EX-4.5 6 dex45.txt SECOND AMENDED AND RESTATED CREDIT AGREEMENT Exhibit 4.5 ================================================================================ SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 25, 2003, by and among GLOBAL IMAGING SYSTEMS, INC. and its Subsidiaries, as Borrowers, the Lenders referred to herein, WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as Administrative Agent, GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent, and SUNTRUST BANK, as Documentation Agent WACHOVIA SECURITIES, LLC acted as Lead Arranger ================================================================================ TABLE OF CONTENTS ARTICLE I DEFINITIONS 1 SECTION 1.1 Definitions............................................... 1 SECTION 1.2 General................................................... 20 SECTION 1.3 Other Definitions and Provisions.......................... 20 ARTICLE II REVOLVING CREDIT FACILITY 21 SECTION 2.1 Revolving Credit Loans.................................... 21 SECTION 2.2 Swingline Loans........................................... 21 SECTION 2.3 Procedure for Advances of Revolving Credit Loans and Swingline Loans................................. 22 SECTION 2.4 Repayment of Loans........................................ 23 SECTION 2.5 Notes..................................................... 25 SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment.... 25 SECTION 2.7 Termination of Revolving Credit Facility.................. 26 ARTICLE III LETTER OF CREDIT FACILITIES 26 SECTION 3.1 L/C Commitment............................................ 26 SECTION 3.2 Procedure for Issuance of Letters of Credit............... 27 SECTION 3.3 Commissions and Other Charges............................. 27 SECTION 3.4 L/C Participations........................................ 28 SECTION 3.5 Reimbursement Obligation of the Borrowers................. 29 SECTION 3.6 Obligations Absolute...................................... 29 SECTION 3.7 Effect of Application..................................... 30 ARTICLE IV TERM LOAN FACILITY 30 SECTION 4.1 Initial Term Loans........................................ 30 SECTION 4.2 Procedure for Advance of Initial Term Loans............... 30 SECTION 4.3 Repayment of Term Loans................................... 31 SECTION 4.4 Prepayments of Term Loans................................. 32 SECTION 4.5 Term Notes................................................ 34 SECTION 4.6 Optional Increase In Term Loan Commitment................. 34 ARTICLE V GENERAL LOAN PROVISIONS 36 SECTION 5.1 Interest.................................................. 36 SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans.. 39 SECTION 5.3 Fees...................................................... 40 SECTION 5.4 Manner of Payment......................................... 40 SECTION 5.5 Crediting of Payments and Proceeds........................ 41 SECTION 5.6 Adjustments............................................... 41 SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent......... 42 SECTION 5.8 Changed Circumstances..................................... 43 SECTION 5.9 Indemnity................................................. 44 SECTION 5.10 Capital Requirements...................................... 45 SECTION 5.11 Taxes..................................................... 45 i SECTION 5.12 Use of Proceeds........................................... 47 SECTION 5.13 Security.................................................. 47 ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING 47 SECTION 6.1 Closing................................................... 47 SECTION 6.2 Conditions to Closing and Initial Extensions of Credit.... 47 SECTION 6.3 Conditions to All Loans and Letters of Credit............. 52 SECTION 6.4 Post-Closing Condition.................................... 53 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWERS 53 SECTION 7.1 Representations and Warranties............................ 53 SECTION 7.2 Survival of Representations and Warranties, Etc........... 60 ARTICLE VIII FINANCIAL INFORMATION AND NOTICES 60 SECTION 8.1 Financial Statements and Projections...................... 61 SECTION 8.2 Officer's Compliance Certificate.......................... 62 SECTION 8.3 Accountants' Certificate.................................. 62 SECTION 8.4 Other Reports............................................. 62 SECTION 8.5 Notice of Litigation and Other Matters.................... 62 SECTION 8.6 Notice Under Subordinated Debt............................ 63 SECTION 8.7 Accuracy of Information................................... 64 ARTICLE IX AFFIRMATIVE COVENANTS 64 SECTION 9.1 Preservation of Corporate Existence and Related Matters... 64 SECTION 9.2 Maintenance of Property................................... 64 SECTION 9.3 Insurance................................................. 64 SECTION 9.4 Accounting Methods and Financial Records.................. 64 SECTION 9.5 Payment and Performance of Obligations.................... 64 SECTION 9.6 Compliance With Laws and Approvals........................ 65 SECTION 9.7 Environmental Laws........................................ 65 SECTION 9.8 Compliance with ERISA..................................... 65 SECTION 9.9 Compliance With Agreements................................ 65 SECTION 9.10 Conduct of Business....................................... 66 SECTION 9.11 Visits and Inspections.................................... 66 SECTION 9.12 Additional Borrowers and Collateral....................... 66 SECTION 9.13 Additional Real Property Collateral....................... 67 SECTION 9.14 Vendor-Provided Financing................................. 67 SECTION 9.15 Interest Rate Protection.................................. 68 SECTION 9.16 Primary Deposit Accounts.................................. 68 SECTION 9.17 Further Assurances........................................ 68 ARTICLE X FINANCIAL COVENANTS 68 SECTION 10.1 Leverage Ratio............................................ 68 SECTION 10.2 Senior Leverage Ratio..................................... 69 SECTION 10.3 Fixed Charge Coverage Ratio............................... 69 SECTION 10.4 Maximum Capital Expenditures.............................. 70 ii ARTICLE XI NEGATIVE COVENANTS 70 SECTION 11.1 Limitations on Debt....................................... 70 SECTION 11.2 Limitations on Guaranty Obligations....................... 72 SECTION 11.3 Limitations on Liens...................................... 72 SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions.......................................... 74 SECTION 11.5 Limitations on Mergers and Liquidation.................... 77 SECTION 11.6 Limitations on Sale of Assets............................. 78 SECTION 11.7 Limitations on Dividends, Distributions and Redemptions... 78 SECTION 11.8 Limitations on Exchange and Issuance of Capital Stock..... 79 SECTION 11.9 Transactions with Affiliates.............................. 79 SECTION 11.10 Certain Accounting Changes; Organizational Documents...... 79 SECTION 11.11 Amendments; Payments and Prepayments of Subordinated Debt. 80 SECTION 11.12 Restrictive Agreements.................................... 80 SECTION 11.13 Impairment of Security Interests.......................... 80 ARTICLE XII DEFAULT AND REMEDIES 80 SECTION 12.1 Events of Default......................................... 80 SECTION 12.2 Remedies.................................................. 83 SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc........... 84 ARTICLE XIII THE ADMINISTRATIVE AGENT 84 SECTION 13.1 Appointment............................................... 84 SECTION 13.2 Delegation of Duties...................................... 84 SECTION 13.3 Exculpatory Provisions.................................... 85 SECTION 13.4 Reliance by the Administrative Agent...................... 85 SECTION 13.5 Notice of Default......................................... 85 SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders............................................. 86 SECTION 13.7 Indemnification........................................... 86 SECTION 13.8 The Administrative Agent in Its Individual Capacity....... 87 SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent............................ 87 SECTION 13.10 Documentation Agent and Syndication Agent................. 87 ARTICLE XIV MISCELLANEOUS 88 SECTION 14.1 Notices.................................................. .88 SECTION 14.2 Expenses; Indemnity....................................... 89 SECTION 14.3 Set-off................................................... 90 SECTION 14.4 Governing Law............................................. 90 SECTION 14.5 Jurisdiction and Venue.................................... 90 SECTION 14.6 Binding Arbitration; Waiver of Jury Trial................. 91 SECTION 14.7 Reversal of Payments...................................... 92 SECTION 14.8 Injunctive Relief; Punitive Damages....................... 92 SECTION 14.9 Accounting Matters........................................ 92 SECTION 14.10 Successors and Assigns; Participations.................... 93 SECTION 14.11 Amendments, Waivers and Consents.......................... 97 SECTION 14.12 Performance of Duties..................................... 98 iii SECTION 14.13 All Powers Coupled with Interest......................... 98 SECTION 14.14 Survival of Indemnities.................................. 98 SECTION 14.15 Titles and Captions...................................... 98 SECTION 14.16 Severability of Provisions............................... 99 SECTION 14.17 Counterparts; Facsimile Signatures....................... 99 SECTION 14.18 Company as Agent for the Borrowers....................... 99 SECTION 14.19 Obligations Joint and Several; Contribution.............. 99 SECTION 14.20 Term of Agreement........................................ 100 SECTION 14.21 Advice of Counsel........................................ 100 SECTION 14.22 No Strict Construction................................... 100 SECTION 14.23 Inconsistencies with Other Documents; Independent Effect of Covenants.......................... 100 iv EXHIBITS AND SCHEDULES ---------------------- EXHIBITS -------- Exhibit A-1 - Form of Revolving Credit Note Exhibit A-2 - Form of Swingline Note Exhibit A-3 - Form of Term Note Exhibit B-1 - Form of Notice of Revolving Credit/Swingline Borrowing Exhibit B-2 - Form of Term Loan Borrowing Exhibit C - Form of Notice of Account Designation Exhibit D - Form of Notice of Prepayment Exhibit E - Form of Notice of Conversion/Continuation Exhibit F - Form of Officer's Compliance Certificate Exhibit G - Form of Assignment and Acceptance Exhibit H - Form of Joinder Agreement SCHEDULES ---------------- Schedule 7.1(a) - Jurisdictions of Organization and Qualification Schedule 7.1(b) - Subsidiaries and Capitalization Schedule 7.1(i) - ERISA Plans Schedule 7.1(l) - Material Contracts Schedule 7.1(m) - Labor and Collective Bargaining Agreements Schedule 7.1(r) - Description of Real Property Schedule 7.1(t) - Debt and Guaranty Obligations Schedule 7.1(u) - Litigation Schedule 11.1 - Existing Debt Not Otherwise Permitted Schedule 11.3(g) - Existing General Liens Schedule 11.3(i) - Existing Vendor-Provided Financing and Trade Financing Liens Schedule 11.4 - Existing Loans, Advances and Investments v Exhibit 45 SECOND AMENDED AND RESTATED CREDIT AGREEMENT ---------------- SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 25th day of June, 2003, by and among GLOBAL IMAGING SYSTEMS, INC., a Delaware corporation (the "Company"), the Subsidiaries of the Company listed on the signature pages hereto (together with the Company, the "Existing Borrowers"), and any Additional Borrowers who may become party to this Agreement (the "Additional Borrowers", and together with the Existing Borrowers, the "Borrowers"), the Lenders who are or may become a party to this Agreement (the "Lenders"), WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as Administrative Agent for the Lenders (the "Administrative Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent for the Lenders (the "Syndication Agent") and SUNTRUST BANK, as Documentation Agent (the "Documentation Agent"). STATEMENT OF PURPOSE -------------------- Pursuant to the Credit Agreement dated as of July 31, 1998 (as amended and restated by the Amended and Restated Credit Agreement dated as of June 23, 1999, and as further amended by the First Amendment and Waiver to the Credit Agreement dated as of February 14, 2000, the Second Amendment and Waiver to the Credit Agreement dated as of March 30, 2000, the Third Amendment to Credit Agreement dated as of May 10, 2001, the Fourth Amendment to Credit Agreement dated as of September 28, 2001 and the Fifth Amendment to Credit Agreement dated as of May 2, 2003, and as may be further amended, restated, supplemented or otherwise modified from time to time, the "Existing Credit Agreement"), by and among the Existing Borrowers, the lenders party thereto (the "Existing Lenders"), the Administrative Agent, Key Corporate Capital, Inc., as syndication agent, and Scotiabanc Inc., as documentation agent, the Existing Lenders have extended certain credit facilities to the Existing Borrowers pursuant to the terms thereof. The Existing Borrowers have requested, and, subject to the terms and conditions hereof, the Administrative Agent, the Syndication Agent, the Documentation Agent and the Lenders have agreed, to amend and restate the Existing Credit Agreement as set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below: "Additional Borrower" means each Subsidiary which hereafter becomes a Borrower pursuant to Section 9.12. "Additional Excess Refused Proceeds" shall have the meaning assigned thereto in Section 2.4(e). "Additional Term Loan Agreement" shall have the meaning assigned thereto in Section 4.6(c). "Additional Term Loans" shall have the meaning assigned thereto in Section 4.6. "Additional Term Loan Effective Date" means the date, which shall be a Business Day, on or before the Term Loan Maturity Date, but no earlier than thirty (30) days after any Increase Notification Date, on which the Term Loan Lenders make any Additional Term Loans to the Borrowers pursuant to Section 4.6. "Adjustment Date" shall have the meaning assigned thereto in Section 5.1(c). "Administrative Agent" means Wachovia in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 13.9. "Administrative Agent's Office" means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 14.1(c). "Affiliate" means, with respect to any Person, any other Person (other than, with respect to any Borrower, a Subsidiary of such Borrower) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person or any of its Subsidiaries. The term "control" means (a) the power to vote five percent (5%) or more of the securities or other equity interests of a Person having ordinary voting power, or (b) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Aggregate Commitment" means the aggregate amount of the Lenders' Commitments hereunder, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be Two Hundred Thirty Million Dollars ($230,000,000). "Agreement" means this Credit Agreement, as amended, restated, supplemented or otherwise modified . "Applicable Law" means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators. 2 "Applicable Margin" means the applicable margin with respect to the Loans as set forth in Section 5.1(c). "Application" means an application in the form specified by the applicable Issuing Lender from time to time, requesting the applicable Issuing Lender to issue a Letter of Credit. "Approved Fund" means any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business; provided, such Approved Fund must be administered by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Arbitration Rules" shall have the meaning assigned thereto in Section 14.6. "Asset Sale Proceeds" shall have the meaning assigned thereto in Section 4.4(b)(i). "Assignment and Acceptance" shall have the meaning assigned thereto in Section 14.10. "Base Rate" means, at any time, the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate. "Base Rate Loan" means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 5.1(a). "Benefited Lender" shall have the meaning assigned thereto in Section 5.6. "Borrowers" means the collective reference to the Existing Borrowers and any Additional Borrowers in their capacity as borrowers hereunder. "Business Day" means (a) for all purposes other than as set forth in clause (b) below, any day, other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina and New York, New York, are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Asset" means, with respect to the Company and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the Company and its Subsidiaries. "Capital Expenditures" means, with respect to the Company and its Subsidiaries for any period, the aggregate cost of all Capital Assets acquired by Company or any Subsidiary thereof during such period less the amount of (a) retirements of Capital Assets (in an amount not to 3 exceed $500,000 during any Fiscal Year or any period of four (4) consecutive fiscal quarters, as applicable) and (b) sales of Capital Assets during such period, as determined in accordance with GAAP. "Capital Lease" means, with respect to the Company and its Subsidiaries, any lease of any property that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the Company and its Subsidiaries. "Cash Equivalents" shall have the meaning given thereto in Section 11.4(b). "Change in Control" shall have the meaning assigned thereto in Section 12.1(i). "Closing Date" means the date of this Agreement or such later Business Day upon which each condition described in Article VI shall be satisfied or waived in all respects in a manner acceptable to the Administrative Agent, in its sole discretion. "Code" means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended, supplemented or otherwise modified. "Collateral" means any collateral pledged by any Borrower, an equityholder of any Borrower, or any Subsidiary of any Borrower, to the Administrative Agent for the ratable benefit of the Administrative Agent and the Lenders, in order to secure the Obligations or any portion thereof. "Commitment" means, as to any Lender, the sum of such Lender's Revolving Credit Commitment, and Term Loan Commitment as set forth opposite such Lender's name on the Register, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof. "Commitment Fee Rate" shall have the meaning assigned thereto in Section 5.3(a). "Company" shall have the meaning assigned thereto in the preamble to this Agreement. "Consolidated" means, when used with reference to financial statements or financial statement items of the Company and its Subsidiaries, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP. "Convertible Subordinated Notes" means the Company's $57,500,000 Convertible Subordinated Notes due 2008 bearing interest at 4.00%. "Credit Facility" means the collective reference to the Revolving Credit Facility, the Term Loan Facility, the Swingline Facility and the L/C Facility. "Debt" means, with respect to the Company and its Subsidiaries at any date and without duplication, the sum of the following calculated on a Consolidated basis in accordance with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money including but not 4 limited to obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person, (b) all obligations with respect to accrued and unpaid cash earnout payments reflected on the Consolidated balance sheet of the Company and its Subsidiaries and created in connection with any Permitted Acquisition and all other obligations to pay the deferred purchase price of property or services of any such Person (including, without limitation, all payment obligations under non-competition agreements), except obligations with respect to (i) Vendor-Provided Financing and (ii) Trade Financing and all other trade payables arising in the ordinary course of business which are not more than ninety (90) days past due (provided that, commencing sixty (60) days after the creation, incurrence or assumption thereof with respect to Section 9.14, Debt shall include any Vendor-Provided Financing or other trade payable in each case referred to in Section 9.14 with respect to which (A) an intercreditor agreement has not been executed as provided in such Section 9.14 or (B) a modification to the applicable security documents which limits the collateral security secured thereby has not been executed as provided in Section 9.14), (c) all obligations of any such Person as lessee under Capital Leases, (d) all Debt of any other Person secured by a Lien on any asset of any such Person, (e) all Guaranty Obligations of any such Person and (f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including, without limitation, any Reimbursement Obligation, and banker's acceptances issued for the account of any such Person. Notwithstanding the foregoing, all payment obligations under any forward contract executed by the Company in connection with any Hedging Agreement shall be excluded from Debt. "Default" means any of the events specified in Section 12.