Document:

exv10w1

 

 

$300,000,000

CREDIT AGREEMENT

among

FAIR ISAAC CORPORATION,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

U.S. BANK NATIONAL ASSOCIATION,

as Syndication Agent,

and

BANK OF AMERICA, N.A.

and

JPMORGAN CHASE BANK, N.A.,

as Documentation Agents

 

Dated as of October 20, 2006

WELLS FARGO BANK, NATIONAL ASSOCIATION

and U.S. BANK NATIONAL ASSOCIATION,

as Joint Lead Arrangers and

Joint Bookrunners

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 1.
	 	DEFINITIONS	 	 	1	 
	1.1
	 	Defined Terms	 	 	1	 
	1.2
	 	Other Definitional Provisions	 	 	17	 
	SECTION 2.
	 	AMOUNT AND TERMS OF COMMITMENTS	 	 	17	 
	2.1
	 	Commitments	 	 	17	 
	2.2
	 	Procedure for Revolving Loan Borrowing	 	 	18	 
	2.3
	 	Commitment Increases	 	 	18	 
	2.4
	 	Swingline Commitment	 	 	20	 
	2.5
	 	Procedure for Swingline Borrowing; Refunding of Swingline Loans	 	 	20	 
	2.6
	 	Facility Fees, Utilization Fees, etc	 	 	21	 
	2.7
	 	Termination or Reduction of Commitments	 	 	22	 
	2.8
	 	Optional Prepayments	 	 	22	 
	2.9
	 	Conversion and Continuation Options	 	 	23	 
	2.10
	 	Limitations on Eurodollar Tranches	 	 	23	 
	2.11
	 	Interest Rates and Payment Dates	 	 	23	 
	2.12
	 	Computation of Interest and Fees	 	 	24	 
	2.13
	 	Inability to Determine Interest Rate	 	 	24	 
	2.14
	 	Pro Rata Treatment and Payments; Notes	 	 	25	 
	2.15
	 	Requirements of Law	 	 	26	 
	2.16
	 	Taxes	 	 	27	 
	2.17
	 	Indemnity	 	 	29	 
	2.18
	 	Change of Lending Office	 	 	30	 
	2.19
	 	Replacement of Lenders	 	 	30	 
	SECTION 3.
	 	LETTERS OF CREDIT	 	 	31	 
	3.1
	 	L/C Commitment	 	 	31	 
	3.2
	 	Procedure for Issuance of Letters of Credit	 	 	31	 
	3.3
	 	Fees and Other Charges	 	 	31	 
	3.4
	 	L/C Participations	 	 	32	 
	3.5
	 	Reimbursement Obligation of the Borrower	 	 	33	 
	3.6
	 	Obligations Absolute	 	 	34	 
	3.7
	 	Letter of Credit Payments	 	 	34	 
	3.8
	 	Applications	 	 	34	 

-i-

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	3.9
	 	Actions of Issuing Lender	 	 	34	 
	3.10
	 	Borrower’s Indemnification	 	 	35	 
	3.11
	 	Lenders’ Indemnification	 	 	35	 
	SECTION 4.
	 	REPRESENTATIONS AND WARRANTIES	 	 	35	 
	4.1
	 	Financial Condition	 	 	36	 
	4.2
	 	No Material Adverse Effect	 	 	36	 
	4.3
	 	Existence; Compliance with Law	 	 	36	 
	4.4
	 	Power; Authorization; Enforceable Obligations	 	 	36	 
	4.5
	 	No Legal Bar	 	 	37	 
	4.6
	 	Litigation	 	 	37	 
	4.7
	 	No Default	 	 	37	 
	4.8
	 	Taxes	 	 	37	 
	4.9
	 	Federal Regulations	 	 	37	 
	4.10
	 	ERISA	 	 	37	 
	4.11
	 	Investment Company Act; Other Regulations	 	 	38	 
	4.12
	 	Environmental Matters	 	 	38	 
	4.13
	 	Accuracy of Information, etc	 	 	39	 
	4.14
	 	Regulatory Matters	 	 	39	 
	4.15
	 	Burdensome Contractual Obligations, Etc	 	 	39	 
	4.16
	 	Foreign Assets Control, Etc	 	 	40	 
	SECTION 5.
	 	CONDITIONS PRECEDENT	 	 	40	 
	5.1
	 	Conditions to the Effective Date	 	 	40	 
	5.2
	 	Conditions to Each Credit Event	 	 	41	 
	SECTION 6.
	 	AFFIRMATIVE COVENANTS	 	 	42	 
	6.1
	 	Financial Statements	 	 	42	 
	6.2
	 	Certificates; Other Information	 	 	43	 
	6.3
	 	Payment of Taxes	 	 	43	 
	6.4
	 	Maintenance of Existence; Compliance	 	 	43	 
	6.5
	 	Maintenance of Property; Insurance	 	 	43	 
	6.6
	 	Inspection of Property; Books and Records; Discussions	 	 	44	 
	6.7
	 	Notices	 	 	44	 
	6.8
	 	Maintenance of Licenses, etc	 	 	44	 

-ii-

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	6.9
	 	More Favorable Debt Covenants	 	 	45	 
	6.10
	 	Use of Proceeds	 	 	45	 
	SECTION 7.
	 	NEGATIVE COVENANTS	 	 	45	 
	7.1
	 	Total Leverage Ratio	 	 	45	 
	7.2
	 	Fixed Charge Coverage Ratio	 	 	45	 
	7.3
	 	Change in Business	 	 	45	 
	7.4
	 	Mergers, Acquisitions, Etc	 	 	45	 
	7.5
	 	Liens	 	 	46	 
	7.6
	 	Subsidiary Debt	 	 	47	 
	7.7
	 	Distributions	 	 	47	 
	7.8
	 	Transactions With Affiliates	 	 	47	 
	7.9
	 	Subsidiary Restrictions	 	 	48	 
	SECTION 8.
	 	EVENTS OF DEFAULT	 	 	48	 
	SECTION 9.
	 	THE AGENTS	 	 	51	 
	9.1
	 	Appointment	 	 	51	 
	9.2
	 	Delegation of Duties	 	 	51	 
	9.3
	 	Exculpatory Provisions	 	 	51	 
	9.4
	 	Reliance by Administrative Agent	 	 	52	 
	9.5
	 	Notice of Default	 	 	52	 
	9.6
	 	Non-Reliance on Agents and Other Lenders	 	 	52	 
	9.7
	 	Indemnification	 	 	53	 
	9.8
	 	Agent in Its Individual Capacity	 	 	53	 
	9.9
	 	Successor Administrative Agent	 	 	53	 
	9.10
	 	Documentation Agents and Syndication Agent	 	 	54	 
	SECTION 10.
	 	MISCELLANEOUS	 	 	54	 
	10.1
	 	Amendments and Waivers	 	 	54	 
	10.2
	 	Notices	 	 	55	 
	10.3
	 	No Waiver; Cumulative Remedies	 	 	57	 
	10.4
	 	Survival of Representations and Warranties	 	 	57	 
	10.5
	 	Payment of Expenses and Taxes	 	 	57	 
	10.6
	 	Successors and Assigns; Participations and Assignments	 	 	58	 
	10.7
	 	Adjustments; Set-off	 	 	61	 

-iii-

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	10.8
	 	Counterparts	 	 	61	 
	10.9
	 	Severability	 	 	61	 
	10.10
	 	Integration	 	 	62	 
	10.11
	 	GOVERNING Law	 	 	62	 
	10.12
	 	Submission To Jurisdiction; Waivers	 	 	62	 
	10.13
	 	Acknowledgments	 	 	62	 
	10.14
	 	Confidentiality	 	 	63	 
	10.15
	 	WAIVERS OF JURY TRIAL	 	 	63	 
	10.16
	 	USA Patriot Act	 	 	63	 

	 	 	 
	SCHEDULES:	 	 
	 
	 	 
	1.1A

	 	Commitments

	 	 	 
	EXHIBITS:	 	 
	 
	 	 
	A

	 	Notice of Revolving Loan Borrowing
	B

	 	Notice of Swingline Borrowing
	C

	 	Notice of Revolving Loan Conversion
	D

	 	Notice of Revolving Loan Interest Period Selection
	E

	 	Form of New Lender Supplement
	F

	 	Form of Commitment Increase Supplement
	G

	 	Form of Compliance Certificate
	H

	 	Form of Closing Certificate
	I

	 	Form of Assignment and Assumption
	J

	 	Form of Legal Opinion of Borrower’s counsel
	K

	 	Form of Exemption Certificate
	L

	 	Form of Revolving Loan Note
	M

	 	Form of Swingline Note

-iv-

 

          THIS CREDIT AGREEMENT (this “Agreement”), dated as of October 20, 2006, is entered
into by and among FAIR ISAAC CORPORATION, a Delaware corporation (the “Borrower”); the
several banks and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”); WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”),
and U.S. BANK NATIONAL ASSOCIATION, as joint lead arrangers and joint bookrunners (together and in
such capacities, the “Joint Lead Arrangers”); U.S. Bank National Association, as
syndication agent (in such capacity, the “Syndication Agent”); BANK OF AMERICA, N.A. and
JPMORGAN CHASE BANK, N.A., as documentation agents (together and in such capacities, the
“Documentation Agents”); and Wells Fargo, as administrative agent (in such capacity,
together with any successor thereto, the “Administrative Agent”).

          WHEREAS, the Borrower has requested the Lenders to make available to it the credit facilities
described herein; and

          WHEREAS, the Lenders are willing to make available the credit facilities described herein upon
and subject to the terms and conditions set forth herein.

          NOW THEREFORE, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

     1.1
Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1
shall have the respective meanings set forth in this Section 1.1.

     “ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, “Base
Rate” shall mean the rate of interest per annum publicly announced from time to time by the
Administrative Agent as its base rate in effect at its principal office in San Francisco,
California (the Base Rate not being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors). Any change in the ABR
due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Base Rate or the Federal Funds
Effective Rate, respectively.

     “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

     “Act”: as defined in Section 10.16.

     “Administrative Agent”: as defined in the preamble hereto and any successor in
accordance with the terms and conditions of Section 9.9.

     “Administrative Agent’s Fee Letter”: the letter agreement dated as of May 10, 2006,
between the Borrower and the Administrative Agent regarding certain fees payable by the Borrower to
the Administrative Agent as expressly indicated therein.

1

 

     “Affiliate”: with respect to any Person, (a) each Person that, directly or indirectly,
owns or controls, whether beneficially or as a trustee, guardian or other fiduciary, ten percent
(10%) or more of any class of Equity Securities of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person or any Affiliate of such Person or (c)
each of such Person’s officers, directors, managers, joint venturers and partners;
provided, however, that in no case shall the Administrative Agent or any Lender be
deemed to be an Affiliate of the Borrower for purposes of this Agreement. For the purpose of this
definition, “control” of a Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.

     “Agents”: the collective reference to the Syndication Agent, the Documentation Agents
and the Administrative Agent.

     “Agreement”: as defined in the preamble hereto.

     “Anti-Terrorism Law”: each of: (a) the Executive Order; (b) the Patriot Act; (c) the
Money Laundering Control Act of 1986, 18 U.S.C. Sect. 1956; and (d) any other governmental rule now
or hereafter enacted to monitor, deter or otherwise prevent terrorism or the funding or support of
terrorism.

     “Applicable Margin”: the applicable rate per annum set forth under the relevant
column heading determined pursuant to the Pricing Grid. The Applicable Margin shall be determined
as provided in the Pricing Grid and may change as set forth in the definition of Pricing Grid.

     “Application”: an application, in such form as the Issuing Lender may specify from
time to time, requesting the Issuing Lender to issue a Letter of Credit.

     “Approved New Lender Offerees”: as defined in Section 2.3(a).

     “Assignee”: as defined in Section 10.6(b).

     “Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit I.

     “Available Commitment”: as to any Lender at any time, an amount equal to (a) such
Lender’s Commitment then in effect minus (b) such Lender’s Extensions of Credit then
outstanding.

     “Beneficial Owner”: as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act,
except that in calculating the beneficial ownership of any particular “person” (as that term is
used in Sections 13(d) and 14(d) of the Exchange Act), notwithstanding the provisions of Rule
13d-3(d)(1)(i)(A) and (B), such “person” will not be deemed to have beneficial ownership of any
securities that such “person” has the right to acquire by conversion of other securities or the
exercise of any option, warrant or right, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns”
and “Beneficially Owned” have correlative meanings.

2

 

     “Benefitted Lender”: as defined in Section 10.7(b).

     “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).

     “Borrower”: as defined in the preamble hereto.

     “Borrowing Date”: any Business Day specified by the Borrower as a date on which the
Borrower requests the Lenders to make a Loan hereunder.

     “Business”: as defined in Section 4.12(b).

     “Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in San Francisco, California, Minneapolis, Minnesota or New York City are authorized or
required by law to close, provided, that with respect to notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading by and between banks in Dollar deposits in the London interbank eurodollar market.

     “Capital Leases”: any and all lease obligations that, in accordance with GAAP, are
required to be capitalized on the books of a lessee.

     “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.

     “Change of Control”: with respect to any Person, an event or series of events by
which:

          (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any
Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such
plan) becomes the Beneficial Owner, directly or indirectly, of 30% or more of the Capital Stock of
such Person entitled to vote for members of the board of directors or equivalent governing body of
such Person; or

          (b) during any period of 12 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of such Person cease to be composed of individuals (i)
who were members of that board or equivalent governing body on the first day of such period, (ii)
whose election or nomination to that board or equivalent governing body was approved by individuals
referred to in clause (i) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose election or nomination to that
board or other equivalent governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a majority of that
board or equivalent governing body (excluding, in the case of both clause
(ii) and clause (iii), any individual whose initial nomination for, or assumption of office
as, a member of that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of one or more directors
by any

3

 

Person or group other than a solicitation for the election of one or more directors by or on
behalf of the board of directors).

     “Code”: the Internal Revenue Code of 1986, as amended from time to time.

     “Commitment”: as to any Lender, the obligation of such Lender, if any, to make
Revolving Loans and participate in Swingline Loans and Letters of Credit in an aggregate principal
and/or face amount not to exceed the amount set forth under the heading “Commitment” opposite such
Lender’s name on Schedule 1.1A or in the Assignment and Assumption or New Lender Supplement
pursuant to which such Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof.

     “Commitment Increase Notice”: as defined in Section 2.3(a).

     “Commitment Increase Supplement”: as defined in Section 2.3(c).

     “Commitment Period”: the period from and including the Effective Date to the
Termination Date.

     “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group
that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

     “Communications”: as defined in Section 10.2(c).

     “Compliance Certificate”: a certificate duly executed by two Responsible Officers
substantially in the form of Exhibit G.

     “Conduit Lender”: any special purpose entity organized and administered by any Lender
for the purpose of making Loans otherwise required to be made by such Lender and designated by such
Lender in a written instrument; provided, that the designation by any Lender of a Conduit
Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this
Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating
Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to its Conduit Lender,
and provided, further, that no Conduit Lender shall be (a) entitled to receive any
greater amount pursuant to Section 2.15, 2.16, 2.17 or 10.5 than the
designating Lender would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) deemed to have any Commitment.

     “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

     “Convertible Notes”: the Borrower’s 1.5% Senior Convertible Notes, Series B due
August 15, 2023.

4

 

     “Credit Event”: as defined in Section 5.2.

     “Default”: any of the events specified in Section 8, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.

     “Defaulting Lender”: a Lender that (a) has failed to fund its portion of any Loan or
any participations in Letters of Credit or Swingline Loans that it is required to fund under this
Agreement and has continued in such failure for three Business Days after written notice from the
Administrative Agent, (b) has otherwise failed to pay over to the Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within three Business Days of the date
when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become
the subject of a receivership, bankruptcy or insolvency proceeding.

     “Designated Person” shall mean any Person who (a) is named on the list of Specially
Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office
of Foreign Assets Control and/or any other similar lists maintained by the U.S. Department of the
Treasury’s Office of Foreign Assets Control pursuant to authorizing statute, executive order or
regulation, (b) (i) is a Person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of the Executive Order or any related legislation or any other
similar executive order(s) or (ii) engages in any dealings or transactions prohibited by Section 2
of the Executive Order or is otherwise associated with any such Person in any manner violative of
Section 2 of the Executive Order or (c) (i) is an agency of the government of a country, (ii) an
organization controlled by a country, or (iii) a Person resident in a country that is subject to a
sanctions program identified on the list maintained by the U.S. Department of the Treasury’s Office
of Foreign Assets Control, or as otherwise published from time to time, as such program may be
applicable to such agency, organization or Person.

     “Disclosed Litigation”: as defined in Section 4.6.

     “Distributions”: dividends (in cash, property or obligations) on, or other payments or
distributions on account of, or the setting apart of money for a sinking or other analogous fund
for, or the purchase, redemption, retirement or other acquisition of, any shares of any class of
Capital Stock of any Person or of any warrants, options or other rights to acquire the same (or to
make any payments to any Person, such as “phantom stock” payments, where the amount is calculated
with reference to the fair market or equity value of any Person), but excluding dividends payable
solely in Capital Stock of any Person.

     “Documentation Agents”: as defined in the preamble hereto.

     “Dollars” and “$”: dollars in lawful currency of the United States.

     “EBITDA”: for any four consecutive fiscal quarter period, (a) the net income of the
Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with
GAAP, consistently applied for such period, plus (b) to the extent deducted in determining such net
income for such period, the sum of the following for such period: (i) Interest Expense for such
period, (ii) income tax expense for such period (iii) depreciation and amortization for such
period, (iv) the aggregate amount of extraordinary, non-operating or non-cash charges for such
period, and (v) an amount equal to the non-cash, share-based compensation deducted in

5

 

accordance with SFAS 123(R) that is not in excess of $75,000,000, plus (c) the following amounts for
restructuring and acquisitions expenses incurred in the following fiscal quarters included in such
period: (i) $2,200,000 in the fiscal quarter ended March 31, 2006, (ii) $5,300,000 in the fiscal
quarter ended June 30, 2006, and (iii) $12,900,000 in the fiscal quarter ended September 30, 2006,
and minus, without duplication, (d) the aggregate amount of extraordinary, non-operating or
non-cash income during such period. Pro forma credit shall be given for the EBITDA of any
companies (or identifiable business units or divisions) (i) acquired by the Borrower in accordance
with the terms of this Agreement as if owned on the first day of the applicable period, and (ii)
sold, transferred or otherwise disposed of in accordance with the terms of this Agreement during
any period will be treated as if not owned during the entire applicable period.

     “EBITDAR”: for any four consecutive fiscal quarter period, the sum of (a) EBITDA for
such period and (b) rental expense determined in accordance with GAAP for such period.

     “Effective Date”: the date on which the conditions precedent set forth in Section
5.1 shall have been satisfied or waived.

     “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the environment, as now
or may at any time hereafter be in effect.

     “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.

     “Eurocurrency Liabilities”: as defined in Regulation D of the Board.

     “Eurocurrency Reserve Requirements”: of any Lender for any Interest Period as applied
to a Eurodollar Loan, the reserve percentage applicable during such Interest Period (or if more
than one such percentage shall be so applicable, the daily average of such percentages for those
days in such Interest Period during any such percentage shall be so applicable) under any
regulations of the Board or other Governmental Authority having jurisdiction with respect to
determining the maximum reserve requirement (including basic, supplemental and emergency reserves)
for such Lender with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.

     “Eurodollar Base Rate”: with respect to each Interest Period pertaining to a
Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for
a period equal to such Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period, such rate to remain fixed for such Interest Period.
In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on
such screen), the “Eurodollar Base Rate” shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to the rate at which the
Administrative Agent

6

 

is offered Dollar deposits at or about 10:00 A.M. two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.

     “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the
Eurodollar Rate or Swingline Loans the rate of interest applicable to which is based upon the
Overnight Eurodollar Rate.

     “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to
a Eurodollar Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/16th of 1%):

	 	 	 	 	 
	 

	 	Eurodollar Base Rate
 

1.00 — Eurocurrency Reserve Requirements
	 	 

     “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current
Interest Periods with respect to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).

     “Event of Default”: any of the events specified in Section 8, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

     “Exchange Act”: Securities Exchange Act of 1934, as amended.

     “Executive Order”: Executive Order No. 13224 on Terrorist Financings: — Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support
Terrorism issued on 23rd September, 2001, as amended by Order No. 13268 and as further amended
after the date hereof.

     “Existing Credit Agreement”: the Credit Agreement, dated as of November 1, 2002,
between the Borrower and Wells Fargo, as amended through the Effective Date.

     “Extensions of Credit”: as to any Lender at any time, an amount equal to the sum of
(a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b)
such Lender’s Percentage of the L/C Obligations then outstanding and (c) such Lender’s Percentage
of the aggregate principal amount of Swingline Loans then outstanding.

     “Facility Fee Rate”: for any day, the applicable rate per annum determined pursuant
to the Pricing Grid. The Facility Fee Rate shall be determined as provided in the Pricing Grid and
may change as set forth in the definition of Pricing Grid.

     “Federal Funds Effective Rate”: for any day, 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 on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.

7

 

     “Fee Payment Date”: (a) the last day of each calendar quarter during the Commitment
Period, (b) the last day of the Commitment Period and (c) the last day of each calendar quarter
after the last day of the Commitment Period, so long as any principal amount of the Loans or any
Reimbursement Obligations remain outstanding after the last day of the Commitment Period.

     “Fixed Charge Coverage Ratio”: for any four consecutive fiscal quarter period, the
ratio of (a) EBITDAR of the Borrower and its Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) for such period to (b) the sum, for the Borrower and
its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP),
of the following items for such period: (i) Interest Expense and (ii) rental expense determined in
accordance with GAAP.

     “Funding Office”: the office of the Administrative Agent specified in Section 10.2
or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

     “GAAP”: generally accepted accounting principles in the United States and, except as
noted below, determined on the basis of such principles in effect on the date hereof and consistent
with those used in the preparation of the most recent audited financial statements referred to in
Section 4.1. In the event that any “Change in Accounting
Principles” (as defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then, upon the request of
the Borrower or the Administrative Agent, the Borrower and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to reflect equitably
such Change in Accounting Principles with the desired result that the criteria for evaluating the
Borrower’s financial condition shall be the same after such Change in Accounting Principles as if
such Change in Accounting Principles had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Change in Accounting Principles had not occurred. “Change
in Accounting Principles” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board or any successor thereto, the SEC or, if applicable, the Public Company Accounting
Oversight Board.

