Document:

Exhibit 10.1

 

March 10, 2010

 

James
Russell (J.R.) Reger

South
Fork Exploration, LLC

P.O. Box
1782

Billings,
Montana 59103

 

Re:  Agreement to Purchase Oil, Gas and Mineral
Leases

 

Dear
Mr. Reger:

 

This
letter sets forth the terms pursuant to which Plains Energy Investments, Inc.
(“Plains”) agrees to purchase all right, title and interests of South Fork
Exploration, LLC (“SFE”) in those certain oil, gas and mineral leases set forth
on Exhibit A hereto (the “Leases”).

 

Plains
hereby agrees to pay SFE $1,374,375 cash and issue SFE 2,573,346 unregistered
shares of Plains common stock, par value $0.001 per share (the “Shares”) upon
receipt by Plains of the following:

 

·                  A fairness opinion from an independent party
acceptable in form and substance to Plains confirming that the terms of the
proposed transaction are fair and reasonable to Plains and its shareholders;
and

 

·                  Executed assignments from SFE on a
county-by-county basis substantially similar to the form attached hereto as
Exhibit B.

 

SFE
hereby agrees to accept the foregoing consideration in exchange for assignment
to Plains of the Leases, and SFE hereby acknowledges the sufficiency of such
consideration.  Either party may
terminate this agreement in the event Plains has not received a fairness
opinion acceptable in form and substance to Plains by April 1, 2010.

 

SFE
hereby agrees to warrant and defend to Plains, its heirs, successors, legal
representatives or assigns against any and all lawful claims and/or demands of
all persons whomsoever claiming or to claim any part thereof and to reimburse
Plains for any and all costs of suit to defend against the same (including, but
not limited to, reasonable attorneys’ fees and expenses) and for any damages of
Plains and any of its affiliates resulting from any claim made by any person
claiming or to claim any part thereof. 
In the event at any time hereafter a defect in title shall arise for any
of the Leases, SFE agrees to do remedy such situation by completing either of
the following at SFE’s sole cost and expense no later than thirty (30) days
following the date on which SFE or Plains (as the case may be) first discovers
any title issue:  (i) SFE shall cure
such defect to Plains’ satisfaction or (ii) SFE shall assign to Plains a
replacement lease (covering lands acceptable to Plains) at SFE’s sole cost and
expense.

 

 

Please
acknowledge your agreement to the foregoing agreement by executing this letter
in the space provided below.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  Plains
  Energy Investments, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/
  Mitchell Thompson

  
	
   

  	
  By
  Mitchell Thompson

  
	
   

  	
  Its
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed
  and accepted this 10th day of March, 2010

  	
   

  
	
  by
  South Fork Exploration, LLC

  	
   

  
	
   

  	
   

  
	
  /s/
  J.R. Reger

  	
   

  
	
  By
  James Russell (J.R.) Reger

  	
   

  
	
  Its
  President

  	
   

  

 

2

 

 

Exhibit B

 

ASSIGNMENT OF OIL AND GAS LEASES

 

KNOW
ALL MEN BY THESE PRESENTS:

 

That
the undersigned, South Fork Exploration,
LLC, P.O. Box 1782, Billings, Montana 59103  (hereinafter called Assignor) for and in consideration of
One Dollar ($1.00) the receipt whereof is hereby acknowledged, does hereby
sell, assign, transfer and set over unto Plains Energy
Investments, Inc., P.O. Box 1500, Billings, MT 59103  (hereinafter called Assignee) all of its right, title and
interest in and to the oil and gas leases as set out in Exhibit “A”
attached hereto and made a part hereof, insofar as said leases cover lands in Mountrail County, North Dakota,
said oil and gas leases being hereinafter referred to as “Leases”.

 

Reserving,
however, unto the Assignor herein an overriding royalty equal to the difference
between the current existing burdens, and 20.0% of 8/8ths of all the oil, gas
and other hydrocarbons produced, saved and marketed from the Leases.  It is the intent to deliver an 80.0% net
revenue interest in each Lease assigned of the oil, liquid hydrocarbons, gases
(included without limitation, hydrogen sulfide gas) and their respective
constituent products produced, saved and marketed from the lands covered by
said leases under and by virtue of said leases. 
This overriding royalty shall be free and clear of all exploration,
development and operating costs incurred on or associated with obtaining
production from the respective lease or lands pooled therewith, provided the
overriding royalty shall bear its proportionate share of all taxes and costs
incurred after the production physically leaves the lease, unit or pooled area
boundary.  If Assignor’s interest, or the
interest assigned by Assignor to Assignee, in said Leases is less than the full
fee simple estate in the oil, gas and other hydrocarbons under any tract or
tracts of land assigned hereby, the overriding royalty herein reserved by
Assignor, with respect to that tract or tracts, shall be proportionately
reduced.

 

Assignor
agrees to warrant and defend to Assignee, its heirs, successors, legal
representatives and assigns, the title to the leases against any and all lawful
claims and/or demands of all persons whomsoever claiming or to claim any part
thereof.

 

The
provisions of this Assignment of Oil and Gas Leases shall be binding upon all
successors, representatives and assigns of the Assignor and Assignee.

 

EXECUTED
this
              
day of March, 2010.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  SOUTH
  FORK EXPLORATION, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  James
  Russell (J.R.) Reger, President

  

 

B-1

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  PLAINS
  ENERGY INVESTMENTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mitchell
  Thompson, Chief Financial Officer

  

 

 

ACKNOWLEDGEMENT

 

	
  STATE
  OF MONTANA

  	
  )

  
	
   

  	
  )
  §

  
	
  COUNTY
  OF YELLOWSTONE

  	
  )

  

 

This
instrument was acknowledged before me on the
           day of March,
2010, by James Russell (J.R.) Reger as President of South Fork Exploration, LLC
and Mitchell Thompson as Chief Financial Officer of Plains Energy Investments, Inc.
on behalf of said companies.

 

 

	
  Notary
  Signature:

  	
   

  	
   

  
	
  Printed
  Name of Notary:

  	
   

  	
   

  
	
  Residing
  at:

  	
   

  	
  SEAL

  
	
  Montana
  Notary Public Commission Expires:

  	
   

  	
   

  
						

 

B-2Exhibit 10.2

 

 

CREDIT AGREEMENT

 

dated as of July 13, 2010

 

among

 

WINMARK CORPORATION,

as the Company and a Loan Party,

 

THE SUBSIDIARIES OF THE COMPANY,

as Loan Parties,

 

EACH LENDER PARTY HERETO,

 

and

 

THE PRIVATEBANK AND TRUST COMPANY,

as a Lender and as Administrative Agent for the Lenders

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
  Other Interpretive Provisions

  	
   

  	
  17

  
	
  1.3

  	
  Letter of Credit Amounts

  	
   

  	
  18

  
	
  SECTION 2

  	
  COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND
  LETTER OF CREDIT PROCEDURES

  	
   

  	
  18

  
	
  2.1

  	
  Commitments

  	
   

  	
  18

  
	
  2.2

  	
  Loan Procedures

  	
   

  	
  19

  
	
  2.3

  	
  Letter of Credit Procedures

  	
   

  	
  21

  
	
  2.4

  	
  Certain Conditions

  	
   

  	
  25

  
	
  2.5

  	
  Defaulting Lenders

  	
   

  	
  25

  
	
  2.6

  	
  Increase in Commitments

  	
   

  	
  26

  
	
  SECTION 3

  	
  EVIDENCING OF LOANS

  	
   

  	
  28

  
	
  3.1

  	
  Notes

  	
   

  	
  28

  
	
  3.2

  	
  Recordkeeping

  	
   

  	
  28

  
	
  SECTION 4

  	
  INTEREST

  	
   

  	
  28

  
	
  4.1

  	
  Interest Rates

  	
   

  	
  28

  
	
  4.2

  	
  Interest Payment Dates

  	
   

  	
  28

  
	
  4.3

  	
  Setting and Notice of LIBOR Rates

  	
   

  	
  28

  
	
  4.4

  	
  Computation of Interest

  	
   

  	
  29

  
	
  SECTION 5

  	
  FEES

  	
   

  	
  29

  
	
  5.1

  	
  Letter of Credit Fees

  	
   

  	
  29

  
	
  5.2

  	
  Other Fees

  	
   

  	
  29

  
	
  SECTION 6

  	
  REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT;
  PREPAYMENTS

  	
   

  	
  30

  
	
  6.1

  	
  Prepayments

  	
   

  	
  30

  
	
  6.2

  	
  Repayments and Terminations

  	
   

  	
  30

  
	
  6.3

  	
  Reduction of Aggregate Commitments

  	
   

  	
  30

  
	
  SECTION 7

  	
  MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES

  	
   

  	
  31

  
	
  7.1

  	
  Payments Generally; Agent’s Clawback

  	
   

  	
  31

  
	
  7.2

  	
  Sharing of Payments

  	
   

  	
  32

  
	
  7.3

  	
  Application of Certain Payments

  	
   

  	
  33

  
	
  7.4

  	
  Due Date Extension

  	
   

  	
  33

  
	
  7.5

  	
  Setoff

  	
   

  	
  33

  
	
  7.6

  	
  Taxes

  	
   

  	
  34

  
	
  SECTION 8

  	
  INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS

  	
   

  	
  34

  
	
  8.1

  	
  Increased Costs

  	
   

  	
  34

  
	
  8.2

  	
  Basis for Determining Interest Rate Inadequate or Unfair

  	
   

  	
  35

  
	
  8.3

  	
  Changes in Law Rendering LIBOR Loans Unlawful

  	
   

  	
  35

  
	
  8.4

  	
  Funding Losses

  	
   

  	
  36

  
	
  8.5

  	
  Right of the Lenders to Fund through Other Offices

  	
   

  	
  36

  
	
  8.6

  	
  Discretion of the Lenders as to Manner of Funding

  	
   

  	
  36

  
	
  8.7

  	
  Mitigation of Circumstances

  	
   

  	
  36

  
	
  8.8

  	
  Conclusiveness of Statements; Survival of Provisions

  	
   

  	
  37

  

 

i

 

	
  SECTION 9

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  37

  
	
  9.1

  	
  Organization

  	
   

  	
  37

  
	
  9.2

  	
  Authorization; No Conflict

  	
   

  	
  37

  
	
  9.3

  	
  Validity and Binding Nature

  	
   

  	
  37

  
	
  9.4

  	
  Financial Condition

  	
   

  	
  37

  
	
  9.5

  	
  No Material Adverse Change

  	
   

  	
  38

  
	
  9.6

  	
  Litigation and Contingent Liabilities

  	
   

  	
  38

  
	
  9.7

  	
  Ownership of Properties; Liens

  	
   

  	
  38

  
	
  9.8

  	
  Equity Ownership; Subsidiaries

  	
   

  	
  38

  
	
  9.9

  	
  Pension Plans

  	
   

  	
  38

  
	
  9.10

  	
  Investment Company Act

  	
   

  	
  39

  
	
  9.11

  	
  Public Utility Holding Company Act

  	
   

  	
  39

  
	
  9.12

  	
  Margin Stock

  	
   

  	
  39

  
	
  9.13

  	
  Taxes; Tax Shelter Registration

  	
   

  	
  39

  
	
  9.14

  	
  Solvency, etc.

  	
   

  	
  40

  
	
  9.15

  	
  Environmental Matters

  	
   

  	
  40

  
	
  9.16

  	
  Insurance

  	
   

  	
  40

  
	
  9.17

  	
  Real Property

  	
   

  	
  40

  
	
  9.18

  	
  Information

  	
   

  	
  41

  
	
  9.19

  	
  Intellectual Property

  	
   

  	
  41

  
	
  9.20

  	
  Burdensome Obligations

  	
   

  	
  41

  
	
  9.21

  	
  Labor Matters

  	
   

  	
  41

  
	
  9.22

  	
  No Default

  	
   

  	
  41

  
	
  9.23

  	
  Accounts

  	
   

  	
  41

  
	
  9.24

  	
  Anti-Terrorism Law Compliance

  	
   

  	
  41

  
	
  9.25

  	
  Compliance with Laws

  	
   

  	
  42

  
	
  9.26

  	
  Hedging Agreements

  	
   

  	
  42

  
	
  9.27

  	
  Patriot Act

  	
   

  	
  42

  
	
  SECTION 10

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  43

  
	
  10.1

  	
  Reports, Certificates and Other Information

  	
   

  	
  43

  
	
  10.2

  	
  Books, Records and Inspections

  	
   

  	
  45

  
	
  10.3

  	
  Maintenance of Property; Insurance

  	
   

  	
  46

  
	
  10.4

  	
  Compliance with Laws; Payment of Taxes and Liabilities

  	
   

  	
  46

  
	
  10.5

  	
  Maintenance of Existence, etc.

  	
   

  	
  47

  
	
  10.6

  	
  Use of Proceeds

  	
   

  	
  47

  
	
  10.7

  	
  Employee Benefit Plans

  	
   

  	
  47

  
	
  10.8

  	
  Environmental Matters

  	
   

  	
  47

  
	
  10.9

  	
  Tax Shelter Registration

  	
   

  	
  48

  
	
  10.10

  	
  Further Assurances

  	
   

  	
  48

  
	
  10.11

  	
  Unsecured Notes

  	
   

  	
  48

  
	
  SECTION 11

  	
  NEGATIVE COVENANTS

  	
   

  	
  48

  
	
  11.1

  	
  Debt

  	
   

  	
  48

  
	
  11.2

  	
  Liens

  	
   

  	
  49

  
	
  11.3

  	
  Operating Leases

  	
   

  	
  50

  
	
  11.4

  	
  Restricted Payments

  	
   

  	
  50

  
	
  11.5

  	
  Mergers, Consolidations, Sales

  	
   

  	
  50

  

 

ii

 

	
  11.6

  	
  Modification of Organizational Documents

  	
   

  	
  52

  
	
  11.7

  	
  Affiliate Transactions

  	
   

  	
  52

  
	
  11.8

  	
  Unconditional Purchase Obligations

  	
   

  	
  52

  
	
  11.9

  	
  Inconsistent Agreements

  	
   

  	
  52

  
	
  11.10

  	
  Business Activities; Issuance of Equity

  	
   

  	
  52

  
	
  11.11

  	
  [INTENTIONALLY OMITTED]

  	
   

  	
  52

  
	
  11.12

  	
  Subordinated Debt Documents

  	
   

  	
  52

  
	
  11.13

  	
  Fiscal Year

  	
   

  	
  52

  
	
  11.14

  	
  Control Agreements

  	
   

  	
  53

  
	
  11.15

  	
  Tangible Net Worth

  	
   

  	
  53

  
	
  11.16

  	
  Debt Service Coverage

  	
   

  	
  53

  
	
  11.17

  	
  Maximum Leverage

  	
   

  	
  53

  
	
  11.18

  	
  Laws and Regulations

  	
   

  	
  53

  
	
  SECTION 12

  	
  EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

  	
   

  	
  53

  
	
  12.1

  	
  Initial Credit Extension

  	
   

  	
  53

  
	
  12.2

  	
  Conditions

  	
   

  	
  55

  
	
  SECTION 13

  	
  EVENTS OF DEFAULT AND THEIR EFFECT

  	
   

  	
  55

  
	
  13.1

  	
  Events of Default

  	
   

  	
  55

  
	
  13.2

  	
  Effect of Event of Default

  	
   

  	
  57

  
	
  13.3

  	
  Application of Funds

  	
   

  	
  58

  
	
  SECTION 14

  	
  ADMINISTRATIVE AGENT

  	
   

  	
  59

  
	
  14.1

  	
  Appointment and Authorization

  	
   

  	
  59

  
	
  14.2

  	
  L/C Issuer

  	
   

  	
  59

  
	
  14.3

  	
  Delegation of Duties

  	
   

  	
  59

  
	
  14.4

  	
  Exculpation of Administrative Agent

  	
   

  	
  59

  
	
  14.5

  	
  Reliance by Administrative Agent

  	
   

  	
  60

  
	
  14.6

  	
  Notice of Default

  	
   

  	
  60

  
	
  14.7

  	
  Credit Decision

  	
   

  	
  61

  
	
  14.8

  	
  Indemnification

  	
   

  	
  61

  
	
  14.9

  	
  Administrative Agent in Individual Capacity

  	
   

  	
  62

  
	
  14.10

  	
  Successor Administrative Agent

  	
   

  	
  62

  
	
  14.11

  	
  Collateral Matters

  	
   

  	
  62

  
	
  14.12

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  63

  
	
  14.13

  	
  Other Agents; Arrangers and Managers

  	
   

  	
  63

  
	
  SECTION 15

  	
  THE LOAN PARTIES

  	
   

  	
  64

  
	
  15.1

  	
  Appointment of the Company

  	
   

  	
  64

  
	
  15.2

  	
  Relationship Among the Loan Parties

  	
   

  	
  64

  
	
  SECTION 16

  	
  GENERAL

  	
   

  	
  67

  
	
  16.1

  	
  Waiver, Amendments, Etc.

  	
   

  	
  67

  
	
  16.2

  	
  Confirmations

  	
   

  	
  68

  
	
  16.3

  	
  Notices

  	
   

  	
  68

  
	
  16.4

  	
  Computations

  	
   

  	
  68

  
	
  16.5

  	
  Expenses, Indemnity, Damage Waiver

  	
   

  	
  69

  
	
  16.6

  	
  Payments Set Aside

  	
   

  	
  70

  
	
  16.7

  	
  Successors and Assigns

  	
   

  	
  71

  
	
  16.8

  	
  Register

  	
   

  	
  72

  

 

iii

 

	
  16.9

  	
  GOVERNING LAW

  	
   

  	
  72

  
	
  16.10

  	
  Confidentiality

  	
   

  	
  72

  
	
  16.11

  	
  Severability

  	
   

  	
  73

  
	
  16.12

  	
  Nature of Remedies

  	
   

  	
  73

  
	
  16.13

  	
  Entire Agreement

  	
   

  	
  73

  
	
  16.14

  	
  Counterparts

  	
   

  	
  73

  
	
  16.15

  	
  Successors and Assigns

  	
   

  	
  74

  
	
  16.16

  	
  Captions

  	
   

  	
  74

  
	
  16.17

  	
  Customer Identification - USA Patriot Act Notice

  	
   

  	
  74

  
	
  16.18

  	
  Nonliability of Agent and each Lender

  	
   

  	
  74

  
	
  16.19

  	
  FORUM SELECTION AND CONSENT TO JURISDICTION

  	
   

  	
  75

  
	
  16.20

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  75

  

 

iv

 

SCHEDULES

 

	
  SCHEDULE
  2.1

  	
   

  	
  Commitments

  
	
  SCHEDULE
  9.6

  	
   

  	
  Litigation
  and Contingent Liabilities

  
	
  SCHEDULE
  9.7

  	
   

  	
  Ownership
  of Properties; Liens

  
	
  SCHEDULE
  9.8

  	
   

  	
  Subsidiaries

  
	
  SCHEDULE
  9.17

  	
   

  	
  Real
  Property

  
	
  SCHEDULE
  11.7

  	
   

  	
  Affiliate
  Transactions

  

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  Form of
  Note

  
	
  EXHIBIT B

  	
   

  	
  Form of
  Compliance Certificate

  
	
  EXHIBIT C

  	
   

  	
  Form of
  Borrowing Base Certificate

  
	
  EXHIBIT D

  	
   

  	
  Form of
  Notice of Borrowing

  
	
  EXHIBIT E

  	
   

  	
  Form of Notice of
  Conversion/Continuation

  

 

 

CREDIT AGREEMENT

 

Dated as of July 13, 2010

 

WINMARK
CORPORATION (the “Company”), the Subsidiaries of the Company that are or
may from time to time become parties hereto (together with the Company and
their respective successors and assigns, the “Loan Parties”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”),
as a Lender and as Administrative Agent for the Lenders:

 

RECITALS

 

WHEREAS,
the Lenders have agreed to make available to the Loan Parties a revolving
credit facility (which includes letters of credit) upon the terms and
conditions set forth in this Credit Agreement (this “Agreement”).

 

In
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:

 

SECTION 1           DEFINITIONS.

 

1.1           Definitions.  When used herein the following terms shall
have the following meanings:

 

“Account”:  As defined in the UCC.

 

“Account
Debtor”:  As defined in the UCC.

 

“Acquisition”:  Any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of all or
substantially all of any business or division of a Person, (b) the acquisition
of all or any portion of the Capital Securities of any Person, (c) a
merger or consolidation or any other combination with another Person (other
than a Person that is already a Subsidiary), or (d) any other Investment
in a Person; provided, however, that an Investment in
publicly-traded securities of a Person shall not constitute an Acquisition so
long as such Investment does not result in (i) the acquisition of all or
substantially all of the assets or Capital Securities of such Person, or (ii) a
merger, consolidation or other combination with such Person.

 

“Administrative
Agent” or “Agent”: 
PrivateBank in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.

 

“Administrative
Agent’s Office”:  Agent’s address
and, as appropriate, account as set forth on the signature page or Schedule
2.1 to this Agreement, or such other address or account as Agent may from
time to time notify the Company and the Lenders in writing (which for purposes
of this provision may include a notice by e-mail).

 

“Affected
Loan”:  As defined in Section 8.3.

 

1

 

“Affiliate”:  With respect to any Person, (a) any
other Person which, directly or indirectly, controls or is controlled by or is
under common control with such Person, (b) any officer or director of such
Person and (c) with respect to any Lender, any entity administered or
managed by such Lender or an Affiliate or investment advisor thereof and which
is engaged in making, purchasing, holding or otherwise investing in commercial
loans.  A Person shall be deemed to be “controlled
by” any other Person if such Person possesses, directly or indirectly, power to
vote 5% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managers or power to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.  Unless expressly
stated otherwise herein, no Lender shall be deemed an Affiliate of any Loan
Party.

 

“Aggregate
Commitments”:  The Commitments of all
Lenders, as reduced from time to time pursuant to Section 6.3.

 

“Agreement”:  As defined in the Recitals.

 

“Applicable
Margin”:  For any day, a rate per
annum of (i) for LIBOR Loans, 2.75%, (ii) for Base Rate Loans, 0.50%
or (iii) for Fixed Rate Loans, 2.75%.

 

“Applicable
Percentage”:  With respect to any
Lender at any time, the percentage (carried out to the ninth decimal place) of
the Aggregate Commitments represented by such Lender’s Commitment at such
time.  If the commitment of each Lender
to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 13.2 or if the
Aggregate Commitments have expired, then the Applicable Percentage of each
Lender shall be determined based on the Applicable Percentage of such Lender
most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each
Lender is set forth opposite the name of such Lender on Schedule 2.1 of
this Agreement or in the Assignment Agreement pursuant to which such Lender
becomes a party hereto, as applicable.

 

“Approved
Fund”:  Any Fund that is administered
or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

 

“Asset
Disposition”:  The sale, lease,
assignment or other transfer for value (each, a “Disposition”) by any
Loan Party to any Person (other than a Loan Party) of any asset or right of
such Loan Party (including, the loss, destruction or damage of any thereof or
any actual or threatened (in writing to any Loan Party) condemnation,
confiscation, requisition, seizure or taking thereof) other than (a) the
Disposition of any asset which is to be replaced, and is in fact replaced,
within 30 days with another asset performing the same or a similar function and
(b) the sale or lease of inventory in the ordinary course of business.

 

“Assignment
Agreement”:  As defined in Section 16.7(a).

 

“Attorney
Costs”:  With respect to any Person,
all reasonable fees and charges of any counsel to such Person, the reasonable
allocable cost of internal legal services of such Person, all reasonable
disbursements of such internal counsel and all court costs and similar legal
expenses.

 

2

 

“Bank
Product Agreements”:  Those certain
cash management service agreements entered into from time to time between any
Loan Party and any Lender or its Affiliates in connection with any of the Bank
Products.

 

“Bank
Product Obligations”:  All
obligations, liabilities, contingent reimbursement obligations, fees, and
expenses owing by the Loan Parties to the Lenders or their Affiliates pursuant
to or evidenced by the Bank Product Agreements and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and including all such
amounts that a Loan Party is obligated to reimburse to any Lender as a result
of such Lender purchasing participations or executing indemnities or
reimbursement obligations with respect to the Bank Products provided to the
Loan Parties pursuant to the Bank Product Agreements.

 

“Bank
Products”:  Any service or facility
extended to any Loan Party by any Lender or its Affiliates including, (a) deposit
accounts, (b) cash management services, including, controlled
disbursement, lockbox, electronic funds transfers (including, book transfers,
fedwire transfers, ACH transfers), online reporting and other services relating
to accounts maintained with any Lender or its Affiliates, (c) debit cards
and (d) Hedging Agreements.

 

“Base
Rate”:  At any time the greater of (a) the
Federal Funds Rate plus 0.5% and (b) the Prime Rate.  The Lenders may lend to their customers at
rates that are at, above, or below the Base Rate.

 

“Base
Rate Loan”:  Any Loan which bears
interest at or by reference to the Base Rate.

 

“Borrowing
Base”:  As of any month-end, the sum
of (a) 90% of the net book value of the Eligible Leased Assets of the Loan
Parties on such month-end, plus (b) an amount equal to EBITDA of
the Company’s franchising and corporate segments for the twelve consecutive
months ended on such month-end times two (2).

 

“Borrowing
Base Certificate”:  A certificate
substantially in the form of Exhibit C.

 

“BSA”:  As defined in Section 10.4.

 

“Business
Day”:  Any day on which PrivateBank
is open for commercial banking business in Chicago, Illinois and, in the
case of a Business Day which relates to a LIBOR Loan, on which dealings are
carried on in the London interbank eurodollar market.

 

“Capital
Expenditures”:  All expenditures
which, in accordance with GAAP, would be required to be capitalized and shown
on the consolidated balance sheet of the Company, including expenditures in
respect of Capital Leases, but excluding expenditures made in connection with
the replacement, substitution or restoration of assets to the extent financed (a) from
insurance proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being replaced or restored or (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.