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default. "Disputes" shall have the meaning set forth in Section 14.6. "Documentation Agent" means SunTrust Bank in its capacity as Documentation Agent hereunder. "Dollars" or "$" means, unless otherwise qualified, dollars in lawful currency of the United States. "EBITDA" means, with respect to the Company and its Subsidiaries for any period, the following calculated without duplication for such period on a Consolidated basis in accordance with GAAP: (a) Net Income plus (b) the sum of the following, in each case to the extent deducted in the determination of Net Income, (i) income and franchise tax provisions by the Company and its Subsidiaries, (ii) Interest Expense (including, without limitation, the call premium relating to the buyback of the Existing Subordinated Notes in the amount of $5,625,000) and (iii) amortization, depreciation and other unusual non-recurring non-cash charges (including (A) amortization of covenants not to compete and other intangible assets and (B) annual non-cash write-offs required to be made by any such Person under FASB 142). "Eligible Assignee" means, with respect to any assignment of the rights, interest and obligations of a Lender hereunder, a Person that is at the time of such assignment (a) a commercial bank organized under the laws of the United States or any state thereof, having 5 combined capital and surplus in excess of $500,000,000, (b) a commercial bank organized under the laws of any other country that is a member of the Organization of Economic Cooperation and Development, or a political subdivision of any such country, having combined capital and surplus in excess of $500,000,000, (c) a finance company, insurance company or other financial institution which in the ordinary course of business extends credit of the type extended hereunder and that has total assets in excess of $250,000,000, (d) already a Lender hereunder (whether as an original party to this Agreement or as the assignee of another Lender), (e) the successor (whether by transfer of assets, merger or otherwise) to all or substantially all of the commercial lending business of the assigning Lender, (f) any Affiliate of the assigning Lender, (g) any Approved Fund, or (h) any other Person that has been approved in writing as an Eligible Assignee by the Borrowers (other than upon the occurrence and during the continuance of any Default or Event of Default) and the Administrative Agent. "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of any Borrower or any ERISA Affiliate or (b) has at any time within the preceding six (6) years been maintained for the employees of any Borrower or any current or former ERISA Affiliate. "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business and not in response to any third party action or request of any kind) or proceedings related in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to human health or the environment. "Environmental Laws" means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials. "ERISA" means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended, supplemented or otherwise modified. "ERISA Affiliate" means any Person who together with any Borrower is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. "Eurodollar Reserve Percentage" means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect 6 for such day as prescribed by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City. "Event of Default" means any of the events specified in Section 12.1, provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. "Excess Proceeds" shall have the meaning assigned thereto in Section 2.4(d). "Excess Refused Proceeds" shall have the meaning assigned thereto in Section 2.4(e). "Existing Borrowers" shall have the meaning assigned thereto in the preamble to this Agreement. "Existing Credit Agreement" shall have the meaning assigned thereto in the preamble to this Agreement. "Existing Lenders" shall have the meaning assigned thereto in the preamble to this Agreement. "Existing Loans" shall have the meaning assigned thereto in Section 6.2(g). "Existing Subordinated Notes" means the $100,000,000 Global Imaging Systems, Inc. 10 3/4% Senior Subordinated Notes due 2007, including, without limitation, any Add-On Notes, Exchange Notes or other replacement notes, in each case issued pursuant to the Indenture dated as of March 8, 1999. "Extensions of Credit" means, as to any Lender at any time, (a) an amount equal to the sum of (i) the amount equal to such Lender's Revolving Credit Commitment Percentage of the Revolving Credit Loans then outstanding, (ii) the amount equal to such Lender's Revolving Credit Commitment Percentage of the L/C Obligations then outstanding, (iii) the amount equal to such Lender's Revolving Credit Commitment Percentage of the Swingline Loans then outstanding, and (iv) the amount equal to such Lender's Term Loan Percentage of the Term Loans then outstanding or (b) the making of any Loan or issuance of or participation in any Letter of Credit by any Lender, as the context requires. "FASB-142" shall mean Financial Accounting Standards Board Statement No. 142, as in effect on the date of this Agreement, specifying, among other things, applicable accounting principles with respect to goodwill adjustments "FDIC" means the Federal Deposit Insurance Corporation, or any successor thereto. "Federal Funds Rate" means, the rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or 7 any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then "Federal Funds Rate" shall mean a daily rate which is determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be the same as the rate for the most immediately preceding Business Day. "Fee Letter" means the separate fee letter agreement executed by the Company, Wachovia Securities, Inc. and Wachovia dated as of May 7, 2003. "Fiscal Year" means the fiscal year of the Company and its Subsidiaries ending on March 31. "Fixed Charges" means, with respect to the Company and its Subsidiaries for any period, the sum of the following for such period calculated on a Consolidated basis in accordance with GAAP: (a) cash income and franchise taxes, (b) Interest Expense, (c) scheduled principal payments with respect to any Debt (including, without limitation, the principal portion of payments attributable to Capital Leases), (d) Restricted Capital Expenditures and (e) Operating Lease Expense. "Funded Debt" means, with respect to the Company and its Subsidiaries on any date, all Debt of such Persons calculated on a Consolidated basis. "GAAP" means generally accepted accounting principles, as recognized by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, consistently applied and maintained on a consistent basis for the Company and its Subsidiaries throughout the period indicated and (subject to Section 14.9) consistent with the prior financial practice of the Company and its Subsidiaries. "Governmental Approvals" means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities. "Governmental Authority" means any nation, province, state or political subdivision thereof, and any government or any Person exercising executive, legislative, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty Obligation" means, with respect to the Company and its Subsidiaries, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise), (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), or 8 (c) with respect to reimbursement or similar agreements entered in the ordinary course of business between any such Person and a third party issuer of surety or performance bonds which are issued for such Person's account for the benefit of a customer of such Person (provided that the term Guaranty Obligation shall not include endorsements for collection or deposit in the ordinary course of business). "Hazardous Materials" means any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or mixtures or toxic substances under any Applicable Law, (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority, (c) the presence of which require investigation or remediation under any Applicable Law, (d) the discharge or emission or release of which requires a permit or license under any Applicable Law or other Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass or pose a health or safety hazard to Persons or neighboring properties, (f) which consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance, or (g) which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas. "Hedging Agreement" means any agreement with respect to any Interest Rate Contract, forward rate agreement, commodity swap, forward foreign exchange agreement, currency swap agreement, cross-currency swap agreement, currency option agreement or other agreement or arrangement designed to alter the risks of any Person arising from fluctuations in interest rates, currency values or commodity prices, all as amended, restated, supplemented or otherwise modified. "Hedging Obligations" shall have the meaning assigned thereto in the definition of "Obligations". "Increase Lenders" shall have the meaning assigned thereto in Section 4.6(b). "Increase Notification" means the written notice by the Company, on behalf of the Borrowers, of its desire to increase the Term Loan Commitment pursuant to Section 4.6. "Increase Notification Date" means the date on which the Increase Notification is received by the Administrative Agent. "Initial Term Loans" shall mean the term loans to be made to the Borrowers by the Lenders pursuant to Section 4.1 and shall not include any of the Additional Term Loans made to the Borrowers pursuant to Section 4.6. "Interest Expense" means, with respect to the Company and its Subsidiaries for any period, the total interest expense (including, without limitation, interest expense attributable to Capital Leases and all net payment obligations pursuant to Hedging Agreements, but excluding 9 amortization of financing fees) of such Persons, all determined for such period on a Consolidated basis, without duplication, in accordance with GAAP. "Interest Period" shall have the meaning assigned thereto in Section 5.1(b). "Interest Rate Contract" means any interest rate swap agreement, interest rate cap agreement, interest rate floor agreement, interest rate collar agreement, interest rate option or any other agreement regarding the hedging of interest rate risk exposure executed in connection with hedging the interest rate exposure of any Person and any confirming letter executed pursuant to such agreement, all as amended, restated, supplemented or otherwise modified. "Inventory" shall have the meaning assigned thereto in the Security Agreement. "ISP98" means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590, as amended or modified. "Issuer" shall have the meaning assigned thereto in the Pledge Agreement. "Issuing Lender" means either Wachovia or SunTrust Bank, in their respective capacities as an issuer of any Letter of Credit, or any successor thereto and "Issuing Lenders" means the collective reference to Wachovia and SunTrust Bank in their capacities as issuers of the Letters of Credit. "Joinder Agreement" means any Joinder Agreement executed by a Subsidiary of any Borrower pursuant to Section 9.12 in favor of the Administrative Agent for the ratable benefit of the Administrative Agent and the Lenders and substantially in the form of Exhibit H, as amended, restated, supplemented or otherwise modified. "L/C Commitment" means the lesser of (a) Fifteen Million Dollars ($15,000,000) and (b) the Revolving Credit Commitment. "L/C Facility" means the letter of credit facility established pursuant to Article III hereof (and pursuant to which the Borrowers may request Letters of Credit). "L/C Facility Termination Date" means the earlier to occur of (a) the resignation of Wachovia as Administrative Agent in accordance with Section 13.9 (provided that, SunTrust Bank is no longer an Issuing Lender) and (b) the fifth (5th) Business Day prior to the Revolving Credit Maturity Date. "L/C Obligations" means at any time, an amount equal to the sum of (a) the aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5. 10 "L/C Participants" means the collective reference to all the Lenders with Revolving Credit Commitments other than, with respect to each Letter of Credit, the applicable Issuing Lender. "Lender" means each Person executing this Agreement as a Lender (including, without limitation, each Issuing Lender and the Swingline Lender unless the context otherwise requires) set forth on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 4.6 or Section 14.10. "Lending Office" means, with respect to any Lender, the office of such Lender maintaining such Lender's Loans. "Letters of Credit" shall have the meaning assigned thereto in Section 3.1. "Leverage Ratio" means the ratio calculated in accordance with Section 10.1. "LIBOR" means the rate of interest per annum determined on the basis of the rate for deposits in Dollars in a minimum amount of at least $5,000,000 for a period equal to the applicable Interest Period which appears on the Dow Jones Market Screen Page 3750 (or any successor) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of one percent. If, for any reason, such rate does not appear on Dow Jones Market Screen Page 3750, then "LIBOR" shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in a minimum amount of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error. "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula: LIBOR LIBOR Rate = -------------------------------------- 1.00 - Eurodollar Reserve Percentage Each calculation by the Administrative Agent of the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error. "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 5.1(a). "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, collateral assignment, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it 11 has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset. "Loan Documents" means, collectively, this Agreement, the Notes, the Applications, the Letters of Credit, each Additional Term Loan Agreement, the Security Documents, and each other document, instrument and agreement executed and delivered by any Borrower, any Subsidiary thereof or their counsel in connection with this Agreement or otherwise referred to herein or contemplated hereby (excluding any Hedging Agreement), all as may be amended, restated, supplemented or otherwise modified. "Loans" means the collective reference to the Revolving Credit Loans, the Term Loans and the Swingline Loans and "Loan" means any of such Loans. "Material Adverse Effect" means, with respect to the Company and its Subsidiaries, a material adverse effect on the properties, business, prospects, operations or condition (financial or otherwise) of such Persons, taken as a whole, or the ability of such Persons, taken as a whole, to perform its obligations under the Loan Documents or Material Contracts, in each case to which it is a party. "Material Contract" means (a) any contract or other agreement, written or oral, of any Borrower or any of its Subsidiaries involving monetary liability of or to any such Person in an amount in excess of $2,000,000 per annum, or (b) any other contract or agreement, written or oral, of any Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make, contributions within the preceding six (6) years. "Net Cash Proceeds" means, as applicable, (a) with respect to any sale or other disposition of assets, the gross cash proceeds received by any Borrower or any of its Subsidiaries from such sale less the sum of (i) all income taxes and other taxes assessed by a Governmental Authority as a result of such sale and any other reasonable fees and expenses incurred in connection therewith and (ii) the principal amount of, premium, if any, and interest on any Debt secured by a Lien on the asset (or a portion thereof) sold, which Debt is required to be and is repaid in connection with such sale, (b) with respect to any payment under an insurance policy or in connection with a condemnation proceeding, the amount of cash proceeds received by any Borrower or its Subsidiaries from an insurance company or Governmental Authority net of all reasonable expenses of collection and (c) with respect to any issuance of Debt or offering of equity securities, the gross cash proceeds received by any Borrower or any of its Subsidiaries therefrom less all legal, underwriting and other reasonable fees and expenses incurred in connection therewith. "Net Income" means, with respect to the Company and its Subsidiaries for any period, the net income (or loss) thereof for such period determined on a Consolidated basis in accordance with GAAP; provided, that there shall be excluded from net income (or loss): (a) the 12 income (or loss) of any Person (other than a Wholly-Owned Subsidiary of the Company) in which the Company or any Subsidiary has an ownership interest unless received by any such Person in a cash distribution and (b) to the extent not included in clause (a) above, any after-tax extraordinary gains or losses. "New Lender" shall have the meaning assigned thereto in Section 4.6(b). "Notes" means the collective reference to the Revolving Credit Notes, the Term Notes and the Swingline Note and "Note" means any of such Notes. "Notice of Account Designation" shall have the meaning assigned thereto in Section 2.3(b). "Notice of Revolving Credit/Swingline Borrowing" shall have the meaning assigned thereto in Section 2.3(a). "Notice of Term Loan Borrowing" shall have the meaning assigned thereto in Section 4.2. "Notice of Conversion/Continuation" shall have the meaning assigned thereto in Section 5.2. "Notice of Prepayment" shall have the meaning assigned thereto in Section 2.4(c). "Obligations" means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C Obligations, (c) all existing/future payment and other obligations owing by any Borrower to any Lender or the Administrative Agent under any Hedging Agreement with any Lender or the Administrative Agent (which such Hedging Agreement is permitted or required hereunder) (all such obligations with respect to any such Hedging Agreement, "Hedging Obligations"), and (d) all other fees and commissions (including attorneys' fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by any Borrower to any Lender or the Administrative Agent, of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note, in each case for the payment of money under or in respect of this Agreement, any Note, any Letter of Credit, any of the other Loan Documents or any Hedging Agreement hedging interest rate exposure under this Agreement. "Officer's Compliance Certificate" shall have the meaning assigned thereto in Section 8.2. "Operating Lease Expense" means, with respect to the Company and its Subsidiaries for any period, all lease, rental and operating lease expenses of such Persons with respect to any operating lease or rental agreement, in each case for real property for such period, all determined for such period on a Consolidated basis in accordance with GAAP. 13 "Other Taxes" shall have the meaning assigned thereto in Section 5.11(b). "Participant" shall have the meaning assigned thereto in Section 14.10. "Partnership/LLC" shall have the meaning assigned thereto in the Pledge Agreement. "Payment Refusal" shall have the meaning assigned thereto in Section 4.4(b). "PBGC" means the Pension Benefit Guaranty Corporation or any successor agency. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained for employees of any Borrower or any ERISA Affiliates or (b) has at any time within the preceding six (6) years been maintained for the employees of any Borrower or any of their current or former ERISA Affiliates. "Permitted Acquisition" means any acquisition permitted by Section 11.4(e) hereof. "Permitted Acquisition Value" means the aggregate amount of the purchase price (including, without limitation, any assumed debt, earn-outs and deferred payments (to the extent a fixed and determinable obligation is incurred), or capital stock of the acquiree, net of the applicable acquired company's cash (including Cash Equivalents) balance as shown on the most recent financial statements of the acquired company delivered in connection with the applicable Permitted Acquisition) to be paid in connection with any applicable Permitted Acquisition as set forth in the applicable stock or asset purchase documents executed by any Borrower or any Subsidiary thereof in order to consummate the applicable Permitted Acquisition. "Person" means an individual, corporation, limited liability company, partnership, association, trust, business trust, joint venture, joint stock company, pool, syndicate, sole proprietorship, unincorporated organization, Governmental Authority or any other form of entity or group thereof. "Pledge Agreement" means the Amended and Restated Pledge Agreement dated as of June 25, 2003, as amended, restated, supplemented or otherwise modified from time to time, executed by the Borrowers in favor of the Administrative Agent for the ratable benefit of itself and the other Lenders. "Prime Rate" means, at any time, the rate of interest per annum publicly announced from time to time by Wachovia as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wachovia as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. "Pro Forma EBITDA" means, with respect to the Company and its Subsidiaries for any period, EBITDA calculated on a pro forma basis to include as of the first day of such period any 14 Permitted Acquisition or any permitted divestiture closed during such period. For the purposes hereof, Pro Forma EBITDA shall be adjusted to reflect any non-recurring costs and any extraordinary expenses of any such Permitted Acquisition and any such permitted divestiture closed during such period in a manner satisfactory to the Administrative Agent. These adjustments shall be consistent with the adjustments made in the financial information delivered to the Administrative Agent and the Lenders as of the Closing Date or in connection with any such Permitted Acquisition and may include, but not be limited to, management compensation in excess of historical compensation levels with respect to the acquired Person (including, without limitation, prerequisites in excess of historical levels) to be paid by the Company or any of its Subsidiaries following any Permitted Acquisition, fees for professional services in excess of historical levels after any such Permitted Acquisition, expenses incurred in connection with any such Permitted Acquisition and such other similar additional expenses incurred after any such Permitted Acquisition. "Purchasing Lender" shall have the meaning assigned thereto in Section 14.10. "Real Property Security Documents" means any mortgage, deed of trust, leasehold mortgage, leasehold deed of trust, landlord agreement and other agreement or writing pursuant to which any Borrower or any Subsidiary thereof grants a security interest in any real property interest securing the Obligations. "Register" shall have the meaning assigned thereto in Section 14.10(d). "Reimbursement Obligation" means the obligation of the Borrowers to reimburse the applicable Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit. "Rental Pool Capital Expenditures" means, with respect to the Company and its Subsidiaries for any period, all expenditures of such Persons which are made in connection with the acquisition, replacement or repair of any equipment that will be revenue producing and rented to customers of such Persons for, with respect to any new equipment, an initial term of at least one (1) year, less (a) retirements of such equipment (in an amount not to exceed $500,000 during any Fiscal Year or any period of four (4) consecutive fiscal quarters, as applicable) and (b) sales of such equipment during such period, all determined for such period on a Consolidated basis in accordance with GAAP. "Required Lenders" means, at any date, (a) any combination of Lenders holding at least fifty-one percent (51%) of the Revolving Credit Commitments at such time (or, if such Commitments have been terminated pursuant to Section 12.2, any combination of Lenders holding at least fifty-one (51%) of the Revolving Credit Loans at such time) and (b) any combination of Lenders holding at least fifty-one percent (51%) of the Term Loans at such time; provided that, the aggregate amount of each Lender's risk participation and funded participation in Swingline Loans and L/C Obligations is deemed "held" by such Lender for purposes of the parenthetical in clause (a) of this definition. 