     “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

     “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing
person that guarantees any Indebtedness, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (a) to purchase any such primary obligation or any property constituting direct or
indirect

8

 

security therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary
obligation, (d) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof or (e) to reimburse or indemnify an issuer of a letter of credit,
surety bond or guarantee issued by such issuer in respect of primary obligations of a primary
obligor other than the Borrower or any Subsidiary; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person
shall be the maximum amount for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee Obligation.

     “Indebtedness”: of any Person at any date, without duplication, (a) all obligations
of such Person for borrowed money (including convertible notes), (b) all obligations of such Person
for the deferred purchase price of property or services (other than trade payables incurred in the
ordinary course of such Person’s business that are payable on terms customary in the trade), (c)
all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are limited to repossession or
sale of such property), (e) all obligations of such Person, contingent or otherwise, as an account
party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar
arrangements (other than reimbursement obligations, which are not due and payable on such date, in
respect of documentary letters of credit issued to provide for the payment of goods and services in
the ordinary course of business), (f) net mark to market exposures under Swap Agreements and other
financial contracts, other than the use of short-term hedges for risk management purposes, (g)
off-balance sheet liabilities, including synthetic leases, but excluding operating leases as
defined by GAAP, (h) all obligations of such Person as lessee which are capitalized in accordance
with GAAP, (i) indebtedness attributable to permitted securitization transactions, (j) any other
obligation for borrowed money or other financial accommodation which in accordance with GAAP would
be shown as a liability on a consolidated balance sheet,
(k) all Guarantee Obligations or contingent obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (j) above, and (l) all obligations of
the kind referred to in clauses (a) through (k) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligation (provided, that if such Person
is not liable for such obligation, the amount of such Person’s Indebtedness with respect thereto
shall be deemed to be the lesser of the stated amount of such obligation and the value of the
property subject to such Lien). The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.

9

 

     “Industrial Loan Corporation”: a financial institution chartered under the laws of
any state as an industrial bank, industrial loan and thrift, or industrial loan company, or any
other Person contemplated by 15 USC 1679(a)(3)(b)(iii), that is not subject to regulation under the
Bank Holding Company Act.

     “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

     “Insolvent”: pertaining to a condition of Insolvency.

     “Interest Expense”: for any period, total interest expense for such period determined
on a consolidated basis in accordance with GAAP.

     “Interest Payment Date”: (a) as to any ABR Loan the last day of each calendar quarter
to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day
that is three months, or a whole multiple thereof, after the first day of such Interest Period and
the last day of such Interest Period, (d) as to any Eurodollar Loan, the date of any repayment or
prepayment made in respect thereof, and (e) as to any Swingline Loan, the day that such Loan is
required to be repaid.

     “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and
ending two weeks or one, two, three or six months thereafter, as selected by the Borrower in its
Notice of Revolving Loan Borrowing or Notice of Revolving Loan Conversion, as the case may be,
given with respect thereto; and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending two weeks or one, two,
three or six months thereafter, as selected by the Borrower by in its Notice of Revolving Loan
Interest Period Selection to the Administrative Agent not later than 10:00 a.m. on the date that is
three Business Days prior to the last day of the then current Interest Period with respect
thereto; provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:

               (i) if any Interest Period would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding 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 immediately preceding Business Day;

               (ii) the Borrower may not select an Interest Period that would extend beyond the Termination
Date; and

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

     “Issuing Lender”: Wells Fargo in its capacity as issuer of Letters of Credit
hereunder, or any successor issuer of Letters of Credit hereunder.

10

 

     “Joint Lead Arrangers”: as defined in the preamble hereto.

     “L/C Commitment”: $25,000,000.

     “L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then
undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount
of drawings under issued Letters of Credit that have not then been reimbursed pursuant to Section
3.5.

     “L/C Participants”: in respect of any Letter of Credit, the collective reference to
all the Lenders other than the Issuing Lender that issued such Letter of Credit.

     “Lenders”: as defined in the preamble hereto; provided, that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.

     “Letters of Credit”: as defined in Section 3.1.

     “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).

     “Loan”: any loan made by any Lender pursuant to this Agreement, including Swingline
Loans and Revolving Loans.

     “Loan Documents”: this Agreement, the Notes, the Administrative Agent’s Fee Letter
and the Applications, in each case, including any amendment, waiver, supplement or other
modification to any of the foregoing.

     “Marketable Securities”: any of the following:

          (a) Direct obligations of, or obligations the principal and interest on which are
unconditionally guaranteed by, the United States of America or obligations of any agency of the
United States of America to the extent such obligations are backed by the full faith and credit of
the United States of America, in each case maturing within one year from the date of acquisition
thereof;

          (b) Certificates of deposit, time or demand deposit accounts or bankers acceptances maturing
within one year from the date of acquisition thereof issued by a commercial bank or trust company
organized under the laws of the United States of America or a state thereof or that is a Lender,
provided that (i) such deposits or bankers acceptances are denominated in Dollars, (ii) such bank
or trust company has capital, surplus and undivided profits of not less than $100,000,000 and (iii)
such bank or trust company has certificates of deposit or other debt obligations rated at least A-1
(or its equivalent) by S&P or P-1 (or its equivalent) by Moody’s;

11

 

          (c) Open market commercial paper maturing within 360 days from the date of acquisition thereof
issued by a corporation organized under the laws of the United States of America or a state
thereof, provided such commercial paper is rated at least A-1 (or its equivalent) by S&P or P-1 (or
its equivalent) by Moody’s;

          (d) Any repurchase agreement entered into with a commercial bank or trust company organized
under the laws of the United States of America or a state thereof or that is a Lender, provided
that (i) such bank or trust company has capital, surplus and undivided profits of not less than
$100,000,000, (ii) such bank or trust company has certificates of deposit or other debt obligations
rated at least A-1 (or its equivalent) by S&P or P-1 (or its equivalent) by Moody’s, (iii) the
repurchase obligations of such bank or trust company under such repurchase agreement are fully
secured by a perfected security interest in a security or instrument of the type described in
clause (a), (B) or (C) above and (iv) such security or instrument so securing the repurchase
obligations has a fair market value at the time such repurchase agreement is entered into of not
less than 100% of such repurchase obligations;

          (e) shares of any money market mutual or similar fund that has all or at least 95% of its
assets invested continuously in investments satisfying the requirements of clauses (a) through (d)
of this definition;

          (f) securities with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by S&P or A2 by Moody’s;
and

          (g) other marketable securities entered into in compliance with the investment policies of the
Borrower delivered to the Administrative Agent prior to the Effective Date and any modifications to
such investment policies after the Effective Date approved by the Administrative Agent.

     “Material Adverse Effect”: any event or circumstance that has had or could reasonably
be expected to have a material adverse effect on (a) the assets, liabilities, condition (financial
or otherwise), businesses or operations of the Borrower and its Subsidiaries (taken as a whole);
(b) the ability of the Borrower to pay or perform the Obligations in accordance with the terms of
this Agreement and the other Loan Documents; (c) the rights and remedies of the Administrative
Agent, the Issuing Lender or any Lender under this Agreement, the other Loan Documents or any
related document, instrument or agreement; or (d) the validity or enforceability of any of the Loan
Documents.

     “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

     “Moody’s”: Moody’s Investors Service, Inc.

12

 

     “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

     “New Lender Supplement”: as defined in Section 2.3(b).

     “New Revolving Credit Lender”: as defined in Section 2.3(b).

     “Non-Excluded Taxes”: as defined in Section 2.16(a).

     “Non-U.S. Lender”: as defined in Section 2.16(b).

     “Notes”: as defined in Section 2.14(g).

     “Notice of Revolving Loan Borrowing”: as defined in Section 2.2.

     “Notice of Revolving Loan Conversion”: as defined in Section 2.9(a).

     “Notice of Revolving Loan Interest Period Selection”: as defined in Section 2.9(b).

     “Notice of Swingline Borrowing”: as defined in Section 2.5(a).

     “Notification”: as defined in Section 10.2(d).

     “Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement
Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent,
the Issuing Lender or any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Administrative Agent, the Issuing Lender or any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

     “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

     “Overnight LIBOR Rate”: with respect to any Swingline Loans, the per annum rate of
interest most recently announced within Well Fargo at its principal office in San Francisco,
California as its Overnight LIBOR Rate, with the understanding that Wells Fargo’s Overnight LIBOR
Rate is one of its base rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as Wells Fargo may designate.

13

 

Wells Fargo shall base its determination of the Overnight LIBOR Rate upon such offers for
deposits on or other market indicators of the interbank market as Wells Fargo in its discretion
deems appropriate, and the Overnight LIBOR Rate available to the Borrower hereunder shall be
adjusted by Wells Fargo to take into account the Eurocurrency Reserve Requirements. Any change in
the Overnight LIBOR Rate shall become effective on the date on which each such change in the
Overnight LIBOR Rate is announced within Wells Fargo.

     “Participant”: as defined in Section 10.6(c).

     “Patriot Act”: the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as the
USA Patriot Act).

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

     “Percentage”: as to any Lender at any time, the percentage which such Lender’s
Commitment then constitutes of the Total Commitments or, at any time after the Commitments shall
have expired or terminated, the percentage which the aggregate principal amount of such Lender’s
Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving
Loans then outstanding, provided, that, in the event that the Revolving Loans are paid in
full prior to the reduction to zero of the Total Extensions of Credit, the Percentages shall be
determined in a manner designed to ensure that the other outstanding Extensions of Credit shall be
held by the Lenders on a comparable basis.

     “Permitted Acquisition” as defined in Section 7.4.

     “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

     “Plan”: at a particular time, any employee benefit plan that is covered by Title IV
of ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

     “Platform”: as defined in Section 10.2(c).

     “Pricing Grid”:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Margin	 	Applicable Margin	 	 	 	 
	 	 	 	 	for	 	for	 	Facility	 	Utilization
	Level	 	Total Leverage Ratio	 	ABR Loans	 	Eurodollar Loans	 	Fee Rate	 	Fee Rate
	1

	 	£ 1.00
	 	 	0	%	 	 	0.300	%	 	 	0.100	%	 	 	0.100	%
	2

	 	> 1.00
£  1.75
	 	 	0	%	 	 	0.375	%	 	 	0.125	%	 	 	0.125	%
	3

	 	> 1.75 £ 2.50
	 	 	0	%	 	 	0.475	%	 	 	0.150	%	 	 	0.125	%
	4

	 	> 2.50
	 	 	0	%	 	 	0.550	%	 	 	0.200	%	 	 	0.125	%

14

 

Any increase or decrease in the Applicable Margin, Facility Fee Rate and Utilization Fee Rate
resulting from a change in the Total Leverage Ratio shall become effective as of the fifth Business
Day immediately following the date a Compliance Certificate is required to be delivered pursuant to
Section 6.2; provided, however, that if no Compliance Certificate is delivered when
due in accordance with such Section, then Tier 4 shall apply as of the date of the failure to
deliver such Compliance Certificate until the fifth Business Day after the date the Borrower
delivers such Compliance Certificate in form and substance acceptable to the Administrative Agent
and thereafter the Applicable Margin, Facility Fee Rate and Utilization Fee Rate shall be based on
the Total Leverage Ratio indicated on such Compliance Certificate until such time as further
adjusted as set forth in this definition. From the Effective Date through the fifth Business Day
immediately following the date the first Compliance Certificate is required to be delivered
pursuant to Section 6.2 after the Effective Date, the Applicable Margin, the Facility Fee and the
Utilization Fee shall be determined based upon Tier 1 of the Pricing Grid, regardless of the Total
Leverage Ratio during such period.

     “Properties”: as defined in Section 4.12(a).

     “Proposed Target”: as defined in Section 7.4(b).

     “Refunded Swingline Loans”: as defined in Section 2.5.

     “Register”: as defined in Section 10.6(c).

     “Regulation U”: Regulation U of the Board as in effect from time to time.

     “Reimbursement Obligation”: the obligation of the Borrower to reimburse the Issuing
Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by the Issuing
Lender.

     “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.

     “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty-day notice period is waived
under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

     “Required Lenders”: at any time, two or more holders of more than 50% of the Total
Commitments then in effect or, if the Commitments have been terminated, the Total Extensions of
Credit then outstanding. In each case, at any time any Lender is a Defaulting Lender, all
Defaulting Lenders shall be excluded in determining “Required Lenders” and “Required Lenders” shall
mean non-Defaulting Lenders otherwise meeting the criteria set forth in this definition.

     “Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws
or other organizational or governing documents of such Person, and any law, treaty, rule or

15

 

regulation or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

     “Responsible Officer”: the chief executive officer, president, chief financial
officer, treasurer or general counsel of the Borrower, but in any event, with respect to financial
matters, the chief financial officer or treasurer of the Borrower.

     “Revolving Credit Offered Increase Amount”: as defined in Section 2.3(a).

     “Revolving Credit Re-Allocation Date”: as defined in Section 2.3(d).

     “Revolving Loans”: as defined in Section 2.1(a).

     “S&P”: Standard & Poor’s Ratings Services.

     “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

     “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.

     “Specified Exchange Act Filings”: the Borrower’s Form 10-K annual report for the year
ended September 30, 2005 and each and all of the Form 8-Ks (and to the extent applicable proxy
statements) filed by the Borrower with the SEC after September 30, 2005 and prior to the date that
is one Business Day before the date of this Agreement.

     “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of Capital Stock having ordinary voting power (other than Capital
Stock having such power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.

     “Swap Agreement”: any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions.

     “Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 2.4 in an aggregate principal amount at any one time outstanding not to
exceed $10,000,000.

     “Swingline Lender”: Wells Fargo, in its capacity as the lender of Swingline Loans, or
any successor swing line lender hereunder.

16

 

     “Swingline Loans”: as defined in Section 2.4.

     “Swingline Note”: as defined in Section 2.14(g).

     “Swingline Participation Amount”: as defined in Section 2.5.

     “Syndication Agent”: as defined in the preamble hereto.

     “Termination Date”: the date that is the fifth anniversary of the Effective Date or
such earlier date as otherwise determined pursuant to Section 2.7.

     “Total Commitments”: at any time, the aggregate amount of the Commitments of all
Lenders at such time. The original amount of the Total Commitments is $300,000,000.

     “Total Extensions of Credit”: at any time, the aggregate amount of the Extensions of
Credit of all Lenders at such time.

     “Total Leverage Ratio”: at the end of any fiscal quarter, the ratio of (a)
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis at such time minus the
amount of cash and Marketable Securities (valued at fair market value) at such time in excess of
$50,000,000, to (b) EBITDA for the four consecutive quarter period ended as of the end of the such
fiscal quarter.

     “Transferee”: any Assignee or Participant.

     “Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

     “United States”: the United States of America.

     “Utilization Fee Rate”: for any day, the applicable rate per annum determined pursuant
to the to the Pricing Grid. The Utilization Fee Rate shall be determined as provided in the
Pricing Grid and may change as set forth in the definition of Pricing Grid.

     “Wells Fargo”: as defined in the preamble hereto.

17

 

     1.2
Other Definitional Provisions. Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto
or thereto. As used herein and, except as otherwise provided therein, in the other Loan Documents, and any certificate or
other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to the
Borrower and its Subsidiaries defined in Section 1.1 and accounting terms partly defined in Section
1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii)
the words “include”, “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue,
assume, suffer to exist or become liable in
respect of (and the words “incurred” and “incurrence” shall have correlative meanings), (iv)
the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time.

          (c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

          (d) All references in this Agreement and each of the other Loan Documents to a time of day
shall mean Minneapolis, Minnesota time, unless otherwise indicated.

          (e) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

     2.1 Commitments. (a) On the terms and subject to conditions hereof, each Lender
severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender’s Percentage of the sum of (i) the L/C Obligations
then outstanding and (ii) the aggregate principal amount of the Swingline Loans then outstanding,
does not exceed the amount of such Lender’s Commitment. During the Commitment Period, the Borrower
may use the Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.8. (b) The Borrower shall repay all
outstanding Revolving Loans on the Termination Date.

     2.2 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that the Borrower
shall give the Administrative Agent irrevocable notice in the form of Exhibit A, duly executed by

18

 

two Responsible Officers and appropriately completed (a “Notice of Revolving Loan
Borrowing”), (which notice must be received by the Administrative Agent prior to 12:00 Noon (a)
three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or (b)
one Business Day prior to the requested Borrowing Date, in the case of ABR Loans) specifying (i)
the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and (iii)
in the case of Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Each borrowing under the Commitments
shall be in an amount equal to $3,000,000 or a whole multiple of
$500,000 in excess thereof (or, if the then aggregate Available Commitments are less than
$3,000,000, such lesser amount). Upon receipt of a Notice of Revolving Loan Borrowing from the
Borrower, the Administrative Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its pro rata share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Funding Office prior to 12:00 Noon on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.

     2.3 Commitment Increases.

          (a) In the event that the Borrower wishes to increase the Total Commitments at any time when
no Default or Event of Default has occurred and is continuing (or would result from such increase),
it shall notify the Administrative Agent in writing of the amount (the “Revolving Credit
Offered Increase Amount”) of such proposed increase (such notice, a “Commitment Increase
Notice”) in a minimum amount equal to $25,000,000 or a whole multiple of $5,000,000 in excess
thereof. The Borrower may offer the Revolving Credit Offered Increase Amount to (i) any Lender
and/or (ii) other banks, financial institutions or other entities with the consent of the
Administrative Agent, such consent not to be unreasonably withheld (“Approved New Lender
Offerees”). The Commitment Increase Notice shall (A) specify the Lenders and/or Approved New
Lender Offerees that will be requested to provide such Revolving Credit Offered Increase Amount,
(B) specify the proposed effective date and (C) be accompanied by a certificate executed by two
Responsible Officers stating that no Default or Event of Default has occurred and is continuing (or
would result from such increase). The Borrower or, if requested by the Borrower, the
Administrative Agent will notify such Lenders, and/or Approved New Lender Offerees of such offer.

          (b) Any Approved New Lender Offerees which the Borrower selects to offer a portion of the
increased Total Commitments and which elects to become a party to this Agreement and obtain a
Commitment in an amount so offered and accepted by it pursuant to Section 2.3(a) shall execute a
new lender supplement (the “New Lender Supplement”) with the Borrower and the
Administrative Agent, substantially in the form of Exhibit E, whereupon such Approved New Lender
Offerees (herein called a “New Revolving Credit Lender”) shall become a Lender for all
purposes and to the same extent as if originally a party hereto and shall be bound by and entitled
to the benefits of this Agreement, provided that the Commitment of any such New Revolving
Credit Lender shall be in an amount not less than $10,000,000.

19

 

          (c) Any Lender which accepts an offer to it by the Borrower to increase its Commitment
pursuant to Section 2.3(a) shall, in each case, execute a Commitment Increase Supplement with the
Borrower and the Administrative Agent, substantially in the form of Exhibit F, whereupon such
Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full
amount of its Commitment as so increased. No Lender shall have any obligation, expressed or
implied, to offer to increase the amount of its Commitment. Only the consent of each Lender
increasing its Commitment shall be required for an increase in the amount of the Commitments
pursuant to this Section 2.3. No Lender which elects not to
increase the amount of its Commitment may be replaced in respect of its existing Commitment as
a result thereof without such Lender’s consent. Subject to the limitations set forth above, the
Borrower and the Administrative Agent shall have discretion jointly to adjust the allocation of the
increased aggregate principal amount of the Commitments among Lenders increasing their Commitments
and New Revolving Credit Lenders.

          (d) If any Approved New Lender Offeree becomes a New Revolving Credit Lender pursuant to
Section 2.3(b) or any Lender’s Commitment is increased pursuant to Section 2.3(c), additional
Revolving Loans made on or after the effectiveness thereof (the “Revolving Credit Re-Allocation
Date”) shall be made pro rata based on the Percentages in effect on and after such Revolving
Credit Re-Allocation Date (except to the extent that any such pro rata borrowings would result in
any Lender making an aggregate principal amount of Revolving Loans in excess of its Commitment, in
which case such excess amount will be allocated to, and made by, such New Revolving Credit Lenders
and/or Lenders with such increased Commitments to the extent of, and pro rata based on, their
respective Commitments otherwise available for Revolving Loans), and continuations of Eurodollar
Loans outstanding on such Revolving Credit Re-Allocation Date shall be effected by repayment of
such Eurodollar Loans on the last day of the Interest Period applicable thereto and the making of
new Eurodollar Loans pro rata based on such new Percentages. In the event that on any such
Revolving Credit Re-Allocation Date there is an unpaid principal amount of ABR Loans, the Borrower
shall make prepayments thereof and borrowings of ABR Loans so that, after giving effect thereto,
the ABR Loans outstanding are held pro rata based on such new Percentages. In the event that on
any such Revolving Credit Re-Allocation Date there is an unpaid principal amount of Eurodollar
Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the
expiration of their respective Interest Periods (unless the Borrower elects to prepay any thereof
in accordance with the applicable provisions of this Agreement), and interest on and repayments of
such Eurodollar Loans will be paid thereon to the respective Lenders holding such Eurodollar Loans
pro rata based on the respective principal amounts thereof outstanding.

          (e) Notwithstanding anything to the contrary in this Section 2.3, (i) no Lender shall have
any obligation to increase its Commitment unless it agrees to do so in its sole discretion and (ii)
in no event shall any transaction effected pursuant to this Section 2.3 cause the Total Commitments
to exceed $500,000,000.

          (f) The Administrative Agent shall have received on or prior to the Revolving Credit
Re-Allocation Date, for the benefit of the Lenders, (i) a legal opinion of counsel to the Borrower
covering such matters as are customary for transactions of this type as may be reasonably requested
by the Administrative Agent, (ii) certified copies of resolutions of the board of directors of the
Borrower authorizing the Borrower to borrow the Revolving Credit Offered

20

 

Increase Amount and (iii) any other documents or instruments as may be requested by the
Administrative Agent.

     2.4 Swingline Commitment. (a) On the terms and subject to conditions hereof, the
Swingline Lender agrees to make a portion of the credit otherwise available to the Borrower under
the Commitments from time to time on or after the Effective Date during the Commitment Period by
making swingline loans (“Swingline Loans”) to the Borrower; provided that (i) the
aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the
Swingline Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any
time, when aggregated with the Swingline Lender’s other outstanding Revolving Loans, may exceed the
Swingline Commitment or the Swingline Lender’s Commitment then in effect) and (ii) the Borrower
shall not request, and the Swingline Lender shall not make, any Swingline Loan if, after giving
effect to the making of such Swingline Loan, the aggregate amount of the Available Commitments
would be less than zero. During the Commitment Period, the Borrower may use the Swingline
Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions
hereof. Swingline Loans shall bear interest only at the Overnight LIBOR Rate plus the Applicable
Margin. (b) The Borrower shall repay to the Swingline Lender the then unpaid principal amount of
each Swingline Loan on or prior to the date that is the earlier of (i) the 15th and last day of
each month and (ii) the Termination Date; provided that on each date on which a Revolving
Loan is borrowed, the Borrower shall repay all Swingline Loans then outstanding.