 

3

 

“Capital
Lease”:  With respect to any Person,
any lease of (or other agreement conveying the right to use) any real or
personal property by such Person that, in conformity with GAAP, is accounted
for as a capital lease on the balance sheet of such Person.

 

“Capital
Securities”:  With respect to any
Person, all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person’s capital, whether now
outstanding or issued or acquired after the Closing Date, including common
shares, preferred shares, membership interests in a limited liability company,
limited or general partnership interests in a partnership or any other
equivalent of such ownership interest.

 

“Capitalized
Lease Obligations”:  As to any
Person, all rental obligations of such Person, as lessee under a Capital Lease
which are or will be required to be capitalized on the books of such Person.

 

“Cash
Collateralize”:  To deliver cash
collateral to a L/C Issuer, to be held as cash collateral for outstanding
Letters of Credit, pursuant to documentation satisfactory to such L/C Issuer
and in an amount satisfactory to such L/C Issuer which amount may exceed the
Stated Amount of outstanding Letters of Credit. 
Derivatives of such term have corresponding meanings.

 

“Change
of Control”:  The occurrence of any
of the following events:  (a) any
Person or two or more Persons acting in concert acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly,
of Capital Securities of the Company representing 50% or more of the combined
voting power of all Capital Securities of the Company entitled to vote in the
election of directors; (b) any Person or two or more Persons acting in
concert acquiring by contract or otherwise, or entering into a contract or
arrangement which upon consummation will result in its or their acquisition of,
control over Capital Securities of the Company representing 50% or more of the
combined voting power of all Capital Securities of the Company entitled to vote
in the election of directors; or (c) the Company shall cease to, directly
or indirectly, own and control 100% of each class of the outstanding Capital
Securities of each Subsidiary.

 

“Closing
Date”:  As defined in Section 12.1.

 

“Code”:  The Internal Revenue Code of 1986.

 

“Collateral”:  The property in which a security interest is,
or is intended to be, granted pursuant to this Agreement, the Security
Agreement, the Pledge Agreement, the Control Agreement or any other Loan
Document.

 

“Collateral
Access Agreement”:  An agreement in
form and substance reasonably satisfactory to Agent pursuant to which a
mortgagee or lessor of real property on which collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory or other
property owned by any Loan Party, acknowledges the Liens of Agent and waives
any Liens held by such Person on such property, and, in the case of any such
agreement with a mortgagee or lessor, permits Agent reasonable access to and
use of such real property following the occurrence and during the continuance
of an Event of Default to assemble, complete and sell any collateral stored or
otherwise located thereon, or any one or more of them.

 

4

 

“Collateral
Documents”:  Collectively, the
Security Agreement, the Pledge Agreement, each Collateral Access Agreement,
each UCC-1 financing statement, each Control Agreement and any other agreement
or instrument pursuant to which the Company, any other Loan Party or any other
Person grants or purports to grant collateral to Agent or otherwise relates to
such collateral, as they may be amended, modified, supplemented, restated or
replaced from time to time.

 

“Commitment”:  As to each Lender, its obligation to (a) make
Loans to the Company pursuant to Section 2.1.1, and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.1 or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.

 

“Company”:  As defined in the Preamble.

 

“Compliance
Certificate”:  A Compliance
Certificate in substantially the form of Exhibit B.

 

“Contingent
Liability”:  With respect to any
Person, each obligation and liability of such Person and all such obligations
and liabilities of such Person incurred pursuant to any agreement, undertaking
or arrangement by which such Person:  (a) guarantees,
endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the indebtedness, dividend, obligation or other
liability of any other Person in any manner (other than by endorsement of
instruments in the course of collection), including any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b) guarantees
the payment of dividends or other distributions upon the Capital Securities of
any other Person; (c) undertakes or agrees (whether contingently or
otherwise):  (i) to purchase,
repurchase, or otherwise acquire any indebtedness, obligation or liability of
any other Person or any or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of
any indebtedness, obligation or liability of any other Person (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain solvency, assets, level of income, working capital or other
financial condition of any other Person, or (iii) to make payment to any
other Person other than for value received; (d) agrees to lease property
or to purchase securities, property or services from such other Person with the
purpose or intent of assuring the owner of such indebtedness or obligation of
the ability of such other Person to make payment of the indebtedness or
obligation; (e) to induce the issuance of, or in connection with the
issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes
or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall
(subject to any limitation set forth herein) be deemed to be the outstanding
principal amount (or maximum permitted principal amount, if larger) of the
indebtedness, obligation or other liability guaranteed or supported thereby.

 

“Control
Agreement”:  An account control
agreement, in form and substance satisfactory to Agent, among Agent, the
applicable Loan Party and the depository or securities intermediary for any
deposit, checking or brokerage account opened or maintained by a Loan Party.

 

5

 

“Controlled
Group”:  All members of a controlled
group of corporations, all members of a controlled group of trades or
businesses (whether or not incorporated) under common control and all members
of an affiliated service group which, together with the Company or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Code or Section 4001 of ERISA.

 

“Debt”:  With respect to any Person, without
duplication, (a) all indebtedness of such Person, (b) all borrowed
money of such Person, whether or not evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a
balance sheet of such Person in accordance with GAAP, not including obligations
of a Loan Party under non-recourse discounted leases, (d) all obligations
of such Person to pay the deferred purchase price of property or services
(excluding trade accounts payable in the ordinary course of business), (e) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person; provided that
if such Person has not assumed or otherwise become liable for such
indebtedness, such indebtedness shall be measured at the fair market value of
such property securing such indebtedness at the time of determination, (f) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn), bankers’ acceptances and similar
obligations issued for the account of such Person (including the Letters of
Credit), (g) all Hedging Obligations of such Person, (h) all
Contingent Liabilities of such Person and (i) all Debt of any partnership
of which such Person is a general partner.

 

“Default
Rate”:  A rate of interest equal to
the rate of interest then in effect with respect to any Loan as of the date of
determination (including any Applicable Margin) plus two percent (2%) (or, in
the case of Obligations not bearing interest, a rate of interest equal to the
Base Rate plus two percent (2%)).

 

“Defaulting
Lender”:  Any Lender that (a) has
failed to fund any portion of the Loans or participations in L/C Obligations
required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder unless such failure has been cured, (b) has
otherwise failed to pay over to Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute or unless such
failure has been cured, (c) has been deemed insolvent or become the
subject of a bankruptcy or insolvency proceeding, (d) has notified
Company, the Administrative Agent, any L/C Issuer or any Lender that it does
not intend to comply with any of its funding obligations under this Agreement
or has made a public statement to the effect that it does not intend to comply
with its funding obligations under this Agreement or under other agreements in
which it commits to extend credit or (e) has failed to confirm within
three Business Days of a request by the Administrative Agent that it will
comply with the terms of this Agreement relating to its obligations to fund
prospective Loans or participations in L/C Obligations.

 

“Depreciation”:  The total amounts added to depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected
on the Company’s financial statements and determined in accordance with GAAP.

 

6

 

“Dollar”
and the sign “$”:  Lawful money of
the United States of America.

 

“EBITDA”:  For any period, the Company’s and the
Subsidiaries’ “Income from Operations” (as set forth on their consolidated
income statement) plus leasing related cash interest expense, plus
depreciation, plus amortization, plus compensation expense
related to the granting of stock options.

 

“Eligible
Assignee”:  Any of the following:
(a) a Lender; (b) an Affiliate of a Lender; (c) an Approved
Fund; and (d) any other Person (other than a natural person) approved by
(i) the Administrative Agent and the L/C Issuer, and (ii) unless an
Event of Default has occurred and is continuing, the Company (each such
approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Company or any of the Company’s Affiliates or Subsidiaries.

 

“Eligible
Leased Assets”:  Each Account and all
such Accounts (exclusive of sales, excise or other similar taxes) owing to a
Loan Party that arises solely from the leasing of Equipment by such Loan Party
and that meets each of the following requirements:

 

(a)           it is genuine
in all respects and has arisen in the ordinary course of the Loan Party’s
business from the sale or lease of Equipment by such Loan Party;

 

(b)           it is subject
to a perfected, first priority Lien in favor of Agent and is not subject to any
other assignment, claim or Lien;

 

(c)           it is the
valid, legally enforceable and unconditional obligation of the Account Debtor
with respect thereto, and is not subject to the fulfillment of any condition
whatsoever or any counterclaim, credit (except as provided in subsection (h) of
this definition), trade or volume discount, allowance, discount, rebate or
adjustment by the Account Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or in part and the Account
Debtor has not refused to accept and/or has not returned or offered to return
any of the Equipment or services which are the subject of such Account;

 

(d)           the Account
Debtor with respect thereto is a resident or citizen of, and is located within,
the United States, unless the lease of Equipment giving rise to such Account is
on letter of credit, banker’s acceptance or other credit support terms
reasonably satisfactory to Agent;

 

(e)           it is not an
Account with respect to which possession and/or control of the Equipment leased
giving rise thereto is held, maintained or retained by the Loan Party (or by
any agent or custodian of such Loan Party) for the account of, or subject to,
further and/or future direction from the Account Debtor with respect thereto;

 

(f)            it has not
arisen out of contracts with the United States or any department, agency or
instrumentality thereof, unless the Loan Party has assigned its right to payment
of such Account to Agent pursuant to the Assignment of Claims Act of 1940, and
evidence (satisfactory to Agent) of such assignment has been delivered to
Agent, or any 

 

7

 

state,
county, city or other governmental body, or any department, agency or
instrumentality thereof;

 

(g)           if the Loan
Party maintains a credit limit for an Account Debtor, the aggregate dollar
amount of Accounts due from such Account Debtor, including such Account, does
not exceed such credit limit;

 

(h)           if the Account
is evidenced by chattel paper or an instrument, the originals of such chattel
paper or instrument shall have been endorsed and/or assigned and delivered to
Agent or, in the case of electronic chattel paper, shall be in the control of
Agent, in each case in a manner satisfactory to Agent;

 

(i)            such Account is
evidenced by an invoice delivered to the related Account Debtor and is not more
than ninety (90) days past the due date thereof;

 

(j)            it is not an
Account with respect to an Account Debtor that is located in any jurisdiction
which has adopted a statute or other requirement with respect to which any
Person that obtains business from within such jurisdiction must file a notice
of business activities report or make any other required filings in a timely
manner in order to enforce its claims in such jurisdiction’s courts unless (i) such
notice of business activities report has been duly and timely filed or the Loan
Party is exempt from filing such report and has provided Agent with
satisfactory evidence of such exemption or (ii) the failure to make such
filings may be cured retroactively by such Loan Party for a nominal fee;

 

(k)           the Account
Debtor with respect thereto is not an Affiliate of the Loan Party;

 

(l)            such Account
does not arise out of a contract or order which, by its terms, forbids or makes
void or unenforceable the assignment thereof by the Loan Party to Agent and is
not unassignable to Agent for any other reason;

 

(m)          there is no
bankruptcy, insolvency or liquidation proceeding pending by or against the
Account Debtor with respect thereto, nor has the Account Debtor suspended
business, made a general assignment for the benefit of creditors or failed to
pay its debts generally as they come due, and/or no condition or event has
occurred having a Material Adverse Effect on the Account Debtor which would
require the Accounts of such Account Debtor to be deemed uncollectible in
accordance with GAAP;

 

(n)           it is not owed
by an Account Debtor with respect to which twenty five percent (25.00%) or more
of the aggregate amount of outstanding Accounts owed at such time by such
Account Debtor is classified as ineligible under clause (j) of this
definition;

 

(o)           if the
aggregate amount of all Accounts owed by the Account Debtor thereon exceeds
twenty five percent (25.00%) of the aggregate amount of all Accounts at such
time, then all Accounts owed by such Account Debtor in excess of such amount
shall be deemed ineligible; and

 

8

 

(p)           it does not
violate the negative covenants and does satisfy the affirmative covenants of
the Loan Party contained in this Agreement, and it is otherwise not
unacceptable to Agent for any other reason;

 

provided, an Account
which is at any time an Eligible Leased Asset, but which subsequently fails to
meet any of the foregoing requirements, shall forthwith cease to be an Eligible
Leased Asset, until such time that such Account meets all of the foregoing
requirements; provided further, that, with respect to any Account, if Agent at
any time hereafter determines in its discretion that the prospect of payment or
performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account shall cease to be an Eligible Leased
Asset after notice of such determination is given to the relevant Loan Party;
and provided  further, that Agent shall, notwithstanding the
foregoing, have the right, in the reasonable exercise of its discretion, to
establish reserves against the aggregate amount of the Eligible Leased Assets.

 

“Environmental
Claims”:  All claims, however
asserted, by any governmental, regulatory or judicial authority or other Person
alleging potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment.

 

“Environmental
Laws”:  All present or future
federal, state or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative or judicial orders,
consent agreements, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authority, in each case
relating to any matter arising out of or relating to public health and safety,
or pollution or protection of the environment or workplace, including any of
the foregoing relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, discharge, emission,
release, threatened release, control or cleanup of any Hazardous Substance.

 

“ERISA”:  The Employee Retirement Income Security Act
of 1974.

 

“Equipment”:  As defined in the UCC.

 

“Event
of Default”:  Any of the events
described in Section 13.1.

 

“Excluded
Taxes”:  With respect to each Lender,
taxes based upon, or measured by, such Lender’s (or a branch of such Lender’s)
overall net income, overall net receipts, or overall net profits (including
franchise taxes imposed in lieu of such taxes), but only to the extent such
taxes are imposed by a taxing authority (a) in a jurisdiction in which
such Lender is organized, (b) in a jurisdiction which such Lender’s
principal office is located, or (c) in a jurisdiction in which such Lender’s
lending office (or branch) in respect of which payments under this Agreement
are made is located.

 

“Federal
Funds Rate”:  For any day, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a 

 

9

 

Business
Day, the average of the quotations for such day on such transactions received
by Agent from three Federal funds brokers of recognized standing selected by
Agent.  Agent’s determination of such
rate shall be binding and conclusive absent manifest error.

 

“Fiscal
Quarter”:  A fiscal quarter of a
Fiscal Year.

 

“Fiscal
Year”:  The fiscal year of the
Company and its Subsidiaries, which period shall be the 12-month period ending
on the last Saturday of each year. 
References to a Fiscal Year with a number corresponding to any calendar
year (e.g., “Fiscal Year 2009”) refer to the Fiscal Year ending on the
last Saturday of such calendar year.

 

“Fixed
Rate Loan”:  A Loan which bears
interest at or by reference to the Loan Index Rate.

 

“FRB”:  The Board of Governors of the Federal Reserve
System or any successor thereto.

 

“Fund”:  Any Person (other than a natural person) that
is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its activities.

 

“GAAP”:  Generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S.  accounting profession) and the
Securities and Exchange Commission, which are applicable to the circumstances
as of the date of determination.

 

“Hazardous
Substances”:  (a) Any petroleum
or petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, dielectric fluid containing
levels of polychlorinated biphenyls, radon gas and mold; (b) any
chemicals, materials, pollutant or substances defined as or included in the
definition of “hazardous substances”, “hazardous waste”, “hazardous materials”,
“extremely hazardous substances”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any governmental authority or for which any
duty or standard of care is imposed pursuant to, any Environmental Law.

 

“Hedging
Agreement”:  Any interest rate,
currency or commodity swap agreement, cap agreement or collar agreement, and
any other agreement or arrangement designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity prices.

 

“Hedging
Obligation”:  With respect to any
Person, any liability of such Person under any Hedging Agreement.  The amount of any Person’s obligation in
respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person
in accordance with GAAP.

 

10

 

“Interest
Period”:  As to any Fixed Rate Loan,
the period commencing on the date such Loan is borrowed or continued as, or
converted into, a Fixed Rate Loan and ending on a date one, two, three or four
years thereafter as selected in writing by the Company.  As to any LIBOR Loan, the period commencing
on the date such Loan is borrowed or continued as, or converted into, a LIBOR
Loan and ending on the date one, two or three months thereafter as selected by
the Company pursuant to Section 2.2.2 or 2.2.3, as the case
may be; provided that:

 

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

 

(b)           any Interest
Period that begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

(c)           the Company may
not select any Interest Period for a Loan which would extend beyond the
scheduled Termination Date.

 

“Inventory”:  As defined in the UCC.

 

“Investment”:  With respect to any Person, any investment in
another Person, whether by acquisition of any Capital Security, by making any
loan or advance, or by making an Acquisition.

 

“L/C
Advance”:  With respect to each
Lender, such Lender’s funding of its participation in any L/C Borrowing in
accordance with its Applicable Percentage.

 

“L/C
Application”:  With respect to any
request for the issuance of a Letter of Credit, a letter of credit application
in the form being used by the L/C Issuer at the time of such request for the
type of letter of credit requested.

 

“L/C
Borrowing”:  An extension of credit
resulting from a drawing under any Letter of Credit that has not been
reimbursed on the date when made or refinanced as a Base Rate Loan in
accordance with Section 2.3.2(a) and Section 2.3.2(b).

 

“L/C
Credit Extension”:  With respect to
any Letter of Credit, the issuance thereof or extension of the expiry date
thereof, or the increase of the amount thereof.

 

“L/C
Fee Rate”:  A rate per annum of
2.75%.

 

“L/C
Issuer”:  PrivateBank, in its
capacity as the issuer of Letters of Credit hereunder, or any Affiliate of
PrivateBank that may from time to time issue Letters of Credit, or any other
financial institution that PrivateBank may cause to issue Letters of Credit for
the account of Company, and their successors and assigns in such capacity.

 

“L/C
Obligations”:  As at any date of
determination, the aggregate amount available to be drawn under all outstanding
Letters of Credit plus the aggregate of all Unreimbursed Amounts, 

 

11

 

including
all Letters of Credit.  For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with Section 1.3.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“Lender”:  As defined in the Preamble and
including the Loan Index Lender.  In
addition to the foregoing, for the purpose of identifying the Persons entitled
to share in the Collateral and the proceeds thereof under, and in accordance
with the provisions of, this Agreement and the Collateral Documents, the term “Lender”
shall include Affiliates of a Lender providing a Bank Product.

 

“Letter
of Credit”:  As defined in Section 2.1.2.

 

“LIBOR
Loan”:  Any Loan which bears interest
at a rate determined by reference to the LIBOR Rate.

 

“LIBOR
Office”:  The office or offices of
any Lender which shall be making or maintaining the LIBOR Loans.  A LIBOR Office may be, at the option of such
Lender, either a domestic or foreign office.

 

“LIBOR
Rate”:  For any Interest Period for a
LIBOR Loan, a rate of interest equal to (a) the per annum rate of interest
at which United States dollar deposits for a period equal to the relevant
Interest Period are offered in the London Interbank Eurodollar market at 11:00 A.M.
(London time) two (2) Business Days prior to the commencement of such
Interest Period (or three (3) Business Days prior to the commencement of
such Interest Period if banks in London, England were not open and dealing in
offshore United States dollars on such second preceding Business Day), as
displayed in the Bloomberg Financial Markets
system (or other authoritative source selected by the Administrative Agent in
its sole discretion), divided by (b) a number determined by subtracting
from 1.00 the then stated maximum reserve percentage for determining reserves
to be maintained by member banks of the Federal Reserve System for Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D), or as LIBOR is otherwise determined by the
Administrative Agent in its sole and absolute discretion.  The Administrative Agent ‘s determination of
the LIBOR Rate shall be conclusive, absent manifest error and shall remain
fixed during such Interest Period.  The
Lenders may lend to their customers at rates that are at, above, or below the
LIBOR Rate.

 

“Lien”:  With respect to any Person, any interest in
any real or personal property, asset or other right owned or being purchased or
acquired by such Person (including an interest in respect of a Capital Lease)
which secures payment or performance of any obligation and shall include any
mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.

 

“Loan”:  An extension of credit by a Lender to a Loan
Party in the form of a revolving loan pursuant to Section 2.1.1.

 

12

 

“Loan
Availability”:  The lesser of (i) the
Aggregate Commitments and (ii) the Borrowing Base.

 

“Loan
Documents”:  This Agreement, the
Notes, the Letters of Credit, the Master Letter of Credit Agreement, the L/C
Applications, the Collateral Documents, the Subordination Agreements and all
documents, instruments and agreements delivered in connection with the
foregoing, as they may be amended, modified, supplemented, restated or replaced
from time to time.

 

“Loan
Index Lender”:  PrivateBank.

 

“Loan
Index Rate”:  The fixed rate per
annum provided from time to time by the Loan Index Lender in its sole
discretion based on its internal “loan index” and made available by the Loan
Index Lender at the Company’s request, which rate shall be fixed for a period
equal to the relevant Interest Period; provided that the Loan Index Rate
shall be not less than U.S. Treasury rates fixed for substantially similar
periods.  The Lenders may lend to their
customers at rates that are at, above, or below the Loan Index Rate.

 

“Loan
Parties”:  As defined in the Preamble.

 

“Loan
or Loans”:  The revolving loan(s) made
by the Lenders to the Loan Parties under this Agreement.

 

“Margin
Stock”:  Any “margin stock” as
defined in Regulation U.

 

“Master
Letter of Credit Agreement”:  At any
time, with respect to the issuance of Letters of Credit, a master letter of
credit agreement or reimbursement agreement in the form, if any, being used by
the L/C Issuer at such time.

 

“Material
Adverse Effect”:  (a) A material
adverse change in, or a material adverse effect upon, the financial condition,
operations, assets, business, properties or prospects of the Loan Parties taken
as a whole, (b) a material impairment of the ability of any Loan Party to
perform any of the Obligations under any Loan Document or (c) a material
adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document.

 

“Multiemployer
Pension Plan”:  A multiemployer plan,
as defined in Section 4001(a)(3) of ERISA, to which the Company or
any other member of the Controlled Group may have any liability.

 

“Net
Cash Proceeds”:  With respect to any
Asset Disposition, the aggregate cash proceeds (including cash proceeds
received pursuant to policies of insurance or by way of deferred payment of
principal pursuant to a note, installment receivable or otherwise, but only as
and when received) received by any Loan Party pursuant to such Asset
Disposition net of (i) the direct costs relating to such sale, transfer or
other disposition (including sales commissions and legal, accounting and
investment banking fees), (ii) taxes paid or reasonably estimated by Loan
Parties to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and (iii) amounts
required to be applied to the 

 

13

 

repayment
of any Debt secured by a Lien on the asset subject to such Asset Disposition
(other than the Loans).

 

“Note”:  Each promissory note executed by the Loan
Parties in favor of a Lender in connection with this Agreement in the form of Exhibit A,
as they may be amended, modified, supplemented, restated or replaced from time
to time, or any one or more of them.

 

“Notice
of Borrowing”:  As defined in Section 2.2.2.

 

“Notice
of Conversion/Continuation”:  As
defined in Section 2.2.3.

 

“Obligations”:  All obligations (monetary (including
post-petition interest, allowed or not) or otherwise) of any Loan Party under
this Agreement and any other Loan Document including Attorney Costs and any
reimbursement obligations of each Loan Party in respect of Letters of Credit
and surety bonds, all Hedging Obligations permitted hereunder which are owed to
any Lender or its Affiliates, and all Bank Products Obligations, all in each
case howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.

 

“OFAC”:  As defined in Section 9.24.

 

“Operating
Lease”:  Any lease of (or other
agreement conveying the right to use) any real or personal property by any Loan
Party, as lessee, other than any Capital Lease.

 

“Outstandings”:  At any time, the sum of (a) the
aggregate principal amount of all outstanding Loans after giving effect to any
borrowings and prepayments or repayments occurring on such date, plus (b) the
Stated Amount of all Letters of Credit.

 

“PBGC”:  The Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.

 

“Pension
Plan”:  A “pension plan”, as such
term is defined in Section 3(2) of ERISA, which is subject to Title
IV of ERISA or the minimum funding standards of ERISA (other than a
Multiemployer Pension Plan), and as to which the Company or any member of the
Controlled Group may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.

 

“Person”:  Any natural person, corporation, partnership,
trust, limited liability company, association, governmental authority or unit,
or any other entity, whether acting in an individual, fiduciary or other
capacity.

 

“Pledge
Agreement”:  Each Pledge Agreement
executed and delivered by a Loan Party to the Agent, as they may be amended,
modified, supplemented, restated or replaced from time to time, or any one or
more of them.

 

“Prime
Rate”:  For any day, the rate of
interest in effect for such day as publicly announced from time to time by
Agent as its prime rate (whether or not such rate is actually 

 

14

 

charged
by Agent), which is not intended to be Agent’s lowest or most favorable rate of
interest at any one time.  Any change in
the Prime Rate announced by Agent shall take effect at the opening of business
on the day specified in the public announcement of such change; provided
that Agent shall not be obligated to give notice of any change in the Prime
Rate.

 

“PrivateBank”:  As defined in the Preamble.

 

“Pro
Rata Share”:  With respect to a
Lender’s obligation to make Loans, participate in L/C Obligations, reimburse
the L/C Issuer, and receive payments of principal, interest, fees, costs, and
expenses with respect thereto, (x) prior to the Aggregate Commitments
being terminated or reduced to zero, the percentage obtained by dividing (i) such
Lender’s Commitment, by (ii) the Aggregate Commitments of all Lenders and (y) from
and after the time the Aggregate Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (i) the aggregate unpaid
principal amount of such Lender’s Outstandings by (ii) the aggregate
unpaid principal amount of all Outstandings.

 

“Regulation
D”:  Regulation D of the FRB.

 

“Regulation
U”:  Regulation U of the FRB.

 

“Related
Parties”:  With respect to any
Person, such Person’s Affiliates and the partners, directors, officers,
employees, agents, trustees and advisors of such Person and of such Person’s
Affiliates.

