EX-10.1






EXHIBIT 10.1




CREDIT AGREEMENT




by and among




PLATO LEARNING, INC.




and




EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO AS BORROWERS




as Borrowers,




EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO AS GUARANTORS




as Guarantors




THE LENDERS THAT ARE SIGNATORIES HERETO




as Lenders,




and




WELLS FARGO FOOTHILL, INC.




as Arranger and Administrative Agent




Dated as of June 4, 2007




1




CREDIT AGREEMENT




THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of June 4, 2007, by and among the
lenders identified on the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together with its successors
and assigns in such capacity, “Agent”), PLATO LEARNING, INC., a Delaware corporation (“Parent”),
each of Parent’s Subsidiaries identified on the signature pages hereof as borrowers (such
Subsidiaries are referred to hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as “Borrowers”), and each of Parent’s Subsidiaries identified
on the signature pages hereof as guarantors (such Subsidiaries, together with Parent, are referred
to hereinafter each and individually as a “Guarantor” and individually and collectively, jointly
and severally, as “Guarantors”).



The parties agree as follows:



1. DEFINITIONS AND CONSTRUCTION.



1.1. Definitions. Capitalized terms used in this Agreement shall have the meanings
specified therefor on Schedule 1.1.



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



1.3. Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein; provided,
however, that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.



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



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



2. LOAN AND TERMS OF PAYMENT.



2.1. Revolver Advances.



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



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



(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.
The outstanding principal amount of the Advances, together with interest accrued thereon, shall be
due and payable on the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.



2.2. Reserved.



2.3. Borrowing Procedures and Settlements.



(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request
by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated to make a Swing
Loan pursuant to Section 2.3(b) below, such notice must be received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding Date specifying (i)
the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that if Swing Lender is not obligated to make a Swing Loan as to
a requested Borrowing, such notice must be received by Agent no later than 10:00 a.m. (California
time) on the Business Day prior to the date that is the requested Funding Date. At Agent’s
election, in lieu of delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of
such telephonic notice, but the failure to provide such written confirmation shall not affect the
validity of the request.



(b) Making of Swing Loans. In the case of a request for an Advance and so long as either (i)
the aggregate amount of Swing Loans made since the last Settlement Date, minus the amount of
Collections or payments applied to Swing Loans since the last Settlement Date, plus the amount of
the requested Advance does not exceed $5,000,000, or (ii) Swing Lender, in its sole discretion,
shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make
an Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender pursuant
to this Section 2.3(b) being referred to as a “Swing Loan” and such Advances being referred
to collectively as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to the Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all the terms and conditions applicable
to other Advances, except that all payments on any Swing Loan shall be payable to Swing Lender
solely for its own account. Subject to the provisions of Section 2.3(d)(ii), Swing Lender
shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual
knowledge that (i) one or more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date. Swing Lender shall not
otherwise be required to determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to Advances that are Base
Rate Loans.



(c) Making of Loans.



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



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



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



(d) Protective Advances and Optional Overadvances.



(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in Agent’s sole
discretion, (A) after the occurrence and during the continuance of a Default or an Event of
Default, or (B) at any time that any of the other applicable conditions precedent set forth in
Section 3 are not satisfied, to make Advances to Borrowers on behalf of the Lenders that
Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the Obligations
(other than the Bank Product Obligations), or (3) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 9 (any of the Advances described in this Section
2.3(d)(i) shall be referred to as “Protective Advances”).



(ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize
Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is
not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to
Borrowers notwithstanding that an Overadvance exists or thereby would be created, so long as both
(A) after giving effect to such Advances, the outstanding Revolver Usage does not exceed the
Borrowing Base by more than $5,000,000, and (B) after giving effect to such Advances, the
outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the
event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by
either of the immediately foregoing clauses (A) and (B), regardless of the amount of, or reason
for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any
(or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice
would result in imminent harm to the Collateral or its value), and the Lenders shall, together with
Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to
Borrowers to an amount permitted by the preceding sentence. In such circumstances, if any Lender
objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction
or repayment thereof shall be implemented according to the determination of the Required Lenders.
Each Lender shall be obligated to settle with Agent as provided in Section 2.3(e) for the
amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such
Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and
any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group
Expenses.



(iii) Each Protective Advance and each Overadvance shall be deemed to be an Advance hereunder,
except that no Protective Advance or Overadvance shall be eligible to be a LIBOR Rate Loan and,
prior to Settlement thereof, all payments on the Protective Advances shall be payable to Agent
solely for its own account. The Protective Advances and Overadvances shall be repayable on demand,
secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans. The provisions of this
Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and
are not intended to benefit any Borrower in any way.



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



(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis,
or on a more frequent basis if so determined by Agent (1) on behalf of Swing Lender, with respect
to the outstanding Swing Loans, (2) for itself, with respect to the outstanding Protective
Advances, and (3) with respect to Loan Parties’ Collections or payments received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately
prior to the date of such requested Settlement (the date of such requested Settlement being the
“Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Protective Advances for the period since the
prior Settlement Date. Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender’s balance of the Advances (including Swing Loans and Protective
Advances) exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in immediately available funds to a Deposit
Account of such Lender (as such Lender may designate), an amount such that such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a Lender’s balance of the Advances
(including Swing Loans and Protective Advances) is less than such Lender’s Pro Rata Share of the
Advances (including Swing Loans and Protective Advances) as of a Settlement Date, such Lender shall
no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available
funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans
and Protective Advances). Such amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the applicable Swing Loans or Protective
Advances and, together with the portion of such Swing Loans or Protective Advances representing
Swing Lender’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to
the extent required by the terms hereof, Agent shall be entitled to recover for its account such
amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.



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



(iii) Between Settlement Dates, Agent, to the extent Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any payments received by Agent, that in accordance with
the terms of this Agreement would be applied to the reduction of the Advances, for application to
the Protective Advances or Swing Loans. If, as of any Settlement Date, Collections or payments of
Loan Parties or their Subsidiaries received since the then immediately preceding Settlement Date
have been applied to Swing Lender’s Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with respect to Protective Advances, and each
Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Protective Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily amount of funds employed by
Swing Lender, Agent, or the Lenders, as applicable.



(f) Notation. Agent shall record on its books the principal amount of the Advances owing to
each Lender, including the Swing Loans owing to Swing Lender, and Protective Advances owing to
Agent, and the interests therein of each Lender, from time to time and such records shall, absent
manifest error, conclusively be presumed to be correct and accurate.



(g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and Protective
Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any failure by any
other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations hereunder.



2.4. Payments.



(a) Payments by Borrowers.



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



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



(b) Apportionment and Application.



(i) So long as no Event of Default has occurred and is continuing and except as otherwise
provided with respect to Defaulting Lenders, all principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees and expenses (other
than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee
or expense relates. All payments to be made hereunder by Borrowers shall be remitted to Agent and
all (subject to Section 2.4(b)(iv) hereof) such payments, and all proceeds of Collateral
received by Agent, shall be applied, so long as no Event of Default has occurred and is continuing,
to reduce the balance of the Advances outstanding and, thereafter, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.



(ii) At any time that an Event of Default has occurred and is continuing and except as
otherwise provided with respect to Defaulting Lenders, all payments remitted to Agent and all
proceeds of Collateral received by Agent shall be applied as follows:



(A) first, to pay any Lender Group Expenses (including cost or expense reimbursements)
or indemnities then due to Agent under the Loan Documents, until paid in full,



(B) second, to pay any fees or premiums then due to Agent under the Loan Documents,
until paid in full,



(C) third, to pay interest due in respect of all Protective Advances, until paid in
full,



(D) fourth, to pay the principal of all Protective Advances, until paid in full,



(E) fifth, ratably to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid
in full,



(F) sixth, ratably to pay any fees or premiums then due to any of the Lenders under
the Loan Documents, until paid in full,



(G) seventh, ratably to pay interest due in respect of the Advances (other than
Protective Advances) and the Swing Loans, until paid in full,



(H) eighth, ratably (i) to pay the principal of all Swing Loans, until paid in full,
(ii) to pay the principal of all Advances until paid in full, (iii) to Agent, to be held by Agent,
for the ratable benefit of Issuing Lender and Lenders, as cash collateral in an amount up to 105%
of the Letter of Credit Usage, and (iv) to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve
established prior to the occurrence of, and not in contemplation of, the subject Event of Default,



(I) ninth, to pay any other Obligations (including the provision of amounts to Agent,
to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount
up to the amount determined by Agent in its Permitted Discretion as the amount necessary to secure
Borrowers’ and their Subsidiaries’ obligations in respect of Bank Products), and



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



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



(iv) Notwithstanding the foregoing, so long as no Event of Default has occurred and is
continuing or would result therefrom, Section 2.4(b)(i) shall not apply to any payment made
by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then
due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.



(v) For purposes of Section 2.4(b)(ii), “paid in full” means payment of all amounts
owing under the Loan Documents according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest accrued after the commencement of
any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.



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



(c) Mandatory Prepayments.



(i) If, as of the last day of any month, the Revolver Usage on such date exceeds the Borrowing
Base as of such date, then Borrowers shall immediately prepay the Obligations in accordance with
Section 2.4(d) in an aggregate amount equal to (i) the Revolver Usage on such date minus
(ii) the Borrowing Base on such date.



(ii) Immediately upon (x) any voluntary or involuntary sale or other disposition of property
or assets by Parent or any of its Subsidiaries (including casualty losses, condemnations or
proceeds of insurance but excluding sales or dispositions which qualify as Permitted Dispositions)
to the extent the Revolver Usage is greater than zero, or (y) the sale or issuance by any of
Parent’s Subsidiaries of any shares of Stock, Borrowers shall prepay the outstanding Obligations in
accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received
by such Person in connection with such sale or issuance of shares of Stock. Nothing contained in
this Section 2.4(c)(ii) shall permit Parent or any of its Subsidiaries to sell or issue any
Stock other than in accordance with the terms and conditions of this Agreement.



(d) Application of Payments. Each prepayment pursuant to Section 2.4(c)(i) and
(c)(ii) shall, (A) so long as no Event of Default shall have occurred and be continuing, be
applied, first, to the outstanding principal amount of the Advances until paid in full, and second,
to cash collateralize the Letters of Credit in an amount equal to 105% of the then extant Letter of
Credit Usage, and (B) if an Event of Default shall have occurred and be continuing, be applied in
the manner set forth in Section 2.4(b)(ii).



2.5. Overadvances. If, at any time or for any reason (except as otherwise provided in
Section 2.3(d)(ii)), the amount of Obligations owed by Borrowers to the Lender Group
pursuant to Section 2.1 or Section 2.12 is greater than any of the limitations set
forth in Section 2.1 or Section 2.12, as applicable (an “Overadvance”),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be
used by Agent to reduce the Obligations in accordance with the priorities set forth in Section
2.4(b). Borrowers promise to pay the Obligations (including principal, interest, fees, costs,
and expenses) in Dollars in full on the Maturity Date or, if earlier, on the date on which the
Obligations are declared due and payable pursuant to the terms of this Agreement.



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



(a) Interest Rates. Except as provided in clause (c) below, all Obligations (except
for (x) undrawn Letters of Credit, (y) Bank Product Obligations and (z) fees and expenses not then
due and payable) whether or not charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof as follows (i) if the relevant Obligation is an Advance that
is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and
(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.



(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the Lenders,
subject to any agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section 2.12(e)) which
shall accrue at a rate equal to 1.75% per annum times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.



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



(i) all Obligations (except for (x) undrawn Letters of Credit, (y) Bank Product Obligations
and (z) fees and expenses not then due and payable) whether or not charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate
equal to 2 percentage points above the per annum rate otherwise applicable hereunder, and



(ii) the Letter of Credit fee provided for above shall be increased to 2 percentage points
above the per annum rate otherwise applicable hereunder.



(d) Payment. Except as provided to the contrary in Section 2.11 or Section
2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations or Commitments are
outstanding. Borrowers hereby authorize Agent, from time to time to charge all interest and fees
(when due and payable), all Lender Group Expenses (as and when incurred), all charges, commissions,
fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), all fees
and costs provided for in Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including the amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of the Bank Product
Reserve) to Borrowers’ Loan Account, which amounts thereafter shall constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances hereunder; provided, that
(i) in the absence of a Default or Event of Default, and (ii) if Revolver Usage does not exceed
zero, and solely with respect to fees and costs in connection with any legal services or
appraisals, Agent shall use commercially reasonable efforts to provide Administrative Borrower at
least 3 Business Days notice prior to making such charges to Borrowers’ Loan Account, and if such
fees and costs are not received by Agent within 3 Business Days of such notice, Agent may charge
Borrowers’ Loan Account in the amount of such fees and costs; provided, further,
that the failure to provide such notice shall not invalidate Agent’s right to charge Borrowers’
Loan Account. Any interest not paid when due shall be compounded by being charged to the Loan
Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances hereunder.



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



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



2.7. Cash Management.



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



(b) Each Cash Management Bank shall establish and maintain Cash Management Agreements with
Agent and the applicable Loan Party. Each such Cash Management Agreement shall, unless otherwise
agreed by Agent, provide, among other things, that (i) upon the occurrence of a Cash Dominion
Trigger Event, the Cash Management Bank will comply solely with the instructions originated by
Agent directing the disposition of the funds in such Cash Management Account without further
consent by Loan Parties, as applicable, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account, other than for
payment of its service fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii) upon the occurrence
of a Cash Dominion Trigger Event, Agent shall have the right to instruct the Cash Management Bank
to forward, by daily sweep, all amounts in the applicable Cash Management Account to the Agent’s
Account; provided, that, if (A) such daily sweeps are occurring after a Cash Dominion
Trigger Event, (B) no Default or Event of Default has occurred and is continuing, and (C) Total
Availability exceeds $7,500,000 for a period of at least sixty (60) consecutive days, then the
Agent shall instruct the Cash Management Bank to terminate the daily sweeps from the Cash
Management Account to the Agent’s Account; provided, further, that Agent shall
retain all rights to subsequently instruct the Cash Management Bank to commence daily sweeps in the
future upon the occurrence of a subsequent Cash Dominion Trigger Event.



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



(d) The Cash Management Accounts shall be cash collateral accounts subject to Control
Agreements (it being understood that the Cash Management Agreements may constitute Control
Agreements).



2.8. Crediting Payments; Clearance Charge. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless such payment item is a
wire transfer of immediately available federal funds made to the Agent’s Account or unless and
until such payment item is honored when presented for payment. Should any payment item not be
honored when presented for payment, then Loan Parties shall be deemed not to have made such payment
and interest shall be calculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it is received into the
Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item
is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Agent as of the opening of business on
the immediately following Business Day. From and after the Closing Date, Agent shall be entitled
to charge Borrowers for one (1) Business Day of ‘clearance’ at the rate then applicable under
Section 2.6 to Advances that are Base Rate Loans on all Collections that are received by
Loan Parties and their Subsidiaries (regardless of whether forwarded by the Cash Management Banks
to Agent). This across-the-board one (1) Business Day clearance charge on all Collections of Loan
Parties and their Subsidiaries is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of whether or not there are
any outstanding monetary Obligations; the effect of such clearance charge being the equivalent of
charging interest on such Collections through the completion of a period ending one (1) Business
Day after the receipt thereof. The parties acknowledge and agree that the economic benefit of the
foregoing provisions of this Section 2.8 shall be for the exclusive benefit of Agent.



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



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



2.11. Fees. Borrowers shall pay to Agent, as and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter.



2.12. Letters of Credit.



(a) Subject to the terms and conditions of this Agreement, the Issuing Lender agrees to issue
letters of credit for the account of Borrowers (each, an “L/C”) or to purchase participations or
execute indemnities or reimbursement obligations (each such undertaking, an “L/C Undertaking”) with
respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of Borrowers. Each request for
the issuance of a Letter of Credit or the amendment, renewal, or extension of any outstanding
Letter of Credit, shall be made in writing by an Authorized Person and delivered to the Issuing
Lender and Agent via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each
such request shall be in form and substance satisfactory to the Issuing Lender in its Permitted
Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the date of issuance,
amendment, renewal, or extension of such Letter of Credit, (iii) the expiration date of such Letter
of Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary of the
Underlying Letter of Credit, as applicable), and (v) such other information (including, in the case
of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so
amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such
Letter of Credit. If requested by the Issuing Lender, the applicable Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the issuance of such requested
Letter of Credit:



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



(ii) the Letter of Credit Usage would exceed $1,500,000, or



(iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding
amount of Advances less the Bank Product Reserve, and less the aggregate amount of reserves, if
any, established by Agent under Section 2.1(b).



Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Credit
may be issued to support letters of credit that already are outstanding as of the Closing Date.
Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender
is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such
L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not
later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement
prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California
time, on the Business Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter (until such time as Administrative Borrower exercises the LIBOR Option
with respect thereto in accordance with Section 2.13(b)), shall bear interest at the rate
then applicable to Advances that are Base Rate Loans under Section 2.6. To the extent an
L/C Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt
by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(b) to reimburse the Issuing Lender, then to such Lenders and the Issuing
Lender as their interests may appear.



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



(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless
from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by the Lender
Group arising out of or in connection with any Letter of Credit; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the
extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any
other member of the Lender Group as determined by a final judgment of a court of competent
jurisdiction. Each Borrower agrees to be bound by the Underlying Issuer’s regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender’s interpretations of any
L/C issued by Issuing Lender to or for such Borrower’s account, even though this interpretation may
be different from such Borrower’s own, and each Borrower understands and agrees that the Lender
Group shall not be liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrowers’ instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer. Each Borrower
hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender
Group under any L/C Undertaking as a result of the Lender Group’s indemnification of any Underlying
Issuer; provided, however, that no Borrower shall be obligated hereunder to indemnify for any loss,
cost, expense, or liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group as determined by a final
judgment of a court of competent jurisdiction. Each Borrower hereby acknowledges and agrees that
neither the Lender Group nor the Issuing Lender shall be responsible for delays, errors, or
omissions resulting from the malfunction of equipment in connection with any Letter of Credit.



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



(e) Any and all issuance charges, commissions, fees, and costs incurred by the Issuing Lender
relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this
Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of the
Issuing Lender; it being acknowledged and agreed by each Borrower that, (i) as of the Closing Date,
the issuance charge imposed by the prospective Underlying Issuer is 0.825% per annum times the
undrawn amount of each Underlying Letter of Credit, (ii) upon prior written notice to the
Administrative Borrower, such issuance charge may be changed from time to time, and (iii) the
Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and
renewals.



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



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



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



and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender
Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the amount received is
reduced, notify Administrative Borrower, and Borrowers shall pay on demand, and in any event within
five (5) days of such demand, such amounts as Agent may specify to be necessary to compensate the
Lender Group for such additional cost or reduced receipt, together with interest on such amount
from the date of such demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this Section, as set
forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding on all of the
parties hereto.



2.13. LIBOR Option.



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



(b) LIBOR Election.



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



(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each
LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan
other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively, “Funding Losses”). Funding Losses
shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or
such Lender to be the excess, if any, of (1) the amount of interest that would have accrued on the
principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period therefor), minus (2) the amount
of interest that would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement of such period,
Dollar deposits of a comparable amount and period in the London interbank market. A certificate of
Agent or a Lender delivered to Administrative Borrower setting forth any amount or amounts that
Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be
conclusive absent manifest error.



(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given time.
Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $500,000 and integral
multiples of $125,000 in excess thereof.



(c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are converted or prepaid on any date
that is not the last day of the Interest Period applicable thereto, including as a result of any
automatic prepayment through the required application by Agent of proceeds of Loan Parties’ and
their Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other reason,
including early termination of the term of this Agreement or acceleration of all or any portion of
the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent
and the Lenders and their Participants harmless against any and all Funding Losses in accordance
with Section 2.13(b)(ii) above.



(d) Special Provisions Applicable to LIBOR Rate.



