Document:

EXHIBIT 10.58

MEDICALCV, INC.

NON-QUALIFIED
STOCK OPTION AGREEMENT

PURSUANT TO 2001 EQUITY INCENTIVE PLAN

No. of shares
subject to option:                                                                                                                                   Option
No.: 

Date of grant:  

THIS OPTION AGREEMENT is entered into effective                    ,
by and between MedicalCV, Inc., a Minnesota corporation (the “Company”),
and                        
(the “Optionee”) pursuant to the Company’s 2001 Equity Incentive Plan, as
amended to date (the “Plan”). Unless otherwise defined herein, certain
capitalized terms shall have the meaning set forth in the Plan.

W I T N E S S E T H:

1.             Nature of the Option. This Option is not intended
to qualify as an Incentive Stock Option within the meaning of Section 422
of the United States Internal Revenue Code of 1986, as amended.

2.             Grant of Option. Pursuant to the provisions of
the Plan, the Company grants to the Optionee, a director of the Company,
subject to the terms and conditions of the Plan and to the terms and conditions
herein set forth, the right and option to purchase from the Company all or a
part of an aggregate of              
(              )
shares of Stock (the “Shares”) at the purchase price of $                
per share, such Option to be exercised as hereinafter provided.

3.             Terms and Conditions. It is understood and agreed
that the Option evidenced hereby is subject to the following terms and
conditions:

(a)           Expiration Date. This Option
shall expire           years after
the date of grant specified above. Notwithstanding the foregoing, if the
Optionee’s employment or relationship with the Company or Related Company is
terminated by reason of death, Disability or Retirement, this Option shall
expire on the one-year anniversary of the termination date. If the Optionee’s
relationship as director of the Company is terminated by reason other than
death this Option shall, subject to Section 4 of the Plan, expire on the
three-month anniversary of the termination date.

(b)           Exercise of Option. Subject to
the Plan and the other terms of this Agreement regarding the exercisability of
this Option, this Option shall be fully vested and exercisable as of                         .
Any exercise shall be accompanied by a written notice to the Company specifying
the number of shares of Stock as to which the Option is being exercised. Notation
of any partial exercise shall be made by the Company on Schedule I hereto. This
Option may not be exercised for a fraction of a Share, and must be exercised
for no fewer than one hundred (100) shares of Stock, or such lesser number of
shares as may be vested.

 

 

(c)           Payment of Purchase Price Upon
Exercise. At the time of any exercise, the Exercise Price of the Shares as
to which this Option is exercised shall be paid in cash to the Company, unless,
in accordance with the provisions of Section 4.2(c) of the Plan, the
Board shall permit or require payment of the purchase price in another manner
set forth in the Plan.

(d)           Nontransferability. This
Option shall not be transferable other than by will or by the laws of descent
and distribution. During the lifetime of the Optionee, this Option shall be
exercisable only by the Optionee or by the Optionee’s guardian or legal
representative. No transfer of this Option by the Optionee by will or by the
laws of descent and distribution shall be effective to bind the Company unless
the Company is furnished with written notice thereof and a copy of the will
and/or such other evidence as the Board may determine necessary to establish
the validity of the transfer.

(e)           Subject to Lock Up. Optionee
understands that the Company at a future date may file a registration or
offering statement (the “Registration Statement”) with the Securities and
Exchange Commission to facilitate an underwritten public offering of its
securities. The Optionee agrees, for the benefit of the Company, that should
such an underwritten public offering be made and should the managing
underwriter of such offering require, the undersigned will not, without the
prior written consent of the Company and such underwriter, during the Lock Up
Period as defined herein:  sell, transfer
or otherwise dispose of, or agree to sell, transfer or otherwise dispose of
this Option or any of the Shares acquired upon exercise of this Option during
the Lock Up Period; or sell or grant, or agree to sell or grant, options, rights
or warrants with respect to any of the Shares acquired upon exercise of this
Option. The foregoing does not prohibit gifts to donees or transfers by will or
the laws of descent to heirs of beneficiaries provided that such donees, heirs
and beneficiaries shall be bound by the restrictions set forth herein. The term
“Lock Up Period” shall mean the lesser of (x) 180 days or (y) the
period during which Company officers and directors are restricted by the
managing underwriter from effective any sales or transfers of the Shares. The
Lock Up Period shall commence on the effective date of the Registration
Statement.

(f)            No Rights as Shareholder. The
Optionee shall have no rights as a shareholder of the Company with respect to
any Shares prior to the date of issuance to the Optionee of a certificate for
such Shares.

(g)           Compliance with Law and
Regulations. This Option and the obligation of the Company to sell and
deliver Shares hereunder shall be subject to all applicable laws, rules and
regulations (including, but not limited to, federal securities laws) and to
such approvals by any government or regulatory agency as may be required. This
Option shall not be exercisable, and the Company shall not be required to issue
or deliver any certificates for Shares of Stock prior to (i) the listing
of such Shares on Nasdaq or any stock exchange on which the Stock may then be
listed, and (ii) the completion of any registration or qualification of
such Shares under any federal or state law, or any rule or regulation of
any government body which the Company shall, in its sole discretion, determine
to be necessary or advisable. Moreover, this Option may not be exercised if its
exercise or the receipt of Shares of Stock pursuant thereto would be contrary
to applicable law.

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(h)           Withholding. All deliveries
and distributions under this Agreement are subject to withholding of all
applicable taxes. At the election of the Participant, and subject to such rules and
limitations as may be established by the Committee from time to time, such
withholding obligations may be satisfied through the surrender of shares of
Stock which the Participant already owns, or to which the Participant is
otherwise entitled under the Plan.

4.             Termination of Employment. Upon the termination
of the service of Optionee prior to the expiration of the Option, the following
provisions shall apply:

(a)           Upon the Optionee’s voluntary
resignation as a director or failure to stand for election or be nominated for
reelection, or upon the failure of shareholders of the Company to reelect
Optionee, Optionee may exercise the Option for a period of three (3) months
after the date of such resignation or or the meeting of shareholders at which
Optionee is not reelected, or until the term of the Option has expired,
whichever date is earlier. To the extent the Optionee was not entitled to
exercise this Option at the date of termination of service, or if Optionee does
not exercise this Option within the time specified herein, this Option shall
terminate.

5.             Death, Disability or Retirement of Optionee. Upon
the death of Optionee prior to the expiration of the Option, the following
provisions shall apply:

(a)           If the Optionee is at the time of his
or her death an incumbent director and has been in continuous service as a
director since the Date of Grant of the Option, then the Option may be
exercised by the Optionee for one (1) year following the date of death or
until the expiration date of the Option, whichever date is earlier, but only to
the extent the Optionee was vested in and entitled to exercise the Option at
the time of his or her death.

(b)           If the Optionee dies within three (3) months
after termination of Optionee’s service as a director of the Company, the
Option may be exercised for nine (9) months following the date of the Optionee’s
death or the expiration date of the Option, whichever date is earlier, by the
Optionee’s estate or by a person who acquires the right to exercise the Option
by will or the laws of descent or distribution, but only to the extent the
Optionee was vested in and entitled to exercise the Option at the time of
Termination.

6.             Optionee Bound by Plan. The Optionee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all the
terms and provisions thereof. In the event of any question or inconsistency
between this Agreement and the Plan, the terms and conditions of the Plan shall
govern.

7.             Heirs and Successors. This Agreement shall be
binding upon, and inure to the benefit of, the Company and its successors and
assigns, and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company’s
assets and business. If any rights exercisable by the Participant or benefits
deliverable to the Participant under this Agreement have not been exercised or
delivered, respectively, at the time of the Participant’s death, such rights
shall be exercisable by the Designated Beneficiary, and such benefits shall be
delivered to the Designated Beneficiary, in accordance with the provisions of
this agreement and the Plan. The “Designated Beneficiary” shall be the
beneficiary or beneficiaries designated by the Participant in a writing filed
with the 

 

 

Committee in such form and at such time as the
Committee shall require. If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive the Participant,
any rights that would have been exercisable by the Participant and any benefits
distributable to the Participant shall be exercised by or distributed to the
legal representative of the estate of the Participant. If a deceased
Participant designates a beneficiary and the Designated Beneficiary survives
the Participant but dies before the Designated Beneficiary’s exercise of all
rights under this Agreement or before the complete distribution of benefits to
the Designated Beneficiary under this Agreement, then any rights that would
have been exercisable by the Designated Beneficiary shall be exercised by the
legal representative of the estate of the Designated Beneficiary, and any
benefits distributable to the Designated Beneficiary shall be distributed to
the legal representative of the estate of the Designated Beneficiary.

8.             Plan Governs. Notwithstanding anything in this
Agreement to the contrary, the terms of this Agreement shall be subject to the
terms of the Plan, a copy of which may be obtained by the Participant from the
office of the Secretary of the Company; and this Agreement is subject to all
interpretations, amendments, rules and regulations promulgated by the
Committee from time to time pursuant to the Plan.

9.             Notices. Any notice hereunder to the Company
shall be addressed to it at its principal executive offices, located at 9725
South Robert Trail, Inver Grove Heights, Minnesota 55077, Attention: Chief
Executive Officer; and any notice hereunder to the Optionee shall be addressed
to the Optionee at the address last appearing in the employment records of the
Company; subject to the right of either party to designate at any time
hereunder in writing some other address.

10.           Counterparts. This Agreement
may be executed in two counterparts each of which shall constitute one and the
same instrument.

