
income calculation for such period, minus (ii) extraordinary or unusual
non-cash gains not incurred in the ordinary course of business of such Person
but that were counted in the net income calculation for such period, (e)
expenses and charges which will be indemnified or reimbursed to the extent such
amounts are covered by funds in a valid escrow account or similar arrangement,
and (f) any other component of net income (or net loss) which is non-cash
and will not convert to cash within one year, including without exception any
charges related to the granting of share-based payments to employees or
directors.


 


“Eligible Transferee”
shall mean a commercial bank, financial institution or other “accredited
investor” (as defined in SEC Regulation D) that is not Borrower, a Subsidiary
or an Affiliate.


 


“Environmental
Laws” shall mean all provisions of law (including the common law), statutes,
ordinances, codes, rules, guidelines, policies, procedures, orders-in-council,
regulations, permits, licenses, judgments, writs, injunctions, decrees, orders,
awards and standards which are legally binding and promulgated by a
Governmental Authority or by any court, agency, instrumentality, regulatory authority
or commission of any of the foregoing concerning environmental health or safety
and protection of, or regulation of the discharge of substances into, the
environment.


 


“Equalization Event”
shall mean the earlier of (a) the occurrence of an Event of Default under
Section 8.11 hereof, or (b) the acceleration of the maturity of the Obligations
after the occurrence of an Event of Default.


 


“Equalization Percentage”
shall mean that term as defined in Section 9.5 hereof.


 


“Equipment” shall mean
all equipment, as defined in the U.C.C.


 


12





















 


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


 


“ERISA Event” shall mean
(a) the existence of a condition or event with respect to an ERISA Plan that
would reasonably be expected to result in the imposition of an excise tax or
any other liability on a Company or of the imposition of a Lien on the assets
of a Company; (b) the engagement by a Controlled Group member in a non-exempt “prohibited
transaction” (as defined under ERISA Section 406 or Code Section 4975) or a
breach of a fiduciary duty under ERISA that could reasonably be expected to
result in liability to a Company; (c) the application by a Controlled Group
member for a waiver from the minimum funding requirements of Code Section 412
or ERISA Section 302 or a Controlled Group member is required to provide
security under Code Section 401(a)(29) or ERISA Section 307; (d) the occurrence
of a Reportable Event with respect to any Pension Plan as to which notice is
required to be provided to the PBGC; (e) the withdrawal by a Controlled Group
member from a Multiemployer Plan in a “complete withdrawal” or a “partial
withdrawal” (as such terms are defined in ERISA Sections 4203 and 4205,
respectively); (f) notice that any Multiemployer Plan is in reorganization
under ERISA Section 4241; (g) the taking by the PBGC of any steps to terminate
a Pension Plan or appoint a trustee to administer a Pension Plan, or the taking
by a Controlled Group member of any steps to terminate a Pension Plan; (h) the
commencement, existence or threatening of a claim, action, suit, audit or
investigation with respect to an ERISA Plan, other than a routine claim for
benefits; or (i) any incurrence by a Controlled Group member of any liability
for post-retirement benefits under any Welfare Plan, other than as required by
ERISA Section 601, et.  seq. or Code Section 4980B.


 


“ERISA Plan” shall mean
an “employee benefit plan” (within the meaning of ERISA Section 3(3)) that a
Controlled Group member at any time sponsors, maintains, contributes to, has
liability with respect to or has an obligation to contribute to such plan.


 


“Eurocurrency Liabilities”
shall have the meaning assigned to that term in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time to time.


 


“Eurodollar” shall mean a
Dollar denominated deposit in a bank or branch outside of the United States.


 


“Eurodollar Loan” shall
mean a Revolving Loan or a portion of the Term Loan described in Section 2.2(a)
or 2.3 hereof, that shall be denominated in Dollars and on which Borrower shall
pay interest at a rate based upon the Derived Eurodollar Rate.


 


“Eurodollar Rate” shall
mean, with respect to a Eurodollar Loan, for any Interest Period, a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the
nearest 1/16th of 1%) by dividing (a) the rate of interest,
determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) two Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is 


 


13





















 


unavailable from Reuters, from any other similar company or service
that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for Dollar deposits in
immediately available funds with a maturity comparable to such Interest Period,
provided that, in the event that such rate quotation is not available for any
reason, then the Eurodollar Rate shall be the average (rounded upward to the
nearest 1/16th of 1%) of the per annum rates at which deposits in immediately
available funds in Dollars for the relevant Interest Period and in the amount of
the Eurodollar Loan to be disbursed or to remain outstanding during such
Interest Period, as the case may be, are offered to Agent (or an affiliate of
Agent, in Agent’s discretion) by prime banks in any Eurodollar market
reasonably selected by Agent, determined as of 11:00 A.M. (London time) (or as
soon thereafter as practicable), two Business Days prior to the beginning of
the relevant Interest Period pertaining to such Eurodollar Loan hereunder; by
(b) 1.00 minus the Reserve Percentage.


 


“Event of Default” shall
mean an event or condition that shall constitute an event of default as defined
in Article VII hereof.


 


“Excluded Taxes” shall
mean net income taxes (and franchise taxes imposed in lieu of net income taxes)
imposed on Agent or a Lender by the Governmental Authority located in the
jurisdiction where Agent or such Lender is organized or conducts business
(other than any such connection arising solely from Agent or such Lender having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any other Loan Document).


 


“Facility Maturity Date”
shall mean the last day of the Commitment Period.


 


“Federal Funds Effective
Rate” shall mean, for any day, the rate per annum (rounded upward to the
nearest one one-hundredth of one percent (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 Closing Date.


 


“Financial Officer” shall
mean any of the following officers: chief executive officer, president, chief
financial officer or treasurer.  Unless
otherwise qualified, all references to a Financial Officer in this Agreement
shall refer to a Financial Officer of Borrower.


 


“Fixed Charge Coverage
Ratio” shall mean, as determined for the most recently completed four fiscal
quarters of Borrower, on a Consolidated basis and in accordance with GAAP, the
ratio of (a) (i) Consolidated EBITDA minus (ii) Consolidated Capital
Expenditures (excluding Consolidated Capital Expenditures that are made (A) in
connection with an Acquisition permitted pursuant to Section 5.13 hereof, (B)
in connection with leasehold improvements (but only to the extent such improvements
are reimbursable by the landlord), or (C) with the net proceeds of Dispositions
of capital assets (excluding real estate), to (b) Consolidated Fixed
Charges.


 


14





















 


“Foreign Subsidiary”
shall mean a Subsidiary that is organized outside of the United States.


 


“Fronting Lender” shall
mean, as to any Letter of Credit transaction hereunder, Agent as issuer of the
Letter of Credit, or, in the event that Agent either shall be unable to issue
or shall agree that another Revolving Lender may issue, a Letter of Credit,
such other Revolving Lender as shall agree to issue the Letter of Credit in its
own name, but on behalf of the Revolving Lenders hereunder.


 


“GAAP” shall mean
generally accepted accounting principles in the United States as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board (or agencies within the United States.
accounting profession with similar or delegated functions and recognized by the
Financial Accounting Standards Board as having authority to issue such
interpretations), applied on a basis consistent with the past accounting
practices and procedures of Borrower and the SEC, which are applicable to the
circumstances as of the date of determination.


 


“General Intangibles”
shall mean all (a) general intangibles, as defined in the U.C.C.; and (b)
choses in action, causes of action, intellectual property, customer lists,
corporate or other business records, inventions, designs, patents, patent
applications, service marks, registrations, trade names, trademarks,
copyrights, licenses, goodwill, computer software, rights to indemnification
and tax refunds.


 


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


 


“Guarantor” shall mean a
Person that shall have pledged its credit or property in any manner for the
payment or other performance of the indebtedness, contract or other obligation
of another and includes (without limitation) any guarantor (whether of payment
or of collection), surety, co-maker, endorser or Person that shall have agreed
conditionally or otherwise to make any purchase, loan or investment in order
thereby to enable another to prevent or correct a default of any kind.


 


“Guarantor of Payment”
shall mean each of the Companies set forth on Schedule 2 hereto, that
are each executing and delivering a Guaranty of Payment, or any other Person
that shall deliver a Guaranty of Payment to Agent subsequent to the Closing
Date.


 


“Guaranty of Payment”
shall mean each Guaranty of Payment and each Amended and Restated Guaranty of Payment executed and
delivered on or after the Closing Date in connection with this Agreement by the
Guarantors of Payment, as the same may from time to time be amended, restated
or otherwise modified.


 


15





















 


“Hedge Agreement” shall
mean any (a) hedge agreement, interest rate swap, basis swap agreement, cap,
collar or floor agreement, or other interest rate management device (including
forward rate agreements) entered into by a Company with any Person in
connection with any Indebtedness of such Company, or (b) currency swap agreement,
forward currency purchase agreement or similar arrangement or agreement
designed to protect against fluctuations in currency exchange rates entered
into by a Company with any Person.


 


“Indebtedness” shall
mean, for any Company (excluding in all cases trade payables payable in the
ordinary course of business by such Company and accrued expenses), without
duplication, (a) all obligations to repay borrowed money, direct or indirect,
incurred, assumed, or guaranteed, (b) all obligations for the deferred purchase
price of capital assets, (c) all obligations under conditional sales or other
title retention agreements, (d) all obligations (contingent or otherwise) under
any letter of credit or banker’s acceptance, (e) all net obligations under any
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device or any Hedge Agreement, (f) all synthetic
leases, (g) all lease obligations that have been or should be capitalized on
the books of such Company in accordance with GAAP, (h) all obligations of such
Company with respect to asset securitization financing programs, (i) all
obligations to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
Person, (j) all indebtedness secured by a Lien on the property of a Company,
whether or not such indebtedness shall have been assumed by such Company,
provided that if such Company has not assumed or otherwise become liable for
such indebtedness, such indebtedness shall be measured at the fair market value
of such property securing such indebtedness at the time of determination, (k)
all indebtedness of any partnership of which any Company is a general partner,
(l) any other transaction (including forward sale or purchase agreements)
having the commercial effect of a borrowing of money entered into by such
Company to finance its operations or capital requirements, and (m) any guaranty of any obligation
described in subparts (a) through (l) hereof.


 


“Intellectual Property
Collateral Assignment Agreement” shall mean an Intellectual Property Collateral
Assignment Agreement executed and delivered on or after the Closing Date by
Borrower or a Guarantor of Payment, wherein Borrower or such Guarantor of
Payment, as the case may be, has granted to Agent, for the benefit of the
Lenders, a security interest in and a collateral assignment of all intellectual
property owned by Borrower or such Guarantor of Payment, as the same may from
time to time be amended, restated or otherwise modified.


 


“Interest Adjustment Date”
shall mean the last day of each Interest Period.


 


“Interest Period” shall
mean, with respect to a Eurodollar Loan, the period commencing on the date such
Eurodollar Loan is made and ending on the last day of such period, as selected
by Borrower pursuant to the provisions hereof, and, thereafter (unless such
Eurodollar Loan is converted to a Base Rate Loan), each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of such period, as selected by Borrower pursuant to the
provisions hereof.  The duration of each
Interest Period for a Eurodollar Loan shall be one month, two months, three
months or six months, in each case as Borrower may select upon notice, as set
forth in Section 2.6 hereof; provided that if Borrower 


 


16





















 


shall fail to so select the duration of any Interest Period for a
Eurodollar Loan at least three Business Days prior to the Interest Adjustment
Date applicable to such Eurodollar Loan, Borrower shall be deemed to have
converted such Eurodollar Loan to a Base Rate Loan at the end of the then
current Interest Period.


 


“Inventory” shall mean
all inventory, as defined in the U.C.C.


 


“Investment Property”
shall mean all investment property, as defined in the U.C.C., unless the
Uniform Commercial Code as in effect in another jurisdiction would govern the
perfection and/or priority of a security interest in investment property, and,
in such case, “investment property” shall be defined in accordance with the law
of that jurisdiction as in effect from time to time.


 


“Lender Credit Exposure”
shall mean, for any Lender, at any time, the aggregate of such Lender’s
respective pro rata shares of the Revolving Credit Exposure and the Term Loan
Exposure.


 


“Letter of Credit” shall
mean a standby letter of credit that shall be issued by the Fronting Lender for
the account of Borrower or a Guarantor of Payment, including amendments
thereto, if any, and shall have an expiration date no later than the earlier of
(a) one year after its date of issuance, or (b) fifteen (15) days prior to the
last day of the Commitment Period.


 


“Letter of Credit
Commitment” shall mean the commitment of the Fronting Lender, on behalf of the
Revolving Lenders, to issue Letters of Credit in an aggregate face amount of up
to Ten Million Dollars ($10,000,000).


 


“Letter of Credit
Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn amount
of all issued and outstanding Letters of Credit, and (b) the aggregate of the
draws made on Letters of Credit that have not been reimbursed by Borrower or
converted to a Revolving Loan pursuant to Section 2.2(b)(iv) hereof.


 


“Leverage Ratio” shall
mean, as determined on a Consolidated basis and in accordance with GAAP, the
ratio of (a) Consolidated Funded Indebtedness (for the most recently completed
fiscal quarter of Borrower) to (b) Consolidated EBITDA (for the most recently
completed four fiscal quarters of Borrower).


 


“Lien” shall mean any
mortgage, deed of trust, security interest, lien (statutory or other), charge,
assignment, hypothecation, encumbrance on, pledge or deposit of, or conditional
sale, leasing (other than operating leases), sale with a right of redemption or
other title retention agreement and any capitalized lease with respect to any
property (real or personal) or asset.


 


“Liquidity” shall mean,
at any date, an amount equal to the sum of (a) cash, (b) Cash Equivalents
having maturities of not more than one year from the date of acquisition; and
(c) the Revolving Credit Availability.


 


17





















 


“Loan” shall mean a
Revolving Loan, a Swing Loan or the Term Loan granted to Borrower by the
Lenders in accordance with Section 2.2 or 2.3 hereof.


 


“Loan Documents” shall
mean, collectively, this Agreement, each Note, each Guaranty of Payment, all
documentation relating to each Letter of Credit, each Security Document and the
Agent Fee Letter, as any of the foregoing may from time to time be amended,
restated or otherwise modified or replaced, and any other document delivered
pursuant thereto.


 


“Material Adverse Effect”
shall mean a material adverse effect on (a) the business, operations, property,
condition (financial or otherwise) or prospects of Borrower, (b) the business,
operations, property, condition (financial or otherwise) or prospects of the
Companies taken as a whole, (c)
the ability of Borrower or the Companies to perform its or their obligations
under this Agreement or any of the other Loan Documents, or (d) the validity or
enforceability of the Loan Documents or the rights and remedies of Agent or the
Lenders hereunder or thereunder.


 


“Material Indebtedness
Agreement” shall mean any debt instrument, lease (capital, operating or
otherwise), guaranty, contract, commitment, agreement or other arrangement
evidencing or entered into in connection with any Indebtedness of any Company
or the Companies in excess of the amount of Three Million Dollars ($3,000,000).


 


“Maximum Amount” shall
mean, for each Lender, the amount set forth opposite such Lender’s name under
the column headed “Maximum Amount” as set forth on Schedule 1 hereto,
subject to decreases determined pursuant to Section 2.10(a) hereof, increases
pursuant to Section 2.10(b) hereof and assignments of interests pursuant to
Section 11.10 hereof; provided, however, that the Maximum Amount for the Swing
Line Lender shall exclude the Swing Line Commitment (other than its pro rata
share), and the Maximum Amount of the Fronting Lender shall exclude the Letter
of Credit Commitment (other than its pro rata share).


 


“Maximum Commitment
Amount” shall mean Two Hundred Million Dollars ($200,000,000).


 


“Maximum
Rate” shall mean that term as defined in Section 2.4(e) hereof.


 


“Maximum Revolving Amount”
shall mean One Hundred Seventy-Five Million Dollars ($175,000,000).


 


“Moody’s” shall mean
Moody’s Investors Service, Inc., or any successor to such company.


 


“Mortgage” shall mean
each Open-End Mortgage, Assignment of Leases and Rents and Security Agreement
(or comparable document), relating to the Real Property, executed and delivered
by a Credit Party, on or
as of the closing date of the Original Credit Agreement or on or as of the
Closing Date, to further secure the obligations under the Loan
Documents, as the same may from time to time be amended, restated or otherwise
modified.


 


18





















 


“Mortgage Amendment”
shall mean each Open-End Mortgage Modification Agreement, relating to each
Mortgage delivered prior to the Closing Date, executed and delivered by a
Company as of the Closing Date.


 


“Multiemployer Plan”
shall mean a Pension Plan that is subject to the requirements of Subtitle E of
Title IV of ERISA.


 


“Non-Credit
Party” shall mean a Company that is not a Credit Party.


 


“Non-Credit
Party Exposure” shall mean the aggregate amount, after the Closing Date, of
loans by a Credit Party to, investments by a Credit Party in, guaranties by a
Credit Party of Indebtedness of, and Letters of Credit issued to or for the
benefit of, a Foreign Subsidiary that is a Non-Credit Party.


 


“Note” shall mean a
Revolving Credit Note, the Swing Line Note or a Term Note, or any other
promissory note delivered pursuant to this Agreement.


 


“Note Agreement” shall
mean the Security Purchase Agreement, dated as of June 10, 2004, by and among
Borrower and the Buyers, as defined therein, as the same may from time to time
be amended, restated or otherwise modified with the prior written consent of
the Required Lenders.


 


“Notice of Loan” shall
mean a Notice of Loan in the form of the attached Exhibit D.


 


“Obligations” shall mean,
collectively, (a) all Indebtedness and other obligations incurred by Borrower
to Agent, the Fronting Lender, the Swing Line Lender, or any Lender pursuant to
this Agreement and the other Loan Documents, and includes the principal of and
interest on all Loans and all obligations pursuant to Letters of Credit, (b)
each extension, renewal or refinancing of the foregoing, in whole or in part,
(c) the commitment and other fees and any prepayment fees payable hereunder,
(d) all fees and charges in connection with Letters of Credit, and (e) all
Related Expenses.


 


“Original Credit
Agreement” shall mean that term as defined in the second Whereas clause on the first
page of this Agreement.


 


“Organizational Documents”
shall mean, with respect to any Person (other than an individual), such Person’s
Articles (Certificate) of Incorporation, operating agreement or equivalent
formation documents, and Regulations (Bylaws), or equivalent governing
documents, and any amendments to any of the foregoing.


 


“Other Taxes” shall mean
any and all present or future stamp or documentary taxes or any other excise,
ad valorem or property taxes, goods and services taxes, harmonized sales taxes
and other sales taxes, use taxes, value added taxes, charges or similar taxes
or levies arising from any payment made hereunder or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.


 


19





















 


“Overall Commitment
Percentage” shall mean a Lender’s percentage of the Total Commitment Amount
based upon such Lender’s Maximum Amount of the Total Commitment Amount.


 


“Participant” shall mean
that term as defined in Section 11.11 hereof.


 


“Patriot Act” shall mean
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, USA Patriot Act, Title III of
Pub. L. 107-56, signed into law October 26, 2001, as amended from time to time.


 


“PBGC” shall mean the
Pension Benefit Guaranty Corporation, or its successor.


 


“Pension Plan” shall mean
an ERISA Plan that is a “pension plan” (within the meaning of ERISA Section
3(2)).


 


“Permitted Foreign Subsidiary
Loans and Investments” shall mean:


 


(a)           the investments by Borrower or a
Domestic Subsidiary in a Foreign Subsidiary, existing as of the Closing Date
and set forth on Schedule 5.11 hereto;


 


(b)           the loans by Borrower or a Domestic
Subsidiary to a Foreign Subsidiary, in such amounts existing as of the Closing
Date and set forth on Schedule 5.11 hereto;


 


(c)           any investment by a Foreign
Subsidiary in, or loan from a Foreign Subsidiary to, or guaranty from a Foreign
Subsidiary of Indebtedness of, a Company; and


 


(d)           any Non-Credit Party Exposure, not
otherwise permitted under this definition, up to the aggregate amount for all
Foreign Subsidiaries, when combined with all Permitted Investments, not to
exceed Five Million Dollars ($5,000,000) at any time outstanding.


 


“Permitted Investment”
shall mean an investment of a Company in the stock (or other debt or equity
instruments) of a Person (other than a Company), so long as the aggregate
amount of all such investments of all Companies does not exceed, at any time,
an aggregate amount of One Million Dollars ($1,000,000).


 


“Person” shall mean any
individual, sole proprietorship, partnership, joint venture, unincorporated
organization, corporation, limited liability company, unlimited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.


 


“Pledge Agreement” shall
mean each Pledge Agreement and each Amended and Restated Pledge Agreement,
relating to the Pledged Securities, executed and delivered by Borrower and each
Domestic Subsidiary, as applicable, in favor of Agent, for the benefit of the
Lenders, dated as of the Closing Date, and any other Pledge Agreement executed
by any other Domestic 


 


20





















 


Subsidiary on or after the Closing Date, as any of the foregoing may
from time to time be amended, restated or otherwise modified.


 


“Pledged Securities”
shall mean all of the shares of capital stock or other equity interest of a
Subsidiary of Borrower, whether now owned or hereafter acquired or created, and
all proceeds thereof; provided, however, that Pledged Securities shall only
include up to sixty-five percent (65%) of the shares of capital stock or other
equity interest of any first-tier Foreign Subsidiary (Schedule 3 hereto
lists, as of the Closing Date, all of the Pledged Securities).


 


“Prime Rate” shall mean
the interest rate established from time to time by Agent as Agent’s prime rate,
whether or not such rate shall be publicly announced; the Prime Rate may not be
the lowest interest rate charged by Agent for commercial or other extensions of
credit. Each change in the Prime Rate shall be effective immediately from and
after such change.


 


“Proceeds” shall mean (a)
proceeds as defined in the U.C.C., and any other proceeds, and (b) whatever is
received upon the sale, exchange, collection or other disposition of Collateral
or proceeds, whether cash or non-cash. 
Cash proceeds includes, without limitation, moneys, checks and Deposit
Accounts.  Proceeds includes, without
limitation, any Account arising when the right to payment is earned under a
contract right, any insurance payable by reason of loss or damage to the
Collateral, and any return or unearned premium upon any cancellation of
insurance.  Except as expressly
authorized in this Agreement, the right of Agent and the Lenders to Proceeds
specifically set forth herein or indicated in any financing statement shall
never constitute an express or implied authorization on the part of Agent or
any Lender to a Company’s sale, exchange, collection or other disposition of
any or all of the Collateral.


 


“Project Dundee
Acquisition” shall mean the Acquisition of nMatrix Inc. and nMatrix Australia
Pty, Ltd.


 


“Real Property” shall
mean each parcel of the real estate owned by a Credit Party as set forth on Schedule
4 hereto, together with all improvements and buildings thereon and all
appurtenances, easements or other rights thereto belonging, and being defined
collectively as the “Property” in each of the Mortgages.


 


“Register” shall mean
that term as described in Section 11.10(i) hereof.


 


“Regularly Scheduled
Payment Date” shall mean the last day of each March, June, September and
December of each year.


 


“Related Expenses” shall
mean any and all reasonable out-of-pocket costs, liabilities and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
attorneys’ fees, legal expenses, judgments, suits and disbursements)
(a) incurred by Agent, or imposed upon or asserted against Agent or any
Lender in any attempt by Agent and the Lenders to (i) obtain, preserve,
perfect or enforce any Loan Document or any security interest evidenced by any
Loan Document; (ii) obtain payment, performance or observance of any and
all of the Obligations; or (iii) maintain, insure, audit, collect,
preserve, repossess or dispose of any of the collateral securing the
Obligations or any part thereof, including, without limitation, costs and 


 


21





















 


expenses for appraisals, assessments and audits of any Company or any
such collateral; or (b) incidental or related to (a) above,
including, without limitation, interest thereupon from the date incurred,
imposed or asserted until paid at the Default Rate.


 


“Related Writing” shall
mean each Loan Document and any other assignment, mortgage, security agreement,
guaranty agreement, subordination agreement, financial statement, audit report
or other writing furnished by any Credit Party, or any of its officers, to
Agent or the Lenders pursuant to or otherwise in connection with this
Agreement.


 


“Reportable Event” shall
mean a reportable event as that term is defined in Title IV of ERISA, except
actions of general applicability by the Secretary of Labor under Section 110 of
such Act.


 


“Request for Extension”
shall mean a notice, substantially in the form of the attached Exhibit G.


 


“Required Lenders” shall
mean the holders of at least fifty-one percent (51%) of the sum of (a) the
principal outstanding under the Term Notes, and (b) (i) during the Commitment
Period, the Revolving Amount, or (ii) after the Commitment Period, the
aggregate amount of the Revolving Credit Exposure (other than the Swing Line
Exposure) and the Letter of Credit Exposure and the Swing Line Exposure;
provided, however, that, if there shall be two or more Lenders, Required
Lenders shall constitute at least two Lenders.


 


“Requirement of Law”
shall mean, as to any Person, any law, treaty, rule or regulation or
determination or policy statement or interpretation of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property.


 


“Reserve Percentage”
shall mean for any day that percentage (expressed as a decimal) that is in
effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, all basic, supplemental, marginal
and other reserves and taking into account any transitional adjustments or
other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities.  The Eurodollar Rate shall
be adjusted automatically on and as of the effective date of any change in the
Reserve Percentage.


 


“Restricted Payment”
shall mean, with respect to any Company, (a) any amount paid in redemption
(including any mandatory redemption or optional redemption), retirement,
repurchase, direct or indirect, of the Convertible Subordinated Notes or any
other Subordinated Indebtedness; or (b) the exercise by such Company of any
right of defeasance or covenant defeasance or similar right with respect to the
Convertible Subordinated Notes or any other Subordinated Indebtedness.