(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis
to take into account any additional or increased costs to such Lender of maintaining or obtaining
any eurodollar deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period, including changes
in tax laws (except changes of general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional or increased costs would increase
the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt
of the notice from the affected Lender, Administrative Borrower may, by notice to such affected
Lender (y) require such Lender to furnish to Administrative Borrower a statement setting forth the
basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment,
or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any
amounts due under Section 2.13(b)(ii) above).



(ii) In the event that any change in market conditions or any law, regulation, treaty, or
directive, or any change therein or in the interpretation of application thereof, shall at any time
after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to
each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding,
the date specified in such Lender’s notice shall be deemed to be the last day of the Interest
Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter
shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not
be entitled to elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.



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



2.14. Capital Requirements. If, after the date hereof, any Lender determines that (i)
the adoption of or change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the interpretation or application thereof by
any Governmental Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or directive of any such
entity regarding capital adequacy (whether or not having the force of law), has the effect of
reducing the return on such Lender’s or such holding company’s capital as a consequence of such
Lender’s Commitments hereunder to a level below that which such Lender or such holding company
could have achieved but for such adoption, change, or compliance (taking into consideration such
Lender’s or such holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender the amount of such reduction of return of
capital as and when such reduction is determined, such amount to be payable within 90 days after
presentation by such Lender of a statement in the amount and setting forth in reasonable detail
such Lender’s calculation thereof and the assumptions upon which such calculation was based (which
statement shall be deemed true and correct absent manifest error). In determining such amount,
such Lender may use any reasonable averaging and attribution methods; provided that
Borrowers shall not be required to compensate such Lender pursuant to this Section 2.14 for
any amount incurred more than 180 days prior to the date that such Lender notifies Administrative
Borrower that it intends to claim compensation therefor.



2.15. Joint and Several Liability of Borrowers.



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



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



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



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



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



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



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



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



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



3. CONDITIONS; TERM OF AGREEMENT.



3.1. Conditions Precedent to the Initial Extension of Credit. The obligation of each
Lender to make its initial extension of credit provided for hereunder, is subject to the
fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set
forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the conditions precedent).



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



(a) the representations and warranties contained in this Agreement or in the other Loan
Documents shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations or warranties that already are qualified
or modified by materiality in the text thereof) on and as of the date of such extension of credit,
as though made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date in which case such representations and warranties shall
be true and correct as of such earlier date);



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



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



(d) no Material Adverse Change shall have occurred since January 31, 2007.



3.3. Term. This Agreement shall continue in full force and effect for a term ending
on June 4, 2010 (the “Maturity Date”). The foregoing notwithstanding, the Lender Group,
upon the election of the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the continuation of an
Event of Default.



3.4. Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with respect to
outstanding Letters of Credit and including all Bank Product Obligations) immediately shall become
due and payable without notice or demand (including the requirement that the Borrowers provide (a)
Letter of Credit Collateralization, and (b) Bank Product Collateralization). No termination of
this Agreement, however, shall relieve or discharge Loan Parties or their Subsidiaries of their
duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens
in the Collateral shall remain in effect until all Obligations have been paid in full and the
Lender Group’s obligations to provide additional credit hereunder have been terminated. When this
Agreement has been terminated and all of the Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have been terminated
irrevocably and the Loan Parties have delivered to Agent a written release of all claims against
the Lender Group, Agent will, at Borrowers’ sole expense, without recourse to the Lender Group, or
representation or warranty, execute and deliver any termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and other similar
discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent’s Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.



3.5. Early Termination by Borrowers. Borrowers have the option, at any time upon 10
Business Days prior written notice to Agent (with such period being extended or shortened as may be
reasonably agreed to by Agent), to terminate this Agreement and terminate the Commitments hereunder
by paying to Agent, in cash, the Obligations (including (a) providing Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage and (b) providing Bank
Product Collateralization with respect to the then existing Bank Products), in full. If Borrowers
have sent a notice of termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrowers shall be obligated to repay the Obligations (including (a) providing
Letter of Credit Collateralization with respect to the then existing Letter of Credit Usage and (b)
providing Bank Product Collateralization with respect to the then existing Bank Products), in full,
on the date set forth as the date of termination of this Agreement in such notice.



3.6. Conditions Subsequent to the Initial Extension of Credit. The obligation of the
Lender Group (or any member thereof) to continue to make Advances hereunder (or to extend any other
credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each
of the conditions subsequent set forth below (the failure by the applicable Loan Party to so
perform or cause to be performed constituting an Event of Default):



(a) Within 30 days after the Closing Date, Loan Parties shall deliver to Agent duly executed
Cash Management Agreements and Control Agreements, for Loan Parties’ accounts specified on
Schedule 3.6(a), in each case in form and substance satisfactory to Agent.



(b) The Loan Parties shall use commercially reasonable efforts to deliver to Agent a
Collateral Access Agreement with respect to the location at 10801 Nesbitt Avenue South,
Bloomington, Minnesota 55437-3109.



(c) [Within 5 Business Days after the Closing Date, Agent shall have received a certificate of
insurance, together with endorsements thereto (including lender’s loss payable endorsements), as
are required by Section 5.8 of the Agreement, and copies of all insurance policies
maintained by the Loan Parties, together with endorsements thereto, in each case, the form and
substance of which shall be reasonably satisfactory to Agent.]



4. REPRESENTATIONS AND WARRANTIES.



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



4.1. No Encumbrances. Each Loan Party and its Subsidiaries has good and indefeasible
title to, or a valid leasehold interest in, their personal property assets and good and marketable
title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of
Liens except for Permitted Liens.



4.2. Reserved.



4.3. Reserved.



4.4. Equipment and Inventory. Each material item of Equipment and Inventory of Loan
Parties and their Subsidiaries is (i) either (a) used or held for use in their business and is in
good working order, ordinary wear and tear and damage by casualty excepted or (b) being held for
sale or other disposition pursuant to a Permitted Disposition of the type described in clause (a)
of the definition thereof, (ii) located only at the locations identified on Schedule 4.4
(as such schedule may be updated pursuant to Section 5.9) and (iii) is properly and
accurately recorded in the books and records of the Loan Parties.



4.5. Reserved.



4.6. Reserved.



4.7. Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.



(a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction of
organization of each Loan Party and each of its Subsidiaries is set forth on Schedule
4.7(a) (as such Schedule may be updated from time to time to reflect changes permitted to be
made under Section 6.5).



(b) The chief executive office of each Loan Party and each of its Subsidiaries is located at
the address indicated on Schedule 4.7(b) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 5.9).



(c) Each Loan Party’s and each of its Subsidiaries’ tax identification number and
organizational identification number, if any, are identified on Schedule 4.7(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be made under Section
6.5).



(d) As of the Closing Date, Loan Parties and their Subsidiaries do not hold any commercial
tort claims, except as set forth on Schedule 4.7(d).



4.8. Due Organization and Qualification; Subsidiaries.



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



(b) Set forth on Schedule 4.8(b) (as such Schedule may be updated from time to time to
reflect changes permitted to be made under Section 5.16) is a complete and accurate
description of the authorized capital Stock of each Loan Party, by class, and, as of the Closing
Date, a description of the number of shares of each such class that are issued and outstanding.
Other than as described on Schedule 4.8(b), there are no subscriptions, options, warrants,
or calls relating to any shares of each Loan Party’s capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument. No Loan Party is
subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire
any shares of its capital Stock or any security convertible into or exchangeable for any of its
capital Stock.



(c) Set forth on Schedule 4.8(c) (as such Schedule may be updated from time to time to
reflect changes permitted to be made under Section 5.16), is a complete and accurate list
of each Loan Party’s direct and indirect Subsidiaries (other than other Loan Parties), showing: (i)
the jurisdiction of their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage
of the outstanding shares of each such class owned directly or indirectly by the applicable Loan
Party. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.



(d) Except as set forth on Schedule 4.8(c), there are no subscriptions, options,
warrants, or calls relating to any shares of any Loan Party’s Subsidiaries’ (other than other Loan
Parties) capital Stock, including any right of conversion or exchange under any outstanding
security or other instrument. No Loan Party nor any of its respective Subsidiaries is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of
any Loan Party’s Subsidiaries’ capital Stock or any security convertible into or exchangeable for
any such capital Stock.



4.9. Due Authorization; No Conflict.



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



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



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



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



(e) The Agent’s Liens are validly created, perfected (other than (i) in respect of motor
vehicles and (ii) any Deposit Accounts and Securities Accounts not subject to a Control Agreement
as permitted by Section 6.12, and subject only to the filing of financing statements, the
recordation of any Mortgages, Copyright Security Agreement, Patent Security Agreements and
Trademark Security Agreements), and first priority Liens, subject only to Permitted Liens that
pursuant to the definition of the term “Permitted Liens” are not prohibited from having a priority
superior to Agent’s Liens.



4.10. Litigation. Other than those matters disclosed on Schedule 4.10, and
other than matters arising after the Closing Date that, as applicable, reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or proceedings
pending or, to the best knowledge of each Loan Party, threatened against any Loan Party or any of
its Subsidiaries. There are no actions, suits or proceedings pending, or to the best knowledge of
each Loan Party, threatened, that relate to this Agreement, any other Loan Document, or any
transaction contemplated hereby or thereby.



4.11. No Material Adverse Change. All financial statements relating to Parent and its
Subsidiaries that have been delivered by Parent or any of its Subsidiaries to the Lender Group have
been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all
material respects, Parent’s and its Subsidiaries’ financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material Adverse Change with
respect to Parent and its Subsidiaries since January 31, 2007.



4.12. Fraudulent Transfer.



(a) Each Borrower is Solvent and the Loan Parties and their Subsidiaries, taken as a whole,
are Solvent.



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



4.13. Employee Benefits. None of Loan Parties, any of their Subsidiaries, or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan, other than those listed on
Schedule 4.13. Each Loan Party and each ERISA Affiliate has satisfied the minimum funding
standards of ERISA and the IRC with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that may result in an
ERISA Event that reasonably could be expected to result in a Material Adverse Change. None of the
Loan Parties or any of their ERISA Affiliates is required to provide security to any Benefit Plan
under Section 401(a)(29) of the IRC.



4.14. Environmental Condition. Except as set forth on Schedule 4.14, (a) to
Loan Parties’ knowledge, none of Loan Parties’ or their Subsidiaries’ properties or assets has ever
been used by Loan Parties, their Subsidiaries, or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such
use, production, storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to Loan Parties’ knowledge, none of Loan
Parties’ nor their Subsidiaries’ properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c)
none of Loan Parties nor any of their Subsidiaries have received notice that a Lien arising under
any Environmental Law has attached to any revenues or to any Real Property owned or operated by
Loan Parties or their Subsidiaries, and (d) none of Loan Parties nor any of their Subsidiaries have
received a summons, citation, notice, or directive from the United States Environmental Protection
Agency or any other federal or state governmental agency concerning any action or omission by any
Loan Party or any Subsidiary of a Loan Party resulting in the releasing or disposing of Hazardous
Materials into the environment.



4.15. Intellectual Property. Each Loan Party owns, or holds appropriate licenses in,
all Intellectual Property that is necessary to the conduct of its business as currently conducted
(collectively, the “Business Intellectual Property”). Attached hereto as Schedule 4.15(a)
is a true, correct, and complete listing of all registered or material unregistered Business
Intellectual Property with respect to which any Loan Party is the owner or is an exclusive licensee
(with all such Business Intellectual Property being identified as a Patent, Trademark, Trade
Secret, or Copyright, as the case may be). Schedule 4.15(a) designates any of the Business
Intellectual Property as to which a Loan Party is an exclusive licensee.



(a) Except as set forth in Schedule 4.15(a):



(i) a Loan Party is the sole owner of the Business Intellectual Property, free and clear of
any Lien (other than in favor of Agent) without the payment of any monies or royalty except with
respect to off-the-shelf software;



(ii) each Loan Party has taken, and will continue to take, all actions which are necessary or
advisable to acquire and protect the Business Intellectual Property, consistent with prudent
commercial practices, including, without limitation: (x) registering all Copyrights (as defined in
the Copyright Security Agreement and included within the Business Intellectual Property) applicable
to any Software in the Copyright Office to the extent such Copyrights constitute part of the
Required Library, and (y) registering all Trademarks (as defined in the Trademark Security
Agreement and included within the Business Intellectual Property) in the United States Patent and
Trademark Office;



(iii) each Loan Party’s rights in and to the Business Intellectual Property are valid and
enforceable;



(iv) none of the Loan Parties has received a demand, claim, notice or inquiry from any Person
in respect of the Business Intellectual Property which challenges, threatens to challenge or
inquiries as to whether there is any basis to challenge, the validity of, the rights of a Loan
Party in or the right of a Loan Party to use, any such Business Intellectual Property, and Loan
Parties know of no basis for any such challenge;



(v) no claim has been threatened or asserted that any Loan Party has violated or infringed
upon the Intellectual Property rights of any Person and, to the knowledge of each Loan Party, no
Loan Party is in violation or infringement of, and has not violated or infringed any proprietary
rights of any other Person;



(vi) to the knowledge of each Loan Party, no Person is infringing any Business Intellectual
Property;



(vii) except between and among Loan Party and their Subsidiaries and except on an arm’s-length
basis for value and other commercially reasonable terms, none of the Borrowers has granted any
license with respect to any Intellectual Property to any Person;



(viii) all versions of Software sold, marketed, distributed, licensed, maintained or serviced
by any Loan Party, and all Software pursuant to which a Borrower generates Recurring Revenue (A)
were authored by regular employees of such Loan Party within the scope of their employment and such
Loan Party was thus the original author pursuant to the work made for hire doctrine, or (B) are
software products which such Loan Party licenses from providers thereof with all necessary rights
to resell or sublicense to third parties; and



(ix) the Loan Parties have taken all reasonable measures to protect the secrecy,
confidentiality and value of all confidential and proprietary information, Trade Secrets and
know-how used in their respective businesses (including, without limitation, entering into
appropriate confidentiality agreements with all officers, directors, employees, and other Persons
with access to the Trade Secrets). Except as set forth on Schedule 4.15(a) hereto, the
Trade Secrets have not been disclosed to any Persons other than the Loan Parties’ employees or
contractors who had a need to know and use such Trade Secrets in the ordinary course of employment
or contract performance and who executed appropriate confidentiality agreements prohibiting
unauthorized disclosure of such Trade Secrets.



(b) With respect to all Software used by any Loan Party, (i) such Loan Party is in possession
of copies of all source and object codes, other than Software owned by third parties and licensed
to such Loan Party, and (ii) all such source and object codes are proprietary information of a Loan
Party, other than such source and object codes relating to Software owned by third parties and
licensed to such Loan Party.



(c) Schedule 4.15(c) hereto contains a breakdown by Software of the Recurring Revenues
generated by the Loan Parties as of the Closing Date.



(d) The Copyrights listed on Schedule 4.15(d) hereto are no longer used or useful in
the conduct of the Loan Parties’ business as currently conducted.



4.16. Leases. Loan Parties and their Subsidiaries enjoy peaceful and undisturbed
possession under all Material Leases to which they are parties or under which they are operating
and all of such Material Leases are valid and subsisting and no material default by Loan Parties or
their Subsidiaries exists under any of them.



4.17. Deposit Accounts and Securities Accounts.



(a) Set forth on Schedule 4.17 is a listing of all of Loan Parties’ and their
Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (i) the name and address of such Person, and (ii) the account numbers of
the Deposit Accounts or Securities Accounts maintained with such Person.



(b) So long as no Default or Event of Default has occurred and is continuing, Administrative
Borrower may amend Schedule 4.17 to add or replace a Deposit Account (other than a Cash
Management Account, the addition or replacement of which shall be governed by Section 2.7)
or a Securities Account; provided, however, that prior to the time of the opening
of any additional or replacement Deposit Account or Securities Account, a Loan Party (or its
Subsidiary, as applicable) and the applicable financial institution at which such Deposit Account
or Securities Account is to be located shall have executed and delivered to Agent a Control
Agreement.



4.18. Complete Disclosure. All factual information (taken as a whole) furnished by or
on behalf of Loan Parties or their Subsidiaries in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter furnished by or on
behalf of Loan Parties or their Subsidiaries in writing to Agent or any Lender will be (taken as a
whole), true and accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date, the Closing Date
Projections represent, and as of the date on which any other Projections are delivered to Agent,
such additional Projections represent Loan Parties’ good faith estimate of their and their
Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by
Loan Parties to be reasonable at the time of the delivery thereof to Agent (it being understood
that such projections and forecasts are subject to uncertainties and contingencies, many of which
are beyond the control of Loan Parties and their Subsidiaries and no assurances can be given that
such projections or forecasts will be realized).



4.19. Indebtedness. Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of each Loan Party and each Subsidiary of a Loan Party outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date, and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and describes the principal
terms thereof as of the Closing Date (i.e., payor, payee, principal balance, amortization (if any),
interest rate, ranking and maturity date).



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



4.21. Margin Stock. None of the Loan Parties is nor will be engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System), and no proceeds of
any Advance will be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.



4.22. Permits, Licenses Etc.. Each Loan Party has, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations required for such
Person lawfully to own, lease, manage or operate, or to acquire, each business and the Real
Property currently owned, leased, managed or operated, or to be acquired, by such Person, except
for such non-compliance that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Change. No condition exists or event has occurred which, in itself or
with the giving of notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license, authorization, approval,
entitlement or accreditation, and to each Loan Party’s knowledge, there is no claim that any
thereof is not in full force and effect.



4.23. Employee and Labor Matters. Except as set forth on Schedule 4.23, there
is (a) no unfair labor practice complaint pending or, to any Loan Party’s knowledge, threatened
against any Loan Party before any Governmental Authority and no grievance or arbitration proceeding
pending or threatened against any Loan Party which arises out of or under any collective bargaining
agreement, (b) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending
or, to the best knowledge of each Loan Party, threatened against any Loan Party and (c) no union
representation question existing with respect to the employees of any Loan Party and no union
organizing activity taking place with respect to any of the employees of any of them. Neither any
Loan Party, nor any ERISA Affiliate of any Loan Party has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act (“WARN”) or similar state law,
which remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan
Party have not been in violation of the Fair Labor Standards Act or any other applicable legal
requirements. All material payments due from any Loan Party on account of workers compensation,
wages and employee health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party.



4.24. Material Contracts. Set forth on Schedule 4.24 is a description of all
Material Contracts of Parent and its Subsidiaries, showing the parties and principal subject matter
thereof and amendments and modifications thereto; provided, however, that
Administrative Borrower may amend Schedule 4.24 to add additional Material Contracts so
long as such amendment occurs by written notice to Agent not less than 15 Business Days after the
date on which Parent or its Subsidiary enters into such Material Contract after the Closing Date.
Except for matters which, either individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change, each Material Contract (other than those that have expired
at the end of their normal terms) (a) is in full force and effect and is binding upon and
enforceable against Parent or its Subsidiary and, to the Loan Parties’ knowledge, each other Person
that is a party thereto in accordance with its terms, (b) has not been otherwise amended or
modified (other than amendments or modifications permitted by Section 6.7(e)), and (c) is
not in default due to the action or inaction of Parent or any of its Subsidiaries.



4.25. Taxes. Each Loan Party, and each Person which has tax liabilities for which any
Loan Party is liable (each, a “Tax Party”) have filed, or caused to be filed, and will
continue to file in a timely manner all federal, state and other material tax returns and reports
required to be filed, and have paid, and will continue to pay, all federal, state and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets (collectively, “Governmental Charges”) otherwise due and
payable, except, in each case, to the extent that the validity of such tax, assessment, fee or
other governmental charge is the subject of a Permitted Protest. All information in such tax
returns, reports and declarations is complete and accurate in all material respects. Each Tax
Party has paid or caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, and has collected, deposited and remitted in accordance with all
applicable laws, all sales, use and similar taxes applicable to the conduct of its business,
except, in each case, to the extent that the validity of such assessment or tax is the subject of a
Permitted Protest. There are no Liens (other than Permitted Liens) on any properties or assets of
any Loan Party imposed or arising as a result of the delinquent payment or the nonpayment of any
tax, assessment, fee or other governmental charge the aggregate amount of which exceeds $25,000.



