Document:

EXHIBIT 10.230

LIMITED
CONSENT, OMNIBUS AMENDMENT NO. 3 AND JOINDER AGREEMENT

TO THE LOAN DOCUMENTS

This Limited Consent, Omnibus
Amendment No. 3 and Joinder Agreement to the Loan Documents (this “Amendment”), dated as of November 1,
2005, is among Residential Funding Corporation, a Delaware corporation (“Lender”),
Prospect Medical Holdings, Inc., a Delaware corporation (“Holdings”), Prospect Medical Group,
Inc., a California professional corporation (“PMG”; and together with Holdings, each a “Borrower” and collectively, the “Borrowers”), PMG, as Borrower Agent (as
defined in the LSA referenced below), each of the Persons signatory hereto as
Guarantors (each an “Initial Guarantor” and collectively,
the “Initial Guarantors”; and together
with the Borrowers, the “Initial Credit
Parties” and each an “Initial Credit Party”)
and Genesis Healthcare of Southern
California, Inc., a Medical Group, a California medical corporation (“Genesis”).

W I T N E S S E T H:

WHEREAS, Lender and the
Initial Credit Parties are parties to that certain Loan and Security Agreement
dated as of September 27, 2004
(as amended, restated, supplemented or otherwise modified prior to the date
hereof, the “LSA”; capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the LSA as
amended hereby unless otherwise defined herein);

WHEREAS, the Borrowers and the
other Initial Credit Parties have requested that the Lender agree to, and
Lender is willing to agree to, provide certain consents as hereinafter set forth,
subject to the terms and conditions contained herein; and

WHEREAS, the parties hereto
desire to amend the LSA and the other Loan Documents as hereinafter set forth.

NOW THEREFORE, in consideration
of the parties’ mutual promises in this Amendment, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

Section 1               Limited Consent.  Notwithstanding any of the provisions of the
LSA to the contrary, and subject to the satisfaction of each of the conditions
set forth in Section 6 hereof, Lender
hereby consents to the acquisition by PMG of all of the outstanding Stock of
Genesis pursuant to that certain Stock Purchase Agreement, dated as of the date
hereof, by and among PMG and Michael W. Lew, M.D., the sole shareholder of
Genesis (the “Genesis Purchase Agreement”)
for an aggregate consideration set forth in Section 1 of
the Genesis Purchase Agreement.

Section 2               LSA Amendments.  Subject to the satisfaction of each of the
conditions set forth in Section 6
hereof, the LSA is hereby amended as follows:

(a)           Section 1.1 of
the LSA is hereby amended by adding in proper alphabetical order the following
new defined terms:

Amendment
No. 3 Date — means November 1, 2005.

 

Genesis
— Genesis Healthcare of Southern
California, Inc., a Medical Group, a California medical corporation.

Genesis
Acquisition — means the acquisition by PMG
of all of the outstanding Stock of Genesis pursuant to the Genesis Acquisition Documents.

Genesis
Acquisition Agreement  — means that certain Stock
Purchase Agreement, dated as of November 1, 2005, by and between PMG and
Michael W. Lew, M.D. pursuant to which PMG has agreed to acquire all of the
outstanding Stock of Genesis,
as the same is in existence and in effect on the Amendment No. 3 Date.

Genesis
Acquisition Documents — collectively means (i) the Genesis Acquisition Agreement,
(ii) the employment agreement between Genesis and Michael W. Lew, M.D., (iii)
the non-competition agreement between Genesis and Michael W. Lew, M.D., and
(iv) all other agreements, documents, certificates, opinions and other
instruments delivered or executed in connection therewith, as each is in
existence and in effect on the Amendment No. 3 Date.

Term Loan A — means the Term Loan A to be made by the
Lender to Borrowers pursuant to Section
2.1(b) hereof.

Term Loan B — means the Term Loan B to be made by the
Lender to Borrowers pursuant to Section
2.1(b) hereof.

Term Loan A
Commitment —
means the Term Loan A Commitment set forth on Exhibit
A.

Term Loan B
Commitment —
means the Term Loan B Commitment set forth on Exhibit
A.

Term Note A — means the Term Note A issued to the Lender
to evidence Term Loan A in the form attached as Exhibit I-2/A.

Term Note B — means the Term Note B issued to the Lender
to evidence Term Loan B in the form attached as Exhibit I-2/B.

(b)           The following definitions set forth in Section 1.1 of the LSA are hereby amended and restated to
read in their entirety as follows:

Loan — means each Advance made by Lender to any
Borrower under the Revolving Credit, the Term Loan A and the Term Loan B made
by Lender to any Borrower pursuant to this Agreement.

 2
 

 

Term Loan — means, collectively, the Term Loan A and
Term Loan B to be made by the Lender to Borrowers pursuant to Section 2.1(b) hereof.

Term Loan
Commitment —
means, collectively, the Term Loan A Commitment and the Term Loan B Commitment
set forth on Exhibit A.

Term Loan
Maturity Date —
means the date on which the Term Loan A and Term Loan B shall terminate and the
entire outstanding balance of the Term Loan A and Term Loan B shall be due and
payable, as set forth on Exhibit A.

Term
Note(s) — means,
collectively, the Term Note A and Term Note B.

(c)           Section 2.1(b)
of the LSA is hereby amended and restated to read in its entirety as follows:

(b)           Term Loans.

(1)           Subject to the terms
and conditions of this Agreement, Lender agrees to make a loan on the Closing
Date in respect of Term Loan A to each Borrower (jointly and severally) in the
amount of the Term Loan A Commitment. 
Lender shall not be obligated to make any further loan to Borrowers
under the Term Loan A after the Closing Date and no portion of the Term Loan A
which has been repaid may be reborrowed. 
Each Borrower shall jointly and severally pay to Lender the principal
balance of the Term Loan A in monthly installments payable commencing on
November 1, 2004 and continuing on the first day of each succeeding month
thereafter in the amount of each such installment of $166,666.67 until the
earlier of:  (i) the date that the Term Loan
A is paid in full or (ii) the Term Loan Maturity Date.  The entire unpaid principal balance of the
Term Loan A, together with all accrued but unpaid interest thereon shall be due
in payable on the Term Loan Maturity Date. 
In addition, Credit Parties shall make certain mandatory prepayments in
respect of the Term Loan A as provided in Section
3.2.2 hereof.  The Term Loan A
shall be evidenced by the Term Note A, and the Borrowers to which Term Loan A
is made shall jointly execute and deliver the Term Note A to Lender on the
Closing Date.

(2)           Subject to the terms
and conditions of this Agreement, Lender agrees to make a loan on the Amendment
No. 3 Date in respect of Term Loan B to each Borrower (jointly and severally)
in the amount of the Term Loan B Commitment. 
Lender shall not be obligated to make any further loan to Borrowers
under the Term Loan B after the Amendment No. 3 Date and no portion of the Term
Loan B which has been repaid may be reborrowed. 
Each Borrower shall jointly and severally pay to Lender

 3
 

 

the principal balance of the Term Loan B in
monthly installments payable commencing on December  1, 2005 and
continuing on the first day of each succeeding month thereafter in the amount
of each such installment of $66,666.67 until the earlier of:  (i) the date that the Term Loan B is paid in
full or (ii) the Term Loan Maturity Date. 
The entire unpaid principal balance of the Term Loan B, together with
all accrued but unpaid interest thereon shall be due in payable on the Term
Loan Maturity Date.  In addition, Credit
Parties shall make certain mandatory prepayments in respect of the Term Loan B
as provided in Section 3.2.2
hereof.  The Term Loan B shall be
evidenced by the Term Note B, and the Borrowers to which Term Loan B is made
shall jointly execute and deliver the Term Note B to Lender on the Amendment
No. 3 Date.  Borrowers hereby direct Lender to disburse
all proceeds of Term Loan B (net of all fees owing to Lender) to the following
account of Borrowers: Wells Fargo Bank, N.A., Los Angeles, California, ABA No.
121000248, Account No. 4121043368, Reference: Prospect Medical Holdings, Inc.

(d)           Section 2.9 of
the LSA is hereby amended by adding the following new sentence at the end
thereof:

Notwithstanding the foregoing, the proceeds
of the Term Loan B shall be used solely to fund the Genesis Acquisition and pay
costs and expenses associated with the Genesis Acquisition that are approved by
Lender.

(e)           The last sentence of Section
3.2.1 of the LSA is hereby amended and restated to read in its
entirety as follows:

Any partial prepayments of the Term Loan A or
Term Loan B shall be ratably applied to prepay the scheduled installments of
such Term Loan A or Term Loan B, as applicable, in inverse order of maturity
except in connection with the payment in full of all Obligations and the
termination of this Agreement.

(f)            Section 3.2.2(a) of
the LSA is hereby amended and restated to read in its entirety as follows:

(a)           If at any time the sum of the Revolving
Credit Balance and the principal balance of the Term Loan exceeds the amount
equal to the lesser of (A) the Revolving Credit Borrowing Base or
(B) the sum of the Revolving Credit Commitment plus the principal balance of the Term Loan then
outstanding, Credit Parties shall immediately pay such excess to Lender for
application as follows: first, to payment
of principal in respect of the Revolving Credit until all Obligations in
respect of the Revolving Credit have been repaid in full; second to the
ratable payment of principal in respect of the Term Loan A in inverse order of
maturity until all Obligations in respect of Term Loan A have been repaid in
full; and third

 4
 

 

to the ratable payment of principal in
respect of the Term Loan B in inverse order of maturity until all Obligations
in respect of Term Loan B have been repaid in full provided that if any Default or Event of Default shall have occurred
and be continuing at the time any payment shall be due or payable pursuant to
this section, all proceeds of any such payment shall be applied in accordance
with Section 3.3 hereof.

(g)           The second sentence of Section
3.2.2(b) of the LSA is hereby amended and restated to read in its
entirety as follows:

Any prepayments required to be paid pursuant
to this section shall be applied first, to
the ratable payment of principal in respect of the Term Loan A in inverse order
of maturity until all Obligations in respect of Term Loan A have been repaid in
full; second, to the ratable payment of principal in respect of the Term
Loan B in inverse order of maturity until all Obligations in respect of Term
Loan B have been repaid in full; and third to payment of principal in
respect of the Revolving Credit until all Obligations in respect of the
Revolving Credit have been repaid in full; provided
that if any Default or Event of Default shall have occurred and be continuing
at the time any payment shall be due or payable pursuant to this section, all
proceeds of any such payment shall be applied in accordance with Section 3.3 hereof.

(h)           The second sentence of Section
3.2.2(c) of the LSA is hereby amended and restated to read in its
entirety as follows:

Any prepayments required to
be paid pursuant to this section shall be applied first, to payment of principal in respect of the Term Loan A in
inverse order of maturity until all Obligations in respect of Term Loan A have
been repaid in full; second, to payment of principal in respect of the
Term Loan B in inverse order of maturity until all Obligations in respect of
Term Loan B have been repaid in full; and third, to payment in respect of
the Revolving Credit until all Obligations in respect of the Revolving Credit
have been repaid in full; provided that if
any Default or Event of Default shall have occurred and be continuing at the
time any payment shall be due or payable hereunder, all proceeds of any such
payment shall be applied in accordance with Section
3.3 hereof.

(i)            The second sentence of Section
3.2.2(d) of the LSA is hereby amended and restated to read in its
entirety as follows:

Any
prepayments required to be paid pursuant to this section shall be applied first, to payment of principal in respect of
the Term Loan A in inverse order of maturity until all Obligations in respect
of Term Loan A have been repaid in full; second, to payment of principal
in respect of the Term Loan B in inverse order of maturity until all
Obligations in respect of Term Loan B have been repaid in full; and third,
to payment in respect

 5
 

 

of the Revolving Credit until all Obligations
in respect of the Revolving Credit have been repaid in full; provided that if any Default or Event of
Default shall have occurred and be continuing at the time any payment shall be
due or payable hereunder, all proceeds of any such payment shall be applied in
accordance with Section 3.3
hereof.

(j)            Section 3.3 of
the LSA is hereby amended and restated to read in its entirety as follows:

Subject to Section
2.5, so long as no
Default or Event of Default has occurred and is continuing and the Termination
Date shall not have occurred and except for voluntary prepayments permitted pursuant
to Section 3.2.1 which shall be
applied in accordance with such section and mandatory prepayments pursuant to Section 3.2.2 which shall be applied in
accordance with such section, all Collections and other payments (including all
monetary proceeds of Collateral) received shall be applied to amounts then due
and payable in the following order:

(a)           to the payment of, or the reimbursement of the Lender for or in respect
of all Fees and Expenses, costs, disbursements and losses which shall have been
incurred or sustained by the Lender and are then due and owing in connection
with the collection of such monies, or for the administration, exercise,
protection or enforcement by the Lender of any of the rights, remedies, duties
or powers of the Lender hereunder or under any of the other Loan Documents;

(b)           to the payment of any and all other accrued Fees and Expenses then due
and owing hereunder or under any of the other Loan Documents;

(c)           to interest on the Revolving Loans and Term Loan then due and owing, ratably
in proportion to the interest accrued as to each such Loan;

(d)           to principal payments on the Term Loan A then due and owing;

(e)           to principal payments on the Term Loan B then due and owing;

(f)            to payment of the Revolving Loans then
outstanding; and

(g)           to all other Obligations which may be then due and owing.

While any Default or Event of Default shall
have occurred and remain continuing or at all times from and after the
Termination Date, all Collections and other payments (including monetary proceeds
of

 6
 

 

Collateral or of realizations upon any Collateral) received shall be
applied to the Obligations in such order as Lender may elect in its sole
discretion.

(k)           Section 5.2(a)
of the LSA is hereby amended and restated to read in its entirety as follows:

(a)           On the Closing Date, Credit Parties (other
than Genesis), and within 5 Business Days of the Amendment No. 3 Date Genesis,
shall deliver Obligor Notices to all of their Obligors obligated under the
Receivables consisting of Capitated Contract Rights, which Obligor Notice shall
direct each such Obligor to make payments of Collections directly to an
applicable Lockbox (or in the case of payments by wire transfer, the applicable
Lockbox Account), and on the Closing Date Credit Parties (other than Genesis),
and within 5 Business Days of the Amendment No. 3 Date Genesis, shall deliver
or cause to be delivered to Lender the duplicate original of each such Obligor
Notices and evidence satisfactory to Lender that the delivery of such Obligor
Notices to the Obligors has been accomplished. 
In addition, on the Closing Date, Credit Parties (other than Genesis),
and within 5 Business Days of the Amendment No. 3 Date Genesis, shall deliver
to Lender a master Obligor Notice, in form and substance satisfactory to Lender,
in respect of all of their Obligors obligated under Fee-For-Service Receivables
which are Governmental Receivables and a master Obligor Notice, in form and
substance satisfactory to Lender, in respect of all of their Obligors obligated
under Fee-For-Service Receivables which are not Governmental Receivables, a
copy of which Obligor Notice specifying the applicable Obligor’s information,
Lender may deliver to the applicable Obligors on or after an Event of Default
has occurred, and each of which master Obligor Notice, among other things,
shall direct such Obligor to make payments of Collections directly to an
applicable Lockbox (or in the case of payments by wire transfer, the applicable
Lockbox Account), and mail all RA/EOBs directly to the applicable Lockbox, and
each of which master Obligor Notice shall attach a schedule listing all of the
applicable Obligors as of the date reasonably proximate to the Closing Date
with respect to Credit Parties (other than Genesis) and as of the date
reasonably proximate to the Amendment No. 3 Date with respect to Genesis, which
schedules shall be updated pursuant to and in accordance with Section 9.5(b)(xvi).  No such direction given by Credit Parties to
any Obligor shall be changed, modified or superceded without the express prior
written consent of Lender.  Credit
Parties shall cause all billing and claim forms sent to Obligors (and return
envelopes, if any, furnished by Credit Parties) to set forth only the
applicable Lockbox as the address for payment of Receivables and, in the case
of Fee-For-Services Receivables, delivery of the related RA/EOBs, and only the
applicable Lockbox Account as the bank account for receipt of wire transfers
for payment of Receivables; provided that unless an Event of Default
shall have occurred and Lender shall have requested Credit Parties to do so,
the Credit Parties not be

 7
 

 

required to direct Obligors of Fee-For-Service Receivables to remit
payments and RA/EOBs only to a Lockbox or Lockbox Account.  If a payment on a Receivable is made by an
Obligor other than to the appropriate Lockbox and Lockbox Account, Credit
Parties shall (x) remit such payment to the Lockbox Account on the same
day of the receipt thereof, if possible, but in any event no later than the
Business Day immediately following the day of the receipt thereof, and (y)
promptly take all necessary actions to effect collection of such proceeds from
the Person having possession thereof, if other than a Credit Party.

(l)            Section 9 of
the LSA is hereby amended by adding the following new Sections
9.25 and 9.26 at the end
thereof:

9.25         Genesis Bank Account.  Genesis shall be permitted to maintain the
account no. 222-07A89 (“Merrill Account”)
at Merrill Lynch Pierce Fenner and Smith, Inc. so long as (a) all funds
maintained in such Merrill Account are at all times held in cash or in Cash
Equivalents, (b) Genesis furnishes evidence to Lender satisfactory to Lender on
or prior to the Amendment No. 3 Date that all credit card related services
associated with such Merrill Account have been terminated and (c) Genesis
causes on each Business Day all available funds maintained in the Merrill
Account in excess of $700,000 (the “Maximum Balance”)
to be transferred to the Concentration Account. 
Not later than January 1, 2006, Genesis shall cease writing any checks
on the Merrill Account and except for the daily wire transfer of funds from the
Merrill Account to the Concentration Account required by this Section, Genesis
shall cease transferring funds from the Merrill Account or making deposits into
the Merrill Account.  In addition, not
later than January 1, 2006, Genesis shall have opened and caused to be fully
operational disbursing accounts at Wells Fargo Bank which are subject to
Control Agreements in favor of Lender on terms satisfactory to Lender.  From and after January 1, 2006, the Maximum
Balance shall be reduced to the sum of all checks outstanding on the Merrill
Account plus $10,000 as a cushion for fees and expenses and as such checks are
presented and honored for payment, the amount described in this clause shall
automatically be reduced.  Commencing on
the Amendment No. 3 Date and continuing until the Lender has received
satisfactory evidence that the Merrill Account Reserve Release Conditions (as
defined below) have been met, Lender shall be entitled to establish and
maintain a special Availability Reserve in the amount of $700,000; provided
that after January 1, 2006, Borrower shall be entitled to present the monthly
account statement for the Merrill Account or other written evidence satisfactory
to Lender demonstrating that the actual balance in the Merrill Account is less
than $700,000, and Lender shall reduce such special Availability Reserve to an
amount equal to the actual balance in the Merrill Account promptly after
receipt of such satisfactory written evidence; provided  further
that such special Availability Reserve shall be eliminated by Lender promptly
upon

 8
 

 

Lender’s
receipt of written evidence satisfactory to Lender demonstrating (a) that the
actual balance in the Merrill Account is less than $100,000 and (b) all checks
and electronic funds transfers from payors under the Capitated
Contracts have been successfully redirected to a lockbox or bank
account in the name of or under the control of the Lender (the
events in clauses (a) and (b) above, the “Merrill Account Reserve Release
Conditions”).

9.26         Genesis Management Agreement.  Promptly upon entering into by Genesis of a
management services agreement with any Management Credit Party, which shall be
in form and substance satisfactory to Lender and shall be deemed to be included
in the definition of “Management
Agreements” set forth in Section
1.1 of the LSA, Genesis shall enter into a collateral assignment
agreement, subordination agreement with Lender and any other agreements that
Lender may request, in respect of such management services agreement, each in
form and substance satisfactory to Lender

(m)          Section 11.1 of
the LSA is hereby amended by (i) deleting the “.” at the end of subsection (s)
thereof and inserting “; or” in place thereof and (ii) adding the following new
Subsection (t) at the end thereof:

(t)            any Credit Party makes
any post-closing payment under the Genesis Acquisition Agreement when any
Default or Event of Default shall have occurred and be continuing or would
result from the funding of such payment.