     2.5 Procedure for Swingline Borrowing; Refunding of Swingline Loans.

          (a) Whenever the Borrower wishes to borrow Swingline Loans, it shall give the Swingline Lender
irrevocable telephonic notice (which telephonic notice must be received by the Swingline Lender not
later than 1:00 P.M. on the proposed Borrowing Date), specifying (i) the amount to be borrowed, and
(ii) the requested Borrowing Date (which shall be a Business Day during the Commitment Period).
Each such telephonic notice must be confirmed promptly by an irrevocable written notice in the form
of Exhibit B, duly executed by two Responsible Officers and appropriately completed (a “Notice
of Swingline Borrowing”). Each borrowing under the Swingline Commitment shall be in an amount
equal to $1,000,000 or a whole multiple thereof. Not later than 2:00 P.M. on the Borrowing Date
specified in a notice in respect of Swingline Loans, the Swingline Lender shall make available to
the Administrative Agent at the Funding Office an amount in immediately available funds equal to
the amount of the Swingline Loan to be made by the Swingline Lender. The Administrative Agent
shall make the proceeds of such Swingline Loan available to the Borrower on such Borrowing Date by
depositing such proceeds in the account of the Borrower with the Administrative Agent on such
Borrowing Date in immediately available funds.

          (b) The Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to
act on its behalf), on one Business Day’s notice given by the Swingline Lender no later than 12:00
Noon request each Lender to make, and each Lender hereby agrees to make, a Revolving Loan, in an
amount equal to such Lender’s Percentage of the aggregate amount of the Swingline Loans (the
“Refunded Swingline Loans”) outstanding on the date of such notice, to repay the Swingline
Lender. Each Lender shall make the amount of such

21

 

Revolving Loan available to the Administrative Agent at the Funding Office in immediately
available funds, not later than 10:00 A.M. one Business Day after the date of such notice. The
proceeds of such Revolving Loans shall be immediately made available by the Administrative Agent to
the Swingline Lender for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to charge the Borrower’s
accounts with the Administrative Agent (up to the amount available in each such account) in order
to immediately pay the amount of such Refunded Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full such Refunded Swingline Loans.

          (c) If prior to the time a Revolving Loan would have otherwise been made pursuant to Section
2.5(b) one of the events described in Section 8(f) or if for any other reason, as determined by the
Swingline Lender in its sole discretion, Revolving Loans may not be made as contemplated by Section
2.5(b), each Lender shall, on the date such Revolving Loan was to have been made pursuant to the
notice referred to in Section 2.5(b), purchase for cash an undivided participating interest in the
then outstanding Swingline Loans by paying to the Swingline Lender an amount (the “Swingline
Participation Amount”) equal to (i) such Lender’s Percentage times (ii) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.

          (d) Whenever, at any time after the Swingline Lender has received from any Lender such
Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of
the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline
Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender’s pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest on all Swingline
Loans then due); provided, however, that in the event that such payment received by
the Swingline Lender is required to be returned, such Lender will return to the Swingline Lender
any portion thereof previously distributed to it by the Swingline Lender.

          (e) Each Lender’s obligation to make the Loans referred to in Section 2.5(b) and to purchase
participating interests pursuant to Section 2.5(c) shall be absolute and unconditional and shall
not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Lender or the Borrower may have against the Swingline Lender, the Borrower or
any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an
Event of Default or the failure to satisfy any of the other conditions specified in Section 5,
(iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach
of this Agreement or any other Loan Document by the Borrower or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

22

 

     2.6 Facility Fees, Utilization Fees, etc.

          (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender
(except for Defaulting Lenders) a facility fee for the period from and including the date hereof to
the last day of the Commitment Period, computed at the Facility Fee Rate on the Commitment of such
Lender during the period for which payment is made, payable quarterly in arrears on each Fee
Payment Date, commencing on the first such date to occur after the date hereof. In addition, if
the principal amount of any Loan, or any Reimbursement Obligations, shall remain outstanding and
unpaid after the last day of the Commitment Period, the Borrower agrees to pay to the
Administrative Agent, for the account of each Lender, a facility fee for the period from the last
day of the Commitment Period until the date on which such amounts are repaid in full, computed at
the Facility Fee Rate on such amounts, payable quarterly in arrears on each Fee Payment Date,
commencing on the first such date after the last day of the Commitment Period.

          (b) If the aggregate principal amount of the Loans and L/C Obligations outstanding on any day
during the calendar quarter preceding a Fee Payment Date (or such shorter period beginning with the
date hereof or ending with the Termination Date) is greater than 50% of the Total Commitments, the
Borrower agrees to pay to the Administrative Agent for the account of each Lender (except for
Defaulting Lenders) a utilization fee at the applicable Utilization Fee Rate on such principal
amount of the Loans and the L/C Obligations outstanding on such day, payable in arrears on each Fee
Payment Date.

          (c) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the
dates as set forth in any written, duly executed fee agreements with the Administrative Agent and
to perform any other obligations contained therein.

     2.7 Termination or Reduction of Commitments. The Borrower shall have the right, upon
not less than three Business Days’ notice to the Administrative Agent, to terminate the Commitments
or, from time to time, to reduce the amount of the Commitments; provided that no such termination
or reduction of Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the Total Extensions of Credit would
exceed the Total Commitments. Any such reduction shall be in an amount equal to $5,000,000, or a
whole multiple thereof, and shall reduce permanently the Commitments then in effect, subject to the
Borrower’s right to subsequently increase the Total Commitments pursuant to Section 2.3.

     2.8 Optional Prepayments. The Borrower may at any time and from time to time prepay
the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to
the Administrative Agent no later than 12:00 Noon one Business Day prior thereto, in the case of
Eurodollar Loans, and no later than 12:00 Noon one Business Day prior thereto, in the case of ABR
Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is
of Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.17. Upon receipt of any such notice the Administrative Agent
shall promptly notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date

23

 

specified therein, together with (except in the case of Revolving Loans that are ABR Loans and
Swingline Loans) accrued interest to such date on the amount prepaid. Partial prepayments of
Revolving Loans which shall be in an aggregate principal amount of $3,000,000 or a whole multiple
of $500,000 in excess thereof.

     2.9 Conversion and Continuation Options.

          (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by
giving the Administrative Agent prior irrevocable written notice of such election no later than
12:00 Noon on the Business Day preceding the proposed conversion date, provided that any
such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent prior irrevocable written notice of such election no later than
12:00 Noon on the third Business Day preceding the proposed conversion date (which notice shall
specify the length of the initial Interest Period therefor), provided that no ABR Loan may
be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and
the Required Lenders have determined in their sole discretion not to permit such conversions. Each
such notice shall be in the form of Exhibit C, duly executed by two Responsible Officers and
appropriately completed (a “Notice of Revolving Loan Conversion”). Upon receipt of a
Notice of Revolving Loan Conversion, the Administrative Agent shall promptly notify each relevant
Lender thereof.

          (b) Any Eurodollar Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice to the
Administrative Agent in the form of Exhibit D, duly executed by two Responsible Officers and
appropriately completed (a “Notice of Revolving Loan Interest Period Selection”), in
accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1,
specifying the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is
continuing unless the Required Lenders have determined in their sole discretion to permit such
continuations, and provided, further, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the
last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

     2.10 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to such elections so
that (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $3,000,000 or a whole multiple of $500,000 in
excess thereof and (b) no more than 8 Eurodollar Tranches shall be outstanding at any one time.

     2.11 Interest Rates and Payment Dates.

24

 

          (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined for such Interest
Period plus the Applicable Margin.

          (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable
Margin.

          (c) On and after the occurrence of an Event of Default, until the time when such Event of
Default shall have been cured or waived in writing by the Required Lenders or all the Lenders (as
required by this Agreement), the Borrower shall pay interest on the aggregate, outstanding
principal amount of all Obligations hereunder at a per annum rate equal to the otherwise applicable
interest rate plus two percent (2.00%) or, if no such per annum rate is applicable to any such
Obligations, at a per annum rate equal to the ABR, plus the Applicable Margin for ABR Loans, plus
two percent (2.00%) payable on demand. Overdue interest shall itself bear interest at such
applicable default rate, and shall be compounded with the principal Obligations daily, to the
fullest extent permitted by applicable law.

          (d) Interest shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to Section 2.11(c) shall be payable from time to time on demand.

     2.12 Computation of Interest and Fees.

          (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on
which is calculated on the basis of the Base Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of
each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The Administrative Agent
shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and
the amount of each such change in interest rate.

          (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive absent manifest error. The Administrative Agent
shall, at the request of the Borrower or any Lender, deliver to the Borrower or such Lender a
statement showing the quotations used by the Administrative Agent in determining any interest rate
pursuant to Section 2.11.

     2.13 Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:

          (a) the Administrative Agent shall have determined (which determination shall be conclusive
and binding upon the Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, or

25

 

          (b) the Administrative Agent shall have received notice from the Required Lenders that the
Eurodollar Rate determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the
relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y)
any Loans that were to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be converted,
on the last day of the then-current Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans.

     2.14 Pro Rata Treatment and Payments; Notes.

          (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any facility fee, utilization fee and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Percentages of the Lenders (excluding any
Defaulting Lenders in connection with the payment of any facility fee or utilization fee).

          (b) Each payment (including each prepayment) by the Borrower on account of principal of and
interest on the Revolving Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Loans then held by the Lenders. Each payment in respect of
Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender
that issued such Letters of Credit.

          (c) Notwithstanding anything to the contrary herein, all payments (including prepayments) to
be made by the Borrower hereunder, whether on account of principal, Reimbursement Obligations,
interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior
to 1:00 P.M. on the due date thereof to the Administrative Agent, for the account of the Lenders or
the Issuing Lender, as applicable, at the Funding Office, in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable
on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during such extension.

          (d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute

26

 

its share of such borrowing available to the Administrative Agent, the Administrative Agent
may assume that such Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds
Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation, for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive
in the absence of manifest error. If such Lender’s share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days after such Borrowing Date,
the Borrower shall repay such amount to the Administrative Agent, on demand, together with interest
thereon, for each day from the date such amount was disbursed to the Borrower until the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at the time to the
Loans comprising such borrowing.

          (e) Unless the Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required to, in reliance
upon such assumption, make available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by the Borrower
within three Business Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the
Administrative Agent or any Lender against the Borrower.

          (f) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the
Borrower will promptly execute and deliver to such Lender a promissory note (a “Note”) of
the Borrower evidencing any Revolving Loans of such Lender, substantially in the form of Exhibit L,
with appropriate insertions as to date and principal amount; provided, that delivery of
Notes shall not be a condition precedent to the Effective Date or the occurrence or making of Loans
on the Effective Date.

          (g) The Swingline Lender’s Swingline Loans shall be evidenced by a promissory note in the form
of Exhibit M (the “Swingline Note”) which note shall be (i) payable to the order of the
Swingline Lender, (ii) in the amount of the Swingline Commitment, (iii) dated the Effective Date
and (iv) otherwise appropriately completed.

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     2.15 Requirements of Law.

          (a) If the adoption of or any change in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority made subsequent to
the date hereof:

               (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement,
any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes and Other
Taxes covered by Section 2.16 and net income taxes and franchise taxes imposed in lieu of net
income taxes);

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

               (iii) shall impose on such Lender any other condition that is generally applicable to loans
made by such Lender;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender,
within 25 days after its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy
to the Administrative Agent) of the event by reason of which it has become so entitled.

          (b) If any Lender shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
such Lender or any Person controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental Authority made subsequent
to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such
Person’s capital as a consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such Person could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or such Person’s policies
with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time
to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent)
of a written request therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such Person for such reduction. Notwithstanding anything
to the contrary in this Section 2.15, the Borrower shall not be required to compensate a Lender
pursuant to this Section

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2.15 for any amounts incurred more than 90 days prior to the date that such Lender notifies
the Borrower of such Lender’s intention to claim compensation therefor; provided that, if
the circumstances giving rise to such claim have a retroactive effect, then such 90-day period
shall be extended to include the period of such retroactive effect not to exceed twelve months.

          (c) A certificate as to any additional amounts payable pursuant to this Section 2.15 submitted
by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive absent
manifest error. The obligations of the Borrower pursuant to this Section 2.15 shall survive for
the termination of this Agreement and the payment of the Loans and all other amounts then due and
payable hereunder.

     2.16 Taxes.

          (a) All payments made by the Borrower under this Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this Agreement or any other
Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to
such Lender’s failure to comply with the requirements of paragraph (d) of this Section or (ii) that
are United States withholding taxes imposed on amounts payable to such Lender at the time such
Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any)
was entitled, at the time of assignment, to receive additional amounts from the Borrower with
respect to such Non-Excluded Taxes pursuant to this paragraph.

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

          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Administrative Agent for its own account or for
the account of the relevant Lender, as the case may be, a certified copy of any original official
receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority, the Borrower shall
indemnify the Administrative Agent and the Lenders for any

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incremental taxes, interest or penalties that may become payable by the Administrative Agent
or any Lender as a result of any such failure.

          (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related participation shall
have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit K and a Form W-8BEN, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of
this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this
paragraph that such Non-U.S. Lender is not legally able to deliver; provided,
however, if any Non-U.S. Lender fails to file forms with the Borrower and the
Administrative Agent (or, in the case of a Participant, with the Lender from which the related
participation was purchased) on or before the date the Non-U.S. Lender becomes a party to this
Agreement (or, in the case of a Participant, on or before the date such Participant purchased the
related participation) entitling the Non-U.S. Lender to a complete exemption from United States
withholding taxes at such time, such Non-U.S. Lender shall not be entitled to receive any increased
payments from the Borrower with respect to United States withholding taxes under paragraph (a) of
this Section, except to the extent that the Non-U.S. Lender’s assignor (if any) was entitled, at
the time of the assignment to the Non-U.S. Lender, to receive additional amounts from the Borrower
with respect to United States withholding taxes.

          (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without withholding or at a
reduced rate, provided that such Lender is legally entitled to complete, execute and
deliver such documentation and in such Lender’s judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.

          (f) Neither the Administrative Agent nor any Lender shall be obligated under any circumstances
to make available its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

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          (g) The agreements in this Section 2.16 shall survive for the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

     2.17 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each
Lender harmless from, any loss, cost or expense (including, without limitation, any interest paid
by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Loans to the
extent not recovered by the Lender in connection with the liquidation or re-employment of such
funds and including the compensation payable by such Lender to a Participant) and any loss
sustained by such Lender in connection with the liquidation or re-employment of such funds
(including, without limitation, a return on such liquidation or re-employment that would result in
such Lender receiving less than it would have received had such Eurodollar Loan remained
outstanding until the last day of the Interest Period applicable to such Eurodollar Loans) that
such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement, (b) default by the
Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has
given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect
thereto. A certificate as to any amounts payable pursuant to this
Section 2.17 submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

     2.18 Change of Lending Office. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 2.15 or 2.16(a) with
respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such event;
provided, that such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no unreimbursed economic disadvantage or any
legal or regulatory disadvantage, and provided, further, that nothing in this
Section 2.18 shall affect or postpone any of the obligations of the Borrower or the rights of any
Lender pursuant to Section 2.15 or 2.16(a).

     2.19 Replacement of Lenders. The Borrower shall be permitted to replace any Lender
that (a) requests (on its behalf or any of its Participants) reimbursement for amounts owing
pursuant to Section 2.15 or 2.16(a) or (b) defaults in its obligation
to make Loans hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.18 which eliminates the continued need for
payment of amounts owing pursuant to Section 2.15 or 2.16(a), (iv)
the replacement financial institution shall purchase, at par, all Loans and other amounts owing to
such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to
such replaced Lender under Section 2.17 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent and, if a different entity, the Issuing
Lender, (vii) the replaced Lender shall be obligated to make such replacement in

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accordance with
the provisions of Section 10.6 (provided that the Borrower
shall be obligated to pay the registration and processing fee referred to therein), (viii) until
such time as such replacement shall be consummated, the Borrower shall pay all additional amounts
(if any) required pursuant to Section 2.15 or 2.16(a), as the case
may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender;
provided, further, that if the Borrower seeks to exercise such right, it must do so
within sixty (60) days after it first knows or should have known of the occurrence of the event or
events giving rise to such right, and neither the Administrative Agent nor any Lender shall have
any obligation to identify or locate a replacement Lender for the Borrower (it being expressly
agreed that in such circumstances it is the Borrower’s obligation to identify or locate a
replacement Lender that is acceptable to the Administrative Agent).

SECTION 3. LETTERS OF CREDIT

     3.1 L/C Commitment.

          (a) On the terms and subject to the conditions hereof, the Issuing Lender, in reliance on the
agreements of the other Lenders set forth in Section 3.4(a), agrees to issue standby letters of credit
(the letters of credit issued on and after the Effective Date pursuant to this Section 3,
collectively, the “Letters of Credit”) for the account of the Borrower on any Business Day
on or after the Effective Date and during the Commitment Period in such form as may be approved
from time to time by the Issuing Lender; provided, that no Issuing Lender shall issue any
Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the
L/C Commitment or (ii) the aggregate amount of the Available Commitments would be less than zero.
Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier
of (x) the first anniversary of its date of issuance and (y) the date which is five Business Days
prior to the Termination Date; provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).

          (b) No Issuing Lender shall at any time be obligated to issue, amend, extend or renew any
Letter of Credit hereunder if such issuance, amendment, extension or renewal would conflict with,
or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.

     3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time
request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its
address for notices specified herein an Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other papers and information as the
Issuing Lender may request. Concurrently with the delivery of an Application to the Issuing
Lender, the Borrower shall deliver a copy thereof to the Administrative Agent and the
Administrative Agent shall provide notice of such request to the Lenders. Upon receipt of any
Application, the Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested thereby by
issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be
agreed to

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by the Issuing Lender and the Borrower (but in no event shall any Issuing Lender be
required to issue any Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers and information
relating thereto). Promptly after issuance by the Issuing Lender of a Letter of Credit, the
Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower. The Issuing Lender
shall promptly give notice to the Administrative Agent of the issuance of each Letter of Credit
issued by the Issuing Lender (including the amount thereof), and shall provide a copy of such
Letter of Credit to the Administrative Agent as soon as possible after the date of issuance.

     3.3 Fees and Other Charges.

          (a) The Borrower will pay a fee on the aggregate drawable amount of all outstanding Letters of
Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar
Loans, shared ratably among the Lenders in accordance with their respective Percentages and payable
quarterly in arrears on each Fee Payment Date after the issuance date. On and after the occurrence
of an Event of Default, until the time when such Event of Default shall have been cured or waived
in writing by the Required Lenders or all the Lenders (as required by this Agreement), the
foregoing fee shall be increased by two percent (2.00%) payable on demand.

          (b) The Borrower shall pay directly to the Issuing Lender for its own account a fronting fee
in an amount with respect to each Letter of Credit equal to 0.10% per annum of the amount of such
Letter of Credit, due and payable quarterly in arrears on each Fee Payment Date after the issuance
date; provided, that in the case of an increase in the amount of a Letter of Credit after
the issuance thereof, such fronting fee shall be payable only on the increased amount thereof. In
addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing Lender for such
normal and customary costs and expenses as are incurred or charged by the Issuing Lender in
issuing, negotiating, effecting payment under, amending, renewing or otherwise administering any
Letter of Credit.

     3.4 L/C Participations.

          (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant,
and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender,
on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk, an
undivided interest equal to such L/C Participant’s Percentage in the Issuing Lender’s obligations
and rights under each Letter of Credit issued by the Issuing Lender hereunder and the amount of
each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit
issued by the Issuing Lender for which the Issuing Lender is not reimbursed in full by the Borrower
in accordance with the terms of this Agreement, such L/C Participant shall pay to the
Administrative Agent for the account of the Issuing Lender upon demand at the Issuing Lender’s
address for notices specified herein (and thereafter the Administrative Agent shall promptly pay to
the Issuing Lender) an amount equal to such L/C
Participant’s Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed. Each L/C Participant’s obligation to pay such amount shall be absolute and

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unconditional and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such L/C Participant may have against the
Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the
Borrower, any other Borrower or any other L/C Participant or (v) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.

          (b) If any amount (a “Participation Amount”) required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender
within three Business Days after the date such payment is due, the Issuing Lender shall so notify
the Administrative Agent, which shall promptly notify the L/C Participants, and each L/C
Participant shall pay to the Administrative Agent, for the account of the Issuing Lender, on demand
(and thereafter the Administrative Agent shall promptly pay to the Issuing Lender) an amount equal
to the product of (i) such Participation Amount, times (ii) the daily average Federal Funds
Effective Rate during the period from and including the date such payment is required to the date
on which such payment is immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any Participation Amount required to be paid by any L/C
Participant pursuant to Section 3.4(a) is not made available to the Administrative Agent for the
account of the Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Administrative Agent on behalf of the Issuing Lender shall be entitled to
recover from such L/C Participant, on demand, such Participation Amount with interest thereon
calculated from such due date at the rate per annum applicable to ABR Loans. A certificate of the
Administrative Agent submitted on behalf of the Issuing Lender to any L/C Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of manifest error.

          (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit
and has received from the Administrative Agent any L/C Participant’s pro rata share of such payment
in accordance with Section 3.4(a), the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied
thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender
will distribute to the Administrative Agent for the account of such L/C Participant (and thereafter
the Administrative Agent will promptly distribute to such L/C Participant) its pro rata share
thereof; provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall
return to the Administrative Agent for the account of the Issuing Lender (and thereafter the
Administrative Agent shall promptly return to the Issuing Lender) the portion thereof previously
distributed by the Issuing Lender.