 


22





















 


“Revolving Amount” shall
mean the Closing Revolving Amount, as such amount may be increased up to the
Maximum Revolving Amount pursuant to Section 2.10(b) hereof, or decreased
pursuant to Section 2.10(a) hereof.


 


“Revolving Credit
Availability” shall mean, at any time, the amount equal to the Revolving Credit
Commitment minus the Revolving Credit Exposure.


 


“Revolving Credit
Commitment” shall mean the obligation hereunder, during the Commitment Period,
of (a) each Revolving Lender to make Revolving Loans, (b) the Fronting Lender
to issue and each Revolving Lender to participate in, Letters of Credit
pursuant to the Letter of Credit Commitment, and (c) the Swing Line Lender to
make, and each Revolving Lender to participate in, Swing Loans pursuant to the
Swing Line Commitment; up to an aggregate principal amount outstanding at any
time equal to the Revolving Amount.


 


“Revolving Credit
Exposure” shall mean, at any time, the sum of (a) the aggregate principal
amount of all Revolving Loans outstanding, (b) the Swing Line Exposure, and (c)
the Letter of Credit Exposure.


 


“Revolving Credit Note”
shall mean a Revolving Credit Note executed and delivered pursuant to Section
2.5(a) hereof.


 


“Revolving Lender” shall
mean a Lender with a percentage of the Revolving Credit Commitment as set forth
on Schedule 1 hereto.


 


“Revolving Loan” shall
mean a Loan granted to Borrower by the Revolving Lenders in accordance with
Section 2.2(a) hereof.


 


“SEC” shall mean the United
States Securities and Exchange Commission, or any governmental body or agency
succeeding to any of its principal functions.


 


“Secured Obligations”
shall mean, collectively, (a) the Obligations, and (b) all obligations and
liabilities of the Companies owing to Lenders under Hedge Agreements.


 


“Security Agreement”
shall mean each Security Agreement, executed and delivered by a Guarantor of
Payment in favor of Agent, for the benefit of the Lenders, dated as of the
Closing Date, and any other Security Agreement executed on or after the Closing
Date, as the same may from time to time be amended, restated or otherwise
modified.


 


“Security Documents”
shall mean each Security Agreement, each Pledge Agreement, each Intellectual
Property Collateral Assignment Agreement, each Mortgage, each Mortgage
Amendment, each Control Agreement, each Confirmation of Security Documents,
each U.C.C. Financing Statement or similar filing as to a jurisdiction located
outside of the United States of America filed in connection herewith or
perfecting any interest created in any of the foregoing documents, and any
other document pursuant to which any Lien is granted by a Company to Agent, for
the benefit of the Lenders, as security for the Secured Obligations, or any
part thereof, 


 


23





















 


as any of the foregoing may from time to time be amended, restated or
otherwise modified or replaced.


 


“Senior Leverage Ratio”
shall mean, at any time, as determined on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Consolidated Senior Funded Indebtedness
(for the most recently completed fiscal quarter of Borrower) to (b)
Consolidated EBITDA (for the most recently completed four fiscal quarters of
Borrower).


 


“Specific Commitment”
shall mean the Revolving Credit Commitment or the Term Loan Commitment.


 


“Standard & Poor’s”
shall mean Standard & Poor’s Ratings Group, a division of McGraw-Hill,
Inc., or any successor to such company.


 


“Subordinated” shall
mean, as applied to Indebtedness, Indebtedness that shall have been
subordinated (by written terms or written agreement being, in either case, in
form and substance reasonably satisfactory to Agent and the Required Lenders)
in favor of the prior payment in full of the Obligations (other than contingent
indemnity obligations).


 


“Subsidiary” of a Company
shall mean (a) a corporation more than fifty percent (50%) of the Voting Power
of which is owned, directly or indirectly, by such Company or by one or more
other subsidiaries of such Company or by such Company and one or more
subsidiaries of such Company, (b) a partnership, limited liability company or
unlimited liability company of which such Company, one or more other
subsidiaries of such Company or such Company and one or more subsidiaries of
such Company, directly or indirectly, is a general partner or managing member,
as the case may be, or otherwise has an ownership interest greater than fifty
percent (50%) of all of the ownership interests in such partnership, limited
liability company or unlimited liability company, or (c) any other Person
(other than a corporation, partnership, limited liability company or unlimited
liability company) in which such Company, one or more other subsidiaries of
such Company or such Company and one or more subsidiaries of such Company,
directly or indirectly, has at least a majority interest in the Voting Power or
the power to elect or direct the election of a majority of directors or other
governing body of such Person.


 


“Swing Line Commitment”
shall mean the commitment of the Swing Line Lender to make Swing Loans to
Borrower up to the aggregate amount at any time outstanding of Five Million
Dollars ($5,000,000).


 


“Swing Line Exposure”
shall mean, at any time, the aggregate principal amount of all Swing Loans
outstanding.


 


“Swing Line Lender” shall
mean KeyBank National Association, as holder of the Swing Line Commitment.


 


“Swing Line Note” shall
mean the Swing Line Note executed and delivered pursuant to Section 2.5(b)
hereof.


 


24





















 


“Swing Loan” shall mean a
loan that shall be denominated in Dollars granted to Borrower by the Swing Line
Lender under the Swing Line Commitment, in accordance with Section 2.2(c) hereof.


 


“Swing Loan Maturity Date”
shall mean, with respect to any Swing Loan, the earlier of (a) thirty (30) days
after the date such Swing Loan is made, or (b) the last day of the Commitment
Period.


 


“Taxes” shall mean any
and all present or future taxes of any kind, including but not limited to,
levies, imposts, duties, surtaxes, charges, fees, deductions or withholdings
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority (together with any interest, penalties, fines, additions
to taxes or similar liabilities with respect thereto) other than Excluded
Taxes.


 


“Term Lender” shall mean
a Lender with a percentage of the Term Loan Commitment as set forth on Schedule
1 hereto.


 


“Term Loan” shall mean
the Loan granted to Borrower by the Term Lenders in accordance with Section 2.3
hereof.


 


“Term Loan Commitment”
shall mean the obligation hereunder of the Term Lenders to make a Term Loan in
the original principal amount of Twenty-Five Million Dollars ($25,000,000),
with each Term Lender’s obligation to participate therein being in the amount
set forth opposite such Term Lender’s name under the column headed “Term Loan
Commitment Amount” as set forth on Schedule 1 hereto.


 


“Term Loan Exposure”
shall mean, at any time, the outstanding principal amount of the Term Loan.


 


“Term Note” shall mean a
Term Note executed and delivered pursuant to Section 2.5(c) hereof.


 


“Total Commitment Amount”
shall mean the Closing Commitment Amount, as such amount may be increased up to
the Maximum Commitment Amount pursuant to Section 2.10(b) hereof, or decreased
pursuant to Section 2.10(a) hereof.


 


“U.C.C.” shall mean the
Uniform Commercial Code, as in effect from time to time in Ohio.


 


“U.C.C. Financing
Statement” shall mean a financing statement filed or to be filed in accordance
with the Uniform Commercial Code, as in effect from time to time, in the
relevant state or states.


 


“Unexercised Availability”
shall mean the aggregate amount of all written commitments received by Borrower
from financial institutions to provide Additional Commitments pursuant to
Section 2.10(b) hereof, but only so long as (a) such commitments have not yet
been accepted by 


 


25





















 


Borrower, (b) such commitments are in form and substance reasonably
satisfactory to Agent, and (c) the aggregate amount of all such commitments does
not exceed the increase amount available to Borrower pursuant to Section
2.10(b) hereof.


 


“Voting Power” shall
mean, with respect to any Person, the exclusive ability to control, through the
ownership of shares of capital stock, partnership interests, membership
interests or otherwise, the election of members of the board of directors or
other similar governing body of such Person. 
The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.


 


“Welfare Plan” shall mean
an ERISA Plan that is a “welfare plan” within the meaning of ERISA Section
3(l).


 


Section 1.2.  Accounting
Terms.  Any accounting term not
specifically defined in this Article I shall have the meaning ascribed thereto
by GAAP.  In the event that any “Accounting
Change” (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then Borrower, Agent and the Required Lenders agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Borrower’s financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall
have been executed and delivered by Borrower, Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue
to be calculated and construed as if such Accounting Changes had not
occurred.  “Accounting Changes” refers to
changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC (or successors thereto or agencies with similar functions).


 


Section 1.3.  Terms
Generally.  The foregoing definitions
shall be applicable to the singular and plurals of the foregoing defined terms.
 Unless otherwise defined in this Article
I, terms that are defined in the U.C.C. are used herein as so defined.


 


ARTICLE II.  AMOUNT AND TERMS OF CREDIT


 


Section 2.1.  Amount
and Nature of Credit.


 


(a)           Subject to the terms and conditions
of this Agreement, the Lenders, during the Commitment Period and to the extent
hereinafter provided, shall make Loans to Borrower, participate in Swing Loans
made by the Swing Line Lender to Borrower, and issue or participate in Letters
of Credit at the request of Borrower, in such aggregate amount as Borrower
shall request pursuant to the Commitment; provided, however, that in no event
shall the aggregate 


 


26





















 


principal amount of all Loans and Letters of Credit outstanding under
this Agreement be in excess of the Total Commitment Amount.


 


(b)           Each Lender, for itself and not one
for any other, agrees to make Loans, participate in Swing Loans, and issue or
participate in Letters of Credit, during the Commitment Period, on such basis
that, immediately after the completion of any borrowing by Borrower or the
issuance of a Letter of Credit:


 


(i)            the aggregate outstanding principal
amount of Loans made by such Lender (other than Swing Loans made by the Swing
Line Lender), when combined with such Lender’s pro rata share, if any, of the
Letter of Credit Exposure and the Swing Line Exposure, shall not be in excess
of the Maximum Amount for such Lender; and


 


(ii)           with respect to each Specific
Commitment, the aggregate outstanding principal amount of Loans (other than
Swing Loans) made by such Lender with respect to such Specific Commitment shall
represent that percentage of the aggregate principal amount then outstanding on
all Loans (other than Swing Loans) within such Specific Commitment that shall
be such Lender’s Applicable Commitment Percentage.


 


Within each Specific
Commitment, each borrowing (other than Swing Loans which shall be risk
participated on a pro rata basis) from the Lenders shall be made pro rata
according to the respective Applicable Commitment Percentages of the Lenders.


 


(c)           The Loans may be made as Revolving
Loans as described in Section 2.2(a) hereof as a Term Loan as described in
Section 2.3 hereof, and as Swing Loans as described in Section 2.2(c) hereof,
and Letters of Credit may be issued in accordance with Section 2.2(b) hereof.


 


Section 2.2.  Revolving
Credit.


 


(a)           Revolving Loans.  Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Revolving Lenders shall make a
Revolving Loan or Revolving Loans to Borrower in such amount or amounts as
Borrower may from time to time request, but not exceeding in aggregate
principal amount at any time outstanding hereunder the Revolving Credit
Commitment, when such Revolving Loans are combined with the Letter of Credit
Exposure and the Swing Line Exposure. 
Borrower shall have the option, subject to the terms and conditions set
forth herein, to borrow Revolving Loans, maturing on the last day of the Commitment
Period, by means of any combination of Base Rate Loans or Eurodollar
Loans.  Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.2(a) to borrow
funds, repay the same in whole or in part and re-borrow hereunder at any time
and from time to time during the Commitment Period.


 


(b)           Letters of Credit.


 


(i)            Generally.  Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Fronting Lender shall, in its own
name, on behalf of the Revolving Lenders, issue such Letters of Credit for the
account of a Credit Party, as 


 


27





















 


Borrower may from time to time request.  Borrower shall not request any Letter of
Credit (and the Fronting Lender shall not be obligated to issue any Letter of Credit)
if, after giving effect thereto, (A) the Letter of Credit Exposure would exceed
the Letter of Credit Commitment or (B) the Revolving Credit Exposure would
exceed the Revolving Credit Commitment. 
The issuance of each Letter of Credit shall confer upon each Revolving
Lender the benefits and liabilities of a participation consisting of an
undivided pro rata interest in the Letter of Credit to the extent of such
Revolving Lender’s Applicable Commitment Percentage.


 


(ii)           Request for Letter of Credit.  Each request for a Letter of Credit shall be
delivered to Agent (and to the Fronting Lender, if the Fronting Lender is a
Lender other than Agent) by an Authorized Officer not later than 11:00 A.M.
(Eastern time) three Business Days prior to the day upon which the Letter of
Credit is to be issued.  Each such
request shall be in a form reasonably acceptable to Agent (and to the Fronting
Lender, if the Fronting Lender is a Lender other than Agent) and shall specify
the face amount thereof, the account party, the beneficiary, the intended date
of issuance, the expiry date thereof, and the nature of the transaction to be
supported thereby.  Concurrently with
each such request, Borrower, and any Credit Party for whose account the Letter
of Credit is to be issued, shall execute and deliver to the Fronting Lender an
appropriate application and agreement, being in the standard form of the
Fronting Lender for such letters of credit, as amended to conform to the
provisions of this Agreement if required by Agent.  Agent shall give the Fronting Lender and each
Revolving Lender notice of each such request for a Letter of Credit.


 


(iii)          Letter of Credit Fees.  With respect to each Letter of Credit and the
drafts thereunder, whether issued for the account of Borrower or any other
Credit Party, Borrower agrees to (A) pay to Agent, for the pro rata benefit of
the Revolving Lenders, a non-refundable commission based upon the face amount
of such Letter of Credit, which shall be paid quarterly in arrears, on each
Regularly Scheduled Payment Date, at the rate per annum of the Applicable
Margin for Eurodollar Loans (in effect on the date such payment is to be made)
multiplied by the face amount of such Letter of Credit; (B) pay to Agent for
the sole benefit of the Fronting Lender, an additional Letter of Credit fee,
which shall be paid on each date that such Letter of Credit shall be issued,
amended or renewed, at the rate of one-eighth percent (1/8%) of the face amount
of such Letter of Credit; and (C) pay to Agent, for the sole benefit of the
Fronting Lender, such other issuance, amendment, negotiation, draw, acceptance,
telex, courier, postage and similar transactional fees as are generally charged
by the Fronting Lender under its fee schedule as in effect from time to time.


 


(iv)          Refunding of Letters of Credit with
Revolving Loans.  Whenever a Letter
of Credit shall be drawn, Borrower shall promptly reimburse the Fronting Lender
for the amount drawn.  In the event that
the amount drawn shall not have been reimbursed by Borrower on the date of the
drawing of such Letter of Credit, at the sole option of Agent (and the Fronting
Lender, if the Fronting Lender is a Lender other than Agent), Borrower shall be
deemed to have requested a Revolving Loan, subject to the provisions of
Sections 2.2(a) and 2.6 hereof (other than the requirement set forth in

Section 2.6(d)


 


28





















 


hereof), in the amount drawn.  Such Revolving Loan shall be evidenced by the
Revolving Credit Notes (or, if a Revolving Lender has not requested a Revolving
Credit Note, by the records of Agent and such Revolving Lender).  Each Revolving Lender agrees to make a
Revolving Loan on the date of such notice, subject to no conditions precedent
whatsoever.  Each Revolving Lender
acknowledges and agrees that its obligation to make a Revolving Loan pursuant
to Section 2.2(a) hereof when required by this Section 2.2(b)(iv) shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or Event of Default, and that its payment to Agent, for the account of
the Fronting Lender, of the proceeds of such Revolving Loan shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not the Revolving Credit Commitment shall
have been reduced or terminated. 
Borrower irrevocably authorizes and instructs Agent to apply the
proceeds of any borrowing pursuant to this Section 2.2(b)(iv) to reimburse, in
full (other than the Fronting Lender’s pro rata share of such borrowing), the
Fronting Lender for the amount drawn on such Letter of Credit.  Each such Revolving Loan shall be deemed to
be a Base Rate Loan unless otherwise requested by and available to Borrower
hereunder.  Each Revolving Lender is
hereby authorized to record on its records relating to its Revolving Credit
Note (or, if such Revolving Lender has not requested a Revolving Credit Note,
its records relating to Revolving Loans) such Revolving Lender’s pro rata share
of the amounts paid and not reimbursed on the Letters of Credit.


 


(v)           Participation in Letters of Credit.  If, for any reason, Agent (and the Fronting
Lender if the Fronting Lender is a Lender other than Agent) shall be unable to
or, in the opinion of Agent, it shall be impracticable to, convert any Letter
of Credit to a Revolving Loan pursuant to the preceding subsection, Agent (and
the Fronting Lender if the Fronting Lender is a Lender other than Agent) shall
have the right to request that each Revolving Lender purchase a participation
in the amount due with respect to such Letter of Credit, and Agent shall
promptly notify each Revolving Lender thereof (by facsimile or telephone,
confirmed in writing).  Upon such notice,
but without further action, the Fronting Lender hereby agrees to grant to each
Revolving Lender, and each Revolving Lender hereby agrees to acquire from the
Fronting Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Revolving Lender’s
Applicable Commitment Percentage of the principal amount due with respect to
such Letter of Credit.  In consideration
and in furtherance of the foregoing, each Revolving Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the account of the Fronting Lender, such Revolving Lender’s ratable
share of the amount due with respect to such Letter of Credit (determined in
accordance with such Revolving Lender’s Applicable Commitment Percentage).  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in the amount due under any
Letter of Credit that is drawn but not reimbursed by Borrower pursuant to this
subsection (v) shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not the Revolving 


 


29





















 


Credit Commitment shall have been reduced or
terminated.  Each Revolving Lender shall
comply with its obligation under this subsection (v) by wire transfer of
immediately available funds, in the same manner as provided in Section 2.6
hereof with respect to Revolving Loans. 
Each Revolving Lender is hereby authorized to record on its records such
Revolving Lender’s pro rata share of the amounts paid and not reimbursed on the
Letters of Credit.


 


(c)           Swing Loans.


 


(i)            Generally.  Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Swing Line Lender shall make a
Swing Loan or Swing Loans to Borrower in such amount or amounts as Borrower,
through an Authorized Officer, may from time to time request; provided that
Borrower shall not request any Swing Loan if, after giving effect thereto, (A)
the Revolving Credit Exposure would exceed the Revolving Credit Commitment, or
(B) the Swing Line Exposure would exceed the Swing Line Commitment.  Each Swing Loan shall be due and payable on
the Swing Loan Maturity Date applicable thereto.


 


(ii)           Refunding of Swing Loans.  If the Swing Line Lender so elects, by giving
notice to Borrower and the Revolving Lenders, Borrower agrees that the Swing
Line Lender shall have the right, in its sole discretion, to require that any
Swing Loan be refinanced as a Revolving Loan. 
Such Revolving Loan shall be a Base Rate Loan unless otherwise requested
by and available to Borrower hereunder. 
Upon receipt of such notice by Borrower and the Revolving Lenders,
Borrower shall be deemed, on such day, to have requested a Revolving Loan in
the principal amount of the Swing Loan in accordance with Sections 2.2(a) and
2.6 hereof (other than the requirement set forth in Section 2.6(d)
hereof).  Such Revolving Loan shall be
evidenced by the Revolving Credit Notes (or, if a Revolving Lender has not
requested a Revolving Credit Note, by the records of Agent and such Revolving
Lender).  Each Revolving Lender agrees to
make a Revolving Loan on the date of such notice, subject to no conditions
precedent whatsoever.  Each Revolving
Lender acknowledges and agrees that such Revolving Lender’s obligation to make
a Revolving Loan pursuant to Section 2.2(a) when required by this Section
2.2(c)(ii) is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that its payment to Agent,
for the account of the Swing Line Lender, of the proceeds of such Revolving
Loan shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not the Revolving Credit
Commitment shall have been reduced or terminated.  Borrower irrevocably authorizes and instructs
Agent to apply the proceeds of any borrowing pursuant to this Section
2.2(c)(ii) to repay in full such Swing Loan.  Each
Revolving Lender is hereby authorized to record on its records relating to its
Revolving Credit Note (or, if such Revolving Lender has not requested a
Revolving Credit Note, its records relating to Revolving Loans) such Revolving
Lender’s pro rata share of the amounts paid to refund such Swing Loan.


 


30





















 


(iii)          Participation in Swing Loans.  If, for any reason, Agent is unable to or, in
the opinion of Agent, it is impracticable to, convert any Swing Loan to a
Revolving Loan pursuant to the preceding Section 2.2(c)(ii), then on any day
that a Swing Loan is outstanding (whether before or after the maturity
thereof), Agent shall have the right to request that each Revolving Lender
purchase a participation in such Swing Loan, and Agent shall promptly notify
each Revolving Lender thereof (by facsimile or telephone, confirmed in
writing).  Upon such notice, but without
further action, the Swing Line Lender hereby agrees to grant to each Revolving
Lender, and each Revolving Lender hereby agrees to acquire from the Swing Line
Lender, an undivided participation interest in such Swing Loan in an amount
equal to such Revolving Lender’s Applicable Commitment Percentage of the
principal amount of such Swing Loan.  In
consideration and in furtherance of the foregoing, each Revolving Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided
above, to pay to Agent, for the benefit of the Swing Line Lender, such
Revolving Lender’s ratable share of such Swing Loan (determined in accordance
with such Revolving Lender’s Applicable Commitment Percentage).  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swing Loans pursuant to this
Section 2.2(c)(iii) is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not the Revolving Credit
Commitment shall have been reduced or terminated.  Each Revolving Lender shall comply with its
obligation under this Section 2.2(c)(iii) by wire transfer of immediately
available funds, in the same manner as provided in Section 2.6 hereof with
respect to Revolving Loans to be made by such Revolving Lender.


 


Section 2.3.  Term
Loan.


 


Subject to the terms and
conditions of this Agreement, the Term Lenders shall make the Term Loan to
Borrower on the Closing Date, in the amount of the Term Loan Commitment.  The Term Loan shall be payable in full on
August 15, 2006.  Borrower shall notify
Agent, in accordance with the notice provisions of Section 2.6 hereof, whether
the Term Loan will be a Base Rate Loan or Eurodollar Loans.  The Term Loan may be a mixture of a Base Rate
Loan and Eurodollar Loans.


 


Section 2.4.  Interest.


 


(a)           Revolving Loans.


 


(i)            Base Rate Loan.  Borrower shall pay interest on the unpaid
principal amount of a Base Rate Loan outstanding from time to time from the
date thereof until paid at the Derived Base Rate from time to time in
effect.  Interest on such Base Rate Loan
shall be payable, commencing December 31, 2005 and on each Regularly Scheduled
Payment Date thereafter and at the maturity thereof.


 


31





















 


(ii)           Eurodollar Loans.  Borrower shall pay interest on the unpaid
principal amount of each Eurodollar Loan outstanding from time to time, fixed
in advance on the first day of the Interest Period applicable thereto through
the last day of the Interest Period applicable thereto (but subject to changes
in the Applicable Margin for Eurodollar Loans), at the Derived Eurodollar Rate.  Interest on such Eurodollar Loan shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period shall exceed three months, the interest
must be paid every three months, commencing three months from the beginning of
such Interest Period).


 


(b)           Swing Loans.  Borrower shall pay interest to Agent, for the
sole benefit of the Swing Line Lender (and any Revolving Lender that shall have
purchased a participation in such Swing Loan), on the unpaid principal amount of
each Swing Loan outstanding from time to time from the date thereof until paid
at the Derived Base Rate from time to time in effect.  Interest on each Swing Loan shall be payable
on the Swing Loan Maturity Date applicable thereto. Each Swing Loan shall bear
interest for a minimum of one day.


 


(c)           Term Loan.


 


(i)            Base Rate Loan.  With respect to any portion of the Term Loan
that shall be a Base Rate Loan, Borrower shall pay interest on the unpaid
principal amount thereof outstanding from time to time from the date thereof
until paid, commencing December 31, 2005, and continuing on each Regularly
Scheduled Payment Date thereafter and at the maturity thereof, at the Derived
Base Rate from time to time in effect.


 


(ii)           Eurodollar Loans.  With respect to any portion of the Term Loan
that shall be a Eurodollar Loan, Borrower shall pay interest on the unpaid
principal amount of such Eurodollar Loan outstanding from time to time, fixed
in advance on the first day of the Interest Period applicable thereto through the
last day of the Interest Period applicable thereto (but subject to changes in
the Applicable Margin for Eurodollar Loans and subject to the additional
increase pursuant to subpart (B) below), at (A) for the period from the Closing
Date through June 30, 2006, the Derived Eurodollar Rate, and (B) on July 1,
2006 and thereafter, the Derived Eurodollar Rate plus two hundred (200) basis
points.  Interest on such Eurodollar Loan
shall be payable on each Interest Adjustment Date with respect to an Interest
Period (provided that if an Interest Period shall exceed three months, the
interest must be paid every three months, commencing three months from the
beginning of such Interest Period).


 


(d)           Default Rate.  Anything herein to the contrary
notwithstanding, if an Event of Default pursuant to Section 8.1 or 8.11 hereof
shall occur and be continuing, upon the election of the Required Lenders with
respect to an Event of Default pursuant to Section 8.1 hereof and automatically
with respect to an Event of Default pursuant to Section 8.11 hereof, (i) the
principal of each Loan and the unpaid interest thereon shall bear interest,
until paid, at the Default Rate, (ii) the fee for the aggregate undrawn amount
of all issued and outstanding Letters of Credit shall be increased by two
percent (2%) in excess of the rate otherwise applicable thereto, and (iii) in
the case of any other amount due from Borrower hereunder or under any other
Loan Document, such amount shall bear interest at the Default Rate.