(n)           Effective as of the date hereof, 2005, the
notice address for Credit Parties set forth in Section 14.1
of the LSA is hereby amended and restated to read in its entirety as follows:

	
  If to Credit Parties:

  	
   

  	
  c/o Prospect Medical Holdings, Inc.

  400 Corporate Point, Suite 525

  Culver City, California 92801

  Attn: Jacob Y. Terner, CEO

  Telephone: (310) 337-4162

  Facsimile: (310) 338-1151

  E-Mail: jack.terner@prospectmedical.com

  

 9
 

 

 

	
  With a copy to:

  	
   

  	
  Miller & Holguin

  1801 Century Park East, Suite 700

  Los Angeles, California 90067

  Attn: Dale S. Miller

  Telephone: (310) 556-1990

  Facsimile: (310) 557-2205

  E-Mail: dmiller@millerholguin.com

  

 

 

(o)           Sections I and III.C of Exhibit A to
the LSA are hereby amended and restated to read in their entirety as follows:

	
  

  	
   

  	
  I. Commitments

  
	
   

  	
   

  
	
   

  	
  Revolving Credit Commitment:

  	
  $5,000,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
  Term Loan A Commitment:

  	
  $10,000,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:

  	
  $4,000,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C. Facility Origination Fee:

  	
  1.00% of the aggregate of the Revolving Credit

  Commitment and the Term Loan A

  Commitment, due on the Closing Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.00% of the Term Loan B Commitment, due on

  the Amendment No. 3 Date.

  

 

(p)           The following definitions set forth on Exhibit A to the LSA are hereby amended and restated to read
in their entirety as follows:

“Interest
Rate” — means: (i) the sum of the Prime Rate plus the Revolving Credit Applicable
Margin with respect to the Revolving Credit Balance, (ii) the sum of Prime Rate
plus the Term Loan A Applicable
Margin with respect to the Term Loan A, and (iii) the sum of Prime Rate plus the Term Loan B Applicable Margin
with respect to the Term Loan B.

“Applicable Margin” — means (a) for the Revolving Credit
Balance, the Revolving Credit Applicable Margin, (b) for the Term Loan A, the
Term Loan A Applicable Margin, and (c) for the Term Loan B, the Term Loan B
Applicable Margin.

 10
 

 

(q)           Exhibit A to the LSA are hereby amended by adding in proper
alphabetical order the following new defined terms:

“Term
Loan A Applicable Margin” — means 200 basis points.

“Term
Loan B Applicable Margin” — means 200 basis points.

(r)            Schedules 8.7, 8.13,
8.15, 8.17, 8.20, 9.8(b) and 10.1 to the LSA are hereby amended
by adding thereto the information contained on the Supplements to Schedules 8.7, 8.13, 8.15, 8.17, 8.20, 9.8(b) and 10.1
attached hereto with respect to Genesis. 
All references in the LSA to Schedules
8.7, 8.13, 8.15, 8.17, 8.20,
9.8(b) and 10.1 shall now be deemed to include a reference to Schedules 8.7, 8.13,
8.15, 8.17, 8.20, 9.8(b) and 10.1 as amended by the Supplements to Schedules 8.7, 8.13, 8.15, 8.17, 8.20, 9.8(b) and 10.1.

Section 3                Omnibus Amendments.  Subject to the satisfaction of each of the
conditions set forth in Section 6
hereof, the LSA and the other Loan Documents are hereby amended so that each
reference in the LSA and in the other Loan Documents to the term “Credit
Parties” or “Guarantors” shall be deemed to include a reference to Genesis.

Section 4                Joinders.

(a)           LSA.  Genesis (sometimes referred to herein as the “New Credit Party”) hereby agrees to
perform, for the benefit of Lender, all of the Obligations of a Guarantor and a
Credit Party (other than a Borrower) under the LSA, as direct and primary
obligations of the New Credit Party, and further agrees that it shall comply
with and be fully bound by the terms of the LSA as if it had been a signatory
thereto as a Guarantor and a Credit Party as of the date thereof.  In furtherance thereof, (i) in order to
secure payment and performance of all of the Obligations, the New Credit Party
hereby grants to Lender a security interest in all Collateral in which it has an
interest, whether now or hereafter arising, in accordance with the terms of the
Section 6 of the LSA and
(ii) the New Credit Party hereby agrees that it is jointly and severally
liable for, and hereby absolutely and unconditionally guarantees to Lender and
its successors and assigns, the full and prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of, all Obligations
owed or hereafter owing to Lender by each other Credit Party, in accordance
with the terms of the Section 15
of the LSA.

(b)           Offset Agreement.  The New Credit Party hereby agrees to
perform, for the benefit of Lender, all of the obligations of a Restricted
Credit Party (as defined therein) under the Offset Agreement, as direct and
primary obligations of the New Credit Party, and further agrees that it shall
comply with and be fully bound by the terms of the Offset Agreement as if it
had been a signatory thereto as a Credit Party as of the date thereof.

(c)           Other Loan Documents.  The New Credit Party hereby agrees to
perform, for the benefit of Lender, all of the obligations of a of a Guarantor
or a Credit Party, as the case may be, under each other Loan Document, as
direct and primary obligations of the New Credit Party, and further agrees that
it shall comply with and be

 11
 

 

fully bound by the terms of each such other Loan Document as if it had
been a signatory thereto as a Guarantor or a Credit Party, as applicable, as of
the date thereof.

Section 5                Amendments to
Collateral Assignments to Transaction Documents.

(a)           Item (xiv) of Exhibit A to that certain Collateral Assignment of
Transaction Documents dated as of September 27, 2004 between PMS and Lender (as
amended, restated, supplemented or otherwise modified from time to time, the “PMS Collateral Assignment”) is hereby
amended by deleting the “.” at the end thereof and inserting “(as amended,
restated, supplemented or otherwise modified from time to time) and item (xvii) of Exhibit A to
the PMS Collateral Assignment is hereby amended by deleting the “.” at the end
thereof and inserting “together with that certain Joinder Agreement by Genesis Healthcare of Southern California,
Inc., a Medical Group, a California medical corporation, dated as of November
1, 2005.”.

(b)           Item (x) of Exhibit A to that certain Collateral Assignment of
Transaction Documents dated as of September 27, 2004 between Sierra Primary and
Lender (as amended, restated, supplemented or otherwise modified from time to
time, the “Sierra Primary Collateral
Assignment”) is hereby amended by deleting the “.” at the end
thereof and inserting “(as amended, restated, supplemented or otherwise
modified from time to time) and item (xi) of Exhibit A to the Sierra Primary Collateral Assignment is
hereby amended by deleting the “.” at the end thereof and inserting “together
with that certain Joinder Agreement by Genesis
Healthcare of Southern California, Inc., a Medical Group, a California medical
corporation, dated as of November 1, 2005.”.

(c)           Item (vii) of Exhibit A to that certain Collateral Assignment of
Transaction Documents dated as of September 27, 2004 between PHR and Lender (as
amended, restated, supplemented or otherwise modified from time to time, the “PHR Collateral Assignment”) is hereby
amended by deleting the “.” at the end thereof and inserting “(as amended,
restated, supplemented or otherwise modified from time to time) and item (vii) of Exhibit A to
the PHR Collateral Assignment is hereby amended by deleting the “.” at the end
thereof and inserting “together with that certain Joinder Agreement by Genesis Healthcare of Southern California,
Inc., a Medical Group, a California medical corporation, dated as of November
1, 2005.”.

Section 6                Effectiveness and
Conditions Subsequent.

6.1           This Amendment shall
become effective on the date each of the following condition have been met:

(a)           this Amendment shall have been executed and
delivered by Lender and the Credit Parties;

(b)           Lender shall have received, each in form and
substance satisfactory to Lender, (i) all documents, agreements and other items
listed on the Closing Checklist attached hereto as Annex I duly executed
and delivered by each applicable party thereto and (ii) all other information
and copies of all documents which Lender may have

 12
 

 

requested in connection therewith. 
Upon the request of Lender or its counsel, such documents will be certified
by appropriate corporate officers or Governmental Authority;

(c)           Lender shall have completed its business,
legal, and collateral due diligence, the results of each of which shall be
satisfactory to Lender;

(d)           Lender shall have received evidence, in form
and substance satisfactory to Lender, that Lender has a valid perfected
security interest in that portion of the Collateral associated with Genesis,
subject only to Permitted Liens; and

(e)           Borrowers shall have paid to the Lender a
facility origination fee equal to $40,000 in connection with this Amendment.

6.2           Not later than the end
of business on November 1, 2005, Lender shall have received a photocopy of the
original stock certificate(s) of Genesis (which may be in the name of Edward
Medical Group II, a Medical Corporation) accompanied by a stock power endorsed
by Michael W. Lew, M.D. to PMG evidencing the consummation of the Genesis
Acquisition. Failure to satisfy this condition in accordance with this Section 6.2 shall constitute an immediate Event of Default
under the LSA and the other Loan Documents.

6.3           Each of the following
conditions must be satisfied on or before November 4, 2005:

(a)           Lender shall have received certified copies
of (i) the Genesis Acquisition Documents and (i) the Management Services
Agreement, dated as of April 1, 2001, between Advanced Medical Management, Inc.
and Genesis together with all amendments, supplements or other modifications
thereto; and

(b)           Lender shall have received the original
stock certificate representing 100% of the outstanding Stock of Genesis,
together with the original undated stock power executed in blank in respect of
such Stock.

Failure to satisfy
any of the above conditions in accordance with this Section 6.3
shall constitute an immediate Event of Default under the LSA and the other Loan
Documents.

6.4           Each of the following
conditions must be satisfied on or before November 11, 2005:

(a)           Lender shall have received a Landlord
Waiver, satisfactory to Lender, for the premises leased by Genesis located at
12665 Garden Grove Blvd., City of Garden Grove, California;

(b)           Lender shall have received, each in form and
substance satisfactory to Lender, certificates of insurance evidencing that
Genesis has been added to Credit Parties’ consolidated liability, casualty and
property insurance policies evidencing its coverage under such policies and
naming Lender as loss payee and/or additional insured, as applicable,
thereunder; and

 13
 

 

(c)           Lenders shall have received, in form and
substance satisfactory to Lender, certificates
from the applicable California tax authority evidencing the payment of all
franchise taxes by each California Credit Party.

Failure to satisfy
any of the above conditions in accordance with this Section 6.4
shall constitute an immediate Event of Default under the LSA and the other Loan
Documents.

6.5           On or prior
to November 8, 2005, Lender shall have received, in form and substance
satisfactory to Lender, evidence that Genesis has sent a letter to Blue Shield
of California (“BSC”)
acknowledging that (i) prior notice with respect to the Genesis Acquisition has
been sent to BSC, (ii) the Genesis Acquisition has been consummated and (iii)
no objections or concerns have been received from BSC concerning the Genesis
Acquisition and as a result Genesis has assumed the consent of BSC to the
Genesis Acquisition, and no later than ninety (90) calendar days following the
Amendment No. 3 Date, Lender shall have received, in form and substance
satisfactory to Lender, a copy of the assignment and assumption agreement
executed between Genesis and BSC. Failure required to satisfy this condition in
accordance with this Section 6.5
shall constitute an immediate Event of Default under the LSA and the other Loan
Documents.

Section 7                Representations and Warranties of the Credit
Parties. To induce the Lender to execute and deliver this
Amendment, the Credit Parties represent and warrant that:

(a)           the execution, delivery and performance by
the Initial Credit Parties and the New Credit Party of this Amendment has been
duly authorized and this Amendment constitutes the legal, valid and binding
obligation of the Initial Credit Parties and the New Credit Party, enforceable
against Initial Credit Parties and the New Credit Party in accordance with its
terms, except as the enforcement thereof may be subject to (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors’ rights generally and (ii) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law);

(b)           no Default or Event of Default has occurred
and is continuing and each of the representations and warranties contained in
the LSA and the other Loan Documents is true and correct in all material
respects on and as of the date hereof as if made on the date hereof, except to
the extent that such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date, and each of the agreements and covenants
in the Loan Documents are hereby reaffirmed with the same force and effect as
if each were separately stated herein and made as of the date hereof;

(c)           the execution, delivery and performance of
this Amendment and the Genesis Acquisition Agreement and the consummation of
the transactions contemplated this Amendment and the Genesis Acquisition
Agreement do not and shall not contravene, result in a breach of, or violate
(i) any provision of any Initial Credit Party’s or the New Credit Party’s
corporate charter or bylaws or other governing documents, (ii) any material law
or regulation, or any order or decree of any court or

 14
 

 

government instrumentality or (iii) any material indenture, mortgage,
deed of trust, lease, agreement or other instrument to which any Initial Credit
Party or the New Credit Party is a party or by which any Initial Credit Party
or the New Credit Party or any of their respective property is bound; and

(d)           all reports, documents, notices or approvals
required to be filed or furnished to or obtained from any Governmental
Authority in connection with this Amendment have been filed or furnished to or
obtained from such Governmental Authority.

Section 8                Miscellaneous

(a)           Effect.  The consents and amendments set forth herein
are effective solely for the purposes set forth herein and shall be limited
precisely as written, and shall not be deemed to (i) except as expressly
provided in this Amendment, be a consent to any amendment, waiver or
modification of any term or condition of the LSA or of any other Loan Document,
(ii) prejudice any right or rights that Lender may now have or may have in the
future under or in connection with the LSA or any other Loan Document, or (iii)
constitute a course of dealing or other basis for altering any Obligation of
the Borrowers or any other Credit Parties under the LSA or any other Loan
Document or any other contract or instrument.

(b)           Reaffirmation.  Except as expressly amended herein, all of
the terms and provisions of the LSA and the Loan Documents are ratified and
confirmed in all respects by each Initial Credit Party and the New Credit Party
and shall remain in full force and effect. 
Each Initial Credit Party and the New Credit Party hereby acknowledges
and agrees that there is no defense, setoff or counterclaim of any kind, nature
or description to the Obligations or the payment thereof when due.  The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein, operate as an
amendment to or waiver of any right, power or remedy of the Lender under the
LSA or any of the other Loan Documents, or constitute an amendment or waiver of
any provision of the LSA or any of the other Loan Documents.

(c)           Binding on Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

(d)           Severability.  Whenever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Amendment.

(e)           GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE

 15
 

 

STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

(f)            No Waiver.  No waiver or consent, and no modification or
amendment of any provision of this Amendment shall be effective unless
specifically made in writing and duly signed by the party purportedly making
such waiver or consent.

(g)           Counterparts.  This Amendment may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
agreement.  This Amendment may be
executed and delivered by telecopier with the same force and effect as if the
same were a fully executed and delivered original manual counterpart.

(h)           Titles.  Paragraph and subparagraph titles, captions
and headings herein are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Amendment or the intent of any provisions hereof.

(i)            Acknowledgment.  The Initial Credit Parties and the New Credit
Party affirm and acknowledge that this Amendment constitutes a Loan Document
under the LSA and any reference to the Loan Documents under the LSA contained
in any notice, request, certificate or other document executed concurrently
with or after the execution and delivery of this Amendment shall be deemed to
include this Amendment unless the context shall otherwise specify.  Each of the Initial Credit Parties and the
New Credit Party hereby adopt and reaffirm each of the terms set forth in Section 15.2 of the LSA as though the same were restated in
this Amendment.

<Remainder of page left intentionally blank>

<Signature pages follow>

 16

 

IN WITNESS WHEREOF, the parties have caused
this Amendment to be duly executed and delivered all as of the day and year
first above written.

	
  

  	
  BORROWER AGENT:

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL GROUP, INC., a California

  professional corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL HOLDINGS, INC., a
  Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL GROUP, INC., a California

  professional corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL SYSTEMS, INC., a
  Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
  PINNACLE HEALTH RESOURCES, a
  California

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIERRA MEDICAL MANAGEMENT, INC., a
  Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIERRA PRIMARY CARE MEDICAL GROUP, A

  MEDICAL CORPORATION, a California professional

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NUESTRA FAMILIA MEDICAL GROUP, INC., a

  California professional corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  SANTA ANA/TUSTIN PHYSICIANS GROUP,
  INC., a

  California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  PEGASUS MEDICAL GROUP, INC.,
  a California

  professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  ANTELOPE VALLEY MEDICAL ASSOCIATES,
  INC., a

  California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  PROSPECT HEALTH SOURCE MEDICAL
  GROUP,

  INC., a California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  PROSPECT PROFESSIONAL CARE MEDICAL

  GROUP, INC., a California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  PROSPECT NWOC MEDICAL GROUP, INC.,
  a

  California professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  APAC MEDICAL GROUP, INC.,
  a California professional

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  STARCARE MEDICAL GROUP, INC.,
  a California

  professional corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

 

	
   

  	
  PROSPECT HOSPITAL ADVISORY
  SERVICES, INC.

  (f/k/a Prospect Medical Management, Inc.), a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  

  	
  GENESIS HEALTHCARE OF SOUTHERN

  CALIFORNIA, INC., A MEDICAL GROUP, a California

  medical corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENESIS HEALTHCARE OF SOUTHERN

  CALIFORNIA, INC., A MEDICAL GROUP, a California

  medical corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  RESIDENTIAL FUNDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:EXHIBIT 10.1

EXECUTION VERSION

 

AMENDED AND RESTATED

CREDIT AGREEMENT

dated as of

December 21, 2006

among

MAC-GRAY CORPORATION,

MAC-GRAY SERVICES, INC.,

INTIRION CORPORATION,

The Lenders Party Hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

KEYBANK NATIONAL ASSOCIATION,

as Syndication Agent,

and

HSBC BANK USA, N.A.,

WACHOVIA BANK NATIONAL ASSOCIATION and

BANK NORTH, N.A.,

as Co-Documentation Agents

J.P. MORGAN
SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE I

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
  SECTION 1.02.

  	
   

  	
  Classification of Loans and Borrowings

  	
   

  	
  76

  
	
  SECTION 1.03.

  	
   

  	
  Terms Generally

  	
   

  	
  77

  
	
  SECTION 1.04.

  	
   

  	
  Accounting Terms; GAAP

  	
   

  	
  78

  
	
  SECTION 1.05.

  	
   

  	
  Pro Forma Basis

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Credits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
   

  	
  Commitments

  	
   

  	
  80

  
	
  SECTION 2.02.

  	
   

  	
  Loans and Borrowings

  	
   

  	
  82

  
	
  SECTION 2.03.

  	
   

  	
  Requests for Borrowings

  	
   

  	
  84

  
	
  SECTION 2.04.

  	
   

  	
  Swingline Loans

  	
   

  	
  87

  
	
  SECTION 2.05.

  	
   

  	
  Letters of Credit

  	
   

  	
  92

  
	
  SECTION 2.06.

  	
   

  	
  Funding of Borrowings

  	
   

  	
  109

  
	
  SECTION 2.07.

  	
   

  	
  Interest Elections

  	
   

  	
  111

  
	
  SECTION 2.08.

  	
   

  	
  Termination and Reduction of Commitments

  	
   

  	
  116

  
	
  SECTION 2.09.

  	
   

  	
  Repayment of Loans; Evidence of Debt

  	
   

  	
  118

  
	
  SECTION 2.10.

  	
   

  	
  [Reserved]

  	
   

  	
  121

  
	
  SECTION 2.11.

  	
   

  	
  Prepayment of Loans

  	
   

  	
  121

  
	
  SECTION 2.12.

  	
   

  	
  Fees

  	
   

  	
  124

  
	
  SECTION 2.13.

  	
   

  	
  Interest

  	
   

  	
  128

  
	
  SECTION 2.14.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  131

  
	
  SECTION 2.15.

  	
   

  	
  Increased Costs

  	
   

  	
  133

  
	
  SECTION 2.16.

  	
   

  	
  Break Funding Payments

  	
   

  	
  137

  
	
  SECTION 2.17.