11.           Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota, except to the extent preempted by federal law, without regard to the
principles of comity or the conflicts of law provisions of any other
jurisdiction.

 

 

 

IN WITNESS WHEREOF, MedicalCV, Inc. has caused
this Agreement to be executed by its Chief Executive Officer and the Optionee
has executed this Agreement, both as of the day and year first above written.

	
  

  	
   

  	
  MEDICALCV, INC.

  	
   

  
	
   

  	
   

  	
   

   

  	
   

  
	
   

  	
   

  	
  By Marc P. Flores

  	
   

  
	
   

  	
   

  	
  Its Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPTIONEE

  	
   

  
	
   

  	
   

  	
   

   

  	
   

  
	
   

  	
   

  	
  [Name]

  	
   

  
	
   

  	
   

  	
  [Title]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Home Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

SCHEDULE I — NOTATIONS AS TO PARTIAL EXERCISE

	
  Date of 

  Exercise

  	
   

  	
  Number of 

  Purchased

  Shares

  	
   

  	
  Balance of 

  Shares on 

  Option

  	
   

  	
  Authorized 

  Signature

  	
   

  	
  Notation

  DateExhibit 10.11

 

 

CREDIT AGREEMENT

by and among

TRC COMPANIES, INC.

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES
HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, INC.

as the Arranger and Administrative Agent

Dated as of July 17, 2006

 

 

 

CREDIT AGREEMENT

THIS
CREDIT AGREEMENT (this “Agreement”), is
entered into as of July 17, 2006, 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”), TRC COMPANIES, INC., a Delaware corporation
(“Parent”), and each of Parent’s Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred
to hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”).

The parties agree as follows:

1.             DEFINITIONS AND CONSTRUCTION.

1.1.          Definitions.  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 cash collateralization 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 with a
Revolver Commitment 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 Borrowers or 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, and (ii) amounts owing by Borrowers or their Subsidiaries
to any Person to the extent secured by a Lien on, or trust over, any of the
Collateral (other than 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.          Intentionally
omitted.

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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 plus the amount of the
requested Advance does not exceed $2,500,000, 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
Borrowers’ 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 

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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 (x) the Obligations under
this Agreement shall have 

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been declared or shall
have become immediately due and payable, (y) the non-Defaulting Lenders, Agent,
and Administrative Borrower shall have waived such Defaulting Lender’s default
in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof.  The operation of this
Section shall not be construed to increase or otherwise affect the Commitment
of any Lender, to relieve or excuse the performance by such Defaulting Lender
or any other Lender of its duties and obligations hereunder, or to relieve or
excuse the performance by Borrowers of their duties and obligations hereunder
to Agent or to the Lenders other than such Defaulting Lender.  Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option, upon written
notice to Agent, to arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be acceptable to Agent.  In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being repaid its share of the outstanding Obligations
(other than Bank Product Obligations, but including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or penalty
of any kind whatsoever; provided however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver
of any of the Lender Groups’ or Borrowers’ rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to fund.

(d)           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 (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 the immediately foregoing provisions, regardless of the amount of, or reason
for, such excess, Agent shall notify the 

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Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers intended
to reduce, within a reasonable time, the outstanding principal amount of the
Advances to Borrowers to an amount permitted by the preceding paragraph.  In such circumstances, if any Lender with a
Revolver Commitment 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 with a Revolver Commitment 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
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 Borrowers’ or their Subsidiaries’
Collections received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested Settlement,
no later than 2:00 p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such requested Settlement
being the “Settlement Date”). 
Such notice of a Settlement Date shall include a summary statement of
the amount of outstanding Advances, Swing 
Loans, and 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, 

 6
 

 

 

transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and 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 such next Settlement.

(iii)          Between Settlement Dates, Agent, to
the extent no 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 Swing Lender’s Pro Rata Share of the Advances.  If, as of any Settlement Date, Collections of
Borrowers or their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Advances
other than to Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay
to the Lenders, to be applied to the outstanding Advances of such Lenders, an
amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances.  During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with respect to 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 

 7
 

 

 

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

(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 

 8
 

 

 

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 those Lenders having a Revolver
Commitment, 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 Parent and its 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.

 9
 

 

 

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

(iv)          In each instance, so long as no Event
of Default has occurred and is continuing, 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.

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

2.5.          Overadvances.  Subject to Section 2.3(d)(ii), if,
at any time or for any reason, 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 Section
2.6(c), all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof
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 with a Revolver
Commitment, 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
2.75% per annum times the Daily Balance of the undrawn amount of all
outstanding Letters of Credit.

 10
 

 

 

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

(i)            all Obligations (except for undrawn
Letters of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2 percentage points
above the per annum rate otherwise applicable hereunder, and

(ii)           the Letter of Credit fee provided for
in Section 2.6(b) 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, without prior notice to Borrowers,
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 any 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 initially accrue interest at the rate then applicable to
Advances that are Base Rate Loans subject to conversion to LIBOR Rate Loans
pursuant to Section 2.13 thereafter. 
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 that are Base Rate
Loans.

(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.

 11

 

 

2.7.          Cash Management.

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

(b)           Each Cash Management Bank shall
establish and maintain Cash Management Agreements with Agent and
Borrowers.  Each such Cash Management
Agreement shall provide, among other things, that (i) the Cash Management Bank
will comply with any instructions originated by Agent directing the disposition
of the funds in such Cash Management Account without further consent by
Borrowers or their Restricted Subsidiaries, 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) it will forward, by daily sweep, all amounts in the applicable Cash
Management Account to the Agent’s Account.

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

(d)           Each Cash Management Account shall be
a cash collateral account subject to a Control Agreement.

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 

 12
 

 

 

Account or unless and
until such payment item is honored when presented for payment.  Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly.  Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it
is received into the Agent’s Account on a Business Day on or before 11:00 a.m.
(California time).  If any payment item
is received into the Agent’s Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received
by Agent as of the opening of business on the immediately following Business
Day.  From and after the Closing Date,
Agent shall be entitled to charge Borrowers for 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 Borrowers 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 Borrowers and their
Subsidiaries is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance 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.

 13
 

 

 

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, Borrowers
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking.  The Issuing Lender shall have no obligation
to issue a Letter of Credit if any of the following would result after giving
effect to the 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 $5,000,000, 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 

 14
 

 

 

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, initially, shall bear interest at the rate then
applicable to Advances that are Base Rate Loans.  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 with
a Revolver Commitment 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 with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment 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 with a
Revolver Commitment 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 with a Revolver Commitment
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.  Each
Borrower agrees to be bound by the Underlying Issuer’s regulations and
interpretations of any Underlying Letter of Credit or by 

 15
 

 

 

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.  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, as of the Closing Date, the issuance charge imposed by the
prospective Underlying Issuer is .825% per annum times the undrawn amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.

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

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

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

 16
 

 

 

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 (such notice to be delivered by Agent within 90 days
after Agent becomes aware that such additional cost was incurred), and Borrowers
shall pay on demand such amounts as Agent may specify to be necessary to
compensate the Lender Group for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until
payment in full thereof at the rate then applicable to Base Rate Loans
hereunder.  The determination by Agent of
any amount due pursuant to this Section, as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest or demonstrable error, be final and conclusive and binding on all of
the parties hereto.

2.13.        LIBOR Option.

(a)           Interest
and Interest Payment Dates.  In
lieu of having interest charged at the rate based upon the Base Rate, Borrowers
shall have the option (the “LIBOR Option”) to have interest on all or a
portion of the Advances be charged (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.

 17
 

 

 

(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, or expenses, “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 $1,000,000 and integral multiples of $500,000 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 Borrowers’ and their Subsidiaries’ Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of
this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with 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 

 18
 

 

 

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)).

(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 (such notice to be delivered by such Lender within 90
days after such Lender becomes aware of such changed circumstances) 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 on demand the amount of such
reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender’s calculation thereof
and the 

 19
 

 

 

assumptions upon which
such calculation was based (which statement shall be deemed true and correct
absent manifest error).  In determining
such amount, such Lender may use any reasonable averaging and attribution
methods.

2.15.        Joint and Several Liability of Borrowers.

(a)           Each Borrower is accepting joint and
several liability hereunder and under the other Loan Documents in consideration
of the financial accommodations to be provided by the 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,
without limitation, any Obligations arising under this Section 2.15), it
being the intention of the parties hereto that all the Obligations shall be the
joint and several obligations of each 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.

(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 

 20
 

 

 

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

(h)           Each Borrower waives all rights and
defenses that such Borrower may have because the Obligations are secured by
Real Property.  This means, among other
things:

(i)            Agent and Lenders may collect from
such Borrower without first foreclosing on any Real or Personal Property
Collateral pledged by Borrowers.

(ii)           If Agent or any Lender forecloses on
any Real Property Collateral pledged by Borrowers:

(A)          The amount of the Obligations 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 and Lenders may  collect from such Borrower even if Agent or
Lenders, by foreclosing on the Real Property Collateral, has destroyed any
right such Borrower may have to collect from the other Borrowers.

This is an
unconditional and irrevocable waiver of any rights and defenses such Borrower
may have because the Obligations are secured by Real Property.  These rights and defenses include, 

 21
 

 

 

but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726
of the California Code of Civil Procedure.

(i)            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, 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.

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

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

 22

 

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 and 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);

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

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

(d)           no Material Adverse Change shall have
occurred since May 31, 2006.