 


32





















 


(e)           Limitation on Interest.  In no event shall the rate of interest
hereunder exceed the maximum rate allowable by law.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under
the Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable law (the “Maximum Rate”).  If Agent or any Lender shall receive interest
in an amount that exceeds the Maximum Rate, the excess interest shall be
applied to the principal of the Loans or, if it exceeds such unpaid principal,
refunded to Borrower.  In determining
whether the interest contracted for, charged, or received by Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable law, (i) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.


 


Section 2.5.  Evidence
of Indebtedness.


 


(a)           Revolving Loans.  Upon the request of a Lender, to evidence the
obligation of Borrower to repay the Revolving Loans made by each Revolving
Lender and to pay interest thereon, Borrower shall execute a Revolving Credit
Note in the form of the attached Exhibit A, payable to the order of such
Revolving Lender in the principal amount of its Applicable Commitment
Percentage of the Revolving Credit Commitment, or, if less, the aggregate
unpaid principal amount of Revolving Loans made by such Revolving Lender;
provided, however, that the failure of a Lender to request a Revolving Credit
Note shall in no way detract from Borrower’s obligations to such Lender
hereunder.


 


(b)           Swing Loan.  Upon the request of the Swing Line Lender, to
evidence the obligation of Borrower to repay the Swing Loans and to pay
interest thereon, Borrower shall execute a Swing Line Note in the form of the attached
Exhibit B, and payable to the order of the Swing Line Lender in the
principal amount of the Swing Line Commitment, or, if less, the aggregate
unpaid principal amount of Swing Loans made by the Swing Line Lender; provided,
however, that the failure of the Swing Line Lender to request a Swing Line Note
shall in no way detract from Borrower’s obligations to the Swing Line Lender
hereunder.


 


(c)           Term Loan.  Upon the request of a Lender, to evidence the
obligation of Borrower to repay the portion of the Term Loan made by each Term
Lender and to pay interest thereon, Borrower shall execute a Term Note in the
form of the attached Exhibit C, payable to the order of such Term Lender
in the principal amount of its Commitment Percentage of the Term Loan Commitment;
provided, however, that failure of a Lender to request a Term Note shall in no
way detract from Borrower’s obligations to such Lender hereunder.


 


33





















 


Section 2.6.  Notice
of Credit Event; Funding of Loans.


 


(a)           Notice of Credit Event.  Borrower, through an Authorized Officer,
shall provide to Agent a Notice of Loan prior to (i) 12:00 noon (Eastern time)
on the proposed date of borrowing or conversion of any Base Rate Loan, (ii)
12:00 noon (Eastern time) three Business Days prior to the proposed date of
borrowing, conversion or continuation of any Eurodollar Loan, and (iii) 3:00
P.M. (Eastern time) on the proposed date of borrowing of any Swing Loan.  Borrower shall comply with the notice
provisions set forth in Section 2.2(b) hereof with respect to Letters of
Credit.


 


(b)           Funding of Loans.  Agent shall notify each Revolving Lender of
the date, amount and Interest Period (if applicable) promptly upon the receipt
of a Notice of Loan (other than for a Swing Loan, or a Revolving Loan to be
funded as a Swing Loan), and, in any event, by 2:00 P.M. (Eastern time) on the
date such notice is received.  On the
date that the Credit Event set forth in such notice is to occur, each such
Lender shall provide to Agent, not later than 3:00 P.M. (Eastern time), the
amount in Dollars, in federal or other immediately available funds, required of
it.  If Agent shall elect to advance the
proceeds of such Loan prior to receiving funds from such Revolving Lender,
Agent shall have the right, upon prior notice to Borrower, to debit any account
of Borrower or otherwise receive such amount from Borrower, promptly after
demand, in the event that such Revolving Lender shall fail to reimburse Agent
in accordance with this subsection.  Agent
shall also have the right to receive interest from such Revolving Lender at the
Federal Funds Effective Rate in the event that such Revolving Lender shall fail
to provide its portion of the Loan on the date requested and Agent shall elect
to provide such funds.


 


(c)           Conversion of Loans.  At the request of Borrower to Agent, subject
to the notice and other provisions of this Section 2.6, the appropriate Lenders
shall convert a Base Rate Loan to one or more Eurodollar Loans at any time and
shall convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment
Date applicable thereto.  Swing Loans may
be converted by the Swing Line Lender to Revolving Loans in accordance with
Section 2.2(c)(ii) hereof.


 


(d)           Minimum Amount.  Each request for:


 


(i)            a Base Rate Loan shall be in an
amount of not less than One Million Dollars ($1,000,000), increased by
increments of One Million Dollars ($1,000,000);


 


(ii)           a Eurodollar Loan shall be in an
amount of not less than One Million Dollars ($1,000,000), increased by
increments of One Million Dollars ($1,000,000); and


 


(iii)          a Swing Loan shall be in an amount of
not less than One Hundred Thousand Dollars ($100,000).


 


(e)           Interest Periods.  Borrower shall not request that Eurodollar
Loans be outstanding for more than six different Interest Periods at the same
time.


 


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Section 2.7.  Payment
on Loans and Other Obligations.


 


(a)           Payments Generally.  Each payment made hereunder by Borrower shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever.


 


(b)           Payments from Borrower.  All payments (including prepayments) to Agent
of the principal of or interest on each Loan or other payment, including but
not limited to principal, interest, fees or any other amount owed by Borrower
under this Agreement, shall be made in Dollars. 
All payments described in this subsection (b) shall be remitted to
Agent, at the address of Agent for notices referred to in Section 11.4 hereof
for the account of the Revolving Lenders (or the Fronting Lender or the Swing
Line Lender, as appropriate) not later than 1:00 P.M. (Eastern time) on the due
date thereof in immediately available funds. 
Any such payments received by Agent after 1:00 P.M. (Eastern time) shall
be deemed to have been made and received on the next Business Day.


 


(c)           Payments to Lenders.  Upon Agent’s receipt of payments hereunder,
Agent shall immediately distribute to the appropriate Lenders (except with
respect to Swing Loans, which shall be paid to the Swing Line Lender or, with
respect to Letters of Credit, certain of which payments shall be paid to the
Fronting Lender) their respective ratable shares, if any, of the amount of
principal, interest, and commitment and other fees received by Agent for the
account of such Lender.  Payments
received by Agent shall be delivered to the Lenders in Dollars in immediately
available funds.  Each appropriate Lender
shall record any principal, interest or other payment, the principal amounts of
Base Rate Loans, Eurodollar Loans, Swing Loans and Letters of Credit, all
prepayments and the applicable dates, including Interest Periods, with respect
to the Loans made, and payments received by such Lender, by such method as such
Lender may generally employ; provided, however, that failure to make any such
entry shall in no way detract from the obligations of Borrower under this
Agreement or any Note.  The aggregate
unpaid amount of Loans, types of Loans, Interest Periods and similar
information with respect to the Loans and Letters of Credit set forth on the
records of Agent shall be rebuttably presumptive evidence with respect to such
information, including the amounts of principal, interest and fees owing to
each Lender.


 


(d)           Timing of Payments.  Whenever any payment to be made hereunder,
including, without limitation, any payment to be made on any Loan, shall be
stated to be due on a day that is not a Business Day, such payment shall be
made on the next Business Day and such extension of time shall in each case be
included in the computation of the interest payable on such Loan; provided,
however, that, with respect to a Eurodollar Loan, if the next Business Day
shall fall in the succeeding calendar month, such payment shall be made on the
preceding Business Day and the relevant Interest Period shall be adjusted
accordingly.


 


Section 2.8.  Prepayment.


 


(a)           Right to Prepay.  Borrower shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the appropriate
Lenders (except with respect to Swing Loans, which shall be paid to the Swing
Line Lender), all or any part of the principal amount of the Loans as
designated by Borrower.  Such payment
shall include interest accrued on the 


 


35





















 


amount so prepaid to the date of such prepayment and any amount payable
under Article III hereof with respect to the amount being prepaid. Prepayments
of Base Rate Loans shall be without any premium or penalty, other than any
prepayment fees, penalties or other charges that may be contained in any Hedge
Agreement.  Each prepayment of the Term
Loan shall be applied to the principal installments thereof on a pro rata basis
among the remaining principal installments.


 


(b)           Notice of Prepayment.  Borrower shall give Agent notice of
prepayment of a Base Rate Loan or Swing Loan by no later than 11:00 A.M.
(Eastern time) on the Business Day such prepayment is to be made and written
notice of the prepayment of any Eurodollar Loan not later than 1:00 P.M. (Eastern
time) three Business Days before the Business Day on which such prepayment is
to be made.


 


(c)           Minimum Amount.  Each prepayment of a Eurodollar Loan shall be
in the principal amount of not less than Five Hundred Thousand Dollars
($500,000), increased by increments of Two Hundred Fifty Thousand Dollars
($250,000), or, with respect to a Swing Loan, the principal balance of such
Swing Loan, except in the case of a mandatory payment pursuant to Section 2.12
or Article III hereof.


 


Section 2.9.  Commitment
and Other Fees.


 


(a)           Commitment Fee.  Borrower shall pay to Agent, for the ratable
account of the Revolving Lenders, as a consideration for the Revolving Credit
Commitment, a commitment fee from the Closing Date to and including the last
day of the Commitment Period, payable quarterly, at a rate per annum equal to
(i) the Applicable Commitment Fee Rate in effect on the payment date,
multiplied by (ii) (A) the average daily Revolving Amount in effect during such
quarter, minus (B) the average daily Revolving Credit Exposure (exclusive of
the Swing Line Exposure) during such quarter. 
The commitment fee shall be payable in arrears, on December 31,
2005 and continuing on each Regularly Scheduled Payment Date thereafter, and on
the last day of the Commitment Period.


 


(b)           Agent Fee.  Borrower shall pay to Agent, for its sole
benefit, the fees set forth in the Agent Fee Letter.


 


Section 2.10.  Modifications
of Commitment.


 


(a)           Optional Reduction of Commitment.  Borrower may at any time and from time to
time permanently reduce in whole or ratably in part the Revolving Credit
Commitment to an amount not less than the then existing Revolving Credit
Exposure, by giving Agent not fewer than three Business Days’ written notice of
such reduction, provided that any such partial reduction shall be in an
aggregate amount, for all of the Revolving Lenders, of not less than Five
Million Dollars ($5,000,000).  Agent
shall promptly notify each Revolving Lender of the date of each such reduction
and such Revolving Lender’s proportionate share thereof.  After each such reduction, the commitment
fees payable hereunder shall be calculated upon the Revolving Amount as so
reduced.  If Borrower reduces in whole
the Revolving Credit Commitment, on the effective date of such reduction
(Borrower having prepaid in full the unpaid principal balance, if 


 


36





















 


any, of the Loans, together with all interest and commitment and other
fees accrued and unpaid, and provided that no Letter of Credit Exposure or
Swing Line Exposure shall exist), all of the Notes shall be delivered to Agent
marked “Canceled” and Agent shall redeliver such Notes to Borrower.  Any partial reduction in the Revolving Amount
shall be effective during the remainder of the Commitment Period.


 


(b)           Increase in Commitment.  At any time during the Commitment Increase
Period, Borrower may request that Agent increase the Revolving Amount from the
Closing Revolving Amount up to the Maximum Revolving Amount by either (i)
proportionally increasing, for one or more Revolving Lenders, with their prior
written consent, their respective Applicable Commitment Percentage of the
Revolving Credit Commitment, or (ii) including one or more Additional Lenders,
each with a new commitment under the Revolving Credit Commitment, as a party to
this Agreement (collectively, the “Additional Commitment”); provided, however,
that existing Lenders shall be given the first opportunity to provide
Additional Commitments.  During the
Commitment Increase Period, the Lenders agree that Agent shall permit one or
more Additional Commitments upon satisfaction of the following requirements:
(A) each Additional Lender, if any, shall execute an Additional Lender
Assumption Agreement, (B) Agent shall provide to Borrower and each Revolving
Lender a revised Schedule 1 to this Agreement, including revised
Applicable Commitment Percentages for each of the Revolving Lenders with
respect to the Revolving Credit Commitment (revised so that each Revolving
Lender will have a new Applicable Commitment Percentage for the Revolving
Credit Commitment), at least three Business Days prior to the date of the
effectiveness of such Additional Commitments (each an “Additional Lender
Assumption Effective Date”), (C) Borrower shall execute and deliver to Agent
and the Revolving Lenders such replacement or additional Revolving Credit Notes
as shall be required by Agent, and (D) Borrower shall, on the Additional Lender
Assumption Effective Date, deliver to Agent, for the benefit of the Lenders,
(1) written confirmation (in form and substance reasonably satisfactory to
Agent) that Borrower shall have given written notice to each Convertible
Subordinated Noteholder that the Obligations incurred pursuant to the
Additional Commitments are being designated as Senior Indebtedness (as defined
in the Convertible Subordinated Notes), and (2) a certificate and any other
reasonable evidence required by Agent or the Required Lenders demonstrating
that all terms and conditions for designating Senior Indebtedness (as defined
in the Convertible Subordinated Notes) under the Convertible Subordinated Notes
are being met.  The Revolving Lenders
hereby authorize Agent to execute each Additional Lender Assumption Agreement
on behalf of the Revolving Lenders.  On
each Additional Lender Assumption Effective Date, the Revolving Lenders shall
make adjustments among themselves with respect to the Revolving Loans then
outstanding and amounts of principal, interest, commitment fees and other
amounts paid or payable with respect thereto as shall be necessary, in the
opinion of Agent, in order to reallocate among such Revolving Lenders such
outstanding amounts, based on the revised Applicable Commitment Percentages and
to otherwise carry out fully the intent and terms of this subsection (b).  In connection therewith, it is understood and
agreed that the Maximum Amount of any Revolving Lender will not be increased
(or decreased except pursuant to Section 2.10(a) hereof) without the prior
written consent of such Revolving Lender. 
Borrower shall not request any increase in the Revolving Amount (or the
Total Commitment Amount) pursuant to this subsection (b) if a Default or an
Event of Default shall then exist, or immediately after giving effect to any
such increase would exist.  Upon each
increase of the Revolving Amount, the Total Commitment 


 


37





















 


Amount shall be proportionally increased from the Closing Commitment
Amount up to the Maximum Commitment Amount.


 


Section 2.11.  Computation
of Interest and Fees.  With the
exception of Base Rate Loans, interest on Loans Related Expenses and commitment
and other fees and charges hereunder shall be computed on the basis of a year
having three hundred sixty (360) days and calculated for the actual number of days
elapsed.  With respect to Base Rate
Loans, interest shall be computed on the basis of a year having three hundred
sixty-five (365) days or three hundred sixty-six (366) days, as the case may
be, and calculated for the actual number of days elapsed.


 


Section 2.12.  Mandatory
Payments.


 


(a)           Revolving Credit Exposure.  If, at any time, the Revolving Credit
Exposure shall exceed the Revolving Credit Commitment, Borrower shall, as
promptly as practicable, but in no event later than the next Business Day, pay
an aggregate principal amount of the Revolving Loans sufficient to bring the
Revolving Credit Exposure within the Revolving Credit Commitment.


 


(b)           Swing Line Exposure.  If, at any time, the Swing Line Exposure
shall exceed the Swing Line Commitment, Borrower shall, as promptly as
practicable, but in no event later than the next Business Day, pay an aggregate
principal amount of the Swing Loans sufficient to bring the Swing Line Exposure
within the Swing Line Commitment.


 


(c)           Mandatory Payments Generally.  Unless otherwise designated by Borrower, each
prepayment pursuant to subsection (a) above shall be applied in the following
order (i) first, to the outstanding Base Rate Loans, and (ii) second, to the
outstanding Eurodollar Loans, provided that if the outstanding principal amount
of any Eurodollar Loan shall be reduced to an amount less than the minimum
amount set forth in Section 2.6(d) hereof as a result of such prepayment, then
such Eurodollar Loan shall be converted into a Base Rate Loan on the date of
such prepayment.  Any prepayment of a
Eurodollar Loan or Swing Loan pursuant to this Section 2.12 shall be subject to
the prepayment provisions set forth in Article III hereof.


 


Section 2.13.  Extension
of Commitment.  Contemporaneously
with the delivery of the financial statements required pursuant to Section
5.3(b) hereof (beginning with the financial statements for the fiscal year of
Borrower ending December 31, 2006), Borrower may deliver a Request for
Extension, requesting that the Revolving Lenders extend the maturity of the
Revolving Credit Commitment for an additional year.  Each such extension shall require the
unanimous written consent of all of the Revolving Lenders and shall be upon
such terms and conditions as may be agreed to by Agent, Borrower and the
Revolving Lenders.  Borrower shall pay
any attorneys’ fees or other expenses of Agent in connection with the
documentation of any such extension, as well as such other fees as may be
agreed upon between Borrower and Agent.


 


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ARTICLE III.  ADDITIONAL PROVISIONS RELATING TO

EURODOLLAR LOANS; INCREASED CAPITAL; TAXES


 


Section 3.1.  Requirements
of Law.


 


(a)           If, after the Closing Date, (i) the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof or (ii) the compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority:


 


(A)          shall subject any Lender to any tax of
any kind whatsoever with respect to this Agreement, any Letter of Credit or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Taxes and Excluded Taxes which are
governed by Section 3.2 hereof);


 


(B)           shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender that is not otherwise included in the
determination of the Eurodollar Rate; or


 


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


 


and the result of any of
the foregoing is to increase the cost to such Lender of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, Borrower shall pay to such Lender, promptly
after receipt of a written request (or, if required by Borrower, a certificate
of such Lender specifying the basis for such request) therefor, any additional
amounts necessary to compensate such Lender for such increased cost or reduced
amount receivable.  If any Lender becomes
entitled to claim any additional amounts pursuant to this subsection (a), such
Lender shall promptly notify Borrower (with a copy to Agent) of the event by
reason of which it has become so entitled.


 


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


 


(c)           A certificate as to any additional
amounts payable pursuant to this Section 3.1 submitted by any Lender to
Borrower (with a copy to Agent) shall be conclusive absent manifest 


 


39





















 


error.  In determining any such
additional amounts, such Lender may use any method of averaging and attribution
that it (in its sole discretion) shall deem applicable.  The obligations of Borrower pursuant to this
Section 3.1 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.


 


(d)           Notwithstanding the foregoing, no
Lender shall be entitled to any indemnification or reimbursement pursuant to
this Section 3.1 to the extent such Lender has not made demand therefore (as
set forth above) within two hundred seventy (270) days after the occurrence of
the event giving rise to such entitlement or, if later, such Lender having
knowledge of such event.


 


Section 3.2.  Taxes.


 


(a)           All payments made by any Credit Party
under any Loan Document shall be made free and clear of, and without deduction
or withholding for or on account of any Taxes or Other Taxes.  If any Taxes or Other Taxes are required to
be deducted or withheld from any amounts payable to Agent or any Lender
thereunder, the amounts so payable to Agent or such Lender shall be increased
to the extent necessary to yield to Agent or such Lender (after deducting,
withholding and payment of all Taxes and Other Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in the
Loan Documents.


 


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


 


(c)           Whenever any Taxes or Other Taxes are
required to be withheld and paid by a Credit Party, such Credit Party shall
timely withhold and pay such taxes to the relevant Governmental
Authorities.  As promptly as possible
thereafter, such Credit Party shall send to Agent for its own account or for
the account of the relevant Lender, as the case may be, a certified copy of an
original official receipt received by such Credit Party showing payment thereof or other evidence of payment reasonably
acceptable to Agent or such Lender. 
If such Credit Party shall fail to pay any Taxes or Other Taxes when due
to the appropriate Governmental Authority or fails to remit to Agent the
required receipts or other required documentary evidence, such Credit Party and
Borrower shall indemnify Agent and the appropriate Lenders on demand for any
incremental taxes, interest or penalties that may become payable by Agent or
such Lender as a result of any such failure.


 


(d)           If
any Lender shall be so indemnified by a Credit Party, such Lender shall use
reasonable efforts to obtain the benefits of any refund, deduction or credit
for any taxes or other amounts with respect to the amount paid by such Credit
Party and shall reimburse such Credit Party to the extent, but only to the
extent, that such Lender shall receive a refund with respect to the amount paid
by such Credit Party or an effective net reduction in taxes or other
governmental charges (including any taxes imposed on or measured by the total
net income of such Lender) of the United States or any state or subdivision or
any other Governmental Authority thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to such Lender.  If, at the
time any audit of such Lender’s income tax return is completed, such Lender
determines, based on such audit, that it shall not have been entitled to the
full amount of any refund reimbursed to such Credit Party as aforesaid or that
its net income 


 


40





















 


taxes shall not have been reduced by a credit or deduction for the full
amount reimbursed to such Credit Party as aforesaid, such Credit Party, upon request
of such Lender, shall promptly pay to such Lender the amount so refunded to
which such Lender shall not have been so entitled, or the amount by which the
net income taxes of such Lender shall not have been so reduced, as the case may
be.


 


(e)           Each
Lender that is not (i) a citizen or resident of the United States of America,
(ii) a corporation, partnership or other entity created or organized in or
under the laws of the United States of America (or any jurisdiction thereof),
or (iii) an estate or trust that is subject to federal income taxation
regardless of the source of its income (any such Person, a “Non-U.S. Lender”)
shall deliver to Borrower and Agent two copies of either U.S. Internal Revenue
Service Form W-8BEN, W-8IMY or Form W-8ECI, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of “portfolio interest”,
a certification with respect to such interest and two copies of Form W-8BEN, or
any subsequent versions thereof or successors thereto, properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by Credit Parties
under this Agreement and the other Loan Documents.  Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement or
such other Loan Document.  In addition,
each Non-U.S. Lender shall deliver such forms or appropriate replacements
promptly upon the expiration, obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender.  Each
Non-U.S. Lender shall promptly notify Borrower at any time it determines that
such Lender is no longer in a position to provide any previously delivered
certificate to Borrower (or any other form of certification adopted by the U.S.
taxing authorities for such purpose). 
Notwithstanding any other provision of this subsection (e), a Non-U.S.
Lender shall not be required to deliver any form pursuant to this subsection
(e) that such Non-U.S. Lender is not legally able to deliver.


 


(f)            The
agreements in this Section 3.2 shall survive the termination of the Loan
Documents and the payment of the Loans and all other amounts payable hereunder.


 


(g)           For
any period with respect to which a Non-U.S. Lender has failed to provide
Borrower with the appropriate form, statement or other document described in
subsection (e) above (other than if such failure is due to a change in law, or
in the interpretation or application thereof, occurring subsequent to the date
on which the form otherwise is not required under subsection (e) above), such
Non-U.S. Lender shall not be entitled to indemnification under Section 3.2(a),
(b) or (c) with respect to any additional Taxes imposed by the United States
solely by reason of such failure.


 


(h)           If
any Lender is entitled to a reduction in (and not a complete exemption from)
the applicable withholding tax and the Company shall have previously paid in
full such withholding tax prior to such reduction, the Company may withhold
from any interest payment to such Lender an amount equivalent to the reduction
in the applicable withholding tax.


 


Section 3.3.  Funding
Losses.  Borrower agrees to indemnify
each Lender, promptly after receipt of a written, reasonably detailed
certification and request therefor, and to hold each 


 


41





















 


Lender harmless from, any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement,
(b) default by Borrower in making any prepayment of or conversion from
Eurodollar Loans after Borrower has given a notice thereof in accordance with
the provisions of this Agreement, (c) the making of a prepayment of a
Eurodollar Loan on a day that is not the last day of an Interest Period
applicable thereto, or (d) any conversion of a Eurodollar Loan to a Base Rate
Loan on a day that is not the last day of an Interest Period applicable
thereto.  Such indemnification shall be
in an amount equal to the excess, if any, of (i) the amount of interest that
would have accrued on the amounts so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount
of interest (as reasonably determined by such Lender) that would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the appropriate London interbank
market, along with any administration fee charged by such Lender.  A certificate as to any amounts payable
pursuant to this Section 3.3 submitted to Borrower (with a copy to Agent) by
any Lender shall be conclusive absent manifest error.  The obligations of Borrower pursuant to this
Section 3.3 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.  Notwithstanding the foregoing, no Lender
shall be entitled to any indemnification or reimbursement pursuant to this
Section 3.3 to the extent such Lender has not made demand therefore (as set
forth above) within two hundred seventy (270) days after the occurrence of the
event giving rise to such entitlement or, if later, such Lender having
knowledge of such event.


 


Section 3.4.  Change
of Lending Office.  Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
Section 3.1 or 3.2(a) hereof with respect to such Lender, it will, if requested
by Borrower, use reasonable efforts (subject to overall policy considerations
of such Lender) to designate another lending office (or an affiliate of such
Lender, if practical for such Lender) for any Loans affected by such event with
the object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage; and provided, further, that nothing in this Section
3.4 shall affect or postpone any of the obligations of Borrower or the rights
of any Lender pursuant to Section 3.1 or 3.2(a) hereof.


 


Section 3.5.  Eurodollar
Rate Lending Unlawful; Inability to Determine Rate.


 


(a)           If
any Lender shall reasonably determine (which determination shall, upon notice
thereof to Borrower and Agent, be conclusive and binding on Borrower) that,
after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any Governmental Authority
asserts that it is unlawful, for such Lender to make or continue any Loan as,
or to convert (if permitted pursuant to this Agreement) any Loan into, a
Eurodollar Loan, the obligations of such Lender to make, continue or convert
any such 


 


42





















 


Eurodollar Loan shall, upon such determination, be suspended until such
Lender shall notify Agent that the circumstances causing such suspension no
longer exist, and all outstanding Eurodollar Loans payable to such Lender shall
automatically convert (if conversion is permitted under this Agreement) into a
Base Rate Loan, or be repaid (if no conversion is permitted) at the end of the
then current Interest Periods with respect thereto or sooner, if required by
law or such assertion.