4.26. Insurance. Each Loan Party and each of its Subsidiaries keeps its property
adequately insured and maintains (a) insurance to such extent and against such risks, including
fire, as is customary with companies in the same or similar businesses, (b) workers’ compensation
insurance in the amount required by applicable law, (c) public liability insurance, which shall
include product liability insurance, in the amount customary with companies in the same or similar
business against claims for personal injury or death on properties owned, occupied or controlled by
it, and (d) such other insurance as may be required by law or as may be reasonably required by
Agent (including, without limitation, against larceny, embezzlement or other criminal
misappropriation). Schedule 4.26 sets forth a list of all insurance maintained by each
Loan Party on the Closing Date.



4.27. Holding Company and Investment Company Acts. None of the Loan Parties is (a) a
“holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding
company”, as such terms are defined in the Public Utility Holding Company Act of 2005, as amended,
or (b) an “investment company” or an “affiliated person” or “promoter” of, or “principal
underwriter” of or for, an “investment company”, as such terms are defined in the Investment
Company Act of 1940, as amended.



4.28. Recurring Revenues. All Recurring Revenues are created pursuant to an “Order
Authorization Form”, a purchase order or a purchase contract duly executed by an Account Debtor.



4.29. Copyrights. With respect to Copyrights acquired, created or generated by a Loan
Party after the Closing Date, and that are required to be registered in the Copyright Office as
constituting part of the Required Library, each of the applications for registration to be filed in
the Copyright Office by the Loan Parties with respect thereto, when filed, will be in proper form
for filing with the Copyright Office and the Loan Parties will have made proper application for,
and will have paid all fees necessary to obtain registration of the Copyrights related to such
applications for registration.



5. AFFIRMATIVE COVENANTS.



Each Loan Party covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, each Loan Party shall and shall cause each of its Subsidiaries
to do all of the following:



5.1. Accounting System. Maintain a system of accounting that enables Parent and its
Subsidiaries to produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time reasonably may be
requested by Agent. Loan Parties also shall keep a reporting system that shows all additions,
sales, claims or credit requests, returns, and allowances (on a consolidated basis) with respect to
their and their Subsidiaries’ sales. Loan Parties shall also maintain their billing
systems/practices as approved by Agent prior to the Closing Date and shall only make material
modifications thereto with notice to, and consent of, Agent.



5.2. Collateral Reporting. Provide Agent (and if so requested by Agent, with copies
for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified
therein. In addition, each Loan Party agrees to cooperate fully with Agent to facilitate and
implement a system of electronic collateral reporting in order to provide electronic reporting of
each of the items set forth above.



5.3. Financial Statements, Reports, Certificates. Deliver to Agent, with copies to
each Lender, each of the financial statements, reports, or other items set forth on
Schedule 5.3 at the times specified therein. In addition, Parent agrees that no Subsidiary
of Parent will have a fiscal year different from that of Parent; provided, that in the
event Parent acquires a Subsidiary (i) during the first nine months of Parent’s Fiscal Year, such
Subsidiary’s fiscal year may remain different from Parent’s Fiscal Year until the end of Parent’s
Fiscal Year in which such Subsidiary was acquired, and (ii) during the last three months of
Parent’s Fiscal Year, such Subsidiary’s fiscal year may remain different from Parent’s Fiscal Year
until the end of Parent’s Fiscal Year in the Fiscal Year following the acquisition date of the
Subsidiary.



5.4. Guarantor Reports. Cause each Guarantor to deliver its annual financial
statements at the time when Parent provides its audited financial statements to Agent, but only to
the extent such Guarantor’s financial statements are not consolidated with Parent’s financial
statements.



5.5. Inspection. Permit Agent, each Lender, and each of their duly authorized
representatives or agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its affairs, finances,
and accounts with, and to be advised as to the same by, its officers and employees at such
reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default
or Event of Default exists, with reasonable prior notice to Administrative Borrower;
provided, that so long as no Default or Event of Default shall have occurred and be
continuing, Borrowers shall not be obligated to reimburse Agent for more than two (2) audits and
one (1) appraisal or business valuation during any 12 month period.



5.6. Maintenance of Properties. Maintain and preserve all of their properties which
are necessary or useful in the proper conduct of their business in good working order and
condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could
not be expected to result in a Material Adverse Change), and comply at all times with the
provisions of all Material Leases to which it is a party as lessee, to the extent necessary to
prevent any loss or forfeiture thereof or thereunder.



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



5.8. Insurance.



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



(b) Administrative Borrower shall give Agent prompt notice of any loss exceeding $250,000
covered by such insurance. So long as no Event of Default has occurred and is continuing, Loan
Parties shall have the exclusive right to adjust any losses payable under any such insurance
policies which are less than $500,000. Following the occurrence and during the continuation of an
Event of Default, or in the case of any losses payable under such insurance exceeding $500,000,
Agent shall have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to any Loan Party whatsoever in respect of such adjustments.



5.9. Location of Inventory and Equipment. Keep Loan Parties’ and their Subsidiaries’
Inventory and Equipment (other than vehicles and Equipment out for repair and Inventory and
Equipment together with an aggregate value of $50,000 or less) only at the locations identified on
Schedule 4.4 and their chief executive offices only at the locations identified on
Schedule 4.7(b); provided, however, that Administrative Borrower may amend
Schedules 4.4 and 4.7 so long as (a) no Default or Event of Default shall have
occurred and be continuing, (b) such amendment occurs by written notice to Agent not less than 30
days prior to the date on which such Inventory or Equipment is moved to such new location or such
chief executive office is relocated, so long as such new location is within the continental United
States, and (c) other than in the case of a Real Property owned by such Loan Party and subject to a
valid Mortgage in favor of Agent, at the time of such written notification, the applicable Loan
Party provides Agent a Collateral Access Agreement with respect thereto.



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



5.11. Leases. Pay when due all rents and other amounts payable under any Material
Leases to which any Loan Party or any Subsidiary of a Loan Party is a party or by which any Loan
Party’s or any of its Subsidiaries’ properties and assets are bound, unless such payments are the
subject of a Permitted Protest.



5.12. Existence. At all times preserve and keep in full force and effect each Loan
Party’s and each of its Subsidiaries’ (a) valid existence and (b) good standing and any rights and
franchises except for good standings, rights and franchises the absence of which could not
reasonably be expected to result in a Material Adverse Change; provided, that the Loan
Parties may dissolve PLATO UK and any Inactive Subsidiary.



5.13. Environmental.



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



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



5.15. Control Agreements. Take all reasonable steps required by Agent in order for
Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 6.12) all of its
Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter of
credit rights.



5.16. Formation of Subsidiaries. At the time that any Loan Party forms any direct or
indirect Subsidiary or acquires any direct or indirect domestic Subsidiary after the Closing Date,
such Loan Party shall, within 10 Business Days after such acquisition or formation, (a) cause such
new Subsidiary to provide to Agent a joinder to this Agreement and the Security Agreement, together
with such other security documents (including Mortgages with respect to any owned Real Property of
such new Subsidiary), as well as appropriate financing statements (and with respect to all property
subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted Liens that pursuant to
the definition of the term “Permitted Liens” are not prohibited from having a priority superior to
Agent’s Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Agent a pledge agreement and appropriate certificates and powers or financing statements,
hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form
and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including
one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with
respect to the execution and delivery of the applicable documentation referred to above (including
policies of title insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section
5.16 shall be a Loan Document.



5.17. Brokerage Commissions. Pay any and all brokerage commission or finders’ fees
incurred in connection with or as a result of Loan Parties’ obtaining financing from the Lender
Group under this Agreement. Loan Parties agree and acknowledge that payment of all such brokerage
commissions or finders’ fees shall be the sole responsibility of Loan Parties, and Loan Parties
agree jointly and severally to indemnify, defend, and hold the Lender Group harmless from and
against any claim of any broker or finder arising out of Loan Parties’ obtaining financing from the
Lender Group under this Agreement.



5.18. Organizational ID Number; Commercial Tort Claims. Immediately, but in any event
within 10 Business Days, (a) upon obtaining an organizational identification number (to the extent
that any Loan Party has not been issued such number on or prior to the Closing Date), notify Agent
in writing and deliver an updated Schedule 4.7(c), and (b) upon obtaining any commercial
tort claim having a value in excess of $250,000, deliver an updated Schedule 4.7(d) and the
other documents required under the Security Agreement.



5.19. Obtaining Permits, Etc. Obtain, maintain and preserve and take all necessary
action to timely renew, in all material respects, all permits, licenses, authorizations, approvals,
entitlements and accreditations that are necessary or useful in the proper conduct of its business.



5.20. Copyright Registrations.



(a) Within 60 days after the Closing Date, apply to register Copyrights with the Copyright
Office constituting the PLE Library.



(b) Within 120 days after the Closing Date, apply to register Copyrights with the Copyright
Office constituting the PWLN Library.



(c) Within 180 days after the Closing Date, apply to register Copyrights with the Copyright
Office constituting the eduTest Library.



(d) Within 60 days after any Library Upgrade, (i) cause all Copyrights with respect to such
Library Upgrade to be registered with the Copyright Office in a manner sufficient to impart
constructive notice of Loan Party’s ownership thereof which obligation may be satisfied by such
Loan Party by filing applications for registration in proper form for filing with the Copyright
Office and otherwise making proper application for, and paying all fees necessary to obtain, a
registration of the Copyrights related to such applications for registration, and (ii) cause to be
prepared, executed, and filed with the Copyright Office, a Copyright Security Agreement or
supplemental schedules to a Copyright Security Agreement reflecting the security interest of the
Agent and the Lender Group in such new Copyrights, which shall be in form and content suitable for
registration with the Copyright Office so as to give constructive notice of the transfer by a Loan
Party to Agent of a security interest in such Copyrights. Agent agrees to file the Copyright
Security Agreement encumbering specific copyrights with the Copyright Office promptly upon receipt
of notice by Loan Parties of all information necessary to file such Copyright Security Agreement.



(e) Beginning 180 days after the Closing Date, and every 180 days thereafter (or, at any time
when a Cash Dominion Trigger Event has occurred and is continuing, every 90 days thereafter), (i)
cause all Copyrights with respect to any Minor Upgrades to any Software comprising the Required
Library made during the previous applicable period to be registered with the Copyright Office in a
manner sufficient to impart constructive notice of Loan Party’s ownership thereof which obligation
may be satisfied by such Loan Party by filing applications for registration in proper form for
filing with the Copyright Office and otherwise making proper application for, and paying all fees
necessary to obtain, a registration of the Copyrights related to such applications for
registration, and (ii) cause to be prepared, executed, and filed with the Copyright Office, a
Copyright Security Agreement or supplemental schedules to a Copyright Security Agreement reflecting
the security interest of the Agent and the Lender Group in such new Copyrights, which shall be in
form and content suitable for registration with the Copyright Office so as to give constructive
notice of the transfer by a Loan Party to Agent of a security interest in such Copyrights. Agent
agrees to file the Copyright Security Agreement encumbering specific copyrights with the Copyright
Office promptly upon receipt of notice by Loan Parties of all information necessary to file such
Copyright Security Agreement.



(f) (i) Cause all versions of such Software which comprise the Required Library to be
deposited in escrow within 30 days after the Closing Date, in accordance with the Source Code
Escrow Agreement, (ii) cause all Library Upgrades to such Software to be deposited in escrow within
30 days after their release to market, (iii) beginning 180 days after the Closing Date, and every
180 days thereafter (or, at any time that a Cash Dominion Trigger Event has occurred and is
continuing, every 90 days thereafter), cause all Minor Upgrades to such Software made during the
prior applicable period to be deposited in escrow in accordance with the Source Code Escrow
Agreement, and (iv) to the extent consistent with the terms of this Agreement, comply at all times
with the provisions of the Source Code Escrow Agreement.



5.21. Further Assurances. At any time upon the request of Agent, Loan Parties shall
execute or deliver to Agent, and shall cause their Subsidiaries to execute or deliver to Agent, any
and all financing statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all
other documents (collectively, the “Additional Documents”) that Agent may request in form and
substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better
perfect the Agent’s Liens in all of the properties and assets of Loan Parties and their
Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or
personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Loan
Parties or their Subsidiaries after the Closing Date, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, Loan Parties authorize Agent to execute any such Additional Documents
in Loan Parties’ or their Subsidiaries’ names, as applicable, and authorizes Agent to file such
executed Additional Documents in any appropriate filing office.



5.22. Material Contracts.



(a) Contemporaneously with the delivery of each Compliance Certificate pursuant hereto,
provide Agent with copies of (a) each Material Contract entered into since the delivery of the
previous Compliance Certificate, and (b) each material amendment or modification of any Material
Contract entered into since the delivery of the previous Compliance Certificate.



(b) Within three (3) Business Days after the cancellation or early termination (but not upon
expiration in accordance with contractual terms) of any Material Contract, provide Agent with
written notice of such cancellation or early termination.



6. NEGATIVE COVENANTS.



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



6.1. Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any Indebtedness, except:



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



(b) Indebtedness set forth on Schedule 4.19 and any Refinancing Indebtedness in
respect of such Indebtedness,



(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such
Indebtedness,



(d) endorsement of instruments or other payment items for deposit,



(e) Indebtedness composing Permitted Investments, and



(f) other unsecured Indebtedness in an aggregate outstanding principal amount not exceeding
$1,000,000.



6.2. Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired,
or any income or profits therefrom, except for Permitted Liens.



6.3. Restrictions on Fundamental Changes.



(a) Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify
its Stock,



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



(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its assets, or



(d) Suspend or go out of a substantial portion of its or their business,



except with respect to (x) a Permitted Acquisition, (y) a merger, consolidation or conveyance,
sale, lease, license, assignment, transfer or other disposition, in one transaction or a series of
related transactions, of all or any substantial portion on its assets between the Loan Parties;
provided, that, (A) in the case of a merger or consolidation involving a Borrower, after
giving effect to the transaction, such Borrower remains as the surviving corporation, (B) in the
case of a conveyance, sale, lease, license, assignment, transfer or other disposition, involving a
Borrower, Borrower shall be the Person receiving (or receiving the benefit) of such assets, (C)
Administrative Borrower shall have provided Agent with at least 30 days prior written notice, and
(D) no Default or Event of Default shall have occurred and be continuing or would result therefrom
and the transaction would not violate any provisions of any Loan Document, and (z) the liquidation,
winding up or dissolving of each of PLATO UK or any Inactive Subsidiary.



6.4. Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license, assign, transfer, or otherwise dispose of) any of the assets of any Loan Party or
any Subsidiary of a Loan Party.



6.5. Change Name. Change any Loan Party’s or any of its Subsidiaries’ name, FEIN,
organizational identification number, state of organization, or organizational identity;
provided, however, that a Loan Party or a Subsidiary of a Loan Party may change its
name upon at least 20 days’ prior written notice by Administrative Borrower to Agent of such change
and so long as, at the time of such written notification, such Loan Party or such Subsidiary
provides any financing statements necessary to perfect and continue perfected Agent’s Liens and any
other documentation reasonably requested by Agent.



6.6. Nature of Business. Make any change in the nature of their business as described
in Schedule 6.6 or acquire any properties or assets that are not reasonably related,
supplementary or ancillary to the conduct of such business activities; provided, that in no
event may any Inactive Subsidiary engage in any business or conduct any operations other than to
maintain its existence.



6.7. Prepayments and Amendments.



(a) Except in connection with a refinancing permitted by Section 6.1, optionally
prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan Party or any
Subsidiary of a Loan Party, or pay any interest in cash in respect thereof that, at the option of
the issuer, may be paid in cash or in kind, other than the Obligations in accordance with this
Agreement,



(b) Except in connection with a refinancing permitted by Section 6.1, make any payment
on account of Indebtedness that has been contractually subordinated in right of payment if such
payment is not permitted at such time under the subordination terms and conditions with respect to
such Indebtedness,



(c) Directly or indirectly, amend, modify, alter, increase, or change any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Section 6.1(b) or (c), except in connection
with a refinancing permitted by Section 6.1 or amendments, modifications, alternatives or
changes that are immaterial and not adverse to the Loan Parties or the Lender Group,



(d) Amend, modify or otherwise change its Governing Documents in any material respect,
including, without limitation, by the filing or modification of any certificate of designation, or
any agreement or arrangement entered into by it with respect to any of its Stock (including any
shareholders’ agreement), or enter into any new agreement with respect to any of its Stock, in each
case, in a manner Agent determines to be not adverse to the Lender Group, or



(e) Directly or indirectly, amend, modify, alter, increase, or change any of the terms or
conditions of any Material Contract except to the extent that such amendment, modification,
alteration, increase, or change could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Change.



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



6.9. Consignments. Consign any of their Inventory or sell any of their Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of sale, except, in
Puerto Rico.



6.10. Distributions. Make any distribution or declare or pay any dividends (in cash
or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of any
Loan Party’s Stock, of any class, whether now or hereafter outstanding, except with respect to (x)
the Permitted Stock Purchases, (y) dividends, or distributions by any Subsidiary of Parent to
Parent for payments to maintain Parent’s corporate existence and compliance with applicable
securities law or accounting, legal, public relations, investor relations or management activities
in an amount not to exceed $100,000 per year, and (z) dividends and distributions to Parent to make
dividends on Parent’s common stock traded on a national securities exchange to the extent (a)
immediately before and immediately after giving effect to such dividend or distribution, (i) Total
Availability is at least $20 million and (ii) there exists no Default or Event of Default and (b)
the aggregate amount of such dividends and distributions for the term of this Agreement does not
exceed $250,000.



6.11. Accounting Methods. Modify or change their Fiscal Year or their method of
accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of Loan Parties’ or their
Subsidiaries’ accounting records without said accounting firm or service bureau agreeing to provide
Agent information regarding Loan Parties’ and their Subsidiaries’ financial condition as reasonably
requested by Agent.



6.12. Investments. Except for Permitted Investments, directly or indirectly, make or
acquire any Investment, or incur any liabilities (including contingent obligations) for or in
connection with any Investment; provided, however, that (x) the Loan Parties shall
not have Permitted Investments (other than in the Cash Management Accounts) in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $50,000 at any one time unless such
applicable Loan Party and the applicable securities intermediary or bank have entered into Control
Agreements governing such Permitted Investments in order to perfect (and further establish) Agent’s
Liens in such Permitted Investments, (y) PLATO UK may have Permitted Investments in Deposit
Accounts and Securities Accounts in an aggregate amount not at any time exceeding $400,000 and (z)
the Loan Parties may make distributions in cash to PLATO UK in an amount not exceeding $60,000 in
any calendar month in respect of expenses other than real estate lease expenses and £75,000 in the
case of real estate lease expenses, in each case. Subject to the foregoing proviso, Loan Parties
shall not and shall not permit their Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit
Account or Securities Account.



6.13. Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any transaction with any Affiliate of any Borrower which is not a Loan Party or any
Subsidiary of a Borrower except for:



(a) transactions (other the payment of management, consulting, monitoring, or advisory fees)
between Loan Parties or their Subsidiaries, on the one hand, and any Affiliate of any Loan Party or
its Subsidiaries, on the other hand, so long as such transactions (i) are upon fair and reasonable
terms, (ii) are fully disclosed to Agent if they involve one or more payments by any Loan Party or
any of Subsidiary of a Loan Party in excess of $50,000 for any single transaction or series of
transactions, and (iii) are no less favorable to Loan Parties or their Subsidiaries, as applicable,
than would be obtained in an arm’s length transaction with a non-Affiliate; and



(b) the payment of reasonable fees, compensation, or employee benefit arrangements to, and any
indemnity provided for the benefit of, outside directors of Parent in the ordinary course of
business and consistent with industry practice.



6.14. Use of Proceeds. Use the proceeds of the Advances for any purpose other than
(a) on the Closing Date to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and
(b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted
purposes, including as consideration for a Permitted Acquisition and the Permitted Stock Purchases.