  	
   

  	
  Taxes

  	
   

  	
  139

  
	
  SECTION 2.18.

  	
   

  	
  Payments Generally; Pro Rata Treatment; Sharing of
  Set-offs

  	
   

  	
  145

  
	
  SECTION 2.19.

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  152

  
	
  SECTION 2.20.

  	
   

  	
  Increase in Commitments

  	
   

  	
  155

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Representations
  and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
   

  	
  Organization; Powers

  	
   

  	
  160

  
	
  SECTION 3.02.

  	
   

  	
  Authorization; Enforceability

  	
   

  	
  161

  
	
  SECTION 3.03.

  	
   

  	
  Governmental Approvals; No Conflicts

  	
   

  	
  162

  

 

 

 

	
  SECTION 3.04.

  	
   

  	
  Financial Condition; No Material Adverse Change

  	
   

  	
  163

  
	
  SECTION 3.05.

  	
   

  	
  Properties

  	
   

  	
  165

  
	
  SECTION 3.06.

  	
   

  	
  Litigation and Environmental Matters

  	
   

  	
  167

  
	
  SECTION 3.07.

  	
   

  	
  Compliance with Laws and Agreements

  	
   

  	
  168

  
	
  SECTION 3.08.

  	
   

  	
  Investment and Holding Company Status

  	
   

  	
  169

  
	
  SECTION 3.09.

  	
   

  	
  Taxes

  	
   

  	
  169

  
	
  SECTION 3.10.

  	
   

  	
  ERISA

  	
   

  	
  170

  
	
  SECTION 3.11.

  	
   

  	
  Disclosure

  	
   

  	
  171

  
	
  SECTION 3.12.

  	
   

  	
  Subsidiaries

  	
   

  	
  172

  
	
  SECTION 3.13.

  	
   

  	
  Insurance

  	
   

  	
  172

  
	
  SECTION 3.14.

  	
   

  	
  Labor Matters

  	
   

  	
  173

  
	
  SECTION 3.15.

  	
   

  	
  Solvency

  	
   

  	
  174

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Conditions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
   

  	
  Effective Date

  	
   

  	
  175

  
	
  SECTION 4.02.

  	
   

  	
  Each Credit Event

  	
   

  	
  179

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Affirmative
  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
   

  	
  Financial Statements and Other Information

  	
   

  	
  181

  
	
  SECTION 5.02.

  	
   

  	
  Notices of Material Events

  	
   

  	
  187

  
	
  SECTION 5.03.

  	
   

  	
  Information Regarding Collateral

  	
   

  	
  188

  
	
  SECTION 5.04.

  	
   

  	
  Existence; Conduct of Business

  	
   

  	
  190

  
	
  SECTION 5.05.

  	
   

  	
  Payment of Obligations

  	
   

  	
  190

  
	
  SECTION 5.06.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  191

  
	
  SECTION 5.07.

  	
   

  	
  Insurance

  	
   

  	
  192

  
	
  SECTION 5.08.

  	
   

  	
  Casualty and Condemnation

  	
   

  	
  192

  
	
  SECTION 5.09.

  	
   

  	
  Books and Records; Inspection and Audit Rights

  	
   

  	
  193

  
	
  SECTION 5.10.

  	
   

  	
  Compliance with Laws

  	
   

  	
  194

  
	
  SECTION 5.11.

  	
   

  	
  Use of Proceeds and Letters of Credit

  	
   

  	
  194

  
	
  SECTION 5.12.

  	
   

  	
  Additional Subsidiaries

  	
   

  	
  195

  
	
  SECTION 5.13.

  	
   

  	
  Further Assurances

  	
   

  	
  196

  
	
  SECTION 5.14.

  	
   

  	
  [Reserved]

  	
   

  	
  198

  
	
  SECTION 5.15.

  	
   

  	
  Post-Closing Matters

  	
   

  	
  198

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Negative
  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
   

  	
  Indebtedness; Certain Equity Securities

  	
   

  	
  199

  
	
  SECTION 6.02.

  	
   

  	
  Liens

  	
   

  	
  207

  
	
  SECTION 6.03.

  	
   

  	
  Fundamental Changes

  	
   

  	
  211

  

 

 

 

	
  SECTION
  6.04.

  	
   

  	
  Investments, Loans, Advances, Guarantees and
  Acquisitions

  	
   

  	
  212

  
	
  SECTION 6.05.

  	
   

  	
  Asset Sales

  	
   

  	
  219

  
	
  SECTION 6.06.

  	
   

  	
  Sale and Leaseback Transactions

  	
   

  	
  222

  
	
  SECTION 6.07.

  	
   

  	
  Swap Agreements

  	
   

  	
  223

  
	
  SECTION 6.08.

  	
   

  	
  Restricted Payments; Certain Payments of
  Indebtedness

  	
   

  	
  224

  
	
  SECTION 6.09.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  226

  
	
  SECTION 6.10.

  	
   

  	
  Restrictive Agreements

  	
   

  	
  228

  
	
  SECTION 6.11.

  	
   

  	
  Amendment of Material Documents

  	
   

  	
  230

  
	
  SECTION 6.12.

  	
   

  	
  Minimum Net Worth

  	
   

  	
  231

  
	
  SECTION 6.13.

  	
   

  	
  Funded Debt Ratio

  	
   

  	
  232

  
	
  SECTION 6.14.

  	
   

  	
  Consolidated Cash Flow Coverage Ratio

  	
   

  	
  232

  
	
  SECTION 6.15.

  	
   

  	
  Senior Secured Leverage Ratio

  	
   

  	
  233

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Events of
  Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE VIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE IX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
   

  	
  Notices

  	
   

  	
  252

  
	
  SECTION 9.02.

  	
   

  	
  Waivers; Amendments

  	
   

  	
  255

  
	
  SECTION 9.03.

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  259

  
	
  SECTION 9.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  265

  
	
  SECTION 9.05.

  	
   

  	
  Survival

  	
   

  	
  275

  
	
  SECTION 9.06.

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  277

  
	
  SECTION 9.07.

  	
   

  	
  Severability

  	
   

  	
  278

  
	
  SECTION 9.08.

  	
   

  	
  Right of Setoff

  	
   

  	
  278

  
	
  SECTION 9.09.

  	
   

  	
  Governing Law; Jurisdiction; Consent to Service of
  Process

  	
   

  	
  279

  
	
  SECTION 9.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  282

  
	
  SECTION 9.11.

  	
   

  	
  Headings

  	
   

  	
  283

  
	
  SECTION 9.12.

  	
   

  	
  Confidentiality

  	
   

  	
  284

  
	
  SECTION 9.13.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  286

  
	
  SECTION 9.14.

  	
   

  	
  USA Patriot Act

  	
   

  	
  287

  
	
  SECTION 9.15.

  	
   

  	
  Obligations Joint and Several

  	
   

  	
  288

  

 

 

 

SCHEDULES:

 

	
  Schedule 1.01

  	
  —

  	
  Mortgaged Property

  
	
  Schedule 2.01

  	
  —

  	
  Commitments

  
	
  Schedule 3.05

  	
  —

  	
  Real Property

  
	
  Schedule 3.06

  	
  —

  	
  Disclosed Matters

  
	
  Schedule 3.12

  	
  —

  	
  Subsidiaries

  
	
  Schedule 3.13

  	
  —

  	
  Insurance

  
	
  Schedule 6.01

  	
  —

  	
  Existing Indebtedness

  
	
  Schedule 6.02

  	
  —

  	
  Existing Liens

  
	
  Schedule 6.04

  	
  —

  	
  Existing Investments

  
	
  Schedule 6.10 
  

  	
  —

  	
  Existing Restrictions

  

 

EXHIBITS:

 

	
  Exhibit A

  	
  —

  	
  Form of Assignment and Assumption

  
	
  Exhibit B

  	
  —

  	
  Form of Opinion of Goodwin Procter LLP

  
	
  Exhibit C

  	
  —

  	
  Form of Reaffirmation Agreement

  

 

AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 21, 2006
(this “Agreement”), among MAC-GRAY CORPORATION, MAC-GRAY SERVICES, INC.,
INTIRION CORPORATION, the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A.,
as Administrative Agent.

WHEREAS, subject to the satisfaction of the conditions
set forth herein, on the Effective Date the Credit Agreement dated as of
January 10, 2005 (the “Original Credit Agreement”) as previously amended by
Amendment No. 1 dated as of August 2, 2005 is amended and restated as
provided herein;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

“ABR”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Alternate Base
Rate.

“Adjusted LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve
Rate.

“Administrative Agent” means JPMorgan Chase
Bank, N.A., in its capacity as administrative agent for the Lenders hereunder,
and its successors in such capacity as provided in Article VIII.

“Administrative Questionnaire” means an
Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.

“Alternate Base Rate” means, for any day, a
rate per annum equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%.  Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage” means, with respect to
any Revolving Lender, the percentage of the total Revolving Commitments represented
by such Lender’s Revolving Commitment. 
If the Revolving Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Revolving Commitments most
recently in effect, giving effect to any assignments.

“Applicable Rate”
means, for any day with respect to any ABR Loan or Eurodollar Loan that is a
Revolving Loan, or with respect to the commitment fees payable hereunder, as
the case may be, the applicable rate per annum set forth below under the
caption “ABR Spread”, “Eurodollar Spread” or “Commitment Fee Rate”, as the case
may be, based upon the Funded Debt Ratio as of the most recent determination
date; provided that (i) prior to the delivery of the financial
statements for the fiscal year ending December 31, 2006 in accordance with
Section 5.01(a) hereof, the “Applicable Rate” shall be deemed to be the
applicable rate per annum set forth below in Category 2 and
(ii) after the delivery of the financial statements for the fiscal year
ending December 31, 2006, the Funded Debt Ratio shall be deemed to be the
Funded Debt Ratio as of the most recent determination date:

	
  Funded Debt Ratio:

  	
   

  	
  ABR

  Spread

  	
   

  	
  Eurodollar

  Spread

  	
   

  	
  Commitment Fee

  Rate

  	
   

  
	
  Category 1

  > 3.50x

  	
   

  	
  0.50

  	
   

  	
  1.50

  	
  %

  	
  0.300

  	
  %

  
	
  Category 2

  < 3.50x and > 3.00x

  	
   

  	
  0.25

  	
  %

  	
  1.25

  	
  %

  	
  0.275

  	
  %

  
	
  Category 3

  < 3.00x

  	
   

  	
  0.00

  	
  %

  	
  1.00

  	
  %

  	
  0.250

  	
  %

  

 

For purposes of the foregoing, (i) the Funded
Debt Ratio shall be determined as of the end of each fiscal quarter of the
Parent Borrower’s fiscal year based upon the Parent Borrower’s consolidated
financial statements delivered pursuant to Section 5.01(a) or (b) and
(ii) each change in the Applicable Rate resulting from a change in the
Funded Debt Ratio shall be effective during the period commencing on and
including the date of delivery to the Administrative Agent of such consolidated
financial statements indicating such change and ending on the date immediately
preceding the effective date of the next such change; provided that the
Funded Debt Ratio shall be deemed to be in Category 1 (A) at any time
that an Event of Default has occurred and is continuing or (B) at the
option of the Administrative Agent or at the request of the Required Lenders if
the Parent Borrower fails to deliver the consolidated financial statements
required to be delivered by it pursuant to Section 5.01(a) or (b), during
the period from the expiration of the time for delivery thereof until such
consolidated financial statements are delivered.

“Assignment and Assumption” means an assignment
and assumption entered into by a Lender and an assignee (with the consent of
any party whose consent is

 2
 

 

required by
Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

“Augmenting Lender” has the meaning assigned to
such term in Section 2.20.

“Board” means the Board of Governors of the
Federal Reserve System of the United States of America.

“Borrowers” means the Parent Borrower, Mac-Gray
Services, Inc. and Intirion Corporation, each a Delaware corporation.

“Borrowing” means (a) Loans of the same
Class and Type, made, converted or continued on the same date and, in the case
of Eurodollar Loans, as to which a single Interest Period is in effect, or
(b) a Swingline Loan.

“Borrowing Request” means a request by the
Borrowers for a Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to remain closed; provided that, when used
in connection with a Eurodollar Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.

“Capital Expenditures” means, for any period,
(a) the additions to property, plant and equipment and other capital
expenditures of the Parent Borrower and its Subsidiaries that are (or would be)
set forth in a consolidated statement of cash flows of the Parent Borrower for
such period prepared in accordance with GAAP and (b) Capital Lease
Obligations incurred by the Parent Borrower and its Subsidiaries during such
period, provided that Capital Expenditures shall not include
expenditures to the extent they are financed with the proceeds of (i) any
sale, transfer or other disposition (including pursuant to a sale and leaseback
transaction) or any casualty or other insured damage to or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Parent Borrower or any Subsidiary or
(ii) expenditures or investments that constitute Permitted Acquisitions.

“Capital Lease Obligations” of any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof determined
in accordance with GAAP.

“Change in Control” means (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in effect
on the date hereof) other than Stewart G. 

 3
 

 

MacDonald, Jr.,
Sandra MacDonald, Daniel MacDonald or Evelyn MacDonald or any of their
respective spouses or immediate family members or trusts or family limited
partnerships for their benefit, of Equity Interests representing more than 25%
of either the aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding Equity Interests in the Parent
Borrower, (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Parent Borrower by Persons who were
neither (i) nominated by the board of directors of the Parent Borrower (or
any committee thereof) nor (ii) appointed by directors so nominated or
(c) the occurrence of a “Change of Control”, as defined in any Senior
Notes Document.

“Change in Law” means (a) the adoption of
any law, rule or regulation after the date of this Agreement, (b) any
change in any law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement or
(c) compliance by any Lender or the Issuing Bank (or, for purposes of
Section 2.15(b), by any lending office of such Lender or by such Lender’s
or the Issuing Bank’s holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.

“Class”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Revolving Loans or Swingline Loans and, when used in reference to any
Commitment, refers to a Revolving Commitment.

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

“Collateral” means any and all “Collateral”, as
defined in any applicable Security Document.

“Collateral Agent” means JPMorgan Chase Bank,
N.A., in its capacity as collateral agent for the Lenders under this Agreement
and the Lenders and other secured parties under any Security Document.

“Collateral Agreement” means the Guarantee and
Collateral Agreement among the Parent Borrower, the Subsidiary Loan Parties and
the Collateral Agent, dated as of January 10, 2005.

“Collateral and
Guarantee Requirement” means the requirement that:

(a)  the Collateral Agent shall have received from
each Loan Party either (i) a counterpart of each of the Collateral
Agreement and the Reaffirmation Agreement duly executed and delivered on behalf
of such Loan Party or (ii) in the case of any Person that becomes a Loan
Party after the Effective Date, a supplement to the Collateral Agreement, in
the form specified therein, duly executed and delivered on behalf of such Loan
Party;

 4
 

 

(b)  all outstanding Equity Interests of each
Subsidiary owned by or on behalf of any Loan Party shall have been pledged
pursuant to the Collateral Agreement (except that the Loan Parties shall not be
required to pledge more than 65% of the outstanding voting Equity Interests of
any Foreign Subsidiary that is not a Loan Party) and the Collateral Agent shall
have received certificates or other instruments representing all such Equity
Interests, together with undated stock powers or other instruments of transfer
with respect thereto endorsed in blank;

(c)  all Indebtedness of the Parent Borrower and
each Subsidiary that is owing to any Loan Party shall be evidenced by a
promissory note and shall have been pledged pursuant to the Collateral
Agreement and the Collateral Agent shall have received all such promissory
notes, together with undated instruments of transfer with respect thereto
endorsed in blank;

(d)  all documents and instruments, including
Uniform Commercial Code financing statements, required by law or reasonably
requested by the Administrative Collateral Agent to be filed, registered or
recorded to create the Liens intended to be created by the Collateral Agreement
and perfect such Liens to the extent required by, and with the priority
required by, the Collateral Agreement, shall have been filed, registered or
recorded or delivered to the Collateral Agent for filing, registration or
recording;

(e)  the Collateral Agent shall have received
(i) counterparts of a Mortgage with respect to each Mortgaged Property
duly executed and delivered by the record owner of such Mortgaged Property,
(ii) a policy or policies of title insurance issued by a nationally
recognized title insurance company insuring the Lien of each such Mortgage as a
valid first Lien on the Mortgaged Property described therein, free of any other
Liens except as expressly permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent or the
Required Lenders may reasonably request, and (iii) such surveys,
abstracts, appraisals, legal opinions and other documents as the Collateral
Agent or the Required Lenders may reasonably request with respect to any such
Mortgage or Mortgaged Property; and

(f)  each Loan Party shall have obtained all
consents and approvals required to be obtained by it in connection with the
execution and delivery of all Security Documents to which it is a party, the
performance of its obligations thereunder and the granting by it of the Liens
thereunder.

“Commitment” means a Revolving Commitment.

“Commitment Increase” has the meaning assigned
to such term in Section 2.20.

“Consolidated Cash Flow” means, for any period,
(a) Consolidated EBITDA for such period minus (b) the sum of
(i) Capital Expenditures for such period (other than Capital Lease
Obligations incurred by the Parent Borrower and its

 5
 

 

Subsidiaries during such
period up to an aggregate amount of $3,000,000), (ii) Prepaid Commission
Expenses for such period, (iii) consolidated cash income taxes paid during
such period and (iv) Restricted Payments paid during such period.

“Consolidated Cash Flow Coverage Ratio” means,
for any period, the ratio of (a) Consolidated Cash Flow for such period to (b)
the sum of (i)(A) the aggregate amount of scheduled principal payments made
during such period in respect of Long-Term Indebtedness of the Parent
Borrower and the Subsidiaries (other than payments made by the Parent Borrower
or any Subsidiary to the Parent Borrower or a Subsidiary) and (B) the aggregate
amount of principal payments (other than scheduled principal payments) made
during such period in respect of Long-Term Indebtedness of the Parent
Borrower and the Subsidiaries, to the extent that such payments reduced any
scheduled principal payments that would have become due within one year after
the date of the applicable payment and (ii) Consolidated Cash Interest Expense
for such period.

“Consolidated Cash Interest Expense” means, for
any period, the excess of (a) the sum of (i) the interest expense
(including imputed interest expense in respect of Capital Lease Obligations) of
the Parent Borrower and the Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, (ii) any interest accrued
during such period in respect of Indebtedness of the Parent Borrower or any
Subsidiary that is required to be capitalized rather than included in
consolidated interest expense for such period in accordance with GAAP, plus
(iii) any cash payments made during such period in respect of obligations
referred to in clause (b)(ii) below that were amortized or accrued in a
previous period, minus (b) the sum of (i) to the extent
included in such consolidated interest expense for such period, non-cash
amounts attributable to amortization of financing costs paid in a previous
period, plus (ii) to the extent included in such consolidated
interest expense for such period, non-cash amounts attributable to
amortization of debt discounts or accrued interest payable in kind for such
period.

“Consolidated EBITDA” means, for any period,
Consolidated Net Income for such period plus (a) without
duplication and to the extent deducted in determining such Consolidated Net
Income, the sum of (i) consolidated interest expense for such period,
(ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization for such period,
(iv) any extraordinary non-cash charges for such period (other than
impairment charges for discontinued and divested operations) and
(v) impairment charges for discontinued or divested operations, provided
that such impairment charges for such period, together with all impairment
charges for discontinued or divested operations since the Effective Date, may
not exceed $4,000,000 in the aggregate, and minus (b) without
duplication and to the extent included in determining such Consolidated Net
Income, any extraordinary or non-operating gains for such period, all
determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Income” means, for any
period, the net income or loss of the Parent Borrower and the Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income of any Subsidiary to the
extent that the declaration or payment of dividends or other distributions by
such Subsidiary of that income is not at the time permitted by a

 6
 

 

Requirement of Law or any
agreement or instrument applicable to such Subsidiary, except to the extent of
the amount of cash dividends or other cash distributions actually paid to the
Borrower or any Subsidiary during such period (unless the income of such
Subsidiary would be excluded from Consolidated Net Income pursuant to this
proviso), (b) the income of any Subsidiary in which any other Person
(other than the Parent Borrower or any Subsidiary or any director holding
qualifying shares in compliance with applicable law) owns an Equity Interest,
except to the extent of the amount of cash dividends or other cash
distributions actually paid to the Parent Borrower or any Subsidiary during
such period (unless the income of such Subsidiary would be excluded from
Consolidated Net Income pursuant to this proviso), and (c) the income or
loss of any Person accrued prior to the date it becomes a Subsidiary or is
merged into or consolidated with the Parent Borrower or any Subsidiary or the
date that such Person’s assets are acquired by the Parent Borrower or any
Subsidiary.