 


(b)           If
Agent or the Required Lenders reasonably determine that for any reason adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Loan, or that
the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, Agent will promptly so notify Borrower and each
Lender.  Thereafter, the obligation of
the Lenders to make or maintain such Eurodollar Loan shall be suspended until
Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, Borrower may
revoke any pending request for a borrowing of, conversion to or continuation of
such Eurodollar Loan or, failing that, will be deemed to have converted such
request into a request for a borrowing of a Base Rate Loan in the amount
specified therein.


 


Section 3.6.  Replacement
of Lenders.  Borrower shall be
permitted to replace any Lender that requests reimbursement for amounts owing
pursuant to Section 3.1 or 3.2(a) hereof, or asserts its inability to make a
Eurodollar Loan pursuant to Section 3.5 hereof; provided that (a) such
replacement does not conflict with any Requirement of Law, (b) no Default or
Event of Default shall have occurred and be continuing at the time of such
replacement, (c) prior to any such replacement, such Lender shall have taken no
action under Section 3.4 hereof so as to eliminate the continued need for
payment of amounts owing pursuant to Section 3.1 or 3.2(a) hereof or, if it has
taken any action, such request has still been made, (d) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement and assume all
commitments and obligations of such replaced Lender, (e) Borrower shall be
liable to such replaced Lender under Section 3.3 hereof if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (f) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to
Agent, (g) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 11.10 hereof (provided that Borrower
(or the succeeding Lender, if such Lender is willing) shall be obligated to pay
the assignment fee referred to therein), and (h) until such time as such
replacement shall be consummated, Borrower shall pay all additional amounts (if
any) required pursuant to Section 3.1 or 3.2(a) hereof, as the case may be.


 


Section 3.7.  Discretion
of Lenders as to Manner of Funding. 
Notwithstanding any provision of this Agreement to the contrary, each
Lender shall be entitled to fund and maintain its funding of all or any part of
such Lender’s Loans in any manner such Lender deems to be appropriate; it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender had actually funded and maintained
each Eurodollar Loan during the applicable Interest Period for such Loan
through the purchase of 


 


43





















 


deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the Eurodollar Rate, as applicable, for such
Interest Period.


 


ARTICLE IV.  CONDITIONS PRECEDENT


 


Section 4.1.  Conditions
to Each Credit Event.  The obligation
of the Lenders, the Fronting Lender and the Swing Line Lender to participate in
any Credit Event shall be conditioned, in the case of each Credit Event, upon
the following:


 


(a)           all
conditions precedent as listed in Section 4.2 hereof required to be satisfied
prior to the first Credit Event shall have been satisfied prior to or as of the
first Credit Event;


 


(b)           Borrower
shall have submitted a Notice of Loan (or with respect to a Letter of Credit,
complied with the provisions of Section 2.2(b)(ii) hereof) and otherwise complied
with Section 2.6 hereof;


 


(c)           no
Default or Event of Default shall then exist or immediately after such Credit
Event would exist;


 


(d)           no
condition or event shall have occurred that Agent or the Required Lenders
determine has or is reasonably likely to have a Material Adverse Effect; and


 


(e)           each
of the representations and warranties contained in Article VI hereof shall be
true in all material respects as if made on and as of the date of such Credit
Event, except to the extent that any thereof expressly relate to an earlier
date.


 


Each request by Borrower for a Credit Event shall be deemed to be a
representation and warranty by Borrower as of the date of such request as to
the satisfaction of the conditions precedent specified in subsections (c), (d)
and (e) above.


 


Section 4.2.  Conditions
to the First Credit Event.  Borrower shall cause the following conditions
to be satisfied on or prior to the Closing Date.  The obligation of the Lenders, the
Fronting Lender and the Swing Line Lender to participate in the first Credit
Event is subject to Borrower satisfying each of the following conditions prior
to or concurrently with such Credit Event (unless waived in writing by Agent):


 


(a)           Notes.  Borrower shall have executed and delivered to
(i) each Lender requesting a Revolving Credit Note such Lender’s Revolving
Credit Note, (ii) each Lender requesting a Term Note such Lender’s Term Note,
and (iii) the Swing Line Lender the Swing Line Note, if requested by the Swing
Line Lender.


 


(b)           Guaranties
of Payment.  Each Guarantor of
Payment shall have executed and delivered to Agent a Guaranty of Payment, in
form and substance reasonably satisfactory to Agent and the Lenders.


 


44





















 


(c)           Confirmation
of Security Documents and Security Agreements.  Each (i) Credit Party that was a Credit Party
prior to the Closing Date shall have executed and delivered to Agent, for the
benefit of the Lenders, a Confirmation of Security Documents, and (ii) Credit
Party that was not a Credit Party prior to the Closing Date, shall have
executed and delivered to Agent, for the benefit of the Lenders, a Security
Agreement; and such other documents or instruments, as may be reasonably
required by Agent to create or perfect the Liens of Agent, for the benefit of
the Lenders, in the assets of such Credit Party, all to be in form and
substance reasonably satisfactory to Agent and the Lenders.


 


(d)           Pledge
Agreements.  Each Credit Party that
has a Subsidiary shall have executed and delivered to Agent, for the benefit of
the Lenders, a Pledge Agreement, in form and substance satisfactory to Agent,
with respect to the Pledged Securities, together with the Pledged Securities
referenced therein and appropriate stock powers.


 


(e)           Intellectual
Property Collateral Assignment Agreement. 
Each Credit Party that (i) owns federally registered intellectual
property, and (ii) was not a Credit Party prior to the Closing Date, shall have
executed and delivered to Agent, for the benefit of the Lenders, an
Intellectual Property Collateral Assignment Agreement, in form and substance
reasonably satisfactory to Agent.


 


(f)            Real
Estate Matters.  With respect to each
parcel of the Real Property, Borrower shall have delivered to Agent:


 


(i)            an opinion of counsel with respect
to the enforceability of the Mortgage Amendment, in form and substance
reasonably satisfactory to Agent and the Lenders; and


 


(ii)           two fully executed originals of each
Mortgage Amendment.


 


(g)           Insurance
Certificate.  Borrower shall have
delivered to Agent evidence of insurance on ACORD 27 or 28 form, and otherwise
reasonably satisfactory to Agent and the Lenders, of adequate personal property
and liability insurance of each Company, with Agent, on behalf of the Lenders,
listed as loss payee and additional insured.


 


(h)           Officer’s
Certificate, Resolutions, Organizational Documents.  Each Credit Party shall have delivered to
Agent an officer’s certificate (or comparable domestic or foreign documents)
certifying the names of the officers of such Credit Party authorized to sign
the Loan Documents, together with the true signatures of such officers and
certified copies of (i) the resolutions of the board of directors (or
comparable domestic or foreign documents) of such Credit Party evidencing
approval of the execution and delivery of the Loan Documents and the execution
of other Related Writings to which such Credit Party is a party, and (ii) the
Organizational Documents of such Credit Party (other than the Organizational
Documents listed in Section 4.3(c) hereof).


 


(i)            Good
Standing and Full Force and Effect Certificates.  Borrower shall have delivered to Agent a good
standing certificate or full force and effect certificate, as the case may 


 


45





















 


be, for each Credit Party, issued on or about the Closing Date by the
Secretary of State in the state or states where such Credit Party is
incorporated or formed or qualified as a foreign entity.


 


(j)            Legal
Opinion.  Borrower shall have
delivered to Agent an opinion of counsel for each Credit Party, in form and
substance reasonably satisfactory to Agent and the Lenders.


 


(k)           Agent
Fee Letter and Other Fees.  Borrower
shall have (i) executed and delivered to Agent, the Agent Fee Letter and paid
to Agent, for its sole account, the fees stated therein, and (ii) paid all
legal fees and expenses of Agent in connection with the preparation and
negotiation of the Loan Documents.


 


(l)            Lien
Searches.  With respect to the
property owned or leased by Borrower and each Guarantor of Payment and any
other property securing the Obligations, Borrower shall have caused to be
delivered to Agent (i) the results of Uniform Commercial Code lien searches, satisfactory to Agent and
the Lenders, (ii) the results of federal and state tax lien and judicial lien
searches, satisfactory to Agent and the Lenders, and (iii) Uniform Commercial Code termination
statements reflecting termination of all U.C.C. Financing Statements previously
filed by any Person and not expressly permitted pursuant to Section 5.9 hereof;
provided that only updates shall be required with respect to any searches that
were conducted in connection with the Original Credit Agreement.


 


(m)          Closing
Certificate.  Borrower shall have
delivered to Agent and the Lenders an officer’s certificate certifying that, as
of the Closing Date, (i) all conditions precedent set forth in this Article IV
have been satisfied, (ii) no Default or Event of Default exists nor immediately
after the first Credit
Event will exist, and (iii) each of the representations and warranties
contained in Article VI hereof are true and correct in all material respects as
of the Closing Date.


 


(n)           Letter
of Direction.  Borrower shall have
delivered to Agent a letter of direction authorizing Agent, on behalf of the
Lenders, to disburse the proceeds of the Loans, which includes the transfer of
funds under this Agreement and wire instructions setting forth the locations to
which such funds shall be sent.


 


(o)           Designation
of Senior Indebtedness.  Borrower
shall, on the Closing Date, deliver to Agent, for the benefit of the Lenders,
written confirmation (in form and substance reasonably satisfactory to Agent)
that Borrower shall have given written notice to each Convertible Subordinated
Noteholder that the Secured Obligations are being designated as Senior
Indebtedness (as defined in the Convertible Subordinated Notes).


 


(p)           Miscellaneous.  Borrower shall have provided to Agent and the
Lenders such other items and shall have satisfied such other conditions as may
be reasonably required by Agent or the Lenders.


 


Section 4.3.  Post-Closing
Conditions.  On or before each of the
dates specified in this Section 4.3, Borrower shall satisfy each of the items
specified in the subsections below:


 


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(a)           Control
Agreement.  No later than thirty (30)
days after the Closing Date (unless a longer period is agreed to by Agent),
Borrower shall have delivered to Agent an executed copy of a Control Agreement,
in form and substance reasonably satisfactory to Agent, for each deposit
account maintained by a Company, unless (i) a Control Agreement was already
provided for such deposit account in connection with the Original Credit
Agreement, or (ii) otherwise agreed by Agent; provided, that in the event
Borrower is not able to deliver such Control Agreements, Borrower shall use its
best efforts to move such accounts to a depository institution that can provide
such Control Agreements as soon as practicable.


 


(b)           Real
Estate Matters.  No later than
forty-five (45) days after the Closing Date (unless a longer period is agreed
to by Agent), with respect to each parcel of the Real Property, Borrower shall
have delivered to Agent an updated loan policy of title insurance reasonably
acceptable to Agent.


 


(c)           Organizational
Documents.  No later than ten (10)
days after the Closing Date, Borrower shall have delivered to Agent certified
copies of the Organizational Documents for Hilsoft, Inc., a Pennsylvania
corporation.


 


ARTICLE V.  COVENANTS


 


Section 5.1.  Insurance.  Each Company shall (a) maintain insurance to
such extent and against such hazards and liabilities as should be maintained in
accordance with its reasonable business judgment; and (b) within ten days of
any Lender’s written request, furnish to such Lender such information about
such Company’s insurance as that Lender may from time to time reasonably
request, which information shall be prepared in form and detail reasonably
satisfactory to such Lender.


 


Section 5.2.  Money
Obligations.  Each Company shall pay
in full (a) prior in each case to the date when penalties would attach, all
taxes, assessments and governmental charges and levies (except only those so
long as and to the extent that the same shall be contested in good faith by
appropriate and timely proceedings and for which adequate provisions have been
established in accordance with GAAP) for which it may be or become liable or to
which any or all of its properties may be or become subject; (b) all of its
wage obligations to its employees in compliance with the Fair Labor Standards
Act (29 U.S.C. §§ 206-207) or any comparable provisions; and (c) all of its
other obligations calling for the payment of money (except only those so long
as and to the extent that the same shall be contested in good faith and for which
adequate provisions have been established in accordance with GAAP) before such
payment becomes overdue; except in the case of (a), (b) or (c), as would not
reasonably be expected to have a Material Adverse Effect.


 


Section 5.3.  Financial
Statements and Information.


 


(a)           Quarterly
Financials.  Borrower shall deliver
to Agent, within forty-five (45) days after the end of each of the first three
quarter-annual periods of each fiscal year of Borrower, balance sheets of the
Companies as of the end of such period and statements of income (loss), 


 


47





















 


stockholders’ equity and cash flow for the quarter and fiscal year to
date periods, all prepared on a Consolidated basis, in accordance with GAAP,
and certified by a Financial Officer of Borrower.


 


(b)           Annual
Audit Report.  Borrower shall deliver
to Agent, within ninety (90) days after the end of each fiscal year of
Borrower, an annual audit report of the Companies for that year prepared on a
Consolidated basis, in accordance with GAAP, and certified by an independent
nationally recognized public accountant, which report shall include balance
sheets and statements of income (loss), stockholders’ equity and cash-flow for
that period.


 


(c)           Compliance Certificate.  Borrower shall deliver to Agent,
concurrently with the delivery of the financial statements set forth in
subsections (a) and (b) above, a Compliance Certificate.


 


(d)           Annual
Budget.  Borrower shall deliver to
Agent, within thirty (30) days after the end of each fiscal year of Borrower,
an annual budget for the current fiscal year, to be in a form  reasonably acceptable to Lender.


 


(e)           Management
Report.  Borrower shall deliver to
Agent, concurrently with the delivery of the quarterly and annual financial
statements set forth in subsection (a) and (b) above, a copy of any management
report, letter or similar writing furnished to the Companies by the accountants
in respect of the Companies’ systems, operations, financial condition or
properties.


 


(f)            Shareholder
and SEC Documents.  Borrower shall
deliver to Agent, as soon as available, copies of all material notices,
reports, definitive proxy or other statements and other documents sent by
Borrower to its shareholders generally, to the holders of any of its debentures
or bonds generally or the trustee of any indenture securing the same or
pursuant to which they are issued, or sent by Borrower (in final form) to any
securities exchange or over the counter authority or system, or to the SEC or
any similar federal agency having regulatory jurisdiction over the issuance of
Borrower’s securities.


 


(g)           Financial
Information of Companies.  Borrower
shall use commercially reasonable efforts to deliver to Agent, within ten days
of the written request of Agent or any Lender, such other information about the
financial condition, properties and operations of any Company as Agent or such
Lender may from time to time reasonably request, which information shall be
submitted in form and detail reasonably satisfactory to Agent or such Lender.


 


Section 5.4.  Financial
Records.  Each Company shall at all
times maintain records and books of account which are true and correct in all
material respects, including, without limiting the generality of the foregoing,
appropriate provisions for possible losses and liabilities, all in accordance
with GAAP, and at all reasonable times (during normal business hours and upon
reasonable notice to such Company) permit Agent, or any representative of
Agent, to examine such Company’s books and records and to make excerpts
therefrom and transcripts thereof; provided, however, that, except during the
continuance of an Event of Default, such examinations shall be limited to one
per year.


 


48





















 


Section 5.5.  Franchises;
Change in Business.


 


(a)           Each
Company (other than a Dormant Subsidiary) shall preserve and maintain at all
times its existence, and its rights and franchises necessary for its business,
except as otherwise permitted pursuant to Section 5.12 hereof.


 


(b)           No
Company shall engage in any business if, as a result thereof, the general
nature of the business of the Companies taken as a whole would be substantially
changed from the general nature of the business the Companies are engaged in on
the Closing Date.


 


Section 5.6.  ERISA Pension and Benefit Plan Compliance.  Except to the extent a failure to comply
would reasonably be expected to result in a Material Adverse Effect, no
Company shall incur any accumulated funding deficiency within the meaning of
ERISA, or any liability to the PBGC, established thereunder in connection with
any ERISA Plan.  Borrower shall furnish
to the Lenders (a) as soon as possible and in any event within thirty (30) days
after any Company knows or has reason to know that any Reportable Event with
respect to any ERISA Plan has occurred, a statement of a Financial Officer of
such Company, setting forth details as to such Reportable Event and the action
that such Company proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event given to the PBGC if a copy of such
notice is available to such Company, and (b) promptly after receipt thereof a
copy of any notice such Company, or any member of the Controlled Group may
receive from the PBGC or the Internal Revenue Service with respect to any ERISA
Plan administered by such Company; provided, that this latter clause shall not
apply to notices of general application promulgated by the PBGC or the Internal
Revenue Service.  Borrower shall promptly
notify the Lenders of any material taxes assessed, proposed to be assessed or
that Borrower has reason to believe may be assessed against a Company by the
Internal Revenue Service with respect to any ERISA Plan.  As used in this Section 5.6, “material” means
the measure of a matter of significance that shall be determined as being an
amount equal to five percent (5%) of Consolidated Net Worth.  As soon as practicable, and in any event
within twenty (20) days, after any Company shall become aware that an ERISA
Event shall have occurred that could reasonably be expected to result in a
Material Adverse Effect, such Company shall provide Agent with notice of such
ERISA Event with a certificate by a Financial Officer of such Company setting
forth the details of the event and the action such Company or another
Controlled Group member proposes to take with respect thereto.  Borrower shall, at the reasonable request of
Agent, deliver or cause to be delivered to Agent true and correct copies of any
documents relating to the ERISA Plan of any Company.


 


Section 5.7. 
Financial Covenants.


 


(a)           Leverage
Ratio.  The Companies shall not
suffer or permit at any time the Leverage Ratio to exceed (i) 3.50 to 1.00 on
the Closing Date through June 29, 2006, (ii) 3.25 to 1.00 on June 30, 2006
through March 30, 2007, and (iii) 3.00 to 1.00 on March 31, 2007 and
thereafter.


 


(b)           Senior
Leverage Ratio.  The Companies shall
not suffer or permit at any time the Senior Leverage Ratio to exceed (i) 2.50
to 1.00 on the Closing Date through June 29, 2006, (ii) 


 


49





















 


2.25 to 1.00 on June 30, 2006 through March 30, 2007, and (iii) 2.00 to
1.00 on March 31, 2007 and thereafter.


 


(c)           Fixed
Charge Coverage Ratio.  The Companies
shall not suffer or permit at any time the Fixed Charge Coverage Ratio to be
less than 1.25 to 1.00.


 


(d)           Current
Ratio.  The Companies shall not
suffer or permit at any time the Current Ratio to be less than 1.50 to 1.00.


 


Section 5.8.  Borrowing.  No Company shall create, incur or have
outstanding any Indebtedness of any kind; provided that this Section 5.8 shall
not apply to the following:


 


(a)           the
Loans, the Letters of Credit and any other Indebtedness under this Agreement;


 


(b)           any
loans granted to or Capitalized
Lease Obligations entered into by any Company for the purchase or lease
of fixed assets (and refinancings of such loans or Capitalized Lease Obligations), which loans and Capitalized Lease Obligations shall
only be secured by the fixed assets being purchased or leased, so long as the
aggregate principal amount of all such loans and Capitalized Lease Obligations for all Companies shall not exceed
Five Million Dollars ($5,000,000) at any time outstanding;


 


(c)           the
Indebtedness existing on the Closing Date, in addition to the other
Indebtedness permitted to be incurred pursuant to this Section 5.8, as set
forth in Schedule 5.8 hereto (and any extension, renewal or refinancing
thereof so long as the principal amount thereof shall not be increased after
the Closing Date);


 


(d)           loans
to a Company from a Company so long as each such Company is a Credit Party;


 


(e)           Indebtedness
under any Hedge Agreement, so long as such Hedge Agreement shall have been
entered into in the ordinary course of business and not for speculative
purposes;


 


(f)            Permitted
Foreign Subsidiary Loans and Investments;


 


(g)           unsecured
Subordinated Indebtedness with subordination terms reasonably satisfactory to
Agent, so long as (i) the aggregate principal amount of all Subordinated
Indebtedness for all Companies (including the Subordinated Indebtedness
existing as of the Closing Date and referenced on Schedule 5.8 hereto),
shall not exceed One Hundred Million Dollars ($100,000,000) at any time
outstanding, and (ii) such Subordinated Indebtedness is permitted under the
Note Agreement and the Convertible Subordinated Notes;


 


(h)           other
Indebtedness (that does not constitute Non-Credit Party Exposure) of Foreign
Subsidiaries, in addition to the Indebtedness listed above, in an aggregate
amount for all Foreign Subsidiaries not to exceed Three Million Dollars
($3,000,000) at any time outstanding, so long as such Indebtedness is permitted
under the Note Agreement and the Convertible Subordinated Notes; and


 


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(i)            other
Indebtedness, in addition to the Indebtedness listed above, in an aggregate
principal amount for all Companies not to exceed Two Million Dollars
($2,000,000) at any time outstanding, so long as such Indebtedness is permitted
under the Note Agreement and the Convertible Subordinated Notes.


 


Section 5.9.  Liens.  No Company shall create, assume or suffer to
exist (upon the happening of a contingency or otherwise) any Lien upon any of
its property or assets, whether now owned or hereafter acquired; provided that
this Section 5.9 shall not apply to the following:


 


(a)           Liens
for taxes not yet due or that are being actively contested in good faith by
appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;


 


(b)           other
statutory or common law Liens incidental to the conduct of its business or the
ownership of its property and assets that (i) were incurred in the ordinary
course of business, (ii) were not incurred in connection with the borrowing of
money or the obtaining of advances or credit, and (iii) do not in the aggregate
materially detract from the value of its property or assets or materially
impair the use thereof in the operation of the business of any Company;


 


(c)           Liens
on property or assets of a Subsidiary to secure obligations of such Subsidiary
to a Credit Party;


 


(d)           purchase
money Liens on fixed assets securing the loans and Capitalized Lease
Obligations pursuant to Section 5.8 (b) hereof, provided that such Lien is
limited to the purchase price (including shipping costs and taxes) and only
attaches to the property being acquired;


 


(e)           any
Lien of Agent, for the benefit of the Lenders;


 


(f)            the
Liens existing on the Closing Date as set forth in Schedule 5.9 hereto
and replacements, extensions, renewals, refundings or refinancings thereof, but
only to the extent that the amount of debt secured thereby shall not be
increased;


 


(g)           easements
or other minor defects or irregularities in title of real property not
interfering in any material respect with the use of such property in the
business of any Company;


 


(h)           attachment,
appeal bonds, judgments and other similar Liens to the extent such judgments
and Liens do not, in the aggregate for all Companies, exceed Five Hundred
Thousand Dollars ($500,000) at any time;


 


(i)            Liens
of a broker or depository institution encumbering deposit, margin, commodity
trading or brokerage accounts held by such broker or depository institution
incurred in the ordinary course of business;


 


51





















 


(j)                                     Liens on assets of Foreign Subsidiaries
securing loans permitted pursuant to Section 5.8(h) hereof, in an
aggregate amount for all Foreign Subsidiaries not to exceed One Million Dollars
($1,000,000); or


 


(k)                                  other Liens, in addition to the Liens listed
above, securing amounts, in the aggregate for all Companies, not to exceed Five
Hundred Thousand Dollars ($500,000).


 


No Company shall enter into
any contract or agreement (other than a contract or agreement entered into in
connection with Indebtedness permitted pursuant to Section 5.8(h) hereof,
the purchase or lease of fixed assets that prohibits Liens on such fixed assets
or intellectual property licensing agreements) that would prohibit Agent or the
Lenders from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of such Company.


 


Section 5.10.  Regulations T, U and X.  No Company shall take any action that would
result in any non-compliance of the Loans or Letters of Credit with Regulations
T, U or X, or any other applicable regulation, of the Board of Governors of the
Federal Reserve System.


 


Section 5.11.  Investments, Loans and Guaranties.  No Company shall (a) create, acquire or
hold any Subsidiary, (b) make or hold any investment in any stocks, bonds
or securities of any kind, (c) be or become a party to any joint venture
or other partnership, (d) make or keep outstanding any advance or loan to
any Person (other than accounts receivable incurred in the ordinary course of
business), or (e) be or become a Guarantor of any kind (other than a
Guarantor of Payment under the Loan Documents); provided that this Section 5.11
shall not apply to the following:


 


(i)                                     any endorsement of a check or other medium of
payment for deposit or collection through normal banking channels or similar
transaction in the normal course of business;


 


(ii)                                  investments of the Companies in Cash
Equivalents;


 


(iii)                               investments in, loans to and guaranties of
the Indebtedness (permitted under Section 5.8 hereof) of, a Company from
or by a Company so long as each such Company is a Credit Party;


 


(iv)                              the holding of each of the Subsidiaries
listed on Schedule 6.1 hereto, and the creation, acquisition and
holding of any new Subsidiary after the Closing Date so long as such new
Subsidiary shall have been created, acquired or held in accordance with the
terms and conditions of this Agreement;


 


(v)                                 any Permitted Investments or Permitted
Foreign Subsidiary Loans and Investments, so long as no Default or Event of
Default shall exist prior to of after giving effect to such loan or investment;


 


52





















 


(vi)                              the purchase or holding of any stock or other
equity interest that has been acquired pursuant to an Acquisition permitted by Section 5.13
hereof;


 


(vii)                           any advance or loan to an officer or employee
of a Company made in the ordinary course of such Company’s business, so long as
all such advances and loans from all Companies aggregate not more than the
maximum principal sum of One Hundred Thousand Dollars ($100,000) at any time
outstanding;


 


(viii)                        any securities (whether debt or equity)
received by a Company in the ordinary course of business in connection with the
bankruptcy or reorganization of any customer or supplier of such Company;


 


(ix)                                any investment received in connection with
Dispositions permitted pursuant to Section 5.12 hereof, so long as any
such investments that shall be securities are promptly pledged to Agent, for
the benefit of the Lenders;


 


(x)                                   to the extent permitted by applicable law,
notes from officers and employees in exchange for capital stock of a Company
purchased by such officers or employees pursuant to a stock ownership or
purchase plan or compensation plan; and


 


(xi)                                other Investments not specifically listed
above in an aggregate amount, for all Companies, not to exceed Two Million
Dollars ($2,000,000) at any time.