     3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse the
Issuing Lender on (i) the Business Day on which the Borrower receives notice from the
Issuing Lender of a draft drawn on a Letter of Credit issued by the Issuing Lender and paid by
the Issuing Lender, if such notice is received on such Business Day prior to 10:00 A.M. or (ii) if

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clause (i) above does not apply, the Business Day immediately following the day on which the
Borrower receives such notice, for the amount of (A) such draft so paid and (B) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Lender in connection with such payment
which are obligations of the Borrower hereunder (the amounts described in the foregoing clauses (A)
and (B) in respect of any drawing, collectively, the “Payment Amount”). Each such payment
shall be made to the Issuing Lender at its address for notices specified herein in lawful money of
the United States of America and in immediately available funds. Interest shall be payable on each
Payment Amount from the date of the applicable drawing until payment in full at the rate set forth
in (i) until the second Business Day following the date of the applicable drawing, Section 2.11(b)
and (ii) thereafter, Section 2.11(c). Each drawing under any Letter of Credit shall (unless an
event of the type described in clause (i) or (ii) of Section 8(f) shall have occurred and be
continuing with respect to the Borrower, in which case the procedures specified in Section 3.4 for
funding by L/C Participants shall apply) constitute a request by the Borrower to the Administrative
Agent for a borrowing pursuant to Section 2.1 of ABR Loans (or, at
the option of the Administrative Agent and the Swingline Lender in their sole discretion, a
borrowing pursuant to Section 2.4 of Swingline Loans) in the amount of such drawing. The Borrowing
Date with respect to such borrowing shall be the first date on which a borrowing of Revolving Loans
(or, if applicable, Swingline Loans) could be made, pursuant to Section 2.1
(or, if applicable, Section 2.4), if the Administrative Agent
had received a notice of such borrowing at the time the Administrative Agent receives notice from
the Issuing Lender of such drawing under such Letter of Credit.

     3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be
absolute and unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had against any Issuing
Lender, any beneficiary of a Letter of Credit or any other Person. Without waiving any claim the
Borrower may assert against the Issuing Lender pursuant to Section 3.12, the Borrower also agrees
with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though such documents
shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit, except for errors or omissions found
by a final and nonappealable decision of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Issuing Lender. The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit
issued by it or the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards or care specified in the Uniform Commercial
Code of the State of Minnesota, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.

     3.7 Letter of Credit Payments. If any draft shall be presented for payment under any
Letter of Credit, the Issuing Lender shall promptly notify the Borrower and the Administrative
Agent of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower

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in
connection with any draft presented for payment under any Letter of Credit, in addition to any
payment obligation expressly provided for in such Letter of Credit issued by the Issuing Lender,
shall be limited to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment appear on their face to be in conformity with
such Letter of Credit.

     3.8 Applications. To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this
Section 3 shall apply.

     3.9 Actions of Issuing Lender. The Issuing Lender shall be entitled to rely, and
shall be fully protected in relying, upon any draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it in good faith 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, independent accountants and other experts selected by the Issuing Lender. The
Issuing Lender shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or concurrence of the Required Lenders as
it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by
the Lenders against any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Notwithstanding any other provision of this Section
3.9, the Issuing Lender shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any
future holders of a participation in any Letter of Credit.

     3.10 Borrower’s Indemnification. The Borrower hereby agrees to indemnify and hold
harmless each Lender, the Issuing Lender and the Administrative Agent, and their respective
directors, officers, agents and employees from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Lender, the Issuing Lender or the Administrative Agent
may incur (or which may be claimed against such Lender, the Issuing Lender or the Administrative
Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and
delivery or transfer of or payment or failure to pay under any Letter of Credit or any actual or
proposed use of any Letter of Credit, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the Issuing Lender may incur by reason of or in connection
with (i) the failure of any other Lender to fulfill or comply with its obligations to the Issuing
Lender hereunder (but nothing herein contained shall affect any rights the Borrower may have
against any defaulting Lender) or (ii) by reason of or on account of the Issuing Lender issuing any
Letter of Credit which specifies that the term “Beneficiary” included therein includes any
successor by operation of law of the named Beneficiary, but which Letter of Credit does not require
that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the Issuing Lender, evidencing the appointment of such successor Beneficiary;
provided that the Borrower shall not be required to indemnify any Lender, any Issuing
Lender or the Administrative Agent for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or
gross negligence of the Issuing Lender in determining whether a request presented under any Letter
of Credit complied with the terms of such Letter of Credit or (y) the Issuing Lender’s failure to
pay

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under any Letter of Credit after the presentation to it of a request strictly complying with
the terms and conditions of such Letter of Credit. Nothing in this Section is intended to limit
the obligations of the Borrower under any other provision of this Agreement.

     3.11 Lenders’ Indemnification. Each Lender shall, ratably in accordance with its
Percentage, indemnify the Issuing Lender, its affiliates and their respective directors, officers,
agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees’ gross negligence or willful misconduct or the Issuing
Lender’s failure to pay under any Letter of Credit after the presentation to it of a request
strictly complying with the terms and conditions of the Letter of Credit) that such indemnitees may
suffer or incur in connection with this Section or any action taken or omitted by such indemnitees
hereunder.

     3.12 Claims Against L/C Issuer. The Borrower will have a claim against the L/C Issuer,
and the L/C Issuer will be liable to the Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the
Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C
Issuer’s payment or failure to pay under any Letter of Credit that is in violation of Article 5 of
the UCC.

SECTION 4. REPRESENTATIONS AND WARRANTIES

          To induce the Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and each Lender, on the Effective Date and on the date of each
Credit Event hereunder after the Effective Date, that:

     4.1 Financial Condition. The audited consolidated balance sheets of the Borrower and
its consolidated Subsidiaries as of September 30, 2004 and 2005, and the related consolidated
statements of income and cash flows for the fiscal years ended September 30, 2003, 2004 and 2005,
reported on by KPMG LLP or Deloitte & Touche LLP, as applicable, and the unaudited consolidated
balance sheets of the Borrower and its consolidated Subsidiaries as of June 30, 2005 and 2006, and
the related consolidated statements of income and cash flows for nine months ended June 30, 2005
and 2006 present fairly the consolidated financial condition of the Borrower and its consolidated
Subsidiaries as of such date, and the consolidated results of its operations and its consolidated
cash flows for the fiscal period then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved. Neither the Borrower nor any of its Subsidiaries has any
Guarantee Obligation, contingent liabilities, liability for taxes, any long-term leases, unusual
forward or long-term commitments, including any Swap Agreement, or other outstanding obligations
(including obligations in respect of off-balance sheet transactions) which, in any such case, are
material in the aggregate, except as disclosed in the
most recent financial statements referred to in this paragraph or in the financial statements
delivered to the Administrative Agent pursuant to Section 6.1.

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     4.2 No Material Adverse Effect. Since September 30, 2005, there has been no
development or event, including any development or event with respect to the Disclosed Litigation
or any matter disclosed in the Specified Exchange Act Filings, that has had or could reasonably be
expected to have a Material Adverse Effect.

     4.3 Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization, (b) has the corporate power and corporate authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which it is currently
engaged, (c) is duly qualified as a foreign corporation or other organization and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except to the extent that the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply therewith could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.

     4.4 Power; Authorization; Enforceable Obligations. The Borrower has the corporate
power and corporate authority to make, deliver and perform the Loan Documents and to obtain
Extensions of Credit. The Borrower has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Documents and to authorize the extensions of credit
on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice
to or other act by or in respect of, any Governmental Authority or any other Person is required in
connection with the Extensions of Credit or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except consents, authorizations,
filings and notices which have been obtained or made and are in full force and effect. This
Agreement has been, and each other Loan Document upon execution and delivery will be, duly executed
and delivered. This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).

     4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the
other Loan Documents, the issuance of Letters of Credit, the Extensions of Credit and the use of
the proceeds thereof will not violate in any material respect any Requirement of Law applicable to
the Borrower or any of its Subsidiaries or any Contractual Obligation of the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or any such Contractual
Obligation. No Requirement of Law or Contractual Obligation applicable to the Borrower or any of
its Subsidiaries could be expected, either individually or in the aggregate, to have a Material
Adverse Effect.

     4.6 Litigation. Except as set forth in Item 1 of Part II of the Borrower’s quarterly
report on Form 10-Q for the fiscal quarter ended June 30, 2006 or Item 3 of Part I of the
Borrower’s annual report on Form 10-K for the fiscal year ended September 30, 2005 (the
“Disclosed Litigation”), no litigation, investigation or proceeding of or before any
arbitrator or

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Governmental Authority is pending or, to the knowledge of the Borrower, threatened by
or against the Borrower or any of its Subsidiaries or against any of their respective properties or
revenues with respect to any of the Loan Documents or that, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.

     4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

     4.8 Taxes. The Borrower and each of its Subsidiaries has filed or caused to be filed
all Federal and state returns of income and franchise taxes imposed in lieu of net income taxes and
all other material tax returns that are required to be filed and has paid all taxes shown to be due
and payable on said returns or with respect to any claims or assessments for taxes made against it
or any of its property by any Governmental Authority (other than any amounts the validity of which
are currently being contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower or any of its
Subsidiaries, as applicable). No material tax Liens have been filed against the Borrower or any of
its Subsidiaries other than (a) Liens for taxes which are not delinquent or (b) Liens for taxes
which are being contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower or any of its
Subsidiaries, as applicable.

     4.9 Federal Regulations. No part of the proceeds of any Loans, and no other
Extensions of Credit, will be used for “buying” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulation U as now and from time to time
hereafter in effect or for any purpose that violates the provisions of the Regulations of the
Board.

     4.10 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred with respect
to any Plan, and each Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. No termination of a Single Employer Plan has occurred that is a distress
termination under Section 41041 of ERISA, a termination at the instigation of the PBGC or has
resulted in, or could reasonably be likely to result in, a material liability to the Company, and
no Lien in favor of the PBGC or a Plan has arisen. The present value of all accrued benefits under
each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits by a material
amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity
would become subject to any
material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. To the Borrower’s knowledge, no such
Multiemployer Plan is in Reorganization or Insolvent.

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     4.11 Investment Company Act; Other Regulations. The Borrower is not an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any
Requirement of Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness under this Agreement.

     4.12 Environmental Matters. Except as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:

          (a) the facilities and properties owned, leased or operated by the Borrower and its
Subsidiaries (the “Properties”) do not contain, and, to the Borrower’s knowledge, have not
previously contained, any Materials of Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could give rise to liability under,
any Environmental Law;

          (b) neither the Borrower nor any of its Subsidiaries has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any of the Properties or
the business operated by the Borrower and its Subsidiaries (the “Business”), nor does the
Borrower have knowledge or reason to believe that any such notice will be received or is being
threatened;

          (c) Materials of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that, to the Borrower’s knowledge,
could give rise to liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that, to the Borrower’s knowledge, could give rise to liability under,
any applicable Environmental Law;

          (d) no judicial proceeding or governmental or administrative action is pending or, to the
knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any of
its Subsidiaries is or will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business;

          (e) there has been no release or threat of release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the operations of the Borrower or any of its
Subsidiaries in connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to liability under Environmental
Laws;

          (f) the Properties and all operations at the Properties are in compliance, and have in the
last five years been in compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any Environmental Law with respect
to the Properties or the Business; and

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          (g) neither the Borrower nor any of its Subsidiaries has assumed any liability of any other
Person under Environmental Laws.

     4.13 Accuracy of Information, etc. No statement or information (other than
projections, if any, and pro forma information) contained in this Agreement, any
other Loan Document or any other document, certificate or statement furnished by or on behalf of
the Borrower to the Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished, any untrue statement of
a material fact or omitted to state a material fact necessary to make the statements contained
herein or therein not misleading. The projections, if any, and pro forma financial
information contained in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a material amount. Except
as set forth in the Borrower’s Specified Exchange Act Filings, there is no fact known to the
Borrower that could reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.

     4.14 Regulatory Matters. The Borrower is not subject to regulation under the
Investment Company Act of 1940, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or to any other Requirement of Law (other than Regulation X of the Board)
limiting its ability to incur Indebtedness.

     4.15 Burdensome Contractual Obligations, Etc. Neither the Borrower or any of its
Subsidiaries nor any of their respective properties are subject to any Contractual Obligation or
Requirement of Law which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

     4.16 Foreign Assets Control, Etc.

          (a) The Borrower (i) is not, nor is controlled by, a Designated Person; (ii) to its knowledge,
has not received funds or other property from a Designated Person; and (iii) is not in breach, or
to its knowledge, the subject, of any action or investigation under any Anti-Terrorism Law. To its
knowledge, (i) the Borrower does not engage nor will it knowingly engage in any dealings or
transactions with any Designated Person, and (ii) the Borrower is not nor will it knowingly be
otherwise associated, with any Designated Person. The Company and each Subsidiary are in
compliance, in all material respects, with the Patriot Act. The Company has taken reasonable
measures to ensure compliance with the Anti-Terrorism Laws.

          (b) No portion of the proceeds of any Extension of Credit made hereunder has been or will be
used, directly or indirectly for, and no fee, commission, rebate or other value has been or will be
paid to, or for the benefit of, any governmental official, political party, official of

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a political party or any other Person acting in an official capacity in violation of any
applicable law, including the U.S. Foreign Corrupt Practices Act of 1977, as amended.

SECTION 5. CONDITIONS PRECEDENT

     5.1 Conditions to the Effective Date. The occurrence of the Effective Date is subject
to the satisfaction of the following conditions precedent:

          (a) Credit Agreement. The Administrative Agent shall have received this Agreement,
executed and delivered by the Administrative Agent, the Borrower and each Person listed on
Schedule 1.1A.

          (b) Notes. A Revolving Loan Note payable to each Lender requesting such a note in the
principal amount of its Commitment and the Swingline Note payable to the Swingline Lender in the
principal amount of the Swingline Commitment, in each case, duly executed by the Borrower.

          (c) Financial Statements. The Lenders shall have received the financial statements
described in Section 4.1.

          (d) Reduction of Commitment under the Existing Credit Agreement. The Administrative
Agent shall have received evidence that the commitment under the Existing Credit Agreement has been
or concurrently with the Effective Date shall be reduced to $750,000, which represents the face
amount of the outstanding letters of credit under the Existing Credit Agreement as of the Effective
Date.

          (e) Consents and Approvals. All governmental and third party consents and approvals
necessary in connection with this Agreement and the other Loan Documents and the transactions
contemplated hereby shall have been obtained and be in full force and effect; and the
Administrative Agent shall have received a certificate executed by two Responsible Officers to the
foregoing effect.

          (f) Fees. The Lenders, the Joint Lead Arrangers and the Administrative Agent shall
have received all fees required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before the Effective Date.

          (g) Closing Certificate; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of the Borrower,
dated the Effective Date, substantially in the form of Exhibit H, with appropriate insertions and
attachments, including the certificate of incorporation of the Borrower certified by the Secretary
of State of the State of Delaware, and (ii) a good standing certificate for the Borrower from the
Secretary of State of the State of Delaware.

          (h) Legal Opinion. The Administrative Agent shall have received the legal opinion of
Faegre & Benson, special counsel on behalf of the Borrower, substantially in the form of Exhibit J.

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          (i) Representations and Warranties. Each of the representations and warranties made
by the Borrower in this Agreement that does not contain a materiality qualification shall be true
and correct in all material respects on and as of the Effective Date, and each of the
representations and warranties made by the Borrower in this Agreement that contains a materiality
qualification shall be true and correct on and as of the Effective Date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such representations
and warranties were true and correct in all material respects, or true and correct, as the case may
be, as of such earlier date).

          (j) UCC Searches. Uniform Commercial Code search certificates from the state of
organization of the Borrower and each of the Borrower’s Significant Subsidiaries (as defined in
Article I, Rule 1-02(w) of Regulation S-X of the Exchange Act) organized under the laws of the
United States or any state thereof reflecting no financing statements or filings which evidence
Liens of other Persons in the Borrower’s or such domestic Significant Subsidiaries properties or
assets except for any such Liens which are expressly permitted by this Agreement.

          (k) Compliance Certificate. A certificate duly executed by two Responsible Officers
containing all information and calculations reasonably necessary to establish that the Total
Leverage Ratio on the last day of the most recently ended fiscal quarter prior to the Effective
Date, after giving pro forma effect for any Credit Event to occur on the Effective Date and the
repayment of any Indebtedness with the proceeds of any such Credit Event, was less than or equal to
1.00 to 1.00.

          (l) No Default. No Default or Event of Default shall have occurred and be continuing.

     5.2 Conditions to Each Credit Event. The agreement of each Lender to make any Loan or
to issue or extend the expiry date under, or participate in, a Letter of Credit (other than the
extension of a Letter of Credit pursuant to the evergreen provisions therein) (each, a “Credit
Event”), including the Issuing Lender to issue a Letter of Credit, on any date (including any
Credit Event to occur on the Effective Date) is subject to the satisfaction of the following
conditions precedent:

          (a) Satisfaction of Conditions Precedent in Section 5.1. The conditions precedent set
forth in Section 5.1 shall have been satisfied or waived in accordance with this Agreement as of
the Effective Date.

          (b) Representations and Warranties. Each of the representations and warranties made
by the Borrower in this Agreement that does not contain a materiality qualification shall be true
and correct in all material respects on and as of the date of such Credit Event as if made on and
as of such date, and each of the representations and warranties made by the Borrower in this
Agreement that contains a materiality qualification shall be true and correct
on and as of such date (or, to the extent such representations and warranties specifically
relate to an earlier date, that such representations and warranties were true and correct in all
material respects, or true and correct, as the case may be, as of such earlier date).

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          (c) Material Adverse Change. Since September 30, 2005, there has been no material
adverse change in the business, assets, results of operations or condition (financial or other) of
the Borrower and its Subsidiaries, taken as a whole.

          (d) No Default. No Default or Event of Default shall have occurred and be continuing
on the date of such Credit Event or after giving effect to the Credit Event requested to be made on
such date.

Each borrowing of Loans hereunder, and each request by the Borrower for the issuance of or
extension of an expiry date under a Letter of Credit hereunder (other than the extension of a
Letter of Credit pursuant to the evergreen provisions therein), shall constitute a representation
and warranty by the Borrower as of the date of such Credit Event that the conditions contained in
this Section 5.2 have been satisfied.

SECTION 6. AFFIRMATIVE COVENANTS

          The Borrower hereby agrees that, so long as the Commitments remain in effect or any Obligation
remains unpaid or unperformed, the Borrower shall and shall cause its Subsidiaries to:

     6.1 Financial Statements. Furnish to the Administrative Agent, and the Administrative
Agent shall deliver to each Lender via Intralinks or any other method reasonably acceptable to the
Administrative Agent:

          (a) as soon as available, but in any event within the earlier of (i) 90 days after the end of
each fiscal year of the Borrower or (ii) five Business Days after the filing of the following
financial statements with the SEC, a copy of the audited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such year and the related audited consolidated
statements of income, statements of stockholders’ equity and comprehensive income and cash flows
for such year, setting forth in each case in comparative form the figures for the previous year,
accompanied by the unqualified opinion of Deloitte & Touche LLP or other independent certified
public accountants of nationally recognized standing; and

          (b) as soon as available, but in any event within the earlier of (i) 45 days after the end of
each of the first three quarterly periods of each fiscal year of the Borrower or (ii) five Business
Days after the filing of the following financial statements with the SEC, the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such
quarter, the related unaudited consolidated statements of income for such quarter and the portion
of the fiscal year through the end of such quarter, statement of stockholders’ equity and
comprehensive income as at the end of such quarter and cash flows for the portion of the fiscal
year through the end of such quarter, setting forth in each case (other than the statement of
stockholders’ equity and comprehensive income) in comparative form the figures for the
previous year, certified by two Responsible Officers as being fairly stated in all material
respects (subject to normal year-end audit adjustments).

All such financial statements shall be complete and correct in all material respects and shall be
prepared in reasonable detail and in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods. All financial statements and reports referred to

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in Section 6.1(a) and (b) shall be deemed to have delivered upon the filing of such financial
statements and reports by the Borrower through the SEC’s EDGAR system or publication by the
Borrower of such financial statements and reports on its website and the receipt by the
Administrative Agent of electronic notice from the Borrower with a link to such financial
statements and reports.

     6.2 Certificates; Other Information. Furnish to the Administrative Agent and each
Lender:

          (a) concurrently with the delivery of any financial statements pursuant to Section 6.1, (i) a
certificate executed by two Responsible Officers stating that such Responsible Officers have
obtained no knowledge of any Default or Event of Default except as specified in such certificate
and (ii) a Compliance Certificate, substantially in the form of Exhibit G, containing all
information and calculations reasonably necessary for determining compliance by the Borrower with
the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be;

          (b) (i) within five days after the same are sent, copies of all financial statements and
reports that the Borrower sends to the holders of any class of its debt securities or public equity
securities, and (ii) within five days after the same are filed, copies of all financial statements
and reports that the Borrower may make to, or file with, the SEC or any national securities
exchange or national market, provided that, such financial statements and reports referred to in
clauses (i) and (ii) shall be deemed to have delivered upon the filing of such financial statements
and reports by the Borrower through the SEC’s EDGAR system or publication by the Borrower of such
financial statements and reports on its website; and

          (c) promptly, such additional financial and other information as the Joint Lead Arrangers may
from time to time reasonably request.

     6.3 Payment of Taxes. Pay all taxes due and payable by or any other tax assessments
made against the Borrower or any of its Subsidiaries or any of their respective property by any
Governmental Authority (other than any amounts the validity of which are currently being contested
in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP
have been provided on the books of the Borrower or any of its Subsidiaries, as applicable).

     6.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in full
force and effect its organizational existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of
Law except to the extent that failure to comply therewith could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     6.5 Maintenance of Property; Insurance. (a) Keep all property useful and necessary in
its business in good working order and condition, ordinary wear and tear excepted, and

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(b) maintain with financially sound and reputable insurance companies insurance on its property in at least such
amounts and against at least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business of comparable size and financial strength and
owning similar properties in the same general areas in which the Borrower operates, which may
include self-insurance, if determined by the Borrower to be reasonably prudent.

     6.6 Inspection of Property; Books and Records; Discussions. Keep proper books of
records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation to its business and
activities and (b) (i) permit representatives of the Administrative Agent and any Lender (but no
more than once annually in case of Lenders unless and Event of Default shall have occurred and be
continuing) to visit and inspect any of its and its Subsidiaries’ properties and examine and make
abstracts from any of its books and records at any reasonable time and to discuss the business,
operations, properties and financial and other condition of the Borrower and its Subsidiaries with
officers and employees of the Borrower and its Subsidiaries and (ii) use commercially reasonable
efforts to provide for the Lenders to meet with the independent certified public accountants of the
Borrower and its Subsidiaries to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries.