 

“Reportable
Event”:  A reportable event as
defined in Section 4043 of ERISA and the regulations issued thereunder as
to which the PBGC has not waived the notification requirement of Section 4043(a),
or the failure of a Pension Plan to meet the minimum funding standards of Section 412
of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.

 

“Required
Lenders”:  Required Lenders shall
mean all Lenders; provided that any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders.

 

“SEC”:  The Securities and Exchange Commission or any
other governmental authority succeeding to any of the principal functions
thereof.

 

“Security
Agreement”:  Each Security Agreement
executed and delivered by a Loan Party to the Agent, as they may be amended,
modified, supplemented, restated or replaced from time to time, or any one or
more of them.

 

“Senior
Debt”:  All Debt of the Company and
its Subsidiaries other than Subordinated Debt.

 

“Senior
Officer”:  With respect to any Loan
Party, any of the chief executive officer, the president, the chief operating
officer or the treasurer of such Loan Party.

 

15

 

“Stated
Amount”:  With respect to any Letter
of Credit at any date of determination, (a) the maximum aggregate amount
available for drawing thereunder under any and all circumstances plus (b) the
aggregate amount of all unreimbursed payments and disbursements under such
Letter of Credit.

 

“Subordinated
Debt”:  The Unsecured Notes and any
other unsecured Debt of the Company which has subordination terms, covenants,
pricing and other terms which have been approved in writing by the Required
Lenders.

 

“Subordinated
Debt Documents”:  The Unsecured Note
Documents and all other documents and instruments relating to the Subordinated
Debt and all amendments and modifications thereof approved by the Required
Lenders.

 

“Subordination
Agreements”:  The provisions of the
Unsecured Note Documents in favor or for the benefit of the “Senior Debt” as
defined therein and all other subordination agreements executed by a holder of
Subordinated Debt in favor of Agent, for the ratable benefit of Agent and the
Lenders, from time to time after the Closing Date.

 

“Subsidiary”:  With respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, such number of outstanding Capital Securities as
have more than 50% of the ordinary voting power for the election of directors
or other managers of such corporation, partnership, limited liability company
or other entity.  Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of the Company.

 

“Tangible
Net Worth”:  As of any date of determination,
the sum of the amounts set forth on the balance sheet of the Company and the
Subsidiaries as total shareholder equity of the Company and the Subsidiaries, plus
any Subordinated Debt, minus the book value of all intangible assets of
the Company and the Subsidiaries (including all such items as goodwill, trade
names, service marks, copyrights, patents, licenses, deferred items,
unamortized debt discount, prepaid expenses and any other items deemed
intangible by Agent), minus Investments in non-public companies net of
cash dividends received in respect of such Investments.

 

“Taxes”:  Any and all present and future taxes, duties,
levies, imposts, deductions, assessments, charges or withholdings, and any and
all liabilities (including interest and penalties and other additions to taxes)
with respect to the foregoing, but excluding Excluded Taxes.

 

“Termination
Date”:  The earlier to occur of (a) July 31,
2014, or (b) such other date on which the Commitment terminates pursuant
to Section 13.

 

“Termination
Event”:  With respect to a Pension
Plan that is subject to Title IV of ERISA, (a) a Reportable Event, (b) the
withdrawal of Company or any other member of the Controlled Group from such
Pension Plan during a plan year in which Company or any other member of the
Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or was deemed such under Section 4068(f) of ERISA, (c) the
termination of such Pension Plan, the filing of a notice of intent to terminate
the Pension Plan or the treatment of an amendment of such Pension Plan as a
termination under Section 4041 of ERISA, (d) the institution by the
PBGC of proceedings to terminate such Pension Plan or (e) any event or 

 

16

 

condition
that might constitute grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Pension Plan.

 

“Total
Plan Liability”:  At any time, the
present value of all vested and unvested accrued benefits under all Pension
Plans, determined as of the then most recent valuation date for each Pension
Plan, using PBGC actuarial assumptions for single employer plan terminations.

 

“type”:  As defined in Section 2.2.1.

 

“UCC”:  As defined in the Security Agreement.

 

“Unfunded
Liability”:  The amount (if any) by
which the present value of all vested and unvested accrued benefits under all
Pension Plans exceeds the fair market value of all assets allocable to those
benefits, all determined as of the then most recent valuation date for each
Pension Plan, using PBGC actuarial assumptions for single employer plan
terminations.

 

“Unmatured
Event of Default”:  Any event that,
if it continues uncured, will, with lapse of time or notice or both, constitute
an Event of Default.

 

“Unreimbursed
Amount”:  As defined in Section 2.3.2(a).

 

“Unsecured
Note Documents”:  The Unsecured
Notes, the Unsecured Note Registration Statement, the Unsecured Note Indenture,
the Unsecured Note Prospectus and each other agreement relating to the Unsecured
Notes.

 

“Unsecured
Note Indenture”:  That certain
Indenture dated June 14, 2006 by and between the Company, as obligor, and
Wells Fargo Bank, National Association, as trustee.

 

“Unsecured
Note Prospectus”:  That certain
Prospectus of the Company dated June 14, 2006 relating to the Unsecured
Notes and included as part of the Unsecured Note Registration Statement.

 

“Unsecured
Note Registration Statement”:  The
Company’s registration statement in respect of the Unsecured Notes on Form S-1,
declared effective by the Securities and Exchange Commission on or about June 14,
2006.

 

“Unsecured
Notes”:  The renewable unsecured
subordinated notes of the Company issued under the Unsecured Note Indenture
pursuant to the Unsecured Note Registration Statement.

 

“Wholly-Owned
Subsidiary”:  As to any Person, a
Subsidiary all of the Capital Securities of which (except directors’ qualifying
Capital Securities) are at the time directly or indirectly owned by such Person
and/or another Wholly-Owned Subsidiary of such Person.

 

1.2           Other Interpretive Provisions.

 

(a)           The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

17

 

(b)           Section, Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

 

(c)           The term “including” is not limiting and means “including without
limitation.”

 

(d)           In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including.”

 

(e)           Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and the other Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, supplements and other modifications thereto, but only to the
extent such amendments, restatements, supplements and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to
any statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.

 

(f)            This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar
matters.  All such limitations, tests and
measurements are cumulative and each shall be performed in accordance with its
terms.

 

(g)           This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to Agent, the Company,
each Lender and the other parties thereto and are the products of all
parties.  Accordingly, they shall not be
construed against Agent merely because of Agent’s involvement in their
preparation.

 

1.3           Letter of Credit Amounts.  Unless otherwise specified herein the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any L/C
Application or Master Letter of Credit Agreement related thereto, provides for
one or more automatic increases in the stated amount thereof, the amount of
such Letter of Credit shall be deemed to be the maximum stated amount of such
Letter of Credit after giving effect to all such increases, whether or not such
maximum stated amount is in effect at such time.

 

SECTION 2           COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT
PROCEDURES.

 

2.1           Commitments.  On and subject to the terms and conditions of
this Agreement, each Lender severally agrees to make Loans to, and the L/C
Issuer agrees to issue Letters of Credit for the account of, the Loan Parties,
jointly or severally, as follows:

 

2.1.1             Loan Commitment.  Each
Lender severally agrees to make Loans on a revolving basis from time to time
until the Termination Date in the amounts as the Company may request from the
Lender; provided, however, that after giving effect to any Loan, (i) the
Outstandings will not at any time exceed Loan Availability and (ii) the
aggregate Outstandings of any Lender shall not exceed such Lender’s
Commitment.  Within the limits of each
Lender’s Commitment, and subject to the other terms and

 

18

 

conditions hereof, Company
may borrow under this Section 2.1.1, prepay under Section 6.1.1,
and reborrow under this Section 2.1.1.

 

2.1.2             L/C Commitment.  Subject to Section 2.3.1,
the L/C Issuer, in reliance on the agreements of the other Lenders set forth
herein, agrees to issue letters of credit, in each case containing such terms
and conditions as are permitted by this Agreement and are reasonably
satisfactory to the L/C Issuer (each, a “Letter of Credit”), at the
request of and for the account of the Company from time to time before the
scheduled Termination Date; provided that (a) the aggregate Stated Amount
of all Letters of Credit shall not at any time exceed $5,000,000 and (b) the
Outstandings shall not at any time exceed Loan Availability.

 

2.2           Loan Procedures.

 

2.2.1             Various Types of Loans.  Each Loan shall be divided into tranches
which are either a Base Rate Loan, a LIBOR Loan or a Fixed Rate Loan (each, a “type”
of Loan), as the Company shall specify in the related Notice of Borrowing or
conversion pursuant to Section 2.2.2 or 2.2.3.  Base Rate Loans, LIBOR Loans and Fixed Rate
Loans may be outstanding at the same time, provided that (i) no
more than eight (8) different LIBOR Loans shall be outstanding at any one
time, and (ii) no more than eight (8) different Fixed Rate Loans
shall be outstanding at any one time.

 

2.2.2             Borrowing Procedures.

 

(a)           The Company shall give written notice (each such written notice, a “Notice
of Borrowing”) substantially in the form of Exhibit D or
telephonic notice (followed immediately by a Notice of Borrowing) to Agent of
each proposed borrowing of a revolving Loan not later than (a) in the case
of a Base Rate Loan or a Fixed Rate Loan, 11:00 A.M., Minneapolis time, on
the proposed date of such borrowing, and (b) in the case of a LIBOR Loan,
11:00 A.M., Minneapolis time, at least three Business Days prior to the
proposed date of such borrowing.  Each
such notice shall be effective upon receipt by Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, (i) in the case
of a LIBOR Loan, the initial Interest Period therefor, and (ii) in the
case of a Fixed Rate Loan, the initial Interest Period therefor as well as an
amortization schedule reflecting equal monthly payments over the life of such
Fixed Rate Loan over the Interest Period therefor commencing on the same date
of the next month following the borrowing (or such other method of amortization
approved in writing by the Agent prior to the commencement of the Interest
Period therefor).  Each Base Rate Loan
shall be in an aggregate amount of at least $100,000 or a higher integral
multiple of $100,000.  Each LIBOR Loan
shall be in an aggregate amount of at least $500,000 or a higher integral
multiple of $100,000.  Each Fixed Rate
Loan shall be in an aggregate amount of at least $200,000 or a higher integral
multiple of $100,000.

 

(b)           Following receipt of a Notice of Borrowing, Agent shall promptly notify
each Lender of the amount of its Applicable Percentage of the applicable
Loans.  Each Lender shall make the amount
of its Loan available to Agent in immediately available funds at Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in
the applicable Notice of Borrowing.  Upon
satisfaction of the applicable conditions set forth in Section 12,
Agent shall 

 

19

 

make all funds so received available to the Company
in like funds as received by Agent either by (i) crediting the account of
Company on the books of PrivateBank with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) Agent by the Company; provided, however,
that if, on the date the Notice of Borrowing with respect to such borrowing is
given by the Company, there are Unreimbursed Amounts outstanding, then the
proceeds of such borrowing first, shall be applied, to the payment in
full of any such Unreimbursed Amounts, and second, shall be made
available to the Company as provided above.

 

2.2.3             Conversion and Continuation Procedures.

 

(a)           Subject to Section 2.2.1,
the Company may, upon irrevocable written notice to Agent in accordance with clause
(b) below:

 

(i)            elect, as of
any Business Day, to convert any Loans (or any part thereof in an aggregate
amount not less than $100,000 or a higher integral multiple of $100,000) into
Loans of the other type; or

 

(ii)           elect, as of
the last day of the applicable Interest Period, to continue any LIBOR Loans
having Interest Periods expiring on such day (or any part thereof in an
aggregate amount not less than $500,000 or a higher integral multiple of
$100,000) for a new Interest Period;

 

(b)           The Company shall give
written notice (each such written notice, a “Notice of Conversion/Continuation”)
substantially in the form of Exhibit E or telephonic notice
(followed immediately by a Notice of Conversion/Continuation) to Agent of each
proposed conversion or continuation not later than (i) in the case of
conversion into Base Rate Loans, 11:00 A.M., Minneapolis time, on the
proposed date of such conversion and (ii) in the case of conversion into
or continuation of LIBOR Loans, 11:00 A.M., Minneapolis time, at least
three Business Days prior to the proposed date of such conversion or continuation,
specifying in each case:

 

(i)            the proposed
date of conversion or continuation;

 

(ii)           the aggregate
amount of Loans to be converted or continued;

 

(iii)          the type of
Loans resulting from the proposed conversion or continuation; and

 

(iv)          in the case of
conversion into, or continuation of, LIBOR Loans, the duration of the requested
Interest Period therefor.

 

(c)           If upon the expiration of
any Interest Period applicable to LIBOR Loans or Fixed Rate Loans, the Company
has failed to select timely a new Interest Period to be applicable to such
LIBOR Loans or Agent has failed to approve a new Interest Period to be
applicable to such Fixed Rate Loans, the Company shall be deemed to have
elected to convert such LIBOR Loans or Fixed Rate Loans, as applicable, into
Base Rate Loans effective on the last day of such Interest Period.

 

20

 

(d)           Any conversion of a LIBOR
Loan on a day other than the last date of an Interest Period therefor shall be
subject to Section 8.4 and any conversion of a Fixed Rate Loan on a
day other than the last date of an Interest Period therefor shall be subject to
Section 5.2(b).

 

(e)           Following receipt of a
Notice of Conversion/Continuation, Agent shall promptly notify each Lender of
such notice, and if no timely Notice of Conversion/Continuation is provided by
the Company, Agent shall notify each Lender of the details of any automatic
conversion to Base Rate Loans described in Section 2.2.3(c).  All conversions and continuation of Loans must
be made uniformly and ratably among the Lenders.

 

2.3           Letter of Credit Procedures.

 

2.3.1             L/C Applications.  The
Loan Parties shall execute and deliver to the L/C Issuer the Master Letter of
Credit Agreement from time to time in effect. 
The Company shall give notice to the L/C Issuer (with a copy to the
Agent) of the proposed issuance of each Letter of Credit on a Business Day
which is at least three Business Days (or such lesser number of days as the
Lender shall agree in any particular instance in its sole discretion) prior to
the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an
L/C Application, duly executed by the Company and in all respects satisfactory
to the L/C Issuer, together with such other documentation as the L/C Issuer may
request in support thereof, it being understood that each L/C Application shall
specify, among other things, the date on which the proposed Letter of Credit is
to be issued, the expiration date of such Letter of Credit (which shall not be
later than the earlier of thirty (30) days prior to (i) one year after the
date of issuance thereof and (ii) the scheduled Termination Date (unless
such Letter of Credit is Cash Collateralized); provided, a Letter of Credit
with an expiration date of one year may provide for renewal thereof in
additional one-year periods, subject to the preceding clause (ii)) and whether
such Letter of Credit is to be transferable in whole or in part.  So long as the L/C Issuer has not received
written notice from Agent, any Lender or any Loan Party that the conditions
precedent set forth in Section 12 with respect to the issuance of
such Letter of Credit have not been satisfied, the L/C Issuer shall issue such
Letter of Credit on the requested issuance date.  In the event of any inconsistency between the
terms of the Master Letter of Credit Agreement, any L/C Application and the
terms of this Agreement, the terms of this Agreement shall control.

 

2.3.2             Reimbursement Obligations; Fundings of Participations.

 

(a)           The L/C Issuer shall notify the Company and Agent whenever any demand for
payment is made under any Letter of Credit by the beneficiary thereunder; provided
that the failure of the L/C Issuer to so notify the Company or Agent shall not
affect the rights of the L/C Issuer or the Lenders in any manner
whatsoever.  Not later than 11:00 a.m.  Minneapolis time on the date of any payment
or disbursement by the L/C Issuer under a Letter of Credit (the “Honor Date”),
each Loan Party, jointly and severally, hereby unconditionally and irrevocably
agrees to reimburse the L/C Issuer through Agent for each such payment or
disbursement.  If the Loan Parties fail
to so reimburse the L/C Issuer by such time, Agent shall promptly notify each
Lender of the Honor Date, the amount of the unreimbursed drawing or
disbursement (the “Unreimbursed 

 

21

 

Amount”),
and the amount of the Lender’s Applicable Percentage thereof.  In such event, the Company shall be deemed to
have requested a borrowing of Base Rate Loans to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the minimum
and multiples specified in Section 2.2 for the principal amount of
Base Rate Loans, but subject to the amount of the unutilized portion of the
Aggregate Commitments and satisfaction of the conditions set forth in Section 12.2.  Any notice given by the L/C Issuer or Agent
pursuant to this Section 2.3.2(a) may be given by telephone if
immediately confirmed in writing; provided that the lack of such immediate
confirmation shall not affect the conclusiveness of binding effect of such
notice.

 

(b)           Each Lender shall upon any notice pursuant to Section 2.3.2(a) make
funds available to Agent for the account of the L/C Issuer at Administrative
Agent’s Office in an amount equal to its Applicable Percentage of the
Unreimbursed Amount not later than 1:00 p.m.  on the Business Day specified in such notice
by Agent, whereupon, subject to the provisions of Section 2.3.2(c),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Company in such amount. 
Agent shall remit the funds so received to the L/C Issuer.

 

(c)           With respect to any Unreimbursed Amount that is not fully refinanced by a
borrowing of Base Rate Loans because the conditions set forth in Section 12.2
cannot be satisfied or for any other reason, the Loan Parties shall be deemed
to have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate.  In such event, each Lender’s
payment to Agent for the account of the L/C Issuer pursuant to Section 2.3.2(b) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.3.2.

 

(d)           Until each Lender funds its Loan or L/C Advance pursuant to this Section 2.3.2
to reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Applicable Percentage of such amount shall
be solely for the account of the L/C Issuer.

 

(e)           Each Lender’s obligation to make Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.3.2,
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, the Company,
any other Loan Party or any other Person for any reason whatsoever; (B) the
occurrence or continuance of an Unmatured Event of Default or an Event of
Default, or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Loans pursuant to this Section 2.3.2 is
subject to the conditions set forth in Section 12.2.  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Loan Parties to reimburse the
L/C Issuer for the amount of any payment made by the L/C Issuer under any
Letter of Credit, together with interest as provided herein.

 

22

 

(f)            If any Lender fails to make available to Agent for the account of the L/C
Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.3.2 by the time specified in Section 2.3.2(b),
the L/C Issuer shall be entitled to recover from such Lender (acting through
Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately
available to the L/C Issuer at a rate per annum equal to the greater of the
Federal Funds Rate and a rate determined by the L/C issuer in accordance with
banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Loan included in the relevant
borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be.  A certificate of the L/C Issuer
submitted to any Lender (through Agent) with respect to any amounts owing under
this clause (f) shall be conclusive absent manifest error.

 

2.3.3             Repayment of Participations.

 

(a)           At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.3.2, if Agent receives
for the account of the L/C Issuer any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from any Loan Party
or otherwise, including proceeds of Cash Collateral applied thereto by Agent),
Agent will distribute to such Lender its Applicable Percentage thereof in the
same funds as those received by Agent.

 

(b)           If any payment received by Agent for the account of the L/C Issuer
pursuant to Section 2.3.2(a) is required to be returned under
any of the circumstances described in Section 16.6 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each Lender shall pay to Agent for the account of the L/C Issuer its Applicable
Percentage thereof on demand of Agent, plus interest thereon from the date of
such demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

2.3.4             Obligations Absolute.  The Loan Parties’ reimbursement obligations
hereunder shall be irrevocable and unconditional under all circumstances,
including (i) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any other Loan Document, (ii) the existence of
any claim, set-off, defense or other right which any Loan Party may have at any
time against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be acting),
the L/C Issuer, Agent, any Lender or any other Person, whether in connection
with any Letter of Credit, this Agreement, any other Loan Document, the
transactions contemplated herein or any unrelated transactions (including any
underlying transaction between any Loan Party and the beneficiary named in any
Letter of Credit), (iii) the validity, sufficiency or genuineness of any
document which the L/C Issuer has determined complies on its face with the
terms of the applicable Letter of Credit, even if such document should later
prove to have been forged, fraudulent, invalid or insufficient in any respect
or any statement therein shall have been untrue or inaccurate in any 

 

23

 

respect, or (iv) the
surrender or impairment of any security for the performance or observance of
any of the terms hereof.

 

2.3.5             Role of L/C Issuer.  Each
Lender and each Loan Party agree that, in paying any drawing under a Letter of
Credit, the L/C Issuer shall not have any responsibility to obtain any document
(other than any sight draft, certificates and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document.  None of the L/C Issuer,
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
L/C Issuer document.  The Company and
each other Loan Party hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude the Company’s (or any Loan Party) pursuing such rights and remedies as
it may have against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer, shall be liable or responsible for any of the matters described
in clauses (i) through (iv) of Section 2.3.4; provided,
however, that anything in such clauses to the contrary notwithstanding,
the Company may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Company, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Company which
the Company proves were caused by the L/C Issuer’s willful misconduct or gross
negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a
Letter of Credit.  In furtherance and not
in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

2.3.6             Cash Collateral.  Upon
the request of Agent, (i) if the L/C Issuer has honored any full or
partial drawing request under any Letter of Credit and such drawing has
resulted in an L/C Borrowing, or (ii) if, as of the L/C Expiration Date,
any L/C Obligation for any reason remains outstanding, the Company shall, in
each case, immediately Cash Collateralize the then outstanding amount of all
L/C Obligations (including any fees then due and owing).  Sections 2.3.1, 6.1.2 and 13.2
set forth certain additional requirements to deliver Cash Collateral
hereunder.  The Company and each Loan
Party hereby grants to Agent, for the benefit of the L/C Issuer and the
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all 

 

24

 

proceeds of the
foregoing.  Cash Collateral shall be
maintained in blocked, non-interest bearing deposit accounts at PrivateBank.

 

2.3.7             Applicability of ISP and UCP.  Unless otherwise expressly agreed by the L/C
Issuer and the Company when a Letter of Credit is issued, (i) the rules of
the ISP shall apply to each standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce (the “ICC”) at the
time of issuance shall apply to each commercial Letter of Credit.

 

2.4           Certain Conditions.  Notwithstanding any other provision of this
Agreement, neither Agent nor any Lender or the L/C Issuer shall have an
obligation to make any Loan, or to permit the continuation of or any conversion
into any LIBOR Loan, or to issue any Letter of Credit, if an Event of Default
or Unmatured Event of Default exists.

 

2.5           Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

 

2.5.1             if any L/C Obligations are outstanding at the time a Lender becomes a
Defaulting Lender then:

 

(a)           all or any part of the Defaulting Lender’s obligation to participate in
L/C Obligations shall be reallocated among the non-Defaulting Lenders in
accordance with their respective Pro Rata Shares as determined pursuant to the
definition of “Pro Rata Share” but only to the extent (x) the sum of all
non-Defaulting Lenders’ Outstandings plus such Defaulting Lender’s obligation
to participate in L/C Obligations does not exceed the total of all
non-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 12.2
are satisfied at such time; and

 

(b)           if the obligation to participate in L/C Obligations of the non-Defaulting
Lenders is reallocated pursuant to Section 2.5.1, then the fees
payable to the Lenders pursuant to Section 5.1 shall be adjusted in
accordance with such non-Defaulting Lenders’ Pro Rata Shares (as determined
pursuant to the definition of “Pro Rata Share”); or

 

(c)           if any Defaulting Lender’s obligation to participate in L/C Obligations
is not reallocated pursuant to Section 2.5.1, then, without
prejudice to any rights or remedies of any L/C Issuer or any Lender hereunder,
all letter of credit fees payable under Section 5.1 with respect to
such Defaulting Lender’s obligation to participate in L/C Obligations shall be
payable to the applicable L/C Issuer until such obligation to participate in
L/C Obligations is reallocated; and

 

2.5.2             So long as any Lender is a Defaulting Lender, no L/C Issuer shall be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders in accordance with Section 2.5.1, and
participating interests in any such newly issued or increased Letter of Credit
shall be allocated among non-Defaulting Lenders in a 

 

25

 

manner
consistent with Section 2.5.1(a) (and Defaulting Lenders shall
not participate therein).

 

2.5.3             In the event that the Administrative Agent and the Company each agrees
that a Defaulting Lender has adequately remedied all matters that caused such
Lender to be a Defaulting Lender, then the obligations to participate in L/C
Obligations of the Lenders shall be readjusted to reflect the inclusion of such
Lender’s Commitment and on such date such Lender shall purchase at par such of
the Loans of the other Lenders as the Administrative Agent shall determine may
be necessary in order for such Lender to hold such Loans in accordance with its
Pro Rata Share (as determined pursuant to the definition of “Pro Rata Share”).

 

2.5.4             Any amount payable to a Defaulting Lender hereunder (whether on account
of principal, interest, fees or otherwise) shall, in lieu of being distributed
to such Defaulting Lender, be retained by the Administrative Agent in a
segregated account and, subject to any applicable requirements of law, be
applied at such time or times as may be determined by the Administrative Agent (i) first,
to the payment of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder, (ii) second, pro rata, to the payment of
any amounts owing by such Defaulting Lender to the L/C Issuer(s) hereunder,
(iii) third, if so determined by the Administrative Agent and the Company,
held in such account as cash collateral for future funding obligations of the
Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the
payment of any amounts owing to the Company or the Lenders as a result of any
judgment of a court of competent jurisdiction obtained by the Company or any
Lender against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement, and (v) fifth, to such
Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided, that if such payment is (x) a prepayment of the
principal amount of any Loans or reimbursement obligations in respect of draws
under Letters of Credit with respect to which the L/C Issuer has funded its
participation obligations and (y) made at a time when the conditions set
forth in Section 12.2 are satisfied, such payment shall be applied solely
to prepay the Loans of, and reimbursement obligations owed to, all Lenders that
are not Defaulting Lenders pro rata prior to being applied to the prepayment of
any Loans, or reimbursement obligations owed to, any Defaulting Lender.