 


For purposes of this Section 5.11,
the amount of any investment in equity interests shall be based upon the
initial amount invested and shall not include any appreciation in value or
return on such investment.


 


Section 5.12.  Merger and Sale of Assets.  No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:


 


(a)                                  any Company may merge with (i) Borrower
(provided that Borrower shall be the continuing or surviving Person), (ii) any
one or more Guarantors of Payment (provided that a Guarantor of Payment shall
be the continuing or surviving Person), or (iii) any other Company, so
long as both such Companies are Non-Credit Parties;


 


(b)                                 any Company may sell, lease, transfer or
otherwise dispose of any of its assets to (i) Borrower, (ii) any
Guarantor of Payment, or (iii) any other Company, so long as both such
Companies are Non-Credit Parties;


 


(c)                                  any Company may sell, lease, transfer or
otherwise dispose of any assets that are obsolete or no longer used in such
Company’s business for fair market value, as determined by the board of
directors of Borrower;


 


53





















 


(d)                                 any sale or other Disposition (including cancellation
of Indebtedness) of Cash Equivalents or non-core assets acquired pursuant to
Acquisitions) in the ordinary course of business for fair market value, as
determined by the board of directors of Borrower; or


 


(e)                                  Acquisitions may be effected in accordance
with the provisions of Section 5.13 hereof and investments may be effected
in accordance with the provisions of Section 5.11 hereof.


 


Section 5.13.  Acquisitions.  No Company shall effect an Acquisition;
provided, however, that a Credit Party may effect:


 


(a)                                  an Acquisition with the prior written consent
of the Required Lenders or so long as:


 


(i)                                     in the case of a merger, amalgamation or
other combination including Borrower, Borrower shall be the surviving entity;


 


(ii)                                  in the case of a merger, amalgamation or
other combination including a Credit Party (other than Borrower), a Credit
Party shall be the surviving entity;


 


(iii)                               the business to be acquired shall be
reasonably similar to that of the Credit Parties or a reasonable extension
thereof;


 


(iv)                              Borrower shall have provided to Agent and the
Lenders, at least ten (10) Business Days prior to such Acquisition (or, if
the aggregate Consideration paid for such Acquisition is less than Five Million
Dollars ($5,000,000), within five Business Days after the completion of such
Acquisition), historical financial statements of the target entity and a pro
forma financial statement of the Companies accompanied by a certificate of a
Financial Officer of Borrower showing (A) pro forma compliance with
Sections 5.7 and 5.13(a)(vii) through (x) hereof, both before and after
the proposed Acquisition, (it being understood that, in the calculation of
Fixed Charge Coverage Ratio, (1) the EBITDA of the business to be acquired
shall be included in Consolidated EBITDA as if the Acquisition had been
completed on the first day of the measurement period, (2) Consolidated
Interest Expense shall be recalculated as if any debt incurred or assumed as a
result of the Acquisition had been in place for the entire measurement period,
and (3) aside from the adjustment in subparts (1) and (2) above,
the fixed charges of the business to be acquired shall not be included in the
calculation of Fixed Charge Coverage Ratio, and (B) positive EBITDA for
the acquired entity during the most recently completed four fiscal quarters of
such entity;


 


(v)                                 no Default or Event of Default shall exist
prior to or after giving effect to such Acquisition;


 


(vi)                              such Acquisition is not actively opposed by
the board of directors (or similar governing body) of the selling Persons or
the Persons whose equity interests are to be acquired;


 


54





















 


(vii)                           Borrower shall have Liquidity of no less than
Ten Million Dollars ($10,000,000) after giving effect to such Acquisition;


 


(viii)                        the aggregate amount of (A) cash
Consideration (exclusive of the issuance of equity) paid for any such
Acquisition (or related series of Acquisitions) would not exceed Sixty-Five
Million Dollars ($65,000,000), and (B) Consideration paid for any such
Acquisition (or related series of Acquisitions) would not exceed One Hundred
Twenty-Five Million Dollars ($125,000,000);


 


(ix)                                the aggregate cash Consideration (exclusive
of the issuance of equity) paid for all Acquisitions for all Companies, during
the Commitment Period, would not exceed One Hundred Thirty Million Dollars
($130,000,000); and


 


(x)                                   the aggregate Consideration paid for all
Acquisitions for all Companies, during the Commitment Period, would not exceed
Two Hundred Million Dollars ($200,000,000); and


 


(b)                                 the Project Dundee Acquisition, but only so
long as (i) the aggregate cash Consideration paid for such Acquisition
would not exceed One Hundred Ten Million Dollars ($110,000,000), and (ii) such
Acquisition is in compliance with Sections 5.13(a)(i) through (vi) hereof
(other than the requirement for ten (10) Business Days prior notice set
forth in Section 5.13(a)(iv) hereof).


 


Section 5.14.  Notice.


 


(a)                                  Borrower shall cause a Financial Officer of
Borrower to promptly notify Agent and the Lenders, in writing, whenever a
Default or Event of Default may occur hereunder or any representation or
warranty made in Article VI hereof or elsewhere in this Agreement or in
any Related Writing may for any reason cease in any material respect to be true
and complete.


 


(b)                                 Borrower shall provide written notice to
Agent and the Lenders contemporaneously with any notice provided to the
Convertible Subordinated Noteholders under any of the Convertible Subordinated
Documents.


 


Section 5.15.  Capital Distributions; Restricted Payments.


 


(a)                                  So long as no Default or Event of Default
shall then exist or immediately thereafter shall begin to exist, any Company
may make Capital Distributions.


 


(b)                                 No Company shall make or commit itself to
make any Restricted Payment at any time, except that, if no Default or Event of
Default shall then exist or immediately thereafter shall begin to exist,
Borrower may


 


(i)                                     make regularly scheduled payments of interest
on the Convertible Subordinated Notes;


 


(ii)                                  convert the Convertible Subordinated Notes
into equity of Borrower; and


 


55





















 


(iii)                               if the Available Liquidity is equal to or
greater than an amount equal to one hundred percent (100%) of the outstanding
principal amount of the Convertible Subordinated Notes, prepay any amount of
principal of the Convertible Subordinated Notes.


 


Section 5.16.  Environmental
Compliance.  Each Company shall comply in all material
respects with any and all material Environmental Laws including, without limitation,
all Environmental Laws in jurisdictions in which such Company owns or operates
a facility or site, arranges for disposal or treatment of hazardous substances,
solid waste or other wastes, accepts for transport any hazardous substances,
solid waste or other wastes or holds any interest in real property or
otherwise.  Borrower shall furnish to the
Lenders, promptly after receipt thereof, a copy of any notice such Company may
receive from any Governmental Authority or private Person, or otherwise, that
any material litigation or proceeding pertaining to any environmental, health
or safety matter has been filed or is threatened against such Company, any real
property in which such Company holds any interest or any past or present
operation of such Company.  No Company
shall allow the release or disposal of hazardous waste, solid waste or other
wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in material violation of any
material Environmental Law.  As used in
this Section 5.16, “litigation or proceeding” means any demand, claim,
notice, suit, suit in equity action, administrative action, investigation or
inquiry whether brought by any Governmental Authority private Person, or
otherwise.  Borrower shall defend,
indemnify and hold Agent and the Lenders harmless against all costs, expenses,
claims, damages, penalties and liabilities of every kind or nature whatsoever
(including attorneys’ fees) arising out of or resulting from the noncompliance
of any Company with any Environmental Law. 
Such indemnification shall survive any termination of this Agreement.


 


Section 5.17.  Affiliate
Transactions.  No Company shall, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate (other than a Company that is a Credit Party or a
Foreign Subsidiary) on terms that shall be less favorable to such Company than
those that might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit (a) the payment
of customary and reasonable directors’ fees, (b) the payment of reasonable
compensation and expense reimbursement to officers and employees for service
actually rendered to any such Company, (c) indemnities and reimbursement
paid to directors, (d) stock option and compensation plans of the
Companies, (e) employment contracts with officers and management of the
Companies, (f) transactions among Companies, (g) the repurchase of
equity interests from former officers, directors and employees to the extent
permitted by this Agreement, (h) advances and loans to officers and
employees of the Companies to the extent permitted by this Agreement, and (i) other
transactions specifically permitted under this Agreement.


 


Section 5.18.  Use of Proceeds.  Borrower’s use of the proceeds of the Loans
shall be solely for working capital and other general corporate purposes (including
Acquisitions) of the Companies and for the refinancing of existing
Indebtedness.


 


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Section 5.19.  Corporate Names and Locations of
Collateral.  No Company shall change
its corporate name, unless, in each case, such Company shall provide Agent and
the Lenders with at least thirty (30) days prior written notice thereof.  Borrower shall also promptly notify Agent and
the Lenders of (a) any material change in any location where any Company’s
Inventory or Equipment is maintained, and any new locations where any material
amount of a Company’s Inventory or Equipment is to be maintained; (b) any
change in the location of the office where any Company’s records pertaining to
its Accounts are kept; (c) the location of any new places of business and
the changing or closing of any of its existing places of business; and (d) any
change in the location of any Company’s chief executive office.  In the event of any of the foregoing or if
otherwise deemed appropriate by Agent, Agent is hereby authorized to file new
U.C.C. Financing Statements describing the Collateral and otherwise in form and
substance sufficient for recordation wherever necessary or appropriate, as
determined in Agent’s sole discretion, to perfect or continue perfected the
security interest of Agent, for the benefit of the Lenders, in the
Collateral.  Borrower shall pay all
filing and recording fees and taxes in connection with the filing or
recordation of such U.C.C. Financing Statements and shall promptly reimburse
Agent if Agent pays the same.  Such
amounts shall be Related Expenses hereunder.


 


Section 5.20.  Subsidiary Guaranties, Security Documents
and Pledge of Stock or Other Ownership Interest.


 


(a)                                  Guaranties and Security Documents.  Each
Domestic Subsidiary (that is not a Dormant Subsidiary) created, acquired or
held subsequent to the Closing Date, shall promptly execute and deliver to
Agent, for the benefit of the Lenders, a Guaranty of Payment of all of the
Obligations and a Security Agreement, such agreements to be in form and
substance reasonably acceptable to Agent, along with any such other supporting
documentation, Security Documents, corporate governance and authorization
documents, and an opinion of counsel as may be deemed necessary or advisable by
Agent.  At such time that a Subsidiary
(that has been classified as a Dormant Subsidiary) no longer meets the
requirements of a Dormant Subsidiary, Borrower shall provide to Agent prompt
written notice thereof, and shall provide, with respect to such Subsidiary, all
of the documents referenced in the foregoing sentence.  In addition, each Subsidiary that acquires a
Subsidiary after the Closing Date, shall execute and deliver to Agent, for the
benefit of the Lenders, a Pledge Agreement and deliver all of the share
certificates (or other evidence of equity) owned by such Subsidiary; provided,
however, that no Company shall be required to pledge more than sixty-five
percent (65%) of the outstanding shares or other ownership interest of any
direct Foreign Subsidiary and shall not be required to pledge any ownership
interest in any indirect Foreign Subsidiary.


 


(b)                                 Perfection or Registration of Interest in
Foreign Shares.  With respect to any foreign shares pledged to
Agent, for the benefit of the Lenders, on or after the Closing Date, Agent
shall at all times, in the discretion of Agent or the Required Lenders, have
the right to perfect, at Borrower’s cost, payable upon request therefor
(including, without limitation, any foreign counsel, or foreign notary, filing,
registration or similar, fees, costs or expenses), its security interest in
such shares in the respective foreign jurisdiction.


 


Section 5.21.  Restrictive Agreements.  Except as set forth in this Agreement,
Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise


 


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cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Subsidiary to (a) make, directly or indirectly, any Capital Distribution
to Borrower, (b) make, directly or indirectly, loans or advances or
capital contributions to Borrower or (c) transfer, directly or indirectly,
any of the properties or assets of such Subsidiary to Borrower; except for such
encumbrances or restrictions existing under or by reason of (i) applicable
law, (ii) non-assignment provisions in leases or other agreements entered
in the ordinary course of business, or (iii) customary restrictions in
security agreements or mortgages securing Indebtedness or capital leases, of a
Company to the extent such restrictions shall only restrict the transfer of the
property subject to such security agreement, mortgage or lease.


 


Section 5.22.  Other Covenants.  In the event that any Company shall enter
into, or shall have entered into, the Note Agreement (or the Convertible
Subordinated Documents), or any agreement evidencing Indebtedness of any
Company or the Companies in excess of the amount of Ten Million Dollars
($10,000,000) wherein the covenants contained therein shall be more restrictive
than the covenants set forth herein, then the Companies shall be bound
hereunder by such more restrictive covenants with the same force and effect as
if such covenants were written herein.


 


Section 5.23.  Note Agreement.


 


(a)                                  Modifications. 
Borrower shall not, without the prior written consent of Agent and the
Required Lenders, amend, restate, supplement or otherwise modify any of the
Convertible Subordinated Documents to (i) increase the principal amount
outstanding thereunder, or (ii) change the date of any principal or
interest payment to an earlier date.


 


(b)                                 No Default.  No “Default” or “Event of
Default”, as each term is defined in the Convertible Subordinated Documents, (i) shall
exist, or (ii) shall exist immediately after the granting or continuation
of any Loan.


 


(c)                                  Senior Indebtedness.  The
Secured Obligations shall at all times constitute indebtedness permitted under
the terms of the Convertible Subordinated Documents and “Senior Indebtedness”,
as defined in the Convertible Subordinated Documents, and permitted to be
secured under the Convertible Subordinated Documents.


 


(d)                                 Subordinated Indebtedness.  The
Secured Obligations shall at all times constitute senior indebtedness which is
entitled to the benefits of the subordination provisions of all outstanding
Subordinated Indebtedness, including, but not limited to, the Convertible
Subordinated Indebtedness.


 


Section 5.24.  Collateral.  Borrower shall:


 


(a)                                  at all reasonable times and after reasonable
prior notice, allow Agent or any Lender by or through any of its officers,
agents, employees, attorneys, or accountants to (i) examine, inspect, and
make extracts from Borrower’s books and other records, including, without
limitation, the tax returns of Borrower; (ii) arrange for verification of
Borrower’s Accounts, under reasonable procedures; and (iii) examine and
inspect Borrower’s Inventory and


 


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Equipment, wherever located,
under reasonable procedures; provided that any such examination or verification
shall be limited, except during the continuance of an Event of Default, to one
visit per year;


 


(b)                                 use commercially reasonable efforts to
promptly furnish to Agent or any Lender upon reasonable request (i) additional
statements and information with respect to the Collateral, and all writings and
information relating to or evidencing any of Borrower’s Accounts (including,
without limitation, computer printouts or typewritten reports listing the
mailing addresses of all present Account Debtors), and (ii) any other
writings and information as Agent or such Lender may reasonably request;


 


(c)                                  notify Agent in writing immediately upon the
creation by any Company of a Deposit Account not listed on Schedule 6.18
hereto and provide for the execution of a Control Agreement with respect
thereto, if required by Agent or the Required Lenders;


 


(d)                                 maintain Borrower’s Equipment (that is
necessary in the business of the Companies) in good operating condition and
repair, ordinary wear and tear and casualty loss excepted, making all necessary
replacements thereof in its reasonable business judgment so that the value and
operating efficiency thereof shall at all times be maintained and preserved;


 


(e)                                  deliver to Agent to hold as security for the
Secured Obligations, within ten Business Days upon the written request of
Agent, all certificated Investment Property owned by a Credit Party, in
suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to Agent, or in the event such Investment Property is
in the possession of a securities intermediary or credited to a securities
account, execute with the related securities intermediary an investment
property control agreement over such securities account in favor of Agent, for
the benefit of the Lenders, in form and substance reasonably satisfactory to
Agent; and


 


(f)                                    upon the reasonable request of Agent, promptly
take such action and promptly make, execute, and deliver all such additional
and further items, deeds, assurances, instruments and any other writings as
Agent may from time to time reasonably deem necessary, including, without
limitation, chattel paper, to carry into the effect the intention of this
Agreement, or so as to completely vest in and ensure to Agent and the Lenders
their respective rights hereunder and in or to the Collateral and the Real
Property.


 


Borrower hereby authorizes
Agent, on behalf of the Lenders, to file U.C.C. Financing Statements with
respect to the Collateral.  All Related
Expenses are payable to Agent within thirty (30) days after demand therefor;
after the occurrence of an Event of Default, Agent may, at its option, debit Related
Expenses directly to any deposit account of a Company located at Agent or the
Revolving Loans.


 


Section 5.25.  Property Acquired Subsequent to the
Closing Date and Right to Take Additional Collateral.  Borrower shall provide Agent with prompt
written notice with respect to any real property acquired by any Company
subsequent to the Closing Date with an individual value in excess of One
Million Dollars ($1,000,000).  In
addition to any other right Agent and


 


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the Lenders may have
pursuant to this Agreement or otherwise, upon written request of Agent,
whenever made, Borrower shall grant to Agent as additional security for the
Secured Obligations, a Lien on such real property of Borrower.  Borrower agrees, promptly after the date of
such written request, to secure all of such Indebtedness by delivering to Agent
security agreements, mortgages (or deeds of trust, if applicable) or other
documents, instruments or agreements or such thereof as Agent may require.  In addition, if any Subsidiary acquires any
federally registered intellectual property (including, without limitation, any
patents, patent applications, trademarks, service marks, copyrights, licenses,
and rights with respect to the foregoing) subsequent to the Closing Date,
Borrower shall promptly provide written notice to Agent and such Subsidiary
shall promptly execute and deliver an Intellectual Property Collateral
Assignment Agreement with respect to such federally registered intellectual
property.  Borrower shall pay all
recordation, legal and other expenses in connection therewith.


 


Section 5.26.  Amendment of Organizational Documents.  No Company shall amend its Organizational
Documents to change its state of organization, or otherwise amend its
Organizational Documents in any manner adverse to Lenders, without the prior
written consent of Agent.


 


ARTICLE VI.  REPRESENTATIONS AND WARRANTIES


 


Section 6.1.  Corporate Existence; Subsidiaries; Foreign
Qualification.  Each Company is duly
organized, validly existing, and in good standing under the laws of its state
or jurisdiction of incorporation or organization, and is duly qualified and
authorized to do business and is in good standing as a foreign entity in the
jurisdictions set forth opposite its name on Schedule 6.1 hereto,
which are all of the states or jurisdictions where the character of its
property or its business activities makes such qualification necessary, except
where a failure to qualify or be in good standing would not reasonably be expected
to result in a Material Adverse Effect.  Schedule 6.1
hereto sets forth, as of the Closing Date, each Subsidiary of Borrower (and
whether such Subsidiary is a Dormant Subsidiary), its state of formation, its
relationship to Borrower, including the percentage of each class of stock or
membership interests owned by a Company, the location of its chief executive
office and its principal place of business. 
Borrower owns all of the equity interests of each of its Subsidiaries.


 


Section 6.2.  Corporate Authority.  Each Credit Party has the right and power and
is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents.  The Loan Documents
to which each Credit Party is a party have been duly authorized and approved by
such Credit Party’s board of directors or other governing body, as applicable,
and are the valid and binding obligations of such Credit Party, enforceable
against such Credit Party in accordance with their respective terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, moratorium and
similar laws and by equitable principles, whether considered at law or in
equity.  The execution, delivery and
performance of the Loan Documents will not conflict with, result in a breach in
any of the provisions of, constitute a default under, or result in the creation
of a Lien (other than Liens permitted under Section 5.9 hereof) upon any
assets or property of any


 


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Company under the provisions
of, such Company’s Organizational Documents or any material agreement.


 


Section 6.3.  Compliance with Laws and Contracts.  Except as would not reasonably be expected to
result in a Material Adverse Effect, each Company:


 


(a)                                  holds permits, certificates, licenses,
orders, registrations, franchises, authorizations, and other approvals from any
Governmental Authority necessary for the conduct of its business and is in
compliance with all applicable laws relating thereto;


 


(b)                                 is in compliance with all federal, state,
local, or foreign applicable statutes, rules, regulations, and orders
including, without limitation, those relating to occupational safety and
health, and equal employment practices;


 


(c)                                  is not in violation of or in default under
any agreement to which it is a party or by which its assets are subject or
bound;


 


(d)                                 shall ensure that no Person who owns a
controlling interest in or otherwise controls a Company is or shall be (i) listed
on the Specially Designated Nationals and Blocked Person List maintained by the
Office of Foreign Assets Control (“OFAC”), Department of the Treasury, or any
other similar lists maintained by OFAC pursuant to any authorizing statute,
executive order or regulation, or (ii) a Person designated under Section 1(b),
(c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar executive orders;


 


(e)                                  comply with all applicable Bank Secrecy Act
and anti-money laundering laws and regulations; and


 


(f)                                    is in compliance, in all material respects,
with the Patriot Act.


 


Section 6.4.  Litigation and Administrative Proceedings.  Except as disclosed on Schedule 6.4
hereto and would not reasonably be expected to result in a Material Adverse
Effect, as of the Closing Date, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or, to the knowledge of each
Company, threatened against any Company, or in respect of which any Company may
have any liability, in any court or before any Governmental Authority,
arbitration board, or other tribunal, (b) no orders, writs, injunctions,
judgments, or decrees of any court or government agency or instrumentality to
which any Company is a party or by which the property or assets of any Company
are bound, and (c) no grievances, disputes, or controversies outstanding
with any union or other organization of the employees of any Company, or
threats of work stoppage, strike, or pending demands for collective bargaining.


 


Section 6.5.  Title to Assets.  Each Company has good title to and ownership
of all material property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof.


 


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Section 6.6.  Liens and Security Interests.  On and after the Closing Date, except for
Liens permitted pursuant to Section 5.9 hereof, (a) there is and will
be no U.C.C. Financing Statement or similar notice of Lien outstanding covering
any personal property of any Company; (b) there is and will be no mortgage
outstanding covering any real property of any Company; and (c) no real or
personal property of any Company is subject to any security interest or Lien of
any kind.  No Company has entered into
any contract or agreement (other than a contract or agreement entered into in
connection with Indebtedness permitted pursuant to Section 5.8(h) hereof,
the purchase or lease of fixed assets or an intellectual property licensing
agreement that prohibits Liens on such assets) that exists on or after the
Closing Date that would prohibit Agent and the Lenders from acquiring a Lien
on, or a collateral assignment of, any of the property or assets of any
Company.


 


Section 6.7.  Tax Returns.  All federal and all material state,
provincial and local tax returns and other reports required by law to be filed
in respect of the income, business, properties and employees of each Company
have been filed and all taxes, assessments, fees and other governmental charges
that are due and payable have been paid, except as otherwise permitted
herein.  The provision for taxes on the
books of each Company is adequate for all years not closed by applicable
statutes and for the current fiscal year.


 


Section 6.8.  Environmental Laws.  Each Company is in material compliance with
all material Environmental Laws, including, without limitation, all
Environmental Laws in all jurisdictions in which any Company owns or operates,
or has owned or operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise.  No material litigation or proceeding arising
under, relating to or in connection with any Environmental Law is pending or,
to the best knowledge of any officer of any Company, threatened, against any
Company, any real property in which any Company holds or has held an interest
or any past or present operation of any Company.  No release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring, or has occurred
(other than those that are currently being cleaned up in accordance with
Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in material violation of
any material Environmental Law.  As used
in this Section 6.8, “litigation or proceeding” means any demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any Governmental Authority or private Person, or
otherwise.


 


Section 6.9.  Locations.  As of the Closing Date, the Companies have
places of business or maintain their Accounts, Inventory and Equipment at the
locations set forth on Schedule 6.9 hereto.  Each Company’s chief executive office is set
forth on Schedule 6.9 hereto. 
Schedule 6.9 further specifies whether each location, as of
the Closing Date, (a) is owned by the Companies, or (b) is leased by
a Company from a third party.  As of the
Closing Date, Schedule 6.9 correctly identifies the name and
address of each third party location where assets of the Companies with a value
in excess of One Million Dollars ($1,000,000) are located.


 


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Section 6.10.  Employee Benefits Plans.  Schedule 6.10 hereto identifies
each ERISA Plan as of the Closing Date. 
Except as would not reasonably be expected to result in a Material
Adverse Effect:


 


(a)                                  no ERISA Event has occurred or is expected to
occur with respect to an ERISA Plan;


 


(b)                                 full payment has been made of all amounts
that a Controlled Group member is required, under applicable law or under the
governing documents, to have paid as a contribution to or a benefit under each
ERISA Plan;


 


(c)                                  the liability of each Controlled Group member
with respect to each ERISA Plan has been fully funded based upon reasonable and
proper actuarial assumptions, has been fully insured, or has been fully
reserved for on its financial statements in accordance with GAAP;


 


(d)                                 no changes have occurred or are expected to
occur that would cause a material increase in the cost of providing benefits
under the ERISA Plan;


 


(e)                                  with respect to each ERISA Plan that is
intended to be qualified under Code Section 401(a), (i) the ERISA
Plan and any associated trust operationally comply with the applicable
requirements of Code Section 401(a); (ii) the ERISA Plan and any
associated trust have been amended to comply with all such requirements as
currently in effect, other than those requirements for which a retroactive
amendment can be made within the “remedial amendment period” available under
Code Section 401(b) (as extended under Treasury Regulations and other
Treasury pronouncements upon which taxpayers may rely); (iii) the ERISA
Plan and any associated trust have received a favorable determination letter
from the Internal Revenue Service stating that the ERISA Plan qualifies under
Code Section 401(a), that the associated trust qualifies under Code Section 501(a) and,
if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first
adopted at a time for which the above-described “remedial amendment period” has
not yet expired; (iv) the ERISA Plan currently satisfies the requirements
of Code Section 410(b), without regard to any retroactive amendment that
may be made within the above-described “remedial amendment period”; and (v) no
contribution made to the ERISA Plan is subject to an excise tax under Code Section 4972;
and


 


(f)                                    with respect to any Pension Plan, the “accumulated
benefit obligation” of Controlled Group members with respect to the Pension
Plan (as determined in accordance with Statement of Accounting Standards No. 87,
“Employers’ Accounting for Pensions”) does not exceed the fair market value of
Pension Plan assets.