3.3.          Term.  This Agreement shall continue in full
force and effect for a term ending on July 17, 2011 (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 (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender,
and (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be held by
Agent for the benefit of the Bank Product Providers with respect to the Bank
Product Obligations).  No termination of
this Agreement, however, shall relieve or discharge Borrowers 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

 23
 

 

have been
terminated.  When this Agreement has been
terminated and all of the Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute
and deliver any 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 90 days prior written notice by
Administrative Borrower to Agent, to terminate this Agreement and terminate the
Commitments hereunder by paying to Agent, in cash, the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the
Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full.  If Administrative Borrower has 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) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the Letter of Credit Usage, or (ii) causing the original Letters of Credit
to be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full, on the date
set forth as the date of termination of this Agreement in such notice.

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

              (a)           within 60 days after the
Closing Date, Borrowers shall deliver to Agent certified copies of the policies
of insurance, together with the endorsements thereto, as are required by Section
5.8, the form and substance of which shall be satisfactory to Agent and its
counsel;

              (b)           within 30 days after the Closing Date, Agent shall have
received a Collateral Access Agreement with respect to the locations listed on Schedule
3.6(b);

              (c)           within 30 days after the Closing Date,
Agent shall have received (i) a Mortgage, in form and substance satisfactory to
Agent, with respect to the property located at 9225 Lockhart Highway, 183
South, Austin, Texas 78747 and (ii) a mortgagee title insurance policy (or
marked commitment to issue the same) for such Real Property Collateral issued
by a title insurance company satisfactory to Agent (each a “Mortgage Policy”
and, collectively, the 

 24
 

 

“Mortgage
Policies”) in amounts satisfactory to Agent assuring Agent that the
Mortgages on such Real Property Collateral are valid and enforceable first
priority mortgage Liens on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance satisfactory to Agent (subject to
survey and other customary exceptions);

              (d)           within 60 days after the Closing
Date, each of the Deposit Accounts listed on Schedule 3.6(d) shall be
subject to a Control Agreement or shall have been closed with all funds in such
Deposit Accounts being transferred to one or more Deposit Accounts that are
subject to a Control Agreement, and prior to any such Deposit Account being
closed, Borrowers shall transfer any funds deposited therein (within one
Business Day after any such funds are so deposited) to a Deposit Account that
is subject to a Control Agreement; provided that Agent shall have
received a Control Agreement with respect to account number 25192-41849 at Bank
of America within 15 days after the Closing Date;

              (e)           within 15 days after the Closing
Date, Agent shall have received opinions of Borrowers’ counsel, in form and
substance satisfactory to Agent, covering the States of New Jersey, Texas,
Virginia and Maine;

              (f)            within 30 days after the Closing
Date, Borrowers shall enhance their reporting systems in a manner reasonably
satisfactory to Agent; and

              (g)           within 10 days after the Closing
Date, the Agent shall have received satisfactory evidence that the articles of
incorporation of Essex Environmental, Inc. shall have been amended in a manner
reasonably satisfactory to Agent to amend the scope of the Persons that may own
Essex Environmental, Inc.

4.             REPRESENTATIONS AND WARRANTIES.

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

4.1.          No
Encumbrances.  Each
Borrower and its Restricted 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.          Eligible
Accounts.  As to each
Account that is identified by a Borrower as an Eligible Account in a borrowing
base report submitted to Agent, such Account is (a) a bona fide existing
payment obligation of the applicable Account Debtor created by the sale and
delivery of Inventory or the rendition of services to such Account Debtor in
the ordinary course of Borrowers’ business, (b) to the extent it is included in
the Borrowing Base, owed to Borrowers 

 25
 

 

without any known
defenses, disputes, offsets, counterclaims, or rights of return or
cancellation, and (c) not excluded as ineligible by virtue of one or more of
the excluding criteria set forth in the definition of Eligible Billed Accounts
or Eligible Unbilled Accounts, as applicable.

4.3.          Intentionally
Omitted.

4.4.          Equipment.  Each material item of Equipment of
Borrowers and their Restricted Subsidiaries is used or held for use in their
business and is in good working order, ordinary wear and tear and damage by
casualty excepted.

4.5.          Location
of Inventory and Equipment.  The
Inventory and Equipment (other than vehicles or Equipment out for repair or
maintained with customers in the ordinary course of business) of Borrowers and
their Restricted Subsidiaries are not stored with a bailee, warehouseman, or
similar party and are located only at, or in-transit between, the locations
identified on Schedule 4.5 (as such Schedule may be updated pursuant to Section
5.9).

4.6.          Intentionally
Omitted.

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 Borrower
and each of its Restricted 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
Borrower and each of its Restricted 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 Borrower’s and each of its
Restricted Subsidiaries’ tax identification numbers and organizational identification
numbers, 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, Borrowers and
their Restricted 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 Borrower is duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be
so qualified reasonably could be expected to 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 Borrower, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding. 

 26
 

 

As of the Closing Date,
other than as described on Schedule 4.8(b), there are no subscriptions,
options, warrants, or calls relating to any shares of each Borrower’s capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument.  No
Borrower is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.

(c)           Set forth on Schedule 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
Borrower’s direct and indirect Restricted Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Restricted Subsidiaries,
and (iii) the number and the percentage of the outstanding shares of each such
class owned directly or indirectly by the applicable Borrower.  All of the outstanding capital Stock of each
such Restricted 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 Borrower’s Restricted Subsidiaries’ capital Stock, including
any right of conversion or exchange under any outstanding security or other
instrument.  No Borrower or any of its
respective Restricted Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise 
acquire or retire any shares of any Borrower’s Restricted 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 Borrower, the execution,
delivery, and performance by such Borrower of this Agreement and the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Borrower.

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

(c)           Other than the filing of financing
statements, the recordation of the Mortgages, and other filings or actions
necessary to perfect Liens granted to Agent in the Collateral, the execution,
delivery, and performance by each Borrower of this Agreement and the other Loan
Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any 

 27
 

 

Governmental Authority,
other than consents or approvals that have been obtained and that are still in
force and effect.

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

(e)           The Agent’s Liens are validly
created, perfected (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 Sections 3.6(d) and 6.12, and subject only to the
filing of financing statements, the recordation of the Mortgages and filings
with the U.S. Patent and Trademark Office), and first priority Liens, subject
only to Permitted Liens.

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

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

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

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

 28

 

 

4.10.        Litigation.  Other than those matters disclosed on Schedule
4.10 and other than matters arising after the Closing Date that 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
Borrower, threatened against any Borrower or any of its Subsidiaries.

4.11.        No
Material Adverse Change.  All
financial statements relating to Parent and its Subsidiaries that have been
delivered by Borrowers to the Lender Group pursuant to Section 5.3 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 May 31, 2006.

4.12.        Fraudulent Transfer.

(a)           Each Borrower (other than TRC
Engineers, Inc.) and each Restricted Subsidiary of a Borrower is Solvent.

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

4.13.        Employee
Benefit Plan Compliance.

(a)           Set forth on Schedule 4.13(a)
is a complete and accurate list of all Plans maintained or contributed to by
any Borrower, any of its Subsidiaries, or any of their respective ERISA
Affiliates as of the Closing Date.

(b)           Each Borrower, each of its
Subsidiaries, and each of their respective ERISA Affiliates are in compliance
with all applicable provisions and requirements of ERISA and the regulations
and published interpretations thereunder with respect to each Plan, and have
performed all their obligations under each Plan, except to the extent
non-compliance with such requirements and non-performance of such obligations,
individually or in the aggregate, would not constitute a Material Adverse
Change.

(c)           No ERISA Event has occurred or is
reasonably expected to occur.

(d)           Except to the extent required under Section 4980B of the
IRC, or as described on Schedule 4.13(d) hereto, no Plan provides health
or welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of any Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates.

(e)           The present value of the aggregate benefit liabilities
under each Pension Plan sponsored, maintained or contributed to by any Borrower,
any of its Subsidiaries or any of their ERISA Affiliates (determined as of the
end of the most recent plan year on the basis of the actuarial assumptions
specified for funding purposes in the most recent actuarial valuation for

 29
 

 

 

such Pension Plan), did not exceed the aggregate
current value of the asset of such Pension Plan.  As of the most recent valuation date for each
Multiemployer Plan for which the actuarial report is available, the potential
liability of any Borrower, any of its Subsidiaries or any of their ERISA
Affiliates for a complete or partial withdrawal from such multiemployer plan
(within the meaning of Section 4203 or Section 4205 of ERISA), when aggregated
with such potential liability for a complete or partial withdrawal from all Multiemployer
Plans, is zero.  Each Borrower, each of
its Subsidiaries and each of their respective ERISA Affiliates have complied
with the requirements of Section 515 of ERISA with respect to each
Multiemployer Plan and are not in “default” (as defined in Section 4219(a)(5)
of ERISA) with respect to payments to a Multiemployer Plan.

(f)            The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder will not involve any
transaction that is subject to the prohibitions of Section 406 of ERISA or in
connection with which taxes could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the IRC.

(g)           All liabilities under each Plan are (i) insured with a
reputable insurance company, (ii) provided for or recognized in the financial
statements most recently delivered to Agent pursuant to Section 5.3
hereof or (iii) estimated in the formal notes to the financial statements most
recently delivered to Agent pursuant to Section 5.3 hereof.

(h)           Borrowers and their respective Subsidiaries are not and
will not be a “plan” within the meaning of Section 4975(e) of the IRC; (ii) the
assets of Borrowers and their respective Subsidiaries do not and will not
constitute “plan assets” within the meaning of the United States Department of
Labor Regulations set forth in 29 C.F.R. §2510.3-101; (iii) Borrowers and their
respective Subsidiaries are not and will not be a “governmental plan” within
the meaning of Section 3(32) of ERISA; and (iv) transactions by or with
Borrowers and their respective Subsidiaries are not and will not be subject to
state statutes applicable to Borrowers and their respective Subsidiaries
regulating investments of fiduciaries with respect to governmental plans.