 

To
the extent of any conflicts between this Section 2.5 and Section 7.2,
the provisions of this Section 2.5 shall control.

 

2.6           Increase in Commitments.

 

2.6.1             Request for Increase.  Provided that there exists no Unmatured Event
of Default or Event of Default, upon notice to the Administrative Agent (which
shall promptly notify the Lenders), the Company may from time to time, request
an increase in the Aggregate Commitments by an amount (for all such requests)
not exceeding $10,000,000; provided that any such request for an
increase shall be in a minimum amount of $2,500,000.  At the time of sending such notice, the
Company (in consultation with the Administrative Agent) shall specify the time
period within which each Lender is 

 

26

 

requested to respond (which
shall in no event be less than fifteen Business Days from the date of delivery
of such notice to the Lenders).

 

2.6.2             Lender Elections to Increase.  Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less
than its Applicable Percentage of such requested increase.  Any Lender not responding within such time
period shall be deemed to have declined to increase its Commitment.

 

2.6.3             Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the
Company and each Lender of the Lenders’ responses to each request made
hereunder.  To achieve the full amount of
a requested increase and subject to the approval of the Administrative Agent
and the L/C Issuer (which approvals shall not be unreasonably withheld), the
Company may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel.

 

2.6.4             Effective
Date and Allocations.  If the
Aggregate Commitments are increased in accordance with this Section, the
Administrative Agent and the Company shall determine the effective date (the “Increase
Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly
notify the Company and the Lenders of the final allocation of such increase and
the Increase Effective Date, and the Lenders shall make such transfers and take
such further action to the extent necessary to keep the outstanding Loans
ratable with any revised Applicable Percentages arising from any nonratable
increase in the Commitments under this Section 2.6.  For the avoidance of doubt, any Loans made
and Letters of Credit issued following the Increase Effective Date and
utilizing any increase in the Aggregate Commitments shall constitute
Obligations for all purposes of the Loan Documents.

 

2.6.5             Conditions
to Effectiveness of Increase.  As a condition precedent to such increase,
the Company shall deliver to the Administrative Agent a certificate of each
Loan Party dated as of the Increase Effective Date (in sufficient copies for
each Lender) signed by a Senior Officer of such Loan Party (i) certifying
and attaching the resolutions adopted by such Loan Party approving or
consenting to such increase, and (ii) in the case of the Company,
certifying that, before and after giving effect to such increase, (A) the
representations and warranties contained in Section 9 and the other
Loan Documents are true and correct on and as of the Increase Effective Date,
except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section 2.6, the
representations and warranties contained in Sections 9.4 and 9.5
shall be deemed to refer to the most recent statements furnished pursuant to Section 10.1,
and (B) no Unmatured Event of Default or Event of Default exists.

 

2.6.6             Conflicting Provisions.  To the extent of any conflicts between this Section 2.6
and Section 16.1, the provisions of this Section 2.6
shall control.

 

27

 

SECTION 3           EVIDENCING OF LOANS.

 

3.1           Notes.  The Loans made by each Lender shall be
evidenced by a Note, with appropriate insertions, payable to the order of each
Lender in a face principal amount equal to its Commitment.

 

3.2           Recordkeeping.  Each Lender shall record in its records, the
date and amount of each Loan made by such Lender, each repayment or conversion
thereof, the purchases and sales by such Lender of participations in Letters of
Credit and, in the case of each LIBOR Loan and each Fixed Rate Loan, the dates
on which each Interest Period for such Loan shall begin and end.  The aggregate unpaid principal amount so
recorded shall be rebuttably presumptive evidence of the principal amount of
the Loans owing and unpaid to such Lender. 
The failure to so record any such amount or any error in so recording
any such amount shall not, however, limit or otherwise affect the Obligations
of the Loan Parties hereunder or under any Note to repay the principal amount
of the Loans hereunder, together with all interest accruing thereon.

 

SECTION 4           INTEREST.

 

4.1           Interest Rates.  The Loan Parties, jointly and severally,
promise to pay interest on the unpaid principal amount of each Loan for the
period commencing on the date of such Loan until such Loan is paid in full as
follows:

 

(a)           at all times while such Loan is a Base Rate Loan, at a rate per annum
equal to the sum of the Base Rate from time to time in effect plus the
Applicable Margin; and

 

(b)           at all times while such Loan is a LIBOR Loan, at a rate per annum equal
to the sum of the LIBOR Rate applicable to each Interest Period for such Loan plus
the Applicable Margin;

 

(c)           at all times while such Loan is a Fixed Rate Loan, at a rate per annum
equal to the sum of the Loan Index Rate applicable to each Interest Period for
such Loan plus the Applicable Margin;

 

provided that at any
time an Event of Default exists, unless the Required Lenders otherwise consent,
the interest rate applicable to each Loan shall be the Default Rate, provided
further that such increase may thereafter be rescinded by the Required
Lenders.  Notwithstanding the foregoing,
upon the occurrence of an Event of Default under Section 13.1.1 or 13.1.4,
such increase shall occur automatically.

 

4.2           Interest Payment Dates.  Accrued interest on each Base Rate Loan shall
be payable in arrears on the first day of each calendar month and at
maturity.  Accrued interest on each LIBOR
Loan shall be payable on the last day of each Interest Period relating to such
Loan, upon a prepayment of such Loan, and at maturity.  Accrued interest on each Fixed Rate Loan shall
be payable on the same date as payments are made on the principal in accordance
with the amortization schedule delivered pursuant to Section 2.2.2(a),
upon a prepayment of such Loan, and at maturity.  After maturity, and at any time an Event of
Default exists, accrued interest on all Loans shall be payable on demand.

 

4.3           Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for each Interest
Period shall be determined by Agent, and notice thereof shall be given by Agent
promptly to the

 

28

 

Company
and the Lenders.  Each determination of
the applicable LIBOR Rate by Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error.  Agent shall, upon written request of the
Company, deliver to the Company a statement showing the computations used by
Agent in determining any applicable LIBOR Rate hereunder.

 

4.4           Computation of Interest.  Interest for LIBOR Loans and for Fixed Rate
Loans shall be computed for the actual number of days elapsed on the basis of a
year of 360 days.  Interest for Base Rate
Loans shall be computed for the actual number of days elapsed in the applicable
year.  The applicable interest rate for
each Base Rate Loan shall change simultaneously with each change in the Base
Rate.

 

SECTION 5           FEES.

 

5.1           Letter of Credit Fees.

 

(a)           The Loan Parties, jointly and severally, agree to pay to the L/C Issuer a
letter of credit fee for each Letter of Credit equal to the L/C Fee Rate of the
Stated Amount of such Letter of Credit (computed for the actual number of days
elapsed on the basis of a year of 360 days); provided that, unless the L/C
Issuer otherwise consents, the rate applicable to each Letter of Credit shall
be increased by 2% at any time that an Event of Default exists.  Such letter of credit fee shall be payable in
arrears on the first day of each calendar month and on the Termination Date (or
such later date on which such Letter of Credit expires or is terminated) for
the period from the date of the issuance of each Letter of Credit (or the last
day on which the letter of credit fee was paid with respect thereto) to the
date such payment is due or, if earlier, the date on which such Letter of
Credit expired or was terminated.

 

(b)           In addition, with respect to each Letter of Credit, the Company agrees to
pay to the L/C Issuer such fees and expenses as the L/C Issuer customarily
requires in connection with the issuance, negotiation, processing and/or
administration of letters of credit in similar situations, including a letter
of credit fronting fee in the amount and at the times agreed to by the Company
and the L/C Issuer.

 

5.2           Other Fees.

 

(a)           Non-Utilization Fee.  The Loan Parties, jointly and severally,
agree to pay to each Lender a non-utilization fee equal to 0.25% of the total
of (i) such Lender’s Commitment, minus (ii) the daily average
of the aggregate principal amount of the Outstandings attributable to such
Lender, which non-utilization fee shall be (X) calculated on the basis of
a year consisting of 360 days, (Y) paid for the actual number of days
elapsed, and (Z) payable quarterly in arrears on the last day of each
calendar quarter and on the Termination Date.

 

(b)           Fixed Rate Loan Prepayment Fee.  The Loan Parties, jointly and severally,
agree to pay to the Agent (for the ratable benefit of the Lenders in accordance
with their respective Pro Rata Shares), with respect to any prepayment made on
a Fixed Rate Loan that is not in accordance with the applicable amortization
schedule for such Fixed Rate Loan provided to and approved by Agent pursuant to
Section 2.2.2 (other than partial prepayments permitted pursuant to
Section 6.1.3), a prepayment fee equal to 1.0% of the aggregate
outstanding principal balance of the Fixed Rate Loan to which such prepayment
is applied.

 

29

 

(c)           Origination Fee.  The Loan Parties, jointly and severally,
agree to pay to PrivateBank an origination fee equal to 0.30% of
$30,000,000.  Such fee shall be due and
payable upon the execution of this Agreement and shall be fully earned when
paid and shall not be refundable for any reason whatsoever.

 

(d)           Lender’s Fees.  The Loan Parties, jointly and severally,
agree to pay to each Lender such other reasonable fees and expenses as are
mutually agreed to from time to time by the Company and such Lender, including
the fees required to be paid in accordance with Section 16.5(a).

 

SECTION 6           REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS.

 

6.1           Prepayments.

 

6.1.1             Voluntary Prepayments.  The Loan Parties may from time to time prepay
the Loans in whole or in part; provided that the Company shall give
Agent and each Lender notice thereof not later than 11:00 A.M.,
Minneapolis time, on the day of such prepayment (which shall be a Business
Day), specifying the Loans to be prepaid and the date and amount of prepayment.

 

6.1.2             Mandatory Prepayments.  If on any day the Outstandings exceed the
Borrowing Base, the Loan Parties shall immediately prepay the Loans and/or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.  The Loan Parties shall make an immediate
prepayment of the Loans upon the receipt by any Loan Party of any Net Cash
Proceeds from any Asset Disposition, in an amount equal to 100% of such Net
Cash Proceeds; provided  that no prepayment shall be required
under this sentence with respect to the first $4,000,000 of Net Cash Proceeds
received by the Loan Parties in any Fiscal Year.

 

6.1.3             Manner of Prepayments.  Each voluntary partial prepayment shall be in
a principal amount of $25,000 or a higher integral multiple of $5,000.  Any prepayment of a LIBOR Loan on a day other
than the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 8.4.  Any prepayment of a Fixed Rate Loan on a day
other than the last day of an Interest Period therefor shall include interest
on the principal amount being repaid and, if such prepayment is not a partial
prepayment permitted pursuant to Section 2.2.2(a), shall be subject
to Section 5.2(b).  Except as
otherwise provided by this Agreement, all principal payments in respect of the
Loans shall be applied first to repay outstanding Base Rate Loans, then to
repay outstanding Fixed Rate Loans in direct order of Interest Period
maturities and then to repay outstanding LIBOR Loans in direct order of
Interest Period maturities.

 

6.2           Repayments and Terminations.  The Loans shall be irrevocably paid in full
in cash, and the Commitment shall terminate, on the Termination Date.

 

6.3           Reduction of Aggregate Commitments.  The Loan Parties may, at any time, upon not
less than 30 days’ prior written notice from the Company to Agent and each
Lender, reduce 

 

30

 

the
amount of the Aggregate Commitments, with any such reduction in a minimum
amount of $1,000,000, or, if more, in an integral multiple of $500,000 and on a
pro rata basis for each Commitment; provided, however, that the
Loan Parties may not at any time reduce the amount of Aggregate Commitments
below the Outstandings.

 

SECTION 7           MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

 

7.1           Payments Generally; Agent’s Clawback.

 

7.1.1             General.  All
payments to be made by the Loan Parties hereunder or any Loan Document shall be
made without condition or deduction for any counterclaim, defense, recoupment
or setoff.  Except as otherwise expressly
provided herein, all payments by the Loan Parties hereunder shall be made to
Agent, for the account of the respective Lenders to which such payment is owed,
at Administrative Agent’s Office in Dollars and in immediately available funds
not later than 12:00 noon on the date specified herein.  Agent will promptly distribute to each Lender
its Applicable Percentage (or other applicable share as provided herein) of
such payment in like funds as received by wire transfer to such Lender’s
lending office.  All payments received by
Agent after 12:00 noon shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by any Loan Party
shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

 

7.1.2             Fundings by Lenders; Payments by Loan Parties.

 

(a)           Unless Agent shall have received notice from a Lender prior to the
proposed date of any borrowing of LIBOR Loans or Fixed Rate Loans (or, in the
case of any borrowing of Base Rate Loans, prior to 12:00 noon on the date of
such borrowing) that such Lender will not make available to Agent such Lender’s
share of such borrowing, Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.2.2 (or, in the
case of a borrowing of Base Rate Loans, that such Lender has made such share
available in accordance with and at the time required by Section 2.2.2)
and may, in reliance upon such assumption, make available to the Company a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable borrowing available
to Agent, then the applicable Lender and the Loan Parties severally agree to
pay to Agent forthwith on demand such corresponding amount in immediately
available funds with interest thereon, for each day from and including the date
such amount is made available to the Company to but excluding the date of
payment to Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by Agent in
connection with the foregoing and (B) in the case of a payment to be made
by the Loan Parties, the interest rate applicable to Base Rate Loans.  If the Loan Parties and such Lender shall pay
such interest to Agent for the same or an overlapping period, Agent shall
promptly remit to the Company the amount of such interest paid by the Loan
Parties for such period.  If such Lender
pays its share of the applicable borrowing to Agent, then the amount so paid
shall constitute such Lender’s Loan included in such borrowing.  Any payment by the Loan Parties shall be
without prejudice to any 

 

31

 

claim the Loan Parties may have against a Lender
that shall have failed to make such payment to Agent.

 

(b)           Unless Agent shall have received notice from the Company prior to the
date on which any payment is due to Agent for the account of the Lenders or the
L/C Issuer hereunder that a Loan Party will not make such payment, Agent may
assume that a Loan Party has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
or the L/C Issuer, as the case may be, the amount due.  In such event, if a Loan Party has not in
fact made such payment, then each of the Lenders or the L/C Issuer, as the case
may be, severally agrees to repay to Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in immediately available funds
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to Agent, at the greater
of the Federal Funds Rate and a rate determined by Agent in accordance with
banking industry rules on interbank compensation.  A notice of Agent to any Lender or the
Company with respect to any amount owing under this subsection (b) shall
be conclusive, absent manifest error.

 

7.1.3             Failure to Satisfy Conditions Precedent.  If any Lender makes available to Agent funds
for any Loan to be made by such Lender as provided in the foregoing provisions
of this Section 7.1, and such funds are not made available to the
Company by Agent because the conditions to the applicable Loan set forth in Section 12
are not satisfied or waived in accordance with the terms hereof, Agent shall
promptly and in any event within one Business Day return such funds (in like
funds as received from such Lender) to such Lender, with interest at the
Federal Funds Rate.

 

7.1.4             Obligations of Lenders Several.  The obligations of the Lenders hereunder to
make Loans, to fund participations in Letters of Credit and to make payments
under Section 16.5(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under Section 16.5(c) on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, purchase
its participation or to make its payment under Section 16.5(c).

 

7.2           Sharing of Payments.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it, or the participations
in L/C Obligations held by it resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Loans or participations and accrued
interest thereon greater than its pro rata share thereof as provided herein,
then the Lender receiving such greater proportion shall (a) notify Agent
of such fact, and (b) purchase (for cash at face value) participations in
the Loans and subparticipations in L/C Obligations of the other Lenders, or
make such other adjustments as shall be equitable, so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them, provided that:

 

32

 

(i)            if any such participations
or subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

 

(ii)           the provisions
of this Section shall not be construed to apply to (x) any payment
made by a Loan Party pursuant to and in accordance with the express terms of
this Agreement or (y) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
subparticipations in L/C Obligations to any assignee or participant, other than
to a Loan Party or any Subsidiary thereof (as to which the provisions of this Section shall
apply).

 

Each
Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

 

To
the extent of any conflicts between this Section 7.2 and Section 2.5,
the provisions of Section 2.5 shall control.

 

7.3           Application of Certain Payments.  So long as no Unmatured Event of Default or
Event of Default has occurred and is continuing, (a) payments matching
specific scheduled payments then due shall be applied to those scheduled
payments and (b) voluntary and mandatory prepayments shall be applied as
set forth in Section 6.1. 
After the occurrence and during the continuance of an Unmatured Event of
Default or Event of Default, all amounts collected or received by the
Administrative Agent as proceeds from the sale of, or other realization upon,
all or any part of the collateral shall be applied in accordance with the
provisions of Section 13.3.

 

7.4           Due Date Extension.  If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of
any such extension.

 

7.5           Setoff.  Each Loan Party agrees that Agent, the L/C
Issuer and each Lender has all rights of set-off and bankers’ lien provided by
applicable law, and in addition thereto, each Loan Party agrees that at any
time any Event of Default exists, Agent, the L/C Issuer or any Lender may apply
to the payment of any Obligations of the Loan Parties hereunder, whether or not
then due, any and all balances, credits, deposits, accounts or moneys of any
Loan Party then or thereafter with Agent, the L/C Issuer or any Lender, as
applicable.

 

33

 

7.6           Taxes.

 

(a)           To the extent permitted by applicable law, all payments hereunder or
under the Loan Documents (including any payment of principal, interest, or
fees) to, or for the benefit, of any person shall be made by the Loan Parties
free and clear of and without deduction or withholding for, or account of, any
Taxes now or hereinafter imposed by any taxing authority.

 

(b)           If a Loan Party makes any payment hereunder or under any Loan Document in
respect of which it is required by applicable law to deduct or withhold any
Taxes, such Loan Party shall increase the payment hereunder or under any such
Loan Document such that after the reduction for the amount of Taxes withheld
(and any taxes withheld or imposed with respect to the additional payments
required under this Section 7.6(b)), the amount paid to the Lender
equals the amount that was payable hereunder or under any such Loan Document
without regard to this Section 7.6(b).  To the extent a Loan Party withholds any
Taxes on payments hereunder or under any Loan Document, such Loan Party shall
pay the full amount deducted to the relevant taxing authority within the time
allowed for payment under applicable law and shall deliver to the affected
Lender (with a copy to Agent) within 30 days after it has made payment to such
authority a receipt issued by such authority (or other evidence satisfactory to
the Lender) evidencing the payment of all amounts so required to be deducted or
withheld from such payment.

 

(c)           If any Lender is required by law to make any payments of any Taxes on or
in relation to any amounts received or receivable hereunder or under any other
Loan Document, or any Tax is assessed against any Lender with respect to
amounts received or receivable hereunder or under any other Loan Document, the
Loan Parties, jointly and severally, will indemnify such person against (i) such
Tax (and any reasonable counsel fees and expenses associated with such Tax) and
(ii) any taxes imposed as a result of the receipt of the payment under
this Section 7.6(c).  A
certificate prepared in good faith as to the amount of such payment by the
Lender shall, absent manifest error, be final, conclusive, and binding on all
parties.

 

SECTION 8           INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

 

8.1           Increased Costs.

 

(a)           If, after the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the interpretation or
administration of any applicable law, rule or regulation by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency: 
(i) shall impose, modify or deem applicable any reserve (including
any reserve imposed by the FRB, but excluding any reserve included in the
determination of the LIBOR Rate pursuant to Section 4), special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by such Lender; or (ii) shall impose on
such Lender any other condition affecting its LIBOR Loans, its Note or its
obligation to make LIBOR Loans; and the result of anything described in clauses
(i) and (ii) above is to increase the cost to (or to impose a cost
on) such Lender (or any LIBOR Office of such Lender) of making or maintaining
any LIBOR Loan, or to reduce the amount of any sum received or receivable by
such Lender (or its LIBOR Office) under this Agreement or under its Note with
respect thereto, then upon demand by such Lender (which demand shall be
accompanied by a statement setting 

 

34

 

forth the basis for such demand and a calculation of
the amount thereof in reasonable detail), the Loan Parties shall pay to such
Lender such additional amount as will compensate such Lender for such increased
cost or such reduction, so long as such amounts have accrued on or after the
day which is 180 days prior to the date on which such Lender first made demand
therefor.

 

(b)           If any Lender shall reasonably determine that any change in, or the
adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy of such Lender, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
the compliance by such Lender or any Person controlling such Lender with any
request or directive regarding capital adequacy of such Lender (whether or not
having the force of law) by any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender’s or such controlling Person’s capital as a consequence of such Lender’s
obligations hereunder or under any Letter of Credit to a level below that which
such Lender or such controlling Person could have achieved but for such change,
adoption, phase-in or compliance (taking into consideration such Lender’s or
such controlling Person’s policies with respect to capital adequacy of such
Lender) by an amount deemed by such Lender or such controlling Person to be
material, then from time to time, upon demand by such Lender (which demand
shall be accompanied by a statement setting forth the basis for such demand and
a calculation of the amount thereof in reasonable detail), the Loan Parties
shall pay to such Lender such additional amount as will compensate such Lender
or such controlling Person for such reduction so long as such amounts have
accrued on or after the day which is 180 days prior to the date on which such
Lender first made demand therefor.

 

8.2           Basis for Determining Interest Rate Inadequate
or Unfair.  If:

 

(a)           any Lender reasonably determines (which determination shall be binding
and conclusive on the Loan Parties) that by reason of circumstances affecting
the interbank LIBOR market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate; or

 

(b)           any Lender reasonably determines that the LIBOR Rate will not adequately
and fairly reflect the cost to such Lender of maintaining or funding LIBOR
Loans for such Interest Period (taking into account any amount to which such
Lender may be entitled under Section 8.1) or that the making or
funding of LIBOR Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such Lender
materially affects such Loans;

 

then such Lender
shall promptly notify the Company thereof and, so long as such circumstances
shall continue, (i) such Lender shall be under no obligation to make or
convert any Base Rate Loans into LIBOR Loans and (ii) on the last day of
the current Interest Period for each LIBOR Loan, such Loan shall, unless then
repaid in full, automatically convert to a Base Rate Loan.

 

8.3           Changes in Law Rendering LIBOR Loans Unlawful.  If any change in, or the adoption of any new,
law or regulation, or any change in the interpretation of any applicable law or
regulation by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Lender cause a substantial question 

 

35

 

as
to whether it is) unlawful for any Lender to make, maintain or fund LIBOR
Loans, then such Lender shall promptly notify the Company and, so long as such
circumstances shall continue, (a) such Lender shall have no obligation to
make or convert any Base Rate Loan into a LIBOR Loan and (b) on the last
day of the current Interest Period for each LIBOR Loan of such Lender (or, in
any event, on such earlier date as may be required by the relevant law,
regulation or interpretation), such LIBOR Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which,
but for the circumstances described in the foregoing sentence, would be a LIBOR
Loan (an “Affected Loan”) shall remain outstanding for the period which
would be applicable to such Affected Loan absent such circumstances.

 

8.4           Funding Losses.  The Loan Parties hereby agree that upon
demand by any Lender (which demand shall be accompanied by a statement setting
forth the basis for the amount being claimed), the Loan Parties will indemnify
such Lender against any net loss or expense which such Lender may sustain or
incur (including any net loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan), as reasonably determined by such Lender, as a result
of (a) any payment, prepayment or conversion of any LIBOR Loan of such
Lender on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any
failure of the Company or another Loan Party to borrow, convert or continue any
Loan on a date specified therefor in a notice of borrowing, conversion or
continuation pursuant to this Agreement. 
For this purpose, all such notices to any Lender pursuant to this
Agreement shall be deemed to be irrevocable.

 

8.5           Right of the Lenders to Fund through Other
Offices.  Each Lender may, if it so
elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch
or Affiliate of such Lender to make such Loan; provided that in such
event for the purposes of this Agreement such Loan shall be deemed to have been
made by such Lender and the obligation of the Company to repay such Loan shall
nevertheless be to such Lender and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or Affiliate.

 

8.6           Discretion of the Lenders as to Manner of
Funding.  Notwithstanding any provision
of this Agreement to the contrary, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Lender had actually funded
and maintained each LIBOR Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the LIBOR Rate for such
Interest Period.

 

8.7           Mitigation of Circumstances.  Each Lender shall promptly notify the Company
of any event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in such Lender’s sole
judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any
obligation by the Loan Parties to pay any amount pursuant to Section 7.6
or 8.1 or (ii) the occurrence of any circumstances described in Section 8.2
or 8.3 (and, if such Lender has given notice of any such event described
in clause (i) or (ii) above and thereafter such event ceases to
exist, such Lender shall promptly so notify the Company).  Without limiting the foregoing, each Lender
will designate a different funding office 

 

36

 

if
such designation will avoid (or reduce the cost to the Loan Parties of) any
event described in clause (i) or (ii) above and such designation will
not, in such Lender’s sole judgment, be otherwise disadvantageous to such
Lender.

 

8.8           Conclusiveness of Statements; Survival of
Provisions. 
Determinations and statements of any Lender pursuant to Section 8.1,
8.2, 8.3 or 8.4 shall be conclusive absent demonstrable
error.  Each Lender may use reasonable
averaging and attribution methods in determining compensation under Sections
8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Obligations, cancellation of the Note, expiration or
termination of the Letters of Credit and termination of this Agreement.

 

SECTION 9           REPRESENTATIONS AND WARRANTIES.

 

To
induce the Lenders to enter into this Agreement and to induce the Lenders to
make Loans and/or issue Letters of Credit hereunder, each Loan Party represents
and warrants to the Lenders that:

 

9.1           Organization.  Each Loan Party is validly existing and in good
standing under the laws of its jurisdiction of organization; and each Loan
Party is duly qualified to do business in each jurisdiction where, because of
the nature of its activities or properties, such qualification is required,
except for such jurisdictions where the failure to so qualify would not have a
Material Adverse Effect.