15 "Responsible Officer" means any of the following: the chief executive officer or chief financial officer of the Company or any other officer of the Company reasonably acceptable to the Administrative Agent. "Restricted Capital Expenditures" means, with respect to the Company and its Subsidiaries for any period, all Capital Expenditures (other than (i) Capital Expenditures made in connection with Permitted Acquisitions and (ii) Rental Pool Capital Expenditures). "Revolving Credit Commitment" means (a) as to any Lender, the obligation of such Lender to make Revolving Credit Loans to the Borrowers hereunder, to issue or participate in Letters of Credit issued for the account of the Borrowers hereunder and to participate in Swingline Loans made to the Borrowers hereunder in an aggregate principal or face amount at any time outstanding not to exceed the amount set forth opposite such Lender's name on the Register, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof, and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit Loans to the Borrowers hereunder, to issue or participate in Letters of Credit issued for the account of the Borrowers hereunder and to participate in Swingline Loans made to the Borrowers hereunder, as such amount may be reduced at any time or from time to time pursuant to the terms hereof. The Revolving Credit Commitment of all Lenders on the Closing Date shall be Ninety Million Dollars ($90,000,000). "Revolving Credit Commitment Percentage" means, as to the respective Revolving Credit Commitment of any Lender at any time, the ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b) all of the Revolving Credit Commitments of all Lenders. "Revolving Credit Facility" means the revolving credit and swingline facility established pursuant to Article II hereof. "Revolving Credit Loans" means any revolving loan made to any Borrower pursuant to Section 2.1, and all such revolving loans collectively as the context requires. "Revolving Credit Maturity Date" means the earliest of the dates referred to in Section 2.7. "Revolving Credit Notes" means the collective reference to the Revolving Credit Notes made by the Borrowers payable to the order of each Lender, substantially in the form of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and any amendments, modifications and supplements thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part; "Revolving Credit Note" means any of such Revolving Credit Notes. "Security Agreement" means the Amended and Restated Security Agreement dated as of June 25, 2003, as amended, restated, supplemented or otherwise modified from time to time, executed by the Borrowers in favor of the Administrative Agent for the ratable benefit of itself and the other Lenders. 16 "Security Documents" means the collective reference to the Security Agreement, the Pledge Agreement, the Real Property Security Documents, any intellectual property security agreements and each other agreement or writing pursuant to which any Borrower or any Subsidiary thereof purports to pledge or grant a security interest in any property or assets securing the Obligations or any such Person purports to guaranty the payment and/or performance of the Obligations. "Senior Funded Debt" means, with respect to the Company and its Subsidiaries on any date, Funded Debt of such Persons minus Funded Debt of such Persons which constitutes Subordinated Debt. "Solvent" means, as to any Borrower or any of its Subsidiaries on a particular date, that any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its debts as they mature, (b) owns property having a value, both at fair valuation and at present fair saleable value on a going concern basis, greater than the amount required to pay its probable liabilities (including contingencies), and (c) does not believe that it will incur debts or liabilities beyond its ability to pay such debts or liabilities as they mature. "Subordinated Debt" means the Debt evidenced by the Existing Subordinated Notes, the Convertible Subordinated Notes and any other Debt of any Borrower or any Subsidiary thereof subordinated in right and time of payment to the Obligations and otherwise containing terms and conditions satisfactory to the Required Lenders. "Subsidiary" means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity is at the time, directly or indirectly, owned by or the management is otherwise controlled by such Person (irrespective of whether, at the time, capital stock or other ownership interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the Company. "Subsidiary Borrowers" means any Subsidiary of the Company which is a Borrower hereunder. "SweepPlus Program" means the cash management facility entered into between the Company and Wachovia pursuant to documentation satisfactory thereto. "Swingline Commitment" means Twenty Million Dollars ($20,000,000). "Swingline Lender" means Wachovia in its capacity as swingline lender hereunder. 17 "Swingline Loan" means any swingline loan made by the Swingline Lender to the Borrowers pursuant to Section 2.2, and all such swingline loans collectively as the context requires. "Swingline Note" means the Swingline Note made by the Borrowers payable to the order of the Swingline Lender, substantially in the form of Exhibit A-2 hereto, evidencing the Swingline Loans, and any amendments, supplements and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part. "Swingline Maturity Date" means the earlier to occur of (a) the resignation of Wachovia as Administrative Agent in accordance with Section 13.9 and (b) the Revolving Credit Maturity Date. "Syndication Agent" means General Electric Capital Corporation in its capacity as Syndication Agent hereunder. "Taxes" shall have the meaning assigned thereto in Section 5.11(a). "Term Loans" means the Initial Term Loans made to the Borrowers by the Lenders pursuant to Section 4.1 and all Additional Term Loans made to the Borrowers pursuant to Section 4.6. "Term Loan Commitment" means (a) as to any Lender, the obligation of such Lender to make the Term Loans to the account of the Borrowers hereunder in an aggregate principal amount not to exceed the amount set forth opposite such Lender's name on the Register, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof, and (b) as to all Lenders, the aggregate commitment to make Term Loans. The Term Loan Commitment of all Lenders as of the Closing Date shall be One Hundred Forty Million Dollars ($140,000,000). "Term Loan Facility" shall mean the term loan facility established pursuant to Article IV hereof. "Term Loan Lender" means each Lender which has a Term Loan Commitment or which has extended Term Loans to the Borrowers. "Term Loan Maturity Date" means the first to occur of (a) June 25, 2009; provided, however, that the Administrative Agent and the Required Lenders shall have the right to accelerate the Term Loan Maturity Date to August 15, 2008 if the Convertible Subordinated Notes have not been either (i) converted into equity in accordance with the terms thereof or (ii) refinanced upon terms and conditions satisfactory to the Administrative Agent and the Required Lenders, in each case by June 25, 2008, and (b) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a). "Term Loan Percentage" means, as to any Lender, the ratio of (a) the outstanding principal balance of the Term Loans of such Lender to (b) the aggregate outstanding principal balance of the Term Loans of all Lenders. 18 "Term Notes" means the collective reference to the Term Notes made by the Borrowers payable to the order of each Lender, substantially in the form of Exhibit A-3 hereto, evidencing the Term Loan Facility, and any amendments, modifications and supplements thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part; "Term Note" means any of such Term Notes. "Termination Event" means: (a) a "Reportable Event" described in Section 4043 of ERISA for which the notice requirement has not been waived by the PBGC, or (b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the partial or complete withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (g) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Trade Financing" means trade financing provided to the Company and its Subsidiaries (other than Vendor-Provided Financing) arising in the ordinary course of business which is (i) payable within sixty (60) days of the invoice date thereof and (ii) not more than thirty (30) days past due. "Uniform Customs" means the Uniform Customs and Practice for Documentary Credits (1993 Revision), effective January, 1994 International Chamber of Commerce Publication No. 500, as amended or modified. "UCC" means the Uniform Commercial Code as in effect in the State of North Carolina, as amended or modified. "United States" means the United States of America. "Vendor-Provided Financing" means financing provided to the Company and its Subsidiaries arising in the ordinary course of business in order to finance the purchase of Inventory thereby, which financing (i) is provided either directly by the corresponding vendor or a third party financial institution or "aggregator" to whom the vendor has transferred title to the financed Inventory and (ii) is payable within one hundred and twenty (120) days of the invoice date thereof. 19 "VPF Customer" means any Borrower which is party to any Vendor-Provided Financing arrangement. "VPF Intercompany Note" means any intercompany note which is payable by a VPF Customer to a VPF Intercompany Noteholder. "VPF Intercompany Noteholder" means any Borrower which is the payee under a VPF Intercompany Note. "VPF Intercompany Subordination Agreement" means any intercompany subordination agreement which is executed by the applicable VPF Intercompany Noteholder in favor of the applicable VPF Provider pursuant to which payments by the applicable VPF Customer to the applicable VPF Intercompany Noteholder on or under the applicable VPF Intercompany Note shall be subordinated to certain senior indebtedness, including, without limitation, the applicable Vendor-Provided Financing and the Obligations. "VPF Provider" means any vendor or a third party financial institution or "aggregator" which has extended Vendor-Provided Financing to a VPF Customer. "Wachovia" means Wachovia Bank, National Association, a national banking association, and its successors. "Wholly-Owned" means, with respect to a Subsidiary, that all of the shares of capital stock or other ownership interests of such Subsidiary are, directly or indirectly, owned or controlled by any Borrower and/or one or more of its Wholly-Owned Subsidiaries (except for directors' qualifying shares or other shares required by Applicable Law to be owned by a Person other than the Borrower). SECTION 1.2 General. Unless otherwise specified, a reference in this Agreement to a particular article, section, subsection, Schedule or Exhibit is a reference to that article, section, subsection, Schedule or Exhibit of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Any reference herein to "Charlotte time" shall refer to the applicable time of day in Charlotte, North Carolina. SECTION 1.3 Other Definitions and Provisions. (a) Use of Capitalized Terms. Unless otherwise defined therein, all capitalized terms defined in this Agreement shall have the defined meanings when used in this Agreement, the Notes and the other Loan Documents or any certificate, report or other document made or delivered pursuant to this Agreement. (b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. 20 ARTICLE II REVOLVING CREDIT FACILITY SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Revolving Credit Loans to the Borrowers on a joint and several basis from time to time from the Closing Date through, but not including, the Revolving Credit Maturity Date as requested by the Company, on behalf of the Borrowers, in accordance with the terms of Section 2.3; provided, that (a) the aggregate principal amount of all outstanding Revolving Credit Loans (after giving effect to any amount requested) shall not exceed the Revolving Credit Commitment less the Swingline Commitment and L/C Obligations and (b) the principal amount of outstanding Revolving Credit Loans from any Lender to the Borrowers shall not at any time exceed such Lender's Revolving Credit Commitment less such Lender's Revolving Credit Commitment Percentage of the Swingline Commitment less such Lender's Revolving Credit Commitment Percentage of all outstanding L/C Obligations. Each Revolving Credit Loan by a Lender shall be in a principal amount equal to such Lender's Revolving Credit Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and reborrow Revolving Credit Loans hereunder until the Revolving Credit Maturity Date. SECTION 2.2 Swingline Loans. (a) Availability. Subject to the terms and conditions of this Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers on a joint and several basis from time to time from the Closing Date through, but not including, the Swingline Maturity Date; provided, that the aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount requested), shall not exceed the lesser of (i) the Revolving Credit Commitment less the sum of all outstanding Revolving Credit Loans and L/C Obligations and (ii) the Swingline Commitment. (b) Refunding. (i) Swingline Loans shall be refunded by the Lenders on demand by the Swingline Lender. Such refundings shall be made by the Lenders in accordance with their respective Revolving Credit Commitment Percentages and shall thereafter be reflected as Revolving Credit Loans of the Lenders on the books and records of the Administrative Agent. Each Lender shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 2:00 p.m. (Charlotte time) on the next succeeding Business Day after such demand is made. No Lender's obligation to fund its respective Revolving Credit Commitment Percentage of a Swingline Loan shall be affected by any other Lender's failure to fund its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any Lender's Revolving Credit Commitment Percentage be increased as a result 21 of any such failure of any other Lender to fund its Revolving Credit Commitment Percentage of a Swingline Loan. (ii) The Borrowers shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, the Borrowers hereby authorize the Administrative Agent to charge any account maintained with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrowers from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Revolving Credit Commitment Percentages. (iii) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section 2.2 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, any Default, Event of Default or non-satisfaction of the conditions set forth in Article VI. Further, each Lender agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section 2.2, one of the events described in Section 12.1(j) or (k) shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Revolving Credit Commitment Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Lender such Lender's participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded). SECTION 2.3 Procedure for Advances of Revolving Credit Loans and Swingline Loans. (a) Requests for Borrowing. The Company, on behalf of the Borrowers, shall give the Administrative Agent irrevocable prior written notice substantially in the form attached hereto as Exhibit B-1 (a "Notice of Revolving Credit/Swingline Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the same Business Day as each Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such borrowing, which shall be in an amount equal to the amount of the Revolving Credit Commitment then available to the Borrowers, or if less, (x) with respect to Base Rate Loans (other than Swingline Loans) in an aggregate principal amount of $500,000 or a whole multiple of $50,000 in excess 22 thereof, (y) with respect to LIBOR Rate Loans in an aggregate principal amount of $3,000,000 or a whole multiple of $500,000 in excess thereof and (z) with respect to Swingline Loans in an aggregate principal amount of $100,000 or a whole multiple of $50,000 in excess thereof (provided that Swingline Loans being made pursuant to the SweepPlus Program may be in a minimum amount of $1,000 or any increment thereof), (C) whether such Loan is to be a Revolving Credit Loan or a Swingline Loan, (D) in the case of a Revolving Credit Loan, whether such Loan is to be a LIBOR Rate Loan or a Base Rate Loan and (E) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto. Notices received after 11:00 a.m. (Charlotte time) shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Lenders of each Notice of Revolving Credit/Swingline Borrowing. (b) Disbursement of Revolving Credit and Swingline Loans. Not later than 2:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Lender will make available to the Administrative Agent, for the account of the Borrowers, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Lender's Revolving Credit Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline Lender will make available to the Administrative Agent, for the account of the Borrowers, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date. The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 2.3 in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrowers identified in the most recent notice substantially in the form of Exhibit C hereto (a "Notice of Account Designation") delivered by the Company, on behalf of the Borrowers, to the Administrative Agent or may be otherwise agreed upon by the Borrowers and the Administrative Agent from time to time. Subject to Section 5.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to the extent that any Lender has not made available to the Administrative Agent its Revolving Credit Commitment Percentage of such Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline Loans shall be made by the Lenders as provided in Section 2.2(b). SECTION 2.4 Repayment of Loans. (a) Repayment on Revolving Credit Maturity Date. The Borrowers shall repay the outstanding principal amount of (i) all Revolving Credit Loans in full on the Revolving Credit Maturity Date and (ii) all Swingline Loans in full in accordance with Section 2.2(b)(ii) (and, in any case, no later than the Swingline Maturity Date), together, in each case, with all accrued but unpaid interest thereon. 23 (b) Mandatory Repayment of Revolving Credit Loans. (i) If at any time the outstanding principal amount of all Revolving Credit Loans plus the sum of all outstanding Swingline Loans and L/C Obligations exceeds the Revolving Credit Commitment, the Borrowers shall repay immediately upon notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, Extensions of Credit in an amount equal to such excess with each such repayment applied first to the principal amount of outstanding Swingline Loans and second to the principal amount of outstanding Revolving Credit Loans and, if necessary, to cash collateralize any outstanding Letters of Credit in accordance with Section 12.2(b). (ii) The Borrower shall also repay the Revolving Credit Loans to the extent required by Section 2.6(c). (c) Optional Repayments. The Borrowers may at any time and from time to time repay the Revolving Credit Loans and Swingline Loans, in whole or in part, upon at least three (3) Business Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice with respect to Base Rate Loans, substantially in the form attached hereto as Exhibit D (a "Notice of Prepayment"), specifying (i) the date of repayment, (ii) the amount of repayment, (iii) whether the repayment is of Revolving Credit Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each, and (iv) whether the repayment is of LIBOR Rate Loans, Base Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial repayments shall be in an aggregate amount of $500,000 or a whole multiple of $50,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans), $3,000,000 or a whole multiple of $500,000 in excess thereof with respect to LIBOR Rate Loans and $100,000 or a whole multiple of $50,000 in excess thereof with respect to Swingline Loans (provided that repayments of Swingline Loans made pursuant to the SweepPlus Program may be in a minimum amount of $1,000 or any increment thereof). Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (d) Repayment of Excess Proceeds. If at any time proceeds ("Excess Proceeds") remain after the prepayment of Term Loans pursuant to Section 4.4(b), the amount of such Excess Proceeds shall be used on the date of the required prepayment under Section 4.4(b) to prepay the outstanding principal amount of the Revolving Credit Loans (with a corresponding reduction of the Revolving Credit Commitment as set forth in Section 2.6(b) below) and Swingline Loans. (e) Repayment Pursuant to Payment Refusals. In the event any Term Loan Lender makes a Payment Refusal election pursuant to Section 4.4(b) and proceeds remain (such remaining proceeds, the "Excess Refused Proceeds"), the amount of such Excess Refused Proceeds shall be used on the date of the required prepayment pursuant to Section 4.4(b) to prepay the outstanding principal amount of the Revolving Credit Loans (without a corresponding reduction in the Revolving Credit Commitment) and Swingline Loans; provided that if proceeds 24 ("Additional Excess Refused Proceeds") remain after the prepayment of the outstanding principal amount of the Revolving Credit Loans and Swingline Loans, the amount of such Additional Excess Refused Proceeds shall be applied in the manner set forth in Section 4.4(b)(v). (f) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may not repay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless such repayment is accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (g) Hedging Agreements. No repayment or prepayment pursuant to this Section 2.4 shall affect any Borrower's obligations under any Hedging Agreement, except as may be specifically provided for under any such Hedging Agreement. SECTION 2.5 Notes. (a) Revolving Credit Notes. Except as otherwise provided in Section 14.10(a)-(e), each Lender's Revolving Credit Loans and the obligation of the Borrowers to repay such Revolving Credit Loans shall be evidenced by a separate Revolving Credit Note executed by the Borrowers payable to the order of such Lender. Each Revolving Credit Note shall be dated as of the Closing Date and shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. (b) Swingline Note. The Swingline Loans and the obligations of the Borrowers to repay such Swingline Loans shall be evidenced by a Swingline Note executed by the Borrowers payable to the order of the Swingline Lender. The Swingline Note shall be dated as of the Closing Date and shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment. (a) Voluntary Reduction. The Borrowers shall have the right at any time and from time to time, upon at least five (5) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Revolving Credit Commitment at any time or (ii) portions of the Revolving Credit Commitment, from time to time, in an aggregate principal amount not less than $3,000,000 or any whole multiple of $500,000 in excess thereof. Notwithstanding the foregoing, the Revolving Credit Commitment cannot be reduced to an amount less than the amount of the then outstanding Letters of Credit and Swingline Loans. (b) Mandatory Reductions. If at any time Excess Proceeds remain after the prepayment of Term Loans pursuant to Section 4.4(b), the Revolving Credit Commitment shall be permanently reduced on the date of the required prepayment under Section 4.4(b) by an amount equal to the amount of such Excess Proceeds. (c) Manner of Payment. Each permanent reduction permitted or required pursuant to this Section 2.6 shall be accompanied by a payment of principal sufficient to reduce the 25 aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations, as applicable, after such reduction to the Revolving Credit Commitment as so reduced and if the Revolving Credit Commitment as so reduced is less than the aggregate amount of all outstanding Letters of Credit, the Borrowers shall be required to furnish cash collateral in accordance with Section 12.2(b) in an amount equal to the aggregate then undrawn and unexpired amount of such Letter of Credit. Any reduction of the Revolving Credit Commitment to zero shall be accompanied by payment of all outstanding Revolving Credit Loans and Swingline Loans (and furnishing of cash collateral in accordance with Section 12.2(b) for all L/C Obligations) and termination of the Revolving Credit Commitment and the Swingline Commitment and the Revolving Credit Facility. Such cash collateral shall be applied in accordance with Section 12.2(b). If the reduction of the Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. SECTION 2.7 Termination of Revolving Credit Facility. The Revolving Credit Facility shall terminate on the earliest of (a) June 25, 2008, (b) the date of termination by the Borrowers pursuant to Section 2.6(a), and (c) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a). ARTICLE III LETTER OF CREDIT FACILITIES SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof, the Issuing Lenders, in reliance on the agreements of the other Lenders set forth in Section 3.4, agree to issue standby letters of credit ("Letters of Credit") for the account of the Borrowers on any Business Day from the Closing Date through but not including the L/C Facility Termination Date in such form as may be approved from time to time by the applicable Issuing Lender; provided, that the Issuing Lenders shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b) the aggregate principal amount of outstanding Revolving Credit Loans plus the aggregate principal amount of outstanding Swingline Loans plus the aggregate amount of L/C Obligations would exceed the Revolving Credit Commitment. Each Letter of Credit shall (i) be denominated in Dollars in a minimum amount of $50,000, (ii) be a standby letter of credit issued to support obligations of any Borrower, contingent or otherwise, incurred in the ordinary course of business, (iii) expire on a date satisfactory to the applicable Issuing Lender, which date shall be no later than the earlier of (A) the date that is twelve (12) months after the date of issuance thereof (provided that any Letter of Credit may be automatically renewable for additional twelve (12) month periods so long as no such renewal shall cause such Letter of Credit to terminate on a date that is later than the Revolving Credit Maturity Date) and (B) the fifth (5/th/) Business Day prior to the Revolving Credit Maturity Date and (iv) be subject to the Uniform Customs and/or ISP98 and, to the extent not inconsistent therewith, the laws of the State of North Carolina. The applicable Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the applicable Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to 26 "issue" and derivations thereof with respect to Letters of Credit shall also include extensions, amendments or modifications of any existing Letters of Credit, unless the context otherwise requires. SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrowers may from time to time request that the applicable Issuing Lender issue a Letter of Credit by delivering to the Administrative Agent and the applicable Issuing Lender at the Administrative Agent's Office an Application therefor, completed to the satisfaction of the Administrative Agent and the applicable Issuing Lender, and such other certificates, documents and other papers and information as the Administrative Agent and the applicable Issuing Lender may request. Upon receipt of any Application, the applicable Issuing Lender shall process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article VI hereof, promptly issue the Letter of Credit requested thereby (but in no event shall the applicable Issuing Lender be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the applicable Issuing Lender and the applicable Borrower. The applicable Issuing Lender shall furnish to the Company and the Administrative Agent a copy of such Letter of Credit and the Administrative Agent shall notify each Lender of the issuance and, upon request by any Lender, furnish to such Lender a copy of such Letter of Credit and the amount of each L/C Participant's participation therein, all promptly following the issuance of such Letter of Credit. SECTION 3.3 Commissions and Other Charges. (a) Letter of Credit Commission. The Borrowers shall pay to the Administrative Agent, for the account of the applicable Issuing Lender and the L/C Participants, a letter of credit commission with respect to each Letter of Credit in an amount equal to the product of (i) the Applicable Margin with respect to LIBOR Rate Loans (as set forth in Section 5.1 hereof) in effect on the corresponding payment date (determined on a per annum basis) and (ii) the average face amount of such Letter of Credit for the corresponding quarterly period. Such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter (based on the then current Applicable Margin) and on the Revolving Credit Maturity Date. The Administrative Agent shall, promptly following its receipt thereof, distribute to the applicable Issuing Lender and the L/C Participants such commission in accordance with their respective Revolving Credit Commitment Percentages. (b) Issuance Fees. In addition to the foregoing commission, the Borrowers shall pay the applicable Issuing Lender, for its account, an issuance fee with respect to each Letter of Credit in an amount equal to the product of (i) one-eighth percent (0.125%) per annum and (ii) the face amount of such Letter of Credit as of the date of issuance of such Letter of Credit. Such fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter and on the Revolving Credit Maturity Date. 27 (c) Other Costs and Expenses. In addition to the foregoing fees and commissions, the Borrowers shall pay or reimburse the applicable Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the applicable Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. SECTION 3.4 L/C Participations. (a) The Issuing Lenders irrevocably agree to grant and hereby grant to each L/C Participant, and, to induce the Issuing Lenders to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the applicable Issuing Lender for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Revolving Credit Commitment Percentage in the applicable Issuing Lender's obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the applicable Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the applicable Issuing Lender (notwithstanding any Default, Event of Default, non-satisfaction of conditions set forth in Article VI or any other circumstances whatsoever) that, if a draft is paid under any Letter of Credit for which the applicable Issuing Lender is not reimbursed in full by the Borrowers through a Revolving Credit Loan or otherwise in accordance with the terms of this Agreement, such L/C Participant shall pay to the applicable Issuing Lender upon demand at the applicable Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. (b) Upon becoming aware of any amount required to be paid by any L/C Participant to the applicable Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the applicable Issuing Lender under any Letter of Credit, the applicable Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the applicable Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the applicable Issuing Lender after the date such payment is due, such L/C Participant shall pay to the applicable Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the applicable Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the applicable Issuing Lender with respect to any amounts owing under this Section 3.4 shall be conclusive in the absence of manifest error. With respect to payment to the applicable Issuing Lender of the unreimbursed amounts described in this Section 3.4(b), if the L/C Participants receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due on the following Business Day. (c) Whenever, at any time after the applicable Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Revolving Credit Commitment Percentage of such payment in accordance with this Section 3.4, the applicable 28 Issuing Lender receives any payment related to such Letter of Credit (whether directly from any Borrower or otherwise), or any payment of interest on account thereof, the applicable Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, that in the event that any such payment received by the applicable Issuing Lender shall be required to be returned by the applicable Issuing Lender, such L/C Participant shall return to the applicable Issuing Lender the portion thereof previously distributed by the applicable Issuing Lender to it. SECTION 3.5 Reimbursement Obligation of the Borrowers. The Borrowers agree to reimburse the applicable Issuing Lender on each date on which the applicable Issuing Lender notifies the Borrowers of the date and amount of a draft paid under any Letter of Credit for the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by the applicable Issuing Lender in connection with such payment. Each such payment shall be made to the applicable Issuing Lender at its address for notices specified herein in lawful money of the United States and in immediately available funds. Interest shall be payable on any and all amounts remaining unpaid by the Borrowers under this Article III from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full at the rate which would be payable on any outstanding Base Rate Loans which were then overdue. If the Borrowers fail to timely reimburse the applicable Issuing Lender on the date the Borrowers receive the notice referred to in this Section 3.5, the Borrowers shall be deemed to have timely given a Notice of Revolving Credit/Swingline Borrowing hereunder to the Administrative Agent requesting the Lenders to make a Revolving Credit Loan as a Base Rate Loan on such date in an amount equal to the amount of such drawing and any taxes, fees, charges or other costs or expenses incurred by the applicable Issuing Lender in connection with such payment by the Issuing Lender and, regardless of whether or not the conditions precedent specified in Article VI have been satisfied, the Lenders shall make Revolving Credit Loans as Base Rate Loans in such amount, the proceeds of which shall be applied to reimburse the applicable Issuing Lender for the amount of the related drawing and costs and expenses. SECTION 3.6 Obligations Absolute. The obligations of the Borrowers under this Article III (including, without limitation, the Reimbursement Obligation) shall be joint and several, and absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrowers may have or have had against the applicable Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrowers also agree that the applicable Issuing Lender and the L/C Participants shall not be responsible for, and the Reimbursement Obligation of the Borrowers under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of any Borrower against any beneficiary of such Letter of Credit or any such transferee. The applicable Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit except for errors or omissions caused by the applicable Issuing Lender's gross negligence or willful misconduct. The Borrowers agree that any action taken or omitted by the applicable Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful 29 misconduct, shall be binding on the Borrowers and shall not result in any liability of the applicable Issuing Lender or any L/C Participant to the Borrowers. The responsibility of the applicable Issuing Lender to the Borrowers in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. SECTION 3.7 Effect of Application. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply. ARTICLE IV TERM LOAN FACILITY ------------------ SECTION 4.1 Initial Term Loans. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make an Initial Term Loan to the Borrowers on a joint and several basis on the Closing Date. The Initial Term Loan shall be funded by each Lender in a principal amount equal to such Lender's Term Loan Percentage of the aggregate principal amount of the Initial Term Loans made on the Closing Date, which aggregate principal amount shall equal the total Term Loan Commitment as of the Closing Date. Notwithstanding the foregoing, if the total Term Loan Commitment (other than with respect to Additional Term Loans) as of the Closing Date is not drawn on the Closing Date, the undrawn amount shall automatically be cancelled. SECTION 4.2 Procedure for Advance of Initial Term Loans. (a) The Company, on behalf of the Borrowers, shall give the Administrative Agent irrevocable prior written notice substantially in the form attached hereto as Exhibit B-2 (a "Notice of Term Loan Borrowing") with respect to the Initial Term Loans prior to 11:00 a.m. (Charlotte time) on the Closing Date requesting that the Lenders make the Initial Term Loans as a Base Rate Loan on such date (provided that the Borrowers may request, no later than three (3) Business Days prior to the Closing Date, that the Lenders make the Initial Term Loans as LIBOR Rate Loans if the Borrowers have delivered to the Administrative Agent a letter in form and substance satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 5.9 of this Agreement). (b) Upon receipt of such Notice of Term Loan Borrowing from the Company, on behalf of the Borrowers, the Administrative Agent shall promptly notify each Lender thereof. Not later than 2:00 p.m. (Charlotte time) on the applicable borrowing date, each Lender will make available to the Administrative Agent for the account of the Borrowers, at the office of the Administrative Agent in immediately available funds, the amount of such Initial Term Loan to be made by such Lender on such borrowing date. The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of the Initial Term Loans in immediately available funds by wire 30 transfer to such Person or Persons as may be designated by the Company, on behalf of the Borrowers. SECTION 4.3 Repayment of Term Loans. (a) Initial Term Loans. The Borrowers shall repay the aggregate outstanding principal amount of the Initial Term Loans in consecutive quarterly installments on the last Business Day of each of June, September, December and March commencing September 30, 2003 as set forth below, except as the amounts of individual installments may be adjusted pursuant to Section 4.4 hereof: ------------------------------------------------------------------------------ YEAR PAYMENT DATE PRINCIPAL INSTALLMENT TERM LOAN COMMITMENT ($) ($) ------------------------------------------------------------------------------ 1 September 30, 2003 350,000 139,650,000 December 31, 2003 350,000 139,300,000 March 31, 2004 350,000 138,950,000 June 30, 2004 350,000 138,600,000 ------------------------------------------------------------------------------ 2 September 30, 2004 350,000 138,250,000 December 31, 2004 350,000 137,900,000 March 31, 2005 350,000 137,550,000 June 30, 2005 350,000 137,200,000 ------------------------------------------------------------------------------ 3 September 30, 2005 350,000 136,850,000 December 31, 2005 350,000 136,500,000 March 31, 2006 350,000 136,150,000 June 30, 2006 350,000 135,800,000 ------------------------------------------------------------------------------ 4 September 30, 2006 350,000 135,450,000 December 31, 2006 350,000 135,100,000 March 31, 2007 350,000 134,750,000 June 30, 2007 350,000 134,400,000 ------------------------------------------------------------------------------ 5 September 30, 2007 350,000 134,050,000 December 31, 2007 350,000 133,700,000 March 31, 2008 350,000 133,350,000 June 30, 2008 350,000 133,000,000 ------------------------------------------------------------------------------ 6 September 30, 2008 33,250,000 99,750,000 December 31, 2008 33,250,000 66,500,000 March 31, 2009 33,250,000 33,250,000 June 25, 2009 33,250,000 0 ------------------------------------------------------------------------------ If not sooner paid, the Term Loans shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date. (b) Additional Term Loans. The Borrower shall repay the aggregate outstanding principal amount of the Additional Term Loans (if any) in consecutive quarterly installments on the last Business Day of each of March, June, September and December commencing with the first full calendar quarter ending after the Additional Term Loan Effective Date, in the following amounts (which such amount shall be calculated on the Additional Term Loan Effective Date): (i) as of any fiscal quarter end prior to the fiscal quarter ending September 30, 2008, an amount equal to one-quarter of one percent (0.25%) of the original principal amount of the Additional Term Loans, and (ii) as of any fiscal quarter ending on or after September 30, 2008, an amount equal to twenty-five 31 percent (25%) of the sum of (X) the original amount of the Additional Term Loans less (Y) the projected amount of all scheduled amortization payments to be made with respect to the Additional Term Loans (determined as of the Additional Term Loan Effective Date) prior to September 30, 2008; provided that such amounts of individual installments may be adjusted pursuant to Section 4.4 hereof. (c) No Reborrowing. Amounts repaid pursuant to this Section 4.3 may not be reborrowed and will constitute a permanent reduction of the Term Loan Commitment. SECTION 4.4 Prepayments of Term Loans. (a) Optional Prepayment of Term Loans. The Borrowers shall have the right at any time and from time to time, upon delivery to the Administrative Agent of a Notice of Prepayment at least three (3) Business Days prior to any repayment, to prepay the Term Loans in whole or in part without premium or