 


Section 6.11.  Consents or Approvals.  No material consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person is required to be obtained or
completed by any Company in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed.


 


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Section 6.12.  Solvency.  Borrower has received consideration that is
the reasonable equivalent value of the obligations and liabilities that Borrower
has incurred to Agent and the Lenders. 
Borrower is not insolvent as defined in any applicable state, federal or
relevant foreign statute, nor will Borrower be rendered insolvent by the
execution and delivery of the Loan Documents to Agent and the Lenders.  Borrower is not engaged or about to engage in
any business or transaction for which the assets retained by it are or will be
an unreasonably small amount of capital, taking into consideration the
obligations to Agent and the Lenders incurred hereunder.  Borrower does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay such debts as they
mature.


 


Section 6.13.  Financial Statements.  The Consolidated financial statements of
Borrower, for the fiscal year ended December 31, 2004 and the quarter
ended June 30, 2005 furnished to Agent and the Lenders, are true and
complete in all material respects, have been prepared in accordance with GAAP,
and fairly present in all material respects the financial condition of the
Companies as of the dates of such financial statements and the results of their
operations for the periods then ending. 
As of the Closing Date, since the dates of such statements, there has
been no material adverse change in any Company’s financial condition, properties
or business or any change in any Company’s accounting procedures.


 


Section 6.14.  Regulations.  No Company is engaged principally or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any “margin stock” (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States of America).  Neither the
granting of any Loan (or any conversion thereof) or Letter of Credit nor the
use of the proceeds of any Loan or Letter of Credit will violate, or be
inconsistent with, the provisions of Regulation T, U or X or any other
Regulation of such Board of Governors.


 


Section 6.15.  Material Agreements.  Except as disclosed on Schedule 6.15
hereto, as of the Closing Date, no Company is a party to any (a) debt
instrument (excluding the Loan Documents); (b) real estate lease, whether
as lessee or lessor thereunder; (c) contract, commitment, agreement, or
other arrangement with any of its “Affiliates” (as such term is defined in the
Securities Exchange Act of 1934, as amended) other than a Company; (d) management
or employment contract or contract for personal services with any of its
Affiliates that is not otherwise terminable at will or on less than ninety (90)
days’ notice without liability; or (e) collective bargaining agreement.


 


Section 6.16.  Intellectual Property.  Each Company owns or has the right to use all
of the material patents, patent applications, industrial designs, designs,
trademarks, service marks, copyrights and licenses, and rights with respect to
the foregoing, necessary for the conduct of its business without any known
significant conflict with the rights of others. 
Except as disclosed on Schedule 6.16 hereto, as of the
Closing Date, no Subsidiary owns any federally registered intellectual
property, including, without limitation, any patents, patent applications,
trademarks, service marks, copyrights, licenses, and rights with respect to the
foregoing.


 


Section 6.17.  Insurance.  Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law
and as is customary with Persons


 


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engaged in the same
businesses as the Companies.  Schedule 6.17
hereto sets forth all insurance carried by the Companies on the Closing Date,
setting forth in detail the amount and type of such insurance.


 


Section 6.18.  Deposit Accounts.  Schedule 6.18 hereto lists all
banks (other than payroll, tax withholding or trust accounts) and other
financial institutions at which any Company maintains deposit or other accounts
as of the Closing Date, and Schedule 6.18 hereto correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.


 


Section 6.19.  Accurate and Complete Statements.  Neither the Loan Documents nor any written
statement made by any Company in connection with any of the Loan Documents
(excluding budgets and projections), contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or in the Loan Documents not materially misleading.  On the Closing Date, after due inquiry by
Borrower, there is no known fact that any Company has not disclosed to Agent
and the Lenders that has or is likely to have a Material Adverse Effect.


 


Section 6.20.  Note Agreement.  No Event of Default (as defined in the Note
Agreement) or Default (as defined in the Note Agreement) exists, nor will any
such Event of Default or Default exist immediately after the granting of any
Loan or the issuance of any Letter of Credit under this Agreement.


 


Section 6.21.  Investment Company; Holding Company.  No Company is (a) an “investment company”
or a company “controlled” by an “investment company” required to be registered
as such within the meaning of the Investment Company Act of 1940, as amended,
or (b) subject to regulation under the Public Utility Holding Company Act
of 1935 or the Federal Power Act, each as amended, or any foreign, federal,
state or local statute or regulation limiting its ability to incur
Indebtedness.


 


Section 6.22.  Defaults.  No Default or Event of Default exists hereunder,
nor will any begin to exist immediately after the execution and delivery
hereof.


 


ARTICLE VII.
SECURITY


 


Section 7.1.  Security Interest in Collateral.  In consideration of and as security for the
full and complete payment of all of the Secured Obligations, Borrower hereby
grants to Agent, for the benefit of the Lenders, a security interest in the
Collateral.


 


Section 7.2.  Collections and Receipt of Proceeds by
Borrower.


 


(a)                                  Prior to the exercise by Agent and the
Required Lenders of their rights under Article IX hereof, both (i) the
lawful collection and enforcement of all of Borrower’s Accounts,


 


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and (ii) the lawful
receipt and retention by Borrower of all Proceeds of all of Borrower’s Accounts
and Inventory shall be as agent of the Lenders.


 


(b)                                 After the occurrence and during the
continuance of an Event of Default, upon written notice to Borrower from Agent,
at the election of the Required Lenders, a Cash Collateral Account shall be
opened by Borrower at the main office of Agent (or such other office as shall
be designated by Agent) and all such lawful collections of Borrower’s Accounts
and such Proceeds of Borrower’s Accounts and Inventory shall be remitted daily
by Borrower to Agent in the form in which they are received by Borrower, either
by mailing or by delivering such collections and Proceeds to Agent,
appropriately endorsed for deposit in the Cash Collateral Account.  In the event that such notice is given to
Borrower from Agent, Borrower shall not commingle such collections or Proceeds
with any of Borrower’s other funds or property, but shall hold such collections
and Proceeds separate and apart therefrom upon an express trust for Agent, for
the benefit of the Lenders.  In such
case, Agent may, in its sole discretion, and shall, at the request of the
Required Lenders, at any time and from time to time after the occurrence and
during the continuance of an Event of Default, apply all or any portion of the
account balance in the Cash Collateral Account as a credit against (i) the
outstanding principal or interest of the Loans, or (ii) any other Secured
Obligations.  If any remittance shall be
dishonored, or if, upon final payment, any claim with respect thereto shall be
made against Agent on its warranties of collection, Agent may charge the amount
of such item against the Cash Collateral Account or any other Deposit Account
(other than a trust, tax withholding or payroll account) maintained by Borrower
with Agent or with any other Lender, and, in any event, retain the same and
Borrower’s interest therein as additional security for the Secured
Obligations.  Agent may, in its sole
discretion, at any time and from time to time, release funds from the Cash
Collateral Account to Borrower for use in Borrower’s business.  The balance in the Cash Collateral Account
may be withdrawn by Borrower upon termination of this Agreement and payment in
full of all of the Secured Obligations (other than contingent indemnity
obligations).


 


(c)                                  After the occurrence and during the
continuance of an Event of Default, at Agent’s written request, Borrower shall
cause all remittances representing collections and Proceeds of Collateral to be
mailed to a lock box at a location acceptable to Agent to which Agent shall
have access for the processing of such items in accordance with the provisions,
terms and conditions of the customary lock box agreement of Agent.


 


(d)                                 Agent, or Agent’s designated agent, is hereby
constituted and appointed Borrower’s attorney-in-fact with authority and power
to endorse, after the occurrence and during the continuance of an Event of
Default, any and all instruments, documents, and chattel paper upon Borrower’s
failure to do so.  Such authority and
power, being coupled with an interest, shall be (i) irrevocable until all
of the Secured Obligations (other than contingent indemnity obligations) are
paid, (ii) exercisable by Agent at any time and without any request upon
Borrower by Agent to so endorse, and (iii) exercisable in Agent’s name or
Borrower’s name.  Borrower hereby waives
presentment, demand, notice of dishonor, protest, notice of protest, and any
and all other similar notices with respect thereto, regardless of the form of
any endorsement thereof.  Neither Agent
nor the Lenders shall be bound or obligated to take any action to preserve any
rights therein against prior parties thereto.


 


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Section 7.3.  Collections and Receipt of Proceeds by
Agent.  Borrower hereby constitutes
and appoints Agent, or Agent’s designated agent, as Borrower’s attorney-in-fact
to exercise at any time, after the occurrence and during the continuance of an
Event of Default, all or any of the following powers which, being coupled with
an interest, shall be irrevocable until the complete and full payment of all of
the Secured Obligations (other than contingent indemnity obligations):


 


(a)                                  to receive, retain, acquire, take, endorse,
assign, deliver, accept, and deposit, in the name of Agent or Borrower, any and
all of Borrower’s cash, instruments, chattel paper, documents, Proceeds of
Accounts, Proceeds of Inventory, collection of Accounts, and any other writings
relating to any of the Collateral;


 


(b)                                 to transmit to Account Debtors, on any or all
of Borrower’s Accounts, notice of assignment thereof to Agent, for the benefit
of the Lenders, and the security interest therein of Agent, for the benefit of
the Lenders, and to request from such Account Debtors at any time, in the name
of Agent or Borrower, information concerning Borrower’s Accounts and the
amounts owing thereon;


 


(c)                                  to transmit to purchasers of any or all of
Borrower’s Inventory, notice of Agent’s security interest therein, and to
request from such purchasers at any time, in the name of Agent or Borrower,
information concerning Borrower’s Inventory and the amounts owing thereon by
such purchasers;


 


(d)                                 to notify and require Account Debtors on
Borrower’s Accounts and purchasers of Borrower’s Inventory to make payment of
their indebtedness directly to Agent;


 


(e)                                  to take or bring, in the name of Agent or
Borrower, all steps, actions, suits, or proceedings deemed by Agent necessary
or desirable to effect the receipt, enforcement, and collection of the
Collateral; and


 


(f)                                    to accept all collections in any form
relating to the Collateral, including remittances that may reflect deductions,
and to deposit the same, into Borrower’s Cash Collateral Account or, at the
option of Agent, to apply them as a payment against the Loans or any other
Secured Obligations in accordance with this Agreement.


 


Section 7.4.  Use of Inventory and Equipment.  Until the exercise by Agent and the Required
Lenders of their rights under Article IX hereof, Borrower may (a) retain
possession of and use its Inventory and Equipment in any lawful manner not
inconsistent with this Agreement or with the terms, conditions, or provisions
of any policy of insurance thereon; (b) sell or lease its Inventory in the
ordinary course of business; provided, however, that a sale or lease in the
ordinary course of business does not include a transfer in partial or total
satisfaction of an Indebtedness; and (c) use and consume any raw materials
or supplies, the use and consumption of which are necessary in order to carry
on Borrower’s business.


 


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ARTICLE VIII.  EVENTS OF DEFAULT


 


Each
of the following shall constitute an Event of Default hereunder:


 


Section 8.1.  Payments.  If (a) the interest on any Loan, any
commitment or other fee or any other Obligation (other than those specified in
subpart (b) hereof) shall not be paid in full when due and payable or
within three Business Days thereafter, or (b) the principal of any Loan or
any reimbursement obligation under any Letter of Credit that has been drawn,
shall not be paid in full when due and payable.


 


Section 8.2.  Special Covenants.  If any Company shall fail or omit to perform
and observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.15, 5.22 or
5.23(b), (c) or (d) hereof.


 


Section 8.3.  Other Covenants.  If any Company shall fail or omit to perform
and observe any agreement or other provision (other than those referred to in Section 8.1
or 8.2 hereof) contained or referred to in this Agreement or any Related
Writing that is on such Company’s part to be complied with, and that Default
shall not have been fully corrected within thirty (30) days after the earlier
of (a) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (b) the giving of written notice thereof to
Borrower by Agent or the Required Lenders that the specified Default is to be
remedied.


 


Section 8.4.  Representations and Warranties.  If any representation or warranty made in any
Loan Document shall be false or misleading in any material respect.


 


Section 8.5.  Cross Default.


 


(a)                                  Convertible Subordinated Indebtedness.  If (i) any
event of default (as each term or similar term is defined in any Convertible
Subordinated Document) shall occur under any Convertible Subordinated Document
or any agreement executed in connection therewith, or (ii) the
Indebtedness incurred in connection with any Convertible Subordinated Note
shall be accelerated for any reason.


 


(b)                                 Other Cross Defaults.  If
any Company shall default in the payment of principal, interest or fees due and
owing (i) in an amount in excess of One Million Dollars ($1,000,000)
beyond any period of grace provided with respect thereto; or (ii) under
any Material Indebtedness Agreement beyond any period of grace provided with
respect thereto or in the performance or observance of any other agreement,
term or condition contained in any agreement under which such obligation is
created, if the effect of such default is to allow the acceleration of the
maturity of such Indebtedness or to permit the holder thereof to cause such
Indebtedness to become due prior to its stated maturity.


 


Section 8.6.  ERISA Default.  The occurrence of one or more ERISA Events
that (a) the Required Lenders reasonably determine would have a Material
Adverse Effect, or (b) results in a Lien on assets of the Companies in
excess of Two Million Dollars ($2,000,000).


 


Section 8.7.  Change in Control.  If any Change in Control shall occur.


 


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Section 8.8.  Money Judgment.  A final judgment or order for the payment of
money shall be rendered against any Company by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of sixty (60) days
after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments for all such Companies shall exceed One Million
Dollars ($1,000,000) (less (a) any amount that will be covered by the
proceeds of insurance and is not subject to dispute by the insurance provider
and (b) any money judgment to the extent such amounts are provided by
funds in a valid escrow account or similar arrangement).


 


Section 8.9.  Security.  If any Lien granted in this Agreement or any
other Loan Document in favor of Agent, for the benefit of the Lenders, shall be
determined to be (a) void, voidable or invalid, or is subordinated or not
otherwise given the priority contemplated by this Agreement with respect to any
material amount of Collateral and the Credit Parties have failed to promptly
execute appropriate documents to correct such matters, or (b) unperfected
as to any material amount of Collateral (as determined by Agent, in its
reasonable discretion).


 


Section 8.10.  Validity of Loan Documents.  (a) Any material provision, of any material
Loan Document shall at any time for any reason cease to be valid, binding and
enforceable against any Credit Party; (b) the validity, binding effect or
enforceability of any Loan Document against any Credit Party shall be contested
by any Credit Party; (c) any Credit Party shall deny that it has any or
further liability or obligation under any Loan Document; or (d) any Loan
Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative in any material respect or in any material way cease
to give or provide to Agent and the Lenders the benefits purported to be
created thereby.


 


Section 8.11.  Solvency.  If Borrower, Poorman-Douglas Corporation or
any other Company with assets over Five Million Dollars ($5,000,000) shall (a) except
as permitted pursuant to Section 5.12 hereof, discontinue business, (b) generally
not pay its debts as such debts become due, (c) make a general assignment
for the benefit of creditors, (d) apply for or consent to the appointment
of an interim receiver, a receiver and manager, an administrator, sequestrator,
monitor, a custodian, a trustee, an interim trustee, liquidator, agent or other
similar official of all or a substantial part of its assets or of such Company,
(e) be adjudicated a debtor or insolvent or have entered against it an
order for relief under Title 11 of the United States Code, or under any other
bankruptcy insolvency, liquidation, winding-up, corporate or similar statute or
law, foreign, federal, state or provincial, in any applicable jurisdiction, now
or hereafter existing, as any of the foregoing the same may be amended from
time to time, or other applicable statute for jurisdictions outside of the
United States, as the case may be, (f) file a voluntary petition in
bankruptcy, or file a proposal or notice of intention to file a proposal or
have an involuntary proceeding filed against it and the same shall continue
undismissed for a period of sixty (60) days from commencement of such
proceeding or case, or file a petition or an answer or an application or a
proposal seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, or admit (by
answer, by default or otherwise) the material allegations of a petition filed
against it in any bankruptcy, reorganization, insolvency or other proceeding
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors, (g) suffer or permit or to continue
unstayed and in effect for sixty


 


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(60) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction, that
approves a petition or an application or a proposal seeking its reorganization
or appoints an interim receiver, a receiver and manager, an administrator,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or of such Company, or (h) take, or omit to take, any
action in order thereby to effect any of the foregoing.


 


ARTICLE IX.  REMEDIES UPON DEFAULT


 


Notwithstanding
any contrary provision or inference herein or elsewhere:


 


Section 9.1.  Optional Defaults.  If any Event of Default referred to in Section 8.1,
8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof shall occur, Agent may,
with the consent of the Required Lenders, and shall, at the written request of
the Required Lenders, give written notice to Borrower to:


 


(a)                                  terminate the Commitment, if not previously
terminated, and, immediately upon such election, the obligations of the
Lenders, and each thereof, to make any further Loan and the obligation of the
Fronting Lender to issue any Letter of Credit immediately shall be terminated;
and/or


 


(b)                                 accelerate the maturity of all of the
Obligations (if the Obligations are not already due and payable), whereupon all
of the Obligations shall become and thereafter be immediately due and payable
in full without any presentment or demand and without any further or other
notice of any kind, all of which are hereby waived by Borrower.


 


Section 9.2.  Automatic Defaults.  If any Event of Default referred to in Section 8.11
hereof shall occur:


 


(a)                                  all of the Commitment shall automatically and
immediately terminate, if not previously terminated, and no Lender thereafter
shall be under any obligation to grant any further Loan, nor shall the Fronting
Lender be obligated to issue any Letter of Credit; and


 


(b)                                 the principal of and interest then outstanding
on all of the Loans, and all of the other Obligations, shall thereupon become
and thereafter be immediately due and payable in full (if the Obligations are
not already due and payable), all without any presentment, demand or notice of
any kind, which are hereby waived by Borrower.


 


Section 9.3.  Letters of Credit.  If the maturity of the Obligations shall be
accelerated pursuant to Section 9.1 or 9.2 hereof, Borrower shall
immediately deposit with Agent, as security for the obligations of Borrower and
any Guarantor of Payment to reimburse Agent and the Revolving Lenders for any
then outstanding Letters of Credit, cash equal to the sum of the aggregate
undrawn balance of any then outstanding Letters of Credit.  Agent and the Lenders are hereby authorized,
at their option, to deduct any and all such amounts from any deposit balances
then owing by any Lender (or any affiliate of such Revolving Lender, wherever
located) to or for the credit or account of any Company, as security for the
obligations of Borrower and any


 


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Guarantor of Payment to
reimburse Agent and the Revolving Lenders for any then outstanding Letters of
Credit.


 


Section 9.4.  Offsets.  If there shall occur or exist any Event of
Default referred to in Section 8.11 hereof or if the maturity of the
Obligations is accelerated pursuant to Section 9.1 or 9.2 hereof, each
Lender shall have the right at any time to set off against, and to appropriate
and apply toward the payment of, any and all of the Obligations then owing by
Borrower to such Lender (including, without limitation, any participation
purchased or to be purchased pursuant to Section 2.2(b), 2.2(c) or
9.5 hereof), whether or not the same shall then have matured, any and all
deposit (general or special (but excluding trust, tax withholding and payroll
accounts)) balances and all other indebtedness then held or owing by such
Lender (including, without limitation, by branches and agencies or any
affiliate of such Lender, wherever located) to or for the credit or account of
Borrower or any Guarantor of Payment, all without notice to or demand upon
Borrower or any other Person, all such notices and demands being hereby
expressly waived by Borrower.


 


Section 9.5.  Equalization Provision.


 


(a)                                  Equalization Within Commitments Prior to an
Equalization Event.  Each Revolving Lender agrees with the other
Revolving Lenders that, if it at any time shall obtain any Advantage over the
other Revolving Lenders, or any thereof, in respect of the Applicable Debt
(except as to Swing Loans and Letters of Credit prior to Agent’s giving of
notice to participate and amounts under Article III hereof), such
Revolving Lender shall purchase from the other Revolving Lenders, for cash and
at par, such additional participation in the Applicable Debt as shall be
necessary to nullify the Advantage.  Each
Term Lender agrees with the other Term Lenders that, if it at any time shall
obtain any Advantage over the other Term Lenders, or any thereof, in respect of
the Applicable Debt (except as to amounts under Article III hereof), such
Term Lender shall purchase from the other Term Lenders, for cash and at par,
such additional participation in the Applicable Debt as shall be necessary to
nullify the Advantage.


 


(b)                                 Equalization Between Commitments After an
Equalization Event.  After the occurrence of an Equalization
Event, each Lender agrees with the other Lenders that, if such Lender at any
time shall obtain any Advantage over the other Lenders or any thereof
determined in respect of the Obligations (including Swing Loans and Letters of
Credit but excluding amounts under Article III hereof) then outstanding,
such Lender shall purchase from the other Lenders, for cash and at par, such
additional participation in the Obligations as shall be necessary to nullify
the Advantage in respect of the Obligations. 
For purposes of determining whether or not, after the occurrence of an
Equalization Event, an Advantage in respect of the Obligations shall exist,
Agent shall, as of the date that the Equalization Event occurs:


 


(i)                                     add the Revolving Credit Exposure and the
Term Loan Exposure to determine the equalization maximum amount (the “Equalization
Maximum Amount”); and


 


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(ii)                                  determine an equalization percentage (the “Equalization
Percentage”) for each Lender by dividing the aggregate amount of its Lender
Credit Exposure by the Equalization Maximum Amount.


 


After the date of an
Equalization Event, Agent shall determine whether an Advantage exists among the
Lenders by using the Equalization Percentage. 
Such determination shall be conclusive absent manifest error.


 


(c)                                  Recovery of Amount.  If
any such Advantage resulting in the purchase of an additional participation as
set forth in subsections (a) or (b) hereof shall be recovered in
whole or in part from the Lender receiving the Advantage, each such purchase
shall be rescinded, and the purchase price restored (but without interest
unless the Lender receiving the Advantage is required to pay interest on the
Advantage to the Person recovering the Advantage from such Lender) ratably to
the extent of the recovery.


 


(d)                                 Application and Sharing of Set-Off Amounts.  Each
Lender further agrees with the other Lenders that, if it at any time shall
receive any payment for or on behalf of Borrower on any Indebtedness owing by
Borrower to that Lender (whether by voluntary payment, by realization upon
security, by reason of offset of any deposit or other Indebtedness, by
counterclaim or cross action, by enforcement of any right under any Loan
Document, or otherwise), it shall apply such payment first to any and all
Indebtedness owing by Borrower to that Lender pursuant to this Agreement
(including, without limitation, any participation purchased or to be purchased
pursuant to this Section 9.5 or any other Section of this
Agreement).  Each Credit Party agrees
that any Lender so purchasing a participation from the other Lenders, or any
thereof, pursuant to this Section 9.5 may exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were a direct creditor of such Credit Party in the
amount of such participation.


 


Section 9.6.  Collateral.  Upon the occurrence and during the
continuance of an Event of Default and at all times thereafter, Agent and the
Lenders shall have the rights and remedies of a secured party under the Ohio
Revised Code as in effect from time to time, in addition to the rights and
remedies of a secured party provided elsewhere within this Agreement, in any
other Related Writing executed by Borrower or otherwise provided in law or
equity.  Agent may require Borrower to
assemble the Collateral, which Borrower agrees to do, and make it available to
Agent and the Lenders at a reasonably convenient place to be designated by
Agent. Agent may, with or without notice to or demand upon Borrower and with or
without the aid of legal process, make use of such force as may be necessary to
enter any premises where the Collateral, or any thereof, may be found and to
take possession thereof (including anything found in or on the Collateral that
is not specifically described in this Agreement, each of which findings shall
be considered to be an accession to and a part of the Collateral) and for that
purpose may pursue the Collateral wherever the same may be found, without
liability for trespass or damage caused thereby to Borrower.  After any delivery or taking of possession of
the Collateral, or any thereof, pursuant to this Agreement, then, with or
without resort to Borrower personally or any other Person or property, all of
which Borrower hereby waives, and upon such terms and in such manner as Agent
may deem advisable, Agent, in its discretion, may sell, assign, transfer and
deliver any of the Collateral at any time, or from time to time.  No prior notice need be given to


 


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Borrower or to any other
Person in the case of any sale of Collateral that Agent determines to be
perishable or to be declining speedily in value or that is customarily sold in
any recognized market, but in any other case Agent shall give Borrower not
fewer than ten days prior notice of either the time and place of any public
sale of the Collateral or of the time after which any private sale or other
intended disposition thereof is to be made. 
Borrower waives advertisement of any such sale and (except to the extent
specifically required by the preceding sentence) waives notice of any kind in
respect of any such sale.  At any such
public sale, Agent or the Lenders may purchase the Collateral, or any part
thereof, free from any right of redemption, all of which rights Borrower hereby
waives and releases.  After deducting all
Related Expenses, and after paying all claims, if any, secured by Liens having
precedence over this Agreement, Agent may apply the net proceeds of each such
sale to or toward the payment of the Secured Obligations, whether or not then
due, in such order and by such division as Agent, in its sole discretion, may
deem advisable. Any excess, to the extent permitted by law, shall be paid to
Borrower, and Borrower shall remain liable for any deficiency.  In addition, Agent shall at all times have
the right to obtain new appraisals of Borrower or the Collateral, the cost of
which shall be paid by Borrower.