 

9.2           Authorization; No Conflict.  Each Loan Party is duly authorized to execute
and deliver each Loan Document to which it is a party, is duly authorized to
borrow monies hereunder and is duly authorized to perform its Obligations under
each Loan Document to which it is a party. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which it is a party, and the borrowings by the Loan Parties hereunder,
do not and will not (a) require any consent or approval of any
governmental agency or authority (other than any consent or approval which has
been obtained and is in full force and effect), (b) conflict with (i) any
provision of law, (ii) the charter, by-laws or other organizational
documents of any Loan Party or (iii) any agreement, indenture, instrument
or other document, or any judgment, order or decree, which is binding upon any
Loan Party or any of their respective properties or (c) require, or result
in, the creation or imposition of any Lien on any asset of any Loan Party
(other than Liens in favor of Agent, for the ratable benefit of Agent and the
Lenders, created pursuant to the Collateral Documents).

 

9.3           Validity and Binding Nature.  Each of this Agreement and each other Loan
Document to which any Loan Party is a party is the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity.

 

9.4           Financial Condition.  The audited consolidated financial statements
of the Company and its Subsidiaries as at December 26, 2009 and the
unaudited consolidated financial statements of the Company and the Subsidiaries
as at  May 29, 2010, copies of each of
which have been delivered to Agent and each Lender, were prepared in accordance
with GAAP 

 

37

 

(subject,
in the case of such unaudited statements, to the absence of footnotes and to
normal year-end adjustments) and present fairly the consolidated financial
condition of the Company and its Subsidiaries as at such dates and the results
of their operations for the periods then ended.

 

9.5           No Material Adverse Change.  Since December 26, 2009, there has been
no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Loan Parties taken as a whole.

 

9.6           Litigation and Contingent Liabilities.  No litigation (including derivative actions),
arbitration proceeding or governmental investigation or proceeding is pending
or, to the knowledge of any Loan Party, threatened against any Loan Party which
might reasonably be expected to have a Material Adverse Effect, except as set
forth in Schedule 9.6.  Other than
any liability incident to such litigation or proceedings, no Loan Party has any
material contingent liabilities not listed on Schedule 9.6 or permitted
by Section 11.1.

 

9.7           Ownership of Properties; Liens.  Each Loan Party owns good and, in the case of
real property, marketable title to all of its properties and assets, real and
personal, tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like) except as
permitted by Section 11.2 and listed in Schedule 9.7.

 

9.8           Equity Ownership; Subsidiaries.  All issued and outstanding Capital Securities
of each Loan Party are duly authorized and validly issued, fully paid,
non-assessable, and free and clear of all Liens other than those in favor of
Agent, for the ratable benefit of Agent and the Lenders, and such securities
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities.  As of the
Closing Date, the Company has no Subsidiaries other than those specifically disclosed
in part (a) of Schedule 9.8 and no Loan Party has material
Investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 9.8.  As of the Closing Date, each Subsidiary is a
Wholly-Owned Subsidiary and all of the issued and outstanding Capital
Securities of each Wholly-Owned Subsidiary is, directly or indirectly, owned by
the Company.

 

9.9           Pension Plans.

 

(a)           The Unfunded Liability of all Pension Plans does not in the aggregate
exceed twenty percent of the Total Plan Liability for all such Pension
Plans.  Each Pension Plan complies in all
material respects with all applicable requirements of law and regulations.  No contribution failure under Section 412
of the Code, Section 302 of ERISA or the terms of any Pension Plan has
occurred with respect to any Pension Plan, sufficient to give rise to a Lien
under Section 302(f) of ERISA, or otherwise to have a Material
Adverse Effect.  There are no pending or,
to the knowledge of any Loan Party, threatened, claims, actions, investigations
or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or the
Company or any other member of the Controlled Group with respect to a Pension
Plan or a Multiemployer Pension Plan which could reasonably be expected to have
a Material Adverse Effect.  Neither the
Company nor any other member of the Controlled Group has engaged in any
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) in connection with

 

38

 

any Pension Plan or Multiemployer Pension Plan which
would subject that Person to any material liability.  Within the past five years, neither the
Company nor any other member of the Controlled Group has engaged in a
transaction which resulted in a Pension Plan with an Unfunded Liability being
transferred out of the Controlled Group, which could reasonably be expected to
have a Material Adverse Effect.  No
Termination Event has occurred or is reasonably expected to occur with respect
to any Pension Plan, which could reasonably be expected to have a Material
Adverse Effect.

 

(b)                                 All contributions (if any) have been made to any Multiemployer Pension
Plan that are required to be made by the Company or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any other member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Pension Plan, incurred any withdrawal liability with respect to any such plan
or received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which,
if continued, could result in a withdrawal or partial withdrawal from any such plan;
and neither the Company nor any other member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code,
that any such plan is or may be terminated, or that any such plan is or may
become insolvent.

 

9.10                        Investment Company Act.  No Loan Party is an “investment company” or a
company “controlled” by an “investment company” or a “subsidiary” of an “investment
company,” within the meaning of the Investment Company Act of 1940.

 

9.11                        Public Utility Holding Company Act.  No Loan Party is a “holding company”, or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company,” within the meaning of the Public
Utility Holding Company Act of 2005.

 

9.12                        Margin Stock.  No Loan Party is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.

 

9.13                        Taxes; Tax Shelter Registration.

 

(a)                                 Each Loan Party has timely filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges
due and payable with respect to such return, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.  The Loan Parties
have made adequate reserves on their books and records in accordance with GAAP
for all taxes that have accrued but which are not yet due and payable.  No Loan Party has participated in any
transaction that relates to a year of the taxpayer (which is still open under
the applicable statute of limitations) which is a “reportable transaction”
within the meaning of Treasury Regulation section 1.6011-4(b)(2) (irrespective
of the date when the transaction was entered into).

 

39

 

(b)                                 No Loan Party intends to treat any of the transactions contemplated by
any Loan Document as being a “reportable transaction” within the meaning of
Treasury Regulation Section 1.6011-4.

 

9.14                        Solvency, etc.  On the Closing Date, and immediately prior to
and after giving effect to the issuance of each Letter of Credit and each
borrowing hereunder and the use of the proceeds thereof, with respect to each
Loan Party, individually, (a) the fair value of its assets is greater than
the amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated, (b) the
present fair saleable value of its assets is not less than the amount that will
be required to pay the probable liability on its debts as they become absolute
and matured, (c) it is able to realize upon its assets and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business, (d) it does
not intend to, and does not believe that it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (e) it
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which its property would constitute unreasonably
small capital.

 

9.15                        Environmental Matters.  The on-going operations of each Loan Party
comply in all respects with all Environmental Laws, except such non-compliance
which could not (if enforced in accordance with applicable law) reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.  Each Loan Party has
obtained, and maintained in good standing, all licenses, permits,
authorizations, registrations and other approvals required under any
Environmental Law and required for their respective ordinary course operations,
and for their reasonably anticipated future operations, and each Loan Party is
in compliance with all terms and conditions thereof, except where the failure
to do so could not reasonably be expected to result in material liability to
any Loan Party and could not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.  No Loan Party or any of its properties or
operations is subject to, or reasonably anticipates the issuance of, any written
order from or agreement with any Federal, state or local governmental
authority, nor subject to any judicial or docketed administrative or other
proceeding, respecting any Environmental Law, Environmental Claim or Hazardous
Substance.  There are no Hazardous
Substances or other conditions or circumstances existing with respect to any
property, arising from operations prior to the Closing Date, or relating to any
waste disposal, of any Loan Party that would reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect.  No Loan Party has any underground storage
tanks that are not properly registered or permitted under applicable
Environmental Laws or that at any time have released, leaked, disposed of or
otherwise discharged Hazardous Substances.

 

9.16                        Insurance. Each Loan Party and its
properties are insured with financially sound and reputable insurance companies
which are not Affiliates of the Loan Parties, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
such Loan Parties operate.

 

9.17                        Real Property.  Set forth on Schedule 9.17 is a
complete and accurate list, as of the Closing Date, of the address of all real
property owned or leased by any Loan Party, together with, in the case of
leased property, the name and mailing address of the lessor of such property.

 

40

 

9.18                        Information.  All information heretofore or contemporaneously
herewith furnished in writing by any Loan Party to Agent or any Lender for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or
on behalf of any Loan Party to Agent or any Lender pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by Agent and the Lenders that any
projections and forecasts provided by any Loan Party are based on good faith
estimates and assumptions believed by such Loan Party to be reasonable as of
the date of the applicable projections or assumptions and that actual results
during the period or periods covered by any such projections and forecasts may
differ from projected or forecasted results).

 

9.19                        Intellectual Property.  Each Loan Party owns and possesses or has a
license or other right to use all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, service marks, service mark rights and
copyrights as are necessary for the conduct of the businesses of the Loan
Parties, without any infringement upon rights of others which could reasonably
be expected to have a Material Adverse Effect.

 

9.20                        Burdensome Obligations.  No Loan Party is a party to any agreement or
contract or subject to any restriction contained in its organizational
documents which could reasonably be expected to have a Material Adverse Effect.

 

9.21                        Labor Matters.  No Loan Party is subject to any labor or
collective bargaining agreement.  There
are no existing or threatened strikes, lockouts or other labor disputes
involving any Loan Party that singly or in the aggregate could reasonably be
expected to have a Material Adverse Effect. 
Hours worked by and payment made to employees of the Loan Parties are
not in violation of the Fair Labor Standards Act or any other applicable law, rule or
regulation dealing with such matters.

 

9.22                        No Default.  No Event of Default or Unmatured Event of
Default exists or would result from the incurrence by any Loan Party of any
Debt hereunder or under any other Loan Document.

 

9.23                        Accounts.  No Loan Party maintains any deposit,
checking, brokerage or similar account with any bank, savings association,
financial institution or similar financial intermediary, other than those
identified in writing to the Agent.

 

9.24                        Anti-Terrorism Law Compliance.  None of the Loan Parties is
subject to or in violation of any law, regulation or list of any government
agency including, without limitation, the U.S. 
Office of Foreign Asset Control (“OFAC”) list, Executive Order
13224 or the USA Patriot Act) that prohibits or limits the conduct of business
with or receiving of funds, goods or services to or for the benefit of certain
Persons specified therein or that prohibits or limits any Lender from making
any Loan or extension of credit to any Loan Party or from otherwise conducting
business with any Loan Party.  Without in
any way limiting the generality of the foregoing, (a) no Loan Party (and,
to the knowledge of each Loan Party, no joint venture thereof) is in violation
in any material respects of any United States Requirements of Law relating to 

 

41

 

terrorism, sanctions or money laundering (the “Anti-Terrorism
Laws”), including the United States Executive Order No. 13224 on
Terrorist Financing (the “Anti-Terrorism Order”) and the Patriot Act;
(b) no Loan Party (and, to the knowledge of each Loan Party, no joint
venture thereof) (i) is listed in the annex to, or is otherwise subject to
the provisions of, the Anti-Terrorism Order, (ii) is owned or controlled
by, or acting for or on behalf of, any person listed in the annex to, or is
otherwise subject to the provisions of, the Anti-Terrorism Order, (iii) commits,
threatens or conspires to commit or supports “terrorism” as defined in the
Anti-Terrorism Order or (iv) is named as a “specially designated national
and blocked person” in the most current list published by OFAC; (c) no
Loan Party (and, to the knowledge of each Loan Party, no joint venture or
Affiliate thereof) (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any person described in clauses (b)(i) through (b)(iv) above,
(ii) deals in, or otherwise engages in any transactions relating to, any
property or interests in property blocked pursuant to the Anti-Terrorism Order
or (iii) engages in or conspires to engage in any transaction that evades
or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law; and (d) each
Loan Party is and will remain in compliance in all material respects with all
U.S. economic sanctions laws, Executive Orders and implementing regulations as
promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control
(“OFAC”), and all applicable anti-money laundering and counter-terrorism
financing provisions of the Bank Secrecy Act and all regulations issued
pursuant to it.  Neither any Loan Party
or Affiliate of any Loan Party (i) is a Person designated by the U.S.
government on the list of the Specially Designated Nationals and Blocked
Persons (the “SDN List”) with which a U.S. Person cannot deal with or
otherwise engage in business transactions, (ii) is a Person who is
otherwise the target of U.S. economic sanctions laws such that a U.S. Person
cannot deal or otherwise engage in business transactions with such Person or (iii) is
controlled by (including without limitation by virtue of such person being a
director or owning voting shares or interests), or acts, directly or
indirectly, for or on behalf of, any person or entity on the SDN List or a
foreign government that is the target of U.S. economic sanctions prohibitions
such that the entry into, or performance under, this Agreement or any other
Loan Document would be prohibited under U.S. law.

 

9.25                        Compliance with Laws.  Each Loan Party is in compliance in all
material respects with the requirements of all laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such requirement of law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

9.26                        Hedging Agreements.  No Loan Party is a party to, nor will it be a
party to, any Hedging Agreement other than a bona fide (not speculative)
Hedging Agreement, in form and substance reasonably acceptable to the
Administrative Agent, to protect the Loan Parties against fluctuations in
interest rates and/or foreign currencies.

 

9.27                        Patriot Act.  The
Loan Parties and each of their Affiliates are in compliance with (a) the
Trading with the Enemy Act, and each of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B
Chapter V, as amended) and any other enabling legislation or executive
order relating thereto, (b) the Patriot Act and (c) other federal or
state laws relating to “know your customer”
and anti-money laundering rules and regulations.  

 

42

 

No
part of the proceeds of any Loan will be used directly or indirectly for any
payments to any government official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977.

 

SECTION 10                        AFFIRMATIVE COVENANTS.

 

Until
the expiration or termination of the Commitment and thereafter until all
Obligations hereunder and under the other Loan Documents are irrevocably paid
in full in cash and all Letters of Credit have been terminated, each Loan Party
agrees that, unless at any time the Required Lenders shall otherwise expressly
consent in writing, it will:

 

10.1                        Reports, Certificates and Other Information.  Furnish to Agent:

 

10.1.1                              Annual Report.  Promptly
when available and in any event within ninety (90) days after the end of each
Fiscal Year (a) a copy of the annual audit report of the Company and its
Subsidiaries for such Fiscal Year, including therein consolidated balance
sheets and consolidated statements of income or operations, shareholder’s
equity and cash flows of the Company and its Subsidiaries as at the end of such
Fiscal Year, together with a written opinion from independent auditors of
national standing selected by the Company and reasonably acceptable to Agent
and each Lender that (A) such consolidated financial statements present
fairly, in all material respects, the financial position for the periods
indicated in conformity with GAAP and (B) in making the examination
necessary for the signing of such annual audit report, nothing came to the
attention of such auditors that caused them to believe that the Company was not
in compliance with any provision of Sections 11.1, 11.3, 11.4,
11.11, 11.15, 11.16 or 11.17 of this Agreement; and
(b) a comparison with the budget for such Fiscal Year and a comparison
with the previous Fiscal Year, certified by a Senior Officer of the Company,
all in reasonable detail and scope satisfactory to Agent and each Lender and
certified by a Senior Officer of the Company.

 

10.1.2                              Monthly Reports. 
Promptly when available and in any event within thirty (30) days after
the end of each fiscal month, consolidated balance sheets of the Company and
its Subsidiaries as of the end of such month, together with consolidated
statements of income or operations for such month, together with a comparison
with the corresponding period of the previous Fiscal Year and for the
statements of income a comparison with the budget for such period of the
current Fiscal Year, certified by a Senior Officer of the Company.

 

10.1.3                              Quarterly Reports. 
Promptly when available and in any event within forty-five (45) days
after the end of each Fiscal Quarter, consolidated balance sheets of the
Company and its Subsidiaries as of the end of such Fiscal Quarter, together
with consolidated statements of income or operations for such Fiscal Quarter,
and a consolidated statement of cash flows for the period beginning with the
first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, together with a comparison with the corresponding period of the
previous Fiscal Year and for the statements of 

 

43

 

income a comparison with the
budget for such period of the current Fiscal Year, certified by a Senior
Officer of the Company.

 

10.1.4                              Compliance Certificates.  Contemporaneously with the furnishing of a
copy of each set of monthly statements pursuant to Section 10.1.2,
a duly completed compliance certificate in the form of Exhibit B,
with appropriate insertions, dated the date of such annual report or such
monthly statements and signed by a Senior Officer of the Company, containing (i) a
computation of each of the financial ratio and/or amount contemplated by Sections
11.15, 11.16 and 11.17 and to the effect that such officer
has not become aware of any Event of Default or Unmatured Event of Default that
has occurred and is continuing or, if there is any such event, describing it
and the steps, if any, being taken to cure it and (ii) at any time when
the Company is not an SEC reporting company, a written statement of the Company’s
management setting forth a discussion of the Loan Parties’ financial condition,
changes in financial condition and results of operations.

 

10.1.5                              Consolidated Operating Budget.  Promptly when available and in any event
within thirty (30) days after the end of each Fiscal Year, a copy of the
consolidated operating budget for the following Fiscal Year, certified by a
Senior Officer of the Company.

 

10.1.6                              Reports to the SEC and to Shareholders.  Promptly upon the filing or sending thereof,
copies of all regular, periodic or special reports of any Loan Party filed with
the SEC; copies of all registration statements of any Loan Party filed with the
SEC (other than on Form S-8); and copies of all proxy statements or other
communications made to security holders generally.

 

10.1.7                              Notice of Default, Litigation and ERISA Matters.  Promptly upon becoming aware of any of the
following, written notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto:

 

(a)                                 the occurrence of an Event of Default or an Unmatured Event of Default;

 

(b)                                 any litigation, arbitration or governmental investigation or proceeding
not previously disclosed by the Company to Agent and the Lenders which has been
instituted or, to the knowledge of any Loan Party, is threatened against any
Loan Party or to which any of the properties of any thereof is subject which
might reasonably be expected to have a Material Adverse Effect;

 

(c)                                  the institution of any steps by any member of the Controlled Group or any
other Person to terminate any Pension Plan, or the failure of any member of the
Controlled Group to make a required contribution to any Pension Plan (if such
failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA) or to any Multiemployer Pension Plan, or the taking of any action with
respect to a Pension Plan which could result in the requirement that the
Company furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan or Multiemployer
Pension Plan which could result in the incurrence by any member of the
Controlled Group of any material liability, fine or penalty 

 

44

 

(including any claim or demand for withdrawal
liability or partial withdrawal from any Multiemployer Pension Plan), or any
material increase in the contingent liability of the Company with respect to
any post-retirement welfare benefit plan or other employee benefit plan of the
Company or another member of the Controlled Group, or any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the Code, that any such plan is or may be
terminated, or that any such plan is or may become insolvent;

 

(d)                                 any cancellation or material change in any insurance maintained by any
Loan Party; or

 

(e)                                  any other event (including (i) any violation of any Environmental
Law or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect.

 

10.1.8                              Borrowing Base Certificates.  Within thirty (30) days of the end of each
month, a Borrowing Base Certificate dated as of the end of such month and
executed by a Senior Officer of the Company on behalf of the Company together
with a lease receivable aging (provided that (a) the Company may
deliver a Borrowing Base Certificate more frequently if it chooses and (b) at
any time an Event of Default exists, Agent or any Lender may require the
Company to deliver Borrowing Base Certificates more frequently).

 

10.1.9                              Management Reports. 
Promptly upon receipt thereof, copies of all detailed financial and
management reports submitted to the Company by independent auditors in
connection with each annual or interim audit made by such auditors of the books
of the Company.

 

10.1.10                       Subordinated Debt Notices.  Promptly following receipt, copies of any
notices (including notices of default or acceleration) received from any holder
or trustee of, under or with respect to any Subordinated Debt.

 

10.1.11                       Other Information. 
Promptly from time to time, such other information concerning the Loan
Parties as Agent or any Lender may reasonably request.

 

10.2                        Books, Records and Inspections.  Keep, and cause each other Loan Party to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; implement and maintain a cash management system reasonably acceptable to
Agent; permit, and cause each other Loan Party to permit, Agent or any
representative thereof to inspect the properties and operations of the Loan
Parties; and permit, and cause each other Loan Party to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), Agent or any representative thereof to visit any or
all of its offices, to discuss its financial matters with its officers and its
independent auditors (and the Company hereby authorizes such independent
auditors to discuss such financial matters with Agent or any representative
thereof), and to examine (and, at the expense of the Loan Parties, photocopy
extracts from) any of its books or 

 

45

 

other
records; and permit, and cause each other Loan Party to permit, Agent and its
representatives to inspect the Inventory and other tangible assets of the Loan
Parties, to perform appraisals of the equipment of the Loan Parties, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence
and other data relating to Inventory, Accounts and any other collateral.  All such inspections or audits by Agent shall
be at the Company’s expense, provided that (i) so long as no Event of
Default or Unmatured Event of Default exists, the Company shall not be required
to reimburse Agent for inspections or audits more frequently than once each
Fiscal Year, and (ii) without limiting Agent’s rights under clause (i) of
this Section 10.2, Agent may at the Company’s expense not later
than October 31, 2010 conduct such audit or inspection in respect of the
Company’s (and the applicable Loan Party’s) leasing portfolio and reasonably
related operations.

 

10.3                        Maintenance of Property; Insurance.

 

(a)                                 Keep, and cause each other Loan Party to keep, all property useful and
necessary in the business of the Loan Parties in good working order and
condition, ordinary wear and tear excepted.

 

(b)                                 Maintain, and cause each other Loan Party to maintain, with responsible
insurance companies, such insurance coverage as may be required by any law or
governmental regulation or court decree or order applicable to it and such
other insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated; and, upon request of
Agent, furnish to Agent a certificate setting forth in reasonable detail the
nature and extent of all insurance maintained by the Loan Parties.  The Company shall cause each issuer of an
insurance policy to provide Agent with an endorsement (i) showing Agent as
lender loss payee with respect to each policy of property or casualty insurance
and naming Agent as an additional insured with respect to each policy of
liability insurance, (ii) providing that 30 days’ notice will be given to
Agent prior to any cancellation of, material reduction or change in coverage
provided by or other material modification to such policy and (iii) reasonably
acceptable in all other respects to Agent.

 

10.4                        Compliance with Laws; Payment of Taxes and
Liabilities.  (a) Comply,
and cause each other Loan Party to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be expected to
have a Material Adverse Effect; (b) without limiting clause (a) above,
ensure, and cause each other Loan Party to ensure, that no person who owns a
controlling interest in or otherwise controls a Loan Party is or shall be (i) listed
on the Specially Designated Nationals and Blocked Person List maintained by the
OFAC, Department of the Treasury, and/or any other similar lists maintained by
OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a
person designated under Section 1(b), (c) or (d) of Executive Order
No. 13224 (September 23, 2001), any related enabling legislation or
any other similar Executive Orders, (c) without limiting clause (a) above,
comply, and cause each other Loan Party to comply, with all applicable Bank
Secrecy Act (“BSA”) and anti-money laundering laws and regulations and (d) pay,
and cause each other Loan Party to pay, prior to delinquency, all taxes and
other governmental charges against it or any collateral, as well as claims of
any kind which, if unpaid, could become a Lien on any of its property; provided
that the foregoing 

 

46

 

shall
not require any Loan Party to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance
with GAAP and, in the case of a claim which could become a Lien on any
collateral, such contest proceedings shall stay the foreclosure of such Lien or
the sale of any portion of the collateral to satisfy such claim.

 

10.5                        Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 11.5)
cause each other Loan Party to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary (other than such
jurisdictions in which the failure to be qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect).

 

10.6                        Use of Proceeds.  Use the proceeds of the Loans and the Letters
of Credit solely for repayment of the Unsecured Notes and the Loan Parties’
existing Debt to Bank of America, N.A., for working capital purposes, for
Acquisitions permitted by Section 11.5, for Capital Expenditures,
for stock repurchases, for dividends and distributions and for other general
business purposes; and not use or permit any proceeds of any Loan to be used,
either directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of “purchasing or carrying” any Margin Stock.

 

10.7                        Employee Benefit Plans.

 

(a)                                 Maintain, and cause each other member of the Controlled Group to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.

 

(b)                                 Make, and cause each other member of the Controlled Group to make, on a
timely basis, all required contributions to any Multiemployer Pension Plan.

 

(c)                                  Not, and not permit any other member of the Controlled Group to (i) seek
a waiver of the minimum funding standards of ERISA, (ii) terminate or
withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take
any other action with respect to any Pension Plan that would reasonably be
expected to entitle the PBGC to terminate, impose liability in respect of, or
cause a trustee to be appointed to administer, any Pension Plan, unless the
actions or events described in clauses (i), (ii) and (iii) individually
or in the aggregate would not have a Material Adverse Effect.

 

10.8                        Environmental Matters.  If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets of any Loan Party, the Company or the applicable
Loan Party shall cause the prompt containment and removal of such Hazardous
Substances and the remediation of such real property or other assets as
necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. 
Without limiting the generality of the foregoing, each Loan Party shall
comply with any Federal or state judicial or administrative order requiring the
performance at any real property of any Loan Party of activities in response to
the release or threatened release of a Hazardous Substance.  To the extent that the transportation of
Hazardous Substances is permitted by this Agreement, the Company shall, and
shall cause its Subsidiaries 

 

47

 

to,
dispose of such Hazardous Substances, or of any other wastes, only at licensed
disposal facilities operating in compliance with Environmental Laws.

 

10.9                        Tax Shelter Registration.  Notify Agent of any action (or the intention
to take an action) inconsistent with the representation in Section 9.13(b).  If the Company so notifies Agent, the Company
acknowledges and agrees that Agent may treat the transactions contemplated
hereby (or any single transaction contemplated hereby) as part of a transaction
that is subject to Treasury Regulation Section 301.6112-1, and Agent, as
applicable, may maintain the lists and other regulations required by such
Treasury Regulation.  To the extent Agent
determines to maintain such list, each Loan Party shall cooperate with Agent in
obtaining the information required under such Treasury Regulation.  Within 10 days after notifying Agent under
this Section 10.9, the Company shall deliver to Agent a duly
completed copy of IRS Form 8886 or any successor form.