“Consolidated Net Worth” means, as of any date
of determination, an amount equal to the net worth of the Parent Borrower and
the Subsidiaries as of such date determined on a consolidated basis in
accordance with GAAP.

“Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

“Cumulative Net Income Amount” shall mean, at
any time, an amount equal to (a) the product of (i) Consolidated Net
Income for the period (taken as one accounting period) commencing July 1,
2005, to the end of the most recently completed fiscal quarter for which
financial statements are delivered pursuant to Section 5.01 and
(ii) 0.50, minus (b) the aggregate amount of such Consolidated
Net Income that has been utilized, or committed to be utilized during such
period, prior to such time to pay dividends in respect of Equity Interests of
the Parent Borrower pursuant to Section 6.08(a)(v).

“Default” means any event or condition which
constitutes an Event of Default or which upon notice, lapse of time or both
would, unless cured or waived, become an Event of Default.

“Deposit Account Control Agreements” has the
meaning assigned to such term in the Collateral Agreement.

“Disclosed Matters” means the actions, suits
and proceedings and the environmental matters disclosed in Schedule 3.06.

“dollars” or “$” refers to lawful money
of the United States of America.

“Effective Date” means the later of December
29, 2006 and the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).

 7
 

 

“Environmental Laws” means all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the presence, management, release or
threatened release of or exposure to any Hazardous Material or to health and
safety matters.

“Environmental Liability” means any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of the Parent
Borrower or any Subsidiary directly or indirectly resulting from or based upon
(a) compliance or non-compliance with any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

“Equity Interests” means shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a
Person.

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

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the Parent Borrower, is treated as a single employer under Section 414(b)
or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of
any Plan; (e) the receipt by the Parent Borrower or any ERISA Affiliate
from the PBGC (or a plan administrator in the case of a Multiemployer Plan) of
any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by the Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a

 8
 

 

determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any
Loan or Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to the
Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to
such term in Article VII.

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, the Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) income or franchise taxes imposed on (or measured by) its
net income or net profits by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized, in which its
principal office is located or in which it is otherwise doing business or, in
the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction described in clause (a)
above, (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrowers under Section 2.19(b)), any
withholding tax that (i) is in effect and would apply to amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to any withholding tax pursuant to
Section 2.17(a), or (ii) is attributable to such Foreign Lender’s
failure to comply with Section 2.17(e) and (d) any Taxes imposed as a
result of such Person’s gross negligence or wilful misconduct.

“Existing Loans” has the meaning assigned to
such term in Section  2.16.

“Federal Funds Effective Rate” means, for any
day, the weighted average (rounded upwards, if necessary, to the next 1/100 of
1%) 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 (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Officer” means the chief financial
officer, principal accounting officer, treasurer or controller of the Parent
Borrower.

“Foreign Lender” means any Lender that is
organized under the laws of a jurisdiction other than that in which the
Borrowers are located.  For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

 9
 

 

“Foreign Subsidiary” means any Subsidiary that
is organized under the laws of a jurisdiction other than the United States of
America, any State thereof or the District of Columbia.

“Funded Debt Ratio” means, on any date, the
ratio of (a) Total Funded Debt as of such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters of the Parent
Borrower ended on such date (or, if such date is not the last day of a fiscal
quarter, ended on the last day of the fiscal quarter of the Parent Borrower
most recently ended prior to such date).

“GAAP” means generally accepted accounting
principles in the United States of America, as in effect from time to time.

“Governmental Authority” means the government
of the United States of America, any other nation or any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or
any other financial statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.

“Hazardous Materials” means (i) any
petroleum products or byproducts and all other hydrocarbons, radon gas,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
chlorofluorocarbons and all other ozone-depleting substances; or (ii) any
chemical, material, substance or waste that is prohibited, limited or regulated
by or pursuant to any Environmental Law.

“Increasing Lender” has the meaning assigned to
such term in Section 2.20.

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person upon which interest charges are

 10
 

 

customarily paid,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding trade accounts payable incurred in the ordinary
course of business), (f) all Indebtedness of the type described in clauses
(a), (b), (c), (d), (e), (g), (h), (i) and (j) of this definition of others
secured by (or for which the holder of such obligations has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such Person of obligations of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’
acceptances.  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 provide that such Person is not liable therefor.  Notwithstanding the foregoing, in connection
with any Permitted Acquisition, the term “Indebtedness” shall not include post
closing purchase price adjustments or earn-outs to which the Seller may become
entitled.

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

“Interest Election Request” means a request by
the Borrowers to convert or continue a Revolving Borrowing in accordance with
Section 2.07.

“Interest Payment Date” means (a) with
respect to any ABR Loan (including a Swingline Loan), the last day of each
March, June, September and December and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

“Interest Period” means, with respect to any
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month that is one,
two, three or six months thereafter (or twelve months thereafter if, at the
time of the relevant Borrowing, all Lenders participating therein agree to make
an interest period of such duration available), as the Borrowers may elect; provided,
that (a) if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (b) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially

 11

 

shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.

“Issuing Bank” means JPMorgan Chase Bank, N.A.,
in its capacity as the issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.05(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

“Laundry Facility Agreements” means agreements
and other documents pursuant to which any of the Borrowers installs, operates
and maintains certain pay per use laundry equipment or rents such equipment to
an owner, manager or any other Person affiliated with the premises at which
such equipment is located.

“LC Disbursement” means a payment made by the
Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of
(a) the aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrowers at such
time.  The LC Exposure of any Revolving
Lender at any time shall be its Applicable Percentage of the total LC Exposure
at such time.

“Lenders” means the Persons listed on
Schedule 2.01 and any other Person that shall have become a party hereto
pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.

“Letter of Credit” means any letter of credit
issued pursuant to this Agreement (including each letter of credit issued under
the Original Credit Agreement and outstanding on the Effective Date).

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate appearing on
Page 3750 of the Dow Jones Market Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period.  In
the event that such rate is not available at such time for any reason, then the
“LIBO Rate” with respect to such Eurodollar Borrowing for such Interest
Period shall be the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the principal London
office of the Administrative Agent in immediately available funds in

 12
 

 

the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period.

“Lien” means, with respect to any asset,
(a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
charge or security interest in, on or of such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

“Loan Documents” means this Agreement, the
Collateral Agreement and the other Security Documents.

“Loan Parties” means the Parent Borrower and
the Subsidiary Loan Parties.

“Loans” means the loans made by the Lenders to
the Borrowers pursuant to this Agreement.

“Long-Term Indebtedness” means any Indebtedness
that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term
liability.

“Material Acquisition” means (a) any
acquisition by the Parent Borrower or a wholly-owned Subsidiary Loan Party of
all the outstanding Equity Interests in, all or substantially all the assets
of, or all or substantially all the assets constituting a division or line of
business of, a Person if (i) the cash consideration for such acquisition
is at least $5,000,000, (ii) the total consideration for such acquisition
is at least $10,000,000 or (iii) the acquired business contributes, together
with all other Permitted Acquisitions that have occurred since the beginning of
the immediately preceding four consecutive fiscal quarter period for which
financial statements are available, in the aggregate at least $1,000,000 to
Consolidated EBITDA for such period (giving pro forma effect to all such
acquisitions as if they had occurred on the first day of such four consecutive
fiscal quarter period) and (b) the other preceding Permitted Acquisitions
described in clause (a)(iii) above.

“Material Adverse Effect” means a material
adverse effect on (a) the business, assets, operations, prospects or
condition, financial or otherwise, of the Parent Borrower and the Subsidiaries
taken as a whole or (b) the ability of any Loan Party to perform any of
its obligations under any Loan Document.

“Material Indebtedness” means Indebtedness
(other than the Loans and Letters of Credit), or obligations in respect of one
or more Swap Agreements, of any one or more of the Parent Borrower and the
Subsidiaries in an aggregate principal amount exceeding $2,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Parent Borrower
or any Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to

 13
 

 

any netting agreements)
that the Parent Borrower or such Subsidiary would be required to pay if such
Swap Agreement were terminated at such time.

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

“Mortgage” means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other security document
granting a Lien on any Mortgaged Property to secure the Obligations.  Each Mortgage shall be satisfactory in form
and substance to the Collateral Agent.

“Mortgaged Property” means, initially, each
parcel of real property and the improvements thereto owned by a Loan Party and
identified on Schedule 1.01, and includes each other parcel
of real property and improvements thereto, in each case with a fair market
value in excess of $2,000,000, with respect to which a Mortgage is granted
pursuant to Section 5.12 or 5.13.

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

“Net Proceeds” means, with respect to any event
(a) the cash proceeds received in respect of such event including
(i) any cash received in respect of any non-cash proceeds, but only
as and when received, (ii) in the case of a casualty, insurance proceeds,
and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable
fees and out-of-pocket expenses paid by the Parent Borrower and the
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an
asset (including pursuant to a sale and leaseback transaction or a casualty or
a condemnation or similar proceeding), the amount of all payments required to
be made by the Parent Borrower and the Subsidiaries as a result of such event
to repay Indebtedness (other than Loans) secured by such asset or otherwise
subject to mandatory prepayment as a result of such event, and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) by the Parent
Borrower and the Subsidiaries, and the amount of any reserves established by
the Parent Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such
event occurred or such cash was received or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by the chief financial officer of the Parent Borrower).

“Obligations” has the meaning assigned to such
term in the Collateral Agreement.

“Original Credit Agreement” has the meaning
assigned to such term in the preamble.

“Original Effective Date” means the date on
which the Original Credit Agreement became effective.

 14
 

 

“Other Taxes” means any and all present or
future recording, stamp, documentary, excise, transfer, sales, property or
similar taxes, charges or levies arising from any payment made under any Loan
Document or from the execution, delivery or enforcement of, or otherwise with
respect to, any Loan Document.

“Parent Borrower” means Mac-Gray Corporation.

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

“Perfection Certificate” means a certificate in
the form of Exhibit D to the Original Credit Agreement or any other form
approved by the Collateral Agent.

“Permitted Acquisition” means any acquisition
by the Parent Borrower or a wholly-owned Subsidiary Loan Party of all the
outstanding Equity Interests in, all or substantially all the assets of, or all
or substantially all the assets constituting a division or line of business of,
a Person if (a) such acquisition was not preceded by, or consummated
pursuant to, a hostile offer (including a proxy contest), (b) such Person
is organized under the laws of, and substantially all its assets are located
in, the United States of America, any State thereof or the District of
Columbia, (c) no Default has occurred and is continuing or would result
therefrom, (d) all transactions related thereto are consummated in accordance
with applicable laws, (e) all actions required to be taken with respect to
such acquired or newly formed Subsidiary or assets under Sections 5.12 and
5.13 shall have been taken, (f) the Parent Borrower and the Subsidiaries,
taken as a whole, are in compliance, on a Pro Forma Basis (including, without
duplication, giving pro forma effect to such acquisition and all other
Permitted Acquisitions that are not Material Acquisitions and that have
occurred since the beginning of the immediately preceding four consecutive
fiscal quarter period for which financial statements are available), with the
covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 recomputed as of
the last day of the most recently ended fiscal quarter of the Parent Borrower
for which financial statements are available, (g) after giving effect to
such acquisition, there shall be no less than $7,000,000 of aggregate unused and
available Revolving Commitments, (h) the business of such Person or such
assets, as the case may be, constitute a business permitted by
Section 6.03(b), and (i) for any acquisition that is a Material
Acquisition, the Borrowers have delivered to the Administrative Agent an
officers’ certificate to the effect set forth in clauses (a), (b), (c),
(d), (e), (f), (g) and (h) above, together with all relevant financial
information for the Person or assets to be acquired.

“Permitted
Encumbrances” means:

(a)  Liens imposed by law for taxes that are not
yet due or are being contested in compliance with Section 5.05;

(b)  carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or are being contested in compliance with Section 5.05;

 15
 

 

(c)  pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment
insurance and other social security laws or regulations;

(d)  deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;

(e)  liens arising by operation of law to secure
landlords or lessors under leases made in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;

(f)  judgment liens in respect of judgments that
do not constitute an Event of Default under clause (k) of Article VII;
and

(g)  easements, zoning restrictions, rights-of-way
and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Parent Borrower or any Subsidiary;

provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.

“Permitted Investments”
means:

(a)  direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof 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)  investments in commercial paper maturing
within 270 days from the date of acquisition thereof and having, at such
date of acquisition, the highest credit rating obtainable from S&P or from
Moody’s;

(c)  investments in certificates of deposit,
banker’s acceptances and time deposits maturing within 180 days from the
date of acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof that has a combined capital and surplus and undivided profits of
not less than $500,000,000; and

(d)  fully collateralized repurchase agreements
with a term of not more than 30 days for securities described in
clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above.

 16
 

 

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Parent Borrower or any ERISA Affiliate is (or, if such
plan were terminated, would under Section 4069 of ERISA be deemed to be)
an “employer” as defined in Section 3(5) of ERISA.

“Prepaid Commission Expenses” means the amount of any one-time
up-front payment required to be paid by the Parent Borrower or any Subsidiary
to the landlord or lessor under any Laundry Facility Agreement upon the
commencement of such Laundry Facility Agreement (but without duplication for
any amount included as a Capital Expenditure).

“Prime Rate” means the rate of interest per
annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.

“Pro Forma Basis” means, with respect to the
calculation of the financial covenants contained in Sections 6.12, 6.13,
6.14 and 6.15 in connection with a Permitted Acquisition that such calculation
shall give pro forma effect to such Permitted Acquisition that is a Material
Acquisition, all other Permitted Acquisitions that are Material Acquisitions,
all issuances, incurrences or assumptions of Indebtedness (with any such
Indebtedness being deemed to be amortized over the applicable testing period in
accordance with its terms) and all dispositions that have occurred since the
beginning of the four consecutive fiscal quarter period for which such
calculation is being made as if it occurred on the first day of such four
consecutive fiscal quarter period (including (a) cost savings to the extent
such cost savings would be permitted to be reflected in pro forma financial
information complying with the requirements of GAAP and Article XI of
Regulation S-X under the Securities Act of 1933, as amended, as
interpreted by the Staff of the SEC, and as certified by a Financial Officer or
(b) other cost savings to the extent such cost savings would be acceptable to
the Administrative Agent in its sole discretion).

“Reaffirmation Agreement” shall mean the
Reaffirmation Agreement, attached hereto as Exhibit C, among the Borrowers
and the other Reaffirming Parties (as defined therein), the Administrative
Agent and the Collateral Agent as amended, supplemented or otherwise modified
from time to time.

“Register” has the meaning set forth in
Section 9.04.

“Related Parties” means, with respect to any
specified Person, such Person’s Affiliates and the respective directors,
officers, employees, agents and advisors of such Person and such Person’s
Affiliates.

 17
 

 

“Required Lenders” means, at any time, Lenders
having Revolving Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Exposures and unused Commitments at such time.

“Requirement of Law” means, with respect to any
Person, (i) the charter, articles or certificate of organization or
incorporation and bylaws or other organizational or governing documents of such
Person and (ii) any statute, law, treaty, rule, regulation, order, decree,
writ, injunction or determination of any arbitrator or 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.

“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests in the Parent Borrower or any Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any Equity Interests in the Parent
Borrower or any Subsidiary or any option, warrant or other right to acquire any
such Equity Interests in the Parent Borrower or any Subsidiary.

“Revolving Availability Period” means the
period from and including the Effective Date to but excluding the earlier of
the Revolving Maturity Date and the date of termination of the Revolving
Commitments.

“Revolving Commitment” means, with respect to
each Lender, the commitment, if any, of such Lender to make Revolving Loans and
to acquire participations in Letters of Credit and Swingline Loans hereunder,
expressed as an amount representing the maximum possible aggregate amount of
such Lender’s Revolving Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.08 and
(b) reduced or increased from time to time pursuant to assignments by or
to such Lender pursuant to Section 9.04. 
The initial amount of each Lender’s Revolving Commitment is set forth on
Schedule 2.01, or in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Revolving Commitment, as applicable.  The initial aggregate amount of the Lenders’
Revolving Commitments is $65,000,000.

“Revolving Exposure” means, with respect to any
Lender at any time, the sum of the outstanding principal amount of such Lender’s
Revolving Loans and its LC Exposure and Swingline Exposure at such time.

“Revolving Lender” means a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.

“Revolving Loan” means a Loan made pursuant to
clause (b) of Section 2.01.

“Revolving Maturity
Date” means December 29, 2011.

 18
 

 

“S&P” means Standard & Poor’s
Ratings Group, Inc.

“SEC” means the Securities and Exchange
Commission or any Governmental Authority succeeding to any of its principal
functions.

“Security Documents” means the Collateral
Agreement, the Reaffirmation Agreement, any Mortgages and each other security
agreement or other instrument or document executed and delivered pursuant to
Section 5.12 or 5.13 to secure any of the Obligations.

“Senior Notes” means (a) the 7.625% senior
notes due 2015 issued by the Parent Borrower on August 16, 2005 and (b) any
substantially identical senior notes that are registered under the Securities
Act of 1933, as amended, and issued in exchange for the senior notes described
in clause (a) of this definition.

“Senior Notes Documents” means the Senior Notes
Indenture, the indenture or indentures under which the Senior Notes Refinancing
Indebtedness is issued, all side letters, instruments, agreements and other
documents evidencing or governing the Senior Notes or any Senior Notes
Refinancing Indebtedness, providing for any Guarantee or other right in respect
thereof, affecting the terms of the foregoing or entered into in connection therewith
and all schedules, exhibits and annexes to each of the foregoing.

“Senior Notes Indenture” means the Indenture
dated as of August 16, 2005, among the Parent Borrower, the Subsidiaries
listed therein and Wachovia Bank, National Association, as trustee, in respect
of the Senior Notes.

“Senior Notes Refinancing Indebtedness” shall
mean any Indebtedness issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”),
the Senior Notes being Refinanced (or previous refinancings thereof
constituting Senior Notes Refinancing Indebtedness), provided that
(a) the principal amount of such Senior Notes Refinancing Indebtedness
does not exceed the principal amount of the Indebtedness so Refinanced (plus
unpaid accrued interest and premium thereon and underwriting discounts, fees,
commissions and expenses), (b) the average life to maturity of such Senior
Notes Refinancing Indebtedness is greater than or equal to that of the
Indebtedness being Refinanced, (c) the terms of such Senior Notes
Refinancing Indebtedness are not less favorable, in any material respect, to
the Lenders and the Borrowers than the terms of the Senior Notes and
(d) no Senior Notes Refinancing Indebtedness shall have obligors that are
not Loan Parties hereunder, or greater guarantees, than the Indebtedness being
Refinanced.

“Senior Secured Debt” means, as of any date,
the aggregate principal amount of Total Funded Debt at such date that consists
of, without duplication, (a) Revolving Exposures and (b) Indebtedness
secured by a Lien, provided that the term “Senior Secured Debt” shall
not include contingent obligations of the Parent Borrower or any Subsidiary as
an account party in respect of any letters of credit unless such letter of
credit supports an obligation that constitutes Indebtedness.

 19
 

 

“Senior Secured Leverage Ratio” means, on any
date, the ratio of (a) Senior Secured Debt as of such date to
(b) Consolidated EBITDA for the period of four consecutive fiscal quarters
of the Parent Borrower and the Subsidiaries ended on such date (or, if such
date is not the last day of a fiscal quarter, ended on the last day of the
fiscal quarter of the Parent Borrower most-recently ended prior to such date).