 


Section 9.7.  Other Remedies.  The remedies in this Article IX are in
addition to, not in limitation of, any other right, power, privilege, or
remedy, either in law, in equity, or otherwise, to which the Lenders may be
entitled.  Agent shall exercise the
rights under this Article IX and all other collection efforts on behalf of
the Lenders and no Lender shall act independently with respect thereto, except
as otherwise specifically set forth in this Agreement.


 


Section 9.8.  Application of Proceeds.


 


(a)                                  Payments Prior to Exercise of Remedies. 
Prior to the exercise by Agent on behalf of the Lenders of remedies
under this Agreement or the other Loan Documents, all monies received by Agent
shall be applied, unless otherwise required by the terms of the other Loan
Documents or by applicable law, as follows (provided that Agent shall have the
right at all times to apply any payment received from Borrower first to the
payment of all obligations (to the extent not paid by Borrower) incurred by
Agent pursuant to Section 11.5 hereof and to the payment of Related
Expenses):


 


(i)                                     with respect to payments received in
connection with the Revolving Credit Commitment, to the Revolving Credit
Lenders (or the Swing Line Lender or the Fronting Lender, as appropriate); and


 


(ii)                                  with respect to payments received in
connection with the Term Loan Commitment, to the Term Loan Lenders.


 


(b)                                 Payments Subsequent to Exercise of Remedies. 
After the exercise by Agent or the Required Lenders of remedies under
this Agreement or the other Loan Documents, all monies received by Agent shall
be applied, unless otherwise required by the terms of the other Loan Documents
or by applicable law, as follows:


 


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(i)                                     first, to the payment of all obligations (to
the extent not paid by Borrower) incurred by Agent pursuant to Section 11.5
hereof and to the payment of Related Expenses;


 


(ii)                                  second, to the payment pro rata of (A) interest
then accrued and payable on the outstanding Loans, (B) any fees then
accrued and payable to Agent, and (C) any fees then accrued and payable to
any Fronting Lender or the holders of the Letter of Credit Commitment in
respect of the Letter of Credit Exposure;


 


(iii)                               third, (A) to the Lenders, on a pro rata
basis, based upon each such Lender’s Overall Commitment Percentage; provided
that the amounts payable in respect of the Letter of Credit Exposure shall be
held and applied by Agent as security for the reimbursement obligations in
respect thereof, and, if any Letter of Credit shall expire without being drawn,
then the amount with respect to such Letter of Credit shall be distributed to
the Lenders, on a pro rata basis in accordance with this subsection (iii),
and (B) the Indebtedness under any Hedge Agreement, such amount to be
based upon the net termination obligation of Borrower under such Hedge
Agreement; with such payment to be pro rata between (A) and (B) hereof;
and


 


(iv)                              finally, any remaining surplus after all of
the Secured Obligations have been paid in full, to Borrower or to whomsoever
shall be lawfully entitled thereto.


 


ARTICLE X.  THE AGENT


 


The
Lenders authorize KeyBank National Association and KeyBank National Association
hereby agrees to act as agent for the Lenders in respect of this Agreement upon
the terms and conditions set forth elsewhere in this Agreement, and upon the
following terms and conditions:


 


Section 10.1.  Appointment and Authorization.  Each Lender hereby irrevocably appoints and
authorizes Agent to take such action as agent on its behalf and to exercise
such powers hereunder as are delegated to Agent by the terms hereof, together
with such powers as are reasonably incidental thereto.  Neither Agent nor any of its affiliates,
directors, officers, attorneys or employees shall (a) be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct
(as determined by a court of competent jurisdiction), or be responsible in any
manner to any of the Lenders for the effectiveness, enforceability,
genuineness, validity or due execution of this Agreement or any other Loan
Documents, (b) be under any obligation to any Lender to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of Borrower or any other Company, or
the financial condition of Borrower or any other Company, or (c) be liable
to any of the Companies for consequential damages resulting from any breach of
contract, tort or other wrong in connection with the negotiation,
documentation, administration or collection of the Loans or Letters of Credit
or any of the Loan Documents.  Notwithstanding
any provision to the contrary contained


 


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in this Agreement or in any
other Loan Document, Agent shall not have any duty or responsibility except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against Agent.  Without limiting the generality
of the foregoing sentence, the use of the term “agent” herein and in other Loan
Documents with reference to Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.


 


Section 10.2.  Note Holders.  Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
Agent, signed by such payee and in form satisfactory to Agent.


 


Section 10.3.  Consultation With Counsel.  Agent may consult with legal counsel selected
by Agent and shall not be liable for any action taken or suffered in good faith
by Agent in accordance with the opinion of such counsel.


 


Section 10.4.  Documents.  Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Document or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and
Agent shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be.


 


Section 10.5.  Agent and Affiliates.  KeyBank National Association (“KeyBank”) and
its affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Companies and Affiliates as though KeyBank were not Agent hereunder and
without notice to or consent of any Lender. 
Each Lender acknowledges that, pursuant to such activities, KeyBank or
its affiliates may receive information regarding any Company or any Affiliate
(including information that may be subject to confidentiality obligations in
favor of such Company or such Affiliate) and acknowledge that Agent shall be
under no obligation to provide such information to other Lenders.  With respect to Loans and Letters of Credit
(if any), KeyBank and its affiliates shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
KeyBank were not Agent, and the terms “Lender” and “Lenders” include KeyBank
and its affiliates, to the extent applicable, in their individual capacities.


 


Section 10.6.  Knowledge of Default.  It is expressly understood and agreed that
Agent shall be entitled to assume that no Default or Event of Default has
occurred, unless Agent has been notified by a Lender in writing that such
Lender believes that a Default or Event of Default has occurred and is
continuing and specifying the nature thereof or has been notified by Borrower
pursuant to Section 5.14 hereof.


 


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Section 10.7.  Action by Agent.  Subject to the other terms and conditions
hereof, so long as Agent shall be entitled, pursuant to Section 10.6
hereof, to assume that no Default or Event of Default shall have occurred and
be continuing, Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in it
by, or with respect to taking or refraining from taking any action or actions
that it may be able to take under or in respect of, this Agreement.  Agent shall incur no liability under or in
respect of this Agreement by acting upon any notice, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything that it may
do or refrain from doing in the reasonable exercise of its judgment, or that
may seem to it to be necessary or desirable in the premises.


 


Section 10.8.  Release of Collateral or Guarantor of
Payment.  In the event of a transfer
of assets permitted by Section 5.12 hereof (or otherwise permitted
pursuant to this Agreement) where the proceeds of such transfer are applied in
accordance with the terms of this Agreement to the extent required to be so
applied, Agent, at the request and expense of Borrower, is hereby authorized by
the Lenders to (a) release such Collateral from this Agreement, (b) release
a Guarantor of Payment in connection with such permitted transfer, and (c) duly
assign, transfer and deliver to the affected Company (without recourse and
without any representation or warranty) such Collateral as is then (or has
been) so transferred or released and as may be in possession of Agent and has
not theretofore been released pursuant to this Agreement.


 


Section 10.9.  Notice of Default.  In the event that Agent shall (a) have
been notified by a Lender in writing that such Lender believes that a Default
or Event of Default has occurred and is continuing, or (b) have actual
knowledge of a Default or Event of Default due to the default in the payment of
principal, interest and fees required to be paid to Agent for the account of
the Lenders, Agent shall promptly notify the Lenders and shall take such action
and assert such rights under this Agreement as the Required Lenders shall
direct and Agent shall inform the other Lenders in writing of the action
taken.  Agent may take such action and assert
such rights as it deems to be advisable, in its discretion, for the protection
of the interests of the holders of the Obligations.


 


Section 10.10.  Delegation of Duties.  Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties.  Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct, as determined by a court
of competent jurisdiction.


 


Section 10.11.  Indemnification of Agent.  The Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower) ratably, according to their respective
Overall Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys’ fees) or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against Agent in its
capacity as agent in any way relating to or arising out of this Agreement or
any Loan Document or any action taken or omitted by Agent with respect to this
Agreement or any Loan Document, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses,


 


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damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys’ fees) or disbursements
resulting from Agent’s gross negligence or willful misconduct as determined by
a court of competent jurisdiction, or from any action taken or omitted by Agent
in any capacity other than as agent under this Agreement or any other Loan
Document.  No action taken in accordance
with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 10.11.  The undertaking in this Section 10.11
shall survive repayment of the Loans, cancellation of the Notes, if any,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, release or discharge of, any or all of the Security Documents,
termination of this Agreement and the resignation or replacement of the agent.


 


Section 10.12.  Successor Agent.  Agent may resign as agent hereunder by giving
not fewer than thirty (30) days prior written notice to Borrower and the
Lenders.  If Agent shall resign under
this Agreement, then either (a) the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders (with the consent of
Borrower so long as an Event of Default has not occurred and is continuing, and
which consent shall not be unreasonably withheld), or (b) if a successor
agent shall not be so appointed and approved within the thirty (30) day period
following Agent’s notice to the Lenders of its resignation, then Agent shall
appoint a successor agent that shall serve as agent until such time as the
Required Lenders appoint a successor agent. 
Upon its appointment, such successor agent shall succeed to the rights,
powers and duties as agent, and the term “Agent” shall mean such successor
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 or any of the parties to this Agreement.


 


ARTICLE XI.  MISCELLANEOUS


 


Section 11.1.  Lenders’ Independent Investigation.  Each Lender, by its signature to this
Agreement, acknowledges and agrees that Agent has made no representation or
warranty, express or implied, with respect to the creditworthiness, financial
condition, or any other condition of any Company or with respect to the
statements contained in any information memorandum furnished in connection
herewith or in any other oral or written communication between Agent and such
Lender.  Each Lender represents that it
has made and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in
connection with the extension of credit hereunder, and agrees that Agent has no
duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto (other
than such notices as may be expressly required to be given by Agent to the
Lenders hereunder), whether coming into its possession before the first Credit
Event hereunder or at any time or times thereafter.  Each Lender further represents that it has
reviewed each of the Loan Documents, and has received copies of and reviewed
the Convertible Subordinated Documents, including, but not limited to, the
conditions relating to the status of the Obligations as Senior Indebtedness (as
defined in the Convertible Subordinated Notes)


 


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Section 11.2.  No Waiver; Cumulative Remedies.  No omission or course of dealing on the part
of Agent, any Lender or the holder of any Note in exercising any right, power or
remedy hereunder or under any of the Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder or under any of the Loan Documents.  The remedies herein provided are cumulative
and in addition to any other rights, powers or privileges held by operation of
law, by contract or otherwise.


 


Section 11.3.  Amendments, Waivers and Consents.


 


(a)                                  General Rule.  No
amendment, modification, termination, or waiver of any provision of any Loan
Document nor consent to any variance therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


(b)                                 Exceptions to the General Rule. 
Anything herein to the contrary notwithstanding, unanimous consent of
the Lenders shall be required with respect to (i) any increase in the
Commitment hereunder (except as specified in Section 2.10(b) hereof),
(ii) the extension of maturity of the Loans, the payment date of interest
or scheduled principal thereunder, or the payment date of commitment or other
fees or amounts payable hereunder, (iii) any reduction in the rate of
interest on the Loans (provided that the institution of the Default Rate and a
subsequent removal of the Default Rate shall not constitute a decrease in
interest rate pursuant to this Section 11.3), or in any amount of interest
or scheduled principal due on any Loan, or the payment of commitment or other
fees hereunder or any change in the manner of pro rata application of any
payments made by Borrower to the Lenders hereunder, (iv) any change in any
percentage voting requirement, voting rights, or the Required Lenders
definition in this Agreement, (v) the release of any Guarantor of Payment
or material amount of Collateral, except as specifically permitted hereunder,
securing the Obligations, or (vi) any amendment to this Section 11.3
or Section 9.5 hereof.


 


(c)                                  Generally.  Notice of amendments or
consents ratified by the Lenders hereunder shall be forwarded by Agent to all
of the Lenders.  Each Lender or other
holder of a Note (or interest in any Loan) shall be bound by any amendment,
waiver or consent obtained as authorized by this Section 10.3, regardless
of its failure to agree thereto.


 


Section 11.4.  Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Lender, mailed or delivered to
it, addressed to the address of such Lender specified on the signature pages of
this Agreement, or, as to each party, at such other address as shall be
designated by such party in a written notice to each of the other parties.  All notices, statements, requests, demands
and other communications provided for hereunder shall be deemed to be given or
made when hand delivered, delivered by overnight courier or two Business Days
after being deposited in the mails with postage prepaid by registered or
certified mail, addressed as aforesaid, or sent by facsimile with telephonic
confirmation of receipt (if received during a Business Day, otherwise the
following Business Day), except that notices from Borrower to Agent or the
Lenders


 


78





















 


pursuant to any of the
provisions hereof shall not be effective until received by Agent or the
Lenders, as the case may be.  For
purposes of Article II hereof, Agent shall be entitled to rely on
telephonic instructions from any person that Agent in good faith believes is an
Authorized Officer of Borrower, and Borrower shall hold Agent and each Lender
harmless from any loss, cost or expense resulting from any such reliance.


 


Section 11.5.  Costs, Expenses and Taxes.  Borrower agrees to pay on demand all reasonable
out-of-pocket costs and expenses of Agent and all Related Expenses, including,
but not limited to, (a) syndication, administration, travel and
out-of-pocket expenses, including but not limited to attorneys’ fees and
expenses (excluding allocated costs of in-house counsel), of Agent in
connection with the preparation, negotiation and closing of the Loan Documents
and the administration of the Loan Documents, the collection and disbursement
of all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, and (c) the reasonable fees and out-of-pocket
expenses of special counsel for Agent, with respect to the foregoing, and of
local counsel, if any, who may be retained by said special counsel with respect
thereto.  Borrower also agrees to pay on
demand all costs and expenses of Agent and the Lenders, including reasonable
attorneys’ fees and expenses, in connection with the restructuring or
enforcement of the Obligations, this Agreement or any Related Writing.  In addition, Borrower shall pay any and all
stamp, transfer, documentary and other taxes, assessments, charges and fees
payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agrees to hold Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or failure to pay such taxes or fees, other than those liabilities
resulting from the gross negligence or willful misconduct of Agent, or, with
respect to amounts owing to a Lender, such Lender, in each case as determined
by a court of competent jurisdiction. 
All obligations provided for in this Section 10.5 shall survive any
termination of this Agreement.


 


Section 11.6.  Indemnification.  Borrower agrees to defend, indemnify and hold
harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys’ fees but excluding anticipated
profits) or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against Agent or any Lender in connection with any
investigative, administrative or judicial proceeding (whether or not such
Lender or Agent shall be designated a party thereto) or any other claim by any
Person relating to or arising out of any Loan Document or any actual or
proposed use of proceeds of the Loans or any of the Obligations, or any
activities of any Company or its Affiliates; provided that no Lender nor Agent
shall have the right to be indemnified under this Section 11.6 for its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.  All obligations provided
for in this Section 11.6 shall survive any termination of this Agreement.


 


Section 11.7.  Obligations Several; No Fiduciary
Obligations.  The obligations of the
Lenders hereunder are several and not joint. 
Nothing contained in this Agreement and no action taken by Agent or the Lenders
pursuant hereto shall be deemed to constitute Agent or the


 


79





















 


Lenders a partnership,
association, joint venture or other entity. 
No default by any Lender hereunder shall excuse the other Lenders from
any obligation under this Agreement; but no Lender shall have or acquire any
additional obligation of any kind by reason of such default.  The relationship between Borrower and the
Lenders with respect to the Loan Documents and the Related Writings is and
shall be solely that of debtor and creditors, respectively, and neither Agent
nor any Lender shall have any fiduciary obligation toward any Credit Party with
respect to any such documents or the transactions contemplated thereby.


 


Section 11.8.  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts and by
facsimile signature, each of which counterparts when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.


 


Section 11.9.  Binding Effect; Borrower’s Assignment.  This Agreement shall become effective when it
shall have been executed by Borrower, Agent and each Lender and thereafter
shall be binding upon and inure to the benefit of Borrower, Agent and each of
the Lenders and their respective successors and permitted assigns, except that
Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of Agent and all of the
Lenders.


 


Section 11.10.  Lender Assignments.


 


(a)                                  Assignments of Commitments.  Each
Lender shall have the right at any time or times to assign to an Eligible
Transferee (other than to a Lender that shall not be in compliance with this
Agreement), without recourse, all or a percentage of all of the following: (i) such
Lender’s Commitment, (ii) all Loans made by that Lender, (iii) such
Lender’s Notes, and (iv) such Lender’s interest in any Letter of Credit or
Swing Loan, and any participation purchased pursuant to Section 2.2(b),
2.2(c) or 9.5 hereof.


 


(b)                                 Prior Consent.  No
assignment may be consummated pursuant to this Section 11.10 without the
prior written consent of Borrower and Agent (other than an assignment by any
Lender to any affiliate of such Lender which affiliate is an Eligible
Transferee and either wholly-owned by a Lender or is wholly-owned by a Person
that wholly owns, either directly or indirectly, such Lender, or to another
Lender), which consent of Borrower and Agent shall not be unreasonably
withheld; provided, however, that Borrower’s consent shall not be required if,
at the time of the proposed assignment, any Default or Event of Default shall
then exist.  Anything herein to the
contrary notwithstanding, any Lender may at any time make a collateral
assignment of all or any portion of its rights under the Loan Documents to a
Federal Reserve Bank, and no such assignment shall release such assigning
Lender from its obligations hereunder.


 


(c)                                  Minimum Amount.  Each
such assignment shall be in a minimum amount of the lesser of Five Million
Dollars ($5,000,000) of the assignor’s Commitment and interest herein or the
entire amount of the assignor’s Commitment and interest herein.


 


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(d)                                 Assignment Fee. 
Unless the assignment shall be to an affiliate of the assignor or the
assignment shall be due to merger of the assignor or for regulatory purposes,
either the assignor or the assignee shall remit to Agent, for its own account,
an administrative fee of Three Thousand Five Hundred Dollars ($3,500).


 


(e)                                  Assignment Agreement. 
Unless the assignment shall be due to merger of the assignor or a
collateral assignment for regulatory purposes, the assignor shall (i) cause
the assignee to execute and deliver to Borrower and Agent an Assignment
Agreement, and (ii) execute and deliver, or cause the assignee to execute
and deliver, as the case may be, to Agent such additional amendments, assurances
and other writings as Agent may reasonably require.


 


(f)                                    Non-U.S. Assignee.  If
the assignment is to be made to an assignee that is organized under the laws of
any jurisdiction other than the United States or any state thereof, the
assignor Lender shall cause such assignee, at least five Business Days prior to
the effective date of such assignment, (i) to represent to the assignor
Lender (for the benefit of the assignor Lender, Agent and Borrower) that under
applicable law and treaties no taxes will be required to be withheld by Agent,
Borrower or the assignor with respect to any payments to be made to such
assignee in respect of the Loans hereunder, (ii) to furnish to the
assignor Lender (and, in the case of any assignee registered in the Register (as
defined below), Agent and Borrower) either U.S. Internal Revenue Service Form W-8ECI,
Form W-8IMY or U.S. Internal Revenue Service Form W-8BEN, as
applicable (wherein such assignee claims entitlement to complete exemption from
U.S. federal withholding tax on all payments hereunder), and (iii) to
agree (for the benefit of the assignor, Agent and Borrower) to provide to the
assignor Lender (and, in the case of any assignee registered in the Register,
to Agent and Borrower) a new Form W-8ECI or Form W-8BEN, as
applicable, upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such assignee, and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.


 


(g)                                 Deliveries by Borrower.  Upon
satisfaction of all applicable requirements specified in subsections (a) through
(f) above, Borrower shall execute and deliver (i) to Agent, the
assignor and the assignee, any consent or release (of all or a portion of the
obligations of the assignor) required to be delivered by Borrower in connection
with the Assignment Agreement, and (ii) to the assignee and the assignor,
if applicable, an appropriate Note or Notes. 
After delivery of the new Note or Notes, the assignor’s Note or Notes
being replaced shall be returned to Borrower marked “replaced”.


 


(h)                                 Effect of Assignment.  Upon
satisfaction of all applicable requirements set forth in subsections (a) through
(g) above, and any other condition contained in this Section 11.10, (i) the
assignee shall become and thereafter be deemed to be a “Lender” for the
purposes of this Agreement, (ii) the assignor shall be released from its obligations
hereunder to the extent that its interest has been assigned, (iii) in the
event that the assignor’s entire interest has been assigned, the assignor shall
cease to be and thereafter shall no longer be deemed to be a “Lender” and (iv) the
signature pages hereto and Schedule 1 hereto shall be
automatically amended, without further action, to reflect the result of any
such assignment.


 


81





















 


(i)                                     Agent to Maintain Register. 
Agent shall maintain at the address for notices referred to in Section 11.4
hereof a copy of each Assignment Agreement delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from
time to time.  The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower,
Agent and the Lenders may treat each Person whose name is recorded in the Register
as the owner of the Loan recorded therein for all purposes of this
Agreement.  The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.


 


Section 11.11.  Sale of Participations.  Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell participations to one or more Eligible Transferees (each a “Participant”)
in all or a portion of its rights or obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of the
Commitment and the Loans and participations owing to it and the Note held by
it); provided that:


 


(a)                                  any such Lender’s obligations under this
Agreement and the other Loan Documents shall remain unchanged;


 


(b)                                 such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations;


 


(c)                                  the parties hereto shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement and each of the other Loan Documents;


 


(d)                                 such Participant shall be bound by the
provisions of Section 9.5 hereof, and the Lender selling such
participation shall obtain from such Participant a written confirmation of its
agreement to be so bound; and


 


(e)                                  no Participant (unless such Participant is
itself a Lender) shall be entitled to require such Lender to take or refrain
from taking action under this Agreement or under any other Loan Document,
except that such Lender may agree with such Participant that such Lender will
not, without such Participant’s consent, take action of the type described as
follows:


 


(i)                                     increase the portion of the participation
amount of any Participant over the amount thereof then in effect, or extend the
Commitment Period, without the written consent of each Participant affected
thereby; or


 


(ii)                                  reduce the principal amount of or extend the
time for any payment of principal of any Loan, or reduce the rate of interest
or extend the time for payment of interest on any Loan, or reduce the
commitment fee, without the written consent of each Participant affected
thereby.


 


82





















 


Borrower agrees that any
Lender that sells participations pursuant to this Section 11.11 shall
still be entitled to the benefits of Article III hereof, notwithstanding
any such transfer; provided, however, that the obligations of Borrower shall
not increase as a result of such transfer and Borrower shall have no obligation
to any Participant.


 


Section 11.12.  Patriot Act Notice.  Each Lender and Agent (for itself and not on
behalf of any other party) hereby notifies the Credit Parties that, pursuant to
the requirements of the Patriot Act, such Lender and Agent are required to
obtain, verify and record information that identifies the Credit Parties, which
information includes the name and address of the Credit Parties and other
information that will allow such Lender or Agent, as applicable, to identify
the Credit Parties in accordance with the Patriot Act.  Borrower shall provide, to the extent
commercially reasonable, such information and take such actions as are
reasonably requested by Agent or a Lender in order to assist Agent or such
Lender in maintaining compliance with the Patriot Act.


 


Section 11.13.  Severability of Provisions; Captions;
Attachments.  Any provision of this
Agreement that shall be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  The several captions to
Sections and subsections herein are inserted for convenience only and shall be
ignored in interpreting the provisions of this Agreement.  Each schedule or exhibit attached to
this Agreement shall be incorporated herein and shall be deemed to be a part
hereof.


 


Section 11.14.  Investment Purpose.  Each of the Lenders represents and warrants
to Borrower that it is entering into this Agreement with the present intention
of acquiring any Note issued pursuant hereto for investment purposes only and
not for the purpose of distribution or resale, it being understood, however,
that each Lender shall at all times retain full control over the disposition of
its assets.


 


Section 11.15.  Entire Agreement.  This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations
and negotiations and prior writings with respect to the subject matter hereof.


 


Section 11.16.  Legal Representation of Parties.  The Loan Documents were negotiated by the
parties with the benefit of legal representation and any rule of
construction or interpretation otherwise requiring this Agreement or any other
Loan Document to be construed or interpreted against any party shall not apply
to any construction or interpretation hereof or thereof.


 


Section 11.17.  Governing Law; Submission to Jurisdiction.


 


(a)                                  Governing Law.  This
Agreement, each of the Notes and any Related Writing shall be governed by and construed
in accordance with the laws of the State of Ohio and the


 


83





















 


respective rights and
obligations of Borrower, Agent, and the Lenders shall be governed by Ohio law,
without regard to principles of conflicts of laws.


 


(b)                                 Submission to Jurisdiction. 
Borrower hereby irrevocably submits to the non-exclusive jurisdiction of
any Ohio state or federal court sitting in Cleveland, Ohio, over any action or
proceeding arising out of or relating to this Agreement, the Obligations or any
Related Writing, and Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such Ohio
state or federal court.  Borrower, on
behalf of itself and its Subsidiaries, hereby irrevocably waives, to the
fullest extent permitted by law, any objection it may now or hereafter have to
the laying of venue in any action or proceeding in any such court as well as
any right it may now or hereafter have to remove such action or proceeding,
once commenced, to another court on the grounds of FORUM NON CONVENIENS or
otherwise.  Borrower agrees that a final,
nonappealable judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.