4.14.        Environmental
Condition.  Except for the
real property owned or operated by any of the Borrowers or any of their
Subsidiaries in connection with the Exit Strategy Program, which real
properties, as of the Closing Date, are listed on Schedule 4.14, (a)
none of the properties or assets currently or, to Borrowers’ knowledge,
formerly owned, leased or operated by Borrowers or their Subsidiaries, has ever
been used by Borrowers, their Subsidiaries, or by previous owners or operators
in the disposal, release or treatment of, or to produce, store, handle, or
transport, any Hazardous Materials, except where such use, production, storage,
handling, or transport was in compliance with applicable Environmental Law; (b)
to Borrowers’ knowledge, none of the properties or assets currently or formerly
owned, leased or operated by Borrowers or their Subsidiaries has ever been the
subject of an Environmental Action or designated or identified in any manner
pursuant to any Environmental Laws as a Hazardous Materials disposal site; (c)
none of Borrowers or any of their Subsidiaries have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrowers or their Subsidiaries; (d) none of
Borrowers or any of their Subsidiaries have received notice of or been a party
to any Environmental Actions concerning any action or omission by any Borrower
or any Subsidiary of a Borrower or any properties or assets currently

 30
 

 

 

or formerly owned, leased or operated by Borrowers or
their Subsidiaries pertaining to (i) violations or alleged violations of
Environmental Laws or (ii) the presence, release, threat of release, treatment,
storage, disposal, use, production, handling or transport of or exposure to
Hazardous Materials; (e) none of the Borrowers or any of their Subsidiaries or
any operator of the Real Property is in violation or alleged violation of
applicable Environmental Laws; and (f) except in the ordinary course in
connection with the Exit Strategy Program, none of the Borrowers or any of
their Subsidiaries have, either expressly or by operation of law, assumed or
undertaken any obligation to (i) perform or cause the performance of Remedial
Actions or (ii) indemnify, defend and hold harmless any other Person with
respect to matters arising from or relating to Environmental Laws, Hazardous
Materials, Environmental Liabilities or Environmental Actions.

4.15.        Intellectual
Property.  Each Borrower
and each Restricted Subsidiary of a Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted, and
attached hereto as Schedule 4.15 (as updated from time to time) is a
true, correct, and complete listing of all material patents, patent applications,
trademarks, trademark applications, copyrights, and copyright registrations as
to which each Borrower or one of its Restricted Subsidiaries is the owner or is
an exclusive licensee; provided, however, that Borrowers may
amend Schedule 4.15 to add additional property so long as such amendment
occurs by written notice to Agent not less than 10 days before the date on
which a Borrower or any Restricted Subsidiary of Borrower acquires any such
property after the Closing Date.

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

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

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

 31
 

 

 

believed by Borrowers 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 Borrowers 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 Borrower and each Restricted
Subsidiary of a Borrower outstanding immediately prior to the Closing Date that
is to remain outstanding after the Closing Date and such Schedule accurately
sets forth the aggregate principal amount of such Indebtedness and the
principal terms thereof.

4.20.        Inactive
Subsidiaries.  Each
Inactive Subsidiary has no Indebtedness or other material liabilities, conducts
no material operations or business and owns no material assets or properties.

5.             AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until
termination of all of the Commitments and payment in full of the Obligations,
Borrowers shall and shall cause each of their respective Restricted
Subsidiaries (and with respect to the covenants contained in Sections 5.13
and 5.18, Borrowers shall cause each of their respective Subsidiaries)
to do all of the following:

5.1.          Accounting
System.  Maintain a system
of accounting that enables Borrowers to produce financial statements in
accordance with GAAP and maintain records pertaining to the Collateral that
contain information as from time to time reasonably may be requested by
Agent.  Borrowers also shall keep a
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their and their Restricted Subsidiaries’ sales.

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

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.

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

 32
 

 

 

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 required to reimburse Lenders (other than
Agent) for any such inspection, but any such Lender may accompany Agent on any
such inspection.

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, so as to prevent any loss or forfeiture thereof or thereunder.

5.7.          Taxes.  Cause all material assessments and taxes,
whether real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against Borrowers, their Restricted 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
Restricted Subsidiaries to make timely payment or deposit of all material tax
payments and withholding taxes required of them by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon reasonable written request, furnish
Agent with proof reasonably satisfactory to Agent indicating that the
applicable Borrower or Restricted Subsidiary of a Borrower has made such
payments or deposits.

5.8.          Insurance.

(a)           At Borrowers’ expense, maintain
insurance respecting their and their Restricted Subsidiaries’ assets wherever
located, covering loss or damage by fire, theft, explosion, and all other hazards
and risks as ordinarily are insured against by other Persons engaged in the
same or similar businesses.  Borrowers
also shall maintain business interruption and commercial general liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation.  All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. 
Borrowers shall deliver copies of all such policies to Agent with 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.  With respect to the
insurance policies obtained by Borrowers and their Restricted Subsidiaries in
connection with the Exit Strategy Program obtained after the Closing Date,
Borrowers shall deliver copies of all such policies to Agent with an
endorsement naming Agent as an additional insured.

(b)           Administrative Borrower shall give
Agent prompt notice of any loss exceeding $50,000 covered by such
insurance.  So long as no Event of
Default has occurred and is continuing, Borrowers shall have the exclusive
right to adjust any losses payable under any such insurance policies which are
less than $250,000.  Following the
occurrence and during the continuation of an Event of Default, or in the case
of any losses payable under such insurance

 33
 

 

 

exceeding $250,000, Agent shall have the exclusive
right to adjust any losses payable under any such insurance policies, without
any liability to Borrowers whatsoever in respect of such adjustments.

5.9.          Location
of Inventory and Equipment.  Keep
Borrowers’ and their Restricted Subsidiaries’ Inventory and Equipment (other
than vehicles and Equipment out for repair or maintained with customers in the
ordinary course of business) only at the locations identified on Schedule 4.5
and their chief executive offices only at the locations identified on Schedule
4.7(b); provided, however, that Administrative Borrower may
amend Schedule 4.5 or Schedule 4.7 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which such Inventory or Equipment is moved to such new location or such chief
executive office is relocated, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Borrower provides Agent a Collateral Access
Agreement with respect thereto (provided that a Collateral Access Agreement
shall only be required to be delivered if books and records are maintained at
such location).

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 Borrower or any Restricted
Subsidiary of a Borrower is a party or by which any Borrower’s or any of its
Restricted Subsidiaries’ properties and assets are bound, unless such payments
are the subject of a Permitted Protest.

5.12.        Existence.  Except as otherwise permitted by Section
6.3, at all times preserve and keep in full force and effect each Borrower’s
and each of its Restricted Subsidiaries’, valid existence and good standing
and, except as could not reasonably be expected to result in a Material Adverse
Change, any rights, franchises, permits, licenses, accreditations, authorizations,
or other approvals material to their businesses.

5.13.        Environmental.

(a)           Keep any property either owned or
operated by any Borrower or any Subsidiary of a Borrower free of any
Environmental Liens or post bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens, (b)
comply with applicable 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 at or in excess of any reportable quantity
or concentration established by or listed under applicable Environmental Laws
at, on, under, to, from or onto property owned or operated by any Borrower or
any Subsidiary of a Borrower except in the ordinary course in connection with
the Exit Strategy Program and take any Remedial Actions required to abate said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly, but in any event within 5 days of its receipt thereof,
provide Agent with written notice of any of the following:  (i) notice that an Environmental Lien
has been filed against any of the real or personal property of any Borrower or
any Subsidiary of a Borrower, (ii) except in the

 34
 

 

 

ordinary course in connection with the Exit Strategy
Program, commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Borrower or any Subsidiary of a
Borrower, (iii) notice of a material violation, citation, or other
administrative order of Environmental Law by a Borrower or a Subsidiary of a
Borrower, and (iv) any acquisition or lease of real property by any Borrower or
any Subsidiary of any Borrower in connection with the Exit Strategy Program.

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, taken as a whole, in light of the
circumstances in which made.  The
foregoing to the contrary notwithstanding, any notification pursuant to the
foregoing provision will not cure or remedy the effect of the prior untrue
statement of a material fact or omission of any material fact nor shall any
such notification have the effect of amending or modifying this Agreement or
any of the Schedules hereto.

5.15.        Control Agreements.  Take all reasonable steps 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 Borrower or any Guarantor forms any direct or indirect Subsidiary
or acquires any direct or indirect Subsidiary after the Closing Date, such
Borrower or such Guarantor shall (a) cause such new Subsidiary to provide to
Agent a joinder to this Agreement or the Guaranty, as applicable, the Security
Agreement, and the Intercompany Subordination Agreement, together with such
other security documents (including, if reasonably requested by Agent,
Mortgages with respect to any 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) 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 reasonable 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.        Further Assurances.  At any time upon the reasonable request of
Agent, Borrowers shall execute or deliver to Agent, and shall cause their
Restricted 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

 35
 

 

 

perfected or to better perfect the Agent’s Liens in
all of the properties and assets of Borrowers and their Restricted 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 Borrowers or their Restricted 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, Borrowers authorize Agent to execute any such Additional Documents in
Borrowers’ or their Restricted Subsidiaries’ names, as applicable, and
authorize Agent to file such executed Additional Documents in any appropriate
filing office.