6.15. Reserved.



6.16. Financial Covenants; Minimum EBITDA. Fail to maintain or achieve EBITDA,
measured on a quarterly basis as of the last day of such quarter for the immediately preceding four
(4) fiscal quarters then ended, of at least the required amount set forth in the following table
for the applicable period set forth opposite thereto; provided, that such financial
covenants shall not be tested until Total Availability is less than $12,500,000:



	 	 	 
	Applicable Amount

	 	Applicable Period
	 
	 	 
	$xxx,xxx

	 	3 months ending July 31, 2007
	 
	 	 
	$x,xxx,xxx

	 	6 months ending October 31, 2007
	 
	 	 
	$x,xxx,xxx

	 	9 months ending January 31, 2008
	 
	 	 
	$x,xxx,xxx

	 	12 months ending April 30, 2008
	 
	 	 
	$x,xxx,xxx

	 	Each quarter thereafter






7. EVENTS OF DEFAULT.



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



7.1. If Borrowers fail to pay when due and payable, or when declared due and payable, all or
any portion of the Obligations consisting of principal, interest, fees, or charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations (including
any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding);



7.2. If Loan Parties or any Subsidiary of any Loan Party:



(a) fail to perform, keep or observe any term, provision, condition, covenant or other
agreement contained in any of Sections 2.7, 5.2, 5.3, 5.5,
5.7, 5.8, 5.12(a), 5.14, 5.16, 5.18, 5.20,
and 5.21 and 6.1 through 6.16 of this Agreement or Section 6 of the
Security Agreement;



(b) fail to perform, keep or observe any term, provision, condition, covenant or other
agreement contained in any of Sections 5.4, 5.6, 5.9, 5.10,
5.11, 5.12(b), 5.15, 5.19 and 5.22 of this Agreement and
such failure continues for a period of 15 days after the earlier of (i) the date on which such
failure shall first become known to any officer of any Loan Party or (ii) written notice thereof is
given to Administrative Borrower by Agent; or



(c) fail to perform, keep or observe any term, provision, condition, covenant or other
agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other
than any such covenant or agreement that is the subject of another provision of this Section
7 (in which event such other provision of this Section 7 shall govern), and such
failure continues for a period of 30 days after the earlier of (i) the date on which such failure
shall first become known to any officer of any Loan Party or (ii) written notice thereof is given
to Administrative Borrower by Agent;



7.3. If any material portion of any Loan Party’s or any of its Subsidiaries’ assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any third Person and the same is not discharged before the earlier of 30 days after
the date it first arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;



7.4. If an Insolvency Proceeding is commenced by any Loan Party or any Subsidiary of a Loan
Party;



7.5. If an Insolvency Proceeding is commenced against any Loan Party or any Subsidiary of a
Loan Party, and any of the following events occur: (a) the applicable Loan Party or Subsidiary
consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing
the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency
Proceeding is not dismissed within 60 calendar days of the date of the filing or presentation
thereof; (d) an interim trustee is appointed to take possession of all or any substantial portion
of the properties or assets of, or to operate all or any substantial portion of the business of,
any Loan Party or any Subsidiary of a Loan Party, or (e) an order for relief shall have been issued
or entered therein;



7.6. If any Loan Party or any Subsidiary of a Loan Party is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part of the Loan
Parties’ business affairs, taken as a whole;



7.7. If one or more judgments, orders, or awards involving an aggregate amount of $200,000, or
more (except to the extent covered by insurance pursuant to which the insurer has accepted
liability therefor in writing) shall be entered or filed against any Loan Party or any Subsidiary
of any Loan Party or with respect to any of their respective assets, and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date
it first arises or 5 days prior to the date on which such asset is subject to being forfeited by
the applicable Loan Party or the applicable Subsidiary;



7.8. If there is a default in one or more agreements to which any Loan Party or any Subsidiary
of a Loan Party is a party with one or more third Persons relative to Indebtedness of any Loan
Party or any Subsidiary of any Loan Party involving an aggregate amount of $200,000 or more, and
such default (a) occurs at the final maturity of the obligations thereunder, or (b) results in a
right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of the
applicable Loan Party’s or Subsidiary’s obligations thereunder;



7.9. If any warranty, representation, statement, or Record made herein or in any other Loan
Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan
Document proves to be untrue in any material respect (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed making thereof;



7.10. If the obligation of any Guarantor under any Guaranty is limited or terminated by
operation of law;



7.11. If the Security Agreement or any other Loan Document that purports to create a Lien,
shall, for any reason, fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security interest in any
Collateral covered hereby or thereby, except as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement;



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



7.13. If a notice of Lien, levy, or assessment is filed of record with respect to any Loan
Party’s or any of its Subsidiary’s assets by the United States, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any
taxes or debts owing at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon any Loan Party’s or any of its Subsidiary’s assets and the same
is not paid before such payment is delinquent, in each case, other than Permitted Liens;



7.14. If there is a loss, suspension or revocation of, or failure to renew, any license or
permit now held or hereafter acquired by any Loan Party, if such loss, suspension, revocation or
failure to renew could reasonably be expected to result in a Material Adverse Change;



7.15. The indictment of any Loan Party or any of its Subsidiaries under any criminal statute,
or commencement of criminal or civil proceedings against any Loan Party or any of its Subsidiaries,
pursuant to which statute or proceedings the penalties or remedies sought or available include
forfeiture to any Governmental Authority of any of the property of such Person having an aggregate
fair market value in excess of $250,000;



7.16. If there is any material damage to, or loss, theft or destruction of, any Collateral,
whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty which causes, for more than 15 consecutive days, the cessation or
substantial curtailment of revenue producing activities for any Loan Party, and if any such event
or circumstance could reasonably be expected to result in a Material Adverse Change;
provided, however, that any such event shall not give rise to an Event of Default
under this Section 7.16 if and for so long as (a) the amount of such damage, loss, theft, or
destruction is covered by a valid and binding policy of insurance between the applicable Loan Party
and an insurer covering full payment thereof and (b) such insurer has been notified of, and has not
disputed, the claim made for payment, or the amount of such damage, loss, theft, or destruction;



7.17. If any Loan Party or any of its Subsidiaries or ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of such complete or
partial withdrawal, such Loan Party or any of its Subsidiaries or ERISA Affiliates incurs a
withdrawal liability in an annual amount exceeding $250,000; or a Multiemployer Plan enters
reorganization status under Section 4241 of ERISA, and, as a result thereof, any Loan Party or any
of its Subsidiaries or ERISA Affiliates incurs an increased annual contribution requirement with
respect to such Multiemployer Plan exceeding $250,000; or



7.18. If any Termination Event with respect to any Benefit Plan shall have occurred, and, 30
days thereafter, (a) such Termination Event (if correctable) shall not have been corrected, and (b)
the then current value of such Benefit Plan’s vested benefits exceeds the then current value of
assets allocable to such benefits in such Benefit Plan by more than $250,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the IRC, the liability is in excess of
such amount).



8. THE LENDER GROUP’S RIGHTS AND REMEDIES.



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



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



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



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



(d) The Lender Group shall have all other rights and remedies available at law or in equity or
pursuant to any other Loan Document.



The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default
described in Section 7.4 or Section 7.5, in addition to the remedies set forth
above, without any notice to any Loan Party or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and
the other Loan Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly waived by each Loan
Party.



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



9. TAXES AND EXPENSES.



If any Loan Party fails to pay any monies (whether taxes, assessments, insurance premiums, or,
in the case of leased properties or assets, rents or other amounts payable under such leases) due
to third Persons, or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and
without prior notice to any Loan Party, may do any or all of the following: (a) make payment of
the same or any part thereof after 5 days notice from Agent to Administrative Borrower, except that
Agent shall only be required to use commercially reasonable efforts to provide concurrent notice to
Administrative Borrower in the case where an event or circumstance exists that imminently threatens
(x) the ability of Agent and the Lenders to realize upon the Collateral or (y) Agent’s Liens on the
Collateral, (b) set up such reserves against the Borrowing Base or the Maximum Revolver Amount as
Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c)
in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance
policies of the type described in Section 5.8 and take any action with respect to such
policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group
Expenses and any such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or
Lien and the receipt of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.



10. WAIVERS; INDEMNIFICATION.



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



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



10.3. Indemnification. Each Loan Party shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, liabilities, costs, penalties and damages,
and all reasonable fees and disbursements of attorneys, experts and consultants and other costs and
expenses actually incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit is brought), at any
time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or administration
(including any restructuring or workout with respect hereto) of this Agreement, any of the other
Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Loan
Parties’ and their Subsidiaries’ compliance with the terms of the Loan Documents, (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document,
or the use of the proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner
related thereto, and (c) in connection with or arising out of any presence or release of Hazardous
Materials at, on, under, to or from any assets or properties owned, leased or operated by Parent or
any of its Subsidiaries or any Environmental Actions, Environmental Liabilities or Remedial Actions
related in any way to any such assets or properties of Parent or any of its Subsidiaries (each and
all of the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary
notwithstanding, Loan Parties shall have no obligation to any Indemnified Person under this
Section 10.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified
Person with respect to an Indemnified Liability as to which Loan Parties were required to indemnify
the Indemnified Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Loan Parties with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT
OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.



11. NOTICES.



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



	 	 	 	 	 
	If to
Administrative
Borrower:
	 	PLATO LEARNING, INC.
	 
	 	10801 Nesbitt Avenue South
	 
	 	Bloomington, Minnesota 55437-3109

	 
	 	Attn:  Steven R. Schuster, Vice President

	 
	 	Fax No.:  952-229-0325

	with copies to:
	 	WINSTON & STRAWN, LLP
	 
	 	35 W. Wacker Drive
	 
	 	Chicago, Illinois 60601

	 
	 	Attn:  Leland Hutchinson, Esq.

	 
	 	Fax No.:  312-558-5700

	If to Agent:
	 	WELLS FARGO FOOTHILL, INC.
	 
	 	2450 Colorado Avenue, Suite 3000 West
	 
	 	Santa Monica, California 90404

	 
	 	Attn: Technology Finance Division Manager

	 
	 	Fax No.:  310-453-7413

	with copies to:
	 	SCHULTE ROTH & ZABEL LLP
	 
	 	919 Third Avenue
	 
	 	New York, New York 10022

	 
	 	Attn:  Kirby Chin, Esq.

	 
	 	Fax No.:  212-593-5955







Agent and Loan Parties may change the address at which they are to receive notices hereunder,
by notice in writing in the foregoing manner given to the other party. All notices or demands sent
in accordance with this Section 11, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof
in the mail; provided that (i) notices sent by overnight courier service shall be deemed to have
been given when received, and (ii) notices by telefacsimile shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the recipient). Each Loan
Party acknowledges and agrees that notices sent by the Lender Group in connection with the exercise
of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.



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



(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.



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



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



13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.



13.1. Assignments and Participations.



(a) Any Lender may assign and delegate to one or more assignees (each an “Assignee”)
that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments
and the other rights and obligations of such Lender hereunder and under the other Loan Documents,
in a minimum amount (unless waived by the Agent) of $5,000,000 (except such minimum amount shall
not apply to (x) an assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each other or a fund or
account managed by any such new Lender or an Affiliate of such new Lender to the extent that the
aggregate amount to be assigned to all such new Lenders is at least $5,000,000); provided,
however, that Borrowers and Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment
and Acceptance and Agent has notified the assigning Lender of its receipt thereof in accordance
with Section 13.1(b), and (iii) unless waived by the Agent, the assigning Lender or
Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500.
Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be
required and the Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of the assigning Lender.



(b) From and after the date that Agent notifies the assigning Lender (with a copy to
Administrative Borrower) that it has received an executed Assignment and Acceptance and, if
applicable, payment of the required processing fee (if required), (i) the Assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under
the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation between Loan Parties and the Assignee;
provided, however, that nothing contained herein shall release any assigning Lender
from obligations that survive the termination of this Agreement, including such assigning Lender’s
obligations under Article 15 and Section 17.9 of this Agreement.



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



(d) Immediately upon Agent’s receipt of the required processing fee, if applicable, and
delivery of notice to the assigning Lender pursuant to Section 13.1, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.



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



(f) In connection with any such assignment or participation or proposed assignment or
participation, a Lender may, subject to the provisions of Section 17.9, disclose all
documents and information which it now or hereafter may have relating to Loan Parties and their
Subsidiaries and their respective businesses.



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



13.2. Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however, that
Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders’
prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent
to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section
13.1 hereof, no consent or approval by any Borrower is required in connection with any such
assignment.



14. AMENDMENTS; WAIVERS.



14.1. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no
consent with respect to any departure by any Loan Party therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Agent at the written request of
the Required Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then any such
waiver or consent shall be effective, but only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders directly affected thereby and
Administrative Borrower (on behalf of all Loan Parties), do any of the following:



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



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



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



(d) change the Pro Rata Share that is required to take any action hereunder,



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



(f) other than as permitted by Section 15.12, release Agent’s Lien in and to any of
the Collateral,



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



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



(i) release any Loan Party from any obligation for the payment of money,



(j) amend any of the provisions of Section 2.4(b)(i) or (ii),



(k) change the definition of Borrowing Base or the definitions of Recurring Revenue, Maximum
Revolver Amount or change Section 2.1(b), or



(l) amend any of the provisions of Section 15.



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



14.2. Replacement of Holdout Lender.



(a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous
consent, authorization, or agreement of all Lenders, and a Lender (“Holdout Lender”) fails
to give its consent, authorization, or agreement or any Lender demands payment under Section
2.4, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender,
may permanently replace the Holdout Lender with one or more substitute Lenders (each, a
"Replacement Lender”), and the Holdout Lender shall have no right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date such notice is
given.



(b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement
Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender
being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata
Share of the Risk Participation Liability and any amount owing under Section 2.4) without
any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and
Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of
Section 13.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder
and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an
amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.



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



15. AGENT; THE LENDER GROUP.



15.1. Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents
on its behalf and to take such other action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 15. The provisions of this Section 15 (other than the
proviso to Section 15.11(a)) are solely for the benefit of Agent, and the Lenders, and Loan
Parties and their Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that the use of the word
“Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has
the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections of Loan Parties and their Subsidiaries, and related
matters, (b) execute or file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of
Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the
Collections of Loan Parties and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections of Loan Parties and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect to Loan Parties, the
Obligations, the Collateral, the Collections of Loan Parties and their Subsidiaries, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.



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



15.3. Liability of Agent. None of the Agent Related Persons shall (a) be liable for
any action taken or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation or warranty made by any Loan Party or any Subsidiary or
Affiliate of any Loan Party, or any officer or director thereof, contained in this Agreement or in
any other Loan Document, or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the books and records or properties of Loan Parties or the books or
records or properties of any of Loan Parties’ Subsidiaries or Affiliates.



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



15.5. Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for
the account of the Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower
referring to this Agreement, describing such Default or Event of Default, and stating that such
notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to
its Participants, if any. Subject to Section 15.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 8; provided, however, that unless and until Agent
has received any such request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable.



15.6. Credit Decision. Each Lender acknowledges that none of the Agent Related
Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Loan Parties and their Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person to any Lender.
Each Lender represents to Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of Loan Parties or any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.
Each Lender also represents that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Loan Parties or any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be furnished to the
Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations, property, financial and
other condition or creditworthiness of Loan Parties or any other Person party to a Loan Document
that may come into the possession of any of the Agent Related Persons.



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



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



15.9. Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders
(unless such notice is waived by the Required Lenders). If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the Required Lenders may
agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term
“Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders
appoint a successor Agent as provided for above.



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



15.11. Withholding Taxes.



(a) Subject to Section 15.11(i), all payments made by any Loan Party hereunder or
under any note or other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without deduction or withholding
for, any present or future Taxes, and in the event any deduction or withholding of Taxes is
required, each Loan Party shall comply with the penultimate sentence of this Section
15.11(a). “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments (but excluding any
tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or
therein measured by or based on the net income or net profits of any Lender) and all interest,
penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, each
Loan Party agrees to pay the full amount of such Taxes and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement, any note related to this
Agreement, or Loan Document, including any amount paid pursuant to this Section 15.11(a)
after withholding or deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Loan Parties shall not be required to
increase any such amounts if the increase in such amount payable results from Agent’s or such
Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent
jurisdiction). Each Loan Party will furnish to Agent as promptly as possible after the date the
payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by any Loan Party.



(b) If a Lender claims an exemption from United States withholding tax, Lender agrees with and
in favor of Agent and Loan Parties, to deliver to Agent:



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



(ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a
United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its
first payment under this Agreement and at any other time reasonably requested by Agent or any Loan
Party;



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



(iv) such other form or forms, including IRS Form W-9, as may be required under the IRC or
other laws of the United States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax before receiving its first payment under this Agreement and
at any other time reasonably requested by Agent or any Loan Party.



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



(c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the
United States, such Lender agrees with and in favor of Agent and Loan Parties, to deliver to Agent
any such form or forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its
first payment under this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower.



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



(d) If any Lender claims exemption from, or reduction of, withholding tax and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender, such Lender agrees to notify Agent and Administrative Borrower of the
percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such
Lender. To the extent of such percentage amount, Agent and Loan Parties will treat such Lender’s
documentation provided pursuant to Sections 15.11(b) or 15.11(c) as no longer
valid. With respect to such percentage amount, such Lender may provide new documentation, pursuant
to Sections 15.11(b) or 15.11(c), if applicable.



(e) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may
withhold from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (b) or (c) of this Section 15.11 are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.



(f) If the IRS or any other Governmental Authority of the United States or other jurisdiction
asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of
any Lender due to a failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid,
directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent under this
Section 15.11, together with all costs and expenses (including attorneys fees and
expenses).



(g) Each Loan Party agrees to pay (without duplication) to the relevant Governmental Authority
in accordance with applicable law any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Document (“Other Taxes”). Each Loan Party shall deliver to Agent and each
Lender an official receipt (or, if an official receipt is not available, such other evidence of
payment as shall be reasonably satisfactory to Agent or such Lender) in respect of any Other Taxes
payable hereunder promptly after payment of such Other Taxes.



(h) The Loan Parties hereby jointly and severally indemnify and agree to hold Agent and each
Lender harmless from and against all Taxes and Other Taxes (including, without limitation, Taxes
and Other Taxes imposed on any amounts payable under this Section 15.11) paid by such
Person, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be paid within 10 days from the date on which Agent or any Lender makes
written demand therefor specifying in reasonable detail the nature and amount of such Taxes or
Other Taxes.



(i) The Loan Parties shall not be required to indemnify any Lender, or pay any additional
amounts to any Lender, in respect of United States Federal withholding tax pursuant to this
Section 15.11 to the extent that (i) the obligation to withhold amounts with respect to
United States Federal withholding tax existed on the date such Lender became a party to this
Agreement or, with respect to payments to a lending office designated by a Lender after the date
such Lender becomes a party hereto (a “New Lending Office”), the date such Lender
designated such New Lending Office with respect to the Obligations or Commitments;
provided, however, that this clause (i) shall not apply to the extent the indemnity
payment or additional amounts any transferee, or Lender (or a transferee) through a New Lending
Office, would be entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the Person making the transfer, or Lender (or a
transferee) making the designation of such New Lending Office, would have been entitled to receive
in the absence of such transfer or designation or (ii) the obligation to pay such additional
amounts would not have arisen but for a failure by such Lender to comply with Section
15.11(b) or Section 15.11(c) above.



(j) The obligation of the Loan Parties and the Lenders under subsections (f), (g) and (h)
above shall survive the payment of all Obligations and the resignation or replacement of Agent.



15.12. Collateral Matters.



(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion,
to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Loan Parties of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of
this Agreement or the other Loan Documents (and Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which no Loan Party or its
Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time
thereafter, or (iv) constituting property leased to a Loan Party or its Subsidiaries under a lease
that has expired or is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any Collateral without
the prior written authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to this
Section 15.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in Agent’s opinion, would
expose Agent to liability or create any obligation or entail any consequence other than the release
of such Lien without recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of Loan Parties in respect of) all interests retained by Loan
Parties, including, the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.