“Statutory Reserve Rate” means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

“subsidiary” means, with respect to any Person
(the “parent”) at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of such
date, as well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Parent
Borrower.

“Subsidiary Loan Party” means any Subsidiary
that is not a Foreign Subsidiary.

“Swap Agreement” means 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; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Parent Borrower or the Subsidiaries shall be a Swap
Agreement.  All Swap Agreements, if any,
between the Borrowers (or any one of them) and one or more Lenders (or
Affiliates thereof) are independent agreements governed by

 20
 

 

the written provisions of
such Swap Agreements, which will remain in full force and effect, unaffected by
any repayment, prepayment, acceleration, reduction, increase or change in the
terms of the Loans.

“Swingline Exposure” means, at any time, the
aggregate principal amount of all Swingline Loans outstanding at such
time.  The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

“Swingline Lender” means JPMorgan Chase Bank,
N.A., in its capacity as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to
Section 2.04.

“Taxes” means any and all present or future
taxes, levies, imposts, duties, deductions, charges or withholdings imposed by
any Governmental Authority.

“Total Funded Debt” means, as of any date, the
sum of (a) the aggregate principal amount of Indebtedness of the Parent
Borrower and the Subsidiaries outstanding as of such date, in the amount that
would be reflected on a balance sheet prepared as of such date on a
consolidated basis in accordance with GAAP, plus (b) the aggregate
principal amount of Indebtedness of the Parent Borrower and the Subsidiaries
outstanding as of such date that is not required to be reflected on a balance
sheet in accordance with GAAP, determined on a consolidated basis, provided
that, for purposes of clause (b) above, the term “Indebtedness” shall not
include contingent obligations of the Parent Borrower or any Subsidiary as an
account party in respect of any letter of credit unless such letter of credit
supports an obligation that constitutes Indebtedness.

“Transactions” means the execution, delivery
and performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder.

“Type”, when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate
or the Alternate Base Rate.

“Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.

SECTION 1.02. 
Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by Type
(e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a “Revolving Borrowing”) or
by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a “Eurodollar Revolving Borrowing”).

 21
 

 

SECTION 1.03. 
Terms Generally.  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) 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, securities,
accounts and contract rights.

SECTION 1.04.  Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

SECTION 1.05.  Pro Forma
Basis.  All calculations in respect
of the Funded Debt Ratio, Senior Secured Leverage Ratio and Consolidated Cash
Flow Coverage Ratio shall be computed on a Pro Forma Basis; provided
that the calculation in clause (f) of the definition of “Permitted Acquisition”
shall be made as described therein.

ARTICLE II

The Credits

SECTION 2.01.  Commitments.  (a) 
Subject to the terms and conditions set forth herein, each Lender agrees
(i) to make Revolving Loans to the Borrowers on the Effective Date in an
amount equal to its Applicable Percentage (calculated after giving effect to
this Agreement) of all Loans and other amounts outstanding under the Original
Credit Agreement on the Effective Date and (ii) to make additional
Revolving Loans to the Borrowers from time to time during the Revolving
Availability Period, in each case in

 22

 

an aggregate
principal amount that will not result in such Lender’s Revolving Exposure
exceeding such Lender’s Revolving Commitment. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

(b)  It is understood and agreed
that any lender that holds loans under the Original Credit Agreement (“Existing
Loans”) shall have the Loans to be made by such Lender under
Section 2.01(a)(i) above, to the extent of the portion thereof not
exceeding the aggregate principal amount of the Existing Loans, effected by
having such Existing Loans converted into Loans hereunder (and each reference
in this Agreement to the making of any Loan hereunder, or words of similar
import, shall, in the case of such Lender, be deemed to include such
conversion).  Any Loans that are made by
converting Existing Loans into Loans shall have identical interest periods in
identical proportions and durations as all other Loans (and any Lenders whose
Existing Loans have been converted shall be paid accrued interest on such
Existing Loans, together with any amount payable under Section 2.16 under
the Original Credit Agreement as if the Existing Loans were being repaid in
full on the Effective Date).

SECTION 2.02.  Loans and
Borrowings.  (a)  Each Loan (other than a Swingline Loan) shall
be made as part of a Borrowing consisting of Loans of the same Class and Type
made by the Lenders ratably in accordance with their respective Commitments of
the applicable Class.  The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of
the Lenders are several and no Lender shall be responsible for any other Lender’s
failure to make Loans as required.

(b)  Subject to
Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrowers may request in accordance
herewith.  Each Swingline Loan shall be
an ABR Loan.  Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrowers to repay such
Loan in accordance with the terms of this Agreement.

(c)  At the commencement of each
Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$4,000,000.  At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $500,000 and not less than $1,000,000.  Each Swingline Loan shall be in an amount
that is an integral multiple of $250,000 and not less than $250,000.  Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at
any time be more than a total of 10 Eurodollar Borrowings
outstanding.  Notwithstanding anything to
the contrary herein, an ABR Revolving Borrowing or a Swingline Loan may be in
an aggregate amount that is equal to the entire unused balance of the total
Revolving Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e).

 23
 

 

(d)  Notwithstanding any other
provision of this Agreement, the Borrowers shall not be entitled to request, or
to elect to convert or continue, any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Maturity Date.

SECTION 2.03.  Requests for
Borrowings.  To request a Revolving
Borrowing, the Borrowers shall notify the Administrative Agent of such request
by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of
the proposed Borrowing; provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(e) may be given not later than
10:00 a.m., New York City time, on the date of the proposed
Borrowing.  Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Borrowing Request in a
form approved by the Administrative Agent and signed by the Borrowers.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with
Section 2.02:

(i) the
aggregate amount of such Borrowing;

(ii) the date
of such Borrowing, which shall be a Business Day;

(iii) whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv) in the case
of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and

(v) the
location and number of the Borrowers’ account to which funds are to be disbursed,
which shall comply with the requirements of Section 2.06.

If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrowers
shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04.  Swingline
Loans.  (a)  Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers
from time to time during the Revolving Availability Period, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Loans exceeding $5,000,000
or (ii) the total Revolving Exposures exceeding the total Revolving
Commitments; provided that the Swingline

 24
 

 

Lender shall
not be required to make a Swingline Loan to refinance an outstanding Swingline
Loan.  Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrowers may borrow,
prepay and reborrow Swingline Loans.  The
aggregate principal amount of all Swingline Loans outstanding under the
Original Credit Agreement on the Effective Date shall continue to be
outstanding under the this Agreement and the terms of this Agreement will
govern the rights of the Lenders and the Swingline Lender with respect thereto.

(b)  To request a Swingline Loan,
the Borrowers shall notify the Administrative Agent of such request by
telephone (confirmed by telecopy), not later than 12:00 noon, New York
City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan.  The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrowers.  The
Swingline Lender shall make each Swingline Loan available to the Borrowers by
means of a credit to the general deposit account of the Borrowers maintained
with the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.05(e), by
remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the
requested date of such Swingline Loan.

(c)  The Swingline Lender may by
written notice given to the Administrative Agent not later than
12:00 noon, New York City time, on any Business Day require the Revolving
Lenders to acquire participations on such Business Day in all or a portion of
the Swingline Loans outstanding.  Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Lenders will participate.  Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to
each Revolving Lender, specifying in such notice such Lender’s Applicable
Percentage of such Swingline Loan or Swingline Loans.  Each Revolving Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender’s
Applicable Percentage of such Swingline Loan or Swingline Loans.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Revolving Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders. 
The Administrative Agent shall notify the Borrowers of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the Administrative
Agent and not to the Swingline Lender. 
Any amounts received by the Swingline Lender from the Borrowers (or
other party on behalf of the Borrowers) in respect of a Swingline Loan after
receipt by

 25
 

 

the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear.  The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Borrowers of any default
in the payment thereof.

SECTION 2.05.  Letters of
Credit.  (a)  General.  Subject to the terms and conditions set forth
herein, the Borrowers may request the issuance of Letters of Credit for the
account of any one of them, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time during
the Revolving Availability Period.  In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrowers to, or entered into
by the Borrowers with, the Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.

(b)  Notice of Issuance,
Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrowers shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
Borrowers also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrowers shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed $2,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.

(c)  Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Revolving Maturity
Date.

(d)  Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the

 26
 

 

part of the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving
Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable Percentage
of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to
be refunded to the Borrowers for any reason. 
Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

(e)  Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrowers shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 3:00 p.m., New York City time, on the
date that such LC Disbursement is made, if the Borrowers shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on
such date, or, if such notice has not been received by the Borrowers prior to
such time on such date, then not later than (i) 3:00 p.m., New York
City time, on the Business Day that the Borrowers receive such notice, if such
notice is received prior to 10:00 a.m., New York City time, on the day of
receipt, or (ii) 12:00 noon, New York City time, on the Business Day
immediately following the day that the Borrowers receive such notice, if such
notice is not received prior to 10:00 a.m., New York City time, on the day
of receipt; provided that, if such LC Disbursement is not less than
$250,000, the Borrowers may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.04 that such payment
be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrowers’ obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan.  If the
Borrowers fail to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment
then due from the Borrowers in respect thereof and such Lender’s Applicable
Percentage thereof.  Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrowers, in
the same manner as provided in Section 2.06 with respect to Loans made by
such Lender (and Section 2.06 shall apply, mutatis  mutandis,
to the payment obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank the amounts so received by it from
the Revolving Lenders.  Promptly
following receipt by the Administrative Agent of any payment from the Borrowers
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank

 27
 

 

as their
interests may appear.  Any payment made
by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank
for any LC Disbursement (other than the funding of ABR Revolving Loans or a
Swingline Loan as contemplated above) shall not constitute a Loan and shall not
relieve the Borrowers of their obligation to reimburse such LC Disbursement.

(f)  Obligations Absolute.  The Borrowers’ obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the
Issuing Bank under a Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to
any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrowers’ obligations hereunder. 
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrowers to the
extent of any direct damages (as opposed to consequential or punitive damages,
claims in respect of which are hereby waived by the Borrowers to the extent
permitted by applicable law) suffered by the Borrowers that are caused by the
Issuing Bank’s failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof.  The parties hereto expressly
agree that, in the absence of gross negligence or wilful misconduct on the part
of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination.  In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g)  Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  The
Issuing Bank shall promptly notify the

 28
 

 

Administrative
Agent and the Borrowers by telephone (confirmed by telecopy) of such demand for
payment and whether the Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such
notice shall not relieve the Borrowers of their obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.

(h)  Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement
in full on the date such LC Disbursement is made, the unpaid amount thereof
shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrowers reimburse
such LC Disbursement, at the rate per annum then applicable to ABR Revolving
Loans; provided that, if the Borrowers fail to reimburse such LC
Disbursement when due pursuant to paragraph (e) of this Section, then
Section 2.13(c) shall apply. 
Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Revolving Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the
extent of such payment.

(i)  Replacement of the
Issuing Bank.  The Issuing Bank may
be replaced at any time by written agreement among the Borrowers, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrowers shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

(j)  Cash Collateralization.  If any Event of Default shall occur and be
continuing, on the Business Day that the Borrowers receive notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrowers shall deposit in an account with the
Collateral Agent, in the name of the Collateral Agent and for the benefit of
the Lenders, an amount in cash equal to the LC Exposure as of such date plus
any accrued and unpaid interest thereon; provided that the obligation to
deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default with respect to
the Borrowers described in clause (h) or (i) of Article VII.  Each such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
obligations of the

 29
 

 

Borrowers
under this Agreement.  The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account.  Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrowers’ risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments
shall accumulate in such account.  Moneys
in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent
of Revolving Lenders with LC Exposure representing greater than 50% of the total
LC Exposure), be applied to satisfy other obligations of the Borrowers under
this Agreement.  If the Borrowers are
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three Business Days after
all Events of Default have been cured or waived.

SECTION 2.06.  Funding of
Borrowings.  (a)  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04.  The Administrative
Agent will make such Loans available to the Borrowers by promptly crediting the
amounts so received, in like funds, to an account of one or more of the
Borrowers maintained with the Administrative Agent in New York City and
designated by the Borrowers in the applicable Borrowing Request; provided
that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the Issuing Bank.

(b)  Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing, the Administrative Agent may
assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the Borrowers a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrowers, the interest rate applicable to ABR
Loans.  If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s
Loan included in such Borrowing.

 30
 

 

SECTION 2.07.  Interest
Elections.  (a)  Each Revolving Borrowing initially shall be
of the Type specified in the applicable Borrowing Request or designated by
Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request or designated by
Section 2.03.  Thereafter, the
Borrowers may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section.  The Borrowers may elect different options
with respect to different portions of the affected Borrowing, in which case
each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. 
This Section shall not apply to Swingline Borrowings, which may not be
converted or continued.

(b)  To make an election pursuant
to this Section, the Borrowers shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrowers were requesting a Revolving Borrowing
of the Type resulting from such election to be made on the effective date of
such election.  Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrowers.

(c)  Each telephonic and written
Interest Election Request shall specify the following information in compliance
with Section 2.02:

(i) the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;

(iii) whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and

(iv) if the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a
Eurodollar Borrowing but does not specify an Interest Period, then the
Borrowers shall be deemed to have selected an Interest Period of one month’s
duration.

(d)  Promptly following receipt
of an Interest Election Request, the Administrative Agent shall advise each
Lender of the details thereof and of such Lender’s portion of each resulting
Borrowing.

 31
 

 

(e)  If the Borrowers fail to
deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrowers, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

SECTION 2.08.  Termination and
Reduction of Commitments.  (a)  Unless previously terminated, the Revolving
Commitments shall terminate on the Revolving Maturity Date.

(b)  The Borrowers may at any
time terminate, or from time to time reduce, the Revolving Commitments; provided
that (i) each reduction of the Revolving Commitments shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and
(ii) the Borrowers shall not terminate or reduce the Revolving Commitments
if, after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.11, the Revolving Exposures would exceed the
total Revolving Commitments.

(c)  The Borrowers shall notify
the Administrative Agent of any election to terminate or reduce the Revolving Commitments
under paragraph (b) of this Section at least three Business Days prior to
the effective date of such termination or reduction, specifying such election
and the effective date thereof.  Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
notice delivered by the Borrowers pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Revolving
Commitments delivered by the Borrowers may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrowers (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.  Any termination or reduction
of the Revolving Commitments shall be permanent.  Each reduction of the Revolving Commitments
shall be made ratably among the Lenders in accordance with their respective
Revolving Commitments.

SECTION 2.09.  Repayment of
Loans; Evidence of Debt.  (a)  The Borrowers hereby unconditionally promise
to pay (i) to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Revolving Loan of such Lender on the
Revolving Maturity Date and (ii) to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of the Revolving
Maturity Date and the first date after such Swingline Loan is made that is the
15th or last day of a calendar month and is at least two Business Days after
such Swingline Loan is made; provided that on each date that a Revolving
Borrowing is made, the Borrowers shall repay all Swingline Loans that were
outstanding on the date such Borrowing was requested.

 32
 

 

(b)  Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrowers to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.

(c)  The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each
Loan made hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d)  The entries made in the
accounts maintained pursuant to paragraph (b) or (c) of this Section shall
be prima  facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

(e)  Any Lender may request that
Loans of any Class made by it be evidenced by a promissory note.  In such event, the Borrowers shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the order of the payee named therein (or,
if such promissory note is a registered note, to such payee and its registered
assigns).

SECTION 2.10.  [Reserved]

SECTION 2.11.  Prepayment of
Loans.  (a)  The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to the requirements of this Section.

(b)  In the event and on such
occasion that the Revolving Exposures exceed the total Revolving Commitments,
the Borrowers shall prepay Revolving Borrowings or Swingline Borrowings (or, if
no such Borrowings are outstanding, deposit cash collateral in an account with
the Collateral Agent pursuant to Section 2.05(j)) in an aggregate amount
equal to such excess.

(c)  Prior to any optional or
mandatory prepayment of Borrowings hereunder, the Borrowers shall select the
Borrowing or Borrowings to be prepaid and shall specify such selection in the
notice of such prepayment pursuant to paragraph (d) of this Section.

(d)  The Borrowers shall notify
the Administrative Agent (and, in the case of prepayment of a Swingline Loan,
the Swingline Lender) by telephone (confirmed by

 33

 

telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of prepayment, (ii) in the case of prepayment of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, New York City time, on the date
of prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment;
provided that, if a notice of optional prepayment is given in connection
with a conditional notice of termination of the Revolving Commitments as
contemplated by Section 2.08, then such notice of prepayment may be
revoked if such notice of termination is revoked in accordance with Section 2.08.  Promptly following receipt of any such notice
(other than a notice relating solely to Swingline Loans), the Administrative
Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

SECTION 2.12.  Fees.  (a) 
The Borrowers agree to pay to the Administrative Agent for the account
of each Lender a commitment fee, which shall accrue at the Applicable Rate on
the average daily unused amount of the Revolving Commitment of such Lender
during the period from and including the Effective Date to but excluding the
date on which the Revolving Commitments terminate.  Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Revolving Commitments terminate, commencing on the
first such date to occur after the date hereof. 
All commitment fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  For purposes of computing commitment fees, a
Revolving Commitment of a Lender shall be deemed to be used to the extent of
the outstanding Revolving Loans and LC Exposure of such Lender (and the
Swingline Exposure of such Lender shall be disregarded for such purpose).

(b)  The Borrowers agree to pay
(i) to the Administrative Agent for the account of each Revolving Lender a
participation fee with respect to its participations in Letters of Credit,
which shall accrue at the same Applicable Rate as interest on Eurodollar
Revolving Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Revolving Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to
the Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per
annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Effective Date to but excluding the later of the 

 34
 

 

date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including the
last day of March, June, September and December of each year shall be payable
on the third Business Day following such last day, commencing on the first such
date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Revolving Commitments terminate and
any such fees accruing after the date on which the Revolving Commitments
terminate shall be payable on demand. 
Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. 
All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

(c)  The Borrowers agree to pay
to the Administrative Agent, for its own account, fees payable in the amounts
and at the times separately agreed upon between the Borrowers and the
Administrative Agent.

(d)  All fees payable hereunder
shall be paid on the dates due, in immediately available funds, to the
Administrative Agent (or to the Issuing Bank, in the case of fees payable to
it) for distribution, in the case of commitment fees and participation fees, to
the Lenders entitled thereto.  Fees paid
shall not be refundable under any circumstances.

SECTION 2.13.  Interest.  (a) 
The Loans comprising each ABR Borrowing (including each Swingline
Loan) shall bear interest at the Alternate Base Rate plus the Applicable
Rate.

(b)  The Loans comprising each
Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.

(c)  Notwithstanding the
foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrowers hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of any Loan, 2.00% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2.00% plus
the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.

(d)  Accrued interest on each
Loan shall be payable in arrears on each Interest Payment Date for such Loan
and, in the case of Revolving Loans, upon termination of the Revolving
Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the 

 35
 

 

principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan
prior to the end of the current Interest Period therefor, accrued interest on
such Loan shall be payable on the effective date of such conversion.

(e)  All interest hereunder shall
be computed on the basis of a year of 360 days, except that interest computed
by reference to the Alternate Base Rate at times when the Alternate Base Rate
is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable
for the actual number of days elapsed (including the first day but excluding
the last day).  The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14.  Alternate Rate
of Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

(a)  the Administrative Agent determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period; or

(b)  the Administrative Agent is advised by the
Required Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice
thereof to the Borrowers and the Lenders by telephone or telecopy as promptly
as practicable thereafter and, until the Administrative Agent notifies the
Borrowers and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

SECTION 2.15.  Increased
Costs.  (a)  Except with respect to Taxes which shall be
governed solely and exclusively by Section 2.17, if any Change in Law shall:

(i) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or

(ii) impose on
any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender or the Issuing Bank of participating in, 

 36
 

 

issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrowers will pay to such Lender or the Issuing Bank, as the case may be,
subject to Section 2.19, such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.