5.18.        ERISA
Compliance.

(a)           Each Borrower shall do, and shall
cause each of its Subsidiaries to do, each of the following:  (i) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the IRC or other federal
or state law; and (ii) not become a party to any Multiemployer Plan; , except
for such non-compliance as would not constitute a Material Adverse Change.

(b)           Deliver to Agent such certifications
or other evidence of compliance with the provisions of Section 4.13 as
Agent may from time to time reasonably request.

(c)           Promptly notify Agent of any of the
following ERISA events affecting any Borrower, any of its Subsidiaries or any
ERISA Affiliates (but in no event more than ten (10) days after such event),
together with a copy of any notice with respect to such event that may be
required to be filed with a Governmental Authority and any notice delivered by
a Governmental Authority to any Borrower, any of its Subsidiaries or any ERISA
Affiliates with respect to such event:

(i)         an ERISA Event;

(ii)        the adoption of any new Pension Plan by
any Borrower, any of its Subsidiaries or any ERISA Affiliates;

(iii)       the adoption of any amendment to a
Pension Plan, if such amendment will result in a material increase in benefits
or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA);
or

(iv)       the
commencement of contributions by any Borrower, any of its Subsidiaries or any
ERISA Affiliate to any Plan that is subject to Title IV of ERISA or section 412
of the IRC;

(d)           Promptly deliver to Agent copies of
(i) each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by any Borrower, any of its Subsidiaries or any ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (ii) all
notices received by any Borrower, any of its Subsidiaries or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and
(iii) such

 36
 

 

 

other documents or governmental reports or filings
relating to any Plan as Agent shall reasonably request.

6.             NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until
termination of all of the Commitments and payment in full of the Obligations,
Borrowers will not and will not permit any of their respective Restricted
Subsidiaries (and with respect to the covenants contained in Section 6.17,
Borrowers will not permit 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)            Indebtedness in the form of a loan
from Federal Partners (or an Affiliate thereof) in an aggregate amount not to
exceed $5,000,000 so long as such Indebtedness is (i) not secured by any of the
assets of any Borrower or Guarantor or any of their respective Subsidiaries and
(ii) subordinated to the Obligations on terms satisfactory to Agent.

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, other than a
merger or consolidation (i) between Borrowers, (ii) between Guarantors or (iii)
between a Borrower and a Guarantor where the Borrower is the surviving Person;

(b)           Liquidate, wind up, or dissolve
itself (or suffer any liquidation or dissolution), other than the liquidation,
winding-up or dissolution of an Inactive Subsidiary, a Borrower or a Guarantor
so long as all of the assets of such liquidating, winding-up or dissolving
Person are transferred from a Borrower to a surviving Borrower or from a
Guarantor to a surviving Guarantor or Borrower;

 37

 

(c)           Suspend or go out of a substantial
portion of its or their business, except as permitted pursuant to clauses (a)
and (b) above.

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
Borrowers or any Restricted Subsidiary of a Borrower.

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

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 to the conduct
of such business activities.

6.7.          Prepayments and Amendments.  Except in connection with Refinancing
Indebtedness permitted by Section 6.1,

(a)           optionally prepay, redeem, defease,
purchase, or otherwise acquire any Indebtedness of any Borrower or any
Restricted Subsidiary of a Borrower, other than the Obligations in accordance
with this Agreement and Permitted Purchase Money Indebtedness,

(b)           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, or

(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), in each case, in any manner adverse to Borrowers,
Agent or the Lenders.

6.8.          Intentionally
Omitted.

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.

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

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 

 38
 

 

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 Parent’s or
its Subsidiaries’ accounting records without said accounting firm or service
bureau agreeing to provide Agent information regarding Parent’s and its
Subsidiaries’ financial condition.

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, subject to Section 3.6(d), Parent and its
Subsidiaries shall not have Permitted Investments (other than in the Cash
Management Accounts or accounts that are exclusively payroll accounts) in
Deposit Accounts or Securities Accounts in an aggregate amount for all such
Deposit Accounts and Securities Accounts in excess of $25,000 at any one time
unless Parent or its Subsidiary, as applicable, and the applicable securities
intermediary or bank have entered into Control Agreements governing such
Permitted Investments in order to perfect (and further establish) the Agent’s
Liens in such Permitted Investments. 
Subject to the foregoing proviso, Borrowers shall not and shall not
permit their Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control Agreement in
respect of such Deposit Account or Securities Account.

6.13.        Transactions
with Affiliates.  Directly
or indirectly enter into or permit to exist any transaction with any Affiliate
of any Borrower or any Restricted Subsidiary of a Borrower except for:

(a)           transactions (other the payment of
management, consulting, monitoring, or advisory fees) between Borrowers or
their Restricted Subsidiaries, on the one hand, and any Affiliate of Borrowers
or their Restricted Subsidiaries (such Affiliate not including another Borrower
or Restricted Subsidiary), on the other hand, so long as such transactions
(i) are upon fair and reasonable terms and (ii) are fully disclosed
to Agent if they involve one or more payments by any Borrower or any Restricted
Subsidiary of a Borrower in excess of $60,000 for any single transaction or
series of transactions; 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,
(i) to repay, in full, the outstanding principal, accrued interest, and accrued
fees and expenses owing to Existing Lender, and (ii) to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.

6.15.        Inventory
and Equipment with Bailees.  Store
the Inventory or Equipment of Borrowers or their Restricted Subsidiaries at any
time now or hereafter with a bailee, warehouseman, or similar party.

 39
 

 

 

6.16.        Financial Covenants.

(a)           Minimum
EBITDA.  Fail to achieve EBITDA, measured on a
quarterly basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:

	
  Applicable Amount

  	
   

  	
  Applicable Period

  
	
  $3,112,000

  	
   

  	
  For the 3 month period

  ending September 30, 2006

  
	
  $5,783,000

  	
   

  	
  For the 6 month period

  ending December 31, 2006

  
	
  $8,644,000

  	
   

  	
  For the 9 month period

  ending March 31, 2007

  
	
  $12,278,000

  	
   

  	
  For the 12 month period

  ending June 30, 2007

  
	
  $13,686,000

  	
   

  	
  For the 12 month period

  ending September 30, 2007

  
	
  $15,535,000

  	
   

  	
  For the 12 month period

  ending December 31, 2007

  
	
  $17,195,000

  	
   

  	
  For the 12 month period

  ending March 31, 2008

  
	
  $18,082,000

  	
   

  	
  For the 12 month period

  ending June 30, 2008

  
	
  $19,247,000

  	
   

  	
  For the 12 month period

  ending September 30, 2008

  
	
  $20,412,000

  	
   

  	
  For the 12 month period

  ending December 31, 2008

  
	
  $21,577,000

  	
   

  	
  For the 12 month period

  ending March 31, 2009

  
	
  $22,742,000

  	
   

  	
  For the 12 month period

  ending June 30, 2009

  
	
  $24,000,000

  	
   

  	
  For the 12 month period

  ending each quarter thereafter

  

 

 40
 

 

                (b)           Average Monthly Backlog. Fail to achieve an Average Monthly Backlog,
measured on a quarterly basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:

	
  Applicable Amount

  	
   

  	
  Applicable Period

  
	
  $190,000,000

  	
   

  	
  For the 3 month period 

  ending September 30, 2006

  
	
  $190,000,000

  	
   

  	
  For the 3 month period 

  ending each quarter thereafter

  

 

(c)           Capital
Expenditures.  Make Capital Expenditures in any
fiscal year in excess of the amount set forth in the following table for the
applicable period:

	
  Fiscal Year

  2007

  	
   

  	
  Fiscal Year

  2008

  	
   

  	
  Fiscal Year

  2009

  	
   

  	
  Each Fiscal

  Year thereafter

  
	
  $9,619,000

  	
   

  	
  $10,099,000

  	
   

  	
  $10,604,000

  	
   

  	
  $10,604,000

  

 

 41
 

 

6.17.        ERISA. 
(a) (i) Terminate,
or permit any of their ERISA Affiliates to terminate, any Pension Plan so as to
result in any material liability to any Borrower, any of its Subsidiaries or
any ERISA Affiliate, (ii) permit to exist any ERISA Event, or any other event
or condition, which presents the risk of a material liability to any ERISA
Affiliate, (iii) make a complete or partial withdrawal (within the meaning of
ERISA Section 4201) from any Multiemployer Plan so as to result in any material
liability to any Borrower, any of its Subsidiaries or any ERISA Affiliate, (iv)
enter into any new Plan or modify any existing Plan so as to increase its
obligations thereunder which could result in any material liability to any
ERISA Affiliate, (v) permit the present value of all nonforfeitable accrued
benefits under any Plan (using the actuarial assumptions utilized by the PBGC
upon termination of a Plan) materially to exceed the fair market value of Plan
assets allocable to such benefits, all determined as of the most recent
valuation date for each such Plan, or (vi) engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Agent or any Lender of any of their rights under this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA or Section
4975 of the IRC, but only if (b) any such event(s) in clause (a), individually
or in the aggregate, could reasonably be expected to constitute a Material
Adverse Change or could reasonably be expected to result in the imposition of a
Lien on any of the rights, properties or assets of any Borrower, any Subsidiary
of a Borrower, or any ERISA Affiliate, in either case pursuant to Title I or
title IV of ERISA or to such penalty or excise tax provisions of the IRC or to
Section 401(a)(29) or 412 of the IRC.