penalty except as provided in Section 5.9 hereof. Each optional prepayment of the Term Loans hereunder shall be in an aggregate principal amount of at least $3,000,000 or any whole multiple of $500,000 in excess thereof, shall be applied to the outstanding principal balance of the Term Loans on a pro rata basis between the Initial Term Loans and the Additional Term Loans and shall reduce the remaining scheduled installments of the Initial Term Loans and the Additional Term Loans in inverse order of maturity thereof. Each repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (b) Mandatory Prepayment of Term Loans. (i) Asset Sale Proceeds. No later than one hundred twenty (120) days following any Borrower's receipt thereof, such Borrower shall make mandatory principal prepayments of the Term Loans in the manner set forth in Section 4.4(b)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from the sale or other disposition or series of related sales or other dispositions of assets by any Borrower or any of its Subsidiaries pursuant to Section 11.6(f) ("Asset Sale Proceeds"); provided that such prepayment shall not be required to the extent that such Asset Sale Proceeds are reinvested in comparable replacement assets within one hundred twenty (120) days of any such transaction. Such prepayment shall be made within one hundred twenty (120) days after the date of consummation of any such transaction. Notwithstanding any of the foregoing to the contrary, upon and during the continuance of an Event of Default and upon notice from the Administrative Agent, all Asset Sale Proceeds received by the Borrowers and their Subsidiaries shall be applied to make prepayments of the Term Loans, such prepayments to be made within three (3) Business Days after the date of receipt of Asset Sale Proceeds. (ii) Insurance Proceeds. No later than one hundred twenty (120) days following the date of receipt by any Borrower or any of its Subsidiaries of any Net Cash Proceeds in excess of $2,500,000 in the aggregate under any of the insurance policies maintained pursuant to Section 4(a)(v) of the Security Agreement ("Insurance Proceeds") which have not been reinvested as of such date to replace or restore the damaged property to which such Insurance Proceeds relate, such Borrower shall make mandatory principal prepayments of the 32 Term Loans in the manner set forth in Section 4.4(b)(v) below in amounts equal to one hundred percent (100%) of the aggregate amount of such Insurance Proceeds (as required in accordance in accordance with Section 4(a)(v) of the Security Agreement). Such prepayment shall be made within one hundred twenty (120) days after the date of receipt of such Insurance Proceeds. Notwithstanding any of the foregoing to the contrary, upon and during the continuance of an Event of Default and upon notice from the Administrative Agent, all Insurance Proceeds received by the Borrowers and their Subsidiaries shall be applied to make prepayments of the Term Loans, such prepayments to be made within three (3) Business Days after the date of receipt of Insurance Proceeds. (iii) Debt Proceeds. The Borrowers shall make mandatory principal prepayments of the Term Loans in the manner set forth in Section 4.4(b)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any incurrence of Debt not permitted hereunder (but otherwise consented to by the Required Lenders) by any Borrower or any of its Subsidiaries. Such prepayment shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such transaction. (iv) Equity Proceeds. The Borrowers shall make mandatory principal prepayments of the Term Loans in the manner set forth in Section 4.4(b)(v) below in amounts equal to fifty percent (50%) of the aggregate Net Cash Proceeds from any offering of equity securities by any Borrower or any of its Subsidiaries. Such prepayment shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such transaction. (v) Notice; Manner of Payment. Upon the occurrence of any event triggering the prepayment requirement under Sections 4.4(b)(i) through and including 4.4(b)(iv), the Company, on behalf of the Borrowers, shall promptly deliver a Notice of Prepayment to the Administrative Agent and upon receipt of such notice, the Administrative Agent shall promptly so notify the Lenders. Each prepayment under this Section 4.4(b) shall be applied as follows: first, to reduce the outstanding principal balance of the Term Loans on a pro rata basis between the Initial Term Loans and the Additional Term Loans to reduce in inverse order of maturity the remaining amortization payments of the Initial Term Loans and the Additional Term Loans pursuant to Section 4.3 and second, to the extent of any excess, to repay the outstanding principal balance of the Revolving Credit Loans pursuant to Section 2.4(d) and to reduce permanently the Revolving Credit Commitment pursuant to Section 2.6(b); provided that any Term Loan Lender may elect to have its pro rata share (based on its Term Loan Percentage) of any mandatory prepayment under Section 4.4(b) be applied first to the outstanding balance of the Revolving Credit Loans in accordance with Section 2.4(e) (any such election, a "Payment Refusal"); provided further that if Additional Excess Refused Proceeds remain after the prepayment of the Term Loans in accordance with this Section 4.4(b)(v) and the prepayment of the Revolving Credit Loans in accordance with Section 2.4(e), the amount of such Additional Excess Refused Proceeds shall be reapplied to the pro rata share of any Term Loan Lenders that have made a Payment Refusal election (which repayment such Term Loan Lenders may not refuse) and to reduce in inverse order of maturity the remaining amortization payments of the Term Loans pursuant to Section 4.3. Any such Term Loan Lender that makes a Payment Refusal shall, no later than 11:00 a.m. (Charlotte time) two (2) Business Days preceding the date specified for any 33 prepayment of the Loans, notify the Administrative Agent in writing of such election. Each prepayment under this Section shall be accompanied by any payment required under Section 5.9. (vi) No Reborrowing. Amounts prepaid pursuant to this Section 4.4 may not be reborrowed and will constitute a permanent reduction of the Term Loan Commitment. Each prepayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. SECTION 4.5 Term Notes. Except as otherwise provided in Section 14.10(a)-(e), each Lender's Term Loan and the obligation of the Borrowers to repay such Term Loan shall be evidenced by a separate Term Note executed by the Borrowers payable to the order of such Lender. Each Term Note shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 5.1. SECTION 4.6 Optional Increase In Term Loan Commitment. (a) Subject to the conditions set forth below, the Borrowers shall have the option, exercisable on no more than one (1) occasion following the Closing Date until the first (1st) anniversary of the Closing Date to incur additional indebtedness under this Agreement in the form of an increase of the Term Loan Commitment of up to Fifty Million Dollars ($50,000,000). The Company, on behalf of the Borrowers, by providing an Increase Notification, may request that additional Term Loans be made on the applicable Additional Term Loan Effective Date pursuant to such increase in the Term Loan Commitment (each such additional Term Loan, an "Additional Term Loan," and collectively, the "Additional Term Loans"). (b) Each Additional Term Loan shall be obtained from existing Lenders, or from other banks, financial institutions or investment funds that qualify as Eligible Assignees, in each case in accordance with this Section 4.6. Participation in any Additional Term Loans shall be offered first to each of the existing Lenders; provided that each such Lender shall have no obligation to provide any portion of such Additional Term Loans. If the amount of the Additional Term Loans requested by the Borrowers shall exceed the commitments which the existing Lenders are willing to provide with respect to such Additional Term Loans, then the Borrowers may invite other banks, financial institutions and investment funds which meet the requirements of an Eligible Assignee to join this Agreement as Lenders for the portion of such Additional Term Loans not committed to by existing Lenders (each such other bank, financial institution or investment fund, a "New Lender" and collectively with the existing Lenders providing increased Term Loan Commitments, the "Increase Lenders"). The Administrative Agent is authorized to enter into, on behalf of the Lenders, any amendment to this Agreement or any other Loan Document as may be necessary to incorporate the terms of any Additional Term Loan herein or therein; provided that such amendment shall not modify this Agreement or any other Loan Document in any manner materially adverse to any Lender and shall otherwise be in accordance with Section 14.11 hereof. (c) The following terms and conditions shall apply to each Additional Term Loan: (i) the Additional Term Loans made under this Section 4.6 shall constitute Obligations of the Borrowers and shall be secured with the other Loans on a pari passu basis; (ii) any New Lender 34 making Additional Term Loans shall be entitled to the same voting rights as the existing Lenders under the Term Loan Facility and the Additional Term Loans shall receive proceeds of prepayments on the same basis as the Initial Term Loans (except to the extent otherwise specified in Section 4.3 and Section 4.4(b)(v)); (iii) the Borrowers shall execute such new or replacement Term Loan Notes as are necessary to reflect the Additional Term Loans under this Section 4.6; (iv) the Administrative Agent and the Lenders shall have received from the Company, on behalf of the Borrowers, updated financial projections and an Officer's Compliance Certificate, in each case in form and substance satisfactory to the Administrative Agent, demonstrating that, after giving effect to any such Additional Term Loan, the Borrowers will be in pro forma compliance with the financial covenants set forth in Article X; (v) no Default or Event of Default shall have occurred and be continuing hereunder as of the Additional Term Loan Effective Date or after giving effect to the making of any such Additional Term Loans; (vi) the representations and warranties made by the Borrowers and contained in this Agreement and the other Loan Documents shall be true and correct on and as of the Additional Term Loan Effective Date with the same effect as if made on and as of such date (other than those representations and warranties that by their terms speak as of a particular date, which representations and warranties shall be true and correct as of such particular date); (vii) the amount of such increase in the Term Loan Commitment and any Additional Term Loans obtained thereunder shall not (A) be less than a minimum principal amount of $10,000,000, or any whole multiple of $5,000,000 in excess thereof and (B) shall not cause the Term Loan Commitment to exceed $190,000,000 in the aggregate; (viii) the Borrowers and each Increase Lender shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, a written agreement acknowledged by the Administrative Agent and each Borrower, in form and substance reasonably satisfactory to the Administrative Agent (the "Additional Term Loan Agreement"), and (ix) the Administrative Agent shall have received any documents or information, including any joinder agreements, in connection with such increase in the Term Loan Commitment as it may request in its reasonable discretion. (d) Upon the execution, delivery, acceptance and recording of the Additional Term Loan Agreement, from and after the applicable Additional Term Loan Effective Date, each Increase Lender shall have a Term Loan Commitment as set forth in the Register and all the rights and obligations of a Lender with such a Term Loan Commitment hereunder. The Increase Lenders shall make the Additional Term Loans to the Borrower on the Additional Term Loan Effective Date in an amount equal to each such Increase Lender's commitment as agreed upon pursuant to subsection (b) above. (e) The Administrative Agent shall maintain a copy of each Additional Term Loan Agreement delivered to it in accordance with Section 14.10(d). (f) Within five (5) Business Days after receipt of notice, the Borrowers shall execute and deliver to the Administrative Agent, in exchange for any surrendered Term Loan Note or Term Loan Notes of any Increase Lender, a new Term Loan Note or Term Loan Notes, to the order of the applicable Increase Lender in an amount equal to the Term Loan Commitment of such Increase Lender as set forth in the Register. Such Term Loan Note or Term Loan Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such Term Loan Commitments, shall be dated as of the applicable Additional Term Loan Effective Date and 35 shall otherwise be in substantially the form of the existing Term Loan Notes. Each surrendered Term Loan Note and/or Term Loan Notes shall be canceled and returned to the Company. (g) The Applicable Margin for the Additional Term Loans shall be determined on the applicable Additional Term Loan Effective Date. If the Applicable Margin for such Additional Term Loans at such time exceeds the Applicable Margin for the Initial Term Loans as set forth in Section 5.1(c), then the Applicable Margin for all Term Loans shall be increased to be equal to the Applicable Margin for such Additional Term Loans as determined on the applicable Additional Term Loan Effective Date. In addition, an amortization schedule shall be prepared by the Administrative Agent in accordance with the terms of Section 4.3(b) to provide for the repayment of the applicable Additional Term Loans. ARTICLE V GENERAL LOAN PROVISIONS SECTION 5.1 Interest. (a) Interest Rate Options. (i) Revolving Credit Loans and Term Loans. Subject to the provisions of this Section 5.1, at the election of the Company, on behalf of the Borrowers, the Revolving Credit Loans and the Term Loans shall bear interest at the Base Rate or the LIBOR Rate plus, in each case, the Applicable Margin as set forth below. The Company, on behalf of the Borrowers, shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Revolving Credit/Swingline Borrowing is given pursuant to Section 2.3 or at the time a Notice of Term Loan Borrowing is given pursuant to Section 4.2 or at the time a Notice of Conversion/Continuation is given pursuant to Section 5.2. Each Loan or portion thereof bearing interest based on the Base Rate (including, without limitation, each Swingline Loan which bears interest based on the Base Rate as provided in subsection (a)(ii) below) shall be a "Base Rate Loan", each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Loan or any portion thereof as to which the Company, on behalf of the Borrowers, has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (ii) Swingline Loans. Subject to the provisions of this Section 5.1, at the election of the Company, on behalf of the Borrowers, each Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin as set forth below. The Company, on behalf of the Borrowers, shall select the rate of interest applicable to any Swingline Loan at the time a Notice of Revolving Credit/Swingline Borrowing is given pursuant to Section 2.3. Any Swingline Loan or any portion thereof as to which the Company, on behalf of the Borrowers, has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (b) Interest Periods. In connection with each LIBOR Rate Loan, the Company, on behalf of the Borrowers, by giving notice at the times described in Section 5.1(a), shall elect an interest period (each, an "Interest Period") to be applicable to such Loan, which Interest Period 36 shall be a period of one (1), two (2), three (3), or six (6) months with respect to each LIBOR Rate Loan; provided that: (i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the next preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (iv) no Interest Period shall extend beyond the Revolving Credit Maturity Date or the Term Loan Maturity Date, as applicable, and Interest Periods shall be selected by the Company, on behalf of the Borrowers, so as to permit the Borrowers to make quarterly principal installment payments pursuant to Section 4.3 without the payment of any amounts pursuant to Section 5.9; and (v) there shall be no more than eight (8) Interest Periods in effect at any time. (c) Applicable Margin. (i) The Applicable Margin provided for in Section 5.1(a) with respect to the Revolving Credit Loans and the Swingline Loans shall (A) for the period from the Closing Date to the first Adjustment Date following the Closing Date equal the percentages set forth in the certificate delivered pursuant to Section 6.2(e)(ii) and (B) thereafter be determined by reference to the Leverage Ratio as of the end of the fiscal quarter immediately preceding the delivery of the financial statements and the accompanying Officer's Compliance Certificate, as of the closing date of any Permitted Acquisition or as of the date issuance of any equity securities of any Borrower as follows: 37 Applicable Margin Per Annum Level Leverage Ratio Base Rate + LIBOR Rate + ----- ------------------------ ------------------------------ I Greater than or equal to 2.00 to 1.00 1.50% 2.75% II Less than 2.00 to 1.00 and greater than or equal to 1.50 to 1.00 1.25% 2.50% III Less than 1.50 to 1.00 1.00% 2.25% (ii) The Applicable Margin with respect to the Term Loans shall be 2.00% with respect to Base Rate Loans and 3.00% with respect to LIBOR Rate Loans. (iii) Adjustments, if any, in the Applicable Margin shall be made by the Administrative Agent on the tenth (10th) Business Day (each an "Adjustment Date") after receipt by the Administrative Agent of quarterly financial statements for the Company and its Subsidiaries and the accompanying Officer's Compliance Certificate setting forth the Leverage Ratio of the Company and its Subsidiaries as of the most recent fiscal quarter end; provided that adjustments in the Applicable Margin also shall be made by the Administrative Agent (A) on the closing date of any Permitted Acquisition following receipt by the Administrative Agent of evidence of pro forma covenant compliance with each covenant contained in Article X (as delivered pursuant to Section 11.4(e) hereof) and (B) on the date of issuance of any equity securities by any Borrower. Subject to Section 5.1(d), in the event the Company fails to deliver such financial statements and Officer's Compliance Certificate, evidence of covenant compliance or notice of issuance of equity securities, as applicable, within the time required by Sections 8.1, 8.2 and 11.4(e) hereof, the Applicable Margin shall be the highest Applicable Margin set forth above until the Adjustment Date following the delivery of such financial statements and Officer's Compliance Certificate, evidence of covenant compliance or notice of issuance of equity securities, as applicable. (d) Default Rate. Subject to Section 12.3, at the discretion of the Administrative Agent or as directed by the Required Lenders, upon the occurrence and during the continuance of an Event of Default, (i) the Borrowers shall no longer have the option to request LIBOR Rate Loans or Swingline Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans, and (iii) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans or such other Obligations arising hereunder or under any other Loan Document. Interest shall continue to accrue on the Notes after the filing by or against any Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign. 38 (e) Interest Payment and Computation. Interest on each Base Rate Loan shall be payable in arrears on the last Business Day of each calendar quarter commencing September 30, 2003; and interest on each LIBOR Rate Loan shall be payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period; provided that interest on each Swingline Loan made while the SweepPlus Program is effective shall be payable in arrears on the last Business Day of each calendar month. All interest rates, fees and commissions provided hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed; provided, that interest on Base Rate Loans shall be computed on the basis of a 365/66-day year and assessed for the actual number of days elapsed. (f) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder or under any of the Notes charged or collected pursuant to the terms of this Agreement or pursuant to any of the Notes exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent's option (i) promptly refund to the Borrowers any interest received by the Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to the principal balance of the Obligations on a pro rata basis. It is the intent hereof that the Borrowers not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrowers under Applicable Law. SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans. Provided that no Default or Event of Default has occurred and is then continuing, the Borrowers shall have the option to (a) convert at any time after the Closing Date all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $3,000,000 or any whole multiple of $500,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $500,000 or a whole multiple of $50,000 in excess thereof into Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers desire to convert or continue Loans as provided above, the Company, on behalf of the Borrowers, shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit E (a "Notice of Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation. 