(b)  If any Lender or the Issuing
Bank reasonably determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s
or the Issuing Bank’s holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender’s or the
Issuing Bank’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or the Issuing Bank’s policies and the
policies of such Lender’s or the Issuing Bank’s holding company with respect to
capital adequacy), then from time to time the Borrowers will, subject to
Section 2.19, pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.

(c)  A certificate of a Lender or
the Issuing Bank setting forth the amount or amounts necessary to compensate
such Lender or the Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section and setting forth the
basis for such amounts and a calculation thereof in reasonable detail shall be
delivered to the Borrowers and shall be conclusive absent manifest error.  The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 Business Days after receipt thereof.

(d)  Failure or delay on the part
of any Lender or the Issuing Bank to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s
right to demand such compensation; provided that the Borrowers shall not
be required to compensate a Lender or the Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 270 days prior to
the date that such Lender or the Issuing Bank, as the case may be, notifies the
Borrowers of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the Issuing Bank’s intention to claim compensation
therefor; provided  further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

SECTION 2.16.  Break Funding
Payments.  In the event of
(a) the payment of any principal of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Revolving Loan on the date specified in
any notice delivered pursuant hereto (regardless of whether such notice may 

 37
 

 

be revoked
under Section 2.11(d) and is revoked in accordance therewith), or
(d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the
Borrowers pursuant to Section 2.19, then, in any such event, the Borrowers
shall compensate each Lender for the loss, cost and expense attributable to
such event.  In the case of a Eurodollar
Loan, such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest that
would accrue on such principal amount for such period at the interest rate that
such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
eurodollar market.  A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrowers and shall
be conclusive absent manifest error.  The
Borrowers shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

SECTION 2.17.  Taxes.  (a) 
Any and all payments by or on account of any obligation of the Borrowers
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrowers shall be required to deduct any Indemnified Taxes or
Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrowers shall make such deductions and (iii) the
Borrowers shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

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

(c)  The Borrowers shall
indemnify the Administrative Agent, each Lender and the Issuing Bank, within
10 Business Days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrowers hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto, whether
or not such Indemnified Taxes or Other Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability and setting forth in reasonable detail the calculation and
basis for such payment or liability delivered to the Borrowers by a Lender or
the Issuing Bank, or by the 

 38
 

 

Administrative
Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.

(d)  As soon as practicable after
any payment of Indemnified Taxes or Other Taxes by the Borrowers to a
Governmental Authority, the Borrowers shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e)  Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrowers are located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrowers (with a copy to the Administrative Agent), at
the time or times prescribed by applicable law, such properly completed and
executed documentation prescribed by applicable law or reasonably requested by
the Borrowers as will permit such payments to be made without withholding or at
a reduced rate.

(f)  Each Lender, the Issuing
Bank and Administrative Agent that is a United States Person, as defined in
section 7701(a)(30) of the Code (other than Persons that are corporations
or otherwise exempt from United States backup withholding Tax), shall deliver
at the time(s) and in the manner(s) prescribed by applicable law, to the
Borrowers and the Administrative Agent (as applicable), a properly completed
and duly executed United States Internal Revenue Form W-9 or any
successor form, certifying that such Person is exempt from United States backup
withholding Tax on payments made hereunder.

(g)  If the Administrative Agent,
the Issuing Bank or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrowers or with respect to which the Borrowers have paid
additional amounts pursuant to this Section 2.17, it shall pay over such
refund to the Borrowers (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrowers under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, the Issuing Bank or such
Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrowers,
upon the request of the Administrative Agent, the Issuing Bank or such Lender,
agree to repay the amount paid over to the Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, the Issuing Bank or such Lender in the
event the Administrative Agent, the Issuing Bank or such Lender is required to
repay such refund to such Governmental Authority.  This Section shall not be construed to
require the Administrative Agent or any Lender to make available its tax
returns (or any information relating to its taxes which it deems confidential)
to the Borrowers or any other person.

SECTION 2.18.  Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.  (a) 
The Borrowers shall make each payment required to be made by it
hereunder or 

 39
 

 

under any
other Loan Document (whether of principal, interest, fees or reimbursement of
LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17,
or otherwise) prior to the time expressly required hereunder or under such
other Loan Document for such payment (or, if no such time is expressly
required, prior to 12:00 noon, New York City time), on the date when due,
in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such payments
shall be made to the Administrative Agent at its offices at 270 Park
Avenue, New York, New York, except payments to be made directly to the Issuing
Bank or Swingline Lender as expressly provided herein and except that payments
pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to
the Persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the Persons specified therein. 
The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof.  If any
payment under any Loan Document shall be due on a day that is not a Business Day,
the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. 
All payments under each Loan Document shall be made in dollars.

(b)  If at any time insufficient funds
are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.

(c)  If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Revolving
Loans or participations in LC Disbursements or Swingline Loans resulting in
such Lender receiving payment of a greater proportion of the aggregate amount
of its Revolving Loans and participations in LC Disbursements and Swingline
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Revolving Loans and participations in
LC Disbursements and Swingline Loans of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans and participations in LC Disbursements and
Swingline Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrowers pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a 

 40
 

 

Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Parent Borrower or any Subsidiary or Affiliate thereof (as to
which the provisions of this paragraph shall apply).  The Borrowers consent to the foregoing and
agree, to the extent they may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrowers’ rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrowers in the amount of such participation.

(d)  Unless the Administrative
Agent shall have received notice from the Borrowers prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders
or the Issuing Bank hereunder that the Borrowers will not make such payment,
the Administrative Agent may assume that the Borrowers have made such payment
on such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrowers
have not in fact made such payment, then each of the Lenders or the Issuing
Bank, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

(e)  If any Lender shall fail to
make any payment required to be made by it pursuant to Section 2.04(c),
2.05(d) or (e), 2.06(a) or (b), 2.18(d) or 9.03(c), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.

SECTION 2.19.  Mitigation
Obligations; Replacement of Lenders. 
(a)  If any Lender requests
compensation under Section 2.15, or if the Borrowers are required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender.  The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

(b)  If any Lender requests
compensation under Section 2.15, or if the Borrowers are required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, or if any Lender 

 41
 

 

defaults in
its obligation to fund Loans hereunder, then the Borrowers may, at their sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (i) the Borrowers shall have
received the prior written consent of the Administrative Agent (and, if a
Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender),
which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant
to Section 2.17, such assignment will result in a reduction in such
compensation or payments.  A Lender shall
not be required to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.

SECTION 2.20.  Increase in
Commitments.  (a)  The Parent Borrower may, by written notice to
the Administrative Agent (which shall promptly deliver a copy to each of the
Lenders), request that the aggregate Revolving Commitments be increased by an
amount not less than $10,000,000 for any such increase; provided that
after giving effect to any such increase the sum of the total Revolving
Commitments shall not exceed $100,000,000. 
Such notice shall set forth the amount of the requested increase in the
Revolving Commitments and the date on which such increase is requested to
become effective (which shall be not less than 30 days or more than 60
days after the date of such notice), and shall offer each Lender the
opportunity to increase its Revolving Commitment by such Lender’s Applicable
Percentage of the proposed increased amount. 
Each Lender shall, by notice to the Parent Borrower and the
Administrative Agent given not more than 10 Business Days after the date of the
Parent Borrower’s notice, either agree to increase its applicable Revolving
Commitment by all or a portion of the offered amount (each Lender so agreeing
being an “Increasing Lender”) or decline to increase its applicable
Commitment (and any Lender that does not deliver such a notice within such
period of 10 Business Days shall be deemed to have declined to increase its
Commitment).  In the event that, on the
10th Business Day after the Parent Borrower shall have delivered a notice pursuant
to the first sentence of this paragraph, the Lenders shall have declined or
agreed pursuant to the preceding sentence to increase their Commitments by an
aggregate amount less than the increase in the total Commitments requested by
the Parent Borrower, the Parent Borrower may arrange for one or more banks or
other financial institutions (any such bank or other financial institution
being called an “Augmenting Lender”), which may include any Lender, to
provide Revolving Commitments or increase their existing Revolving Commitments
in an aggregate amount equal to the unsubscribed amount; provided that
each Augmenting Lender, if not already a Lender hereunder, shall be subject to
the approval of the Administrative Agent (which approval shall not be
unreasonably withheld) and the Borrowers and each Augmenting 

 42
 

 

Lender shall
execute all such documentation as the Administrative Agent shall reasonably
specify to evidence the Commitment of such Augmenting Lender and/or its status
as a Lender hereunder.  Any increase in
the aggregate Revolving Commitments may be made in an amount which is less than
the increase requested by the Parent Borrower if the Parent Borrower is unable
to arrange for, or chooses not to arrange for, Augmenting Lenders.

(b)  Each of the parties hereto
hereby agrees that, upon the effectiveness of any increase in the aggregate
Revolving Commitments pursuant to this Section 2.20 (the “Commitment
Increase”), this Agreement may be amended to the extent (but only to the
extent) necessary to reflect the existence and terms of the Commitment Increase
evidenced thereby as provided for in Section 9.02(c).  Each of the parties hereto hereby agrees that
the Administrative Agent may take any and all action as may be reasonably
necessary to ensure that all Revolving Loans in respect of the Commitment
Increase, when originally made, are included in each Borrowing of outstanding
Revolving Loans on a pro rata basis. 
Each Borrower agrees that Section 2.16 shall apply to any costs incurred
by any Lender to effect the foregoing.

(c)  Increases and new Commitments
created pursuant to this Section 2.20 shall become effective on the date
specified in the notice delivered by the Parent Borrower pursuant to the first
sentence of paragraph (a) above or on such other date as agreed upon by
the Parent Borrower, the Administrative Agent and the Lenders (including the
Augmenting Lenders).

(d)  Notwithstanding the
foregoing, no increase in the Commitments (or in any Commitment of any Lender)
or addition of an Augmenting Lender shall become effective under this Section
unless on the date of such increase, the conditions set forth in
paragraphs (a) and (b) of Section 4.02 shall be satisfied and the
Administrative Agent shall have received a certificate to that effect dated
such date and executed by the chief financial officer of the Parent Borrower.

ARTICLE III

Representations
and Warranties

The Borrowers represent
and warrant to the Lenders that:

SECTION 3.01.  Organization;
Powers.  Each of the Parent Borrower
and the Subsidiaries are duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, have all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted and to execute, deliver and perform its obligations under
each Loan Document to which it is a party and, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, is qualified to do business in, and are in
good standing in, every jurisdiction where such qualification is required for
the conduct of its business.

 43
 

 

SECTION 3.02.  Authorization;
Enforceability.  The Transactions to
be entered into by each Loan Party have been duly authorized by all necessary
corporate or other action and, if required, stockholder action.  This Agreement has been duly executed and
delivered by each of the Borrowers and constitutes, and each other Loan
Document to which any Loan Party is to be a party, when executed and delivered
by such Loan Party, will constitute, a legal, valid and binding obligation of
the Borrowers or such Loan Party (as the case may be), enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

SECTION 3.03.  Governmental
Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except such
as have been obtained or made and are in full force and effect and except
filings necessary to perfect Liens created under the Loan Documents,
(b) will not violate any Requirement of Law applicable to the Parent
Borrower or any Subsidiary, (c) will not violate or result in a default
under any material indenture, material agreement or other material instrument
binding upon the Parent Borrower or any Subsidiary or their assets, or give
rise to a right thereunder to require any payment to be made by the Parent
Borrower or any Subsidiary or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation thereunder, and
(d) will not result in the creation or imposition of any Lien on any asset
of the Parent Borrower or any Subsidiary, except Liens created under the Loan
Documents.

SECTION 3.04.  Financial
Condition; No Material Adverse Change. 
(a)  The Parent Borrower has
heretofore furnished to the Lenders its consolidated balance sheet and
consolidated statements of income, stockholders equity and cash flows
(i) as of and for the fiscal years ended December 31, 2003,
December 31, 2004 and December 31, 2005, reported on by
PricewaterhouseCoopers LLP, independent public accountants and (ii) as of
and for the fiscal quarters and the portion of the fiscal year ended
March 31, 2006 June 30, 2006 and September 30, 2006 (and for the
comparable periods for the prior fiscal year), certified by its chief financial
officer.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Parent Borrower and its Subsidiaries as of
such dates and for such periods in accordance with GAAP consistently applied,
subject to year-end audit adjustments and the absence of footnotes in the
case of the statements referred to in clause (ii) above.

(b)  Except as disclosed in the
financial statements referred to above or the notes thereto and except for the
Disclosed Matters, none of the Parent Borrower or the Subsidiaries has, as of
the Effective Date, any material direct or contingent liabilities, unusual long-term
commitments or unrealized losses.

(c)  No event, change or
condition has occurred that has had, or could reasonably be expected to have, a
materially adverse effect on the business, operations, properties, assets,
condition (financial or otherwise), liabilities or prospects of the Parent

 44

 

Borrower and
the Subsidiaries, taken as a whole, whether or not covered by insurance, since
December 31, 2005.

SECTION 3.05.  Properties.  (a) 
Each of the Parent Borrower and the Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to
its business (including the Mortgaged Properties), except for (i) minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or as proposed to be conducted or to utilize such
properties for their intended purposes and (ii) leaseholds subject to all
superior title matters and all matters which encumber the landlord’s or ground
lessor’s interest.

(b)  Each of the Parent Borrower
and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Parent Borrower and the Subsidiaries does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

(c)  Schedule 3.05 sets
forth the address of each real property that is owned or leased by the Parent
Borrower or any Subsidiary (other than addresses of the locations to which the
Laundry Facility Agreements relate) as of the Effective Date.

SECTION 3.06.  Litigation and
Environmental Matters.  (a)  There are no actions, suits or proceedings by
or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Parent Borrower, threatened against the Parent Borrower or any
of its Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve any of the
Loan Documents or the Transactions.

(b)  Except for the Disclosed
Matters and except with respect to any other matters that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Parent Borrower nor any Subsidiary (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.

(c)  Since the date of this
Agreement, there has been no change in the status of the Schedule 3.06 of
Disclosed Matters that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.07.  Compliance with
Laws and Agreements.  Each of the
Parent Borrower and the Subsidiaries is in compliance with all Requirements of
Law applicable to it or its property and all indentures, agreements and other
instruments 

 45
 

 

binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.08.  Investment and
Holding Company Status.  Neither the
Parent Borrower nor any Subsidiary is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

SECTION 3.09.  Taxes.  Each of the Parent Borrower and the
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) any Taxes that are being
contested in good faith by appropriate proceedings and for which the Parent
Borrower or such Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed by
more than $250,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $250,000 the
fair market value of the assets of all such underfunded Plans.

SECTION 3.11.  Disclosure.  The Borrowers have disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which the
Parent Borrower or any Subsidiary is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.  No reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party
to the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished) contains, when
taken as a whole, any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Parent Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time delivered and, if such projected
financial information was delivered prior to the Effective Date, as of the
Effective Date.

SECTION 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name of,
and the ownership interest of the Parent Borrower in, each Subsidiary of the
Parent Borrower 

 46
 

 

and identifies
each Subsidiary that is a Subsidiary Loan Party, in each case as of the
Effective Date.

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a description
of all insurance maintained by or on behalf of the Parent Borrower and the
Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums in respect of such insurance have
been paid.  The Borrowers believe that
the insurance maintained by or on behalf of the Parent Borrower and the
Subsidiaries is adequate.

SECTION 3.14.  Labor Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Parent Borrower or any Subsidiary
pending or, to the knowledge of the Parent Borrower, threatened.  The hours worked by and payments made to
employees of the Parent Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters.  All payments of a material amount due from
the Parent Borrower or any Subsidiary, or for which any reasonably foreseeable
claim may be made against the Parent Borrower or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits (other than
routine claims for benefits), have been paid or accrued as a liability on the
books of the Parent Borrower or such Subsidiary.  The consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Parent
Borrower or any Subsidiary is bound.

SECTION 3.15.  Solvency.  Immediately after the consummation of the
Transactions to occur on the Effective Date, (a) the fair value of the
assets of the Loan Parties, taken as a whole, at a fair valuation, will exceed
their debts and liabilities, subordinated, contingent or otherwise,
(b) the present fair saleable value of the property of the Loan Parties,
taken as a whole, will be greater than the amount that will be required to pay
the probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured, (c) the Loan Parties will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured and (d) the Loan Parties will not
have unreasonably small capital with which to conduct the business in which
they are engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.

ARTICLE IV

Conditions

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the later of December 29, 2006 and the date on which each of
the following conditions is satisfied (or waived in accordance with
Section 9.02):

(a)  The Administrative Agent (or
its counsel) shall have received from each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party 

 47
 

 

or
(ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

(b)  The Administrative Agent
shall have received a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of Goodwin
Procter LLP, counsel for the Borrowers, substantially in the form of
Exhibit B, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Required Lenders shall reasonably
request.  The Borrowers hereby request
such counsel to deliver such opinions.

(c)  The Administrative Agent
shall have received such documents and certificates as the Administrative Agent
or its counsel may reasonably request relating to the organization, existence
and good standing of each Loan Party, the authorization of the Transactions and
any other legal matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.

(d)  The Administrative Agent
shall have received a certificate, dated the Effective Date and signed by the
President, a Vice President or a Financial Officer of the Parent Borrower,
confirming compliance with the conditions set forth in paragraphs (a) and
(b) of Section 4.02.

(e)  All Existing Loans shall
have been repaid in full (or converted into Loans hereunder as set forth in
Section 2.01(b)) and the Administrative Agent shall have received all fees
and other amounts (i) in respect of the Original Credit Agreement
(including all accrued and unpaid fees set forth in Section 2.12 of the
Original Credit Agreement and all amount due under Section 2.16 of this
Agreement) and (ii) due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all reasonable
out-of-pocket expenses (including reasonable fees, charges and
disbursements of counsel) required to be reimbursed or paid by any Loan Party
hereunder or under any other Loan Document.

The Administrative Agent shall notify the Borrowers
and the Lenders of the Effective Date, and such notice shall be conclusive and
binding.

SECTION 4.02.  Each Credit
Event.  The obligation of each Lender
to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to
issue, amend, renew or extend any Letter of Credit, is subject to receipt of
the request therefor in accordance herewith and to the satisfaction of the
following conditions:

(a)  The representations and
warranties of each Loan Party set forth in the Loan Documents shall be true and
correct (i) to the extent such representation or warranty is modified or
qualified based on the terms “materially” or “material” or by reference to the
term “Material Adverse Effect”, in any respect and (ii) to the extent such
representation or warranty is not so modified or qualified, in any material
respect, in each 

 48
 

 

case on and as
of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

(b)  At the time of and
immediately after giving effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, no Default shall
have occurred and be continuing.

Each Borrowing and each issuance, amendment, renewal
or extension of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrowers on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative
Covenants

Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees, expenses and other
amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit shall have expired or been terminated and all LC
Disbursements shall have been reimbursed, the Borrowers covenant and agree with
the Lenders that:

SECTION 5.01. 
Financial Statements and Other Information.  The Borrowers will furnish to the
Administrative Agent on behalf of each Lender:

(a)  within 90 days after the end of each
fiscal year of the Parent Borrower, its audited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by PricewaterhouseCoopers
LLP or other independent public accountants of recognized national standing
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Parent Borrower and
the Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;

(b)  within 45 days after the end of each of
the first three fiscal quarters of each fiscal year of the Parent Borrower, its
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
a Financial Officer as presenting fairly in all material respects the financial
condition and results of operations of the Parent Borrower and its Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;

 49
 

 

(c)  concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a
Financial Officer (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with
Sections 6.12, 6.13, 6.14 and 6.15 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the
Parent Borrower’s audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;

(d)  concurrently with any delivery of financial
statements under clause (a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements
of any Default under Sections 6.12, 6.13, 6.14 or 6.15 and, if such knowledge
has been obtained, describing such Default (which certificate may be limited to
the extent required by accounting rules or guidelines);

(e)  within 45 days after the commencement of
each fiscal year of the Parent Borrower, a detailed consolidated budget for
such fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for such
fiscal year and setting forth the assumptions used for purposes of preparing
such budget) and, promptly when available, any significant revisions of such
budget;

(f)  promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Parent Borrower or any Subsidiary with the SEC or with
any national securities exchange, as the case may be; and

(g)  promptly following any request therefor, such
other information regarding the operations, business affairs and financial condition
of the Parent Borrower or any Subsidiary, or compliance with the terms of any
Loan Document, as the Administrative Agent or any Lender may reasonably
request.