6.18.        Inactive Subsidiaries.  No Inactive Subsidiary will incur any
Indebtedness or other material liabilities, conduct any material operations or
business or own or acquire any material assets or properties.

6.19.        Liquidity.  At any time prior to the date that Agent
receives the audited financial statements of Parent and its Subsidiaries for
the fiscal year ended June 30, 2007 in accordance with Section 5.3, permit
the sum of Borrowers’ and their Restricted Subsidiaries’ Excess Availability
plus Qualified Cash to be less than $5,000,000.

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,
(a) all or any portion of the Obligations consisting of interest, fees, or
charges due the Lender Group, reimbursement of Lender Group Expenses, or other
amounts (other than any portion thereof constituting principal) 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), and such
failure continues for a period of 3 Business Days, or (b) all or any portion of
the principal of the Obligations;

 42
 

 

7.2.          If
any Borrower or any Subsidiary of any Borrower

(a)           fails to perform or observe any
covenant or other agreement contained in any of Sections 2.7, 5.2,
5.3, 5.4, 5.5, 5.8, 5.12, 5.16, 5.17,
5.18, and 6.1 through 6.19 of this Agreement or Section 6
of the Security Agreement;

(b)           fails to perform or observe any
covenant or other agreement contained in any of Sections 5.7, 5.10,
5.14 and 5.15 of this Agreement and such failure continues for a
period of 10 days after the earlier of (i) the date on which such failure shall
first become known to any officer of any Borrower or (ii) written notice
thereof is given to Administrative Borrower by Agent; or

(c)           fails to perform or observe any
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 20 days after the earlier of (i) the date on which
such failure shall first become known to any officer of any Borrower or (ii)
written notice thereof is given to Administrative Borrower by Agent;

7.3.          If
any material portion of any Borrower’s or any of its Restricted 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 Borrower or the applicable Restricted Subsidiary;

7.4.          If
an Insolvency Proceeding is commenced by any Borrower or any Restricted
Subsidiary of a Borrower;

7.5.          If
an Insolvency Proceeding is commenced against any Borrower or any Restricted
Subsidiary of a Borrower, and any of the following events occur:  (a) the applicable Borrower or Restricted
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 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 Borrower or any Restricted Subsidiary of a Borrower, or (e) an
order for relief shall have been issued or entered therein;

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

7.7.          If
one or more judgments, orders, or awards involving an aggregate amount of
$100,000, or more (except to the extent fully covered by insurance pursuant to
which the insurer has accepted liability therefor in writing) shall be entered
or filed against any Borrower or any Restricted Subsidiary of any Borrower 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 

 43
 

 

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 Borrower or the applicable Restricted
Subsidiary;

7.8.          If
there is a default in one or more agreements to which any Borrower or any
Restricted Subsidiary of a Borrower is a party with one or more third Persons
relative to Indebtedness of any Borrower or any Restricted Subsidiary of any
Borrower involving an aggregate amount of $100,000 or more, and such default
(i) occurs at the final maturity of the obligations thereunder, or
(ii) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of the applicable Borrower’s or
Restricted 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 the Guaranty is limited or terminated by
operation of law or by such Guarantor, or any such Guarantor becomes the
subject of an Insolvency Proceeding;

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 the Collateral covered hereby or thereby,
except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement or as a result of any action of
Agent or any Lender;

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

7.13.        If
there exists an amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities) which exceeds $100,000, or there
occurs one or more ERISA Events which individually or in the aggregate results
in a Material Adverse
Change or the imposition of a Lien on any of the rights, properties or assets
of any Borrower, any Subsidiary of a Borrower, or any ERISA Affiliate, in
either case pursuant to Title I or title IV of ERISA or to such penalty or
excise tax provisions of the IRC or to Section 401(a)(29) or 412 of the IRC;
or

 44

 

 

7.14.        If
any Change of Control shall occur.

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 Borrowers:

(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 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 Borrowers or any other Person
or any act by the Lender Group, the Commitments shall automatically terminate
and the Obligations then outstanding, together with all accrued and unpaid
interest thereon and all fees and all other amounts due under this Agreement
and the other Loan Documents, shall automatically and immediately become due
and payable, without presentment, demand, protest, or notice of any kind, all
of which are expressly waived by Borrowers.

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

9.             TAXES AND EXPENSES.

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

 45
 

 

 

(a) make payment of
the same or any part thereof, unless the same is the subject of a Permitted
Protest, (b) set up such reserves against the Borrowing Base or the Maximum
Revolver Amount as Agent deems necessary, in its Permitted Discretion, 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
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments,
chattel paper, and guarantees at any time held by the Lender Group on which any
such Borrower may in any way be liable.

10.2.        The
Lender Group’s Liability for Collateral.  Each Borrower 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 Borrowers, unless caused by the
gross negligence or willful misconduct of Agent or any Lender (as finally
determined by a court of competent jurisdiction).

10.3.        Indemnification.  Each Borrower shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons, and
each Participant (each, an “Indemnified Person”) harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, liabilities, fines, costs,
penalties, and damages, and all reasonable fees and disbursements of attorneys,
experts, or consultants and all 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 Borrowers’ 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 

 46
 

 

 

or properties currently
or formerly owned, leased or operated by Parent or any of its Subsidiaries or
any Environmental Actions, Environmental Liabilities and Costs or Remedial
Actions related in any way to (i) any such assets or properties of Parent or
any of its Subsidiaries and (ii) the acts or omissions of Parent and its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”).  The foregoing to the contrary
notwithstanding, Borrowers 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 Borrowers were required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT (BUT NOT GROSSLY 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 Borrowers or Agent to the other relating to this
Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as Administrative
Borrower or Agent, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Borrowers in care of Administrative Borrower or
to Agent, as the case may be, at its address set forth below:

	
  

  	
  If to Administrative Borrower:

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  	
  21 Griffin Road North

  
	
   

  	
   

  	
  Windsor, Connecticut 06095

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
  Fax No.: 860-298-6323

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies to:

  	
  PAUL, HASTINGS, JANOFSKY & WALKER LLP

  
	
   

  	
   

  	
  1055 Washington Boulevard

  
	
   

  	
   

  	
  Stamford, Connecticut 06901

  
	
   

  	
   

  	
  Attn: Christopher H. Craig, Esq.

  
	
   

  	
   

  	
  Fax No.: 203-359-3031

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Agent:

  	
  WELLS FARGO FOOTHILL, INC.

  
	
   

  	
   

  	
  One Boston Place

  
	
   

  	
   

  	
  Boston, Massachusetts 02108

  
	
   

  	
   

  	
  Attn: Business Finance Manager

  
	
   

  	
   

  	
  Fax No.: 617-523-1697

  

 

 47
 

 

 

	
  

  	
  with copies to:

  	
  BINGHAM MCCUTCHEN LLP

  
	
   

  	
   

  	
  399 Park Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attn: Mark B. Joachim, Esq.

  
	
   

  	
   

  	
  Fax No.: 212-702-3608

  

 

Agent and Borrowers may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other party.  All
notices or demands sent in accordance with this Section 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.  Each Borrower 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.  BORROWERS 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)           BORROWERS AND EACH MEMBER
OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM 

 48
 

 

 

OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  BORROWERS AND 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 portion, 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, (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 

 49
 

 

 

cease to be a party
hereto and thereto), and such assignment shall effect a novation among
Borrowers, the assigning Lender, 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 Section 15 and Section 16.7(a)
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 Borrowers or the performance
or observance by Borrowers 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(b), 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) Borrowers, Agent, and the Lenders shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender’s
rights and obligations under this Agreement and the other Loan Documents,
(iv) no Lender shall transfer or grant any participating interest under 

 50
 

 

 

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

(f)            In connection with any such
assignment or participation or proposed assignment or participation, a Lender
may, subject to the provisions of Section 16.7, disclose all documents
and information which it now or hereafter may have relating to Borrowers and
their Subsidiaries and their respective businesses.

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

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.

 51

 

 

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 Borrowers 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
Borrowers) 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 Borrowers), do any of the following:

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

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

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

(d)           change the 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)            other than in connection with a
merger, liquidation, dissolution or sale of such Person expressly permitted by
the terms hereof or the other Loan Documents, release any Borrower or any
Guarantor 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 Eligible Accounts, Eligible Billed Accounts,
Eligible Unbilled Accounts, 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 

 52
 

 

 

of Agent,
Issuing Lender, or Swing Lender, as applicable, under this Agreement or any
other Loan Document.  The foregoing
notwithstanding, any amendment, modification, waiver, consent, termination, or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrowers,
shall not require consent by or the agreement of Borrowers.

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, 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) 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 Borrowers of any provision of this
Agreement.  Agent’s and each Lender’s
rights under this Agreement and the other Loan Documents will be cumulative and
not exclusive of any other right or remedy that Agent or any Lender may have.

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 

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

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 

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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 Borrower or
any Subsidiary or Affiliate of any Borrower, 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 Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of Borrowers or the books or records or properties of any of
Borrowers’ 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 Borrowers or counsel to any Lender), independent accountants and other experts
selected by Agent.  Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless Agent shall first receive such advice or concurrence
of the Lenders as it deems appropriate and until such instructions are
received, Agent shall act, or refrain from acting, as it deems advisable.  If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. 
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

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.

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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 Borrowers and their Subsidiaries or Affiliates, shall
be deemed to constitute any representation or warranty by any Agent-Related
Person to any Lender.  Each Lender
represents to Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers.  Each
Lender also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrowers and any other
Person party to a Loan Document.  Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent Related Persons.