 

10.10                 Further Assurances.  Take such actions as are necessary or as
Agent or any Lender may reasonably request from time to time to ensure that the
Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of the Loan Parties (including, upon the
acquisition or creation thereof, any Subsidiary acquired or created after the
Closing Date), in each case as Agent may determine, including the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, and the filing or
recording of any of the foregoing and the delivery of certificated securities
and other collateral with respect to which perfection is obtained by
possession.

 

10.11                 Unsecured Notes.  By August 31, 2010, pay the Unsecured
Notes in full.

 

SECTION 11                        NEGATIVE COVENANTS

 

Until
the expiration or termination of the Commitment and thereafter until all
Obligations hereunder and under the other Loan Documents are irrevocably paid
in full in cash and all Letters of Credit have been terminated, each Loan Party
agrees that, unless at any time the Required Lenders shall otherwise expressly
consent in writing, it will:

 

11.1                        Debt.  Not, and not permit any other Loan Party to,
incur, assume or suffer to exist any Debt, except:

 

(a)                                 Obligations under this Agreement and the other Loan Documents;

 

(b)                                 Debt secured by Liens permitted by Section 11.2(d), and
extensions, renewals and refinancings thereof; provided that such Debt
shall not exceed the cost of the applicable property being leased or acquired
and that the aggregate amount of all such Debt at any time outstanding shall
not exceed $500,000;

 

(c)                                  Debt of the Company to any domestic Wholly-Owned Subsidiary or Debt of
any domestic Wholly-Owned Subsidiary to the Company or another domestic
Wholly-Owned Subsidiary; provided that such Debt shall be subordinated
to the Obligations of the Loan Parties hereunder in a manner reasonably
satisfactory to Agent and the Required Lenders;

 

48

 

(d)                                 Subordinated Debt;

 

(e)                                  Hedging Obligations incurred in favor of any Lender or an Affiliate
thereof for bona fide hedging purposes and not for speculation;

 

(f)                                    Contingent Liabilities arising with respect to customary indemnification
obligations in favor of sellers in connection with Acquisitions permitted under
Section 11.5 and purchasers in connection with dispositions
permitted under Section 11.5;

 

(g)                                 other unsecured Debt, in addition to the Debt listed above, in an
aggregate outstanding amount not at any time exceeding $250,000;

 

(h)                                 Accounts payable and trade debt arising in the ordinary course of the
Loan Parties’ business; and

 

(i)                                     Any non-recourse obligation of a Loan Party arising from a discounting
transaction in the ordinary course of business.

 

11.2                           Liens.  Not, and not permit any other Loan Party to,
create or permit to exist any Lien on any of its real or personal properties,
assets or rights of whatsoever nature (whether now owned or hereafter
acquired), except:

 

(a)                                  Liens for taxes or other governmental charges not at the time delinquent
or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves;

 

(b)                                 Liens arising in the ordinary course of business such as (i) Liens
of carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law, (ii) Liens in the form of deposits or pledges incurred in
connection with worker’s compensation, unemployment compensation and other types
of social security (excluding Liens arising under ERISA), and (iii) Liens
created in the ordinary course of business arising from non-recourse
discounting transactions including (without limitation) liens against (A) the
particular lease, (B) all equipment subject to such lease, (C) all
lease collateral for such lease, (D) all warranty and other rights a Loan
Party may have with respect to such lease and the related equipment against the
manufacturers of such equipment and against the sellers and assignors from whom
such Loan Party may have acquired such lease and such equipment, (E) proceeds
from any and all of the foregoing.  Upon
the written request of the Company, each Lender agrees to execute a
subordination agreement in form and substance satisfactory to such Lender in
connection with liens pursuant to Section 11.2(b)(iii);

 

(c)                                  Liens arising in the ordinary course of business in an amount of not more
than $25,000;

 

(d)                                 subject to the limitation set forth in Section 11.1(b), (i) Liens
arising in connection with Capital Leases (and attaching only to the property
being leased), (ii) Liens existing on property at the time of the
acquisition thereof by any Loan Party (and not created in contemplation of such
acquisition) and (iii) Liens that constitute purchase money security
interests on any property securing debt incurred for the purpose of financing
all or any part of the 

 

49

 

cost of acquiring such property, provided that any
such Lien attaches to such property within 60 days of the acquisition thereof
and attaches solely to the property so acquired;

 

(e)                                  attachments, appeal bonds, judgments and other similar Liens, for sums
not exceeding $250,000 arising in connection with court proceedings, provided
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;

 

(f)                                    easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of any Loan Party; and

 

(g)                                 Liens arising under the Loan Documents.

 

11.3                           Operating Leases.  Not permit the aggregate amount of all rental
payments under Operating Leases made (or scheduled to be made) by the Loan
Parties (on a consolidated basis) to exceed $1,000,000 in any Fiscal Year.

 

11.4                           Restricted Payments.  Not, and not permit any other Loan Party to, (a) make
any distribution to any holders of its Capital Securities, (b) purchase or
redeem any of its Capital Securities, (c) pay any management fees or
similar fees to any of its equityholders or any Affiliate thereof, (d) make
any redemption, prepayment, defeasance, repurchase or any other payment in
respect of any Subordinated Debt other than regular payments of principal and
interest as and when due under the Unsecured Notes subject to the terms of the
Subordination Agreement related thereto, or (e) set aside funds for any of
the foregoing.  Notwithstanding the
foregoing, so long as no Unmatured Event of Default or Event of Default has
occurred and is continuing or would occur as a result of any of the following, (i) any
Subsidiary may pay dividends or make other distributions to the Company or to a
domestic Wholly-Owned Subsidiary; (ii) the Company may purchase or redeem
any of its Capital Securities so long as after giving effect to such purchase
or redemption the Company will remain in compliance with all the financial
ratios and restrictions set forth in Sections 11.15, 11.16 and 11.17,
as certified by the Company in form and substance satisfactory to Agent and the
Required Lenders; (iii) the Company may make payments in respect of
Subordinated Debt to the extent permitted under the applicable Subordination
Agreement, and (iv) the Company may grant stock options pursuant to a plan
approved by the Shareholders of the Company.

 

11.5                           Mergers, Consolidations, Sales.  Not, and not permit any other Loan Party to, (a) be
a party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any Capital Securities of any class of, or
any partnership or joint venture interest in, any other Person, (b) sell,
transfer, convey or lease all or any substantial part of its assets or Capital
Securities (including the sale of Capital Securities of any Subsidiary) except
for sales and leases of inventory in the ordinary course of business, or (c) sell
or assign with or without recourse any receivables, except for (i) any
such merger, consolidation, sale, transfer, conveyance, lease or assignment of
or by any Wholly-Owned Subsidiary into the Company or into any other domestic
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by
the Company or any domestic Wholly-Owned Subsidiary of the assets or Capital
Securities of any Wholly-Owned Subsidiary; (iii) sales and dispositions of
assets for at least fair market value 

 

50

 

(as
determined by the Board of Directors of the Company) so long as the net book
value of all assets sold or otherwise disposed of in any Fiscal Year does not
exceed 10% of the net book value of the consolidated assets of the Loan Parties
as of the last day of the preceding Fiscal Year; (iv) the discounting of
non-recourse leases in the ordinary course of business; and (v) any
Acquisition by the Company or any domestic Wholly-Owned Subsidiary where:

 

(A) 
the business or division acquired are for use, or the Person acquired or
invested in is engaged, in a business engaged in by a Loan Party on the Closing
Date;

 

(B) 
immediately before and after giving effect to such Acquisition, no Event of
Default or Unmatured Event of Default shall exist;

 

(C) 
the aggregate consideration to be paid by the Loan Parties (including any Debt
assumed or issued in connection therewith, the amount thereof to be calculated
in accordance with GAAP) in connection with such Acquisition (or any series of
related Acquisitions) is less than $10,000,000 individually and the aggregate
consideration for all Acquisitions by the Loan Parties since the Closing Date
does not exceed $10,000,000;

 

(D) 
immediately after giving effect to such Acquisition, (i) the Company is in
pro forma compliance with all the financial ratios and restrictions set forth
in Sections 11.15, 11.16 and 11.17 and (ii) Loan
Availability minus Outstandings is greater than or equal to $5,000,000;

 

(E) 
in the case of the Acquisition of any Person, the Board of Directors of such
Person has approved such Acquisition;

 

(F) 
reasonably prior to such Acquisition, Agent and each Lender shall have received
complete executed or conformed copies of each material document, instrument and
agreement to be executed in connection with such Acquisition together with all
lien search reports and lien release letters and other documents as Agent or
such Lender may require to evidence the termination of Liens on the assets or
business to be acquired if applicable;

 

(G) 
not less than ten (10) Business Days prior to such Acquisition, Agent and
each Lender shall have received an acquisition summary with respect to the
Person and/or business or division to be acquired or invested in, such summary
to include a reasonably detailed description thereof (including financial
information) and operating results (including financial statements for the most
recent 12 month period for which they are available and as otherwise
available), the terms and conditions, including economic terms, of the proposed
Acquisition, and the Company’s calculation of pro forma EBITDA relating
thereto;

 

(H) 
consents have been obtained in favor of Agent and each Lender to the collateral
assignment of rights and indemnities under the related acquisition documents
and opinions of counsel for the Loan Parties and (if delivered to the Loan
Party) the selling party in favor of Agent and each Lender have been delivered;
and

 

(I) 
the provisions of Section 10.10 have been satisfied.

 

51

 

11.6                           Modification of Organizational Documents.  Not permit the charter, by-laws or other
organizational documents of any Loan Party to be amended or modified in any way
which could reasonably be expected to materially adversely affect the interests
of any Lender.

 

11.7                           Affiliate Transactions.  Not, and not permit any other Loan Party to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Loan Parties) which
is on terms which are less favorable than are obtainable from any Person which
is not one of its Affiliate, except for those listed on Schedule 11.7.

 

11.8                           Unconditional Purchase Obligations.  Not, and not permit any other Loan Party to,
enter into or be a party to any contract for the purchase of materials,
supplies or other property or services if such contract requires that payment
be made by it regardless of whether delivery is ever made of such materials,
supplies or other property or services.

 

11.9                           Inconsistent Agreements.  Not, and not permit any other Loan Party to,
enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by a Loan Party hereunder or by the
performance by any Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit any Loan Party from granting to Agent,
for the ratable benefit of Agent and the Lenders, a Lien on any of its assets
or (c) create or permit to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make
other distributions to the Company or any other Subsidiary, or pay any Debt
owed to the Company or any other Subsidiary, (ii) make loans or advances
to any Loan Party or (iii) transfer any of its assets or properties to any
Loan Party, other than (A) customary restrictions and conditions contained
in agreements relating to the sale of all or a substantial part of the assets
of any Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary to be sold and such sale is permitted
hereunder, (B) restrictions or conditions imposed by any agreement
relating to purchase money Debt, Capital Leases and other secured Debt
permitted by this Agreement if such restrictions or conditions apply only to
the property or assets securing such Debt and (C) customary provisions in
leases and other contracts restricting the assignment thereof.

 

11.10                     Business Activities.  Not, and not permit any other Loan Party to,
engage in any line of business other than the businesses engaged in and
businesses reasonably related thereto.

 

11.11                     [INTENTIONALLY OMITTED].

 

11.12                     Subordinated Debt Documents.  Not amend, modify or supplement any
Subordinated Debt Document in any manner that could affect or impair the rights
of the Lenders contemplated in the Subordination Agreements or amend, modify or
supplement the Subordination Agreements in any respect, in each case without
the prior written consent of the Required Lenders; provided  that
the Company may pay the Unsecured Notes on or before August 31, 2010.

 

11.13                     Fiscal Year.  Not change its Fiscal Year.

 

52

 

11.14                     Control Agreements.  Not fail to deliver to Agent within thirty
(30) days after Agent’s request, a Control Agreement for any deposit, checking
or brokerage account opened or maintained by a Loan Party.

 

11.15                     Tangible Net Worth.  Not permit the Tangible Net Worth of the
Company and the Subsidiaries to be:

 

(a)                                  as of July 31, 2010, less than Two Million Dollars ($2,000,000); and

 

(b)                                 as of the last Business Day of each fiscal month following July 31,
2010, the sum of the minimum Tangible Net Worth from the immediately preceding
fiscal month plus fifty percent (50%) of the net income of the fiscal
month then ended, if positive.

 

11.16                     Debt Service Coverage.  As of the end of each fiscal month and on a
trailing twelve month basis, not fail to maintain a ratio of (i) the sum
of (a) EBITDA of the Loan Parties, minus (b) capital
expenditures of the Loan Parties, minus (c) cash taxes of the Loan
Parties, and minus (d) dividends and other distributions of the
Company, divided by (ii) the sum of (x) scheduled principal
payments of Debt of the Loan Parties paid or due and payable on or before the
last day of such period (other than Fixed Rate Loans), plus
(y) total cash interest expense (including leasing related cash interest
expense) on Debt of the Loan Parties, of not less than (A) 2.00 from the
Closing Date through fiscal May 2012, (B) 2.25 from fiscal June 2012
through fiscal May 2013 and (C) 2.50 from fiscal June 2013 and
thereafter.

 

11.17                     Maximum Leverage.  As of the end of each month and on a trailing
twelve month basis, not fail to maintain a ratio of (i) Debt of the Loan
Parties minus consolidated Subordinated Debt minus non-recourse
Debt of the Loan Parties in connection with discounting activities of the Loan
Parties divided by (ii) EBITDA of the Loan Parties, that shall not
exceed (A) 2.50 from the Closing Date through fiscal May 2012 and (B) 2.25
from fiscal June 2012 and thereafter.

 

11.18                     Laws and Regulations.  Not to fail to comply with the laws,
regulations and executive orders referred to in Sections 9.24 and 9.27.

 

SECTION 12                             EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

 

The
obligation of each Lender to make the Loans and/or to issue Letters of Credit
is subject to the following conditions precedent:

 

12.1                           Initial Credit Extension.  The obligation of each Lender to make the
initial Loans and the obligation of the L/C Issuer to issue the initial Letter
of Credit (whichever first occurs) is, in addition to the conditions precedent
specified in Section 12.2, subject to the condition precedent that
Agent shall have received all of the following, each duly executed and dated
the Closing Date (or such earlier date as shall be satisfactory to Agent), in
form and substance satisfactory to Agent and each Lender (and the date on which
all such conditions precedent have been satisfied or waived in writing by Agent
is called the “Closing Date”):

 

12.1.1                                  Notes.  A Note,
duly executed by the Loan Parties, in favor of each Lender.

 

53

 

12.1.2                                  Authorization Documents.  For each Loan Party, such Person’s (a) charter
(or similar formation document), certified by the appropriate governmental
authority; (b) good standing certificates in its state of incorporation
(or formation) and in each other state requested by Agent; (c) bylaws (or
similar governing document); (d) resolutions of its board of directors (or
similar governing body) approving and authorizing such Person’s execution,
delivery and performance of the Loan Documents to which it is party and the
transactions contemplated thereby; and (e) signature and incumbency
certificates of its officers executing any of the Loan Documents (it being
understood that the Lenders may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein), all
certified by its secretary or an assistant secretary (or similar officer) as
being in full force and effect without modification.

 

12.1.3                                  Consents, etc. 
Certified copies of all documents evidencing any necessary corporate or
partnership action, consents and governmental approvals (if any) required for
the execution, delivery and performance by the Loan Parties of the documents
referred to in this Section 12.

 

12.1.4                                  Security Documents.  A
Security Agreement executed by each Loan Party, a Pledge Agreement executed by
the Company, and a Control Agreement for each account identified by Agent,
executed by the applicable Loan Party and the depository or financial
intermediary, in each case together with all instruments, transfer powers and
other items required to be delivered in connection therewith.

 

12.1.5                                  Financing Statements.  UCC-1 financing statements relating to the
Collateral (as defined in the Security Agreement) and the Capital Securities
pledged pursuant to the Pledge Agreement, completed and, if required, executed
by each Loan Party, for filing in each jurisdiction reasonably requested by
Agent.

 

12.1.6                                  Opinions of Counsel. 
Opinions of counsel for each Loan Party, including local counsel
reasonably requested by Agent.

 

12.1.7                                  Insurance.  Evidence of
the existence of insurance required to be maintained pursuant to Section 10.3(b),
together with evidence that Agent has been named as a lender loss payee and an
additional insured on all related insurance policies.

 

12.1.8                                  Payment of Fees. 
Evidence of payment by the Company of all accrued and unpaid fees, costs
and expenses to the extent then due and payable on the Closing Date, together
with all Attorney Costs of Agent to the extent invoiced prior to the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute Agent’s
reasonable estimate of Attorney Costs incurred or to be incurred by Agent
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and Agent).

 

12.1.9                                  Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code
search reports and pending suit judgments and tax lien search reports dated a
date reasonably near to the Closing Date, listing all effective financing 

 

54

 

statements, suits, judgments
or tax liens which name any Loan Party (under their present names and any
previous names) as debtors, together with copies of any such financing
statements, suits, judgments and tax liens.

 

12.1.10                            Filings, Registrations and Recordings.  Agent shall have received each document
(including Uniform Commercial Code financing statements) required by the
Collateral Documents or under law or reasonably requested by any Lender to be
filed, registered or recorded in order to create in favor of Agent, for the
ratable benefit of Agent and the Lenders, a perfected Lien on the collateral
described therein, prior to any other Liens (subject only to Liens permitted
pursuant to Section 11.2), in proper form for filing, registration
or recording.

 

12.1.11                            Other Documents.  Such
other documents as Agent or any Lender may reasonably request.

 

12.2                           Conditions.  The obligation (a) of each Lender to
make each Loan and (b) of the L/C Issuer to issue each Letter of Credit is
subject to the following further conditions precedent that:

 

12.2.1                                  Compliance with Warranties, No Default, etc.  Both before and after giving effect to any
borrowing and the issuance of any Letter of Credit, the following statements
shall be true and correct:

 

(a)                                  the representations and warranties of each Loan Party set forth in this
Agreement and the other Loan Documents shall be true and correct in all
respects with the same effect as if then made (except to the extent stated to
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date); and

 

(b)                                 no Event of Default or Unmatured Event of Default shall have then
occurred and be continuing.

 

12.2.2                                  Confirmatory Certificate.  If requested by any Lender or the L/C Issuer,
as applicable, such Lender or L/C Issuer shall have received a certificate
dated the date of such requested Loan or Letter of Credit and signed by a duly
authorized representative of the Company as to the matters set out in Section 12.2.1
(it being understood that each request by the Company for the making of a Loan
or the issuance of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Company that the conditions precedent set
forth in Section 12.2.1 will be satisfied at the time of the making
of such Loan or the issuance of such Letter of Credit), together with such
other documents as such Lender or L/C Issuer may reasonably request in support
thereof.

 

SECTION 13                             EVENTS OF DEFAULT AND THEIR EFFECT.

 

13.1                           Events of Default.  Each of the following shall constitute an Event
of Default under this Agreement:

 

13.1.1                                  Non-Payment of the Loans, etc.  Default in the payment when due of the
principal of any Loan; or default, and continuance thereof for five days, in
the 

 

55

 

payment when due of any
interest, fee, reimbursement obligation with respect to any Letter of Credit or
other amount payable by the Loan Parties hereunder or under any other Loan
Document.

 

13.1.2                                  Non-Payment of Other Debt.  Any default shall occur under the terms
applicable to any Debt of any Loan Party in an aggregate amount (for all such
Debt so affected and including undrawn committed or available amounts and
amounts owing to all creditors under any combined or syndicated credit
arrangement) exceeding $250,000 and such default shall (a) consist of the
failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate
the maturity of such Debt or permit the holder or holders thereof, or any
trustee or agent for such holder or holders, to cause such Debt to become due
and payable (or require any Loan Party to purchase or redeem such Debt or post
cash collateral in respect thereof) prior to its expressed maturity.

 

13.1.3                                  Other Material Obligations.  Default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed
to by, any Loan Party with respect to any material purchase or lease of goods
or services where such default, singly or in the aggregate with all other such
defaults, might reasonably be expected to have a Material Adverse Effect.

 

13.1.4                                  Bankruptcy, Insolvency, etc.  Any Loan Party becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal to pay, debts as
they become due; or any Loan Party applies for, consents to, or acquiesces in
the appointment of a trustee, receiver or other custodian for such Loan Party
or any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for any Loan Party or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of any Loan Party, and if such
case or proceeding is not commenced by such Loan Party, it is consented to or
acquiesced in by such Loan Party, or remains for 60 days undismissed; or any
Loan Party takes any action to authorize, or in furtherance of, any of the
foregoing.

 

13.1.5                                  Non-Compliance with Loan Documents.  (a) Failure by any Loan Party to comply
with or to perform any covenant set forth in Section 10.1.5, 10.3(b),
10.5 or 10.9 or Section 11; or (b) failure by
any Loan Party to comply with or to perform any other provision of this
Agreement or any other Loan Document (and not constituting an Event of Default
under any other provision of this Section 13) and continuance of
such failure described in this clause (b) for 30 days.

 

13.1.6                                  Representations; Warranties.  Any representation or warranty made by any
Loan Party herein or any other Loan Document is breached or is false or
misleading in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by any Loan Party to Agent
or any Lender in connection herewith is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.

 

56

 

13.1.7                                  Pension Plans.  (a) Any
Person institutes steps to terminate a Pension Plan if as a result of such
termination the Company or any member of the Controlled Group could be required
to make a contribution to such Pension Plan, or could incur a liability or
obligation to such Pension Plan, in excess of $250,000; (b) a contribution
failure occurs with respect to any Pension Plan sufficient to give rise to a
Lien under Section 302(f) of ERISA; (c) the Unfunded Liability
exceeds twenty percent of the Total Plan Liability; or (d) there shall
occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan
and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that the Company or any member of the Controlled Group
have incurred on the date of such withdrawal) exceeds $250,000.

 

13.1.8                                  Judgments.  Final
judgments which exceed an aggregate of $250,000 shall be rendered against any
Loan Party and shall not have been paid, discharged or vacated or had execution
thereof stayed pending appeal within 30 days after entry or filing of such
judgments.

 

13.1.9                                  Invalidity of Collateral Documents, etc.  Any Collateral Document shall cease to be in
full force and effect; or any Loan Party (or any Person by, through or on
behalf of any Loan Party) shall contest in any manner the validity, binding
nature or enforceability of any Collateral Document.

 

13.1.10                            Invalidity of Subordination Provisions, etc.  Any subordination provision in any document
or instrument governing Subordinated Debt, or any subordination provision in
any guaranty by any Subsidiary of any Subordinated Debt, shall cease to be in
full force and effect, or any Loan Party or any other Person (including the
holder of any applicable Subordinated Debt) shall contest in any manner the
validity, binding nature or enforceability of any such provision.

 

13.1.11                            Change of Control.  A
Change of Control shall occur.

 

13.1.12                            Material Adverse Effect.  The occurrence of any event having a Material
Adverse Effect.

 

13.2                           Effect of Event of Default.  If any Event of Default occurs and is
continuing, Agent shall, at the request of, or may, with the consent of, the
Required Lenders, take any or all of the following actions:

 

(a)                                  declare the Commitment of each Lender to make Loans and any obligation of
the L/C Issuer to issue Letters of Credit to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b)                                 declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company;

 

57

 

(c)                                  require that the Company Cash Collateralize the L/C Obligations (in an
amount equal to the Stated Amount thereof); and

 

(d)                                 exercise on behalf of itself, the Lenders and the L/C Issuer all rights
and remedies available to it, the Lenders and the L/C Issuer under the Loan
Documents and/or under any applicable law;

 

provided, however,
that upon the occurrence of an actual or deemed entry of an order for relief
with respect to the Company under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate, the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, and the obligation of the Company to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of Agent or any Lender.

 

13.3                           Application of Funds.  After the exercise of remedies provided for
in Section 13.2 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 13.2),
any amounts received on account of the Obligations shall be applied by Agent in
the following order:

 

First, to payment of
that portion of the Obligations constituting fees, indemnities, expenses and
other amounts (including fees, charges and disbursements of counsel to Agent
(including fees and time charges for attorneys who may be employees of Agent)
and amounts payable under Section 7.6 or Section 8)
payable to Agent in its capacity as such;

 

Second, to payment of
that portion of the Obligations constituting fees, indemnities and other
amounts (other than principal, interest and Letter of Credit fees) payable to
Lenders and the L/C Issuer (including fees, charges and disbursements of
counsel to the respective Lenders and the L/C Issuer (including fees and time
charges for attorneys who may be employees of any Lender or the L/C Issuer) and
amounts payable under Section 7.6 or Section 8),
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;

 

Third, to payment of
that portion of the Obligations constituting accrued and unpaid Letter of
Credit fees and interest on the Loans, L/C Borrowings and other Obligations,
ratably among Lenders and the L/C Issuer in proportion to the respective
amounts described in this clause Third payable to them;

 

Fourth, to payment of
that portion of the Obligations constituting unpaid principal of the Loans and
L/C Borrowings, ratably among Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Fourth held by them;

 

Fifth, to Agent for
the account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

 

Last, the balance,
if any, after all of the Obligations have been irrevocably paid in full in
cash, to Company or as otherwise required by law.

 

58

 

Subject
to Section 2.3.2, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall
be applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.

 

SECTION 14                             ADMINISTRATIVE AGENT.

 

14.1                           Appointment and Authorization.  Each Lender hereby irrevocably (subject to Section 14.10)
appoints, designates and authorizes the Administrative Agent to take such
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 it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender or participant, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.  Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law.  Instead,
such term is used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.