SECTION 5.02. 
Notices of Material Events. 
The Borrowers will furnish to the Administrative Agent and each Lender
prompt written notice of the following:

(a)  the occurrence of any Default;

(b)  the filing or commencement of any action,
suit or proceeding by or before any arbitrator or Governmental Authority
against or, to the knowledge of an executive officer or the Parent Borrower or
any Subsidiary or a Financial Officer, affecting the Borrowers or any Affiliate
thereof that, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect;

 50
 

 

(c)  the occurrence of any ERISA Event that, alone
or together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Parent Borrower and its Subsidiaries in
an aggregate amount exceeding $250,000; and

(d)  any other development that results in, or
could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Parent Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

SECTION 5.03. 
Information Regarding Collateral. 
(a)  The Borrowers will furnish to
the Collateral Agent prompt written notice of any change (i) in any Loan
Party’s corporate name, (ii) in the jurisdiction of incorporation or
organization of any Loan Party or (iii) in any Loan Party’s organizational
identification number.  The Borrowers
agree not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Collateral Agent to continue at
all times following such change to have a valid, legal and perfected security
interest in all the Collateral.  The
Borrowers also agree promptly to notify the Collateral Agent if any material
portion of the Collateral is damaged or destroyed.

(b) 
Each year, at the time of delivery of financial statements pursuant to
Section 5.01, the Borrowers shall deliver to the Collateral Agent a
certificate of a Financial Officer or chief legal officer of the Parent
Borrower setting forth the information required pursuant to the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Original
Effective Date or the date of the most recent certificate delivered pursuant to
this Section .

SECTION 5.04. 
Existence; Conduct of Business. 
The Parent Borrower will, and will cause each Subsidiary to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.

SECTION 5.05. 
Payment of Obligations. 
The Parent Borrower will, and will cause each Subsidiary to, pay its
Material Indebtedness and other material obligations, including Tax
liabilities, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Parent Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) such contest effectively suspends collection of the
contested obligation and the enforcement of 

 51
 

 

any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.

SECTION 5.06. 
Maintenance of Properties. 
The Parent Borrower will, and will cause each Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

SECTION 5.07. 
Insurance.  The Parent
Borrower will, and will cause each Subsidiary to, maintain, with financially
sound and reputable insurance companies (a) insurance in such amounts
(with no greater risk retention) and against such risks as are customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all
insurance required to be maintained pursuant to the Security Documents.  The Borrowers will furnish to the Lenders,
upon request of the Administrative Agent, information in reasonable detail as
to the insurance so maintained.

SECTION 5.08. 
Casualty and Condemnation. 
The Borrowers (a) will furnish to the Administrative Agent and the
Lenders prompt written notice of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of or any material interest
in the Collateral under power of eminent domain or by condemnation or similar
proceeding and (b) will ensure that the Net Proceeds of any such event
(whether in the form of insurance proceeds, condemnation awards or otherwise)
are collected and applied in accordance with the applicable provisions of the
Security Documents.

SECTION 5.09. 
Books and Records; Inspection and Audit Rights.  The Parent Borrower will, and will cause each
Subsidiary to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities.  The Parent
Borrower will, and will cause each Subsidiary to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.

SECTION 5.10. 
Compliance with Laws.  The
Parent Borrower will, and will cause each of its Subsidiaries to, comply with
all Requirements of Law (including Environmental Law) applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.11. 
Use of Proceeds and Letters of Credit.  The proceeds of the Loans made on the
Effective Date (excluding Existing Loans converted into Loans hereunder) shall
be used to repay all Loans and other amounts outstanding under the Original
Credit Agreement, if any, on the Effective Date in accordance with
Section 2.01.  Thereafter, the
proceeds of the Revolving Loans and Swingline Loans will be used only 

 52
 

 

for working capital and general corporate purposes (including Permitted
Acquisitions).  No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations T, U and X.  Letters of
Credit will be used only for general corporate purposes.

SECTION 5.12. 
Additional Subsidiaries. 
If any additional Subsidiary is formed or acquired after the Effective
Date, the Parent Borrower will, within five Business Days after such Subsidiary
is formed or acquired, notify the Collateral Agent and the Lenders thereof and
cause the Collateral and Guarantee Requirement to be satisfied with respect to
such Subsidiary (if it is a Subsidiary Loan Party) and with respect to any
Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of
any Loan Party.

SECTION 5.13. 
Further Assurances. 
(a)  The Parent Borrower will, and
will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or that the Collateral Agent or the Required
Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied, all at the expense of the Loan
Parties.  The Borrowers also agree to
provide to the Collateral Agent, from time to time upon request, evidence
reasonably satisfactory to the Collateral Agent as to the perfection and
priority of the Liens created or intended to be created by the Security
Documents.

(b)  If
any material assets (including any real property or improvements thereto or any
interest therein) are acquired by the Borrowers or any Subsidiary Loan Party
after the Effective Date (other than assets constituting Collateral under the
Collateral Agreement that become subject to the Lien of the Collateral
Agreement upon acquisition thereof), the Borrowers will notify the Collateral
Agent and the Lenders thereof, and, if requested by the Collateral Agent or the
Required Lenders, the Borrowers will cause such assets to be subjected to a
Lien securing the Obligations and will take, and cause the Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the Collateral Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the Loan
Parties.

SECTION 5.14. 
[Reserved]

SECTION 5.15. 
Post-Closing Matters. 
(a)  On or prior to the date that
is 60 days after the Effective Date (or such later date as is acceptable
to the Administrative Agent in its sole discretion), the Parent Borrower will,
or will cause the Subsidiaries to, deliver to the Administrative Agent executed
Deposit Account Control Agreements (as and to the extent required in the
Collateral Agreement and not already satisfied), each in form and substance
satisfactory to the Collateral Agent.

 53
 

 

(b)  At
all times after the Effective Date (or such later date as is acceptable to the
Administrative Agent in its sole discretion), the Parent Borrower will, or will
cause the Subsidiaries to, maintain a centralized cash management system of a
type and on terms reasonably satisfactory to the Administrative Agent at the
Administrative Agent, any Lender or any of their respective Affiliates.

ARTICLE
VI

Negative
Covenants

Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees, expenses and other
amounts payable under any Loan Document have been paid in full and all Letters
of Credit have expired or been terminated and all LC Disbursements shall have
been reimbursed, the Borrowers covenant and agree with the Lenders that:

SECTION 6.01. 
Indebtedness; Certain Equity Securities.  (a) 
The Parent Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

(i)
Indebtedness created under the Loan Documents;

(ii)
Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
extensions, renewals and replacements of any such Indebtedness; provided
that such extending, renewal or replacement Indebtedness (A) shall not be
Indebtedness of an obligor that was not an obligor with respect to the
Indebtedness being extended, renewed or replaced, (B) shall not be in a
principal amount that exceeds the principal amount of Indebtedness being
extended, renewed or replaced (plus accrued interest and premium
thereon), (C) shall not have an earlier maturity date or decreased
weighted average life than the Indebtedness being extended, renewed or replaced
and (D) shall be subordinated to the Obligations on the same terms as the
Indebtedness being extended, renewed or replaced;

(iii)
Indebtedness of the Parent Borrower to any Subsidiary and of any Subsidiary to
the Parent Borrower or any other Subsidiary; provided (A) that
Indebtedness of any Subsidiary that is not a Loan Party to the Parent Borrower
or any Subsidiary Loan Party shall be subject to Section 6.04 and
(B) Indebtedness of any Borrower to any Subsidiary (other than another
Borrower) and Indebtedness of any Subsidiary Loan Party to any Subsidiary that
is not a Subsidiary Loan Party shall be subordinated to the Obligations on
terms reasonably satisfactory to the Administrative Agent;

(iv)
Guarantees by the Parent Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Parent Borrower or any other Subsidiary; provided
that (A) the Indebtedness so Guaranteed is permitted by this
Section 6.01 (other than Section 6.01(a)(ii)), (B) Guarantees by
the Parent 

 54
 

 

Borrower or
any Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a Loan
Party shall be subject to Section 6.04, (C) Guarantees permitted
under this clause (iv) shall be subordinated to the Obligations of the
applicable Subsidiary on the same terms as the Indebtedness so Guaranteed is
subordinated to the Obligations and (D) neither the Senior Notes nor any
Senior Notes Refinancing Indebtedness shall be Guaranteed by any Subsidiary, unless
such Subsidiary is a Loan Party that has Guaranteed the Obligations pursuant to
the Collateral Agreement;

(v)
Indebtedness of the Parent Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof (plus accrued interest and premium thereon); provided
that (A) such Indebtedness is incurred prior to or within 90 days
after such acquisition or the completion of such construction or improvement
and (B) the aggregate principal amount of Indebtedness permitted by this
clause (v) shall not exceed $10,000,000 at any time outstanding;

(vi)
(A) Indebtedness of any Person that becomes a Subsidiary after the date
hereof; provided that (1) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (2) the aggregate
principal amount of Indebtedness permitted by this clause (vi) shall not
exceed $2,000,000 at any time outstanding (excluding Capital Lease Obligations
under leases for vehicles) and (B) any refinancings, renewals and
replacements of any such Indebtedness pursuant to the preceding clause (A)
that do not increase the outstanding principal amount (plus accrued
interest and premium) thereof;

(vii) other
unsecured Indebtedness in an aggregate principal amount not exceeding
$1,000,000 at any time outstanding; provided that the aggregate
principal amount of Indebtedness of the Subsidiaries that are not Subsidiary
Loan Parties permitted by this clause (viii) shall not exceed $500,000 at
any time outstanding;

(viii)
Indebtedness owed to any Person (including obligations in respect of letters of
credit for the benefit of such Person) providing workers’ compensation, health,
disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business;

(ix)
Indebtedness of the Borrower or any Subsidiary in respect of performance bonds,
bid bonds, appeal bonds, surety bonds, performance and completion guarantees
and similar obligations, in each case provided in the ordinary course of
business;

 55

 

(x)
Indebtedness in respect of Swap Agreements permitted by Section 6.07; and

(xi)
(A) the Senior Notes in an aggregate principal amount not to exceed
$225,000,000 and (B) Senior Notes Refinancing Indebtedness.

(b)  The Parent Borrower will
not, and will not permit any Subsidiary to issue preferred Equity Interests.

SECTION 6.02.  Liens.  The Parent Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:

(i) Liens
created under the Loan Documents;

(ii) Permitted
Encumbrances;

(iii) any Lien
on any property or asset of the Parent Borrower or any Subsidiary existing on
the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of the Parent
Borrower or any Subsidiary and (ii) such Lien shall secure only those
obligations that it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof (plus accrued interest and premium thereon);

(iv) any Lien
existing on any property or asset prior to the acquisition thereof by the
Parent Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (A) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (B) such Lien shall not
apply to any other property or assets of the Parent Borrower or any Subsidiary
and (C) such Lien shall secure only those obligations that it secures on
the date of such acquisition or the date such Person becomes a Subsidiary, as
the case may be, and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof (plus accrued interest
and premium thereon);

(v) Liens on
fixed or capital assets acquired, constructed or improved by the Parent
Borrower or any Subsidiary; provided that (A) such security
interests secure Indebtedness permitted by clause (v) of
Section 6.01(a), (B) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (C) the
Indebtedness secured thereby does not exceed the lesser of the cost of
acquiring, constructing or improving such fixed or capital asset or its fair
market value at the time such security interest attaches, and in any event,
such Indebtedness does not exceed $10,000,000 at any time outstanding and
(D) such 

 56
 

 

security interests shall not apply to any
other property or assets of the Parent Borrower or any Subsidiary;

(vi) Liens of
a collecting bank arising in the ordinary course of business under
Section 4-208 of the Uniform Commercial Code in effect in the relevant
jurisdiction covering only the items being collected upon;

(vii) Liens
granted by a Subsidiary that is not a Loan Party in favor of the Parent
Borrower or another Loan Party in respect of Indebtedness owed by such
Subsidiary.

SECTION 6.03.  Fundamental
Changes.  (a)  The Parent Borrower will not, and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into a Borrower in a transaction in which a Borrower is
the surviving corporation, (ii) any Subsidiary (other than a Borrower) may
merge into any Subsidiary (other than a Borrower) in a transaction in which the
surviving entity is a Subsidiary and (if any party to such merger is a
Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any Subsidiary
(other than a Subsidiary Loan Party) may liquidate or dissolve if the Parent
Borrower determines in good faith that such liquidation or dissolution is in
the best interests of the Parent Borrower and is not materially disadvantageous
to the Lenders; provided that any such merger involving a Person that is
not a wholly owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.04.

(b)  The Parent Borrower will
not, and will not permit any of the Subsidiaries to, engage to any material
extent in any business other than businesses of the type conducted by the
Parent Borrower and the Subsidiaries on the date of execution of this Agreement
and businesses reasonably related thereto.

SECTION 6.04.  Investments,
Loans, Advances, Guarantees and Acquisitions.  The Parent Borrower will not, and will not
permit any of the Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
prior to such merger) any Equity Interests in or evidences of indebtedness or
other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:

(a)  Permitted Investments;

(b)  Permitted Acquisitions; provided that
the aggregate cash consideration for such Permitted Acquisitions, which shall
be deemed to include (i) any amounts actually paid pursuant to any
post-closing payment adjustments, earn-

 57
 

 

outs or non-compete payments and
(ii) the principal amount of Indebtedness that is assumed pursuant to
Section 6.01(a)(vi) or otherwise incurred in connection with such
Permitted Acquisition, shall not exceed $40,000,000 for any period of four
consecutive fiscal quarters and $80,000,000 in the aggregate since the
Effective Date plus, in each case (without duplication) an amount equal
to any returns of capital or sale proceeds actually received in cash in respect
of any such Permitted Acquisition (which amount shall not exceed the purchase
price paid (including the principal amount of Indebtedness assumed pursuant to
Section 6.01(a)(vi) in connection therewith) in respect of such Permitted
Acquisition);

(c)  investments existing on the date hereof and
set forth on Schedule 6.04;

(d)  investments by the Parent Borrower and its
Subsidiaries in Equity Interests in their respective Subsidiaries; provided
that (i) any such Equity Interests held by a Loan Party shall be pledged
pursuant to the Collateral Agreement (subject to the limitations applicable to
common stock of a Foreign Subsidiary referred to in the definition of “Collateral
and Guarantee Requirement”) and (ii) the aggregate amount of investments
by Loan Parties in Subsidiaries that are not Loan Parties (together with
outstanding intercompany loans permitted under clause (ii) to the proviso
to Section 6.04(e) and outstanding Guarantees permitted under the proviso
to Section 6.04(g)) shall not exceed $500,000 at any time outstanding (in
each case determined without regard to any write-down or write-offs);

(e)  loans or advances made by the Parent Borrower
to any Subsidiary and made by any Subsidiary to the Parent Borrower or any
other Subsidiary; provided that (i) any such loans and advances
made by a Loan Party shall be evidenced by a promissory note pledged pursuant
to the Collateral Agreement and (ii) the amount of such loans and advances
made by Loan Parties to Subsidiaries that are not Loan Parties (together with
investments permitted under clause (ii) of Section 6.04(d) and
outstanding Guarantees permitted under the proviso to Section 6.04(g)
shall not exceed $500,000 at any time outstanding (in each case determined
without regard to any write-down or write-offs);

(f)  loans or advances to employees made in the
ordinary course of business of the Parent Borrower or a Subsidiary not exceeding
$250,000 in the aggregate outstanding at any time, provided that no such
advances to any single employee shall exceed $100,000 in the aggregate
outstanding (determined without regard to any write-downs or write-offs of such
loans or advances).

(g)  Guarantees constituting Indebtedness
permitted by Section 6.01; provided that the aggregate principal
amount of Indebtedness of Subsidiaries that are not Loan Parties that is
Guaranteed by any Loan Party (together with investments permitted under
clause (ii) of Section 6.04(d) and outstanding intercompany loans
permitted under clause (ii) to the proviso to Section 6.04(e)) 

 58
 

 

shall not exceed $500,000 at any time
outstanding (in each case determined without regard to any write-downs or
write-offs);

(h)  investments received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case in the ordinary course of
business;

(i)  investments in the form of Swap Agreements
permitted by Section 6.07;

(j)  investments of any Person existing at the
time such Person becomes a Subsidiary of the Borrower or consolidates or merges
with the Borrower or any of the Subsidiaries (including in connection with a
Permitted Acquisition) so long as such investments were not made in
contemplation of such Person becoming a Subsidiary or of such consolidation or
merger;

(k)  investments received in connection with the
dispositions of assets permitted by Section 6.05;

(l)  other investments, loans and advances by the
Parent Borrower or any Subsidiary in an aggregate amount, as valued at cost at
the time each such investment is made and including all related commitments for
future advances, not exceeding $250,000 in the aggregate for all such investments
made from and after the Effective Date plus an amount equal to any
returns of capital actually received in cash in respect of any such investments
(which amount shall not exceed the amount of such investment valued at cost at
the time such investment was made).

SECTION 6.05.  Asset Sales.  The Parent Borrower will not, and will not
permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose
of any asset, including any Equity Interest owned by it, nor will the Parent
Borrower permit any Subsidiary to issue any additional Equity Interest in such
Subsidiary, except:

(a)  sales, transfers and other dispositions of
(i) inventory, (ii) used or surplus equipment and
(iii) Permitted Investments in the ordinary course of business;

(b)  sales, transfers and other dispositions to
the Parent Borrower or a Subsidiary; provided that any such sales,
transfers or dispositions involving a Subsidiary that is not a Loan Party shall
be made in compliance with Section 6.09;

(c)  sales, transfers and other dispositions of
accounts receivable in connection with the compromise, settlement or collection
thereof consistent with past practice;

 59
 

 

(d)  sales, transfers and other dispositions of
property to the extent such property constitutes an investment permitted by
clauses (a), (h), (i) and (k) of Section 6.04;

(e)  sale and leaseback transactions permitted by
Section 6.06;

(f)  dispositions resulting from any casualty or
other insured damage to, or any taking under power of eminent domain or by
condemnation or similar proceeding of, any property or asset of the Borrower or
any Subsidiary; and

(g)  sales, transfers and other dispositions of
assets (other than Equity Interests in a Subsidiary unless all Equity Interests
in such Subsidiary (other than a Borrower) are sold) that are not permitted by
any other clause of this Section; provided that the aggregate fair
market value of all assets sold, transferred or otherwise disposed of in
reliance upon this clause (g) shall not exceed $5,000,000;

provided that all sales, transfers,
leases and other dispositions permitted hereby (other than those permitted by
clause (b), (c) and (f) above) shall be made for fair value and (other
than those permitted by clause (b)) for at least 75% cash consideration.

SECTION 6.06.  Sale and Leaseback
Transactions.  The Parent Borrower
will not, and will not permit any of the Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred, except for any such sale of any fixed or
capital assets that is made for cash consideration in an amount not less than
the fair value of such fixed or capital asset and is consummated within 90 days
after the Parent Borrower or such Subsidiary acquires or completes the
construction of such fixed or capital asset.

SECTION 6.07.  Swap
Agreements.  The Parent Borrower will
not, and will not permit any of the Subsidiaries to, enter into any Swap
Agreement, except (a) Swap Agreements entered into to hedge or mitigate
risks to which the Parent Borrower or any Subsidiary has actual exposure (other
than those in respect of shares of capital stock or other equity ownership
interests of the Parent Borrower or any of its Subsidiaries) and (b) Swap
Agreements entered into in order to effectively cap, collar or exchange
interest rates (from floating to fixed rate, from fixed to floating rates, from
one floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Parent Borrower or any
Subsidiary.