 


[Remainder of page left intentionally blank]


 


84





















 


Section 11.18.  JURY TRIAL WAIVER.  TO THE EXTENT PERMITTED BY LAW, BORROWER,
AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER,
AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.


 


IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first set forth above.


 


	
  Address:

  	
  501 Kansas Avenue

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
  Kansas City, Kansas 66105

  	
   

  
	
   

  	
  Attn:  Elizabeth Braham

  	
  By:

  	
  /s/ Elizabeth M. Braham

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Elizabeth M. Braham

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President
  and Chief

  Financial Officer

  
						



 


	
  Address:

  	
  127 Public Square

  	
  KEYBANK NATIONAL ASSOCIATION,

  
	
   

  	
  Cleveland, Ohio 44114-1306

  	
  as Agent and as a Lender

  
	
   

  	
  Attn:  Institutional Banking01 Kansas Avenue

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Vijaya N. Kulkarni

  	
   

  
	
   

  	
   

  	
  Name:  Vijaya N. Kulkarni

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  



 





















 


SCHEDULE 1


 


	
  LENDERS

  	
   

  	
  COMMITMENT

  PERCENTAGE

  	
   

  	
  REVOLVING

  CREDIT

  COMMITMENT

  AMOUNT

  	
   

  	
  TERM LOAN

  COMMITMENT

  AMOUNT

  	
   

  	
  MAXIMUM AMOUNT

  	
   

  
	
  KeyBank National Association

  	
   

  	
  100

  	
  %

  	
  $

  	
  100,000,000

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  125,000,000

  	
   

  
	
  Total Commitment Amount

  	
   

  	
  100

  	
  %

  	
  $

  	
  100,000,000

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  125,000,000

  	
   

  



 





















 


SCHEDULE 2


 


GUARANTORS OF PAYMENT


 


Bankruptcy Services LLC


EPIQ Systems Acquisition, Inc.


Poorman-Douglas Corporation


nMatrix Inc.


Hilsoft, Inc.


Financial Balloting Group
LLC


Novare, Inc.


 





















 


EXHIBIT A


FORM OF


REVOLVING CREDIT NOTE


 


	
  $

  	
   

  	
  November 15, 2005

  



 


FOR
VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”),
promises to pay, on the last day of the Commitment Period, as defined in the
Credit and Security Agreement (as hereinafter defined), to the order of                     (“Lender”)
at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, as hereinafter
defined, 127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of


 


DOLLARS


 


or the aggregate unpaid
principal amount of all Revolving Loans, as defined in the Credit and Security
Agreement made by Lender to Borrower pursuant to Section 2.2(a) of
the Credit and Security Agreement, whichever is less, in lawful money of the
United States of America.


 


As
used herein, “Credit and Security Agreement” means the Amended and Restated
Credit and Security Agreement dated as of November 15, 2005, among
Borrower, the Lenders, as defined therein, and KeyBank National Association, as
lead arranger, sole book runner and administrative agent for the Lenders (“Agent”),
as the same may from time to time be amended, restated or otherwise
modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.


 


Borrower
also promises to pay interest on the unpaid principal amount of each Revolving
Loan from time to time outstanding, from the date of such Revolving Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(a) of the Credit and
Security Agreement.  Such interest shall
be payable on each date provided for in such Section 2.4(a); provided,
however, that interest on any principal portion that is not paid when due shall
be payable on demand.


 


The
portions of the principal sum hereof from time to time representing Base Rate
Loans and Eurodollar Loans, and payments of principal of any thereof, shall be
shown on the records of Lender by such method as Lender may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from the obligations of Borrower under this Note.


 


If
this Note shall not be paid at maturity, whether such maturity occurs by reason
of lapse of time or by operation of any provision for acceleration of maturity
contained in the Credit and Security Agreement, the principal hereof and the
unpaid interest thereon shall bear interest, until paid, at a rate per annum
equal to the Default Rate.  All payments
of principal of and interest on this Note shall be made in immediately
available funds.


 


This
Note is one of the Revolving Credit Notes referred to in the Credit and
Security Agreement.  Reference is made to
the Credit and Security Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare


 


E-1





















 


this Note due prior to its
stated maturity, and other terms and conditions upon which this Note is issued.


 


Borrower
hereby designates all Indebtedness and other obligations now or hereafter
incurred or otherwise outstanding under this Note, the Credit and Security
Agreement and the other Loan Documents, as defined in the Credit and Security
Agreement, to be “Senior Indebtedness” as defined in the Note Agreement.  Except as expressly provided in the Credit
and Security Agreement, Borrower expressly waives presentment, demand, protest
and notice of any kind.  This Note shall
be governed by and construed in accordance with the laws of the State of Ohio,
without regard to conflicts of laws provisions.


 


JURY
TRIAL WAIVER.  BORROWER, TO THE EXTENT PERMITTED BY LAW,
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE
LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


E-2





















 


EXHIBIT B


FORM OF


SWING LINE NOTE


 


	
  $5,000,000

  	
   

  	
  November 15, 2005

  



 


FOR
VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”),
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION (“Swing Line Lender”)
at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, as hereinafter
defined, 127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of


 


	
  FIVE MILLION AND 00/100

  	
   

  	
  DOLLARS

  



 


or the aggregate unpaid
principal amount of all Swing Loans, as defined in the Credit and Security
Agreement (as hereinafter defined) made by Swing Line Lender to Borrower
pursuant to Section 2.2(c) of the Credit and Security Agreement,
whichever is less, in lawful money of the United States of America on the
earlier of the last day of the Commitment Period, as defined in the Credit and
Security Agreement, or, with respect to each Swing Loan, the Swing Loan
Maturity Date applicable thereto.


 


As
used herein, “Credit and Security Agreement” means the Amended and Restated
Credit and Security Agreement dated as of November 15, 2005, among
Borrower, the Lenders, as defined therein, and KeyBank National Association, as
lead arranger, sole book runner and administrative agent for the Lenders (“Agent”),
as the same may from time to time be amended, restated or otherwise
modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.


 


Borrower
also promises to pay interest on the unpaid principal amount of each Swing Loan
from time to time outstanding, from the date of such Swing Loan until the
payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(b) of the Credit and
Security Agreement.  Such interest shall
be payable on each date provided for in such Section 2.4(b); provided,
however, that interest on any principal portion that is not paid when due shall
be payable on demand.


 


The
principal sum hereof from time to time and the payments of principal and
interest thereon, shall be shown on the records of Swing Line Lender by such
method as Swing Line Lender may generally employ; provided, however, that
failure to make any such entry shall in no way detract from the obligation of
Borrower under this Note.


 


If
this Note shall not be paid at maturity, whether such maturity occurs by reason
of lapse of time or by operation of any provision for acceleration of maturity
contained in the Credit and Security Agreement, the principal hereof and the
unpaid interest thereon shall bear interest, until paid, at a rate per annum
equal to the Default Rate.  All payments
of principal of and interest on this Note shall be made in immediately available
funds.


 


E-3





















 


This
Note is the Swing Line Note referred to in the Credit and Security
Agreement.  Reference is made to the
Credit and Security Agreement for a description of the right of the undersigned
to anticipate payments hereof, the right of the holder hereof to declare this
Note due prior to its stated maturity, and other terms and conditions upon
which this Note is issued.


 


Borrower
hereby designates all Indebtedness and other obligations now or hereafter
incurred or otherwise outstanding under this Note, the Credit and Security
Agreement and the other Loan Documents, as defined in the Credit and Security
Agreement, to be “Senior Indebtedness” as defined in the Note Agreement.  Except as expressly provided in the Credit
and Security Agreement, Borrower expressly waives presentment, demand, protest
and notice of any kind.  This Note shall
be governed by and construed in accordance with the laws of the State of Ohio,
without regard to conflicts of laws provisions.


 


JURY
TRIAL WAIVER.  BORROWER, TO THE EXTENT
PERMITTED BY LAW, HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
BORROWER, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS NOTE OR ANY OTHER NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


E-4





















 


EXHIBIT C


FORM OF


TERM NOTE


 


	
  $

  	
   

  	
  November 15, 2005

  



 


FOR
VALUE RECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”)
promises to pay to the order of [                 ]
(“Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, as
hereinafter defined, 127 Public Square, Cleveland, Ohio 44114-1306 the
principal sum of


 


DOLLARS


 


in lawful money of the
United States of America in consecutive principal payments as set forth in the
Credit and Security Agreement (as hereinafter defined).


 


As
used herein, “Credit and Security Agreement” means the Amended and Restated
Credit and Security Agreement dated as of November 15, 2005, among
Borrower, the Lenders, as defined therein, and KeyBank National Association, as
lead arranger, sole book runner and administrative agent for the Lenders (“Agent”),
as the same may from time to time be amended, restated or otherwise
modified.  Each capitalized term used
herein that is defined in the Credit and Security Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit and Security
Agreement.


 


Borrower
also promises to pay interest on the unpaid principal amount of the Term Loan
from time to time outstanding, from the date of the Term Loan until the payment
in full thereof, at the rates per annum that shall be determined in accordance
with the provisions of Section 2.4(c) of the Credit and Security
Agreement.  Such interest shall be
payable on each date provided for in such Section 2.4(c); provided,
however, that interest on any principal portion that is not paid when due shall
be payable on demand.


 


The
portions of the principal sum hereof from time to time representing Base Rate
Loans and Eurodollar Loans, and payments of principal of either thereof, shall
be shown on the records of Lender by such method as Lender may generally
employ; provided, however, that failure to make any such entry shall in no way
detract from the obligations of Borrower under this Note.


 


If
this Note shall not be paid at maturity, whether such maturity occurs by reason
of lapse of time or by operation of any provision for acceleration of maturity
contained in the Credit and Security Agreement, the principal hereof and the
unpaid interest thereon shall bear interest, until paid, at a rate per annum
equal to the Default Rate.  All payments
of principal of and interest on this Note shall be made in immediately
available funds.


 


This
Note is one of the Term Notes referred to in the Credit and Security
Agreement.  Reference is made to the
Credit and Security Agreement for a description of the right of the undersigned
to anticipate payments hereof, the right of the holder hereof to declare this
Note due prior to its stated maturity, and other terms and conditions upon
which this Note is issued.


 


E-5





















 


Borrower
hereby designates all Indebtedness and other obligations now or hereafter
incurred or otherwise outstanding under this Note, the Credit and Security
Agreement and the other Loan Documents, as defined in the Credit and Security
Agreement, to be “Senior Indebtedness” as defined in the Note Agreement.  Except as expressly provided in the Credit
and Security Agreement, Borrower expressly waives presentment, demand, protest
and notice of any kind.  This Note shall
be governed by and construed in accordance with the laws of the State of Ohio,
without regard to conflicts of laws provisions.


 


JURY
TRIAL WAIVER.  BORROWER, TO THE EXTENT
PERMITTED BY LAW, HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
BORROWER, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS NOTE OR ANY OTHER NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


E-6





















 


EXHIBIT D


FORM OF


NOTICE OF LOAN


 


, 20  


 


KeyBank National
Association, as Agent


127 Public Square


Cleveland, Ohio 44114-0616


Attention:  Institutional Banking


 


Ladies and Gentlemen:


 


The
undersigned, EPIQ SYSTEMS, INC., refers to the Amended and Restated Credit and
Security Agreement, dated as of November 15, 2005 (“Credit Agreement”, the
terms defined therein being used herein as therein defined), among the
undersigned, the Lenders, as defined in the Credit Agreement, and KeyBank
National Association, as Agent, and hereby gives you notice, pursuant to Section 2.6
of the Credit Agreement that the undersigned hereby requests a Loan under the
Credit Agreement, and in connection therewith sets forth below the information
relating to the Loan (the “Proposed Loan”) as required by Section 2.6 of
the Credit Agreement:


 


(a)                                  The Business Day of the Proposed Loan is                      ,
20  .


 


(b)                                 The amount of the Proposed Loan is $                            .


 


(c)                                  The Proposed Loan is to be a Base Rate Loan         /
Eurodollar Loan           /
Swing Loan          .

(Check one.)


 


(d)                                 If the Proposed Loan is a Eurodollar Loan,
the Interest Period requested is one month      , two
months      , three months       ,
six months       .

(Check one.)


 


The undersigned hereby
certifies on behalf of Borrower that the following statements are true on the
date hereof, and will be true on the date of the Proposed Loan:


 


(i)                                     the representations and warranties contained
in Article VI of the Credit Agreement are true in all material respects as
if made on and as of such date, except to the extent that any thereof expressly
relate to an earlier date;


 


(ii)                                  no event has occurred and is continuing, or
would result from such Proposed Loan, or the application of proceeds therefrom,
that constitutes a Default or Event of Default; and


 


E-7





















 


(iii)                               the conditions set forth in Section 2.6
and Article IV of the Credit Agreement have been satisfied.


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


E-8





















 


EXHIBIT E


FORM OF


COMPLIANCE CERTIFICATE


 


For Fiscal Quarter ended                           


 


THE UNDERSIGNED HEREBY
CERTIFIES THAT:


 


(1)                                  I am the duly elected President or Chief
Financial Officer of EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”);


 


(2)                                  I am familiar with the terms of that certain
Amended and Restated Credit and Security Agreement, dated as of November 15,
2005, among the undersigned, the lenders named on Schedule 1
thereto (together with their respective successors and assigns, collectively,
the “Lenders”), as defined in the Credit Agreement, and KeyBank National
Association, as Agent (as the same may from time to time be amended, restated
or otherwise modified, the “Credit Agreement”, the terms defined therein being
used herein as therein defined), and the terms of the other Loan Documents, and
I have made, or have caused to be made under my supervision, a review in
reasonable detail of the transactions and condition of Borrower and its
Subsidiaries during the accounting period covered by the attached financial
statements;


 


(3)                                  The review described in paragraph (2) above
did not disclose, and I have no knowledge of, the existence of any condition or
event that constitutes or constituted a Default or Event of Default, at the end
of the accounting period covered by the attached financial statements or as of
the date of this Certificate;


 


(4)                                  The representations and warranties made by
Borrower contained in Article VI of the Credit Agreement are true in all
material respects as if made on and as of the date hereof, except to the extent
that any thereof expressly relate to an earlier date; and


 


(5)                                  Set forth on Attachment I hereto are
calculations of the financial covenants set forth in Section 5.7 of the
Credit Agreement, which calculations show compliance with the terms thereof.


 


IN
WITNESS WHEREOF, I have signed this certificate the      day
of                ,
20  .


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


E-9





















 


EXHIBIT F


FORM OF


ASSIGNMENT AND ACCEPTANCE AGREEMENT


 


This
Assignment and Acceptance Agreement (this “Assignment Agreement”) between                                  (the
“Assignor”) and                                   (the
“Assignee”) is dated as of               ,
20  .  The parties hereto agree
as follows:


 


1.                                       Preliminary Statement. 
Assignor is a party to an Amended and Restated Credit and Security
Agreement, dated as of November 15, 2005 (as the same may from time to
time be amended, restated or otherwise modified, the “Credit Agreement”), among
EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”), the lenders named on Schedule 1
thereto (together with their respective successors and assigns, collectively,
the “Lenders” and, individually, each a “Lender”), and KEYBANK NATIONAL
ASSOCIATION, as lead arranger, sole book runner and administrative agent for
the Lenders (“Agent”).  Capitalized terms
used herein and not otherwise defined herein shall have the meanings attributed
to them in the Credit Agreement.


 


2.                                       Assignment and Assumption. 
Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, an interest in and to Assignor’s rights
and obligations under the Credit Agreement, effective as of the Assignment
Effective Date (as hereinafter defined), equal to the percentage interest
specified on Annex 1 hereto (hereinafter, the “Assigned Percentage”) of
Assignor’s right, title and interest in and to (a) the Commitment, (b) any
Loan made by Assignor that is outstanding on the Assignment Effective Date, (c) Assignor’s
interest in any Letter of Credit outstanding on the Assignment Effective Date, (d) any
Note delivered to Assignor pursuant to the Credit Agreement, and (e) the
Credit Agreement and the other Related Writings.  After giving effect to such sale and
assignment and on and after the Assignment Effective Date, Assignee shall be
deemed to have a “Commitment Percentage” under the Credit Agreement equal to
the Commitment Percentage set forth in subpart II.A on Annex 1 hereto
and an Assigned Amount as set forth on subpart I.B of Annex 1 hereto
(hereinafter, the “Assigned Amount”).


 


3.                                       Assignment Effective Date.  The
Assignment Effective Date (the “Assignment Effective Date”) shall be

[
                    ,             ]
(or such other date agreed to by Agent). 
On or prior to the Assignment Effective Date, Assignor shall satisfy the
following conditions:


 


(a)                                  receipt by Agent of this Assignment
Agreement, including Annex 1 hereto, properly executed by Assignor and
Assignee and accepted and consented to by Agent and, if necessary pursuant to
the provisions of Section 11.10(b) of the Credit Agreement, by
Borrower;


 


(b)                                 receipt by Agent from Assignor of a fee of
Three Thousand Five Hundred Dollars ($3,500), if required by Section 11.10(d) of
the Credit Agreement;


 


(c)                                  receipt by Agent from Assignee of an
administrative questionnaire, or other similar document, which shall include (i) the
address for notices under the Credit Agreement, (ii) the address of its
Lending Office, (iii) wire transfer instructions for delivery of funds by
Agent, (iv) and such other information as Agent shall request; and


 


E-10





















 


(d)                                 receipt by Agent from Assignor or Assignee of
any other information required pursuant to Section 11.10 of the Credit
Agreement or otherwise necessary to complete the transaction contemplated
hereby.


 


4.                                       Payment Obligations.  In
consideration for the sale and assignment of Loans hereunder, Assignee shall
pay to Assignor, on the Assignment Effective Date, the amount agreed to by
Assignee and Assignor.  Any interest,
fees and other payments accrued prior to the Assignment Effective Date with
respect to the Assigned Amount shall be for the account of Assignor.  Any interest, fees and other payments accrued
on and after the Assignment Effective Date with respect to the Assigned Amount
shall be for the account of Assignee. 
Each of Assignor and Assignee agrees that it will hold in trust for the
other party any interest, fees or other amounts which it may receive to which
the other party is entitled pursuant to the preceding sentence and to pay the
other party any such amounts which it may receive promptly upon receipt
thereof.


 


5.                                       Credit Determination; Limitations on Assignor’s
Liability.  Assignee represents and warrants to Assignor,
Borrower, Agent and the Lenders (a) that it is capable of making and has
made and shall continue to make its own credit determinations and analysis
based upon such information as Assignee deemed sufficient to enter into the
transaction contemplated hereby and not based on any statements or
representations by Assignor, (b) Assignee confirms that it meets the
requirements to be an assignee as set forth in Section 11.10 of the Credit
Agreement; (c) Assignee confirms that it is able to fund the Loans and the
Letters of Credit as required by the Credit Agreement; (d) Assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the Related Writings are
required to be performed by it as a Lender thereunder; and (e) Assignee
represents that it has reviewed each of the Loan Documents and the Convertible
Subordinated Documents.  It is understood
and agreed that the assignment and assumption hereunder are made without
recourse to Assignor and that Assignor makes no representation or warranty of
any kind to Assignee and shall not be responsible for (i) the due
execution, legality, validity, enforceability, genuineness, sufficiency or
collectability of the Credit Agreement or any Related Writings, (ii) any
representation, warranty or statement made in or in connection with the Credit
Agreement or any of the Related Writings, (iii) the financial condition or
creditworthiness of Borrower or any Guarantor of Payment, (iv) the
performance of or compliance with any of the terms or provisions of the Credit
Agreement or any of the Related Writings, (v) the inspection of any of the
property, books or records of Borrower, or (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or Letters of
Credit.  Neither Assignor nor any of its
officers, directors, employees, agents or attorneys shall be liable for any
mistake, error of judgment, or action taken or omitted to be taken in
connection with the Loans, the Letters of Credit, the Credit Agreement or the
Related Writings, except for its or their own bad faith or willful
misconduct.  Assignee appoints Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to Agent by the terms thereof.


 


6.                                       Indemnity.  Assignee agrees to indemnify
and hold Assignor harmless against any and all losses, cost and expenses
(including, without limitation, attorneys’ fees) and liabilities


 


E-11





















 


incurred by Assignor in
connection with or arising in any manner from Assignee’s performance or
non-performance of obligations assumed under this Assignment Agreement.


 


7.                                       Subsequent Assignments. 
After the Assignment Effective Date, Assignee shall have the right
pursuant to Section 11.10 of the Credit Agreement to assign the rights
which are assigned to Assignee hereunder, provided that (a) any such
subsequent assignment does not violate any of the terms and conditions of the
Credit Agreement, any of the Related Writings, or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Credit Agreement or any of the Related Writings has been
obtained, (b) the assignee under such assignment from Assignee shall agree
to assume all of Assignee’s obligations hereunder in a manner satisfactory to
Assignor and (c) Assignee is not thereby released from any of its
obligations to Assignor hereunder.


 


8.                                       Reductions of Aggregate Amount of Commitments.  If
any reduction in the Total Commitment Amount occurs between the date of this
Assignment Agreement and the Assignment Effective Date, the percentage of the
Total Commitment Amount assigned to Assignee shall remain the percentage
specified in Section 1 hereof and the dollar amount of the Commitment of
Assignee shall be recalculated based on the reduced Total Commitment Amount.


 


9.                                       Acceptance of Agent; Notice by Assignor.  This
Assignment Agreement is conditioned upon the acceptance and consent of Agent
and, if necessary pursuant to Section 11.10 of the Credit Agreement, upon
the acceptance and consent of Borrower; provided, that the execution of this
Assignment Agreement by Agent and, if necessary, by Borrower is evidence of
such acceptance and consent.


 


10.                                 Entire Agreement.  This
Assignment Agreement embodies the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.


 


11.                                 Governing Law.  This
Assignment Agreement shall be governed by the laws of the State of Ohio,
without regard to conflicts of laws.


 


12.                                 Notices.  Notices shall be given under
this Assignment Agreement in the manner set forth in the Credit Agreement.  For the purpose hereof, the addresses of the
parties hereto (until notice of a change is delivered) shall be the address set
forth under each party’s name on the signature pages hereof.


 


[Remainder of page intentionally left blank.]


 


E-12





















 


13.                                 JURY TRIAL WAIVER.  EACH OF THE UNDERSIGNED, TO THE EXTENT
PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, ANY OF
THE LENDERS, AND BORROWER, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED HERETO.


 


IN
WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement by
their duly authorized officers as of the date first above written.


 


	
   

  	
   

  	
   

  	
  ASSIGNOR:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Phone:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
											



 


	
   

  	
   

  	
   

  	
  ASSIGNEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Phone:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
											



 


	
  Accepted and Consented to
  this      day

  of       , 20  :

  	
   

  	
  Accepted and Consented to
  this      day

  of          , 20  :

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  KEYBANK NATIONAL ASSOCIATION,

  as Agent

  	
   

  	
  EPIQ SYSTEMS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										



 


E-13





















 


ANNEX 1

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT


 


On
and after the Assignment Effective Date, after giving effect to all other
assignments being made by Assignor on the Assignment Effective Date, the
Commitment of Assignee, and, if this is less than an assignment of all of
Assignor’s interest, Assignor, shall be as follows:


 


    I.                             INTEREST OF ASSIGNOR BEING ASSIGNED TO ASSIGNEE


 


	
  A.

  	
  Assigned Percentage

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Assigned Amount

  	
   

  	
  $

  	
   

  	
   

  
						



 


    II.                         ASSIGNEE’S COMMITMENT (as of the Assignment Effective Date)


 


	
  A.

  	
  Assignee’s Commitment Percentage under the Credit Agreement

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Assignee’s Commitment Amount under the Credit Agreement

  	
   

  	
  $

  	
   

  	
   

  
						



 


    III.                     ASSIGNOR’S COMMITMENT (as of the Assignment Effective Date)


 


	
  A.

  	
  Assignor’s Commitment Percentage under the Credit Agreement

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Assignor’s Commitment Amount under the Credit Agreement

  	
   

  	
  $

  	
   

  	
   

  
						



 


E-14





















 


EXHIBIT G


FORM OF


REQUEST FOR EXTENSION


 


, 20  


 


KeyBank National
Association, as Agent


127 Public Square


Cleveland, Ohio  44114


Attention:  Institutional Banking


 


Ladies and Gentlemen:


 


The
undersigned, EPIQ SYSTEMS, INC. (“Borrower”), refers to the Amended and
Restated Credit and Security Agreement, dated as of November 15, 2005 (as
the same may from time to time be amended, restated or otherwise modified, the “Credit
Agreement”, the terms defined therein being used herein as therein defined),
among Borrower, the Lenders, as defined in the Credit Agreement, and KeyBank
National Association, as lead arranger, sole book runner and administrative
agent for the Lenders (“Agent”), and hereby gives you notice, pursuant to Section 2.13
of the Credit Agreement that the undersigned hereby requests an extension as
set forth below (the “Extension”) under the Credit Agreement, and in connection
with the Extension sets forth below the information relating to the Extension
as required by Section 2.13 of the Credit Agreement.


 


The
undersigned hereby requests Agent and the Lenders to extend the Commitment
Period from                                       ,
200  to                                        ,
200 .


 


The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Extension: (a) the
representations and warranties contained in each Loan Document are correct,
before and after giving effect to the Extension and the application of the
proceeds therefrom, as though made on and as of such date; (b) no event
has occurred and is continuing, or would result from such Extension, or the
application of proceeds therefrom, which constitutes a Default or an Event of
Default; and (c) the conditions set forth in Section 2.13 and Article IV
of the Credit Agreement have been satisfied.


 


	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 


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