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



15.13. Restrictions on Actions by Lenders; Sharing of Payments.



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



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



15.14. Agency for Perfection. Agent hereby appoints each other Lender as its agent
(and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens
in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected only by possession or control. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in accordance with
Agent’s instructions.



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



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



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



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



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



(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Agent or other party performing any audit or examination will inspect only
specific information regarding Loan Parties and will rely significantly upon the books and records
of Loan Parties and their Subsidiaries, as well as on representations of Loan Parties’ personnel,



(d) agrees to keep all Reports and other material, non-public information regarding Loan
Parties and their Subsidiaries and their operations, assets, and existing and contemplated business
plans in a confidential manner in accordance with Section 17.9, and



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



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



15.18. Several Obligations; No Liability. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor of Agent in its
capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time
outstanding, the amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation, duty, or liability
to any Participant of any other Lender. Except as provided in Section 15.7, no member of
the Lender Group shall have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Loan Party or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on
its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder
or in connection with the financing contemplated herein.



15.19. Bank Product Providers. Each Bank Product Provider shall be deemed a party
hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it
being understood and agreed that the rights and benefits of such Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no amounts are due to
any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the
amount of any such liability owed to it prior to such distribution.



16. GUARANTY.



16.1. Guarantied Obligations. Each Guarantor hereby irrevocably and unconditionally
guaranties to the Lender Group and the Bank Product Providers, as and for its own debt, until final
payment in full thereof has been made, (a) the prompt payment of the Guarantied Obligations, when
and as the same shall become due and payable, whether at maturity, pursuant to a mandatory
prepayment requirement, by acceleration, or otherwise; it being the intent of each Guarantor that
the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance, and fulfillment by Borrowers of all
of the agreements, conditions, covenants, and obligations of Borrowers contained in this Agreement
and under each of the other Loan Documents.



16.2. Continuing Guaranty. This Guaranty includes Guarantied Obligations arising
under successive transactions continuing, compromising, extending, increasing, modifying,
releasing, or renewing the Guarantied Obligations, changing the interest rate, payment terms, or
other terms and conditions thereof, or creating new or additional Guarantied Obligations after
prior Guarantied Obligations have been satisfied in whole or in part. To the maximum extent
permitted by law, each Guarantor hereby waives any right to revoke this Guaranty as to future
Guarantied Obligations. If such a revocation is effective notwithstanding the foregoing waiver,
each Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written
notice thereof has been received by Agent, (b) no such revocation shall apply to any Guarantied
Obligations in existence on such date (including any subsequent continuation, extension, or renewal
thereof, or change in the interest rate, payment terms, or other terms and conditions thereof),
(c) no such revocation shall apply to any Guarantied Obligations made or created after such date to
the extent made or created pursuant to a legally binding commitment of a Lender in existence on the
date of such revocation, (d) no payment by any Guarantor, any Borrower, or from any other source,
prior to the date of such revocation shall reduce the maximum obligation of Guarantors hereunder,
and (e) any payment by Borrowers or from any source other than a Guarantor subsequent to the date
of such revocation shall first be applied to that portion of the Guarantied Obligations as to which
the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent
so applied shall not reduce the maximum obligation of Guarantors hereunder.



16.3. Performance Under this Guaranty. In the event that any Borrower fails to make
any payment of any Guarantied Obligations, on or prior to the due date thereof, or if any Borrower
shall fail to perform, keep, observe, or fulfill any other obligation referred to in clause
(b) of Section 16.1 of this Guaranty in the manner provided in this Agreement or any
other Loan Document, each Guarantor immediately shall cause, as applicable, such payment to be made
or such obligation to be performed, kept, observed, or fulfilled.



16.4. Primary Obligations. This Guaranty is a primary and original obligation of each
Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional,
and continuing guaranty of payment and performance which shall remain in full force and effect
without respect to future changes in conditions. Each Guarantor hereby agrees that it is directly,
jointly and severally with each other Guarantor and any other guarantor of the Guarantied
Obligations, liable to Agent, for the benefit of the Lender Group and the Bank Product Providers,
that the obligations of such Guarantor hereunder are independent of the obligations of Borrowers or
any other guarantor, and that a separate action may be brought against each Guarantor, whether such
action is brought against any Borrower or any other Guarantor or whether any Borrower or any other
Guarantor is joined in such action. Each Guarantor hereby agrees that its liability hereunder
shall be immediate and shall not be contingent upon the exercise or enforcement by any member of
the Lender Group or any Bank Product Provider of whatever remedies they may have against any
Borrower or any other Guarantor, or the enforcement of any Lien or realization upon any security by
any member of the Lender Group or any Bank Product Provider. Each Guarantor hereby agrees that any
release which may be given by Agent to any Borrower or any other Guarantor shall not release such
Guarantor. Each Guarantor consents and agrees that no member of the Lender Group nor any Bank
Product Provider shall be under any obligation to marshal any property or assets of any Borrower or
any other Guarantor in favor of such Guarantor, or against or in payment of any or all of the
Guarantied Obligations.



16.5. Waivers.



To the fullest extent permitted by applicable law, each Guarantor hereby waives: (i) notice of
acceptance hereof; (ii) notice of any loans or other financial accommodations made or extended
under this Agreement, or the creation or existence of any Guarantied Obligations; (iii) notice of
the amount of the Guarantied Obligations, subject, however, to such Guarantor’s right to make
inquiry of Agent to ascertain the amount of the Guarantied Obligations at any reasonable time;
(iv) notice of any adverse change in the financial condition of any Borrower or of any other fact
that might increase such Guarantor’s risk hereunder; (v) notice of presentment for payment, demand,
protest, and notice thereof as to any instrument among the Loan Documents; (vi) notice of any
Default or Event of Default under this Agreement or any other Loan Document; and (vii) all other
notices (except if such notice is specifically required to be given to such Guarantor under this
Guaranty or any other Loan Documents to which such Guarantor is a party) and demands to which such
Guarantor might otherwise be entitled.



To the fullest extent permitted by applicable law, each Guarantor hereby waives the right by
statute or otherwise to require any member of the Lender Group or any Bank Product Provider, to
institute suit against any Borrower or to exhaust any rights and remedies which any member of the
Lender Group or any Bank Product Provider, has or may have against any Borrower. In this regard,
each Guarantor agrees that it is bound to the payment of each and all Guarantied Obligations,
whether now existing or hereafter arising, as fully as if the Guarantied Obligations were directly
owing to Agent, the Lender Group or the Bank Product Providers, as applicable, by such Guarantor.
Each Guarantor further waives any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been performed and paid in the
manner provided for in the applicable Loan Documents, to the extent of any such payment) of any
Borrower or by reason of the cessation from any cause whatsoever of the liability of any Borrower
in respect thereof.



To the fullest extent permitted by applicable law, each Guarantor hereby waives: (i) any right
to assert against any member of the Lender Group or any Bank Product Provider, any defense (legal
or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time
hereafter have against any Borrower or any other party liable to any member of the Lender Group or
any Bank Product Provider; (ii) any defense, set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the present or future lack of perfection, sufficiency,
validity, or enforceability of the Guarantied Obligations or any security therefor; (iii) any right
or defense arising by reason of any claim or defense based upon an election of remedies by any
member of the Lender Group or any Bank Product Provider; (iv) the benefit of any statute of
limitations affecting such Guarantor’s liability hereunder or the enforcement thereof, and any act
which shall defer or delay the operation of any statute of limitations applicable to the Guarantied
Obligations shall similarly operate to defer or delay the operation of such statute of limitations
applicable to such Guarantor’s liability hereunder.



Until such time as all of the Guarantied Obligations have been finally paid in full and all
Commitments have been terminated, each Guarantor hereby waives and postpones (i)  any right of
subrogation such Guarantor has or may have as against Borrowers with respect to the Guarantied
Obligations; (ii) any right to proceed against any Borrower or any other Person, now or hereafter,
for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective
of whether direct or indirect, liquidated or contingent), with respect to the Guarantied
Obligations; and (iii) any right to proceed or to seek recourse against or with respect to any
property or asset of any Borrower.



If any of the Guarantied Obligations or the obligations of any Guarantor under this Guaranty
at any time are secured by a mortgage or deed of trust upon real property, any member of the Lender
Group or any Bank Product Provider may elect, in its sole discretion, upon a default with respect
to the Guarantied Obligations or the obligations of any Guarantor under this Guaranty, to foreclose
such mortgage or deed of trust judicially or nonjudicially in any manner permitted by law, before
or after enforcing this Guaranty, without diminishing or affecting the liability of any Guarantor
hereunder. Each Guarantor understands that (a) by virtue of the operation of antideficiency law
applicable to nonjudicial foreclosures, an election by any member of the Lender Group or any Bank
Product Provider to nonjudicially foreclose on such a mortgage or deed of trust probably would have
the effect of impairing or destroying rights of subrogation, reimbursement, contribution, or
indemnity of such Guarantor against Borrowers, other Guarantors or other guarantors or sureties,
and (b) absent the waiver given by such Guarantor herein, such an election would estop the Lender
Group and the Bank Product Providers from enforcing this Guaranty against such Guarantor.
Understanding the foregoing, and understanding that each Guarantor hereby is relinquishing a
defense to the enforceability of this Guaranty, each Guarantor hereby waives any right to assert
against any member of the Lender Group or any Bank Product Provider any defense to the enforcement
of this Guaranty, whether denominated “estoppel” or otherwise, based on or arising from an election
by any member of the Lender Group or any Bank Product Provider to nonjudicially foreclose on any
such mortgage or deed of trust. Each Guarantor understands that the effect of the foregoing waiver
may be that such Guarantor may have liability hereunder for amounts with respect to which such
Guarantor may be left without rights of subrogation, reimbursement, contribution, or indemnity
against Borrowers, other Guarantors or other guarantors or sureties.



Without limiting the generality of any other waiver or other provision set forth in this
Guaranty, each Guarantor waives all rights and defenses that such Guarantor may have if all or part
of the Guarantied Obligations are secured by real property. This means, among other things:



(i) Any member of the Lender Group or any Bank Product Provider may collect from such
Guarantor without first foreclosing on any real or personal property collateral that may be pledged
by such Guarantor, any Borrower, or any other Guarantor.



(ii) If any member of the Lender Group or any Bank Product Provider forecloses on any real
property collateral that may be pledged by such Guarantor, any Borrower or any other Guarantor:



(A) The amount of the Guarantied Obligations or any obligations of any Guarantor in respect
thereof may be reduced only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.



(B) Agent may collect from such Guarantor even if any member of the Lender Group or any Bank
Product Provider, by foreclosing on the real property collateral, has destroyed any right such
Guarantor may have to collect from any Borrower or any other Guarantor.



This is an unconditional and irrevocable waiver of any rights and defenses Guarantors may have
if all or part of the Guarantied Obligations are secured by real property.



Without limiting the generality of any other waiver or other provision set forth in this
Guaranty, each Guarantor waives all rights and defenses arising out of an election of remedies by
any member of the lender group or any bank product provider, even though such election of remedies,
such as a nonjudicial foreclosure with respect to security for the Guarantied Obligations, has
destroyed such Guarantor’s rights of subrogation and reimbursement against any Borrower by the
operation of applicable law.



Without limiting the generality of any other waiver or other provision set forth in this
Guaranty, each Guarantor hereby agrees as follows:



(iii) Agent’s right to enforce this Guaranty is absolute and is not contingent upon the
genuineness, validity or enforceability of any of the Loan Documents. Each Guarantor agrees that
Agent’s rights under this Guaranty shall be enforceable even if Borrowers had no liability at the
time of execution of the Loan Documents or later ceases to be liable.



(iv) Each Guarantor agrees that Agent’s rights under the Loan Documents will remain
enforceable even if the amount secured by the Loan Documents is larger in amount and more
burdensome than that for which Borrowers are responsible. The enforceability of this Guaranty
against each Guarantor shall continue until all sums due under the Loan Documents have been paid in
full and shall not be limited or affected in any way by any impairment or any diminution or loss of
value of any security or collateral for Borrowers’ obligations under the Loan Documents, from
whatever cause, the failure of any security interest in any such security or collateral or any
disability or other defense of any Borrower, any other Guarantor, any other guarantor of Borrowers’
obligations under any Loan Document, any pledgor of collateral for any person’s obligations to
Agent or any other person in connection with the Loan Documents.



(v) Each Guarantor waives the right to require Agent to (A) proceed against Borrowers, any
guarantor of Borrowers’ obligations under any Loan Document, any other pledgor of collateral for
any person’s obligations to Agent or any other person in connection with the Guarantied
Obligations, (B) proceed against or exhaust any other security or collateral Agent may hold, or
(C) pursue any other right or remedy for such Guarantor’s benefit, and agrees that Agent may
exercise its right under this Guaranty without taking any action against any Borrower, any other
Guarantor, any other guarantor of Borrowers’ obligations under the Loan Documents, any pledgor of
collateral for any person’s obligations to Agent or any other person in connection with the
Guarantied Obligations, and without proceeding against or exhausting any security or collateral
Agent holds.



16.6. Releases. Each Guarantor consents and agrees that, without notice to or by such
Guarantor and without affecting or impairing the obligations of such Guarantor hereunder, any
member of the Lender Group or any Bank Product Provider may, by action or inaction, compromise or
settle, extend the period of duration or the time for the payment, or discharge the performance of,
or may refuse to, or otherwise not enforce, or may, by action or inaction, release all or any one
or more parties to, any one or more of the terms and provisions of this Agreement or any other Loan
Document or may grant other indulgences to Borrowers in respect thereof, or may amend or modify in
any manner and at any time (or from time to time) any one or more of the Loan Documents, or may, by
action or inaction, release or substitute any other guarantor, if any, of the Guarantied
Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for
the Guarantied Obligations or any other guaranty of the Guarantied Obligations, or any portion
thereof.



16.7. No Election. The Lender Group and the Bank Product Providers shall have the
right to seek recourse against each Guarantor to the fullest extent provided for herein and no
election by any member of the Lender Group or any Bank Product Provider to proceed in one form of
action or proceeding, or against any party, or on any obligation, shall constitute a waiver of the
Lender Group’s or any Bank Product Provider’s right to proceed in any other form of action or
proceeding or against other parties unless Agent, on behalf of the Lender Group or the Bank Product
Providers, has expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by the Lender Group or the Bank Product
Providers under any document or instrument evidencing the Guarantied Obligations shall serve to
diminish the liability of any Guarantor under this Guaranty except to the extent that the Lender
Group and the Bank Product Providers finally and unconditionally shall have realized payment in
full of the Guarantied Obligations by such action or proceeding.



16.8. Financial Condition of Borrowers. Each Guarantor represents and warrants to the
Lender Group and the Bank Product Providers that it is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and
which bear upon the risk of nonpayment of the Guarantied Obligations. Each Guarantor further
represents and warrants to the Lender Group and the Bank Product Providers that it has read and
understands the terms and conditions of this Agreement and each other Loan Document. Each
Guarantor hereby covenants that it will continue to keep itself informed of Borrowers’ financial
condition, the financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Guarantied Obligations.



16.9. Payments; Application. All payments to be made hereunder by each Guarantor
shall be made in Dollars, in immediately available funds, without setoff, counterclaim or other
defense, and without deduction or offset (whether for taxes or otherwise) and shall be applied to
the Guarantied Obligations in accordance with the terms of this Agreement.



16.10. Attorneys Fees and Costs. Each Guarantor agrees to pay, on demand, all
reasonable attorneys fees and all other costs and expenses which may be incurred by Agent or any
other member of the Lender Group in connection with the enforcement of this Guaranty or in any way
arising out of, or consequential to, the protection, assertion, or enforcement of the Guarantied
Obligations (or any security therefor), irrespective of whether suit is brought.



17. GENERAL PROVISIONS.



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



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



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



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



17.5. Bank Product Providers. Each Bank Product Provider shall be deemed a party
hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it
being understood and agreed that the rights and benefits of such Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no amounts are due to
any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the
amount of any such liability owed to it prior to such distribution.



17.6. Lender-Creditor Relationship. The relationship between the Lenders and Agent,
on the one hand, and Borrowers, on the other hand, is solely that of creditor and debtor. No
member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to
Borrowers arising out of or in connection with, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and Borrowers, on the other
hand, by virtue of any Loan Document or any transaction contemplated therein.



17.7. Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and all of which, when taken together,
shall constitute but one and the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile or other electronic method of transmission shall be equally as effective
as delivery of an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile or other electronic method of transmission
also shall deliver an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.



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



17.9. Confidentiality.



Agent and Lenders each individually (and not jointly or jointly and severally) agree that
material, non-public information regarding Loan Parties and their Subsidiaries, their operations,
assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not
parties to this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors,
and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member
of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the terms of this
Section 17.9, (c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by Parent or the Administrative
Borrower or as requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally available to the
public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection
with any assignment, prospective assignment, sale, prospective sale, participation or prospective
participations, or pledge or prospective pledge of any Lender’s interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing
to receive such information hereunder subject to the terms of this Section, and (g) in connection
with any litigation or other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such parties under this
Agreement or the other Loan Documents. The provisions of this Section 17.9 shall survive
for 2 years after the payment in full of the Obligations.



Anything in this Agreement to the contrary notwithstanding, Agent may provide information
concerning the terms and conditions of this Agreement and the other Loan Documents to loan
syndication and pricing reporting services.



17.10. Lender Group Expenses. Loan Parties agree to pay any and all Lender Group
Expenses promptly after demand therefor by Agent and agrees that their obligations contained in
this Section 17.10 shall survive payment or satisfaction in full of all other Obligations.



17.11. USA PATRIOT Act. Agent and each Lender that is subject to the requirements of
the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
hereby notifies each Loan Party that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies each Loan Party, which information includes
the name and address of each Loan Party and other information that will allow Agent or such Lender
to identify each Loan Party in accordance with the Act.



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



17.13. PLATO, Inc. as Agent for Borrowers. Each Borrower hereby irrevocably appoints
PLATO, Inc. as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative
Borrower”) which appointment shall remain in full force and effect unless and until Agent shall
have received prior written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (a) to provide Agent with all
notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and
all other notices and instructions under this Agreement and (b) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit
and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of
this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers
in a combined fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient
and economical manner and at their request, and that Lender Group shall not incur liability to any
Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify each member of the Lender Group and hold each member of
the Lender Group harmless against any and all liability, expense, loss or claim of damage or
injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from
or incurred by reason of (i) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (ii) the Lender Group’s relying on any instructions of the Administrative Borrower, or
(iii) any other action taken by the Lender Group hereunder or under the other Loan Documents,
except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related
Person under this Section 17.13 to the extent that such liability has been finally
determined by a court of competent jurisdiction to have resulted solely from the gross negligence
or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.



[Signature pages to follow.]






2






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



	 
	 

	BORROWERS:

	 

	PLATO, INC.,

a Delaware corporation

	 

	By:

	Title:

	GUARANTORS:

	 

	LIGHTSPAN, INC.,

a Delaware corporation

	 

	By:

	Title:

	CYBERED, INC.,

a Nevada corporation

	 

	By:

	Title:

	PLATO LEARNING, INC.,

	 

	a Delaware corporation

	 

	By:

	Title:

	AGENT AND LENDER:

	 

	WELLS FARGO FOOTHILL, INC.,

	 

	a California corporation, as Agent and as a Lender

	 

	By:

	Title:







3



TABLE OF CONTENTS




Page




1. DEFINITIONS AND CONSTRUCTION



	 	 	 
	1.1.

1.2.

1.3.

1.4.

1.5.

	 	Definitions

Accounting Terms

Code

Construction

Schedules and Exhibits






2. LOAN AND TERMS OF PAYMENT



	 	 	 
	2.1.

2.2.

2.3.

2.4.

2.5.

2.6.

2.7.

2.8.

2.9.

2.10.

2.11.

2.12.

2.13.

2.14.

2.15.