SECTION 6.08.  Restricted
Payments; Certain Payments of Indebtedness. 
(a)  The Parent Borrower will not,
and will not permit any Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except (i) the Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests,
(ii) the Parent Borrower may declare and pay dividends with respect to its
common stock payable solely in additional 

 60
 

 

shares of its
common stock, (iii) the Parent Borrower may make Restricted Payments, not
exceeding $6,000,000 during any fiscal year, provided that the total of
all Restricted Payments made since July 1, 2005 may not exceed 50% of the
Consolidated Net Income accrued during the period (treated as one accounting
period) from July 1, 2005 to the end of the most recent fiscal quarter ending
at least 45 days prior to the date of such Restricted Payment (or, in case
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) and (iv) at any time on or after the Effective Date, the Parent
Borrower may declare and pay dividends in an aggregate amount not to exceed the
Cumulative Net Income Amount at the time of such payment.

(b)  The Parent Borrower will not,
and will not permit any Subsidiary to, make or agree to pay or make, directly
or indirectly, any payment or other distribution (whether in cash, securities
or other property) of or in respect of principal of or interest on any
Indebtedness, or any payment or other distribution (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Indebtedness, except:

(i) payment of
Indebtedness created under the Loan Documents;

(ii) scheduled
payments of principal or interest with respect to Indebtedness to the extent
permitted by Section 6.01; and

(iii) payment
of secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness.

SECTION 6.09.  Transactions
with Affiliates.  The Parent Borrower
will not, and will not permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except (a) transactions in the ordinary course of
business and are at prices and on terms and conditions not less favorable to
the Parent Borrower or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (b) transactions between or among the
Parent Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any investment permitted by Sections 6.04(d) and
6.04(e), (d) any Indebtedness permitted under Section 6.01(a)(iii),
(e) loans or advances to employees permitted under Section 6.04,
(f) the payment of reasonable fees to directors of the Parent Borrower or
any Subsidiary who are not employees of the Parent Borrower or any Subsidiary,
and compensation and employee benefit arrangements paid to, and indemnities
provided for the benefit of, directors, officers or employees of the Parent
Borrower or its Subsidiaries in the ordinary course of business, (g) any
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements, stock
options and stock ownership plans approved by the Parent Borrower’s Board of
Directors, (h) employment and severance arrangements entered into in the
ordinary course of business and approved by the Parent Borrower’s Board of
Directors between the Parent Borrower or any Subsidiary and any employee
thereof and (i) any Restricted Payment permitted by Section 6.08.

 61
 

 

SECTION 6.10.  Restrictive
Agreements.  The Parent Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Parent
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Parent Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Parent Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing
on the Original Effective Date identified on Schedule 6.10 (but shall
apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) 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 permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by (A) any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness or (B) any Senior Notes Documents and
(v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.

SECTION 6.11.  Amendment of
Material Documents.  The Parent
Borrower will not, and will not permit any Subsidiary to, amend, modify or
waive any of its rights under (a) its certificate of incorporation,
by-laws or other organizational documents to the extent adverse to the Lenders
or (b) any Senior Notes Documents.

SECTION 6.12.  Minimum Net
Worth.  As of the end of each fiscal
quarter of the Parent Borrower, the Parent Borrower shall not permit the
Consolidated Net Worth of the Borrowers to be less than $80,000,000, plus,
on a cumulative basis, an amount equal to 50% of the net after tax profit of
the Borrowers earned in each fiscal year of the Parent Borrower commencing with
the fiscal year ending on December 31, 2006, minus impairment charges of
up to $4,000,000 in the aggregate since the Effective Date for discontinued or
divested operations.

SECTION 6.13.  Funded Debt
Ratio.  As of the end of each fiscal
quarter of the Parent Borrower, the Parent Borrower will not permit the Funded
Debt Ratio to exceed 4.25 to 1.00.

SECTION
6.14.  Consolidated Cash Flow Coverage
Ratio.  The Parent Borrower will not
permit the Consolidated Cash Flow Coverage Ratio for any fiscal quarter ending
on the last day of any such fiscal quarter that falls into any period set forth

 62
 

 

below to be less than the ratio set forth
opposite such period:

	
  Date

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  December 31,
  2006 through September 30, 2009

  	
   

  	
  1.10 to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31,
  2009 through the Revolving Maturity Date

  	
   

  	
  1.15 to 1.00

  

 

SECTION 6.15. 
Senior Secured Leverage Ratio. 
The Parent Borrower shall not permit the Senior Secured Leverage Ratio
on the last day of any fiscal quarter ending on or after December 31, 2006, to
be in excess of 2.50 to 1.00.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”)
shall occur:

(a)  the Borrowers shall fail to
pay any principal of any Loan or any reimbursement obligation in respect of any
LC Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)  the Borrowers shall fail to
pay any interest on any Loan or any fee or any other amount (other than an
amount referred to in clause (a) of this Article) payable under this
Agreement or any other Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;

(c)  any representation or
warranty made or deemed made by or on behalf of the Parent Borrower or any
Subsidiary in or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect (i) to the extent such
representation or warranty is modified or qualified based on the terms “materially”
or “material” or by reference to the term “Material Adverse Effect”, in any
respect and (ii) to the extent such representation or warranty is not so
modified or qualified, in any material respect, in each case when made or
deemed made;

 63
 

 

(d)  the Borrowers shall fail to
observe or perform any covenant, condition or agreement contained in
Section 5.02, 5.03 or 5.04 (with respect to the existence of the
Borrowers) or 5.11 or in Article VI;

(e)  any Loan Party shall fail to
observe or perform any covenant, condition or agreement contained in any Loan
Document (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of
30 days after notice thereof from the Administrative Agent to the Borrowers
(which notice will be given at the request of any Lender);

(f)  the Parent Borrower or any
Subsidiary shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable;

(g)  any event or condition
occurs that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (g) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

(h)  an involuntary proceeding
shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of the Parent
Borrower or any Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Parent Borrower or any Subsidiary or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;

(i)  the Parent Borrower or any
Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Parent Borrower or any Subsidiary or for a substantial
part of its assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

 64
 

 

(j)  the Parent Borrower or any
Subsidiary shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

(k)  one or more judgments for
the payment of money in an aggregate amount in excess of $2,000,000 shall be
rendered against the Parent Borrower, any Subsidiary or any combination thereof
and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of the Parent
Borrower or any Subsidiary to enforce any such judgment;

(l)  an ERISA Event shall have
occurred that, in the opinion of the Required Lenders, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent Borrower and its Subsidiaries in an aggregate
amount exceeding (i) $500,000 in any year or (ii) $1,000,000 for all
periods;

(m)  any Lien purported to be created
under any Security Document shall cease to be, or shall be asserted by any Loan
Party not to be, a valid and perfected Lien on any Collateral, having a value
in excess of $500,000, with the priority required by the applicable Security
Document, except (i) as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan Documents or
(ii) as a result of the Administrative Agent’s failure to maintain
possession of any stock certificates, promissory notes and failure to file
continuation statements or other instruments delivered to it under the
Collateral Agreement;

(n)  any Loan Document shall for
any reason be asserted by any Loan Party not to be a legal, valid and binding
obligation of any party thereto;

(o)  the Guarantees of the
Obligations by Parent Borrower and the Subsidiary Loan Parties pursuant to the
Collateral Agreement shall cease to be in full force and effect (other than in
accordance with the terms of the Loan Documents) or shall be asserted by Parent
Borrower or any Subsidiary Loan Party not to be in effect or not to be legal,
valid and binding obligations; or

(p)  a Change in Control shall
occur;

then, and in every such event (other than an event
with respect to the Borrowers described in clause (h) or (i) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Borrowers, take either or both of the following actions, at the
same or different times: 
(i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest

 65

 

thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers; and in case of any event with respect to the
Borrowers described in clause (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrowers.

ARTICLE VIII

The Administrative
Agent

Each of the Lenders and the Issuing Bank hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental
thereto.  For purposes of this Article
VIII, all references to the Administrative Agent shall be deemed to be
references to both the Administrative Agent and the Collateral Agent.

The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative
Agent, and such bank and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Parent Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Administrative
Agent hereunder.

The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Parent Borrower or any of
its Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02) or
in the absence of its own gross negligence or wilful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and 

 66
 

 

until written notice
thereof is given to the Administrative Agent by the Borrowers or a Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document,
(iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of each Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

Subject to the appointment and acceptance of a
successor the Administrative Agent as provided in this paragraph, the
Administrative Agent may resign at any time upon notice to the Lenders, the
Issuing Bank and the Borrowers.  Upon any
such resignation, the Required Lenders shall have the right, in consultation
with the Borrowers, to appoint a successor. 
If no successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Administrative Agent which shall be a bank with an office
in New York, New York, or an Affiliate of any such bank.  Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the Borrowers to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrowers and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall 

 67
 

 

continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

ARTICLE IX

Miscellaneous

SECTION 9.01.  Notices.  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

(a)  if to the Borrowers, to them c/o Mac-Gray
Corporation, 404 Wyman Street, Suite 400, Waltham, Massachusetts  02451, Attn.: 
Michael J. Shea, Chief Financial Officer, and Linda A.
Serafini, corporate counsel (Telecopy No.: (781) 290-0550);

(b)  if to the Administrative Agent, the Issuing
Bank or the Swingline Lender, to JPMorgan Chase Bank, N.A., 2 Corporate Drive, Suite
730, Shelton, CT 06484, Attention of Peter Killea (E-mail:
peter.killea@jpmorgan.com, Telecopy No.: (203) 944-8427);

(c)  if to the Collateral Agent, to JPMorgan Chase
Bank, N.A., 131 S. Dearborn Avenue, Floor 6, Chicago, IL 60603, Attention of
Donna Hermanek-Pellikan (E-mail: donna_hermanek@bankone.com, Telecopy No.:
(312) 325-3239);

(d)  if to any other Lender, to it at its address
(or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy
number for notices and other communications hereunder by notice to the other
parties hereto.  All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.

 68
 

 

SECTION 9.02. 
Waivers; Amendments. 
(a)  No failure or delay by the
Administrative Agent, the Issuing Bank, the Collateral Agent or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  The
rights and remedies of the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, the Issuing Bank, the Collateral Agent or any Lender may
have had notice or knowledge of such Default at the time.

(b) 
Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Required Lenders or, in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
or reduce any fees payable hereunder, without the written consent of each
Lender affected thereby, (iii) postpone the maturity of any Loan, or the
required date of reimbursement of any LC Disbursement, or any date for the
payment of any interest or fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.18(b) or (c) in a manner that would alter the
pro rata sharing of payments required thereby, without the written consent of
each Lender, (v) change any of the provisions of this Section or the
percentage set forth in the definition of “Required Lenders” or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release any Subsidiary Loan Party from its Guarantee under
the Collateral Agreement (except as expressly provided in the Collateral
Agreement), or limit its liability in respect of such Guarantee, without the
written consent of each Lender, (vii) release all or substantially all the
Collateral from the Liens of the Security Documents, without the written consent
of each Lender or (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments
due to Lenders holding Loans of any Class differently than those holding Loans
of any other Class, without the written consent of Lenders holding a 

 69
 

 

majority in interest of the outstanding Loans and unused Commitments of
each affected Class; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Issuing Bank or the Swingline Lender without the prior written
consent of the Administrative Agent, the Issuing Bank or the Swingline Lender,
as the case may be.

(c) 
Notwithstanding the foregoing, technical and conforming modifications to
the Loan Documents may be made with the consent of the Borrowers and the
Administrative Agent to the extent necessary to integrate any Commitment
Increase on substantially the same basis as the Revolving Loans.

SECTION 9.03. 
Expenses; Indemnity; Damage Waiver.  (a) 
The Borrowers shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank,
the Collateral Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent, the Issuing Bank or
any Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) 
The Borrowers (and, in the case of the Collateral Agreement, the
Grantors and Guarantors) shall jointly and severally indemnify the
Administrative Agent, the Issuing Bank, the Collateral Agent, each Lender and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee by any third party
or by the Parent Borrower or any other Loan Party arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document
or any other agreement or instrument contemplated hereby (other than, in the
case of the Lenders, costs associated with the preparation and administration
of the Loan Documents), the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of
Credit or the use of the proceeds therefrom (including any refusal by the
Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any Mortgaged Property or any
other property currently 

 70
 

 

or formerly owned or operated by the Parent Borrower or any Subsidiary,
or any Environmental Liability related in any way to the Parent Borrower or any
Subsidiary, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing or to the
Collateral, whether based on contract, tort or any other theory, whether
brought by a third party or by the Parent Borrower or any other Loan Party and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final judgment to have resulted from the
gross negligence, wilful misconduct or bad faith of such Indemnitee.

(c)  To
the extent that the Borrowers (and, in the case of the Collateral Agreement,
the Grantors and Guarantors) fail to pay any amount required to be paid by them
to the Administrative Agent, the Issuing Bank, the Collateral Agent or the
Swingline Lender under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent, the Issuing Bank, the
Collateral Agent or the Swingline Lender, as the case may be, such Lender’s pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Issuing Bank, the Collateral Agent or the Swingline
Lender in its capacity as such.  For
purposes hereof, a Lender’s “pro rata share” shall be determined based upon its
share of the sum of the total Revolving Exposures and unused Commitments at the
time.

(d)  To
the extent permitted by applicable law, the Borrowers (and, in the case of the
Collateral Agreement, the Grantors and Guarantors) shall not assert, and hereby
waive, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

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

SECTION 9.04. 
Successors and Assigns. 
(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 Bank that issues any Letter of Credit), except that
(i) the Borrowers may not assign or otherwise transfer any of their rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrowers 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.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),

 71
 

 

Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) 
(i)  Subject to the conditions set
forth in paragraph (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of (A) the Borrowers; provided that no consent
of the Borrowers shall be required for an assignment to a Lender, an Affiliate
of a Lender or, if a Default has occurred and is continuing, any other
assignee, (B) the Administrative Agent, and (C) the Issuing Bank.

(ii) 
Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans of any Class, the amount of the Commitment 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 $5,000,000 unless each of
Borrowers and the Administrative Agent otherwise consent (such consent not to
be unreasonably withheld or delayed), provided that no such consent of
the Borrowers shall be required if a Default has occurred and is continuing,
(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause (B) shall not be
construed to prohibit assignment of a proportionate part of all the assigning
Lender’s rights and obligations in respect of one Class of Commitments or
Loans; (C) 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 (D) 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)(v) of this Section, 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 9.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 9.04 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)(i) of this Section.

 72
 

 

(iv) 
The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). 
The entries in the Register shall be conclusive, absent manifest error,
and the Borrowers, the Administrative Agent, the Issuing Bank 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 Borrowers, the
Issuing Bank 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 Borrowers, the Administrative Agent, the Issuing Bank or the
Swingline Lender, 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 Commitment
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 Borrowers, the Administrative Agent, the
Issuing Bank 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 or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant.  Subject to paragraph (c)(ii) of this
Section, the Borrowers agree 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.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.

 73
 

 

(ii)  A
Participant shall not be entitled to receive any greater payment under Sections 2.15
or 2.17 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 Borrowers’ prior written
consent.  A Participant shall not be
entitled to the benefits of Section 2.17 unless the Borrowers are notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrowers, to comply with Sections 2.17(e) or (f) as
though it were a Lender.

(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.

SECTION 9.05. 
Survival.  All covenants,
agreements, representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated.  The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.

SECTION 9.06. 
Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating
to the subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective 

 74
 

 

successors and assigns.  Delivery
of an executed counterpart of a signature page of this Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 9.07. 
Severability.  Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

SECTION 9.08. 
Right of Setoff.  If an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrowers against any of and all the obligations
of the Borrowers now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

SECTION 9.09. 
Governing Law; Jurisdiction; Consent to Service of Process.  (a) 
This Agreement shall be construed in accordance with and governed by the
law of the State of New York.

(b) 
Each of the Borrowers hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against the Borrowers or their properties in the courts of any
jurisdiction.

(c) 
Each of the Borrowers hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in 

 75
 

 

paragraph (b) of this Section. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

(d) 
Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01.  Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

SECTION 9.10. 
WAIVER OF JURY TRIAL.  EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. 
Headings.  Article and
Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.

SECTION 9.12. 
Confidentiality.  Each of
the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same
as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrowers or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
from a source other the Borrowers.  For
the purposes of this Section, “Information” means all information 

 76
 

 

received from the Borrowers relating to the Borrowers or their
business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrowers.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

SECTION 9.13. 
Interest Rate Limitation. 
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or reserved by
the Lender holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or periods shall be increased (but not above the Maximum
Rate therefor) until such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.

SECTION 9.14. 
USA Patriot Act.  Each
Lender hereby notifies the Borrowers 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 Borrowers, which information includes
the name and address of the Borrowers and other information that will allow
such Lender to identify the Borrowers in accordance with the Act.

SECTION 9.15. 
Obligations Joint and Several. 
Each Borrower agrees that it shall, jointly with each other Borrower and
severally, be liable for all the Obligations. 
Each Borrower further agrees that the Obligations of any other Borrower
may be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its agreement hereunder
notwithstanding any extension or renewal of any Obligation of any other
Borrower.  Upon payment by a Borrower of
any sums as provided above, all rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations.

 77

 

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

	
   

  	
  MAC-GRAY CORPORATION,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Michael J. Shea

  	
   

  
	
   

  	
   

  	
  Name: Michael J. Shea

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MAC-GRAY SERVICES, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Michael J. Shea

  	
   

  
	
   

  	
   

  	
  Name: Michael J. Shea

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTIRION CORPORATION,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Michael J. Shea

  	
   

  
	
   

  	
   

  	
  Name: Michael J. Shea

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., 

  individually and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Peter M. Killea

  	
   

  
	
   

  	
   

  	
  Name: Peter M. Killea

  
	
   

  	
   

  	
  Title: Vice President

  
					

 

 

Amended and
Restated Credit Agreement

 

 

	
  

  	
  KEYBANK NATIONAL ASSOCIATION,

  individually and as Syndication Agent,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Mitchell A. Felder

  	
   

  
	
   

  	
   

  	
  Name: Mitchell A. Felder

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK USA, N.A.,

  
	
   

  	
  individually and as Co-Documentation 

  Agent,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Kenneth V. McGraime

  	
   

  
	
   

  	
   

  	
  Name: Kenneth V. McGraime

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, individually and as Co-

  Documentation Agent,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Jeffrey Kinney 

  	
   

  
	
   

  	
   

  	
  Name: Jeffrey Kinney

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TD BANK NORTH, N.A.,

  
	
   

  	
  individually and as Co-Documentation 

  Agent,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Jeffrey Westling

  	
   

  
	
   

  	
   

  	
  Name: Jeffrey Westling

  
	
   

  	
   

  	
  Title: Senior Vice President

  
					

 

 

Amended and
Restated Credit Agreement

 

 

	
  

  	
  LASALLE BANK, N.A.,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Henry L. Petrillo

  	
   

  
	
   

  	
   

  	
  Name: Henry L. Petrillo

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EASTERN BANK,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Joseph Learey

  	
   

  
	
   

  	
   

  	
  Name: Joseph Learey

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOVEREIGN BANK,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ Penny Garver

  	
   

  
	
   

  	
   

  	
  Name: Penny Garver

  
	
   

  	
   

  	
  Title: Senior Vice President

  
					

 

 

Amended and
Restated Credit Agreement

 

Schedule 2.01

Commitments

	
  Lender

  	
   

  	
  Revolving

  Commitment

  	
   

  
	
  JPMorgan Chase Bank,
  N.A.

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  KeyBank National Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  HSBC Bank USA, National
  Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  Wachovia Bank, National
  Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  BankNorth, N.A.

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  LaSalle Bank NA

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  Eastern Bank

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Sovereign Bank

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  65,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]