 

14.2                           L/C Issuer.  The
L/C Issuer shall act on behalf of the Lenders (according to their Pro Rata
Shares) with respect to any Letters of Credit issued by it and the documents
associated therewith.  The L/C Issuer
shall have all of the benefits and immunities (a) provided to the
Administrative Agent in this Section 14 with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of Credit as fully
as if the term “Administrative Agent”, as used in this Section 14,
included the L/C Issuer with respect to such acts or omissions and (b) as
additionally provided in this Agreement with respect to the L/C Issuer.

 

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

 

14.4                           Exculpation of Administrative Agent.  None of the Administrative Agent nor any of
its directors, officers, employees or agents shall (a) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated hereby
(except to the extent resulting from its own 

 

59

 

gross negligence or willful misconduct in connection
with its duties expressly set forth herein as determined by a final,
nonappealable judgment by a court of competent jurisdiction), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or Affiliate of
any Loan Party, or any officer 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 the Administrative 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 the creation, perfection or priority of any Lien or
security interest therein), or for any failure of any Loan Party or any other
party to any Loan Document to perform its Obligations hereunder or
thereunder.  The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party or any of the Loan Parties’
Affiliates.

 

14.5                           Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, electronic
mail message, affidavit, letter, telegram, facsimile, 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 the Loan Parties), independent accountants and other experts selected by the
Administrative Agent.  The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if
it so requests, confirmation from the Lenders of their obligation to indemnify
the Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender.  For purposes of determining compliance with
the conditions specified in Section 12, each Lender that has signed
this Agreement shall be deemed to have consented to, approved or accepted or to
be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received written notice from such Lender
prior to the proposed Closing Date specifying its objection thereto.

 

14.6                           Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or any Loan Party referring to this Agreement,
describing such Event of Default or Unmatured Event of Default and stating that
such notice is a “notice of default”. 
The Administrative Agent will notify the Lenders of its receipt of any
such notice.  The Administrative Agent
shall take such action with respect to such Event of Default or Unmatured Event
of Default as may be requested by the Required Lenders in accordance with Section 13;
provided that unless and until the Administrative Agent has received any
such 

 

60

 

request, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Unmatured Event of Default as it shall deem
advisable or in the best interest of the Lenders.

 

14.7                           Credit Decision.  Each
Lender acknowledges that the Administrative Agent has not made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent and acceptance of any assignment or
review of the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender as to any
matter, including whether the Administrative Agent has disclosed material
information in its possession.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent 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 the Loan Parties, and made its own decision
to enter into this Agreement and to extend credit to the Company hereunder.  Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties.  Except
for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Administrative Agent, the Administrative 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 or other condition or creditworthiness of Loan Parties which may come
into the possession of the Administrative Agent.

 

14.8                           Indemnification. 
Whether or not the transactions contemplated hereby are consummated,
each Lender shall indemnify upon demand the Administrative Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or
on behalf of the Loan Parties and without limiting the obligation of the Loan
Parties to do so), according to its applicable Pro Rata Share, from and against
any and all indemnified liabilities contemplated by Section 16.5(b);
provided that no Lender shall be liable for any payment to any such
Person of any portion of the indemnified liabilities contemplated by Section 16.5(b) to
the extent determined by a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from the applicable Person’s own gross
negligence or willful misconduct.  No
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of
this Section.  Without limitation of the
foregoing, each Lender shall reimburse the Administrative Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs and Taxes) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Loan Parties.  The
undertaking in this Section shall survive repayment of the Loans,
cancellation of the Note, expiration or termination of the Letters of Credit,
any foreclosure under, or modification, 

 

61

 

release or discharge of, any or all of the
Collateral Documents, termination of this Agreement and the resignation or
replacement of the Administrative Agent.

 

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

 

14.10                     Successor Administrative Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders.  If the Administrative Agent resigns under
this Agreement, the Required Lenders shall, with (so long as no Event of
Default exists) the consent of the Loan Parties (which shall not be unreasonably
withheld or delayed), appoint from among the Lenders a successor agent for the
Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Loan Parties, a successor agent from among the Lenders.  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 Administrative Agent and the term “Administrative
Agent” shall mean such successor agent, and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 14 and Section 16.5
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.  If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

 

14.11                     Collateral Matters.  The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, (a) to release
any Lien granted to or held by the Administrative Agent under any Collateral
Document (i) upon termination of the Commitments and irrevocable payment
in full in cash of all Loans and all other obligations of the Loan Parties
hereunder and the expiration or termination of all Letters of Credit; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder (including the release of any guarantor); or (iii) subject
to Section 16.1, if approved, authorized or ratified in writing by
the Required Lenders; or (b) to subordinate its interest in any Collateral
to any holder of a Lien on such Collateral which is permitted by Section 11.2(d)(i) or
(d)(iii)  (it being 

 

62

 

understood that the Administrative Agent may
conclusively rely on a certificate from any Loan Party in determining whether
the Debt secured by any such Lien is permitted by Section 11.1(b)).  Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative Agent’s
authority to release, or subordinate its interest in, particular types or items
of Collateral pursuant to this Section 14.11.  Each Lender hereby authorizes the Administrative
Agent to give blockage notices in connection with any Subordinated Debt at the
direction of Required Lenders and agrees that it will not act unilaterally to
deliver such notices.

 

14.12                     Administrative Agent May File Proofs of
Claim.  In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to any Loan Party, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Loan Parties) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and
their respective agents and counsel and all other amounts due the Lenders and
the Administrative Agent under Sections 5 and 16.5) allowed in
such judicial proceedings; and

 

(b)                                 to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5 and 16.5.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

14.13                     Other Agents; Arrangers and Managers.  None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as
a “syndication agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead
arranger” or “co-arranger”, if any, shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than, in the case
of such Lenders, those applicable to all Lenders as such.  Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have 

 

63

 

any
fiduciary relationship with any Lender. 
Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.

 

SECTION 15                             THE LOAN PARTIES.

 

15.1                           Appointment of the Company.  Each Loan Party hereby appoints and
authorizes the Company to take such action as its agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Company
by the terms thereof, together with such power that are reasonably incidental
thereto, and the Company hereby accepts such appointment.

 

15.2                           Relationship Among the Loan Parties.

 

(a)                                  JOINT AND SEVERAL LIABILITY.  EACH LOAN PARTY AGREES THAT IT IS LIABLE,
JOINTLY AND SEVERALLY WITH EACH OTHER LOAN PARTY, FOR THE PAYMENT OF ALL
OBLIGATIONS OF THE LOAN PARTIES UNDER THIS AGREEMENT AND EACH OTHER LOAN
DOCUMENT, AND THAT AGENT AND ANY LENDER CAN ENFORCE SUCH OBLIGATIONS AGAINST
ANY OR ALL LOAN PARTIES, IN AGENT’S OR SUCH LENDER’S SOLE AND UNLIMITED
DISCRETION.

 

(b)                                 Waivers of Defenses.  The obligations of the Loan Parties hereunder
shall not be released, in whole or in part, by any action or thing which might,
but for this provision of this Agreement, be deemed a legal or equitable
discharge of a surety or guarantor, other than irrevocable payment in full in
cash and performance in full of the Obligations (except for contingent
indemnity and other contingent Obligations not yet due and payable) at a time
after any obligation of any Lender hereunder to make the Loans and to issue
Letters of Credit shall have expired or been terminated and all outstanding
Letters of Credit shall have expired or the liability of such Lender thereon
shall have otherwise been discharged. 
The purpose and intent of this Agreement is that the Obligations
constitute the direct and primary obligations of each Loan Party and that the
covenants, agreements and all obligations of each Loan Party hereunder be
absolute, unconditional and irrevocable. 
Each Loan Party shall be and remain liable for any deficiency remaining
after foreclosure of any mortgage, deed of trust or security agreement securing
all or any part of the Obligations, whether or not the liability of any other
Person for such deficiency is discharged pursuant to statute, judicial decision
or otherwise.

 

(c)                                  Other Transactions.  Each of Agent and each Lender is expressly
authorized to exchange, surrender or release with or without consideration any
or all collateral and security which may at any time be placed with it by the
Loan Parties or by any other Person on behalf of the Loan Parties, or to
forward or deliver any or all such collateral and security directly to the Loan
Parties for collection and remittance or for credit.  No invalidity, irregularity or
unenforceability of any security for the Obligations or other recourse with
respect thereto shall affect, impair or be a defense to the Loan Parties’
obligations under this Agreement or any other Loan Document.  The liabilities of each Loan Party hereunder
shall not be affected or impaired by any failure, delay, neglect or omission on
the part of Agent or any Lender to realize upon any of the Obligations of any
other Loan Party to Agent or such Lender, or upon any collateral or security
for any or all of the Obligations, nor by the taking by Agent or such Lender of
(or the failure to take) any guaranty or guaranties to secure the Obligations,
nor by the taking by Agent 

 

64

 

or such Lender of (or the failure to take or the
failure to perfect its security interest in or other lien on) collateral or
security of any kind.  No act or omission
of Agent or any Lender, whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of a Loan Party, shall
affect or impair the obligations of the Loan Parties hereunder.

 

(d)                                 Actions Not Required.  Each Loan Party, to the extent permitted by
applicable law, hereby waives any and all right to cause a marshaling of the
assets of any other Loan Party or any other action by any court or other
governmental body with respect thereto or to cause Agent or any Lender to
proceed against any security for the Obligations or any other recourse which
Agent or such Lender may have with respect thereto and further waives any and
all requirements that Agent or any Lender institute any action or proceeding at
law or in equity, or obtain any judgment, against any other Loan Party or any
other Person, or with respect to any collateral security for the Obligations,
as a condition precedent to making demand on or bringing an action or obtaining
and/or enforcing a judgment against, such Loan Party under this Agreement or
any other Loan Document.

 

(e)                                  No Subrogation.  Notwithstanding any payment or payments made
by any Loan Party hereunder or any setoff or application of funds of any Loan
Party by Agent or any Lender, such Loan Party shall not be entitled to be
subrogated to any of the rights of Agent or such Lender against any other Loan
Party or any other guarantor or any collateral security or guaranty or right of
offset held by Agent or such Lender for the payment of the Obligations, nor
shall such Loan Party seek or be entitled to seek any contribution or
reimbursement from any other Loan Party or any other guarantor in respect of
payments made by such Loan Party hereunder, until all amounts owing to each
Lender by the Loan Parties on account of the Obligations are irrevocably paid in
full in cash.  If any amount shall be
paid to a Loan Party on account of such subrogation rights at any time when all
of the Obligations shall not have been irrevocably paid in full in cash, such
amount shall be held by that Loan Party in trust for Agent or such Lender,
segregated from other funds of that Loan Party, and shall, forthwith upon
receipt by the Loan Party, be turned over to Agent or such Lender in the exact
form received by the Loan Party (duly indorsed by the Loan Party to Agent or
such Lender, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as Agent or such Lender may determine.

 

(f)                                    Application of Payments.  Any and all payments upon the Obligations
made by the Loan Parties or by any other Person, and/or the proceeds of any or
all collateral or security for any of the Obligations, may be applied by Agent
or any Lender on such items of the Obligations as Agent or any Lender may
elect.

 

(g)                                 Recovery of Payment.  If any payment received by Agent or any
Lender and applied to the Obligations is subsequently set aside, recovered,
rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of a Loan Party or any
other obligor), the Obligations to which such payment was applied shall, to the
extent permitted by applicable law, be deemed to have continued in existence,
notwithstanding such application, and each Loan Party shall be jointly and
severally liable for such Obligations as fully as if such application had never
been made.  References in this Agreement
to amounts “irrevocably paid” or to “irrevocable payment” refer to payments
that cannot be set aside, recovered, rescinded or required to be returned for
any reason.

 

65

 

(h)                                 Loan Parties’ Financial Condition.  Each Loan Party is familiar with the
financial condition of the other Loan Parties, and each Loan Party has executed
and delivered this Agreement based on that Loan Party’s own judgment and not in
reliance upon any statement or representation of Agent or any Lender.  Neither Agent nor any Lender shall have any
obligation to provide any Loan Party with any advice whatsoever or to inform
any Loan Party at any time of Agent’s or such Lender’s actions, evaluations or
conclusions on the financial condition or any other matter concerning the Loan
Parties.

 

(i)                                     Bankruptcy of the Loan Parties.  Each Loan Party expressly agrees that, to the
extent permitted by applicable law, the liabilities and obligations of that
Loan Party under this Agreement shall not in any way be impaired or otherwise
affected by the institution by or against any other Loan Party or any other
Person of any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or any other similar proceedings for relief under any bankruptcy
law or similar law for the relief of debtors and that any discharge of any of
the Obligations pursuant to any such bankruptcy or similar law or other law
shall not diminish, discharge or otherwise affect in any way the obligations of
that Loan Party under this Agreement or any other Loan Document, and that upon
the institution of any of the above actions, such obligations shall be
enforceable against that Loan Party.

 

(j)                                     Limitation; Insolvency Laws.  As used in this Section 15.2(j):  (a) the term “Applicable Insolvency Laws”
means the laws of the United States of America or of any State, province,
nation or other governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
transfers or conveyances or other similar laws (including, without limitation,
11 U.S.C. §547, §548, §550 and other “avoidance” provisions of Title 11 of the
United Stated Code) as applicable in any proceeding in which the validity
and/or enforceability of this Agreement against any Loan Party, or any
Specified Lien is in issue; and (b) “Specified Lien” means any
security interest, mortgage, lien or encumbrance granted by any Loan Party
securing the Obligations, in whole or in part. 
Notwithstanding any other provision of this Agreement, if, in any
proceeding, a court of competent jurisdiction determines that with respect to
any Loan Party, this Agreement or any other Loan Document or any Specified Lien
would, but for the operation of this Section, be subject to avoidance and/or
recovery or be unenforceable by reason of Applicable Insolvency Laws, this
Agreement and each such Specified Lien shall be valid and enforceable against
such Loan Party, only to the maximum extent that would not cause this
Agreement, such other Loan Document or such Specified Lien to be subject to
avoidance, recovery or unenforceability. 
To the extent that any payment to, or realization by, Agent or any
Lender on the Obligations exceeds the limitations of this Section and is
otherwise subject to avoidance and recovery in any such proceeding, the amount
subject to avoidance shall in all events be limited to the amount by which such
actual payment or realization exceeds such limitation, and this Agreement and
such other Loan Document as limited shall in all events remain in full force
and effect and be fully enforceable against such Loan Party.  This Section is intended solely to
reserve the rights of Agent and each Lender hereunder against each Loan Party,
in such proceeding to the maximum extent permitted by Applicable Insolvency
Laws and neither the Loan Parties, any guarantor of the Obligations nor any
other Person shall have any right, claim or defense under this Section that
would not otherwise be available under Applicable Insolvency Laws in such
proceeding.

 

66

 

SECTION 16                             GENERAL.

 

16.1                           Waiver, Amendments, Etc.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Company or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Company or the applicable Loan
Party, as the case may be, and acknowledged by Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

 

(a)                                  waive any condition set forth in Section 12 without the
written consent of each Lender; provided, however, in the sole discretion of
Agent, only a waiver by Agent shall be required with respect to immaterial
matters or items with respect to which the Company has given assurances
satisfactory to Agent that such items shall be delivered promptly following the
Closing Date;

 

(b)                                 extend or increase the Commitment of any Lender without the written
consent of such Lender;

 

(c)                                  postpone any date fixed by this Agreement or any other Loan Document for
any payment (excluding mandatory prepayments) of principal, interest, fees or
other amounts due to Lenders (or any of them) hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;

 

(d)                                 reduce the principal of, or the rate of interest specified herein on, any
Loan or Letter of Credit, or any fees or other amounts payable hereunder or
under any other Loan Document, without the written consent of each Lender
directly affected thereby;

 

(e)                                  change any provision of this Agreement in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender;

 

(f)                                    change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or

 

(g)                                 release the Liens on all or substantially all of the Collateral in any
transaction or series of related transactions except in accordance with the
terms of any Loan Document, without the written consent of each Lender;

 

and,
provided  further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the L/C Issuer in addition to the
Lenders required above, affect the rights or duties of the L/C Issuer under
this Agreement or any Issuer Document relating to any Letter of Credit issued
or to be issued by it; and (ii) no amendment, waiver or consent shall,
unless in writing and signed by Agent in addition to the Lenders required
above, affect the rights or duties of Agent under this Agreement or any other
Loan Document.  Notwithstanding anything
to the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.  No delay on the part of
the Lender in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or 

 

67

 

partial
exercise by any of them of any right, power or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy.  Any such amendment, modification, waiver or
consent described in this Section 16.1 shall be effective only in
the specific instance and for the specific purpose for which given.

 

If,
in connection with any proposed amendment, modification, waiver or termination
requiring the consent of the Required Lenders, but the consent of other Lender(s) whose
consent is required is not obtained (any such Lender whose consent is not obtained
being referred to as a “Non-Consenting Lender”), then, so long as the
Administrative Agent is not a Non-Consenting Lender, the Administrative Agent
and/or an Eligible Assignee or Eligible Assignees designated by the
Administrative Agent shall have the right to purchase from such Non-Consenting
Lender(s), and such Non-Consenting Lender(s) agree that they shall, upon
the Administrative Agent’s request, sell and assign to the Administrative Agent
and/or such Eligible Assignee or Eligible Assignees, all of the Loans,
participations in L/C Obligations and Commitments of such Non-Consenting Lender(s) for
an amount equal to the outstanding principal balance of all Obligations held by
such Non-Consenting Lender(s) and all accrued interest, fees, expenses and
other amounts then due with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement (as defined below).

 

To
the extent of any conflicts between Section 16.1 and Section 2.6,
the provisions of Section 2.6 shall control.

 

16.2                           Confirmations.  Each Loan Party and each Lender agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing the aggregate unpaid principal amount of the Loans then outstanding
under the Note.

 

16.3                           Notices.  Except as otherwise provided in Sections
2.2.2 and 2.2.3 all notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its
address shown on the signature page or at such other address as such party
may, by written notice received by the other parties, have designated as its
address for such purpose.  Notices sent
by facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received.  For purposes of Sections
2.2.2 and 2.2.3, Agent shall be entitled to rely on telephonic
instructions from any person that Agent in good faith believes is an authorized
officer or employee of the Company, and the Company shall hold Agent harmless
from any loss, cost or expense resulting from any such reliance.

 

16.4                           Computations.  Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Company
notifies Agent that the Company (or any other Loan Party) wishes to amend any
covenant in Section 10 (or any related definition) to eliminate or
to take into account the effect of any change in GAAP on the operation of such
covenant (or if Agent notifies the Company that Agent wishes to amend

 

68

 

Section 10 (or any related definition) for such
purpose), then the Loan Parties’ compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or such
covenant (or related definition) is amended in a manner satisfactory to the
Company and Agent.

 

16.5        Expenses, Indemnity, Damage Waiver.

 

(a)           Costs and Expenses.  The Loan Parties shall pay (i) all
reasonable out-of-pocket expenses incurred by Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for
Agent), in connection with the syndication of the credit facilities provided
for herein (excluding syndication to the initial Lender), the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) all reasonable out-of-pocket expenses incurred
by the L/C Issuer in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer
(including the fees, charges and disbursements of any counsel for Agent, any
Lender or the L/C Issuer), and shall pay all fees and time charges for
attorneys who may be employees of Agent, any Lender or the L/C Issuer, in
connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.

 

(b)           Indemnification by the Loan Parties.  The Loan Parties shall indemnify Agent (and
any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee), and shall indemnify and hold
harmless each Indemnitee from all fees and time charges and disbursements for
attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by the Company or any
other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder, or the
consummation of the transactions contemplated hereby or thereby, or, in the
case of Agent (and any sub-agent thereof) and its Related Parties only, the
administration of this Agreement and the other Loan Documents, (ii) any
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Loan Parties or any of their Subsidiaries, or
any Environmental Liability related in any way to the Loan Parties or any of
their Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the
Company or any other Loan Party, 

 

69

 

and regardless of whether any Indemnitee is a party
thereto IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN
PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE
INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee or (y) result from a claim brought
by the Company or any other Loan Party against an Indemnitee for breach in bad
faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Company or such other Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that the Loan Parties for any
reason fail to irrevocably pay any amount required under subsection (a) or
(b) of this Section to be paid by them to Agent (or any sub-agent
thereof), the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to Agent (or any such sub-agent), the L/C Issuer
or such Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against Agent (or any
such sub-agent) or the L/C Issuer in its capacity as such, or against any
Related Party of any of the foregoing acting for Agent (or any such sub-agent)
or L/C Issuer in connection with such capacity.

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use
by unintended recipients of any information or other materials distributed to
such unintended recipients by such Indemnitee through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnitee as determined by a final
and nonappealable judgment of a court of competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

(f)            Survival.  The agreements in this Section shall
survive the resignation of Agent and the L/C Issuer, the replacement of any
Lender, the termination of the Aggregate Commitments and the repayment, satisfaction
or discharge of all the other Obligations.

 

16.6        Payments Set Aside.  To the extent that any payment by or on
behalf of the Loan Parties is made to Agent, the L/C Issuer or any Lender, or
Agent, the L/C Issuer or any Lender 

 

70

 

exercises
its right of setoff, and such payment or the proceeds of such setoff or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Applicable Insolvency Laws or otherwise, then (a) to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred, and (b) each
Lender and the L/C Issuer severally agrees to pay to Agent upon demand its
applicable share (without duplication) of any amount so recovered from or
repaid by Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the Federal Funds Rate from
time to time in effect.  The obligations
of the Lenders and the L/C Issuer under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

16.7        Successors and Assigns.

 

(a)           Any Lender may at any time assign to one or more Eligible Assignees all
or any portion of such Lender’s Loans and Commitments, provided, that such
Lender shall consult with the Company prior to such assignment and, so long as
no Event of Default exists, such assignment shall be to a Person mutually
agreed to by the Company (which agreement shall not be unreasonably withheld)
and such Lender, except that the Company’s agreement shall not be required if
an Event of Default exists or for an assignment by a Lender to a Lender or an
Affiliate of a Lender.  Any such
assignment shall be in a minimum aggregate amount equal to $5,000,000 or, if
less, the remaining Commitment and Loans held by such Lender.  The Company and the Administrative Agent
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned to an Eligible Assignee until the
Administrative Agent shall have received and accepted an effective assignment
agreement (an “Assignment Agreement”), in form and substance acceptable
to the Administrative Agent, executed, delivered and fully completed by the
applicable parties thereto and a processing fee of $3,500 paid by the
applicable Eligible Assignee or the assigning Lender.  The Company shall be deemed to have granted
its consent to any assignment requiring its consent hereunder unless the
Company has expressly objected to such assignment within three Business Days
after notice thereof.

 

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

 

(c)           Any Lender may at any time sell to one or more Persons participating
interests in its Loans, Commitments or other interests hereunder.  In the event of a sale by such Lender of a
participating interest, (i) such Lender’s obligations hereunder shall
remain unchanged for all purposes, (ii) the Loan Parties shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations hereunder and (iii) all amounts payable by the Loan
Parties shall be determined as if such Lender had not sold such participation
and shall 

 

71

 

be paid directly to such Lender.  No participant shall have any direct or
indirect voting rights hereunder.  The
Loan Parties agree that if amounts outstanding under this Agreement are due and
payable (as a result of acceleration or otherwise), each participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement and with respect to any Letter of Credit to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided that such
right of set-off shall be subject to the obligation of each participant to
share with each Lender, and each Lender agrees to share with each
participant.  The Loan Parties also agree
that each participant shall be entitled to the benefits of Section 7.6
or 8 as if it were a Lender (provided that on the date of the
participation no participant shall be entitled to any greater compensation
pursuant to Section 7.6 or 8 than would have been paid to
the Lender on such date if no participation had been sold.

 

16.8        Register.  The Administrative Agent shall maintain a
copy of each Assignment Agreement delivered and accepted by it and register
(the “Register”) for the recordation of names and addresses of the
Lenders and the Commitment of each Lender from time to time and whether such
Lender is the original Lender or the Assignee. 
No assignment shall be effective unless and until the Assignment
Agreement is accepted and registered in the Register. All records of transfer
of a Lender’s interest in the Register shall be conclusive, absent manifest
error, as to the ownership of the interests in the Loans. The Administrative
Agent shall not incur any liability of any kind with respect to any Lender with
respect to the maintenance of the Register.

 

16.9        GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

16.10      Confidentiality.  As
required by federal law and the Agent’s policies and practices, the Agent may
need to obtain, verify, and record  certain
customer identification information and documentation in connection with
opening or maintaining accounts, or establishing or continuing to provide
services.  Each of Agent and each
Lender agrees to use commercially reasonable efforts (equivalent to the efforts
each of Agent and each Lender applies to maintain the confidentiality of its
own confidential information) to maintain as confidential all information
provided to it by any Loan Party and designated as confidential, except that
Agent and each Lender may disclose such information (a) to Persons
employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitment; (b) to any
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 16.11 (and any
such assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause (a) above);
(c) as required or requested by any federal or state regulatory authority
or examiner, or any insurance industry association, or as reasonably believed
by Agent or such Lender to be compelled by any court decree, subpoena or legal
or administrative order or process; (d) as, on the advice of Agent’s or
such Lender’s counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any litigation to which Agent or such Lender is a party; (f) to any
nationally recognized rating agency that requires access to information about
Agent or 

 

72

 

such
Lender’s investment portfolio in connection with ratings issued with respect to
the Lender; (g) to any Affiliate of Agent or such Lender who may provide
Bank Products to the Loan Parties; (h) to Lender’s independent auditors
and other professional advisors as to which such information has been
identified as confidential; or (i) that ceases to be confidential through
no fault of Agent or such Lender. 
Notwithstanding the foregoing, the Company consents to the publication
by Agent and each Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement, and each
of Agent and each Lender reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.  Notwithstanding anything
in this Agreement or any other Loan Document to the contrary, any information
with respect to the “tax treatment” or “tax structure” (in each case, within
the meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby shall not be confidential and Agent, each Lender and other
parties hereto may disclose without limitation of any kind any information that
is provided to Agent or such Lender with respect to the “tax treatment” or “tax
structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4);
provided, that to the extent any Loan Document contains information that
relates to the “tax treatment” or “tax structure” and contains other
information, this paragraph shall only apply to the information regarding the “tax
treatment” or “tax structure.”