     6.7 Notices. Promptly give notice to the Administrative Agent and each Lender:

          (a) the occurrence of any Default or Event of Default;

          (b) any litigation or proceeding to which the Borrower or any of its Subsidiaries is a party
(i) in which the amount involved is $25,000,000 or more and not covered by insurance, (ii) in which
injunctive or similar relief is sought, (iii) which relates to any Loan Document or (iv) seeks to
prohibit the ownership or operation by the Borrower or any of its Subsidiaries of all or a material
portion of their respective businesses or assets;

          (c) the following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any
Plan; and

          (d) any development or event that has had or could reasonably be expected to have a Material
Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of two Responsible
Officers setting forth the details of the occurrence referred to therein and stating what action
the Borrower proposes to take with respect thereto.

     6.8 Maintenance of Licenses, etc. Maintain in full force and effect any
authorization, consent, license or approval of any Governmental Authority necessary for the conduct
of the

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Borrower’s business as now conducted by it or necessary in connection with this Agreement,
except to the extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

     6.9 More Favorable Debt Covenants. Promptly advise the Administrative Agent and the
Lenders if at any time after the date of this Agreement the Borrower or any of its Subsidiaries
shall enter into or be a party to any instrument or agreement relating to or amending any
provisions applicable to any of its Indebtedness which exceeds $50,000,000. Thereupon, if the
Administrative Agent or the Required Lenders shall request, upon notice to the Borrower, the
Administrative Agent and the Lenders shall enter into an amendment to this Agreement or an
additional agreement (as the Administrative Agent may request), providing for substantially the
same covenants and defaults as those provided for in such instrument or agreement to the extent
required and as may be selected by the Administrative Agent.

     6.10 Use of Proceeds. Only use the proceeds of the Extensions of Credit to: (a)
refinance certain debt outstanding, including the debt under the Existing Credit Agreement and
Convertible Notes, (b) finance Permitted Acquisitions, (c) repurchase shares of the Borrower’s
Capital Stock in accordance with applicable Legal Requirements and (d) provide for the working
capital needs and general corporate purpose needs of the Borrower and its Subsidiaries.

SECTION 7. NEGATIVE COVENANTS

          The Borrower hereby agrees that, so long as the Commitments remain in effect or any Obligation
remains unpaid or unperformed:

     7.1 Total Leverage Ratio. The Borrower shall not permit the Total Leverage Ratio on
the last day of any fiscal quarter to exceed 3.00 to 1.00.

     7.2 Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed Charge
Coverage Ratio on the last day of any fiscal quarter to be less than 2.50 to 1.00.

     7.3 Change in Business. The Borrower shall not and shall not permit its Subsidiaries
to engage, either directly or indirectly through Affiliates, in any business substantially
different from the business of the Borrower or the applicable Subsidiary as of the Effective Date;
provided, however, that the Borrower or any of its Subsidiaries may (a) form or acquire an
Industrial Loan Corporation and (b) act as a broker, agent or act in another similar capacity
for third party providers of financial product or consumers seeking financial products.

     7.4 Mergers, Acquisitions, Etc. The Borrower shall not and shall not permit its
Subsidiaries to consolidate with or merge into any other Person or permit any other Person to merge
into it, acquire any Person as a new Subsidiary, sell all or substantially all of its assets or
acquire all or substantially all of the assets of any other Person, except for the following (each,
a “Permitted Acquisition”):

          (a) the Borrower and its wholly-owned Subsidiaries may merge with each other and the
Borrower’s wholly-owned Subsidiaries may sell all or substantially all of their

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assets to each other, provided that in any such merger involving the Borrower, the Borrower is the surviving
Person; and

          (b) the Borrower or any of its Subsidiaries may acquire (by merger or otherwise) any Person as
a new Subsidiary or acquire all or substantially all the assets of any other Person (each, a
“Proposed Target”); provided that:

               (i) no Default or Event of Default exists or will result after giving effect to any such
acquisition;

               (ii) the Proposed Target is engaged in a business or activity reasonably related to the
business of the Borrower and its Subsidiaries (for purposes hereof, the operation of an Industrial
Loan Corporation shall be deemed reasonably related to the business of the Borrower and its
Subsidiaries);

               (iii) after giving effect to such acquisition, the Proposed Target shall be owned directly by
the Borrower or shall become a wholly-owned Subsidiary, directly or indirectly, of the Borrower;

               (iv) on a pro forma basis, as if the Proposed Target had been a Subsidiary of the Borrower or
owned by the Borrower at the time the most recent Compliance Certificate was delivered to the
Administrative Agent, the Borrower would have been in compliance with the financial covenants set
forth in Section 7.1 and Section 7.2;

               (v) the Board of Directors or other governing body of the Proposed Target shall have approved
the acquisition and such acquisition shall be completed as a result of an arm’s length negotiation
(i.e. on a non-hostile basis); and

               (vi) after giving effect to such acquisition, (A) the pro forma Total Leverage Ratio shall be
less than 2.50 to 1.00 or (B) the total cash or other consideration paid or payable in cash or
other property (including any assumed Indebtedness) in connection with such acquisition and all
acquisitions during such fiscal year shall not exceed $100,000,000.

          (c) the Borrower or its Subsidiaries may enter into any other merger, consolidation,
acquisition of assets or sale of assets approved in writing by the Required Lenders.

     7.5 Liens. The Borrower shall not and shall not permit its Subsidiaries to create,
incur, assume or permit to exist any Lien on or with respect to any of its Property whether now
owned or hereafter acquired, except for the following:

          (a) Liens listed in Schedule 7.5(a) and existing on the date of this Agreement;

          (b) Liens for taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith, provided that adequate reserves for the
payment thereof have been established in accordance with GAAP and no Property of the Borrower or
any of its Subsidiaries is subject to impending risk of loss or forfeiture by reason of nonpayment
of the obligations secured by such Liens;

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          (c) Liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords and other
similar Liens imposed by applicable Legal Requirements incurred in the ordinary course of business
or are being contested in good faith, provided that adequate reserves for the payment thereof have
been established in accordance with GAAP and no Property of the Borrower or any of its Subsidiaries
is subject to impending risk of loss or forfeiture by reason of nonpayment of the obligations
secured by such Liens;

          (d) Deposits under workers’ compensation, unemployment insurance and social security laws or
to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the ordinary course of business;

          (e) Zoning restrictions, easements, rights-of-way, title irregularities and other similar
encumbrances, which alone or in the aggregate are not substantial in amount and do not materially
detract from the value of the Property subject thereto or interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;

          (f) Liens incurred in connection with the extension, renewal or refinancing of the
Indebtedness secured by the Liens described in clauses (a) and (e) above, provided that any
extension, renewal or replacement Lien (i) is limited to the property covered by the existing Lien
and (ii) in the case of Liens securing Indebtedness described in clause (a), secures Indebtedness
which is no greater in amount and has material terms no less favorable to the Lenders than the
Indebtedness secured by the existing Lien;

          (g) Any attachment or judgment Lien not constituting an Event of Default;

          (h) Banker’s Liens, rights of setoff and similar Liens with respect to cash and Marketable
Securities on deposit in one or more bank or securities accounts in the ordinary course of
business; and

          (i) Liens securing other Indebtedness in aggregate principal amount not exceeding 5% of the
stockholders’ equity of the Borrower and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) as shown on the most recent
balance sheet delivered to the Administrative Agent in accordance with Section 6.1.

     7.6 Subsidiary Debt. The Borrower shall not permit its Subsidiaries to create, incur,
assume or permit to exist any Indebtedness other than (i) Indebtedness owing to the Borrower or
another Subsidiary, and (ii) other Indebtedness in an aggregate principal amount not exceeding 5%
of the stockholders’ equity of the Borrower and its Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP) as shown on the most recent balance sheet
delivered to the Administrative Agent in accordance with Section 6.1.

     7.7 Distributions. The Borrower shall not and shall not permit its Subsidiaries to
reorganize, recapitalize or make any Distributions or set apart any funds for any such purpose,
except that (a) any wholly-owned Subsidiary may make Distributions to the Borrower or another
wholly-owned Subsidiary, and (b) the Borrower and its Subsidiaries may make a Distribution or set
apart funds for such purpose if (i) no Default or Event of Default exists or will result after

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giving effect to any such Distribution and (ii) on a pro forma basis, as if the Distribution has
been made, or the funds were set apart for such purpose, at the time the most recent Compliance
Certificate was delivered to the Administrative Agent, the Borrower would have been in compliance
with the financial covenants set forth in Section 7.1 and Section 7.2.

     7.8 Transactions With Affiliates. The Borrower shall not and shall not permit its
Subsidiaries to enter into any Contractual Obligation with any Affiliate or engage in any other
transaction with any Affiliate except upon terms at least as favorable to the Borrower or such
Subsidiary, as applicable, as an arms-length transaction with unaffiliated Persons.

     7.9 Subsidiary Restrictions. The Borrower shall not and shall not permit its
Subsidiaries to enter into, or be otherwise subject to, any Contractual Obligation (including its
charter documents) which limits the amount of or otherwise imposes restrictions on (a) the payment
of Distributions by any Subsidiary to the Borrower or any other Subsidiary, (b) the payment by any
Subsidiary of any Indebtedness owed to the Borrower or any other Subsidiary, (c) the making of
loans or advances by any Subsidiary to the Borrower or any other Subsidiary, (d) the transfer by
any Subsidiary of its property to the Borrower or any other Subsidiary, or (e) the merger or
consolidation of any Subsidiary with or into the Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by applicable laws or by
this Agreement which (taken as a whole) could reasonably be expected not to have a Material Adverse
Effect, (ii) the foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is not prohibited
hereunder, (iii) clause (d) of the foregoing shall not apply to customary provisions in leases and
other contracts restricting the assignment thereof, and (iv) the foregoing shall not apply to (A)
any Contractual Obligation in effect on the date hereof or that governs any Indebtedness, Capital
Stock or assets of a Person acquired by a Borrower or any Subsidiary as in effect on the date of
such acquisition (except to the extent such Contractual Obligation was created or such Indebtedness
was incurred in connection with or in contemplation of such acquisition, which limitation or
restriction is not applicable to any Person, or the assets of any Person, other than the Person, or
the assets of the Person, so acquired, provided, that in the case
of Indebtedness, such Indebtedness was permitted by the terms of this Agreement to be
incurred), (B) customary provisions in joint venture agreements and other similar instruments
relating solely to the securities, assets and revenues of such joint venture, and (C) restrictions
on deposits or minimum net worth requirements imposed under contracts entered into in the ordinary
course of business.

SECTION 8. EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

          (a) the Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when
due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan
or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan
Document, within five Business Days after any such interest or other amount becomes due in
accordance with the terms thereof; or

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          (b) any representation or warranty made or deemed made by the Borrower herein or in any other
Loan Document or that is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or as of the date made or
deemed made; or

          (c) the Borrower shall default in the observance or performance of any agreement contained in
Section 6.4, Section 6.7(a), Section 6.9 or Section 7 of this Agreement; or

          (d) the Borrower shall default in the observance or performance of any other agreement
contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section 8), and such default shall continue unremedied for a period of 20 days
after the date of such default; or

          (e) the Borrower or any of its Subsidiaries shall (i) default in making any payment of any
principal of or interest on any Indebtedness (including any Guarantee Obligation, but excluding the
Loans) beyond the period of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due prior to its stated
maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause (i) or (ii) of
this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one
or more defaults, events or conditions of the type described in clauses (i) or (ii) of this
paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $25,000,000; or

          (f) (i) the Borrower or any of its Subsidiaries shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (i) above that (A) results
in the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any such relief that

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shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as they become due;
or (v) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set forth in the
foregoing clauses (i) through (iv);

          (g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency”
(as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan
or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any of its
Subsidiaries or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any of its
Subsidiaries shall, or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with
all other such events or conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or

          (h) one or more judgments or decrees shall be entered against the Borrower or any of its
Subsidiaries involving in the aggregate a liability (not paid or, subject to customary deductibles,
fully covered by insurance as to which the relevant insurance company has not acknowledged
coverage) of $25,000,000 or more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

          (i) the Borrower shall become a Designated Person; or

          (j) there shall have occurred a Change of Control.

then, and in any such event, (i) if such event is an Event of Default specified in paragraph (f)
above, automatically the Commitments shall immediately terminate and the Loans (with accrued
interest thereon) and all other amounts owing under this Agreement and the other Loan Documents
(including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) shall immediately become
due and payable, and (ii) if such event is any other Event of Default, either or both of the
following actions may be taken: (A) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (B) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans (with

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accrued interest thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and payable. With respect to
all Letters of Credit with respect to which presentment for honor shall not have occurred at the
time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a
cash collateral account opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay other obligations of the
Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or
such other Person as may be lawfully entitled thereto). Except as expressly provided above in this
Section 8, presentment, demand, protest and all other notices of any kind are hereby expressly
waived by the Borrower.

SECTION 9. THE AGENTS

     9.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

     9.2 Delegation of Duties. The Administrative Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

     9.3 Exculpatory Provisions. Neither any Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted from its or
such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made by

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the Borrower or any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any
other Loan Document or for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agents 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 the
Borrower.

     9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order 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 Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with 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 (or, if
so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if
so specified by this Agreement, all Lenders), and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

     9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.

     9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that
neither the Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of the Borrower or any of its
affiliates, shall be deemed to constitute any representation or warranty by any Agent to any

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Lender. Each Lender represents to the Agents that it has, independently and without reliance
upon any Agent or any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and its affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower and its affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder,
the Administrative Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or any of its affiliates that may come
into the possession of the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.

     9.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Percentages in effect on the date on
which indemnification is sought under this Section (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Percentages immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time (whether before or after the
payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions contemplated hereby
or thereby or any action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The
agreements in this Section 9.7 shall survive the repayment of the Loans and all other amounts
payable hereunder.

     9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the Borrower as though
such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to
any Letter of Credit issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its
individual capacity.

     9.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the

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Administrative Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall (unless an Event of Default under Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon such appointment and
approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no
successor agent has accepted appointment as Administrative Agent by the date that is 10 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 assume and
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. After any retiring
Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9 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 and the other Loan Documents.

     9.10 Arrangers, Joint Bookrunners, Documentation Agents and Syndication Agent. None
of the Joint Lead Arrangers, Joint Bookrunners, Documentation Agents or the Syndication Agent shall
have any duties or responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

     10.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any
terms hereof or thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 10.1. Except for any amendments to this Agreement pursuant to Section
6.9 and any increase in the Total Commitments pursuant to Section 2.3, which amendments and
increase shall only require the consent of the Borrower and the Administrative Agent, the Required
Lenders and the Borrower may, or, with the written consent of the Required Lenders, the
Administrative Agent and the Borrower may, from time to time, (a) enter into written amendments,
supplements or modifications hereto and to the other Loan Documents for the purpose of adding any
provisions to this Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver and
no such amendment, supplement or modification shall:

               (i) forgive the principal amount or extend the final scheduled date of maturity of any Loan,
extend the stated expiration date of any Letter of Credit beyond the Termination Date, reduce the
stated rate of any interest or fee payable hereunder (except in connection with the waiver of
applicability of any post-default increase in interest rates (which waiver shall be effective with
the consent of the Required Lenders)) or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Lender’s

56

 

Commitment, in each case without the written consent of each Lender directly affected thereby
(except that only the Lenders who are increasing their Commitments are required to consent to a
request by the Borrower under Section 2.3 to increase the Total Commitments);

               (ii) eliminate or reduce the voting rights of any Lender under this Section 10.1 or Section
10.6(a)(i) without the written consent of such Lender;

               (iii) reduce any percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations under this Agreement
and the other Loan Documents, in each case without the written consent of all Lenders;

               (iv) amend, modify or waive any provision of Section 2.14 related to pro rata
treatment without the consent of each Lender directly affected thereby;

               (v) amend, modify or waive any provision of Section 9 without the written consent of the
Administrative Agent;

               (vi) amend, modify or waive any provision of Section 2.4 or 2.5 without the written consent of
the Swingline Lender; or

               (vii) amend, modify or waive any provision of Section 3 or any other provision affecting the
Issuing Lender without its written consent.

Any such waiver and any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon the Borrower, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Borrower, the Lenders and the
Administrative Agent shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.

     10.2 Notices.

          (a) Except as otherwise provided herein, including without limitation Section 10.2(b), all
notices, requests and demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered, or three Business Days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in
the case of the Borrower and the Administrative Agent, and as set forth in an administrative
questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other
address as may be hereafter notified by the respective parties hereto:

	 	 	 
	Borrower:

	 	Fair Isaac Corporation
	 

	 	901 Marquette Avenue, Suite 3200
	 

	 	Minneapolis, Minnesota 55402-3232
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopy: (612) 758-5201

57

 

	 	 	 
	 

	 	Telephone: (612) 758-5200
	 
	 	 
	With a copy to:

	 	Fair Isaac Corporation
	 

	 	901 Marquette Avenue, Suite 3200
	 

	 	Minneapolis, MN 55402-3232
	 

	 	Attention: General Counsel
	 

	 	Telecopy: (612) 758-6034
	 

	 	Telephone: (612) 758-5200
	 
	 	 
	Administrative Agent, Issuing

	 	Wells Fargo Bank, National Association
	Lender and Swingline Lender:

	 	MAC N9305-0187
	 

	 	18th Floor
	 

	 	90 S 7TH ST
	 

	 	Minneapolis, MN 55402-3903
	 

	 	Attention:
	 

	 	Telecopy: (612) 667-4144
	 

	 	Telephone: (612) 667-1602

provided that any notice, request or demand to or upon the Administrative Agent, the
Issuing Lender or any Lender shall not be effective until received.

          (b) Notices and other communications to the Administrative Agent, the Issuing Lender or the
Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent, the Issuing
Lender and each Lender. The Administrative Agent or the Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be limited to
particular notices or communications. Additionally, if the Administrative Agent agrees to accept a
notice pursuant to Section 2, including any notice of borrowing, notice of interest period
selection or notice of Revolving Loan conversion, made by e-mail transmission, such e-mail
transmission shall be binding on the Borrower whether or not written confirmation is sent by the
Borrower or requested by the Administrative Agent, and the Administrative Agent may act prior to
the receipt of any requested written confirmation, without any liability whatsoever, based upon
e-mail notice believed by the Administrative Agent in good faith to be from the Borrower or its
agents. The Administrative Agent’s records of the terms of any e-mail notice pursuant to Section 2
shall be conclusive on the Borrower in the absence of gross negligence or willful misconduct on the
part of the Administrative Agent in connection therewith.

          (c) The Borrower agrees that the Administrative Agent may make any material delivered by the
Borrower to the Administrative Agent, as well as any amendments, waivers, consents, and other
written information, documents, instruments and other materials relating to the Borrower or any of
its Subsidiaries, or any other materials or matters relating to this Agreement, the other Loan
Documents or any of the transactions contemplated hereby or thereby (collectively, the
“Communications”) available to the Lenders by posting such notices on

58

 

an electronic delivery system (which may be provided by the Administrative Agent, an
Affiliate, or any Person that is not an Affiliate of the Administrative Agent), such as IntraLinks,
or a substantially similar electronic system that requires passwords for access and takes other
customary measures with respect to confidentiality and security (the “Platform”). The
Borrower acknowledges that (i) the distribution of material through an electronic medium is not
necessarily secure and that there are confidentiality and other risks associated with such
distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the
Administrative Agent nor any of its Affiliates represents or warrants the accuracy, completeness,
timeliness, sufficiency or sequencing of the Communications posted on the Platform. The
Administrative Agent and its Affiliates expressly disclaim with respect to the Platform any
liability for errors in transmission, incorrect or incomplete downloading, delays in posting or
delivery, or problems accessing the Communications posted on the Platform and any liability for any
losses, costs, expenses or liabilities that may be suffered or incurred in connection with the
Platform, except to the extent any of the foregoing liabilities are caused by the gross negligence
or willful misconduct of the Administrative Agent or any of its Affiliates. No warranty of any
kind, express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Administrative Agent or any of its
Affiliates in connection with the Platform.

          (d) Each Lender agrees that notice to it (as provided in the next sentence) (a
“Notification”) specifying that any Communication has been posted to the Platform shall for
purposes of this Agreement constitute effective delivery to such Lender of such information,
documents or other materials comprising such Communication. Each Lender agrees (i) to notify, on
or before the date such Lender becomes a party to this Agreement, the Administrative Agent in
writing of such Lender’s e-mail address to which a Notification may be sent (and from time to time
thereafter to ensure that the Administrative Agent has on record an effective e-mail address for
such Lender) and (ii) that any Notification may be sent to such e-mail address.

     10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents 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.
The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

     10.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans and other Extensions of Credit.

     10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Administrative Agent, the Issuing Lender and the Lenders for all their respective reasonable
out-of-pocket costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the reasonable

59

 

fees and disbursements of counsel to the Administrative Agent and filing and recording fees
and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior
to the Effective Date (in the case of amounts to be paid on the Effective Date) and from time to
time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall
deem appropriate, (b) to pay or reimburse each Lender, the Issuing Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement or preservation of
any rights under this Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel to the Administrative Agent, the Lenders and the Issuing
Lender, (c) to pay, indemnify, and hold each Lender, the Issuing Lender and the Administrative
Agent harmless from, any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and Other Taxes, if any, that may be
payable or determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender, the
Issuing Lender and the Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an “Indemnitee”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement and performance of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable
to the operations of the Borrower and its Subsidiaries or any of the Properties and the reasonable
fees and expenses of counsel in connection with claims, actions or proceedings by any Indemnitee
against the Borrower under any Loan Document (all the foregoing in this clause (d), collectively,
the “Indemnified Liabilities”), provided, that the Borrower shall have no
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities resulted from the gross negligence or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due under this Section
10.5 shall be payable not later than 10 days after written demand therefor. The agreements in this
Section 10.5 shall survive the repayment of the Loans and all other amounts payable hereunder.

     10.6 Successors and Assigns; Participations and Assignments.

          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section 10.6.

60

 

          (b) (i) Subject to the conditions set forth in paragraph 10.6(c)(b)(ii) below, any
Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitments and the
Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably
withheld) of:

                    (A) the Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender or an affiliate of any Lender or, if an Event of Default has occurred and is
continuing, any other Person; and

                    (B) the Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment of any Commitment to an assignee that is a Lender or an
affiliate of a Lender.

               (ii) Assignments shall be subject to the following additional conditions:

                    (A) except in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitments or Loans, the amount of the Commitments or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not be less than
$10,000,000 unless each of the Borrower and the Administrative Agent otherwise consent,
provided that no such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing;

                    (B) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of $3,500; and

                    (C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
administrative questionnaire.