	 	Revolver Advances

Reserved

Borrowing Procedures and Settlements

Payments

Overadvances

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

Cash Management

Crediting Payments; Clearance Charge

Designated Account

Maintenance of Loan Account; Statements of Obligations

Fees

Letters of Credit

LIBOR Option

Capital Requirements

Joint and Several Liability of Borrowers






3. CONDITIONS; TERM OF AGREEMENT



	 	 	 
	3.1.

3.2.

3.3.

3.4.

3.5.

3.6.

	 	Conditions Precedent to the Initial Extension of Credit

Conditions Precedent to all Extensions of Credit

Term

Effect of Termination

Early Termination by Borrowers

Conditions Subsequent to the Initial Extension of Credit






4. REPRESENTATIONS AND WARRANTIES



	 	 	 
	4.1.

4.2.

4.3.

4.4.

4.5.

4.6.

	 	No Encumbrances

Reserved

Reserved

Equipment and Inventory

Reserved

Reserved







	 	4.7.	 	Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims





	 	 	 	 	 
	4.8.
	 	Due Organization and Qualification; Subsidiaries

	4.9.
	 	Due Authorization; No Conflict

	4.10.
	 	Litigation

	4.11.
	 	No Material Adverse Change

	4.12.
	 	Fraudulent Transfer

	4.13.
	 	Employee Benefits

	4.14.
	 	Environmental Condition

	4.15.
	 	Intellectual Property

	4.16.
	 	Leases

	4.17.
	 	Deposit Accounts and Securities Accounts

	4.18.
	 	Complete Disclosure

	4.19.
	 	Indebtedness

	4.20.
	 	Brokerage Fees

	4.21.
	 	Margin Stock

	4.22.
	 	Permits, Licenses Etc

	4.23.
	 	Employee and Labor Matters

	4.24.
	 	Material Contracts.  .

	4.25.
	 	Taxes

	4.26.
	 	Insurance

	4.27.
	 	Holding Company and Investment Company Acts

	4.28.
	 	Recurring Revenues

	4.29.
	 	Copyrights







5. AFFIRMATIVE COVENANTS



	 	 	 
	5.1.

5.2.

5.3.

5.4.

5.5.

5.6.

5.7.

5.8.

5.9.

5.10.

5.11.

5.12.

5.13.

5.14.

5.15.

5.16.

5.17.

5.18.

5.19.

5.20.

5.21.

5.22.

	 	Accounting System

Collateral Reporting

Financial Statements, Reports, Certificates

Guarantor Reports

Inspection

Maintenance of Properties

Taxes

Insurance

Location of Inventory and Equipment

Compliance with Laws

Leases

Existence

Environmental

Disclosure Updates

Control Agreements

Formation of Subsidiaries

Brokerage Commissions

Organizational ID Number; Commercial Tort Claims

Obtaining Permits, Etc

Copyright Registrations

Further Assurances

Material Contracts.






6. NEGATIVE COVENANTS



	 	 	 
	6.1.

6.2.

6.3.

6.4.

6.5.

6.6.

6.7.

6.8.

6.9.

6.10.

6.11.

6.12.

6.13.

6.14.

6.15.

6.16.

	 	Indebtedness

Liens

Restrictions on Fundamental Changes

Disposal of Assets

Change Name

Nature of Business

Prepayments and Amendments

Change of Control

Consignments

Distributions

Accounting Methods

Investments

Transactions with Affiliates

Use of Proceeds

Reserved

Financial Covenants






7. EVENTS OF DEFAULT.



8. THE LENDER GROUP’S RIGHTS AND REMEDIES




	 	8.1.	 	Rights and Remedies






	 	8.2.	 	Remedies Cumulative





9. TAXES AND EXPENSES



10. WAIVERS; INDEMNIFICATION



	 	 	 
	10.1.

10.2.

10.3.

	 	Demand; Protest; etc

The Lender Group’s Liability for Collateral

Indemnification






11. NOTICES



12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER



13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS




	 	13.1.	 	Assignments and Participations






	 	13.2.	 	Successors





14. AMENDMENTS; WAIVERS



	 	 	 
	14.1.

14.2.

14.3.

	 	Amendments and Waivers

Replacement of Holdout Lender

No Waivers; Cumulative Remedies






15. AGENT; THE LENDER GROUP



	 	 	 
	15.1.

15.2.

15.3.

15.4.

15.5.

15.6.

15.7.

15.8.

15.9.

15.10.

15.11.

15.12.

15.13.

15.14.

15.15.

15.16.

	 	Appointment and Authorization of Agent

Delegation of Duties

Liability of Agent

Reliance by Agent

Notice of Default or Event of Default

Credit Decision

Costs and Expenses; Indemnification

Agent in Individual Capacity

Successor Agent

Lender in Individual Capacity

Withholding Taxes

Collateral Matters

Restrictions on Actions by Lenders; Sharing of Payments

Agency for Perfection

Payments by Agent to the Lenders

Concerning the Collateral and Related Loan Documents







	 	15.17.	 	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information






	 	15.18.	 	Several Obligations; No Liability






	 	15.19.	 	Bank Product Providers





16. GUARANTY.



	 	 	 
	16.1.

16.2.

16.3.

16.4.

16.5.

16.6.

16.7.

16.8.

16.9.

16.10.

	 	Guarantied Obligations

Continuing Guaranty

Performance Under this Guaranty

Primary Obligations

Waivers

Releases

No Election

Financial Condition of Borrowers

Payments; Application

Attorneys Fees and Costs






17. GENERAL PROVISIONS.



	 	 	 	 	 
	17.1.
	 	Effectiveness

	17.2.
	 	Section Headings

	17.3.
	 	Interpretation

	17.4.
	 	Severability of Provisions

	17.5.
	 	Bank Product Providers.  .

	17.6.
	 	Lender-Creditor Relationship.  .

	17.7.
	 	Counterparts; Electronic Execution

	17.8.
	 	Revival and Reinstatement of Obligations

	17.9.
	 	Confidentiality

	17.10.
	 	Lender Group Expenses

	17.11.
	 	USA PATRIOT Act

	17.12.
	 	Integration

	17.13.
	 	PLATO, Inc. as Agent for Borrowers







4




EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A-1

	 	Form of Assignment and Acceptance
	 
	 	 
	Exhibit B-1

	 	Form of Borrowing Base Certificate
	 
	 	 
	Exhibit C-1

	 	Form of Compliance Certificate
	 
	 	 
	Exhibit L-1

	 	Form of LIBOR Notice
	 
	 	 
	Schedule A-1

	 	Agent’s Account
	 
	 	 
	Schedule C-1

	 	Commitments
	 
	 	 
	Schedule D-1

	 	Designated Account
	 
	 	 
	Schedule P-3

	 	Permitted Liens
	 
	 	 
	Schedule R-1

	 	Real Property Collateral
	 
	 	 
	Schedule 1.1

	 	Definitions
	 
	 	 
	Schedule 2.7(a)

	 	Cash Management Banks
	 
	 	 
	Schedule 3.1

	 	Conditions Precedent
	 
	 	 
	Schedule 3.6(a)

	 	Deposit Accounts and Securities Accounts Requiring

Cash Management or Control Agreements
	 
	 	 
	Schedule 4.4

	 	Locations of Inventory and Equipment
	 
	 	 
	Schedule 4.7(a)

	 	Jurisdictions of Organization
	 
	 	 
	Schedule 4.7(b)

	 	Chief Executive Offices
	 
	 	 
	Schedule 4.7(c)

	 	Organizational Identification Numbers
	 
	 	 
	Schedule 4.7(d)

	 	Commercial Tort Claims
	 
	 	 
	Schedule 4.8(b)

	 	Capitalization of Loan Parties
	 
	 	 
	Schedule 4.8(c)

	 	Capitalization of Loan Parties’ Subsidiaries
	 
	 	 
	Schedule 4.10

	 	Litigation
	 
	 	 
	Schedule 4.13

	 	Benefit Plans
	 
	 	 
	Schedule 4.14

	 	Environmental Matters
	 
	 	 
	Schedule 4.15(a)

	 	Business Intellectual Property
	 
	 	 
	Schedule 4.15(c)

	 	Software
	 
	 	 
	Schedule 4.15(d)

	 	Copyrights No Longer Used
	 
	 	 
	Schedule 4.17

	 	Deposit Accounts and Securities Accounts
	 
	 	 
	Schedule 4.19

	 	Permitted Indebtedness
	 
	 	 
	Schedule 4.23

	 	Employee and Labor Matters
	 
	 	 
	Schedule 4.24

	 	Material Contracts
	 
	 	 
	Schedule 4.26

	 	Insurance
	 
	 	 
	Schedule 5.2

	 	Collateral Reporting
	 
	 	 
	Schedule 5.3

	 	Financial Statements, Reports, Certificates
	 
	 	 
	Schedule 6.6

	 	Nature of Business






5




Schedule A-1




Agent’s Account




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



6




Schedule C-1




Commitments




	 	 	 	 	 
	Lender	 	Commitment
	Wells Fargo Foothill, Inc.
	 	$	20,000,000	 
	 
	 	 	 	 
	All Lenders
	 	$	20,000,000	 
	 
	 	 	 	 






7




Schedule D-1




Designated Account




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



"Designated Account Bank” means      , whose office is located at      ,
and whose ABA number is      .



8




Schedule 1.1




As used in the Agreement, the following terms shall have the following definitions:



"Account” means an account (as that term is defined in the Code).



"Account Debtor” means any Person who is obligated on an Account, chattel paper, or a
general intangible.



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



"Acquisition” means (a) a Stock Acquisition, or (b) an Asset Acquisition, as the
context requires.



"Act” has the meaning specified therefor in Section 17.11.



"Additional Documents” has the meaning specified therefor in Section 5.21.



"Adjustment Date” means the first day of each calendar quarter, commencing on July 1,
2007 and each October 1, January 1, April 1 and July 1 thereafter.



"Administrative Borrower” has the meaning specified therefor in Section 17.13.



"Advances” has the meaning specified therefor in Section 2.1(a).



"Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more intermediaries, of the
power to direct the management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 6.13 of the Agreement: (a) any Person which owns directly or
indirectly 10% or more of the Stock having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the partnership or other
ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a
general partner or joint venturer shall be deemed an Affiliate of such Person.



"Agent” has the meaning specified therefor in the preamble to the Agreement.



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



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



"Agent’s Liens” means the Liens granted by Loan Parties to Agent under the Loan
Documents.



"Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.



"Applicable Prepayment Premium” has the meaning specified therefor in the Fee Letter.



"Asset Acquisition” means the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of any other Person.



"Assignee” has the meaning specified therefor in Section 13.1(a).



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



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



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



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



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



"Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank
Product Providers in an amount determined by Agent as sufficient to satisfy the reasonably
estimated credit exposure with respect to the then existing Bank Products.



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



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



"Bank Product Reserve” means, as of any date of determination, the lesser of
(a) $50,000, and (b) the amount of reserves that Agent has established based upon the Bank Product
Providers’ reasonable determination of the credit exposure of Parent and its Subsidiaries in
respect of Bank Products) in respect of Bank Products then provided or outstanding.



"Bankruptcy Code” means title 11 of the United States Code, as in effect from time to
time, or any comparable insolvency or bankruptcy statute in any other applicable jurisdiction, as
in effect from time to time.



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



"Base Rate” means, the rate of interest announced, from time to time, within Wells
Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the
“prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate.



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



"Base Rate Margin” means for each of the following periods, the following: (i) from
the Closing Date to the first Adjustment Date following such date, the Base Rate Margin shall be
set at Level I in the table below and (ii) on each Adjustment Date, the Base Rate Margin shall be
set at the respective Level indicated in the table below based upon the arithmetic average of the
Total Availability of Borrowers set forth opposite thereto during the immediately preceding
calendar quarter, which arithmetic average of the Total Availability shall be calculated by Agent
as of the end of the most recently ended calendar quarter during such calendar quarter.



	 	 	 	 	 
	Level	 	Average Total Availability	 	Base Rate Margin
	I

	 	Less than $10,000,000
	 	0.50 percentage points
	 

	 	 
	 	 
	 
	 	 	 	 
	II

	 	Less than $15,000,000

but greater than or equal to $10,000,000
	 	

0.25 percentage points
	 

	 	 
	 	 
	 
	 	 	 	 
	III

	 	Greater than or equal to $15,000,000
	 	0.00 percentage points
	 

	 	 
	 	 






The adjustment of the Base Rate Margin (if any) will occur on each Adjustment Date,
provided, that, at any time that an Event of Default shall have occurred and be continuing,
the Base Rate Margin shall be set at Level I in the table above (plus, at the election of Agent or
the Required Lenders, the default rate of interest applicable thereto pursuant to Section
2.6(c)).



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



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



"Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to the Agreement.



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



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



(a) the lesser of




(i) $20,000,000, and




(ii) 100% of the amount of Recurring Revenues,




minus




(b) minus the sum of (x) the Bank Product Reserve, and (y) the aggregate amount of
reserves, if any, established by Agent under Section 2.1(b).



"Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.



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



"Business Intellectual Property” has the meaning specified therefor in Section
4.15.



"Capital Expenditures” means, with respect to any Person for any period, the aggregate
of all expenditures by such Person and its Subsidiaries during such period that are capital
expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or
financed.



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



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



"Cash Dominion Trigger Event” means (a) the occurrence and continuation of a Default
or Event of Default under Section 7.1, 7.4 or 7.5 or (b) any time when
Total Availability is less than $7,500,000.



"Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within 1 year from the date of
acquisition thereof, (b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality thereof maturing within 1
year from the date of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of
creation thereof and, at the time of acquisition, having a rating of at least A-2 from S&P or at
least P-2 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the
criteria described in clause (d) above, or (ii) any other bank organized under the laws of the
United States or any state thereof so long as the amount maintained with any such other bank is
less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation, (f)
readily marketable, investment grade auction-rate securities, which reprice on a short-term basis
and have liquidity or other backstop facilities to facilitate refunding if auctions do not clear,
and (g) Investments in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (f) above.



"Cash Management Account” has the meaning specified therefor in Section
2.7(a).



"Cash Management Agreements” means those certain cash management agreements, in form
and substance satisfactory to Agent in its Permitted Discretion, each of which is among a Loan
Party or one of its Subsidiaries, Agent, and one of the Cash Management Banks.



"Cash Management Bank” has the meaning specified therefor in Section 2.7(a).



"Change of Control” means that (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 25%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors, or (b) a majority
of the members of the Board of Directors do not constitute Continuing Directors, or (c) Parent
ceases to own and control, directly or indirectly, 100% of the outstanding Stock of each of its
Subsidiaries.



"Closing Date” means the date of the making of the initial Advance (or other extension
of credit).



"Closing Date Projections” means a set of Projections of Parent and its Subsidiaries
for the two (2) year period following the Closing Date (on a year by year basis, and for the 1 year
period following the Closing Date, on a month by month basis), in form and substance (including as
to scope and underlying assumptions) reasonably satisfactory to Agent.



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



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



"Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in any Loan Party’s books and
records, Equipment, or Inventory, in each case, in form and substance satisfactory to Agent.



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



"Commitment” means, with respect to each Lender, its Commitment, and, with respect to
all Lenders, their Commitments, in each case as such Dollar amounts are set forth beside such
Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced
or increased from time to time pursuant to assignments made in accordance with the provisions of
Section 13.1.



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



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



"Control Agreement” means a control agreement, in form and substance satisfactory to
Agent, executed and delivered by the applicable Loan Party, Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).



"Copyright Office” mean the United States Register of Copyrights, Library of Congress.



"Copyrights” has the meaning set forth in the definition of “Intellectual Property”.



"Copyright Security Agreement" has the meaning specified therefor in the Security
Agreement.



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



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



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



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



"Deposit Account” means any deposit account (as that term is defined in the Code).



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



"Designated Account Bank” has the meaning specified therefor in Schedule D-1.



"Disbursement Letter” means an instructional letter executed and delivered by
Borrowers to Agent and Lenders regarding the extensions of credit to be made on the Closing Date,
in form and substance reasonably satisfactory to Agent.



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



"EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’
consolidated net earnings (or loss), minus extraordinary gains and interest income, plus
extraordinary losses with respect to non-cash items, interest expense, income taxes, stock-based
compensation and depreciation and amortization for such period, in each case, determined on a
consolidated basis in accordance with GAAP. For the purposes of calculating EBITDA for any period
of 12 consecutive months (each, a “Reference Period”), if at any time during such Reference Period
(and after the Closing Date) Parent or any of its Subsidiaries shall have made a Permitted
Acquisition, EBITDA for such Reference Period shall be calculated after giving pro forma effect
thereto in accordance with Regulation S-X promulgated under the Exchange Act or in such other
manner acceptable to Agent as if the Permitted Acquisition occurred on the first day of such
Reference Period.



"eduTest Library” means Copyrights of the Loan Parties relating to the Software owned
by the Loan Parties constituting the subscription platform known as “Edutest”, including, without
limitation, all delivery systems and content related thereto, and all Major Upgrades, Minor
Upgrades and all new releases related thereto.



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



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



"Environmental Law” means any applicable federal, state, provincial, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy, or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent binding on any Loan
Party or any Subsidiary of a Loan Party, relating to the environment, the effect of the environment
on employee health, or Hazardous Materials, in each case as amended from time to time.



"Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental Authority or any
third party, and which relate to any Environmental Action.



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



"Equipment” means equipment (as that term is defined in the Code).



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



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



"ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, (b) the withdrawal of Parent or any of its Subsidiaries or ERISA Affiliates
from a Benefit Plan during a plan year in which it was a “substantial employer” (as defined in
Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in
a distress termination (as described in Section 4041(c) of ERISA), (d) the institution by the PBGC
of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e) any event or condition
(i) that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or
the appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan, or (ii) that
may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Parent or
any of its Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by Parent or any of its Subsidiaries or
ERISA Affiliates.



"Event of Default” has the meaning specified therefor in Section 7.



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



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



"Fee Letter” means that certain fee letter between Borrowers and Agent dated June 4,
2007.



"FEIN” means Federal Employer Identification Number.



"Fiscal Year” means the fiscal year of Parent and its Subsidiaries ending on October
31st of each calendar year.



"Funded Indebtedness” means, as of any date of determination, all Indebtedness for
borrowed money or letters of credit of Parent and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, that by its terms matures more than one year after the date of
calculation, and any such Indebtedness maturing within one year from such date that is renewable or
extendable at the option of Parent or its Subsidiaries, as applicable, to a date more than one year
from such date, including, in any event, but without duplication, with respect to Parent and its
Subsidiaries, the Revolver Usage, and the amount of their Capital Lease Obligations.



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



"Funding Losses” has the meaning specified therefor in Section 2.13(b)(ii).



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



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



"Governmental Authority” means any federal, state, local, or other governmental or
administrative body, instrumentality, board, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body exercising executive, legislative, judicial, taxing, regulatory or administrative
powers or functions of or pertaining to government.



"Governmental Charges” has the meaning specified therefor in Section 4.25.



"Guarantied Obligations” means (a) the due and punctual payment of the principal of,
and interest (including any interest that, but for the commencement of an Insolvency Proceeding,
would have accrued) on, any and all premium on, and any and all fees, costs, indemnities, and
expenses incurred in connection with, the Indebtedness owed by Borrowers to any member of the
Lender Group or any Bank Product Provider pursuant to the terms of the Agreement or any other Loan
Document and (b) the due and punctual payment of all other present or future Indebtedness owing by
Borrowers to any member of the Lender Group or any Bank Product Provider in connection with any
Loan Document.



"Guarantors” means (a) Parent, and (b) each other Person that guarantees, pursuant to
Section 5.16, Section 16, or otherwise, all or any part of the Obligations, and
"Guarantor” means any one of them.



"Guaranty” means (a) the guaranty of each Guarantor party to the Agreement contained
in Section 16 thereof, and (b) each guaranty executed and delivered by each Guarantor in
favor of Agent for the benefit of the Lender Group and the Bank Product Providers, in form and
substance satisfactory to Agent.