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 Borrowers 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 Borrowers and their
Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders.  In the event Agent is not reimbursed for such
costs and expenses by Borrowers or their Subsidiaries, each Lender hereby
agrees that it is and shall be obligated to pay to Agent such Lender’s Pro Rata
Share thereof.  Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit
hereunder.  Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro
Rata Share of any costs or out of pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement 

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(whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers.  The undertaking in this Section shall survive
the payment of all Obligations hereunder and the resignation or replacement of
Agent.

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 Borrowers and their Subsidiaries and Affiliates and any other Person party
to any Loan Documents as though WFF were not Agent hereunder, and, in each case,
without notice to or consent of the other members of the Lender Group.  The other members of the Lender Group
acknowledge that, pursuant to such activities, WFF or its Affiliates may
receive information regarding Borrowers or their Affiliates and any other
Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge
that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under 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 Borrowers 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
Borrowers or their Affiliates and any other Person party to any 

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Loan Documents that is
subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender 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)           All payments made by any Borrower
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 Borrower 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 Borrower agrees to pay the full amount of such Taxes and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement, any note, 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 Borrowers 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) or failure to provide any necessary
withholding exemption or reduction forms or other documentation as set forth in
Sections 15.11(b) and 15.11(c). 
Each Borrower 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 Borrower.

(b)           If a Lender claims an exemption from
United States withholding tax, Lender agrees with and in favor of Agent and any
Borrower, 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 Borrower (within the meaning of Section 871(h)(3)(B)
of the IRC), or (III) a controlled foreign corporation related to any Borrower
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
Borrower;

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(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 Borrower;

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

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, Lender agrees
with and in favor of Agent and Borrowers, 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.

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 Borrowers 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, Lender shall 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 

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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). 
The obligation of the Lenders under this subsection 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 Borrowers of all Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Administrative Borrower certifies to Agent that the
sale or disposition is permitted under Section 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
Borrower or its Subsidiaries owned any interest at the time the Agent’s Lien
was granted nor at any time thereafter, or (iv) constituting property leased to
a Borrower or its Subsidiaries under a lease that has expired or is terminated
in a transaction permitted under this Agreement.  Except as provided above, Agent will not
execute and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially all of
the Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders.  Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent’s
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 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 Borrowers in respect of) all interests retained by Borrowers,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.

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

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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 Borrowers
or any deposit accounts of Borrowers now or hereafter maintained with such
Lender.  Each of the Lenders further
agrees that it shall not, unless specifically requested to do so in writing by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.

(b)           If, at any time or times any Lender
shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds
of Collateral or any payments with respect to the Obligations, except for any
such proceeds or payments received by such Lender from Agent pursuant to the
terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s
Pro Rata Share 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 

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

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

(d)           agrees to keep all Reports and other
material, non-public information regarding Borrowers and their Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 16.7, and

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

In addition to
the foregoing:  (x) any Lender may from
time to time request of Agent in writing that Agent provide to such Lender a
copy of any report or document provided by Borrowers to Agent that has not been
contemporaneously provided by Borrowers to such Lender, and, upon receipt of
such request, Agent 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 Borrowers, any
Lender may, from time to time, reasonably request 

 62
 

 

 

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
Borrower or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.

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.           GENERAL PROVISIONS.

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

16.2.        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.

16.3.        Interpretation.  Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against the Lender Group or
Borrowers, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been
reviewed by all parties and 

 63
 

 

 

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.

16.4.        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.

16.5.        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.

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

16.7.        Confidentiality.

(a)           Agent and Lenders each individually
(and not jointly or jointly and severally) agree that material, non-public
information regarding Borrowers and their Subsidiaries, their operations,
assets, and existing and contemplated business plans shall be treated by Agent
and the 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:  (i) to attorneys for and other advisors,
accountants, auditors, and consultants to any member of the Lender Group, (ii)
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
16.7, (iii) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (iv) as may be agreed to in advance
by Administrative Borrower or its Subsidiaries or as requested or required by
any Governmental Authority pursuant to any subpoena or other legal process, (v)
as to any such information that is or becomes generally available to the public
(other than as a result of 

 64
 

 

 

prohibited disclosure by
Agent or the Lenders), (vi) in connection with any assignment, participation or
pledge of any Lender’s interest under this Agreement, provided that any such assignee,
participant, or pledgee shall have agreed in writing to receive such
information hereunder subject to the terms of this Section, and (vii) 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
16.7(a) shall survive for 2 years after the payment in full of the
Obligations.

(b)           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.

16.8.        Lender Group Expenses.  Borrowers agree to pay any and all Lender
Group Expenses promptly after demand therefor by Agent and agrees that their
obligations contained in this Section 16.8 shall survive payment or
satisfaction in full of all other Obligations.

16.9.        USA PATRIOT Act. Each Lender that is subject to the
requirements of the Patriot Act hereby notifies Borrowers that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies Borrowers, which information includes the name and
address of Borrowers and other information that will allow such Lender to
identify Borrowers in accordance with the Patriot Act.

16.10.      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.

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

 65
 

 

 

Lender Group and hold
each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by
any Borrower or by any third party whosoever, arising from or incurred by
reason of (a) the handling of the Loan Account and Collateral of Borrowers
as herein provided, (b) the Lender Group’s relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 16.10 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from
the gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.

[Signature pages to follow.]

 66

 

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

	
  

  	
  TRC COMPANIES, INC.,
a Delaware corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC ENVIRONMENTAL

  CORPORATION,
a Connecticut corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC ENGINEERS, INC.,
a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC OMNI ENVIRONMENTAL

  CORPORATION,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ECON CAPITAL, LP,
a Texas limited partnership, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

 

	
  

  	
  TRC MARIAH ASSOCIATES, INC.,
a Wyoming corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC GARROW ASSOCIATES, INC.,
a Georgia corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NOVAK ENGINEERING, INC.,
a Michigan corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE-BLAUVELT ENGINEERS, INC.

  (VA),
a Virginia corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE-BLAUVELT ENGINEERS, INC.

  (NJ),
a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE CONSTRUCTION SERVICES, INC.,
a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

 

 

	
  

  	
  SITE-BLAUVELT ENGINEERS, INC.

  (NY),
a New York corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS, INC.,
an Arizona corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS SOUTHWEST, L.L.C.,
an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS WEST, L.L.C.,
an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS TX, L.L.C.,
an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

 

 

	
  

  	
  WILLIS ENGINEERING INC.,
a Louisiana corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VPOINT,
a Nevada corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC RAVIV ASSOCIATES, INC.,
a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BV ENGINEERING,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC SOLUTIONS, INC.,
a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC LOWNEY,
a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

 

 

	
  

  	
  IMBSEN & ASSOCIATES,
a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC ENGINEERED AUTOMATION

  SYSTEMS, INCORPORATED,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ESSEX ENVIRONMENTAL, INC.,
a California corporation , as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VECTRE CORP.,
a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E/PRO ENGINEERING AND

  ENVIRONMENTAL CONSULTING LLC,
a Maine limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SGS WITTER, INC.,
a New Mexico corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

 

 

	
  

  	
  CUBIX CORPORATION,

  a Texas corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  a California corporation, as Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brent Shay

  
	
   

  	
  Title:

  	
  Vice President

  

 

[SIGNATURE
PAGE OF CREDIT AGREEMENT]

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  	 

	
  1.

  	
   

  	
  DEFINITIONS AND
  CONSTRUCTION

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.2.

  	
   

  	
  Accounting Terms

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.3.

  	
   

  	
  Code

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.4.

  	
   

  	
  Construction

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.5.

  	
   

  	
  Schedules and Exhibits

  	
   

  	
  2

  	
   

  
	
  2.

  	
   

  	
  LOAN AND TERMS
  OF PAYMENT

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  2.1.

  	
   

  	
  Revolver
  Advances

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  2.2.

  	
   

  	
  Intentionally
  omitted

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  2.3.

  	
   

  	
  Borrowing
  Procedures and Settlements

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
  2.4.

  	
   

  	
  Payments

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  2.5.

  	
   

  	
  Overadvances

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  2.6.

  	
   

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

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  2.7.

  	
   

  	
  Cash Management

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  2.8.

  	
   

  	
  Crediting
  Payments; Clearance Charge

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  2.9.

  	
   

  	
  Designated
  Account

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  2.10.

  	
   

  	
  Maintenance of
  Loan Account; Statements of Obligations

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  2.11.

  	
   

  	
  Fees

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
  2.12.

  	
   

  	
  Letters of
  Credit

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
  2.13.

  	
   

  	
  LIBOR Option

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
  2.14.

  	
   

  	
  Capital
  Requirements

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
  2.15.

  	
   

  	
  Joint and
  Several Liability of Borrowers

  	
   

  	
  20

  	
   

  
	
  3.

  	
   

  	
  CONDITIONS; TERM OF
  AGREEMENT

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  3.1.

  	
   

  	
  Conditions
  Precedent to the Initial Extension of Credit

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  3.2.

  	
   

  	
  Conditions
  Precedent to all Extensions of Credit

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  3.3.

  	
   

  	
  Term

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  3.4.

  	
   

  	
  Effect of
  Termination

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  3.5.

  	
   

  	
  Early
  Termination by Borrowers

  	
   

  	
  24

  	
   

  
	
  4.

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
  4.1.

  	
   

  	
  No Encumbrances

  	
   

  	
  25

  	
   

  
														

 

 i
 

 

 

	
  

  	
   

  	
  4.2.