               (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from
and after the effective date specified in each Assignment and Assumption the Assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 10.5 but shall be subject to the limitations set forth therein). Any
assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with paragraph (c) of this
Section.

               (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption

61

 

delivered to it and a register for the recordation of the names and addresses of the Lenders,
and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

               (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this paragraph.

          (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the Administrative
Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement may provide that such
Lender will not, without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the
proviso to the second sentence of Section 10.1 and (2) directly affects such Participant. Subject
to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section 10.7. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as
though it were a Lender, provided such Participant shall be subject to Section 10.7 as
though it were a Lender.

               (ii) Notwithstanding anything to the contrary herein, a Participant shall not be entitled to
receive any greater payment under Section 2.15 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower’s prior written consent to such
greater payments. Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits
of Section 2.16 unless such Participant complies with Section 2.16(d).

62

 

          (d) 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 a Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for such Lender as a party hereto.

          (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph
(d) above.

          (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it
may have funded hereunder to its designating Lender without the consent of the Borrower or the
Administrative Agent and without regard to the limitations set forth in Section 10.6(c). Each of
the Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute
against a Conduit Lender or join any other Person in instituting against a Conduit Lender any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state
bankruptcy or similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however, that each
Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other
party hereto for any loss, cost, damage, expense, obligations, penalties, actions, judgments, suits
or any kind whatsoever arising out of its inability to institute such a proceeding against such
Conduit Lender during such period of forbearance.

     10.7 Adjustments; Set-off.

          (a) Except to the extent that this Agreement expressly provides for payments to be allocated
to a particular Lender, if any Lender (a “Benefitted Lender”) shall receive any payment of
all or part of the Obligations owing to it hereunder, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of the Obligations owing to such other
Lender hereunder, such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each such other Lender
hereunder, or shall provide such other Lenders with the benefits of any such collateral, as shall
be necessary to cause such Benefitted Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.

          (b) In addition to any rights and remedies of the Lenders provided by law, including other
rights of set-off, each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), after any applicable grace period, to set off and appropriate and apply
against such amount any and all deposits (general or special,

63

 

time or demand, provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by such Lender or any branch, affiliate or agency thereof
to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of such setoff
and application.

     10.8 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.

     10.9 Severability. Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     10.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject
matter hereof and thereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.

     10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF MINNESOTA.

     10.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:

          (a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the
State of Minnesota, the courts of the United States located in Minnesota, and appellate courts from
any thereof;

          (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

          (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar

64

 

form of mail), postage prepaid, to the Borrower at its address set forth in Section 10.2 or at
such other address of which the Administrative Agent shall have been notified pursuant thereto;

          (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

          (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding relating to this Agreement or any other Loan Document any
special, exemplary, punitive or consequential damages.

     10.13 Acknowledgments. The Borrower hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;

          (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

          (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the
Lenders.

     10.14 Confidentiality. Each of the Administrative Agent and each Lender agrees to
keep confidential in accordance with such party’s customary practices (and in any event in
compliance with applicable law regarding material non-public information) all non-public
information provided to it by the Borrower, the Administrative Agent or any Lender pursuant to or
in connection with this Agreement; provided that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to the Administrative
Agent, any other Lender or any affiliate thereof, (b) subject to an agreement to comply with the
provisions of this Section 10.14 or substantially equivalent provisions, to any actual or
prospective Transferee or any direct or indirect counterparty to any Swap Agreement (or any
professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of its affiliates (as long as such
attorneys, accountants and other professional advisors are subject to confidentiality requirements
substantially equivalent to this Section 10.14), (d) upon the request or demand of any Governmental
Authority, (e) in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization or any nationally
recognized rating agency that requires access to information about a Lender’s investment portfolio
in connection with ratings issued with respect to such Lender, or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document, provided that, in the
case of clauses (d), (e) and (f) of this
Section 10.14, with the exception of disclosure to bank regulatory authorities, the Borrower (to the extent legally permissible)
shall be

65

 

given prompt prior notice so that it may seek a protective order or other appropriate
remedy.

     10.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     10.16 USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	FAIR ISAAC CORPORATION

 	 
	 	By:  	/s/ Charles M. Osborne
 	 
	 	 	Name:  	Charles M. Osborne 	 
	 	 	Title:  	Vice President & CFO 	 
	 

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Arranger,
Administrative Agent, Issuing Lender and as a Lender

	 
	 	By:  	/s/ R. James Hancock
 	 
	 	 	Name:  	R. James Hancock 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	U.S BANK NATIONAL ASSOCIATION, as Arranger and as a
Lender

	 
	 	By:  	/s/ Michael J. Reymann
 	 
	 	 	Name:  	Michael J. Reymann 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Documentation Agent and as
a Lender

	 
	 	By:  	/s/ Daniel R. Petrick
 	 
	 	 	Name:  	Daniel R. Petrick 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as Documentation Agent and
as a Lender

 	 
	 	By:  	/s/ Anthony Galea
 	 
	 	 	Name:  	Anthony Galea 	 
	 	 	Title:  	Associate 	 
	 

[Signature page to Fair Isaac Credit Agreement]

 

 

	 	 	 	 	 
	 	CITIBANK, N.A., as a Lender

 	 
	 	By:  	/s/ Ross Levitsky
 	 
	 	 	Name:  	Ross Levitsky 	 
	 	 	Title:  	Director 	 
	 

	 	 	 	 	 
	 	DEUTSCHE BANK AG, NEW YORK BRANCH, as a Lender

 	 
	 	By:  	/s/ Yvonne Tilden
 	 
	 	 	Name:  	Yvonne Tilden 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Andreas Neumeier
 	 
	 	 	Name:  	Andreas Neumeier 	 
	 	 	Title:  	Director 	 
	 

[Signature page to Fair Isaac Credit Agreement]

 

 

SCHEDULE 1.1A

COMMITMENTS

	 	 	 	 	 
	Name of Lender	 	Revolving Commitment	 
	Wells Fargo Bank, National Association
	 	$	75,000,000	 
	U.S. Bank National Association
	 	$	75,000,000	 
	Bank of America, N.A.
	 	$	50,000,000	 
	JPMorgan Chase Bank, N.A.
	 	$	50,000,000	 
	Citibank, N.A.
	 	$	25,000,000	 
	Deutsche Bank AG, New York Branch
	 	$	25,000,000	 
	Total
	 	$	300,000,000.00SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of October 19,
2006, by and among MDwerks, Inc., a Delaware corporation, with headquarters
located at 1020 NW 6th St., Suite I, Deerfield Beach, FL 33442 (the "COMPANY"),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" and collectively, the "BUYERS").

     WHEREAS:

     A. The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the 1933 Act.

     B. The Company has authorized a new series of senior secured convertible
notes of the Company which notes shall be convertible into the Company's common
stock, par value $0.001 per share (the "COMMON STOCK"), in accordance with the
terms of the Notes (as defined below).

     C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate principal
amount of the Notes, in substantially the form attached hereto as Exhibit A (the
"INITIAL NOTES"), set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers attached hereto (which aggregate amount for all Buyers shall
be $2,500,000) (as converted, collectively, the "INITIAL CONVERSION SHARES"),
(ii) warrants, in substantially the form attached hereto as Exhibit B-1 (the
"SERIES D WARRANTS"), to acquire one half that number of shares of Common Stock
set forth opposite such Buyer's name in column (5) on the Schedule of Buyers and
(iii) warrants in substantially the form attached hereto as Exhibit B-2 (the
"SERIES E WARRANTS") to acquire one half of that number of shares of Common
Stock set forth opposite such Buyer's name in column (6) on the Schedule of
Buyers (collectively with the Series D Warrants, the "WARRANTS"). Any shares of
the Common Stock issued or issuable upon the exercise of the Warrants are
hereinafter referred to as the "WARRANT SHARES."

     D. Subject to the terms and conditions set forth in this Agreement, the
Buyers shall purchase in an Additional Closing (as defined in Section 1(a)(ii)
below), (i) that aggregate principal amount of Notes, in substantially the form
attached hereto as Exhibit A (collectively, the "ADDITIONAL NOTES" and,
collectively with the Initial Notes, the "NOTES"), set forth opposite such
Buyer's name in column (4) on the Schedule of Buyers (which aggregate amount for
all Buyers shall be $2,500,000) (as converted, collectively, the "ADDITIONAL
CONVERSION SHARES" and, collectively with the Initial Conversion Shares, the
"CONVERSION SHARES"); (ii) Series D Warrants to acquire one half of that number
of shares of Common Stock set forth opposite such Buyer's name in column (5) on
the Schedule of Buyers ("ADDITIONAL SERIES D WARRANTS") and (iii) Series E
Warrants to acquire one half of that number of shares of Common Stock set forth
opposite such Buyer's name in column (6) on the Schedule of Buyers ("ADDITIONAL
SERIES E

                                        1

WARRANTS" AND, COLLECTIVELY WITH THE ADDITIONAL SERIES D WARRANTS, "ADDITIONAL
WARRANTS").

     E. At the Closing (as defined below), the parties hereto shall execute and
deliver a Registration Rights Agreement, substantially in the form attached
hereto as Exhibit C (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company has agreed to provide certain registration rights with respect to the
Conversion Shares and the Warrant Shares under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.

     F. The Notes, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "SECURITIES".

     G. Except as may be otherwise provided herein, the Notes will rank senior
to all outstanding and future indebtedness of the Company, subject to Permitted
Senior Indebtedness (as defined in the Notes), and except as may be otherwise
provided herein, will be secured by a perfected security interest in all of the
assets of the Company and each of the Company's subsidiaries, as evidenced by
the security agreement attached hereto as Exhibit D (the "SECURITY AGREEMENT")
and together with the Guaranty, and any ancillary documents related thereto,
collectively the "SECURITY DOCUMENTS").

     NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

1. PURCHASE AND SALE OF NOTES AND WARRANTS.

     (a) Purchase of Notes and Warrants.

     (i) Initial Notes and Warrants. Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 6(a) and 7(a) below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, will
purchase from the Company on the Initial Closing Date (as defined below), (x) a
principal amount of Initial Notes as is set forth opposite such Buyer's name in
column (3) on the Schedule of Buyers and (y) Warrants to acquire one half of
that number of Warrant Shares as is set forth opposite such Buyer's name in
columns (5&6) on the Schedule of Buyers (the "INITIAL CLOSING").

     (ii) Additional Notes and Warrants. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 1(c), 6(b) and 7(b) below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
will purchase from the Company on the Additional Closing Date (as defined
below), a principal amount of Additional Notes as is set forth opposite such
Buyer's name in column (4) on the Schedule of Buyers and Additional Warrants to
acquire one half of that number of Warrant Shares as is set forth opposite such
Buyer's name in columns (5&6) (the "ADDITIONAL CLOSING").

     (iii) Closing. The Initial Closing and the Additional Closing are referred
to in this Agreement as a "CLOSING". Each Closing shall occur on the applicable
Closing Date at the offices of Gottbetter & Partners, LLP, 488 Madison Avenue,
New York, NY 10022.

                                        2

     (iv) Purchase Price. The aggregate purchase price for the Initial Notes and
the Warrants to be purchased by each Buyer at the Initial Closing (the "INITIAL
PURCHASE PRICE") shall be the amount set forth opposite such Buyer's name in
column (7) of the Schedule of Buyers. Each Buyer shall pay $.95 for each $1.00
of principal amount of Initial Notes and related Warrants to be purchased by
such Buyer at the Closing. The aggregate purchase price for the Initial Notes
and the Warrants to be purchased by each Buyer at the Additional Closing shall
be the amount set forth opposite such Buyer's name in column (7) of the Schedule
of Buyers (the "ADDITIONAL PURCHASE PRICE", and together with the Initial
Purchase Price, the "PURCHASE PRICE"). Each Buyer shall pay $.95 for each $1.00
of principal amount of Additional Notes to be purchased at each Additional
Closing.

     (b) Initial Closing Date. The date and time of the Initial Closing (the
"INITIAL CLOSING DATE") shall be 10:00 a.m., New York City Time, on the date
hereof after notification of satisfaction (or waiver) of the conditions to the
Initial Closing set forth in Sections 6(a) and 7(a) below (or such later date as
is mutually agreed to by the Company and each Buyer).

     (c) Additional Closing Dates. The date and time of the Additional Closing
(the "ADDITIONAL CLOSING DATE," and together with the Initial Closing Date, each
or "CLOSING DATE" and collectively, the "CLOSING DATES") shall be 10:00 a.m.,
New York City Time, on the date specified in the applicable Additional Closing
Notice (as defined below), subject to satisfaction (or waiver) of the conditions
to the Additional Closing set forth in Sections 6(b) and 7(b) and the conditions
contained in this Section 1(c) (or such later date as is mutually agreed to by
the Company and the applicable Buyer). Subject to the requirements of Sections
6(b) and 7(b) and the conditions contained in this Section 1(c), each Buyer
shall purchase the Additional Notes upon receipt of a notice of the filing of
the Registration Statement (the "ADDITIONAL CLOSING NOTICE"). The Additional
Closing Notice shall be delivered at least one Business Day prior to the
Additional Closing Date set forth in such Additional Closing Notice. As used
herein, "BUSINESS DAY" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

     (d) Form of Payment. On the Initial Closing Date, (i) each Buyer shall pay
its Initial Purchase Price to the Company for the Initial Notes and the Warrants
to be issued and sold to such Buyer at the Closing by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions and (ii) the Company shall deliver to each Buyer (A) the Initial
Notes (in the principal amounts as such Buyer shall have requested prior to the
Closing) which such Buyer is then purchasing and (B) the Warrants (in the
amounts as such Buyer shall have requested prior to the Closing) which such
Buyer is purchasing, in each case duly executed on behalf of the Company and
registered in the name of such Buyer or its designee. On the Additional Closing
Date, each Buyer shall pay the Additional Purchase Price to the Company for the
Additional Notes and Additional Warrants to be issued and sold to such Buyer at
the Additional Closing by wire transfer of immediately available funds for such
Additional Purchase Price in accordance with the Company's written wire
instructions. At each Closing, the Company shall deliver to each Buyer the Notes
(in the principal amounts as such Buyer shall request) and the Warrants which
such Buyer is then purchasing duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.

                                        3

2. BUYER'S REPRESENTATIONS AND WARRANTIES.

     Each Buyer represents and warrants with respect to only itself that:

     (a) No Public Sale or Distribution. Such Buyer is (i) acquiring the Notes
and the Warrants and (ii) upon conversion of the Notes and exercise of the
Warrants will acquire the Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise of the Warrants, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempt from registration under the 1933 Act; provided, however, that by making
the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exempt from registration under the 1933 Act. Such
Buyer is acquiring the Securities hereunder in the ordinary course of its
business. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.
Further, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among such Buyer and any other Person with respect to any
securities of the Company, including but not limited to transfer or voting of
any of the Securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.

     (b) Accredited Investor Status. Such Buyer is an "accredited investor" as
that term is defined in Rule 501(a) under the 1933 Act. Such Buyer is not a
registered broker-dealer under Section 15 of the 1934 Act.

     (c) Reliance on Exemptions. Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

     (d) Information. Such Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Buyer. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have had such
questions answered to its satisfaction. Such Buyer understands that its
investment in the Securities involves a high degree of risk. Such Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.

     (e) No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment

                                        4

in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.

     (f) Transfer or Resale. Such Buyer understands that except as provided in
the Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to the Company, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with reasonable assurance (including an opinion
of counsel) that such Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a
successor rule thereto) (collectively, "RULE 144"); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the Person (as defined in
Section 3(s)) through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other Person is under any obligation to
register the Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder. The Securities
may be pledged in connection with a bona fide margin account or other loan or
financing arrangement secured by the Securities and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document (as
defined in Section 3(b)), including, without limitation, this Section 2(f).

     (g) Legends. Such Buyer understands that the certificates or other
instruments representing the Notes and the Warrants and, until such time as the
resale of the Conversion Shares and the Warrant Shares have been registered
under the 1933 Act as contemplated by each of the Registration Rights Agreement,
the stock certificates representing the Conversion Shares and the Warrant
Shares, except as set forth below, shall bear any legend as required by the
"blue sky" laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

          [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
          CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
          [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY
          THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
          MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
          ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

                                        5

          OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
          COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
          UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
          NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
          CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
          ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, or issue to such holder by electronic delivery at the applicable
balance account at DTC (as defined below) unless otherwise required by state
securities laws, if (i) such Securities are registered for resale under the 1933
Act, (ii) in connection with a sale, assignment or other transfer, such holder
provides the Company with an opinion of counsel, in a form reasonably acceptable
to the Company, to the effect that such sale, assignment or transfer of the
Securities may be made without registration under the applicable requirements of
the 1933 Act, or (iii) such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A.

     (h) Validity; Enforcement. The Transaction Documents (as defined below) to
which such Buyer is a party have been duly and validly authorized, executed and
delivered on behalf of such Buyer and shall constitute the legal, valid and
binding obligations of such Buyer enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.

     (i) No Conflicts. The execution, delivery and performance by such Buyer of
the Transaction Documents to which such Buyer is a party and the consummation by
such Buyer of the transactions contemplated hereby and thereby will not (i)
result in a violation of the organizational documents of such Buyer or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except in the case
of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, have or reasonably
be expected to have a material adverse effect on the ability of such Buyer to
perform its obligations hereunder.

     (j) Residency. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers.

     (k) Independent Investment Decision. Such Buyer has independently evaluated
the merits of its decision to purchase the Securities pursuant to the
Transaction Documents, and such Buyer confirms that it has (i) not relied on the
advice of any other Buyer's business and/or legal

                                        6

counsel in making such decision and (ii) not received or relied on any advice of
the Company or its business and/or legal counsel in making such decision. Such
Buyer acknowledges that it had the opportunity to review this Agreement, the
other Transaction Documents and the transactions contemplated hereby and thereby
with its own legal counsel and investment and tax advisors, if any. Such Buyer
is relying solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement and the other Transaction Documents.

     (l) Certain Trading Activities. Such Buyer has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with
such Buyer, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company's
securities) since the time that such Buyer was first contacted by the Company
regarding the transactions contemplated hereby. Such Buyer covenants that
neither it nor any Person acting on its behalf or pursuant to any understanding
with it will engage in any transactions in the securities of the Company
(including Short Sales) prior to the time that the transactions contemplated by
this Agreement are publicly disclosed. For the purpose of this Agreement, "SHORT
SALES" include, without limitation, all "short sales" as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, swaps and
similar arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.

     (m) Limited Ownership. The purchase by such Buyer of the Securities
issuable to it at the Closing will not result in such Buyer or in the aggregate
with other Buyers (individually or together with other Persons with whom such
Buyer has identified, or will have identified, itself as part of a "group" in a
public filing made with the SEC involving the Company's securities) acquiring,
or obtaining the right to acquire, in excess of 19.999% of the outstanding
shares of Common Stock or the voting power of the Company on a post transaction
basis that assumes that the Closing shall have occurred. Such Buyer does not
presently intend to, alone or together with others, make a public filing with
the SEC to disclose that it has (or that it together with such other Persons
have) acquired, or obtained the right to acquire, as a result of the Closing
(when added to any other securities of the Company that it or they then own or
have the right to acquire), in excess of 19.999% of the outstanding shares of
Common Stock or the voting power of the Company on a post transaction basis that
assumes that the Closing shall have occurred.

     (n) General Solicitation. Such Buyer is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar.

     (o) Organization; Authority. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership or other entity power
and authority to enter into and to consummate the transactions contemplated by
the applicable Transaction Documents to which it is a party and otherwise to
carry out its obligations thereunder.

                                        7

     (p) Prohibited Transactions. During the last ten (10) days prior to the
date hereof, neither such Buyer nor any Person acting on behalf of or pursuant
to any understanding with such Buyer has, directly or indirectly, effected or
agreed to effect any short sale, whether or not against the box, established any
"put equivalent position" (as defined in Rule 16a-1(h) under the Exchange Act)
with respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security that includes, relates to or derived any significant
part of its value from the Common Stock or otherwise sought to hedge its
position in the Securities (but not including any actions to secure available
shares to borrow in order to effect short sales or similar transactions in the
future) (each, a "PROHIBITED TRANSACTION"). Prior to the earliest to occur of
(i) the termination of this Agreement or (ii) the date of the 8-K Filing as
described in Section 4(i), such Buyer shall not, and shall cause any Person
acting on behalf of or pursuant to any understanding with such Buyer not to,
engage, directly or indirectly, in a Prohibited Transaction. Such Buyer
acknowledges that the representations, warranties and covenants contained in
this Section 2(p) are being made for the benefit of the Buyers as well as the
Company.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company represents and warrants to each of the Buyers that:

     (a) Organization and Qualification. The Company and its "SUBSIDIARIES"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns a majority of the capital stock, equity or similar
interest) are entities duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are formed, and have the
requisite power and authority to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign entity to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, properties, assets,
operations, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby and the other Transaction Documents or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). The Company has no Subsidiaries except
as set forth on Schedule 3(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and clear of
any liens, except those liens and security interests which may have been created
or will be created in connection with the Company's acquisition of each
Subsidiary as detailed on Schedule 3(a) attached hereto and as otherwise set
forth in Schedule 3(a) attached hereto (the "PERMITTED LIENS" hereinafter
defined), and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.

     (b) Authorization; Enforcement; Validity. The Company has the requisite
power and

                                        8

authority to enter into and perform its obligations under this Agreement, the
Notes, the Warrants, the Registration Rights Agreement, the Security Documents,
the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), and
each of the other agreements entered into by the Company hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"TRANSACTION DOCUMENTS") and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of this Agreement and the
other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Notes and the Warrants, the reservation for
issuance and the issuance of the Conversion Shares issuable upon conversion of
the Notes, the reservation for issuance and issuance of Warrant Shares issuable
upon exercise of the Warrants, and the granting of a security interest in the
Collateral (as defined in the Security Documents) have been duly authorized by
the Company's board of directors and (other than (i) the filing of appropriate
UCC financing statements with the appropriate states and other authorities
pursuant to the Security Agreement, (ii) the filing of a Form D under Regulation
D of the 1933 Act and (iii) the filing with the SEC of one or more Registration
Statements and any other filings as may be required by any state securities
agency in accordance with the requirements of the Registration Rights Agreement)
no further filing, consent, or authorization is required by the Company, its
board of directors or its stockholders. This Agreement and the other Transaction
Documents to which the Company and/or any Subsidiary is a party have been duly
executed and delivered by the Company and/or such Subsidiary, as applicable, and
constitute the legal, valid and binding obligations of the Company and/or such
Subsidiary, as applicable, enforceable against the Company and/or such
Subsidiary, as applicable, in accordance with their respective terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.