"Hazardous Materials” means any asbestos, urea-formaldehyde, polychlorinated
biphenyls, nuclear fuel or material, chemical waste, radioactive material, explosives, known
carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants,
contaminants, chemicals, materials or substances listed or identified in, or regulated by, and
Environmental Laws.



"Hedge Agreement” means any and all agreements, or documents now existing or hereafter
entered into by Parent or any of its Subsidiaries that provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Parent’s or any of its Subsidiaries’ exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency
valuations or commodity prices.



"Holdout Lender” has the meaning specified therefor in Section 14.2(a).



"Inactive Subsidiary” means each of Academic Systems Corporation, Edutest, Inc.,
Teachmaster Technologies, Inc. and Netschools Corporation.



"Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any
other Person that constitutes Indebtedness under any of clauses (a) through (f) above.



"Indemnified Liabilities” has the meaning specified therefor in Section 10.3.



"Indemnified Person” has the meaning specified therefor in Section 10.3.



"Intellectual Property” shall mean all foreign and domestic (i) trademarks, service
marks, brand names, certification marks, collective marks, d/b/a’s, Internet domain names, logos,
symbols, trade dress, assumed names, fictitious names, trade names, and other indicia of origin,
all applications and registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including without limitation all extensions, modifications and renewals of
same (collectively, “Trademarks”); (ii) inventions, discoveries and ideas, whether
patentable or not, and all patents, registrations, and applications therefor, including without
limitation divisions, continuations, continuations-in-part and renewal applications, and including
without limitation renewals, extensions and reissues (collectively, “Patents”); (iii)
confidential and proprietary information, trade secrets and know-how, including without limitation
processes, schematics, databases, formulae, drawings, prototypes, models, designs and customer
lists (collectively, “Trade Secrets”); (iv) published and unpublished works of authorship,
whether copyrightable or not, copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof (collectively,
"Copyrights”); and (v) all other intellectual property or proprietary rights and claims or
causes of action arising out of or related to any infringement, misappropriation or other violation
of any of the foregoing, including without limitation rights to recover for past, present and
future violations thereof.



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



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



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



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



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



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



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



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



"L/C” has the meaning specified therefor in Section 2.12(a).



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



"L/C Undertaking” has the meaning specified therefor in Section 2.12(a).



"Lender” and “Lenders” have the respective meanings set forth in the preamble
to the Agreement, and shall include any other Person made a party to the Agreement in accordance
with the provisions of Section 13.1.



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



"Lender Group Expenses” means all (a) reasonable out-of-pocket costs or expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b)
reasonable out-of-pocket fees or charges paid or incurred by Agent in connection with the Lender
Group’s transactions with Loan Parties or their Subsidiaries, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic collateral appraisals or business valuations to the
extent of the fees and charges (and up to the amount of any limitation) contained in the Agreement
or the Fee Letter), real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) reasonable out-of-pocket costs and expenses incurred by Agent in the
disbursement of funds to Borrowers or other members of the Lender Group (by wire transfer or
otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral,
or any portion thereof, irrespective of whether a sale is consummated, (f) reasonable audit fees
and expenses (including travel, meals and lodging) of Agent related to any inspections or audits to
the extent of the fees and charges (and up to the amount of any limitation) contained in the
Agreement or the Fee Letter, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or the Lender Group’s
relationship with any Loan Party or any Subsidiary of a Loan Party, (h) Agent’s and each Lender’s
reasonable out-of pocket costs and expenses (including reasonable attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering (including travel, meals and lodging),
syndicating, or amending the Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and
expenses (including attorneys, accountants, consultants, and other advisors fees and expenses)
incurred in terminating, enforcing (including reasonable attorneys, accountants, consultants, and
other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an
Insolvency Proceeding concerning any Loan Party or any Subsidiary of a Loan Party or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the Collateral.



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



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



"Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including provisions that specify that
the Letter of Credit fee set forth in the Agreement will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then existing Letter of Credit Usage, (ii) causing the
Underlying Letters of Credit to be returned to the Issuing Lender, or (iii) providing Agent with a
standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial
bank acceptable to the Agent (in its sole discretion) in an equal to 105% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit fee set forth in the
Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fee
that accrues must be an amount that can be drawn under any such standby letter of credit).



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



"LIBOR Deadline” has the meaning specified therefor in Section 2.13(b)(i).



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



"LIBOR Option” has the meaning specified therefor in Section 2.13(a).



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



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



"LIBOR Rate Margin” means for each of the following periods, the following: (i) from
the Closing Date to the first Adjustment Date following such date, the LIBOR Rate Margin shall be
set at Level I in the table below and (ii) on each Adjustment Date, the LIBOR Rate Margin shall be
set at the respective Level indicated in the table below based upon the arithmetic average of the
Total Availability of Borrowers set forth opposite thereto during the immediately preceding
calendar quarter, which arithmetic average of the Total Availability shall be calculated by Agent
as of the end of the most recently ended calendar quarter during such calendar quarter.



	 	 	 	 	 
	Level	 	Average Total Availability	 	LIBOR Rate Margin
	I

	 	Less than $10,000,000
	 	2.75 percentage points
	 

	 	 
	 	 
	 
	 	 	 	 
	II

	 	Less than $15,000,000

but greater than or equal to $10,000,000
	 	

2.25 percentage points
	 

	 	 
	 	 
	 
	 	 	 	 
	III

	 	Greater than or equal to $15,000,000
	 	1.75 percentage points
	 

	 	 
	 	 






The adjustment of the LIBOR Rate Margin (if any) will occur on each Adjustment Date,
provided, that, (i) pursuant to Section 2.13(a) of the Agreement, at any time that
an Event of Default shall have occurred and be continuing, Borrowers shall no longer have the
option to request that Advances bear interest at a rate based upon the LIBOR Rate, and (ii) subject
to Agent’s right to convert the interest rate on outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans pursuant to Section 2.13(a) of the Agreement, at any time
that an Event of Default shall have occurred and be continuing, the LIBOR Rate Margin shall be set
at Level I in the table above (plus, at the election of Agent or the Required Lenders, the default
rate of interest applicable thereto pursuant to Section 2.6(c)).



"Library Upgrade” means (a) a Major Upgrade or (b) the introduction of a new Software
platform or product.



"Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other
security arrangement and any other preference, priority, or preferential arrangement of any kind or
nature whatsoever, including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.



"Loan Account” has the meaning specified therefor in Section 2.10.



"Loan Documents” means the Agreement, the Bank Product Agreements, any Borrowing Base
Certificate, the Cash Management Agreements, the Control Agreements, each Copyright Security
Agreement, the Disbursement Letter, the Fee Letter, each Guaranty, the Intercompany Subordination
Agreement, the Letters of Credit, each Mortgage, each Patent Security Agreement, the Security
Agreement, the Source Code Escrow Agreement, each Trademark Security Agreement, the UCC Filing
Authorization Letter, any note or notes executed by a Borrower in connection with the Agreement and
payable to a member of the Lender Group, and any other agreement, instrument, and other document
executed and delivered, now or in the future, pursuant to or in connection with the Agreement or
any of the other foregoing documents or otherwise evidencing or securing any Advance or any other
Obligation.



"Loan Parties” means Borrowers and Guarantors.



"Major Upgrade” means an upgrade to Software internally designated as “Major” by the
applicable Loan Parties pursuant to the “major.minor.micro” (MMM) method of software version
control.



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



"Material Contract” means, with respect to any Loan Party, (a) each contract or
agreement to which such Loan Party is a party involving aggregate consideration payable to or by
such Loan Party of $1,000,000 or more (other than purchase orders in the ordinary course of the
business of such Loan Party and other than contracts that by their terms may be terminated by such
Loan Party in the ordinary course of its business upon less than 60 days’ notice without penalty or
premium) and (b) any other contract or agreement material to the business, operations, condition
(financial or otherwise), performance, prospects or properties of such Loan Party.



"Material Lease” means, with respect to any Person, (a) each lease to which such
Person or any of its Subsidiaries is a party as a lessee with respect to (i) the location of the
chief executive office of such Person or such Subsidiary, (ii) a location at which such Person or
such Subsidiary maintains its books and records, or (iii) a location at which such Person and its
Subsidiaries store Inventory and Equipment with an aggregate fair market value in excess of
$250,000, and (b) any other real estate lease material to the business, operations, condition
(financial or otherwise), performance, prospects or properties of such Person or such Subsidiary.



"Maturity Date” has the meaning specified therefor in Section 3.3.



"Maximum Revolver Amount” means $20,000,000, as such amount may be reduced from time
to time pursuant to the terms of this Agreement.



"Minor Upgrade” means an upgrade to Software internally designated as “Minor” by the
Loan Parties pursuant to the “major.minor.micro” (MMM) method.



"Moody’s" has the meaning specified therefor in the definition of Cash Equivalents.



"Mortgages” means, individually and collectively, one or more mortgages, deeds of
trust, or deeds to secure debt, executed and delivered by a Loan Party in favor of Agent, in form
and substance satisfactory to Agent, that encumber the Real Property Collateral.



"Multiemployer Plan” means a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA) to which a Loan Party or any of its Subsidiaries or ERISA Affiliates has contributed, or was
obligated to contribute, within the past six years.



"Net Cash Proceeds” means,



with respect to any sale or disposition by a Loan Party or a Subsidiary of a Loan Party of
property or assets, the amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred consideration) by or on behalf
of a Loan Party or a Subsidiary of a Loan Party, in connection therewith after deducting therefrom
only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A)
Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents and (B)
Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in
connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses related
thereto and required to be paid by a Loan Party or such Subsidiary of a Loan Party in connection
with such sale or disposition and (iii) taxes paid or payable to any taxing authorities by a Loan
Party or such Subsidiary of a Loan Party in connection with such sale or disposition, in each case
to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of
such cash, actually paid or payable to a Person that is not an Affiliate of a Loan Party or a
Subsidiary of a Loan Party, and are properly attributable to such transaction; and



with respect to the issuance or incurrence of any Indebtedness by a Loan Party or a Subsidiary
of a Loan Party, or the issuance by a Loan Party or a Subsidiary of a Loan Party of any shares of
its Stock, the aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of deferred consideration)
by or on behalf of a Loan Party or such Subsidiary in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and
required to be paid by a Loan Party or such Subsidiary in connection with such issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by a Loan Party or such Subsidiary
in connection with such issuance or incurrence, in each case to the extent, but only to the extent,
that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to
a Person that is not an Affiliate of a Loan Party or Subsidiary of a Loan Party, and are properly
attributable to such transaction.



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



"Originating Lender” has the meaning specified therefor in Section 13.1(e).



"Other Taxes” has the meaning specified therefor in Section 15.11(g).



"Overadvance” has the meaning specified therefor in Section 2.5.



"Parent” has the meaning specified therefor in the preamble to the Agreement.



"Participant” has the meaning specified therefor in Section 13.1(e).



"Patents” has the meaning set forth in the definition of “Intellectual Property”.



"Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.



"PBGC” means the Pension Benefit Guaranty Corporation as defined in Title IV of ERISA,
or any successor thereto.



“Permitted Acquisition” means (a) a Permitted Cash Acquisition, or (b) a Permitted
Non-Cash Acquisition, as the context requires.



"Permitted Cash Acquisition” means any Acquisition as to which each of the following
is applicable:



(a) such Acquisition qualifies as a Permitted Non-Cash Acquisition except that the
consideration payable in respect of the proposed Acquisition includes some form of consideration
other than solely the consideration specified in clause (b) of the definition of Permitted Non-Cash
Acquisition;



(b) Parent has provided Agent with forecasted balance sheets, profit and loss statements, and
cash flow statements of the Person to be acquired, all prepared on a basis consistent with such
Person’s historical financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 3 year period following the date of the proposed
Acquisition (on a year by year basis, and for the 1 year period following the date of the proposed
Acquisition, on a month by month basis), in form and substance (including as to scope and
underlying assumptions) reasonably satisfactory to Agent;



(c) Parent shall have Total Availability in an amount equal to $20,000,000 immediately after
giving effect to the consummation of the proposed Acquisition,



(d) the assets being acquired (other than a de minimis amount of assets in relation to the
assets being acquired) are located within the United States or the Person whose Stock is being
acquired is organized in a jurisdiction located within the United States,



(e) the purchase consideration payable in respect of all Permitted Cash Acquisitions, in the
aggregate (including the proposed Acquisition and including deferred payment obligations) shall not
exceed $5,000,000 in the aggregate in any 12 month period,



(f) in the case of an Asset Acquisition (and notwithstanding any contrary provisions of
Section 5.16 or any other contrary provision of the Agreement), Parent or its Subsidiaries, as
applicable, shall have executed and delivered any and all documentation reasonably requested by
Agent in order to provide Agent with a first priority perfected security interest, subject to
Permitted Liens, in such assets, and



(g) in the case of a Stock Acquisition (and notwithstanding any contrary provisions of
Section 5.16 or any other contrary provision of the Agreement), (i) the Person whose Stock
is being acquired shall have executed and delivered any and all documentation reasonably requested
by Agent in order to become a Borrower, (ii) the Person whose Stock is being acquired shall have
executed and delivered any and all documentation reasonably requested by Agent in order to provide
Agent with a first priority perfected security interest, subject to Permitted Liens, in the assets
of such Person, and (iii) the owner of the Stock subject to such Stock Acquisition shall have
executed and delivered any and all documentation reasonably requested by Agent in order to provide
Agent with a first priority perfected security interest in such Stock.



"Permitted Discretion” means a determination made in the exercise of reasonable (from
the perspective of a senior secured lender) business judgment.



"Permitted Dispositions” means (a) sales or other dispositions of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents
in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, (d)
the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business, (e) other sales and dispositions in the
aggregate not exceeding $500,000 during any twelve calendar month period and (f) the liquidation or
dissolution of PLATO UK or any Inactive Subsidiary.



"Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in connection with
purchases of goods or services in the ordinary course of business, (d) Investments received in
settlement of amounts due to a Borrower or any Subsidiary of a Borrower effected in the ordinary
course of business or owing to a Borrower or any Subsidiary of a Borrower as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor
of a Borrower or any Subsidiary of a Borrower, (e) Permitted Acquisitions, and (f) Investments by
any Loan Party in any Loan Party.



"Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b) Liens
for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet
delinquent, or (ii) do not have priority over the Agent’s Liens and the underlying taxes,
assessments, or charges or levies are the subject of Permitted Protests, (c) judgment Liens that do
not constitute an Event of Default under Section 7.7 of the Agreement, (d) Liens set forth on
Schedule P-3, provided that any such Lien only secures the Indebtedness that it secures on
the Closing Date and any Refinancing Indebtedness in respect thereof (e) the interests of lessors
under operating leases, (f) purchase money Liens or the interests of lessors under Capital Leases
to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long
as (i) such Lien attaches only to the asset purchased or acquired and the proceeds thereof, and
(ii) such Lien only secures the Indebtedness that was incurred to acquire the asset purchased or
acquired or any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation of law
in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers,
incurred in the ordinary course of Loan Parties’ business and not in connection with the borrowing
of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (h) Liens on amounts deposited in connection with obtaining worker’s
compensation or other unemployment insurance and other social security legislation, (i) Liens on
amounts deposited in connection with the making or entering into of bids, tenders, or leases in the
ordinary course of business and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining such bonds in the
ordinary course of business, and (k) with respect to any Real Property, easements, rights of way,
zoning restrictions and similar encumbrances that do not materially interfere with or impair the
use or operation thereof, and (l) normal and customary rights of setoff upon deposits in favor of
banks or other depository institutions.



"Permitted Non-Cash Acquisition” means any Acquisition so long as:



(a) no Default or Event of Default shall have occurred and be continuing or would result from
the consummation of the proposed Acquisition and the proposed Acquisition is consensual,



(b) the consideration payable in respect of the proposed Acquisition shall (i) be composed
solely of (A) common Stock of Parent, (B) Permitted Preferred Stock of Parent, or (C) proceeds of
Indebtedness incurred pursuant to clause (f) of Section 6.1, and (ii) not exceed $10,000,000 in the
aggregate in any 12 month period;



(c) no Indebtedness will be incurred, assumed, or would exist with respect to Parent or its
Subsidiaries as a result of such Acquisition, other than Indebtedness permitted under clauses (c)
or (f) of Section 6.1 and no Liens will be incurred, assumed, or would exist with respect to the
assets of Parent or its Subsidiaries as a result or such Acquisition other than Liens permitted
under clause (f) of the definition of Permitted Liens;



(d) Parent has provided Agent with written confirmation, supported by reasonably detailed
calculations, that on a pro forma basis, created by adding the historical combined financial
statements of Parent (including the combined financial statements of any other Person or assets
that were the subject of a prior Permitted Acquisition during the relevant period) to the
historical consolidated financial statements of the Person to be acquired (or the historical
financial statements related to the assets to be acquired) pursuant to the proposed Acquisition
(adjusted to eliminate expense items that would not have been incurred and to include income items
that would have been recognized, in each case, if the combination had been accomplished at the
beginning of the relevant period; such eliminations and inclusions to be mutually and reasonably
agreed upon by Parent and Agent), Parent and its Subsidiaries (i) would have been in compliance
with the financial covenants in Section 6.16 for the 12 month period ended immediately
prior to the proposed date of consummation of such proposed Acquisition, and (ii) are projected to
be in compliance with the financial covenants in Section 6.16 for the 12 month period ended
one year after the proposed date of consummation of such proposed Acquisition, together with copies
of all such historical financial statements of the Person or assets being acquired,



(e) Parent has provided Agent with written notice of the proposed Acquisition at least 30
Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than
5 Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the
acquisition agreement and other material documents relative to the proposed Acquisition, which
agreement and documents must be reasonably acceptable to Agent,



(f) the assets being acquired (other than a de minimis amount of assets in relation to Parent
and its Subsidiaries’ total assets), or the Person whose Stock is being acquired, are useful in or
engaged in, as applicable, the business of Parent and its Subsidiaries as described in Schedule
6.6 or are reasonably related, supplementary or ancillary thereto,



(g) such Acquisition shall be consensual and shall have been approved by the board of
directors of the Person whose Stock or assets are proposed to be acquired and shall not have been
preceded by an unsolicited tender offer for such Stock by, or proxy contest initiated by, Parent or
any of its Subsidiaries or an Affiliate thereof;



(h) the subject assets or Stock, as applicable, are being acquired directly by Borrowers or
one of their Subsidiaries that is a Guarantor, and (i) in the case of an Asset Acquisition,
Borrowers or such Guarantor, as applicable, shall have executed and delivered or authorized, as
applicable, any and all documentation reasonably requested by the Agent in order to include the
newly acquired assets within the collateral hypothecated under the Loan Documents, and (ii) in the
case of a Stock Acquisition, Borrowers or the Guarantor, as applicable, shall have complied with
Section 5.16 of the Agreement, and



(i) no more than (2) Acquisitions shall be consummated during any 12 month period, and no more
than one (1) Acquisition shall be consummated during any 3 month period.



"Permitted Protest” means the right of Parent or any of its Subsidiaries to protest
any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on a Parent’s or any of its
Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or any of its Subsidiaries, as applicable,
in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent’s Liens.



"Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount
outstanding at any one time not in excess of $100,000.



"Permitted Stock Purchases” means repurchases and redemptions of the Stock of Parent
conducted in accordance with a repurchase or redemption program approved by the Board of Directors
of Parent, provided, that (a) no Default or Event of Default has occurred and is continuing
at the time of any such repurchase or redemption or would result therefrom, (b) the aggregate
purchase price of all Stock repurchased and redeemed shall not exceed $1,300,000 after the date of
this Agreement and (c) Total Availability is at least $20,000,000 at the time of any such
repurchase or redemption, after giving effect to such repurchase or redemption.



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



"PLATO UK” means PLATO Learning (UK) Limited, a company organized in England and
Wales.



"PLE Library” means Copyrights of the Loan Parties relating to the Software owned by
the Loan Parties constituting the subscription platform known as the “Plato Learning Environment”,
including, without limitation, all delivery systems and content related thereto, and all Major
Upgrades, Minor Upgrades and all new releases related thereto.