  	
   

  	
  Eligible Accounts

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
  4.3.

  	
   

  	
  Intentionally Omitted

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.4.

  	
   

  	
  Equipment

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.5.

  	
   

  	
  Location of Inventory
  and Equipment

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.6.

  	
   

  	
  Inventory Records

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.7.

  	
   

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

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.8.

  	
   

  	
  Due Organization and
  Qualification; Subsidiaries

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.9.

  	
   

  	
  Due Authorization; No
  Conflict

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
  4.10.

  	
   

  	
  Litigation

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  4.11.

  	
   

  	
  No Material Adverse
  Change

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  4.12.

  	
   

  	
  Fraudulent Transfer

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  4.13.

  	
   

  	
  Employee Compliance

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  4.14.

  	
   

  	
  Environmental Condition

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
  4.15.

  	
   

  	
  Intellectual Property

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
  4.16.

  	
   

  	
  Leases

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
  4.17.

  	
   

  	
  Deposit Accounts and
  Securities Accounts

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
  4.18.

  	
   

  	
  Complete Disclosure

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
  4.19.

  	
   

  	
  Indebtedness

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  4.20.

  	
   

  	
  Inactive Subsidiaries

  	
   

  	
  32

  	
   

  
	
  5.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.1.

  	
   

  	
  Accounting System

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.2.

  	
   

  	
  Collateral Reporting

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.3.

  	
   

  	
  Financial Statements,
  Reports, Certificates

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.4.

  	
   

  	
  Guarantor Reports

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.5.

  	
   

  	
  Inspection

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  5.6.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
  5.7.

  	
   

  	
  Taxes

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
  5.8.

  	
   

  	
  Insurance

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
  5.9.

  	
   

  	
  Location of Inventory
  and Equipment

  	
   

  	
  34

  	
   

  

 

 ii
 

 

 

	
  

  	
   

  	
  5.10.

  	
   

  	
  Compliance with Laws

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
  5.11.

  	
   

  	
  Leases

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
  5.12.

  	
   

  	
  Existence

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
  5.13.

  	
   

  	
  Environmental

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
  5.14.

  	
   

  	
  Disclosure Updates

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  5.15.

  	
   

  	
  Control Agreements

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  5.16.

  	
   

  	
  Formation of
  Subsidiaries

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  5.17.

  	
   

  	
  Further Assurances

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  5.18.

  	
   

  	
  ERISA Compliance

  	
   

  	
  36

  	
   

  
	
  6.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  6.1.

  	
   

  	
  Indebtedness

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  6.2.

  	
   

  	
  Liens

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  6.3.

  	
   

  	
  Restrictions on
  Fundamental Changes

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  6.4.

  	
   

  	
  Disposal of Assets

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.5.

  	
   

  	
  Change Name

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.6.

  	
   

  	
  Nature of Business

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.7.

  	
   

  	
  Prepayments and
  Amendments

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.8.

  	
   

  	
  Intentionally Omitted

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.9.

  	
   

  	
  Consignments

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.10.

  	
   

  	
  Distributions

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.11.

  	
   

  	
  Accounting Methods

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  6.12.

  	
   

  	
  Investments

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
  6.13.

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
  6.14.

  	
   

  	
  Use of Proceeds

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
  6.15.

  	
   

  	
  Inventory and Equipment
  with Bailees

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
  6.16.

  	
   

  	
  Financial Covenants

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
  6.17.

  	
   

  	
  ERISA

  	
   

  	
  42

  	
   

  
	
   

  	
   

  	
  6.18.

  	
   

  	
  Inactive Subsidiaries

  	
   

  	
  42

  	
   

  
	
  7.

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  42

  	
   

  
	
  8.

  	
   

  	
  THE LENDER GROUP’S
  RIGHTS AND REMEDIES

  	
   

  	
  45

  	
   

  

 

 iii
 

 

 

	
  

  	
   

  	
  8.1.

  	
   

  	
  Rights and Remedies

  	
   

  	
  45

  	
   

  
	
   

  	
   

  	
  8.2.

  	
   

  	
  Remedies Cumulative

  	
   

  	
  45

  	
   

  
	
  9.

  	
   

  	
  TAXES AND EXPENSES

  	
   

  	
  45

  	
   

  
	
  10.

  	
   

  	
  WAIVERS; INDEMNIFICATION

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  10.1.

  	
   

  	
  Demand; Protest; etc

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  10.2.

  	
   

  	
  The Lender Group’s
  Liability for Collateral

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  10.3.

  	
   

  	
  Indemnification

  	
   

  	
  46

  	
   

  
	
  11.

  	
   

  	
  NOTICES

  	
   

  	
  47

  	
   

  
	
  12.

  	
   

  	
  CHOICE OF LAW AND
  VENUE; JURY TRIAL WAIVER

  	
   

  	
  48

  	
   

  
	
  13.

  	
   

  	
  ASSIGNMENTS AND
  PARTICIPATIONS; SUCCESSORS

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
  13.1.

  	
   

  	
  Assignments and
  Participations

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
  13.2.

  	
   

  	
  Successors

  	
   

  	
  51

  	
   

  
	
  14.

  	
   

  	
  AMENDMENTS; WAIVERS

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  14.1.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  14.2.

  	
   

  	
  Replacement of Holdout
  Lender

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
  14.3.

  	
   

  	
  No Waivers; Cumulative
  Remedies

  	
   

  	
  53

  	
   

  
	
  15.

  	
   

  	
  AGENT; THE LENDER GROUP

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
  15.1.

  	
   

  	
  Appointment and
  Authorization of Agent

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
  15.2.

  	
   

  	
  Delegation of Duties

  	
   

  	
  54

  	
   

  
	
   

  	
   

  	
  15.3.

  	
   

  	
  Liability of Agent

  	
   

  	
  54

  	
   

  
	
   

  	
   

  	
  15.4.

  	
   

  	
  Reliance by Agent

  	
   

  	
  55

  	
   

  
	
   

  	
   

  	
  15.5.

  	
   

  	
  Notice of Default or
  Event of Default

  	
   

  	
  55

  	
   

  
	
   

  	
   

  	
  15.6.

  	
   

  	
  Credit Decision

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
  15.7.

  	
   

  	
  Costs and Expenses;
  Indemnification

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
  15.8.

  	
   

  	
  Agent in Individual
  Capacity

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
  15.9.

  	
   

  	
  Successor Agent

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
  15.10.

  	
   

  	
  Lender in Individual
  Capacity

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
  15.11.

  	
   

  	
  Withholding Taxes

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
  15.12.

  	
   

  	
  Collateral Matters

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
  15.13.

  	
   

  	
  Restrictions on Actions
  by Lenders; Sharing of Payments

  	
   

  	
  61

  	
   

  

 

 iv
 

 

 

	
  

  	
   

  	
  15.14.

  	
   

  	
  Agency for Perfection

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
  15.15.

  	
   

  	
  Payments by Agent to
  the Lenders

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
  15.16.

  	
   

  	
  Concerning the
  Collateral and Related Loan Documents

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
  15.17.

  	
   

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

  	
   

  	
  62

  	
   

  
	
   

  	
   

  	
  15.18.

  	
   

  	
  Several Obligations; No
  Liability

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
  15.19.

  	
   

  	
  Bank Product Providers

  	
   

  	
  63

  	
   

  
	
  16.

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
  16.1.

  	
   

  	
  Effectiveness

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
  16.2.

  	
   

  	
  Section Headings

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
  16.3.

  	
   

  	
  Interpretation

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
  16.4.

  	
   

  	
  Severability of
  Provisions

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
  16.5.

  	
   

  	
  Counterparts;
  Electronic Execution

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
  16.6.

  	
   

  	
  Revival and
  Reinstatement of Obligations

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
  16.7.

  	
   

  	
  Confidentiality

  	
   

  	
  64

  	
   

  
	
   

  	
   

  	
  16.8.

  	
   

  	
  Lender Group Expenses

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
  16.9.

  	
   

  	
  USA PATRIOT Act

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
  16.10.

  	
   

  	
  Integration

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
  16.11.

  	
   

  	
  Parent as Agent for Borrowers

  	
   

  	
  65

  	
   

  

 

 v

 

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-1

  	
  Permitted Holders

  
	
  Schedule P-2

  	
  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(b)

  	
  Collateral Access Agreements to be Delivered
  Post-Closing

  
	
  Schedule 3.6(d)

  	
  Deposit Accounts to be Covered Post-Closing

  
	
  Schedule 4.5

  	
  Locations of Inventory and Equipment

  
	
  Schedule 4.7(a)

  	
  States 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 Borrowers

  
	
  Schedule 4.8(c)

  	
  Capitalization of Borrowers’ Subsidiaries

  
	
  Schedule 4.10

  	
  Litigation

  
	
  Schedule 4.13(a)

  	
  List of Plans

  
	
  Schedule 4.13(d)

  	
  Plans that Provide Benefits for Retired or Former
  Employees

  
	
  Schedule 4.14

  	
  Environmental Matters

  
	
  Schedule 4.15

  	
  Intellectual Property

  
	
  Schedule 4.17

  	
  Deposit Accounts and Securities Accounts

  
	
  Schedule 4.19

  	
  Permitted Indebtedness

  
	
  Schedule 5.2

  	
  Collateral Reporting

  
	
  Schedule 5.3

  	
  Financial Statements, Reports, Certificates

  
	
  Schedule 6.6

  	
  Nature of Business

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]