     (c) Issuance of Securities. The issuance of the Notes and the Warrants are
duly authorized and are free from all liens and charges with respect to the
issue thereof. As of the Closing, a number of shares of Common Stock shall have
been duly authorized and reserved for issuance which equals 175% of the maximum
number of shares Common Stock initially issuable upon conversion of the Notes
and upon exercise of the Warrants. Upon conversion in accordance with the Notes
or exercise in accordance with the Warrants, as the case may be, the Conversion
Shares and the Warrant Shares, respectively, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. The offer and issuance by the
Company of the Securities is exempt from registration under the 1933 Act.

     (d) No Conflicts. The execution, delivery and performance of this Agreement
and the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and the Warrants, the granting of a
security interest in the Collateral and reservation for issuance and issuance of
the Conversion Shares and the Warrant Shares) will not (i) result in a violation
of the Articles of Incorporation (as defined in Section 3(r)) of the

                                        9

Company or any of its Subsidiaries, any capital stock of the Company or Bylaws
(as defined in Section 3(r)) of the Company or any of its Subsidiaries or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and the rules and regulations of the Over-The-Counter Bulletin Board (the
"PRINCIPAL MARKET") applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected except where such violation would not result in a Material Adverse
Affect.

     (e) Consents. Other than as set forth on Schedule 3(e), the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence shall have been obtained
or effected on or prior to the Closing Date, and the Company and its
Subsidiaries are unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registrations, applications or
filings pursuant to the preceding sentence. The Company is not in violation of
the applicable listing requirements of the Principal Market. The issuance by the
Company of the Securities shall not have the effect of delisting or suspending
the Common Stock from the Principal Market.

     (f) Acknowledgment Regarding Buyer's Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company, (ii) to the knowledge of the Company, an "affiliate"
of the Company (as defined in Rule 144) or (iii) to the knowledge of the
Company, a "beneficial owner" of more than 10% of the shares of Common Stock (as
defined for purposes of Rule 13d-3 of the 1934 Act. The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the
other Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Buyer or any of its representatives or agents
in connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.

     (g) No General Solicitation. Neither the Company, nor any of its
Subsidiaries or Affiliates, nor, to the Company's knowledge, any Person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or brokers'
commissions (other than for persons engaged by any Buyer or its investment
advisor) relating to

                                       10

or arising out of the transactions contemplated hereby.

     (h) No Integrated Offering. None of the Company, its Subsidiaries, any of
their Affiliates, or any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act. None of the Company, its Subsidiaries, their
Affiliates or any Person acting on its or their behalf will take any action or
steps referred to in the preceding sentence that would require registration of
any of the Securities under the 1933 Act.

     (i) Dilutive Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Notes in accordance with this Agreement
and the Notes and its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrant is, in each case,
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.

     (j) Application of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or the laws of the
jurisdiction of its formation which is or could become applicable to any Buyer
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company's issuance of the Securities and any Buyer's
ownership of the Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

     (k) SEC Documents; Financial Statements. Except as disclosed in the SEC
Documents or on Schedule 3(k), during the two (2) years prior to the date
hereof, the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements, notes
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC DOCUMENTS"). The Company has delivered to
the Buyers or their respective representatives true, correct and complete copies
of the SEC Documents not available on the EDGAR system if such SEC Documents
have been requested in writing by Buyers. As of their respective filing dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and except as subsequently amended, none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective filing dates, except as subsequently amended, the financial
statements of the Company included in the SEC Documents complied as to form in
all material

                                       11

respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     (l) Absence of Certain Changes. Except as disclosed in the SEC Documents or
on Schedule 3(l), since the date of the Company's most recent audited financial
statements contained in a Form 10-KSB, there has been no material adverse change
and no material adverse development in the business, assets, properties,
operations, condition (financial or otherwise) or results of operations of the
Company. Except as disclosed in the SEC Documents or on Schedule 3(l), since the
date of the Company's most recent audited financial statements contained in a
Form 10-KSB, neither the Company nor any of its Subsidiaries has (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $100,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of $100,000.
Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, after
giving effect to the transactions contemplated hereby to occur at the Closing,
will not be Insolvent (as defined below). For purposes of this Section 3(l),
"INSOLVENT" means (i) the present fair saleable value of the Company's assets is
less than the amount required to pay the Company's total Indebtedness (as
defined in Section 3(s)), (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now
conducted.

     (m) No Undisclosed Events, Liabilities, Developments or Circumstances.
Except for the transactions contemplated hereunder, no event, liability,
development or circumstance has occurred or exists, with respect to the Company,
its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form SB-2 or any other
appropriate form filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced.

     (n) Conduct of Business; Regulatory Permits. Neither the Company nor any of
its Subsidiaries is in violation of any term of or in default under its Articles
of Incorporation or Bylaws or their organizational charter or certificate of
incorporation or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order

                                       12

or any law, statute, ordinance, rule or regulation applicable to the Company or
its Subsidiaries, and neither the Company nor any of its Subsidiaries is or will
conduct its business in violation of any of the foregoing, except for violations
which would not, individually or in the aggregate, have a Material Adverse
Effect. Without limiting the generality of the foregoing, the Company is not in
violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances which would reasonably
lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future. During the one (1) year prior to the date hereof, (i)
the Common Stock has been designated for quotation on the Principal Market, (ii)
trading in the Common Stock has not been suspended by the SEC or the Principal
Market and (iii) the Company has received no communication, written or oral,
from the SEC or the Principal Market regarding the suspension or delisting of
the Common Stock from the Principal Market. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any written notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.

     (o) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company or any of its Subsidiaries (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

     (p) Sarbanes-Oxley Act. The Company is in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof.

     (q) Transactions With Affiliates. Except as set forth in the SEC Documents
filed at least ten days prior to the date hereof and other than the grant of
stock options disclosed on the SEC Documents or on Schedule 3(q), none of the
officers, directors or employees of the Company or any of its Subsidiaries is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company or any of its
Subsidiaries, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.

     (r) Equity Capitalization. As of the date hereof, the authorized capital
stock of the

                                       13

Company consists of (i) 100,000,000 shares of Common Stock, par value $0.001 per
share, of which as of the date hereof, 12,373,398 are issued and outstanding, up
to 2,751,250 shares will be reserved for issuance pursuant to the Company's
stock option and purchase plans and 1,759,678 shares are reserved for issuance
pursuant to securities (other than the Notes and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii),
10,000,000 shares of Preferred stock, par value $0.001 per share, of which 1,000
shares have been designated as Series A Convertible Preferred stock, par value
$0.001 per share, of which as the date hereof, 14.333 shares are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed on
Schedule 3(r): (i) none of the Company's capital stock is subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) or in the SEC Documents, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any capital stock of the Company or any of its
Subsidiaries; (iii) or in the SEC Documents there are no outstanding debt
securities, notes, credit or loan agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness (as defined below)
of the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) or in the
SEC Documents, there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except pursuant to the Registration Rights
Agreement); (vi) or in the SEC Documents, there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to purchase, repurchase, retire or redeem a security of
the Company or any of its Subsidiaries; (vii) or in the SEC Documents, there are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (viii) or in the SEC
Documents, the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement; and (ix) the
Company and its Subsidiaries have no liabilities or obligations required to be
disclosed in the SEC Documents but not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company's or its Subsidiaries'
respective businesses and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect. The Company has furnished to the
Buyers true, correct and complete copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the "ARTICLES OF
INCORPORATION"), and the Company's Bylaws, as amended and as in effect on the
date hereof (the "BYLAWS"). The terms of all securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and the material rights
of the holders thereof in respect thereto are disclosed in the SEC Documents or
on Schedule 3(r).

                                       14

     (s) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(s)
or in the SEC Documents, neither the Company nor any of its Subsidiaries (i) has
any outstanding Indebtedness (as defined below), (ii) is a party to any
contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument would
result in a Material Adverse Effect or (iii) is in violation of any term of or
in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect. The Company's
SEC Documents and Schedule 3(s) provide a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services including (without limitation)
"Capital Leases" in accordance with generally accepted accounting principles
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) "CONTINGENT OBLIGATION" means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and
(z) "PERSON" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

     (t) Absence of Litigation. There is no action, suit, proceeding or written
inquiry before or by the Principal Market, any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
its Subsidiaries' officers or directors, which is in the aggregate material to
the Company, except as set forth in the SEC Documents or on Schedule 3(t).

                                       15

     (u) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

     (v) Employee Relations.

          (i) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union. The Company
and its Subsidiaries believe that their relations with their employees are good.
No executive officer of the Company or any of its Subsidiaries (as defined in
Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary
that such officer intends to leave the Company or any such Subsidiary or
otherwise terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries, to
the knowledge of the Company or any such Subsidiary, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.

          (ii) To the knowledge of the Company, the Company and its Subsidiaries
are in compliance with all federal, state and local laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

     (w) Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case, except as set forth in Schedule 3(w), free and clear
of all liens, encumbrances and defects except such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.

     (x) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals,

                                       16

governmental authorizations, trade secrets and other intellectual property
rights ("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses as now conducted. Except as set forth in Schedule 3(x), none of the
Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others. There is
no claim, action or proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights.

     (y) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

     (z) Subsidiary Rights. Except as set forth in Schedule 3(z), the Company
and its Subsidiaries have the unrestricted right to vote, and (subject to
limitations imposed by applicable law) to receive dividends and distributions
on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

     (aa) Investment Company. The Company is not, and is not an affiliate of, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

     (bb) Tax Status. Except as set forth in Schedule (bb), the Company and each
of its Subsidiaries (i) has made or filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. No liens
have been filed and no claims are being asserted by or against the Company or

                                       17

any of its Subsidiaries with respect to any taxes (other than liens for taxes
not yet due and payable). Neither the Company nor it Subsidiaries has received
notice of assessment or proposed assessment of any taxes claimed to be owed by
it or any other Person on its behalf. Except as disclosed on Schedule 3(bb),
neither the Company nor any Subsidiary is a party to any tax sharing or tax
indemnity agreement or any other agreement of a similar nature that remains in
effect. Each of the Company and its Subsidiaries has complied in all material
respects with all applicable legal requirements relating to the payment and
withholding of taxes and, within the time and in the manner prescribed by law,
has withheld from wages, fees and other payments and paid over to the proper
governmental or regulatory authorities all amounts required.

     (cc) Internal Accounting and Disclosure Controls. The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference (the
"INTERNAL ACCOUNTING CONTROLS"). The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that are
effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company's management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure.

     (dd) Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.

     (ee) Ranking of Notes. Except as set forth on Schedule (ee), no
Indebtedness of the Company is senior to or ranks pari passu with the Notes in
right of payment, whether with respect of payment of redemptions, interest,
damages or upon liquidation or dissolution or otherwise.

     (ff) Form SB-2 Eligibility. The Company is eligible to register the
Conversion Shares and the Warrant Shares for resale by the Buyers using Form
SB-2 promulgated under the 1933 Act.

     (gg) Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of

                                       18

the Securities to be sold to each Buyer hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will
be or will have been complied with except where the failure to do so would not
be reasonably likely to result in a Material Adverse Effect.

     (hh) Manipulation of Price. The Company and its Subsidiaries have not, and
to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result or that could reasonably
be expected to cause or result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.

     (ii) U.S. Real Property Holding Corporation. The Company is not, nor has
ever been, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Buyer's request.

     (jj) Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to
constitute material, nonpublic information other than the existence of the
transactions contemplated by this Agreement or the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in the Securities. All
disclosure provided to the Buyers regarding the Company, its business and the
transactions contemplated by this Agreement and the other Transaction Documents,
including the Schedules and Exhibit s hereto and thereto, furnished by or on
behalf of the Company is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made herein or therein, in the light of the
circumstances under which they were made, not misleading. Each press release
issued by the Company or its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred with respect to the Company or any of its
Subsidiaries or its or their business, assets, liabilities, properties,
operations or financial conditions (financial or otherwise), which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.

     (kk) Lien Searches. Within six (6) Business Days prior to the date hereof,
the Company shall have delivered or caused to be delivered to each Buyer
certified copies of UCC financing statement search results listing any and all
effective financing statements filed within five years prior to such date in any
applicable jurisdiction that name the Company or any of their Subsidiaries as a
debtor to perfect an interest in any of the assets thereof, together with copies
of such financing statements, none of which financing statements, except for any
financing statements filed with respect to the Senior Indebtedness or Permitted
Liens (as defined in the Notes) and as otherwise agreed to in writing by the
Buyers, shall cover any of the "Collateral"

                                       19

(as defined in the Security Documents), and the results of searches for any
effective tax liens and judgment liens filed against any such Person or its
property in any applicable jurisdiction, which results, except as otherwise
agreed to in writing by the Buyers, shall not show any such effective tax liens
and judgment liens.

4.   COVENANTS.

     (a) Best Efforts. Each party shall use its best efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.

     (b) Form D and Blue Sky. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing.

     (c) Blue Sky. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the states of the United States
following the Closing Date.

     (d) Reporting Status. Until the date on which the Investors (as defined in
the Registration Rights Agreement) shall have sold all the Conversion Shares and
Warrant Shares and none of the Notes or Warrants is outstanding (the "REPORTING
PERIOD"), the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination.

     (e) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities substantially as set forth on Schedule 4(e).

     (f) Financial Information. The Company agrees to send the following to each
Investor (as defined in the Registration Rights Agreement) during the Reporting
Period (i) unless the following are filed with the SEC through EDGAR and are
available to the public through the EDGAR system, within one (1) Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
or 10-KSB, any interim reports or any consolidated balance sheets, income
statements, stockholders' equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933
Act, and (ii) copies of any notices and other information made available or
given to the stockholders of the Company generally, contemporaneously with the
making available or giving thereof to the stockholders. As used herein "Business
Day" means any other day other than a Saturday, Sunday, or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.

                                       20

     (g) Listing. The Company shall promptly secure the listing of all of the
Registrable Securities (as defined in the Registration Rights Agreement) upon
each national securities exchange and automated quotation system, if any, upon
which the Common Stock is then listed (subject to official notice of issuance)
and shall maintain such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or suspension of the
Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).

     (h) Fees. The Company shall (i) pay Gottbetter & Partners, LLP ("G&P")
$40,000 in legal fees plus reasonable expenses and (ii) pay Gottbetter Capital
Master, Ltd. (a Buyer) ("GCF") or its designee(s) $15,000 for due diligence and
all reasonable expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all reasonable legal fees
and disbursements in connection therewith, documentation and implementation of
the transactions contemplated by the Transaction Documents and due diligence in
connection therewith), which amounts, to the extent they have not been paid,
shall be withheld by such Buyer from its Purchase Price at the Closing. GCF and
G&P acknowledge receipt of $25,000 delivered prior to the date hereof as an
advance against the fees of G&P and GCF referred to above in this Section 4(g).
The Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated by the
Transaction Documents including, without limitation, any fees or commissions
payable to the Placement Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim against a Buyer relating to any such payment. Except as otherwise
set forth in the Transaction Documents, each party to this Agreement shall bear
its own expenses in connection with the sale of the Securities to the Buyers.

     (i) Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by an Investor in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) hereof;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.

     (j) Disclosure of Transactions and Other Material Information. On or before
8:30 a.m., New York Time, on the fourth Business Day following the date of this
Agreement, the Company shall file a Current Report on Form 8-K describing the
terms of the transactions

                                       21

contemplated by the Transaction Documents in the form required by the 1934 Act
and attaching the material Transaction Documents (including, without limitation,
this Agreement, the form of each of the Notes, the form of Warrant, the
Registration Rights Agreement and the Security Documents) as exhibits to such
filing (including all attachments, the "8-K FILING"). From and after the filing
of the 8-K Filing with the SEC, the Company shall have disclosed any material,
nonpublic information delivered to the Buyers by the Company, any of its
Subsidiaries or any of their respective officers, directors, employees,
stockholders, representatives or agents. The Company shall not, and shall cause
each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents, not to, provide any Buyer with any material,
nonpublic information regarding the Company or any of its Subsidiaries from and
after the filing of the 8-K Filing with the SEC without the express written
consent of such Buyer, except to the extent necessary to obtain a consent of
Buyer to a matter requiring Buyer's consent pursuant to the Transaction
Documents. In the event of a breach of the foregoing covenant by the Company,
its Subsidiaries, or any of its respective officers, directors, employees and
agents, in addition to any other remedy provided herein or in the Transaction
Documents, a Buyer shall have the right to make a public disclosure, in the form
of a press release, public advertisement or otherwise, of such material,
nonpublic information without the prior approval by the Company, its
Subsidiaries, or any of their respective officers, directors, employees or
agents. No Buyer shall have any liability to the Company, its Subsidiaries, or
any of its or their respective officers, directors, employees, stockholders or
agents for any such disclosure, except to the extent such disclosure contains
false or misleading information. Subject to the foregoing, none of the Company,
its Subsidiaries or any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby without the
approval of all of the Buyers; provided, however, that the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) the Required Holders (as defined in the Notes) shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release). Except as required by applicable law and regulations,
without the prior written consent of any applicable Buyer, the Company shall not
disclose the name of any Buyer in any filing, announcement, release or
otherwise.

     (j) Restriction on Redemption and Cash Dividends. So long as any Notes are
outstanding, the Company shall not, directly or indirectly, redeem, or declare
or pay any cash dividend or distribution on, the Common Stock without the prior
express written consent of the Required Holders (as defined in the Notes).

     (k) Additional Notes; Variable Securities; Dilutive Issuances. So long as
any Buyer beneficially owns any Securities, the Company will not issue any Notes
(other than to the Buyers as contemplated hereby) and the Company shall not
issue any other securities that would cause a breach or default under the Notes.
For long as any Notes or Warrants remain outstanding, the Company shall not, in
any manner, issue or sell any rights, warrants or options to subscribe for or
purchase Common Stock or directly or indirectly convertible into or exchangeable
or exercisable for Common Stock at a price which varies or may vary with the
market price of the Common Stock, including by way of one or more reset(s) to
any fixed price unless the conversion, exchange or exercise price of any such
security cannot be less than the then applicable

                                       22

Conversion Price (as defined in the Notes) with respect to the Common Stock into
which any Note is convertible or the then applicable Exercise Price (as defined
in the Warrants) with respect to the Common Stock into which any Warrant is
exercisable. For long as any Notes or Warrants remain outstanding, the Company
shall not, in any manner, enter into or affect any Dilutive Issuance (as defined
in the Notes) if the effect of such Dilutive Issuance is to cause the Company to
be required to issue upon conversion of any Note or exercise of any Warrant any
shares of Common Stock in excess of that number of shares of Common Stock which
the Company has authorized for purposes of such conversions or exercises or
which the Company may issue upon conversion of the Notes and exercise of the
Warrants without breaching the Company's obligations under the rules or
regulations of the Principal Market.

     (l) Corporate Existence. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants.

     (m) Reservation of Shares. So long as any Buyer owns any Securities, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 175% of the number of shares
of Common Stock issuable upon conversion of all of the Notes and issuable upon
exercise of the Warrants then outstanding (without taking into account any
limitations on the conversion of the Notes or exercise of the Warrants set forth
in the Notes and Warrants, respectively).

     (n) Conduct of Business. Neither the Company nor its Subsidiaries will
conduct its business in violation of any term of or in default under its
Certificate or Articles of Incorporation or Bylaws. The business of the Company
and its Subsidiaries shall not be conducted in violation of any law, ordinance
or regulation of any government, or any department or agency thereof or
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.

     (o) Additional Issuances of Securities.

          (i) For purposes of this Section 4(o), the following definitions shall
     apply.

               (1) "CONVERTIBLE SECURITIES" means any stock or securities (other
          than Options) convertible into or exercisable or exchangeable for
          shares of Common Stock.

               (2) "OPTIONS" means any rights, warrants or options to subscribe
          for or purchase shares of Common Stock or Convertible Securities.

               (3) "COMMON STOCK EQUIVALENTS" means, collectively, Options and
          Convertible Securities.

          (ii) Except for Excluded Securities, from the date hereof until the
     date that is 30 Trading Days, (as defined in the Note) following the
     Effective Date (the "TRIGGER DATE"), the Company will not, directly or
     indirectly, offer, sell, grant any option to purchase, or otherwise dispose
     of (or announce any offer, sale, grant or any option to

                                       23

     purchase or other disposition of) any of its or its Subsidiaries' equity or
     equity equivalent securities, including without limitation any debt,
     preferred stock or other instrument or security that is, at any time during
     its life and under any circumstances, convertible into or exchangeable or
     exercisable for shares of Common Stock or Common Stock Equivalents (any
     such offer, sale, grant, disposition or announcement being referred to as a
     "SUBSEQUENT PLACEMENT")

          (iii) Except for Excluded Securities from the Trigger Date until the
     date on which none of the Notes is outstanding, the Company will not
     directly or indirectly, effect any subsequent Placement unless the Company
     shall have first complied with this Section 4(o)(iii).

               (1) The Company shall deliver to each Buyer who still holds Notes
          a written notice (the "OFFER NOTICE") of any proposed or intended
          issuance or sale or exchange (the "OFFER") of the securities being
          offered (the "OFFERED SECURITIES") in a Subsequent Placement, which
          Offer Notice shall (w) identify and describe the Offered Securities,
          (x) describe the price and other terms upon which they are to be
          issued, sold or exchanged, and the number or amount of the Offered
          Securities to be issued, sold or exchanged, (y) identify the persons
          or entities (if known) to which or with which the Offered Securities
          are to be offered, issued, sold or exchanged and (z) offer to issue
          and sell to or exchange with such Buyers all of the Offered
          Securities, allocated among such Buyers (a) based on such Buyer's pro
          rata portion of the aggregate principal amount of Notes purchased
          hereunder (the "BASIC AMOUNT"), and (b) with respect to each Buyer
          that elects to purchase its Basic Amount, any additional portion of
          the Offered Securities attributable to the Basic Amounts of other
          Buyers as such Buyer shall indicate it will purchase or acquire should
          the other Buyers subscribe for less than their Basic Amounts (the
          "UNDERSUBSCRIPTION AMOUNT").