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



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



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



(c) with respect to all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.7), the percentage obtained by dividing (i) such Lender’s
Commitment, by (ii) the aggregate amount of Commitments of all Lenders; provided, however, that in
the event the Commitments have been terminated or reduced to zero, Pro Rata Share under this clause
shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender’s
Advances plus such Lender’s ratable portion of the Risk Participation Liability with respect to
outstanding Letters of Credit, by (B) the outstanding principal amount of all Advances plus the
aggregate amount of the Risk Participation Liability with respect to outstanding Letters of Credit.



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



"Protective Advances” has the meaning specified therefor in Section 2.3(d)(i).



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



"Purchase Price” means the full value of all consideration of every kind and nature
paid by the acquiror to the seller(s), whether in the form of cash or cash equivalents, issuance of
Stock, incurrence or assumption of Indebtedness or otherwise (but excluding in any event any
transaction expenses, costs and fees incurred or paid by the acquiror in connection with the
acquisition, whether or not consisting of expenses, costs, fees and disbursements of attorneys,
consultants, investment bankers and other financial advisors, brokers and finders, accountants or
other advisors), minus all cash or Cash Equivalents of the target company (or any “newco” or other
Subsidiary by or through which such Permitted Acquisition is consummated) that are acquired in such
Permitted Acquisition.



"PWLN Library” means Copyrights of the Loan Parties relating to the Software owned by
the Loan Parties constituting the subscription platform known as the “Plato Web Learning Network”,
including, without limitation, all delivery systems and content related thereto, and all Major
Upgrades, Minor Upgrades and all new releases related thereto.



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



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



"Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired by a Loan Party.



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



"Recurring Revenues” means, as of any date of determination, the revenues during the
immediately preceding 12 full calendar month period then ended arising from support, maintenance
and subscription fees and related revenues during such period arising from subscription service and
software maintenance under perpetual agreements between Borrowers and their customers located in
the United States, including Puerto Rico, in each case, as reflected in the financial statements of
Parent of such Borrowers delivered to Agent pursuant to clause (g) of Schedule 5.2,
and which revenue is recognized by Borrowers in accordance with GAAP.



"Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness
so long as: (a) the terms and conditions of such refinancings, renewals, or extensions do not, in
Agent’ s reasonable judgment, materially impair the prospects of repayment of the Obligations by
the Loan Parties or materially impair the Loan Parties’ creditworthiness, (b) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so
refinanced, renewed, or extended, (c) such refinancings, renewals, or extensions do not result in
an increase in the interest rate to a rate greater than the market rate for similar instruments
with respect to the Indebtedness so refinanced, renewed, or extended, (d) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken
as a whole, are materially more burdensome or restrictive to the Loan Parties, (e) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or extension must include
subordination terms and conditions that are at least as favorable to the Lender Group as those that
were applicable to the refinanced, renewed, or extended Indebtedness, and (f) the Indebtedness that
is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the Indebtedness that was
refinanced, renewed, or extended.



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



"Replacement Lender” has the meaning specified therefor in Section 14.2(a).



"Report” has the meaning specified therefor in Section 15.17.



"Reportable Event” means any of the events described in Section 4043(c) of ERISA or
the regulations thereunder other than a Reportable Event as to which the provision of 30 days’
notice to the PBGC is waived under applicable regulations.



"Required Availability” means that the sum of (a) Excess Availability, plus (b)
Qualified Cash exceeds $25,000,000.



"Required Library” means Copyrights of the Loan Parties relating to the Software owned
by the Loan Parties that comprise the eduTest Library, the PLE Library, the PWLN Library and any
Library Upgrades released by the Loan Parties.



"Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (d) of the definition of Pro Rata Shares) equal or exceed 50.1%.



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



"Revolver Commitment” means, with respect to each Lender, its Revolver Commitment,
and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in
the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments made in accordance
with the provisions of Section 13.1.



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



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



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



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



"Settlement” has the meaning specified therefor in Section 2.3(e)(i).



"Settlement Date” has the meaning specified therefor in Section 2.3(e)(i).



"Software” mean any computer programs and computer systems (including all databases,
compilations, tool sets, compilers, higher level or proprietary languages, related documentation
and materials, whether in source code, object code, or human readable form) sold, marketed,
distributed, licensed or maintained by the Parent or any of its Subsidiaries, and any computer
programs necessary for the conduct of the Parent’s and its Subsidiaries’ business as currently
conducted.



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



"Source Code Escrow Agreement” means a source code escrow agreement with respect to
each version of each item of Software of Parent and its Subsidiaries constituting the Required
Library, in form and substance satisfactory to Agent and an escrow agent satisfactory to Agent.



"S&P” has the meaning specified therefor in the definition of Cash Equivalents.



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



"Stock Acquisition” means the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the Stock of any other Person.



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



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



"Swing Loan” has the meaning specified therefor in Section 2.3(b).



"Tax Party” has the meaning specified therefor in Section 4.25.



"Taxes” has the meaning specified therefor in Section 15.11(a).



"Termination Event” means (a) a Reportable Event with respect to any Benefit Plan,
(b) any event that causes any Loan Party or any of its ERISA Affiliates to incur liability under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
4971 or 4975 of the IRC, (c) the filing of a notice of intent to terminate a Benefit Plan or the
treatment of a Benefit Plan amendment as a termination under Section 4041 of ERISA, (d) the
institution of proceedings by the PBGC to terminate a Benefit Plan, (e) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan, or (f) any equivalent event, action,
condition, proceeding or otherwise under any federal, state, local or foreign counterparts or
equivalents thereof, in each case as amended from time to time.



"Total Availability” means, as of any date of determination, the sum of (i) Qualified
Cash and (ii) Excess Availability.



"Trade Secrets” has the meaning set forth in the definition of “Intellectual
Property”.



"Trademarks” has the meaning set forth in the definition of “Intellectual Property”.



"Trademark Security Agreement” has the meaning specified therefor in the Security
Agreement.



"TTM EBITDA” means, as of any date of determination, EBITDA of Parent determined on a
consolidated basis in accordance with GAAP, for the 12 month period most recently ended.



"UCC Filing Authorization Letter” has the meaning specified therefor in clause
(b) of Schedule 3.1.



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



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



"United States” means the United States of America.



"Voidable Transfer” has the meaning specified therefor in Section 17.8.



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



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



9




Schedule 3.1




The obligation of each Lender to make its initial extension of credit provided for in the
Agreement is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making
of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction
or waiver of the following), of each of the following conditions precedent:



(a) the Closing Date shall occur on or before June 4, 2007;



(b) Agent shall have received a letter (the “UCC Filing Authorization Letter”) duly
executed by each Loan Party authorizing Agent to file appropriate financing statements in such
office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the
security interests to be created by the Loan Documents;



(c) Agent shall have received evidence that appropriate financing statements have been duly
filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the Agent’s Liens in and to the Collateral, and Agent shall have received searches
reflecting the filing of all such financing statements, and evidencing the absence of any other
Liens on the Collateral, other than Liens acceptable to Agent;



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



(i) the Cash Management Agreements,



	 	 	 
	(ii)

(iii)

(iv)

	 	the Control Agreements,

the Copyright Security Agreement,

the Disbursement Letter,






(v) the Fee Letter,



(vi) the Intercompany Subordination Agreement,



(vii) the Patent Security Agreement,



(viii) the Security Agreement, together with (A) all certificates representing the shares of
Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank and (B)
all promissory notes pledged thereunder, as well as allonges thereto or other appropriate
instruments of transfer endorsed in blank,



(ix) the Trademark Security Agreement,



(x) the Source Code Escrow Agreement;



(e) Agent shall have received a certificate from the Secretary or Assistant Secretary of each
Loan Party (i) attesting to the resolutions of such Loan Party’s Board of Directors authorizing its
execution, delivery, and performance of the Agreement and the other Loan Documents to which such
Loan Party is a party, (ii) authorizing specific officers of such Loan Party to execute the same,
and (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party;



(f) Agent shall have received copies of each Loan Party’s Governing Documents, as amended,
modified, or supplemented to the Closing Date, certified by the Secretary or Assistant Secretary of
such Loan Party, and, to the extent applicable, as of a recent date not more than 10 days prior to
the Closing Date, by an appropriate official of the jurisdiction of organization of such Loan
Party;



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



(h) Agent shall have received certificates of status with respect to each Loan Party, each
dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer
of the jurisdictions (other than the jurisdiction of organization of such Loan Party) in which its
failure to be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Loan Party is in good standing in such jurisdictions;



(i) Agent shall have received a certificate of insurance, together with endorsements thereto
(including lender’s loss payable endorsements), as are required by Section 5.8 of the
Agreement, and copies of all insurance policies maintained by the Loan Parties, together with
endorsements thereto, in each case, the form and substance of which shall be reasonably
satisfactory to Agent;



(j) Agent shall have received a Collateral Access Agreement with respect to the location at
10801 Nesbitt Avenue South, Bloomington, Minnesota 55437-3109;



(k) Agent shall have received opinions of Loan Parties’ counsel in form and substance
satisfactory to Agent;



(l) Borrowers shall have the Required Availability after giving effect to the initial
extensions of credit under the Agreement, and the payment of all fees, costs and expenses required
to be paid by Borrowers on the Closing Date under the Agreement and the other Loan Documents, and
the payment of all trade payables of Parent and its Subsidiaries over 90 days past due, and
Administrative Borrower shall deliver to Agent a certificate of the chief financial officer or
treasurer of Administrative Borrower certifying as to the matters set forth above and containing a
calculation of Required Availability as of the Closing Date;



(m) Agent shall have received a certificate of the chief financial officer or its equivalent
of Parent certifying (i) as to the truth and accuracy of the representations and warranties of each
Loan Party contained in Section 4 of the Agreement, (ii) the absence of any Defaults or
Events of Default, and (iii) that after giving effect to the incurrence of Indebtedness under the
Agreement and the other transactions contemplated thereby, each Loan Party is Solvent;



(n) Agent shall have completed its business, legal, and collateral due diligence, including
(i) a collateral audit and review of Loan Parties’ and their Subsidiaries’ books and records and
verification of Loan Parties’ representations and warranties to the Lender Group, the results of
which shall be satisfactory to Agent, (ii) an inspection of each of the locations where Loan
Parties’ and their Subsidiaries’ Inventory is located, the results of which shall be satisfactory
to Agent, (iii) a review of the legal corporate structure of Loan Parties and their Subsidiaries,
the results of which shall be satisfactory to Agent and its counsel, and (iv) a review of Loan
Parties’ pending litigation, labor matters and Material Contracts, in each case, the results of
which shall be satisfactory to Agent and its counsel;



(o) Agent shall have received completed reference checks with respect to Loan Parties’ senior
management, the results of which are satisfactory to Agent;



(p) Agent shall have received the Closing Date Projections;



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



(r) Agent shall have received copies of each of the Material Contracts, together with a
certificate of the Secretary of the Administrative Borrower certifying each such agreement as being
a true, correct, and complete copy thereof and that each such agreement remains in full force and
effect and that none of the Loan Parties is in breach or default in any of its obligations under
such agreements;



(s) Loan Parties shall have received all licenses, approvals or evidence of other actions
required by any Governmental Authority in connection with the execution and delivery by Loan
Parties of the Loan Documents or with the consummation of the transactions contemplated thereby
(except for the recording of the UCC-1 financing statements constituting “fixture filings” being
recorded concurrently with the initial extensions of credit hereunder);



(t) Agent shall have received copies of searches satisfactory to Agent respecting each Loan
Party’s trademarks and trademark applications, and each Loan Party’s copyrights and copyright
applications, with the United States Patent and Trademark Office and the Copyright Office,
respectively.



(u) Agent shall have received such information and taken such action as shall be required for
it to comply with the Act; and



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



10




Schedule 5.2




Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the
documents set forth below at the following times in form satisfactory to Agent (if the due date of
any document described in this Schedule 5.2 does not occur on a Business Day, such document shall
be due on the first Business Day following such due date):



	 	 	 
	If Revolver Usage

is greater than or

equal to $50,000,

weekly (no later

than Wednesday of

each week), and if

Revolver Usage is

less than $50,000,

monthly (no later

than the 10th day

of each month)

	 	





(a) a detailed report regarding Borrowers’ and their

Subsidiaries’ cash and Cash Equivalents, including an

indication of which amounts constitute Qualified Cash; and

(b) a detailed calculation of Total Availability.

(c) a detailed calculation of the Borrowing Base.

(d) copies of all bank statements for any Deposit Accounts

and Securities Accounts subject to a Cash Management

Agreement or Control Agreement, as applicable.
	 

	 	 
	 
	 	 
	Monthly (no later

than the 30th day

of each month)

	 	(e) a summary aging, by vendor, of Borrowers’ and their

Subsidiaries’ accounts payable and any book overdraft

(delivered electronically in an acceptable format, if

Borrowers have implemented electronic reporting) and an

aging, by vendor, of any held checks;

(f) a deferred revenue roll-forward; and

(g) a calculation for the prior month of Recurring

Revenues.
	 

	 	 
	 
	 	 
	Quarterly (no later

than 30 days after

the end of each

fiscal quarter)

	 	(h) a report regarding Borrowers’ and their Subsidiaries’

accrued, but unpaid, ad valorem taxes;

(i) a complete inventory of the Copyrights comprising the

Required Library, as well as all other Copyrights, Patents

and Trademarks that are registered or the subject of

pending applications for registration, which were

acquired, generated or filed by Borrowers or any of their

Subsidiaries during the prior period, and (ii) a report

setting forth all new versions or material modifications

to intellectual property related to the Copyrights

comprising the Required Library.
	 

	 	 
	 
	 	 
	Upon request by

Agent

	 	(j) a report detailing the number of Accounts generating

Recurring Revenue that were terminated during the

immediately preceding monthly period and the number of new

Accounts generating Recurring Revenue entered into during

the immediately preceding monthly period (together with

copies of all relevant documentation, including any “Order

Authorization Form”, purchase order or purchase contract);

and

(k) such other reports as to the Collateral or the

financial condition of Borrowers and their Subsidiaries,

as Agent may reasonably request.
	 

	 	 






11




Schedule 5.3




Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or
other items set forth set forth below at the following times in form satisfactory to Agent:



	 	 	 	 	 
	As soon as available, but in
any event within 40 days (45
days in the case of a month
that is the end of one of
Parent’s fiscal quarters)
after the end of each month
during each of Parent’s
Fiscal Years, provided, that
Loan Parties are not required
	 	(a) an unaudited consolidated and

	to deliver such reports until
	 	consolidating balance sheet and

	the month end immediately
	 	income statement, and consolidated

	succeeding the first date on
	 	statement of cash flow covering

	which any Revolver Usage is
	 	Parent's and its Subsidiaries'

	greater than or equal to
	 	operations during such period, and

	$50,000
	 	(b) a Compliance Certificate.

	 
	 	 	 	 
	 
	 	(c) (i) consolidated financial

	 
	 	statements of Parent and its

	 
	 	Subsidiaries for each such Fiscal

	 
	 	Year, audited by independent

	 
	 	certified public accountants

	 
	 	reasonably acceptable to Agent and

	 
	 	certified, without any qualifications

	 
	 	(including any (i) "going concern" or

	 
	 	like qualification or exception, (ii)

	 
	 	qualification or exception as to the

	 
	 	scope of such audit, or (iii)

	 
	 	qualification which relates to the

	 
	 	treatment or classification of any

	 
	 	item and which, as a condition to the

	 
	 	removal of such qualification, would

	 
	 	require an adjustment to such item,

	 
	 	the effect of which would be to cause

	 
	 	any noncompliance with the provisions

	 
	 	of Section 6.16 of the Agreement), by

	 
	 	such accountants to have been

	 
	 	prepared in accordance with GAAP

	 
	 	(such audited financial statements to

	 
	 	include a balance sheet, income

	 
	 	statement, and statement of cash flow

	 
	 	and, if prepared, such accountants'

	 
	 	letter to management), and (ii)

	 
	 	unaudited consolidating financial

	 
	 	statements of Parent and its

	As soon as available, but in
	 	Subsidiaries for each such Fiscal

	any event within 90 days
	 	Year, and

	after the end of each of
	 	 	—	 
	Parent’s Fiscal Years,
	 	(d) a Compliance Certificate.

	 
	 	 	 	 
	 
	 	(e) an unaudited consolidated and

	 
	 	consolidating balance sheet and

	As soon as available, but in
	 	income statement, and consolidated

	any event within 45 days
	 	statement of cash flow covering

	after the end of each of
	 	Parent's and its Subsidiaries'

	Parent’s fiscal quarters,
	 	operations during such period

	 
	 	 	 	 
	 
	 	(f) copies of Loan Parties'

	 
	 	Projections, in form and substance

	 
	 	(including as to scope and underlying

	 
	 	assumptions) satisfactory to Agent,

	 
	 	in its Permitted Discretion, for the

	 
	 	forthcoming 2 years, year by year,

	 
	 	and for the forthcoming Fiscal Year,

	 
	 	month by month, certified by the

	 
	 	chief financial officer (or its

	 
	 	equivalent) of Administrative

	As soon as available, but in
	 	Borrower as being such officer's good

	any event within 30 days
	 	faith estimate of the financial

	prior to the start of each of
	 	performance of Loan Parties during

	Parent’s Fiscal Years,
	 	the period covered thereby.

	 
	 	 	 	 
	 
	 	(g) notice to Agent Form 8-K current

	 
	 	reports have been filed with, and are

	 
	 	available from, the SEC,

	 
	 	(h) notice to Agent that any other

	 
	 	filings (other than any Form 10Q

	 
	 	quarterly reports or Form 10-K annual

	 
	 	reports) have been made by any Loan

	 
	 	Party with the SEC, with a brief

	 
	 	description of such filing, and

	 
	 	(i) any other information that is

	If and when filed by any Loan
	 	provided by any Loan Party to its

	Party,
	 	shareholders generally.

	 
	 	 	 	 
	Promptly, but in any event
within 5 days after a Loan
Party has knowledge of any
	 	(j) notice of such event or condition

	event or condition that
	 	and a statement of the curative

	constitutes a Default or an
	 	action that Loan Parties propose to

	Event of Default,
	 	take with respect thereto.

	 
	 	 	 	 
	 
	 	(k) notice of (i) any unfair labor

	 
	 	practice complaint pending or

	 
	 	threatened against any Loan Party

	 
	 	before any Governmental Authority or

	 
	 	grievance or arbitration proceeding

	 
	 	pending or threatened against any

	 
	 	Loan Party that arises out of or

	 
	 	under any collective bargaining

	 
	 	agreement, (ii) any strike, labor

	 
	 	dispute, slowdown, stoppage or

	 
	 	similar action or grievance pending

	 
	 	or threatened against any Loan Party,

	 
	 	(iii) any union representation

	 
	 	question with respect to the

	 
	 	employees of any Loan Party, (iv) any

	 
	 	union organizing activity taking

	 
	 	place with respect to any of the

	 
	 	employees of any Loan Party, and (v)

	As soon as possible, but in
	 	any labor negotiations that could

	any event within 5 days after
	 	lead to, or result in, a labor

	a Loan Party has knowledge
	 	strike, dispute, slowdown, stoppage

	thereof,
	 	or similar action.

	 
	 	 	 	 
	Promptly after the
	 	(l) notice of all actions, suits, or

	commencement thereof, but in
	 	proceedings brought by or against any

	any event within 5 days after
	 	Loan Party or any Subsidiary of a

	the service of process with
	 	Loan Party before any Governmental

	respect thereto on any Loan
	 	Authority which reasonably could be

	Party or any Subsidiary of a
	 	expected to result in a Material

	Loan Party,
	 	Adverse Change.

	 
	 	 	 	 
	 
	 	(m) any other information reasonably

	 
	 	requested relating to the financial

	 
	 	condition of Loan Parties or their

	Upon the request of Agent,
	 	Subsidiaries.

	 
	 	 	 	 







12