 

16.11      Severability.  Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.  All obligations of the
Loan Parties and rights of Agent and each Lender expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.

 

16.12      Nature of Remedies.  All Obligations of the Loan Parties and
rights of Agent and each Lender expressed herein or in any other Loan Document
shall be in addition to and not in limitation of those provided by applicable
law.  No failure to exercise and no delay
in exercising, on the part of Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.

 

16.13      Entire Agreement.  This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof (except as relates to the fees described in Section 5.2)
and any prior arrangements made with respect to the payment by the Loan Parties
of (or any indemnification for) any fees, costs or expenses payable to or
incurred (or to be incurred) by or on behalf of Agent or any Lender.

 

16.14      Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts
and each such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Agreement.  Receipt of an executed signature page to
this Agreement by facsimile or other 

 

73

 

electronic
transmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documents
maintained by the Lender shall deemed to be originals.

 

16.15      Successors and Assigns.  This Agreement shall be binding upon each
Loan Party, Agent, the Lenders and their respective successors and assigns, and
shall inure to the benefit of each Loan Party, Agent, the Lenders and the
successors and assigns of the Lenders. 
No other Person shall be a direct or indirect legal beneficiary of, or
have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. 
No Loan Party may assign or transfer any of its rights or Obligations
under this Agreement without the prior written consent of Agent and each Lender.

 

16.16      Captions.  Section captions used in this Agreement
are for convenience only and shall not affect the construction of this
Agreement.

 

16.17      Customer
Identification - USA Patriot Act Notice.  Each Lender and PrivateBank (for
itself and not on behalf of any other party) hereby notifies the Loan Parties
that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L.
107-56, signed into law October 26, 2001 (the “Patriot Act”), it is
required to obtain, verify and record information that identifies the Loan
Parties, which information includes the name and address of the Loan Parties
and other information that will allow such Lender or PrivateBank, as
applicable, to identify the Loan Parties in accordance with the Patriot Act.

 

16.18      Nonliability of Agent and each Lender.  The relationship between the Loan Parties on
the one hand and Agent and each Lender on the other hand shall be solely that
of Loan Parties, agent and lender. 
Neither Agent nor any Lender has a fiduciary relationship with or duty
to any Loan Party arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Loan Parties, on the
one hand, and the Lenders, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor.  Neither Agent nor any Lender undertakes any
responsibility to any Loan Party to review or inform any Loan Party of any
matter in connection with any phase of any Loan Party’s business or
operations.  Each Loan Party agrees, on
behalf of itself and each other Loan Party, that Agent and each Lender shall
have no liability to any Loan Party (whether sounding in tort, contract or
otherwise) for losses suffered by any Loan Party in connection with, arising
out of, or in any way related to the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from
which recovery is sought.  NEITHER AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY WITH RESPECT TO,
AND EACH LOAN PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH
OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).  Each Loan Party acknowledges that it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party.  No joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Loan Parties and the Lender.

 

74

 

16.19      FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF MINNESOTA
OR IN THE UNITED STATES DISTRICT COURT SITTING IN MINNEAPOLIS, MINNESOTA; PROVIDED
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT OR
ANY LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.  EACH LOAN PARTY HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF MINNESOTA AND OF THE UNITED STATES COURT SITTING IN HENNEPIN COUNTY,
MINNESOTA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF MINNESOTA.  EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

16.20      WAIVER OF JURY TRIAL.  EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

 

[Signature pages follow.]

 

75

 

The
parties hereto have caused this Agreement to be duly executed and delivered by
their duly authorized officers as of the date first set forth above.

 

 

	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett
  D. Heffes

  
	
   

  	
  Title:

  	
  President,
  Finance and Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WIRTH
  BUSINESS CREDIT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett
  D. Heffes

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WINMARK
  CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett
  D. Heffes

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GROW
  BIZ GAMES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett
  D. Heffes

  
	
   

  	
  Title:

  	
  Treasurer

  

 

Address
for Notices:

 

c/o
Winmark Corporation

605
Highway 169 North

Suite 400

Minneapolis,
MN 55422

Attention:  Chief Financial Officer

Telephone:  (763) 520-8500

Fax:  (763) 520-8469

 

Signature Page to
Credit Agreement

 

 

	
   

  	
  THE
  PRIVATEBANK AND TRUST  COMPANY, as a
  Lender and as Administrative Agent for the Lenders 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter Pricco

  
	
   

  	
  Name:

  	
  Peter
  Pricco

  
	
   

  	
  Title:

  	
  Managing
  Director

  

 

Address
for Notices:

 

The
PrivateBank and Trust Company

50
South Sixth Street, Suite 1415

Minneapolis,
MN 55402

Attention:  Peter Pricco

Telephone:  (612) 392-2202

Fax:  (612) 605-6193

 

Signature Page to
Credit Agreement

 

 

SCHEDULE 2.1

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The PrivateBank and Trust Company

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  100.00

  	
   

  

 

 

SCHEDULE 9.6

 

LITIGATION AND CONTINGENT LIABILITIES

 

None.

 

 

SCHEDULE 9.7

 

OWNERSHIP OF PROPERTIES; LIENS

 

1.             On August 30, 2000, the
Company (f/k/a Grow Biz International, Inc.) signed a Trademark License
Agreement (“Agreement”) with Hollis Technologies, Inc., a Florida
limited liability company (“Hollis”), granting Hollis the use of the
COMPUTER RENAISSANCE AND DESIGN trademarks (U.S. Reg. No. 1,875,949,
Canada TM 474,198 and Japan trademark No. 4,313,894) for term of twenty
(20) years, with automatic successive renewals of ten (10) years
each.  In addition, per the Agreement,
Hollis may request, and the Company will grant to Hollis, a license for the use
of the CIRCULAR ARROWS DESIGN trademark under the same terms and conditions.

 

2.             In 2001 and 2002, the Company
entered into Trademark License Agreements with 14 former ReTool® franchisees
and a former employee of Winmark for the license of the RETOOL (U.S.  Reg.  No. 2,304,808)
and RETOOL AND DESIGN (U.S.  Reg.  No. 2,267,043) trademarks for a period
of 10 years with an option to renew for an additional ten (10) year
period.

 

3.             See attached lien summary.

 

 

DEBTOR:            WINMARK CORPORATION

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minnesota
  Secretary of State

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Corporation

  	
   

  	
  US
  Bancorp

  	
   

  	
  File
  No.: 200515352382

  Filed: 2-24-05 

  Lapse: 2-24-10

  	
   

  	
  Leased
  equipment (informational filing)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Corporation

  	
   

  	
  US
  Bancorp

  	
   

  	
  File
  No.: 200517859904

  Filed: 9-02-05

  Lapse: 9-02-10

  	
   

  	
  Leased
  equipment (informational filing)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Corporation

  	
   

  	
  US
  Bancorp

  	
   

  	
  File
  No.: 200517888515

  Filed: 9-07-05

  Lapse: 9-07-10

  	
   

  	
  Leased
  equipment (informational filing)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Corporation

  	
   

  	
  US
  Bancorp

  	
   

  	
  File
  No.: 200519313670

  Filed: 12-28-05

  Lapse: 12-28-10

  	
   

  	
  Leased
  equipment (informational filing)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Corporation

  	
   

  	
  US
  Bancorp

  	
   

  	
  File
  No.: 200614556687

  Filed: 12-06-06

  Lapse: 12-06-11

  	
   

  	
  Leased
  equipment (informational filing)

  

 

Debtor:                                                     WINMARK
CAPITAL CORPORATION

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minnesota Secretary of State

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.: 200518175801

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment leased

  

 

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200810362801 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200810554528 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200811963536 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200811963574 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of

  

 

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Debtor
  in and to the equipment leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200811963613 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200811963651 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, Inc.

  	
   

  	
  File
  No.:  200811963699 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  Wells
  Fargo Equipment Finance, 

  	
   

  	
  File
  No.:  200813630128 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues,

  

 

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Inc.

  	
   

  	
   

  	
   

  	
  insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  SG
  Equipment Finance USA Corp.

  	
   

  	
  File
  No.:  200914553972 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  SG
  Equipment Finance USA Corp.

  	
   

  	
  File
  No.:  200914571677 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  SG
  Equipment Finance USA Corp.

  	
   

  	
  File
  No.:  200914572911 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  

 

 

	
  Jurisdiction

  	
   

  	
  Lien

  Type

  	
   

  	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UCC

  	
   

  	
  Winmark
  Capital Corporation

  	
   

  	
  SG
  Equipment Finance USA Corp.

  	
   

  	
  File
  No.:  201018636380 

  	
   

  	
  A
  certain Lease Agreement, including all payments, revenues, insurance,
  proceeds, all right, title and interest of Debtor in and to the equipment
  leased thereunder

  

 

 

DEBTOR:             WIRTH BUSINESS CREDIT, INC.

 

None.

 

 

DEBTOR:             GROW BIZ GAMES, INC.

 

None.

 

 

SCHEDULE 9.8

 

SUBSIDIARIES

 

	
   

  	
   

  	
  Company

  	
   

  	
  Percent Ownership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Grow Biz Games, Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
  Wirth Business Credit, Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
  Winmark Capital Corporation

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Tomsten, Inc.

  	
   

  	
  18.3

  	
  %

  

 

 

SCHEDULE 9.17

 

REAL PROPERTY

 

	
  Property
  Type:

  	
   

  	
  Winmark
  Corporation headquarters

  	
  (Leased)

  
	
   

  	
   

  	
   

  
	
  Property
  Location:

  	
   

  	
  605
  Highway 169 North, Suite 400

  
	
   

  	
   

  	
  Minneapolis,
  MN 55441

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
   

  	
  Utah
  State Retirement Investment Fund,

  
	
   

  	
   

  	
  an
  independent agency of the State of Utah

  
	
   

  	
   

  	
  c/o CB Richard Ellis

  
	
   

  	
   

  	
  510 Marquette Ave., Suite 250

  
	
   

  	
   

  	
  Minneapolis,
  MN 55435

  
	
   

  	
   

  	
   

  
	
  Property
  Type:

  	
   

  	
  Winmark
  Capital Corporation Office Space

  	
  (Leased)

  
	
   

  	
   

  	
   

  
	
  Property
  Location:

  	
   

  	
  1942
  Broadway Suite # 318 & 317

  
	
   

  	
   

  	
  Boulder,
  CO 80302

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
   

  	
  Office
  Partners, Inc. (d/b/a Broadway Suites, Inc.)

  
	
   

  	
   

  	
  1942
  Broadway

  
	
   

  	
   

  	
  Boulder,
  CO 80302

  
	
   

  	
   

  	
   

  
	
  Property
  Type:

  	
   

  	
  Winmark
  Capital Corporation Office Space

  	
  (Leased)

  
	
   

  	
   

  	
   

  
	
  Property
  Location:

  	
   

  	
  2
  Ravinia Drive, Suite # 500

  
	
   

  	
   

  	
  Atlanta,
  GA 30346

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
   

  	
  The
  Regus Group

  
	
   

  	
   

  	
  3003
  Summit Blvd., Suite 1400

  
	
   

  	
   

  	
  Atlanta,
  GA 30319

  
	
   

  	
   

  	
   

  
	
  Property
  Type:

  	
   

  	
  Winmark
  Capital Corporation Office Space

  	
  (Leased)

  
	
   

  	
   

  	
   

  
	
  Property
  Location:

  	
   

  	
  1309
  State Street, Suite A

  
	
   

  	
   

  	
  Santa
  Barbara, CA 93101

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
   

  	
  State
  Street GBF, LLC

  
	
   

  	
   

  	
  116
  East Sola Street

  
	
   

  	
   

  	
  Santa
  Barbara, CA 93101

  
	
   

  	
   

  	
   

  
	
  Property
  Type:

  	
   

  	
  Winmark
  Capital Corporation Office Space

  	
  (Leased)

  
	
   

  	
   

  	
   

  
	
  Property
  Location:

  	
   

  	
  233
  East Carillo Street, Suite C

  
	
   

  	
   

  	
  Santa
  Barbara, CA 93101

  

 

 

	
  Lessor:

  	
   

  	
  MT-233
  Office Building, LLC

  
	
   

  	
   

  	
  233
  East Carillo Street, Suite D

  
	
   

  	
   

  	
  Santa
  Barbara, CA 93101

  

 

 

SCHEDULE 11.7

 

AFFILIATE TRANSACTIONS

 

None.

 

 

EXHIBIT A

 

FORM OF NOTE

 

 

	
   

  	
  , 20   

  
	
  $

  	
  Minneapolis, Minnesota

  

 

The
undersigned, jointly and severally, for value received, promise to pay to the
order of
                              
(the “Lender”) at the Administrative Agent’s Office (as defined in the
Credit Agreement), the principal sum of
                                          
Dollars
($                            )
or the aggregate unpaid amount of all Loans made to the undersigned by the
Lender pursuant to the Credit Agreement referred to below (as shown on the
schedule attached hereto (and any continuation thereof) or in the records of
the Lender), such principal amount to be payable on the dates set forth in the
Credit Agreement.

 

The
undersigned, jointly and severally, further promise to pay interest on the
unpaid principal amount of each Loan from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement.  Payments of
both principal and interest are to be made in lawful money of the United States
of America.

 

This
Note evidences indebtedness incurred under, and is subject to the terms and
provisions of, the Credit Agreement, dated as of July 13, 2010 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; terms not otherwise defined herein are used herein as defined
in the Credit Agreement), among the undersigned, The PrivateBank and Trust
Company, certain other lenders party thereto and the Lender, to which Credit
Agreement reference is hereby made for a statement of the terms and provisions
under which this Note may or must be paid prior to its due date or its due date
accelerated.

 

The
undersigned, jointly and severally, agree to pay all costs of collection,
including attorneys’ fees, in the event this Note is not paid when due.  This Note is being delivered in, and shall be
governed by, the laws of the State of Minnesota.  Presentment or other demand for payment,
notice of dishonor and protest are expressly waived.

 

	
  WINMARK
  CORPORATION

  	
   

  	
  GROW
  BIZ GAMES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:
  Brett Heffes

  	
   

  	
  Name:
  Brett Heffes

  
	
  Title:
  President, Finance and Administration

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WIRTH
  BUSINESS CREDIT, INC.

  	
   

  	
  WINMARK
  CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:
  Brett Heffes

  	
   

  	
  Name:
  Brett Heffes

  
	
  Title:
  Treasurer

  	
   

  	
  Title:
  Chief Financial Officer and Treasurer

  

 

 

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

To:                             The PrivateBank
and Trust Company (the “Administrative Agent”) and the other Lenders
referred to below

 

Please
refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its
subsidiaries (together with the Company, the “Loan Parties”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), and THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”),
as a Lender and as Administrative Agent for the Lenders.  Terms used but not otherwise defined herein
are used herein as defined in the Credit Agreement.

 

I.                                        Reports.  Enclosed herewith is a copy of the monthly
report of the Loan Parties as of
                  ,
         (the “Computation Date”),
which report fairly presents in all material respects the financial condition
and results of operations of the Loan Parties as of the Computation Date and
has been prepared in accordance with GAAP consistently applied.

 

II.                                   Tangible Net Worth.  The Company hereby certifies and warrants to
you that the following is a true and correct computation of the Tangible Net
Worth requirement set forth in Section 11.15 of the Credit Agreement,
which is equal to or greater than the sum of the minimum Tangible Net Worth
from the immediately preceding month plus fifty percent (50%) of the net income
of the month then ended, if positive:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Shareholders’
  equity:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Common
  stock

  	
  $

  	
   

  
	
   

  	
   

  	
  Other
  comprehensive income

  	
  $

  	
   

  
	
   

  	
   

  	
  Retained
  earnings

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  shareholders’ equity

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Subordinated
  Debt

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Intangible
  items:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Goodwill

  	
  $

  	
   

  
	
   

  	
   

  	
  Trademarks

  	
  $

  	
   

  
	
   

  	
   

  	
  Trade
  names

  	
  $

  	
   

  
	
   

  	
   

  	
  Service
  marks

  	
  $

  	
   

  
	
   

  	
   

  	
  Copyrights

  	
  $

  	
   

  
	
   

  	
   

  	
  Patents

  	
  $

  	
   

  
	
   

  	
   

  	
  Licenses

  	
  $

  	
   

  
	
   

  	
   

  	
  Deferred items

  	
  $

  	
   

  

 

B-1

 

	
   

  	
   

  	
  Unamortized
  Debt discount

  	
  $

  	
   

  
	
   

  	
   

  	
  Prepaid
  expenses(1)

  	
  $

  	
   

  
	
   

  	
   

  	
  Other
  intangible items

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  Intangible Items

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  Investments:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investment
  in Tomsten, Inc.

  	
  $

  	
   

  
	
   

  	
   

  	
  Investment
  in Bridge Funds Limited

  	
  $

  	
   

  
	
   

  	
   

  	
  Additional
  Investments

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  Investments

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.

  	
  Actual
  Tangible Net Worth [(A+B) – (C + D)]

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F.

  	
  Minimum
  Tangible Net Worth from prior month end

  	
  $

  	
   

  
	
   

  	
   

  	
  plus 50% of
  positive current month end net income

  	
  $

  	
   

  
	
   

  	
   

  	
  Required
  Minimum Tangible Net Worth

  	
   

  	
  $

  
						

 

III.                              Debt Service Coverage.  The Company hereby certifies and warrants to
you that the following is a true and correct computation of the Debt service
coverage requirement set forth in Section 11.16 of the Credit Agreement,
which is not less than the ratio set forth in Section 11.16 of the Credit
Agreement:

 

	
   

  	
  A.

  	
  TTM
  EBITDA:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  TTM
  income from operations

  	
  $

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  TTM
  leasing related cash interest expense

  	
  $

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  TTM
  depreciation

  	
  $

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  TTM
  amortization

  	
  $

  	
   

  
	
   

  	
   

  	
  (v)

  	
  TTM
  compensation related to stock options

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TTM EBITDA [(i + ii + iii + iv + v)] 

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Cash
  flow available for Debt service:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  TTM
  EBITDA

  	
  $

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  TTM
  capital expenditures

  	
  $

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  TTM
  cash taxes

  	
  $

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  TTM
  dividends and distributions

  	
  $

  	
   

  

 

(1) 
Excludes Income Tax Refund Receivable

 

B-2

 

	
   

  	
   

  	
  Cash
  flow available for Debt service [(i – (ii + iii + iv)]

  	
  $

  
	
   

  	
  C.

  	
  Debt
  service:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  TTM
  principal payments (excluding principal payments under Fixed Rate Loans)

  	
  $

  
	
   

  	
   

  	
  (ii)

  	
  TTM
  cash interest expense (including leasing related cash interest expense)

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Debt
  Service [(i + ii)]

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Actual
  Debt service coverage ratio [B/C]:

  	
   

  
	
   

  	
  Required
  minimum covenant level

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  Maximum
  Senior Leverage.  The
  Company hereby certifies and warrants to you that the following is a true and
  correct computation of the total leverage requirement set forth in Section 11.17
  of the Credit Agreement, which is not greater than the ratio set forth in
  Section 11.17 of the Credit Agreement:

  
	
   

  	
   

  
	
   

  	
  A.

  	
  TTM
  recourse senior Debt:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  TTM
  EBITDA:

  	
  $

  	
   

  
	
   

  	
   

  
	
   

  	
  Actual
  total leverage ratio [A/B]:

  
	
   

  	
  Maximum
  covenant level

  
								

 

The
Company further certifies to you that no Event of Default or Unmatured Event of
Default has occurred and is continuing.

 

The
Company has caused this Certificate to be executed and delivered by its duly
authorized officer on
                          
        ,
20      .

 

 

	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

B-3

 

EXHIBIT C

 

FORM OF BORROWING BASE CERTIFICATE

 

To:                             The PrivateBank and Trust
Company (the “Administrative Agent”) and the Lenders referred to below

 

Please
refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its
subsidiaries (together with the Company, the “Loan Parties”), each
lender from time to time party hereto (collectively, the “Lenders” and individually,
a “Lender”), THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”),
as a Lender and as Administrative Agent for the Lenders.  Capitalized terms used but not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.

 

The
Company hereby certifies and warrants to the Administrative Agent and the
Lenders that at the close of business on
                    ,
         (the “Calculation Date”),
the Borrowing Base was
$                    ,
computed as set forth on the schedule attached hereto.

 

Attached
hereto is an aging of the Loan Parties’ lease receivables as of the date
hereof.

 

The
Company has caused this Certificate to be executed and delivered by its officer
thereunto duly authorized on
                    ,
20    .

 

	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

SCHEDULE TO BORROWING BASE CERTIFICATE

Dated as of [                    ]

 

	
  A.

  	
  Availability
  Created by Eligible Leased Assets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Net
  book value of Eligible Leased Assets

  	
  $

  	
   

  
	
   

  	
  Advance rate

  	
  90

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Availability
  created by Eligible Leases

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Availability
  created by EBITDA of franchising and corporate segments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TTM
  EBITDA of franchising segment

  	
  $

  	
   

  
	
   

  	
  TTM
  EBITDA of corporate segment

  	
  $

  	
   

  
	
   

  	
  Total

  	
  $

  	
   

  
	
   

  	
  Advance rate

  	
  200

  	
  %

  
	
   

  	
  Availability created by EBITDA of

  	
   

  	
   

  
	
   

  	
  franchising and corporate segments

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Availability: A+B (not to exceed $30,000,000)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Less
  Outstandings:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Excess
  Availability

  	
  $

  	
   

  

 

C-2

 

EXHIBIT D

 

FORM OF NOTICE OF BORROWING

 

To:          The PrivateBank and Trust Company (the
“Administrative Agent”)

 

Please
refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its
subsidiaries (together with the Company, the “Loan Parties”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”),
as a Lender and as Administrative Agent for the Lenders.  Capitalized terms used but not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.

 

The
undersigned hereby gives irrevocable notice, pursuant to Section 2.2.2 of
the Credit Agreement, of a request hereby for a borrowing as follows:

 

(i)            The requested borrowing date for the
proposed borrowing (which is a Business Day) is           ,           .

 

(ii)           The aggregate amount of the proposed
borrowing is $     .

 

(iii)          The type of Revolving Loans comprising
the proposed borrowing are [Base Rate] [LIBOR] [Fixed Rate] Loans.

 

(iv)          The duration of the Interest Period
for each LIBOR Loan made as part of the proposed borrowing, if applicable, is             month(s) (which
shall be 1, 2 or 3 months).

 

(v)           The duration of the Interest Period
for each Fixed Rate Loan made as part of the proposed borrowing, if applicable,
is           year(s) (which
shall be 1, 2, 3 or 4 years).  An
amortization schedule reflecting monthly payments over the life of such Fixed
Rate Loan over the Interest Period therefor commencing on the same date of the
next month following the borrowing is attached hereto.

 

The
undersigned hereby certifies that on the date hereof and on the date of
borrowing set forth above, and immediately after giving effect to the borrowing
requested hereby:  (i) there exists
and there shall exist no Unmatured Event of Default or Event of Default under
the Credit Agreement; (ii) each of the representations and warranties
contained in the Credit Agreement and the other Loan Documents is true and
correct as of the date hereof, except to the extent that such representation or
warranty expressly relates to another date and except for changes therein
expressly permitted or expressly contemplated by the Credit Agreement; (iii) no
more than eight (8) different LIBOR Loans are/will be outstanding; and (iv) no
more than eight (8) different Fixed Rate Loans are/will be outstanding.

 

The
Company has caused this Notice of Borrowing to be executed and delivered by its
officer thereunto duly authorized on                 ,      .

 

	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT E

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

To:          The PrivateBank and Trust Company (the
“Administrative Agent”)

 

Please
refer to the Credit Agreement dated as of July 13, 2010 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Winmark Corporation (the “Company”) and its
subsidiaries (together with the Company, the “Loan Parties”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”),
as a Lender and as Administrative Agent for the Lenders.  Capitalized terms used but not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.

 

The
undersigned hereby gives irrevocable notice, pursuant to Section 2.2.3
of the Credit Agreement, of its request to:

 

(a)           on [date] convert $[                ]
of the aggregate outstanding principal amount of the [         ] Loan, into a(n) [      ]
Loan [and, in the case of a LIBOR Loan, having an Interest Period of [           ] month(s)][and, in the case of a
Fixed Rate Loan, having an Interest Period of [               ]
years(s)];

 

[(b)        on [date] continue $[          ] of the aggregate outstanding
principal amount of the [LIBOR Loan, as a LIBOR Loan having an Interest Period
of [            ]month(s)][Fixed Rate
Loan, as a Fixed Rate Loan having an Interest Period of [       ]
year(s)].

 

The
undersigned hereby represents and warrants that all of the conditions contained
in Section 12.2 of the Credit Agreement have been satisfied on and as of
the date hereof, and will continue to be satisfied on and as of the date of the
conversion/continuation requested hereby, before and after giving effect
thereto.  The undersigned also represents
and warrants that, before and after giving effect the conversion/continuation
requested hereby, (i) no more than eight (8) different LIBOR Loans
are/will be outstanding, and (ii) no more than eight (8) different
Fixed Rate Loans are/will be outstanding.

 

The
Company has caused this Notice of Conversion/Continuation to be executed and
delivered by its officer thereunto duly authorized on       ,               .

 

	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]