               (2) To accept an Offer, in whole or in part, such Buyer must
          deliver a written notice to the Company prior to the end of the fifth
          (5th ) Business Day after such Buyer's receipt of the Offer Notice
          (the "OFFER PERIOD"), setting forth the portion of such Buyer's Basic
          Amount that such Buyer elects to purchase and, if such Buyer shall
          elect to purchase all of its Basic Amount, the Undersubscription
          Amount, if any, that such Buyer elects to purchase (in either case,
          the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by
          all Buyers are less than the total of all of the Basic Amounts, then
          each Buyer who has set forth an Undersubscription Amount in its Notice
          of Acceptance shall be entitled to purchase, in addition to the Basic
          Amounts subscribed for, the Undersubscription Amount it has subscribed
          for; provided, however, that if the Undersubscription Amounts
          subscribed for exceed the difference between the total of all the
          Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE
          UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed for any
          Undersubscription Amount shall be entitled to purchase only that
          portion of the Available Undersubscription Amount as the Basic Amount
          of such Buyer bears to the total Basic Amounts of all Buyers that have
          subscribed for

                                       24

          Undersubscription Amounts, subject to rounding by the Company to the
          extent its deems reasonably necessary.

               (3) The Company shall have twenty (20) Business Days from the
          expiration of the Offer Period above to offer, issue, sell or exchange
          all or any part of such Offered Securities as to which a Notice of
          Acceptance has not been given by the Buyers (the "REFUSED
          SECURITIES"), but only to the offerees described in the Offer Notice
          (if so described therein) and only upon terms and conditions
          (including, without limitation, unit prices and interest rates) that
          are not more favorable to the acquiring person or persons or less
          favorable to the Company than those set forth in the Offer Notice.

               (4) In the event the Company shall propose to sell less than all
          the Refused Securities (any such sale to be in the manner and on the
          terms specified in Section 4(o)(iii)(3) above), then each Buyer may,
          at its sole option and in its sole discretion, reduce the number or
          amount of the Offered Securities specified in its Notice of Acceptance
          to an amount that shall be not less than the number or amount of the
          Offered Securities that such Buyer elected to purchase pursuant to
          Section 4(o)(iii)(2) above multiplied by a fraction, (i) the numerator
          of which shall be the number or amount of Offered Securities the
          Company actually proposes to issue, sell or exchange (including
          Offered Securities to be issued or sold to Buyers pursuant to Section
          4(o)(iii)(3) above prior to such reduction) and (ii) the denominator
          of which shall be the original amount of the Offered Securities. In
          the event that any Buyer so elects to reduce the number or amount of
          Offered Securities specified in its Notice of Acceptance, the Company
          may not issue, sell or exchange more than the reduced number or amount
          of the Offered Securities unless and until such securities have again
          been offered to the Buyers in accordance with Section 4(o)(iii)(1)
          above.

               (5) Upon the closing of the issuance, sale or exchange of all or
          less than all of the Refused Securities, the Buyers shall acquire from
          the Company, and the Company shall issue to the Buyers, the number or
          amount of Offered Securities specified in the Notices of Acceptance,
          as reduced pursuant to Section 4(o)(iii)(3) above if the Buyers have
          so elected, upon the terms and conditions specified in the Offer. The
          purchase by the Buyers of any Offered Securities is subject in all
          cases to the preparation, execution and delivery by the Company and
          the Buyers of a purchase agreement relating to such Offered Securities
          reasonably satisfactory in form and substance to the Buyers and their
          respective counsel and to the Company and its counsel.

               (6) Any Offered Securities not acquired by the Buyers or other
          persons in accordance with Section 4(o)(ii)(3) above may not be
          issued, sold or exchanged until they are again offered to the Buyers
          under the procedures specified in this Agreement.

          (iv) The restrictions contained in subsections (ii) and (iii) of this
     Section 4(o)

                                       25

     shall not apply in connection with the issuance of any Excluded Securities
     (as defined in the Notes).

     (p) Additional Registration Statements. Until the Effective Date, the
Company will not file a registration statement under the 1933 Act relating to
securities that are not the Securities.

     (q) No Short Position. Each of the Buyers and any of its Affiliates do not
have an open short position in the Common Stock nor will any of the Buyers or
any of their respective Affiliates establish any open short position in the
Common Stock.

     (r) Transactions With Affiliates. So long as any Note or Warrant is
outstanding, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any Subsidiary's officers, directors, person who
were officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in which any
such entity or individual owns a five percent (5%) or more beneficial interest
(each a "RELATED PARTY"), except for (a) customary employment arrangements and
benefit programs on reasonable terms, (b) any investment in an Affiliate of the
Company, (c) any agreement, transaction, commitment, or arrangement on an
arms-length basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party or (d) any agreement
transaction, commitment, or arrangement which is approved by a majority of the
disinterested directors of the Company, for purposes hereof, any director who is
also an officer of the Company or any subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. "Affiliate" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(i) has a ten percent (10%) or more equity interest in that person or entity,
(ii) has ten percent (10%) or more common ownership with that person or entity,
(iii) controls that person or entity, or (iv) shares common control with that
person or entity. "Control" or "controls" for purposes hereof means that a
person or entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.

     (s) Restriction on Issuance of the Capital Stock. Except for Excluded
Securities (as defined in the Notes), the Company shall not, without the prior
written consent of the Buyers, (i) issue or sell shares of Common Stock or
preferred stock without consideration or for a consideration per share less than
the greater of the Closing Bid Price of the Common Stock determined immediately
prior to its issuance or $.01, if the Common Stock is not traded or quoted on
the Principal Market or any national exchange or market, (ii) issue any warrant,
option, right, contract, call, or other security instrument granting the holder
thereof, the right to acquire Common Stock without consideration or for a
consideration less than the greater of such Common Stock's Closing Bid Price
value determined immediately prior to its issuance or $.01, if the Common Stock
is not traded on the American Stock Exchange or any national exchange, or (iii)
file any registration statement on Form S-8, provided unless (x) such shares are
not issued without consideration or for a consideration less than the greater of
the Common Stock's Closing Bid Price on the date of issuance or $.01, if the
Common Stock is not traded or quoted on the

                                       26

Principal Market or any national exchange or market, and (y) such Form S-8
registration statement is not filed prior to 90 days following the effectiveness
of the registration statement. "Closing Bid Price" on any day shall be the
closing bid price for a share of Common Stock on such date on the American Stock
Exchange (or such other exchange, market, or other system that the Common Stock
is then traded on), as reported on Bloomberg, L.P. (or similar organization or
agency succeeding to its functions of reporting prices).

     (t) Removal of Legend. In addition to the Buyer's other available remedies,
the Company shall pay to the Buyer, in cash, as partial liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares and/or Conversion Shares
(based on the closing price of the Common Stock on the date such Warrant Shares
and/or Conversion Shares are submitted to the Company's transfer agent), $5 per
Trading Day (increasing to $10 per trading day five (5) trading days after such
damages have begun to accrue) for each trading day after the third (3rd) trading
day following delivery by a Buyer to the Company or the Company's transfer agent
of a certificate representing Warrant Shares and/or Conversion Shares issued
with a restrictive legend, until such certificate is delivered to the Buyer with
such legend removed. Nothing herein shall limit the Buyer's right to pursue
actual damages for the failure of the Company and its transfer agent to deliver
certificates representing any securities as required hereby or by the
Irrevocable Transfer Agent Instructions, and the Buyer shall have the right to
pursue all remedies available to it at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief.

5. REGISTER; TRANSFER AGENT INSTRUCTIONS.

     (a) Register. The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
each holder of Securities), a register for the Notes and the Warrants in which
the Company shall record the name and address of the Person in whose name the
Notes and the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person, the number of
Conversion Shares issuable upon conversion of the Notes and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person. The
Company shall keep the register open and available at all times during business
hours for inspection by any Buyer or its legal representatives.

     (b) Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company ("DTC"), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares and the Warrant Shares issued
at the Closing or upon conversion of the Notes or exercise of the Warrants in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants in the form of Exhibit E
attached hereto (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). The Company
warrants that no instruction with respect to the Securities other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(g) hereof, will be given
by the Company to its transfer agent, and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with
Section 2(f), the Company shall permit the transfer and shall promptly instruct

                                       27

its transfer agent to issue one or more certificates or credit shares to the
applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. In the
event that such sale, assignment or transfer involves Conversion Shares or
Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, the transfer agent shall issue
such Securities to the Buyer, assignee or transferee, as the case may be,
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach
by the Company of the provisions of this Section 5(b), that a Buyer shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

     (a) Initial Closing Date. The obligation of the Company hereunder to issue
and sell the Initial Notes and the related Warrants to each Buyer at the Initial
Closing is subject to the satisfaction, at or before the Initial Closing Date,
of each of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:

     (i) Such Buyer shall have executed each of the Transaction Documents to
which it is a party and delivered the same to the Company.

     (ii) Such Buyer and each other Buyer shall have delivered to the Company
the Initial Purchase Price (less, in the case of GCF, the amounts withheld
pursuant to Section 4(g)) for the Initial Notes and the related Warrants being
purchased by such Buyer at the Initial Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.

     (iii) The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Initial Closing Date.

     (b) Additional Closing Dates. The obligation of the Company hereunder to
issue and sell the Additional Notes to each Buyer at the Additional Closings is
subject to the satisfaction, at or before the Additional Closing Dates, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:

     (i) Such Buyer and each other Buyer shall have delivered to the Company the
Additional Purchase Price for the Additional Notes being purchased by such Buyer
at the

                                       28

Additional Closing by wire transfer of immediately available funds pursuant to
the wire instructions provided by the Company.

     (ii) The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the
Additional Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Additional Closing Date.

7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

     (a) Initial Closing Date. The obligation of each Buyer hereunder to
purchase the Initial Notes and the related Warrants at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

     (i) The Company shall have executed and delivered (or, in the case of any
Transaction Document to which a Subsidiary is a party, caused such Subsidiary to
execute and deliver) to such Buyer (A) each of the Transaction Documents to
which it or any Subsidiary is a party, (B) the Initial Notes (in such principal
amounts as such Buyer shall request) being purchased by such Buyer at the
Initial Closing pursuant to this Agreement, and (C) the Warrants (in such
amounts as such Buyer shall request) being purchased by such Buyer at the
Initial Closing pursuant to this Agreement.

     (ii) Such Buyer shall have received the opinion of Peckar & Abramson, P.C.,
the Company's outside counsel, dated as of the Initial Closing Date, in
substantially the form of Exhibit F attached hereto and a letter stating that
the Company is in good standing with its attorneys.

     (iii) The Company shall have delivered to such Buyer a true copy of the
Irrevocable Transfer Agent Instructions which instructions shall have been
delivered to and acknowledged in writing by the Company's transfer agent.

     (iv) The Company shall have delivered to such Buyer a true copy of a
certificate evidencing the formation and good standing of the Company and each
of its Subsidiaries in such entity's jurisdiction of formation issued by the
Secretary of State (or comparable office) of such jurisdiction, as of a date
within ten (10) days of the Initial Closing Date.

     (v) The Company shall have delivered to such Buyer a true copy of
certificate evidencing the Company's and each Subsidiary's qualification as a
foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company or such Subsidiary
conducts business, as of a date within ten (10) days of the Initial Closing
Date.

                                       29

     (vi) The Company shall have delivered to such Buyer a certified copy of the
Articles of Incorporation as certified by the Secretary of State of the State of
Delaware within ten (10) days of the Initial Closing Date.

     (vii) The Company shall have delivered to such Buyer a certificate,
executed by the Chief Executive Officer of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted
by the Company's Board of Directors in a form reasonably acceptable to such
Buyer, (ii) the Articles of Incorporation and (iii) the Bylaws, each as in
effect at the Initial Closing, in the form attached hereto as Exhibit G.

     (viii) The representations and warranties of the Company shall be true and
correct in all material respects (other than representations and warranties that
are already qualified by materiality or Material Adverse Effect which shall be
true and correct in all respects) as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Initial Closing
Date. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Initial Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer in the form attached hereto as Exhibit H.

     (ix) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within two (2) days of the Initial Closing Date.

     (x) The Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended, as of the Initial
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Initial Closing Date, either (A) in writing by the SEC or
the Principal Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market.

     (xi) The Company shall have obtained all governmental, regulatory or third
party consents and approvals, if any, necessary for the sale of the Securities
and the grant of the security interest in the assets of the Company and its
Subsidiaries, including the consent of any existing lender or landlord of the
Company or any Subsidiary, as applicable.

     (xii) The Company shall have provided to the Buyer an acknowledgement, to
the satisfaction of the Buyer, from the Company's certified public accountant as
to its ability to provide all consents required in order to file a registration
statement in connection with this transaction and that the Company is in good
standing with its auditors.

     (xiii) Within six (6) Business Days prior to the Initial Closing, the
Company shall have delivered or caused to be delivered to each Buyer true copies
of UCC search results, listing all effective financing statements which name as
debtor the Company or any of its Subsidiaries filed

                                       30

in the prior five years to perfect an interest in any assets thereof, together
with copies of such financing statements, none of which, except as otherwise
agreed in writing by the Buyers, shall cover any of the Collateral (as defined
in the Security Documents) and the results of searches for any tax lien and
judgment lien filed against such Person or its property, which results, except
as otherwise agreed to in writing by the Buyers shall not show any such Liens
(as defined in the Security Documents).

     (xiv) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.

     (b) Additional Closing Dates. The obligation of each Buyer hereunder to
purchase the Additional Notes at an Additional Closings is subject to the
satisfaction, at or before the Additional Closing Dates, of each of the
following conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:

     (i) The Company shall have executed and delivered to such Buyer the
Additional Notes (in such principal amounts as such Buyer shall request) which
are being purchased by such Buyer at the Additional Closing pursuant to this
Agreement.

     (ii) Such Buyer shall have received the opinion of Peckar & Abramson, P.C.,
the Company's outside counsel, dated as of the Additional Closing Date in form
acceptable to the Buyer and that the Company is in good standing with its
attorneys.

     (iii) The Irrevocable Transfer Agent Instructions shall remain in effect as
of the Additional Closing Date and the Company shall cause its transfer agent to
deliver a letter to such Buyer to that effect.

     (iv) The Company shall have delivered to such Buyer a certificate, executed
by the Chief Executive Officer of the Company dated as of the Additional Closing
Date, as to (i) the Resolutions, (ii) the Certificate of Incorporation and (iii)
the Bylaws, each as in effect at the Additional Closing, in the form attached
hereto as Exhibit E.

     (v) The representations and warranties of the Company shall be true and
correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the date when made and as of
the Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Additional Closing Date. Such Buyer shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of the Additional
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer; Nothing herein shall be deemed a
representation, warranty, covenant or agreement that the representations and
warranties contained herein that are described in the

                                       31

Representation Certificate (as defined below) shall be true and correct as of
the Additional Closing Date.

     (vi) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Additional Closing Date.

     (vii) The Common Stock (I) shall be designated for quotation or listed on
the Principal Market, (II) shall not have been suspended, as of the Additional
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Additional Closing Date, in writing by the SEC or the
Principal Market and (III) during any day during the ninety (90) Trading Days
prior to the Additional Closing Date, shall not have fallen below the minimum
listing maintenance requirements of the Principal Market.

     (viii) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
applicable Additional Notes.

     (ix) No Event of Default (as defined in the Notes) shall have occurred and
be continuing.

     (x) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.

     (xi) The Registration Statement shall have been filed with the SEC or a
pre-effective amendment to a previously filed Registration Statement to include
the Conversion Shares and the Warrant Shares shall have been filed with the SEC.

8. TERMINATION. In the event that the Initial Closing shall not have occurred
with respect to a Buyer on or before five (5) Business Days from the date hereof
due to the Company's or such Buyer's failure to satisfy the conditions set forth
in Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this Section
8, the Company shall remain obligated to reimburse the non-breaching Buyers for
the expenses described in Section 4(g) above that have not previously been paid.

9. MISCELLANEOUS.

     (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each

                                       32

party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

     (c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

     (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

     (e) Entire Agreement; Amendments. This Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the
Buyers, the Company, their Affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the
Required Holders, and any amendment to this Agreement made in conformity with
the provisions of this Section 9(e) shall be binding on all Buyers and holders
of Securities, as applicable. No provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the applicable Securities then outstanding. No consideration
shall be offered or paid to any Person

                                       33

to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration also is offered to all of
the parties to the Transaction Documents, holders of Notes or holders of the
Warrants, as the case may be. The Company has not, directly or indirectly, made
any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.

     (f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

     If to the Company:

                              MDwerks, Inc.
                              1020 NW 6th St.
                              Suite I
                              Deerfield Beach, FL 33442
                              Telephone: (954) 389-8300
                              Facsimile: (954) 427-5871
                              Attention: Howard Katz

     Copy to (for informational purposes only):

                              Peckar & Abramson, P.C.
                              70 Grand Avenue
                              River Edge, NJ 07661
                              Telephone: (201) 343-3434
                              Facsimile: (201) 343-6306
                              Attention: Stephen P. Katz, Esq.

     If to the Transfer Agent:

                              Corporation Stock Transfer
                              3200 Cherry Creek Avenue South - Suite 43
                              Denver, CO 80209
                              Telephone: (303) 282-4800
                              Facsimile: (303) 282-5800

     If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer's representatives as set forth on
the Schedule of Buyers, with a copy (for informational purposes only) to:

                              Gottbetter & Partners, LLP
                              488 Madison Avenue, 12th Floor
                              New York, New York 10022

                                       34

                              Telephone: (212) 400-6900
                              Facsimile: (212) 400-6901
                              Attention: Jason M. Rimland, Esq.

     or to such other address and/or facsimile number and/or to the attention of
such other Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

     (g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Required Holders (unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions set forth in
the Notes and the Warrants). A Buyer may assign some or all of its rights
hereunder without the consent of the Company, in which event such assignee shall
be deemed to be a Buyer hereunder with respect to such assigned rights; provided
that such assignee agrees in writing to be bound by all of the provisions
contained herein.

     (h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and, except as set forth in Section 9(k) below, is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

     (i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3 shall survive for a period of two (2) years following the
Initial Closing Date and the agreements and covenants set forth in Sections 4, 5
and 9 shall survive the Closing for the periods referred to in such sections.
Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.

     (j) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     (k) Indemnification. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer (collectively, the "INDEMNITEES") from and

                                       35

against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
and including reasonable attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or any Subsidiary in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company or any
Subsidiary contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby except in the
case of (i) a claim arising out of the breach by the Indemnitee of any of the
Transaction Documents or certificate or instrument contemplated thereby or by
any of the Transaction Documents, (ii) the willful misconduct of Indemnitee,
(iii) any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Securities, or (iv) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

     (l) Buyer Indemnification. In consideration of the Company's execution and
delivery of the Transaction Documents and its sale of the Securities thereunder
and in addition to all of the Buyers' other obligations under the Transaction
Documents, each Buyer shall defend, protect, indemnify and hold harmless the
Company from and against any and all Indemnified Liabilities, incurred by the
Company as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by such Buyer
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (b) any breach of any covenant, agreement or
obligation of such Buyer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby. To the
extent that the foregoing undertaking by a Buyer may be unenforceable for any
reason, such Buyer shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(l)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

     (m) Remedies. Each Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to

                                       36

exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond
or other security.

     (n) Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then such Buyer may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.

     (o) Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration 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 enforcement
or setoff had not occurred.

     (p) Independent Nature of Buyers' Obligations and Rights. The obligations
of each Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents and the Company
acknowledges that to its knowledge the Buyers are not acting in concert or as a
group, and the Company will not assert any such claim, with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Buyer confirms that it has independently participated in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose.

                            [SIGNATURE PAGE FOLLOWS]

                                       37

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

                                        COMPANY:
                                        MDWERKS, INC.

                                        By: /s/ Howard Katz
                                            ------------------------------------
                                            Name: Howard Katz
                                            Title: Chief Executive Officer

                                       38

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

                                        BUYERS:
                                        GOTTBETTER CAPITAL MASTER, LTD.

                                        By: /s/ Adam S. Gottbetter
                                            ------------------------------------
                                            Name: Adam S. Gottbetter
                                            Title: Director

                                       39

                               SCHEDULE OF BUYERS

      (1)                    (2)                   (3)         (4)           (5)       (6)       (7)               (8)
                                                                          AGGREGATE AGGREGATE
                                                                          NUMBER OF NUMBER OF
                                             AGGREGATE       AGGREGATE     SERIES D  SERIES E             LEGAL REPRESENTATIVE'S
                          ADDRESS AND       PRINCIPAL OF   PRINCIPAL OF    WARRANT   WARRANT   PURCHASE        ADDRESS AND
BUYER                  FACSIMILE NUMBER    INITIAL NOTES ADDITIONAL NOTES   SHARES    SHARES    PRICE        FACSIMILE NUMBER
----------------------------------------------------------------------------------------------------------------------------------

Gottbetter Capital 488 Madison Avenue        2,500,000       2,500,000     375,000   375,000  2,375,010 Jason M. Rimland, Esq.
Master, Ltd.       12th Floor                                                                           Gottbetter & Partners, LLP
                   New York, NY 10022                                                                   488 Madison Avenue
                   Facsimile: 212.400.6999                                                              12th Floor
                                                                                                        New York, NY 10022
                                                                                                        Facsimile: 212.400.6901
----------------------------------------------------------------------------------------------------------------------------------

                                       40

                                    EXHIBITS

Exhibit A     Form of Notes
Exhibit B-1   Form of Series D Warrants
Exhibit B-2   Form of Series E Warrants
Exhibit C     Registration Rights Agreement
Exhibit D     Form of Security Agreement
Exhibit E     Irrevocable Transfer Agent Instructions
Exhibit F     Form of Opinion Letter
Exhibit G     Form of Resolutions, Articles of Incorporation and By-Laws
Exhibit H     Form of Officer's Certificate

                                    SCHEDULES

Schedule 3(a)    Subsidiaries
Schedule 3(k)    SEC Documents; Financial Statements
Schedule 3(l)    Absence of Certain Changes
Schedule 3(q)    Transactions with Affiliates, Officers, Directors and Employees
Schedule 3(r)    Equity Capitalization
Schedule 3(s)    Indebtedness and Other Contracts
Schedule 3(t)    Absence of Litigation
Schedule 3(w)    Title
Schedule 3(x)    Intellectual Property Rights
Schedule 3(z)    Subsidiary Rights
Schedule 3(bb)   Tax Status
Schedule 3(ee)   Ranking of Notes
Schedule 4(e)    Planned Use of Gross Proceeds

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