39 SECTION 5.3 Fees. (a) Revolving Credit Commitment Fee. Commencing on the Closing Date, the Borrowers shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable commitment fee at a rate per annum equal to the applicable rate set forth below (the "Commitment Fee Rate") on the average daily unused portion of the Revolving Credit Facility; provided that the amount of outstanding Swingline Loans shall not be considered usage of the Revolving Credit Commitment for the purpose of calculating such commitment fee. The commitment fee shall be payable in arrears on the last Business Day of each calendar quarter during the term of this Agreement commencing September 30, 2003, and on the Revolving Credit Maturity Date. Such commitment fee shall be distributed by the Administrative Agent to the Lenders pro rata in accordance with the Lenders' respective Revolving Credit Commitment Percentages. Average Daily Unused Portion of the Revolving Credit Facility Commitment for the applicable calendar quarter Fee Rate ----------------------------------- ---------- Less than or equal to 33% of the total amount of the Revolving Credit Facility 0.75% Greater than 33% of the total amount of the Revolving Credit Facility 0.50% (b) Underwriting Fees. The Borrowers shall pay to Wachovia, for its account, on the Closing Date the underwriting fee as set forth in the Fee Letter. (c) Administrative Agent's and Other Fees. The Borrowers agree to pay to the Administrative Agent, for its account, the annual administrative fee set forth in the Fee Letter and each other fee set forth in the Fee Letter. SECTION 5.4 Manner of Payment. (a) Each payment by the Borrowers on account of the principal of or interest on the Revolving Credit Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement with respect to the Revolving Credit Loans, the Swingline Loans, the Letters of Credit, any Revolving Credit Note or the Swingline Note shall be made not later than 1:00 p.m. (Charlotte time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office for the account of the Lenders (other than as set forth below) pro rata in accordance with their respective Revolving Credit Commitment Percentages (except as specified below), in Dollars, in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever, (b) each payment by the Borrowers on account of the principal of or interest on the Term Loans or of any fee, commission or other amounts payable to 40 the Lenders under this Agreement with respect to the Term Loans or any Term Note shall be made in like manner, except for the account of the Lenders pro rata in accordance with their respective Term Loan Percentages and (c) any other amounts payable to the Lenders under this Agreement shall be made in like manner, except for the account of the Lenders pro rata based on their respective share in the Obligation with respect to which such payment was received. Any payment received after such time but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on such date for the purposes of Section 12.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro rata share of such payment in accordance with such Lender's Revolving Credit Commitment Percentage, or Term Loan Percentage, as applicable, (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lenders' fees or L/C Participants' commissions payable pursuant to Section 3.3(a) shall be made in like manner, but for the account of the applicable Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agent's fees or expenses shall be made for the account of the Administrative Agent. Each payment to the Administrative Agent with respect to the Swingline Note (including, without limitation, the Swingline Lender's fees or expenses) shall be made for the account of the Swingline Lender. Any amount payable to any Lender under Sections 5.8, 5.9, 5.10, 5.11 or 14.2 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 5.1(b)(ii), if any payment under this Agreement or any Note shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. SECTION 5.5 Crediting of Payments and Proceeds. In the event that the Borrowers shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 12.2, all payments received by the Lenders upon the Notes and the other Obligations and all net proceeds from the enforcement of the Obligations shall be applied first to all expenses then due and payable by the Borrowers hereunder and under the other Loan Documents, then to all indemnity obligations then due and payable by the Borrowers hereunder and under the Loan Documents, then to all of the Administrative Agent's, the Issuing Lenders' fees then due and payable, then to all commitment and other fees and commissions then due and payable, then to accrued and unpaid interest on the Notes, the Reimbursement Obligation and Hedging Obligations (including any termination payments and any accrued and unpaid interest thereon) (pro rata in accordance with all such amounts due), then to the principal amount of the Notes and the Reimbursement Obligation (pro rata in accordance with all such amounts due), then to the cash collateral account described in Section 12.2(b) hereof to the extent of any L/C Obligations then outstanding, and then to the ratable payment of any other outstanding Obligations, in that order. SECTION 5.6 Adjustments. If any Lender (a "Benefited Lender") shall at any time receive any payment of all or part of the Obligations owing to it, or interest thereon, or if any Lender shall at any time receive any collateral in respect to the Obligations owing to it 41 (whether voluntarily or involuntarily, by set-off or otherwise), in a greater proportion than the pro rata distribution to the extent required by Section 5.4, such Benefited Lender shall purchase for cash from the other Lenders such portion of each such other Lender's Extensions of Credit or other Obligations, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the extent of such recovery, but without interest. The Borrowers agree that each Lender so purchasing a portion of another Lender's Extensions of Credit or other Obligations may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent. The obligations of the Lenders under this Agreement to make the Loans and issue or participate in Letters of Credit are several and are not joint or joint and several. Unless the Administrative Agent shall have received notice from a Lender prior to a proposed borrowing date that such Lender will not make available to the Administrative Agent such Lender's ratable portion of the amount to be borrowed on such date (which notice shall not release such Lender of its obligations hereunder), the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the proposed borrowing date in accordance with Sections 2.3(b) and 4.2 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If such amount is made available to the Administrative Agent on a date after such borrowing date, such Lender shall pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the amount not made available by such Lender in accordance with the terms hereof, times (b) the daily average Federal Funds Rate during such period as determined by the Administrative Agent, times (c) a fraction the numerator of which is the number of days that elapse from and including such borrowing date to the date on which such amount not made available by such Lender in accordance with the terms hereof shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent with respect to any amounts owing under this Section 5.7 shall be conclusive, absent manifest error. If such Lender's ratable portion of such borrowing is not made available to the Administrative Agent by such Lender within three (3) Business Days after such borrowing date, the Administrative Agent shall be entitled to recover such amount made available by the Administrative Agent with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrowers. The failure of any Lender to make its ratable portion of any Loan available shall not relieve it or any other Lender of its obligation, if any, hereunder to make its ratable portion of such Loan available on such borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its ratable portion of such Loan available on the borrowing date. Notwithstanding anything set forth herein to the contrary, any Lender that fails to make available its ratable portion of any Loan shall not (a) have any voting or consent rights under or with respect to any Loan Documents or (b) constitute a "Lender" (or be included in the calculation of Required Lenders hereunder) for any voting or consent rights under or with respect to any Loan Document. 42 SECTION 5.8 Changed Circumstances. (a) Circumstances Affecting LIBOR Rate Availability. If with respect to any Interest Period the Administrative Agent or any Lender (after consultation with Administrative Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars, in the applicable amounts are not being quoted via Dow Jones Market Screen Page 3750 or offered to the Administrative Agent or such Lender for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the Borrowers shall repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period. (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any of its Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrowers and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any Loan or continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period. (c) Increased Costs. If, after the date hereof, the introduction of, or any change in, any Applicable Law, or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of such Governmental Authority, central bank or comparable agency: (i) shall subject any of the Lenders (or any of their respective Lending Offices) to any tax, duty or other charge with respect to any Note, Letter of Credit or Application or shall change the basis of taxation of payments to any of the Lenders (or any of their respective 43 Lending Offices) of the principal of or interest on any Note, Letter of Credit or Application or any other amounts due under this Agreement in respect thereof (except for changes in the rate of tax on the overall net income of any of the Lenders or any of their respective Lending Offices imposed by the jurisdiction in which such Lender is organized or is or should be qualified to do business or such Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit, insurance or capital or similar requirement against assets of, deposits with or for the account of, or credit extended by any of the Lenders (or any of their respective Lending Offices) or shall impose on any of the Lenders (or any of their respective Lending Offices) or the foreign exchange and interbank markets any other condition affecting any Note; and the result of any of the foregoing is to increase the costs to any of the Lenders of maintaining any LIBOR Rate Loan or issuing or participating in Letters of Credit or to reduce the yield or amount of any sum received or receivable by any of the Lenders under this Agreement or under the Notes in respect of a LIBOR Rate Loan or Letter of Credit or Application, then such Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify the Borrowers of such fact and demand compensation therefor and, within fifteen (15) days after such notice by the Administrative Agent, the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or Lenders for such increased cost or reduction. The Administrative Agent will promptly notify the Borrowers of any event of which it has knowledge which will entitle such Lender to compensation pursuant to this Section 5.8(c); provided, that the Administrative Agent shall incur no liability whatsoever to the Lenders or the Borrowers in the event it fails to do so. The amount of such compensation shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its ratable portion of the LIBOR Rate Loans in the London interbank or domestic certificate of deposit market, as applicable, and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrowers through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. SECTION 5.9 Indemnity. The Borrowers hereby indemnify each of the Lenders against any loss or expense which may arise or be attributable to each Lender's obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrowers to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow, continue or convert on a date specified therefor in a Notice of Revolving Credit/Swingline Borrowing, Notice of Term Loan Borrowing or Notice of Conversion/ Continuation or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor. The amount of such loss or expense shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its ratable portion of the LIBOR Rate Loans in the London interbank or domestic certificate of deposit market, as applicable, and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such 44 Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrowers through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. SECTION 5.10 Capital Requirements. If either (a) the introduction of, or any change in, or in the interpretation of, any Applicable Law or (b) compliance with any guideline or request from any central bank or comparable agency or other Governmental Authority (whether or not having the force of law), has or would have the effect of reducing the rate of return on the capital of, or has affected or would affect the amount of capital required to be maintained by, any Lender or any corporation controlling such Lender as a consequence of, or with reference to the Commitments and other commitments of this type, below the rate which the Lender or such other corporation could have achieved but for such introduction, change or compliance, then within five (5) Business Days after written demand by any such Lender, the Borrowers shall pay to such Lender from time to time as specified by such Lender additional amounts sufficient to compensate such Lender or other corporation for such reduction. A certificate as to such amounts submitted to the Borrowers and the Administrative Agent by such Lender, shall, in the absence of manifest error, be presumed to be correct and binding for all purposes. SECTION 5.11 Taxes. (a) Payments Free and Clear. Except as otherwise provided in Section 5.11(e), any and all payments by the Borrowers hereunder or under the Notes or the Letters of Credit shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholding, and all liabilities with respect thereto excluding, (i) in the case of each Lender and the Administrative Agent, income and franchise taxes imposed by the jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof and (ii) in the case of each Lender, income and franchise taxes imposed by the jurisdiction of such Lender's Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Note or in respect of any Letter of Credit to any Lender or the Administrative Agent, (A) except as otherwise provided in Section 5.11(e), the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.11) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the amount such party would have received had no such deductions or withholdings been made, (B) the Borrowers shall make such deductions or withholdings, (C) the Borrowers shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with Applicable Law, and (D) the Borrowers shall deliver to the Administrative Agent and such Lender evidence of such payment to the relevant taxing authority or other Governmental Authority in the manner provided in Section 5.11(d). 45 (b) Stamp and Other Taxes. In addition, the Borrowers shall pay any present or future stamp, registration, recordation or documentary taxes or any other similar fees or charges or excise or property taxes, levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Loans, the Letters of Credit or the other Loan Documents, or the perfection of any rights or security interest in respect thereof (hereinafter referred to as "Other Taxes"). (c) Indemnity. Except as otherwise provided in Section 5.11(e), the Borrowers shall indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 5.11) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within thirty (30) days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Evidence of Payment. Within thirty (30) days after the date of any payment of Taxes or Other Taxes, the Borrowers shall furnish to the Administrative Agent and the applicable Lender, at its address referred to in Section 14.1, the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment satisfactory to the Administrative Agent. (e) Delivery of Tax Forms. To the extent required by Applicable Law to reduce or eliminate withholding or payment of taxes, each Lender and the Administrative Agent shall deliver to the Borrowers, with a copy to the Administrative Agent, on the Closing Date or concurrently with the delivery of the relevant Assignment and Acceptance, as applicable, (i) two United States Internal Revenue Service Forms W-9, Forms W-8ECI or Forms W-8BEN, as applicable (or successor forms) properly completed and certifying in each case that such Lender is entitled to a complete exemption from withholding or deduction for or on account of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be, to establish an exemption from United States backup withholding taxes. Each such Lender further agrees to deliver to the Borrowers, with a copy to the Administrative Agent, as applicable, two Form W-9, Form W-8BEN or W-8ECI, or successor applicable forms or manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrowers, certifying in the case of a Form W-9, Form W-8BEN or W-8ECI (or successor forms) that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes (unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders such forms inapplicable or the exemption to which such forms relate unavailable and such Lender notifies the Borrowers and the Administrative Agent that it is not entitled to receive payments without deduction or withholding of United States federal income taxes) and, in the case of a Form W-8BEN or W-8ECI, establishing an exemption from United States backup withholding tax. Notwithstanding 46 anything in any Loan Document to the contrary, the Borrowers shall not be required to pay additional amounts to any Lender or the Administrative Agent under Section 5.11, (i) if such Lender or the Administrative Agent fails to comply with the requirements of this Section 5.11(e), other than to the extent that such failure is due to a change in law occurring after the date on which such Lender or the Administrative Agent became a party to this Agreement or (ii) that are the result of such Lender's or the Administrative Agent's gross negligence or willful misconduct, as applicable. (f) Survival. Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 5.11 shall survive the payment in full of the Obligations and the termination of the Commitments. SECTION 5.12 Use of Proceeds. Except as otherwise permitted pursuant to Section 11.7(d) hereof, the Borrowers shall use the proceeds of the Extensions of Credit (a) to refinance the obligations under the Existing Credit Agreement as set forth herein, (b) to redeem the Existing Subordinated Notes (including any interest and prepayment premiums due thereon) and (c) for working capital and general corporate requirements of the Borrowers and their Subsidiaries, including Permitted Acquisitions and the payment of certain fees and expenses incurred in connection with the transactions contemplated hereby. SECTION 5.13 Security. -------- (a) The Obligations of the Borrowers shall be secured by the Collateral described in the Security Documents. (b) Each Borrower hereby (i) reaffirms all of its respective covenants, representations, warranties and other obligations set forth in each Security Document executed prior to the Closing Date in connection with the Existing Credit Agreement (including, without limitation, the Pledge Agreement and the Security Agreement) and (ii) acknowledges, represents and agrees that such covenants, representations, warranties and other obligations remain in full force and effect and secure the Obligations hereunder. ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING -------------------------------------------- SECTION 6.1 Closing. The closing shall take place at the offices of Kennedy, Covington, Lobdell & Hickman, L.L.P. at 10:00 a.m. on June 25, 2003 or on such other date as the parties hereto shall mutually agree. SECTION 6.2 Conditions to Closing and Initial Extensions of Credit. The obligation of the Lenders to close this Agreement and to make the initial Loan, issue the initial Letter of Credit is subject to the satisfaction of each of the following conditions: 47 (a) Executed Loan Documents. The following Loan Documents in form and substance reasonably satisfactory to the Administrative Agent and each Lender: (i) this Agreement; (ii) the Revolving Credit Notes; (iii) the Term Notes; (iv) the Swingline Note; and (v) any other applicable Loan Documents shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist thereunder, and the Borrowers shall have delivered original counterparts thereof to the Administrative Agent (including, without limitation, an affidavit that such documents have been executed and delivered outside of the State of Florida). (b) Closing Certificates; etc. (i) Officer's Certificate of the Borrowers. The Administrative Agent shall have received a certificate from a Responsible Officer of the Company, on behalf of each Borrower and in form and substance satisfactory to the Administrative Agent, to the effect that all representations and warranties of the Borrowers contained in this Agreement and the other Loan Documents are true, correct and complete; that the Borrowers are not in violation of any of the covenants contained in this Agreement and the other Loan Documents; that, after giving effect to the transactions contemplated by this Agreement, no Default or Event of Default has occurred and is continuing; and that the Borrowers have satisfied each of the closing conditions. (ii) Certificate of Secretary of each Borrower. The Administrative Agent shall have received a certificate of the secretary or assistant secretary of each Borrower certifying as to the incumbency and genuineness of the signature of each officer of such Borrower executing Loan Documents to which it is a party and certifying that attached thereto is a (A) true and complete copy of the articles of incorporation of such Borrower and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, (B) a true and complete copy of the bylaws of such Borrower as in effect on the date of such certifications, (C) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Borrower authorizing the borrowings contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) a true and complete copy of each certificate required to be delivered pursuant to Section 6.2(b)(iii); (iii) Certificates of Good Standing. The Administrative Agent shall have received long-form certificates as of a recent date of the good standing of each Borrower under 48 the laws of its jurisdiction of organization and the laws of the jurisdiction where its principal place of business is located. (iv) Opinions of Counsel. The Administrative Agent shall have received favorable opinions of counsel to the Borrowers addressed to the Administrative Agent and the Lenders with respect to the Borrowers, the Loan Documents and such other matters as the Lenders shall request. (v) Tax Forms. The Administrative Agent shall have received copies of the United States Internal Revenue Service forms required by Section 5.11(e) hereof. (c) Collateral. (i) Filings and Recordings. All filings and recordations that are necessary to perfect the security interests of the Lenders in the collateral described in the Security Documents shall have been forwarded for filing in all appropriate locations and the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that upon such filings and recordations such security interests constitute valid and perfected first priority Liens therein. (ii) Pledged Collateral. The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the capital stock or other ownership interests pledged pursuant to the Pledge Agreement, together with an undated stock or other power for each such certificate duly executed in blank by the registered owner thereof, and, as applicable, executed acknowledgements and consents, authorizations statements and transactions statements and (B) each original promissory note pledged pursuant to the Security Agreement, together with an undated transfer instruments executed in blank by the registered owner thereof. (iii) Lien Search. The Administrative Agent shall have received the results of a Lien search (including a search as to judgments, pending litigation and tax matters) made against the Borrowers and any of their Subsidiaries under the Uniform Commercial Code (or applicable judicial docket) as in effect in its jurisdiction of organization and any state in which any of its assets are located, indicating among other things that its assets are free and clear of any Lien except for Liens permitted hereunder. (iv) Hazard and Liability Insurance. The Administrative Agent shall have received certificates of insurance, evidence of payment of all insurance premiums for the current policy year of each, and, if requested by the Administrative Agent, copies (certified by a Responsible Officer of the Company) of insurance policies in the form required under Section 9.3 and the Security Documents and otherwise in form and substance reasonably satisfactory to the Administrative Agent. 49 (d) Consents; Defaults. (i) Governmental and Third Party Approvals. The Borrowers shall have obtained all necessary approvals, authorizations and consents of any Person and of all Governmental Authorities and courts having jurisdiction with respect to the transactions contemplated by this Agreement and the other Loan Documents. (ii) Permits and Licenses. All permits and licenses, including permits and licenses under Applicable Laws, the absence of which would have a Material Adverse Effect on the current conduct of business of the Borrowers and their Subsidiaries, shall have been obtained. (iii) No Injunction, Etc. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, or which, in the Administrative Agent's sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement and such other Loan Documents. (iv) No Material Adverse Change. There shall not have occurred any material adverse change in the condition (financial or otherwise), operations, properties, business or prospects of the Borrowers and their Subsidiaries or any event or condition that has had or could reasonably be expected to have a Material Adverse Effect. (v) No Event of Default. No Default or Event of Default shall have occurred and be continuing. (e) Financial Matters. (i) Financial Statements. The Administrative Agent shall have received the unaudited Consolidated financial statements of the Company and its Subsidiaries as of December 31, 2002, in form and substance satisfactory to the Administrative Agent and prepared in accordance with GAAP. (ii) Financial Condition Certificate. The Company, on behalf of the Borrowers, shall have delivered to the Administrative Agent a certificate, in form and substance satisfactory to the Administrative Agent, and certified as accurate by a Responsible Officer of the Company, that (A) each Borrower and each of its Subsidiaries are each Solvent, (B) the payables of each Borrower are current and not past due in the ordinary course of business, (C) attached thereto are calculations evidencing compliance on a pro forma basis with the covenants contained in Article X hereof, (D) attached thereto are the financial projections previously delivered to the Administrative Agent representing the good faith opinions of the Company and senior management thereof as to the projected results contained therein and (E) attached thereto is a calculation of the Applicable Margin and the Commitment Fee Rate pursuant to Sections 5.1(c) and 5.3(a). 50 (iii) Payment at Closing; Fee Letter. The Borrowers shall have paid to the Administrative Agent and the Lenders the fees set forth or referenced in Section 5.3 and any other accrued and unpaid fees or commissions due hereunder (including, without limitation, legal fees and expenses), and to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents. The Administrative Agent shall have received duly authorized and executed copies of the Fee Letter. (f) Miscellaneous. (i) Notices of Borrowing. The Administrative Agent shall have received a Notice of Revolving Credit/Swingline Borrowing from the Company, on behalf of the Borrowers, in accordance with Section 2.3(a) and a Notice of Term Loan Borrowing from the Company, on behalf of the Borrowers, in accordance with Section 4.2, and a Notice of Account Designation from the Company, on behalf of the Borrowers, specifying the account or accounts to which the proceeds of any Loans made after the Closing Date are to be disbursed. (ii) Proceedings and Documents. All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Administrative Agent. The Administrative Agent shall have received copies of all other instruments and other evidence as the Administrative Agent may reasonably request, in form and substance satisfactory to the Administrative Agent, with respect to the transactions contemplated by this Agreement and the taking of all actions in connection therewith. (iii) Due Diligence and Other Documents. The Borrowers shall have delivered to the Administrative Agent such other documents, certificates and opinions as the Administrative Agent reasonably requests, including, without limitation, copies of each document evidencing or governing the Subordinated Debt to the extent requested thereby, certified by Responsible Officer of the Company as a true and correct copy thereof. (g) Refinancing of the Existing Extensions of Credit. On the Closing Date, (i) all outstanding loans under the Existing Credit Agreement (the "Existing Loans") made by any Existing Lender who is not a Lender hereunder shall be repaid in full and the commitments and other obligations and rights (except as expressly set forth in the Existing Credit Agreement) of such Existing Lender shall be terminated, (ii) all outstanding Existing Loans not being repaid under clause (i) above shall be deemed Revolving Credit Loans or Term Loans, as applicable, hereunder and the Administrative Agent shall make such transfers of funds as are necessary in order that the outstanding balance of such Revolving Credit Loans or Term Loans, as applicable, together with any Revolving Credit Loans and any Term Loans funded on the Closing Date, are in accordance with the Revolving Credit Commitment Percentage or Term Loan Percentage, as applicable, of the Lenders hereunder, (iii) there shall have been paid in cash in full all accrued but unpaid interest due on the Existing Loans to the Closing Date, (iv) there shall have been paid in cash in full all accrued but unpaid fees under the Existing Credit Agreement due to the Closing Date and all other amounts, costs and expenses then owing to any of the Existing 51 Lenders and/or Wachovia, as administrative agent under the Existing Credit Agreement, (v) all outstanding Letters of Credit under the Existing Credit Agreement shall be Letters of Credit hereunder and (vi) all outstanding promissory notes issued by the Borrowers to the Existing Lenders under the Existing Credit Agreement shall be deemed canceled and the originally executed copies thereof shall be promptly returned to the Administrative Agent who shall forward such notes to the Company, on behalf of the Borrowers. SECTION 6.3 Conditions to All Loans and Letters of Credit. The obligations of the Lenders to make any Loan or convert or continue any Loan, the Issuing Lenders to issue or extend any Letter of Credit is subject to the satisfaction of the following conditions precedent on the relevant borrowing, conversion, continuation or issue date, as applicable: (a) Continuation of Representations and Warranties. The representations and warranties contained in Article VII shall be true and correct on and as of such borrowing or issuance date with the same effect as if made on and as of such date; except for any representation and warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date. (b) No Existing Default. No Default or Event of Default shall have occurred and be continuing (i) on the borrowing date with respect to such Loan or after giving effect to the Loans to be made on such date or (ii) on the issue date with respect to such Letter of Credit or after giving effect to the issuance of such Letters of Credit on such date. (c) Officer's Compliance Certificate; Additional Documents. The Administrative Agent shall have received the current Officer's Compliance Certificate and each additional document, instrument, legal opinion or other item of information reasonably requested by it. (d) Loans In Connection With Permitted Acquisitions. The Borrowers shall comply with the following requirements in connection with any Loan made to a Borrower to finance a Permitted Acquisition: (i) such Loan shall be a Revolving Credit Loan or Term Loan (if within the permitted time period provided in Section 4.6) made on the closing date of such Permitted Acquisition and (ii) the Borrowers shall have complied with each applicable terms and conditions contained in Sections 6.3, 9.12, 9.13, 9.14 and 11.4 in connection with such Permitted Acquisition; provided that the Administrative Agent, the Lenders and the Borrowers agree that any such Loan may be made to the applicable Borrower no earlier than three (3) Business Days prior to the closing date of such Permitted Acquisition if (i) the proceeds of such Loan are deposited into a deposit account of the applicable Borrower (or the proceeds of such Loan are advanced to a Wholly-Owned Subsidiary of a Borrower created solely for the purpose of consummating such Permitted Acquisition and deposited into a deposit account of such Wholly-Owned Subsidiary) which is maintained with a financial institution reasonably acceptable to the Administrative Agent and (ii) such financial institution shall have entered into an escrow arrangement, in form and substance satisfactory to the Administrative Agent, pursuant to which such financial institution shall retain control of the proceeds of such Loan until (A) all conditions in the applicable acquisition documents necessary for the Permitted Acquisition to close have been satisfied to the reasonable satisfaction of the Administrative Agent and (B) the Borrowers shall have complied with each applicable terms and conditions contained in Sections 6.3, 9.12, 52 9.13, 9.14 and 11.4 in connection with such Permitted Acquisition; provided further that the Borrowers agree (and such financial institution shall agree pursuant to such escrow agreement) that the proceeds of the Loan deposited in such deposit account shall be immediately applied to repay such Loan if the conditions (ii)(A) and (ii)(B) have not been satisfied within such three (3) Business Day period. SECTION 6.4 Post-Closing Condition Regarding Alternative Office Solutions, Inc. Notwithstanding anything contained in Section 9.12 to the contrary, the Company shall cause Alternative Office Solutions, Inc., a Subsidiary of the Company, to either (a) execute all documents required to be executed pursuant to Section 9.12 or (b) merge into a Borrower, in either case no later than December 15, 2003. ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWERS SECTION 7.1 Representations and Warranties. To induce the Administrative Agent and the Lenders to enter into this Agreement and to induce the Lenders to make the Loans or issue or participate in the Letters of Credit, each Borrower hereby represents and warrants to the Administrative Agent and the Lenders both before and after giving effect to the transactions contemplated hereunder that: (a) Organization; Power; Qualification. Each Borrower and each Subsidiary thereof is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization, except where the failure to be so qualified and authorized would not be reasonably expected to have a Material Adverse Effect. The jurisdictions in which each Borrower and each Subsidiary thereof is organized and qualified to do business as of the Closing Date are described on Schedule 7.1(a). (b) Ownership. Each Subsidiary of each Borrower as of the Closing Date is listed on Schedule 7.1(b). As of the Closing Date, the capitalization of each Borrower and each Subsidiary thereof consists of the number of shares or other ownership interests, authorized, issued and outstanding, of such classes and series, with or without par value, described on Schedule 7.1(b). All outstanding shares or other ownership interests have been duly authorized and validly issued and are fully paid and nonassessable with no personal liability attaching to the ownership thereof, and not subject to any preemptive or similar rights. The shareholders or other owners of each Subsidiary of each Borrower and the number of shares or other ownership interests owned by each as of the Closing Date are described on Schedule 7.1(b). As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or permit the issuance of capital stock or other 53 ownership interests of any Borrower or any Subsidiary thereof, except as described on Schedule 7.1(b). (c) Authorization of Agreement, Loan Documents and Borrowing. Each Borrower and each Subsidiary thereof has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of each Borrower and each Subsidiary thereof party thereto, and each such document constitutes the legal, valid and binding obligation of each Borrower and each Subsidiary thereof party thereto, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. (d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by each Borrower and each Subsidiary thereof of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any material Governmental Approval or violate any material Applicable Law relating to any Borrower or any Subsidiary thereof, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of any Borrower or any Subsidiary thereof or any material indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Liens arising under the Loan Documents. (e) Compliance with Law; Governmental Approvals. Each Borrower and each Subsidiary thereof (i) has all material Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, and (ii) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties, except where the failure to be in compliance with any such Governmental Approval or Applicable Law would not be reasonably expected to have a Material Adverse Effect. (f) Tax Returns and Payments. Each Borrower and each Subsidiary thereof has duly filed or caused to be filed all federal tax returns, all state tax returns and all other material tax returns (including material local tax returns) required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal taxes, all state taxes and all other material taxes (including material local taxes), assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable. Such returns accurately reflect in all material respects all liability for taxes of the Borrower and its Subsidiaries for the periods covered thereby. There is no ongoing audit or examination or, to the knowledge of the Borrower, other investigation by any Governmental Authority of the tax liability of the Borrower and its 54 Subsidiaries, except as could not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 7.1(u), no Governmental Authority has asserted any Lien or other claim against any Borrower or any Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved, except unpaid taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. The charges, accruals and reserves on the books of each Borrower and each Subsidiary thereof in respect of federal, state, local and other taxes for all Fiscal Years and portions thereof since the organization of each such Borrower and each such Subsidiary thereof are in the judgment of each such Borrower adequate, and each such Borrower does not anticipate any additional material taxes or material assessments for any of such years. The Borrowers do not intend to treat the Loans and/or Letters of Credit as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event that any Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If any Borrower so notifies the Administrative Agent, the Borrowers acknowledge that one or more of the Lenders may treat its Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 1.6011-4 or Section 301.6112-1, and the Administrative Agent and such Lender or Lenders, as applicable, may file such forms or maintain such lists and other records as they may determine is required by such Treasury Regulations. (g) Intellectual Property Matters. Each Borrower and each Subsidiary thereof owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service marks, service mark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are material and required to conduct its business, except for those, the failure of which to own or possess, could not reasonably be expected to have a Material Adverse Effect. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and, to each Borrower's knowledge, no Borrower nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations, in each case which could reasonably be expected to have a Material Adverse Effect. (h) Environmental Matters. (i) The properties of each Borrower and each Subsidiary thereof do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which (A) constitute or constituted a violation of applicable Environmental Laws or (B) could give rise to liability under applicable Environmental Laws; (ii) Such properties and all operations conducted in connection therewith are in compliance, and have been in compliance, in each case in all material respects, with all applicable Environmental Laws, and there is no contamination at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof; 55 (iii) No Borrower nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of their properties or the operations conducted in connection therewith, nor does any Borrower or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened; (iv) Hazardous Materials have not been transported or disposed of to or from the properties of any Borrower or any Subsidiary thereof in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws; (v) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of any Borrower, threatened, under any Environmental Law to which any Borrower or any Subsidiary thereof is or will be named as a party with respect to such properties or operations conducted in connection therewith, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to such properties or such operations; and (vi) There has been no release, or to the best of the knowledge of any Borrower, the threat of release, of Hazardous Materials at or from such properties, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws. (i) ERISA. (i) As of the Closing Date, no Borrower nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 7.1(i); (ii) Each Borrower and each ERISA Affiliate is in compliance in all material respects with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code. No liability has been incurred by any Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan; (iii) No Pension Plan has been terminated, nor has any accumulated funding deficiency (as defined in Section 412 of the Code) been incurred (without regard to any waiver 56 granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Section 412 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan; (iv) No Borrower nor any ERISA Affiliate has: (A) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (C) failed to make a required contribution or payment to a Multiemployer Plan, or (D) failed to make a required installment or other required payment under Section 412 of the Code; (v) No Termination Event has occurred or is reasonably expected to occur; and (vi) No proceeding, claim, lawsuit and/or investigation is existing or, to the best knowledge of any Borrower after due inquiry, threatened concerning or involving any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan. (j) Margin Stock. No Borrower nor any Subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. (k) Government Regulation. No Borrower nor any Subsidiary thereof is an "investment company" or a company "controlled" by an "investment company" (as each such term is defined or used in the Investment Company Act of 1940, as amended) and no Borrower nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as amended, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby. (l) Material Contracts. Schedule 7.1(l) sets forth a complete and accurate list of all Material Contracts of each Borrower and each Subsidiary thereof in effect as of the Closing Date not listed on any other Schedule hereto; other than as set forth in Schedule 7.1(l), each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. Each Borrower and each Subsidiary thereof has delivered to the Administrative 57 Agent a true and complete copy of each Material Contract which is required to be listed on Schedule 7.1(l) or any other Schedule hereto and which has been requested by the Administrative Agent. (m) Employee Relations. Each Borrower and each Subsidiary thereof has a stable work force in place and is not, as of the Closing Date, party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 7.1(m). No Borrower knows of any pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries. (n) Burdensome Provisions. No Borrower nor any Subsidiary thereof is a party to any indenture, agreement, lease or other instrument, or subject to any corporate or partnership restriction, Governmental Approval or Applicable Law which is so unusual or burdensome as in the foreseeable future could be reasonably expected to have a Material Adverse Effect. No Borrower nor any Subsidiary thereof presently anticipates that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material Adverse Effect. (o) Financial Statements. The Consolidated unaudited balance sheet of the Company and its Subsidiaries as of December 31, 2002 and the related unaudited statements of income and retained earnings and cash flows for the fiscal quarter then ended, copies of which have been furnished to the Administrative Agent and each Lender, are complete and correct and fairly present the assets, liabilities and financial position of the Company and its Subsidiaries as at such dates, and the results of the operations and changes of financial position for the periods then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP. The Company and its Subsidiaries have no Debt, obligation or other unusual forward or long-term commitment which is not fairly reflected in the foregoing financial statements or in the notes thereto. (p) No Material Adverse Change. Since December 31, 2002, there has been no material adverse change in the properties, business, operations, prospects, or condition (financial or otherwise) of the Borrowers and their Subsidiaries and no event has occurred or condition arisen that could reasonably be expected to have a Material Adverse Effect. (q) Solvency. As of the Closing Date and after giving effect to each Extension of Credit made hereunder, each Borrower and each Subsidiary thereof will be Solvent. (r) Titles to Properties. Each Borrower and each Subsidiary thereof has such title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the Company and its Subsidiaries delivered pursuant to Section 7.1(o), except those which have been disposed of by any Borrower or any Subsidiary thereof subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder. All of the real property owned or leased by any Borrower is described on Schedule 7.1(r) hereto. 58 (s) Liens. None of the properties and assets of any Borrower or any Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to Section 11.3. No financing statement under the Uniform Commercial Code of any state which names any Borrower or any Subsidiary thereof or any of their respective trade names or divisions as debtor, and which has not been terminated, has been filed in any state or other jurisdiction and no Borrower nor any Subsidiary thereof has signed any such financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement, except to perfect those Liens permitted by Section 11.3 hereof. (t) Debt and Guaranty Obligations. Schedule 7.1(t) is a complete and correct listing of all Debt and Guaranty Obligations of each Borrower and each Subsidiary thereof as of the Closing Date in excess of $2,000,000. Each Borrower and each Subsidiary thereof has performed and is in compliance with all of the terms of such Debt and Guaranty Obligations and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with notice or lapse of time or both would constitute such a default or event of default on the part of any Borrower or any Subsidiary thereof exists with respect to any such Debt or Guaranty Obligation. (u) Litigation. Except as set forth on Schedule 7.1(u), as of the Closing Date there are no Material actions, suits or proceedings pending or, to the knowledge of any Borrower, threatened against or in any way relating adversely to or affecting any Borrower or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator or any kind or before or by any Governmental Authority. For purposes of this Section 7.1(u) only, "Material" shall mean any such actions, suits or proceedings with an actual or potential amount in controversy greater than $1,000,000 or that would have or could lead to a Material Adverse Effect on any Borrower or any Subsidiary thereof. (v) Absence of Defaults. No event has occurred or is continuing (i) which constitutes a Default or an Event of Default or (ii) which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default by any Borrower or any Subsidiary thereof under any Material Contract or any judgment, decree or order to which any Borrower or any Subsidiary thereof is a party or by which any Borrower or any Subsidiary thereof or any of their respective properties may be bound or which would require any Borrower or its Subsidiaries to make any payment thereunder prior to the scheduled maturity date therefor (except, with respect to clause (ii), where such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect). (w) Senior Debt Status. The Obligations of the Borrowers and their Subsidiaries under this Agreement, the Notes and each other Loan Document to which each such Person is a party (i) do rank and will rank at least senior in priority of payment to all Subordinated Debt and all senior unsecured Debt of each such Person and (ii) is hereby designated as "Senior Indebtedness" or "Designated Senior Indebtedness", as applicable, under all instruments and documents, now or in the future, relating to all Subordinated Debt and all senior unsecured Debt of each such Person. 59 (x) No Hostile Acquisitions. No part of the proceeds of the Loans or the Letters of Credit will be used to finance any Permitted Acquisition unless the board of directors (or other governing body) or the shareholders of the Person to be acquired and/or seller, as applicable, shall have previously approved such transaction. (y) Accuracy and Completeness of Information. All written information, reports and other papers and data produced by or on behalf of each Borrower and each Subsidiary thereof and furnished to the Lenders were, at the time the same were so furnished, complete and correct in all material respects to the extent necessary to give the recipient a true and accurate knowledge of the subject matter (other than the business plans and projections delivered on the Closing Date or pursuant to Section 8.1(c), which business plans and projections shall represent the good faith opinions of the Company and senior management thereof as to the projected results contained therein). No document furnished or written statement made to the Administrative Agent or the Lenders by any Borrower or any Subsidiary thereof in connection with the negotiation, preparation or execution of this Agreement or any of the Loan Documents contains or will contain any untrue statement of a fact material to the creditworthiness of any Borrower or any Subsidiary thereof or omits or will omit to state a fact necessary in order to make the statements contained therein not misleading. No Borrower is aware of any facts which it has not disclosed in writing to the Administrative Agent having a Material Adverse Effect, or insofar as any Borrower can now foresee, which could reasonably be expected to have a Material Adverse Effect. SECTION 7.2 Survival of Representations and Warranties, Etc. All representations and warranties set forth in this Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder. ARTICLE VIII FINANCIAL INFORMATION AND NOTICES Until all the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, the Borrowers will furnish or cause to be furnished to the Administrative Agent at the Administrative Agent's office at the address set forth in Section 14.1 and to the Lenders at their respective addresses as set forth on the Register or such other office as may be designated by the Administrative Agent and Lenders from time to time: 60 SECTION 8.1 Financial Statements and Projections. (a) Quarterly Financial Statements. As soon as practicable and in any event within forty-five (45) days after the end of each fiscal quarter, an unaudited Consolidated balance sheet of the Company and its Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto and a report containing management's discussion and analysis of such financial statements, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Company in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Company to present fairly in all material respects the financial condition of the Company and its Subsidiaries as of their respective dates and the results of operations of the Company and its Subsidiaries for the respective periods then ended, subject to normal year end adjustments; provided that the requirements of this subsection (a) may be satisfied by the delivery of the applicable quarterly report on Form 10-Q containing the foregoing. (b) Annual Financial Statements. As soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year, an audited Consolidated balance sheet of the Company and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements of income, retained earnings and cash flows for the Fiscal Year then ended, including the notes thereto and a report containing management's discussion and analysis of such financial statements, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared by an independent certified public accounting firm acceptable to the Administrative Agent in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operation of any change in the application of accounting principles and practices during the year, and accompanied by a report thereon by such certified public accountants that is not qualified with respect to scope limitations imposed by the Company or any of its Subsidiaries or with respect to accounting principles followed by the Company or any of its Subsidiaries not in accordance with GAAP; provided that the requirements of this subsection (b) may be satisfied by the delivery of the applicable annual report on Form 10-K containing the foregoing. (c) Annual Business Plan and Financial Projections. As soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year, a business plan of the Company and its Subsidiaries for the ensuing four (4) fiscal quarters, such plan to be prepared in accordance with GAAP and to include, on a quarterly basis, the following: a quarterly operating and capital budget, a projected income statement, statement of cash flows and balance sheet and a report containing management's discussion and analysis of such projections, accompanied by a certificate from the chief financial officer of the Company to the effect that, to the best of such officer's knowledge, such projections are good faith estimates of the financial condition and operations of the Company and its Subsidiaries for such four (4) fiscal quarter period. 61 (d) Quarterly Earnout Summary. As soon as practicable and in any event within forty-five (45) days after the end of each fiscal quarter for which the aggregate total earnout payments made by the Company and its Subsidiaries during the period of four (4) consecutive fiscal quarters ending on such date exceeds $1,000,000, a summary prepared by the Company in accordance with GAAP setting forth (i) all cash earnout payments made by the Company and its Subsidiaries as of such fiscal quarter end since March 31, 2003, (ii) all cash earnout payments and all stock earnout payments to be made by the Company and its Subsidiaries during the next four (4) fiscal quarter period (such payments to be set forth on a quarterly basis) and (iii) all contingent cash earnout payments and all contingent stock earnout payments which the Company and its Subsidiaries may be required to make after such fiscal quarter end. SECTION 8.2 Officer's Compliance Certificate. At each time financial statements are delivered pursuant to Sections 8.1(a) or (b) and at such other times as the Administrative Agent shall reasonably request (including, without limitation, in connection with any Permitted Acquisition pursuant to Section 11.4), a certificate of the chief financial officer or the treasurer of the Company, on behalf of the Borrowers, in the form of Exhibit F attached hereto (an "Officer's Compliance Certificate") SECTION 8.3 Accountants' Certificate. At each time financial statements are delivered pursuant to Section 8.1(b), a certificate of the independent public accountants addressed to the Administrative Agent for the benefit of the Lenders certifying such financial statements and stating that in connection with their audit, nothing came to their attention that caused them to believe that the Borrowers failed to comply with the terms, covenants, provisions or conditions of Article X or Article XI, insofar as they relate to accounting matters or, if such is not the case, specifying such non-compliance. SECTION 8.4 Other Reports. (a) Promptly upon receipt thereof, copies of all reports, if any, submitted to any Borrower or its Board of Directors by its independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto; (b) Such other information regarding the operations, business affairs and financial condition of each Borrower and each Subsidiary thereof as the Administrative Agent or any Lender may reasonably request. SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but in no event later than ten (10) days after an officer of any Borrower obtains knowledge thereof) telephonic and written notice of: (a) the commencement of (i) all proceedings and investigations by or before any Governmental Authority and (ii) all actions and proceedings in any court or before any arbitrator against or involving any Borrower or any Subsidiary thereof or any of their respective properties, assets or businesses which, in either case, if adversely determined, could reasonably be expected to have a Material Adverse Effect; 62 (b) any notice of any violation received by any Borrower or any Subsidiary thereof from any Governmental Authority including, without limitation, any notice of violation of Environmental Laws, which violation could reasonably be expected to have a Material Adverse Effect; (c) any labor controversy that has resulted in, or threatens to result in, a strike or other work action against any Borrower or any Subsidiary thereof that could reasonably be expected to have a Material Adverse Effect; (d) any attachment, judgment, lien, levy or order exceeding $5,000,000 that may be assessed against or threatened against any Borrower or any Subsidiary thereof; (e) (i) any Default or Event of Default or (ii) any event which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default under any Material Contract to which any Borrower or any Subsidiary thereof is a party or by which any Borrower or any Subsidiary thereof or any of their respective properties may be bound (and, with respect to this clause (ii), which event could reasonably be expected to have a Material Adverse Effect); (f) (i) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by any Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) any Borrower obtaining knowledge or reason to know that any Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; (g) any event which makes any of the representations set forth in Section 7.1 inaccurate in any respect (provided that, with respect to any representation set forth in Section 7.1 that is not subject to a materiality or a Material Adverse Effect qualification, any event which makes such representation inaccurate in any material respect); and (h) any intention by the Borrowers to treat any of the Extensions of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4) (and the Borrowers shall deliver, in conjunction with such notification, a duly completed copy of IRS Form 8886 or any successor form). SECTION 8.6 Notice Under Subordinated Debt. Promptly upon the delivery or receipt thereof, a copy of any notice of any default or event of default, acceleration, redemption, request for a material waiver, request for a material amendment or any other notice of a material event delivered to or received by any Person (including, without limitation, any trustee or noteholder) in connection with any Subordinated Debt. 63 SECTION 8.7 Accuracy of Information. All written information, reports, statements and other papers and data furnished by or on behalf of the Borrowers to the Administrative Agent or any Lender whether pursuant to this Article VIII or any other provision of this Agreement, or any of the Security Documents, shall comply with Section 7.1(y). ARTICLE IX AFFIRMATIVE COVENANTS Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 14.11, each Borrower will, and will cause each of its Subsidiaries to: SECTION 9.1 Preservation of Corporate Existence and Related Matters. Except as permitted by Section 11.5, preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation and authorized to do business in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect. SECTION 9.2 Maintenance of Property. Protect and preserve in accordance with sound business practices all properties useful in and material to its business, including copyrights, patents, trade names, trademarks and service marks; maintain in accordance with sound business practices all buildings, equipment and other tangible real and personal property material to its business; and from time to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner. SECTION 9.3 Insurance. Maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as are customarily maintained by similar businesses and as may be required by Applicable Law and as are required by any Security Documents, and on the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. SECTION 9.4 Accounting Methods and Financial Records. Maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its properties. SECTION 9.5 Payment and Performance of Obligations. Pay and perform all Obligations under this Agreement and the other Loan Documents, and pay or perform (a) all 64 material taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (b) all other material indebtedness, obligations and liabilities in accordance with customary trade practices; provided, that such Borrower or such Subsidiary thereof may contest any item described in clauses (a) or (b) of this Section 9.5 in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP. SECTION 9.6 Compliance With Laws and Approvals. Observe and remain in compliance in all material respects with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business. SECTION 9.7 Environmental Laws. In addition to and without limiting the generality of Section 9.6, (a) comply in all material respects with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of such Borrower or such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 9.8 Compliance with ERISA. In addition to and without limiting the generality of Section 9.6, (a) comply in all material respects with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (b) not take any action or fail to take action the result of which could be a liability to the PBGC or to a Multiemployer Plan, (c) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code, (d) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (e) furnish to the Administrative Agent upon the Administrative Agent's request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent. SECTION 9.9 Compliance With Agreements. Comply in all material respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Material Contract; provided, that such Borrower or such Subsidiary may contest any such lease, agreement or other 65 instrument in good faith through applicable proceedings so long as adequate reserves are maintained in accordance with GAAP. SECTION 9.10 Conduct of Business. Engage only in businesses in substantially the same fields as the businesses conducted on the Closing Date and in lines of business reasonably related thereto. SECTION 9.11 Visits and Inspections. Permit representatives of the Administrative Agent or any Lender, from time to time upon notice to the Company and during normal business hours (other than upon or during the continuance of a Default or an Event of Default), to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. SECTION 9.12 Additional Borrowers and Collateral. (a) Subject to subsection (b) below, upon the reasonable request of the Administrative Agent but in any event no later than June 15 and December 15 of each calendar year, with respect to each Subsidiary which has not executed either this Agreement or all relevant joinder documents under this Section 9.12, cause to be delivered to the Administrative Agent, (i) a Joinder Agreement duly executed by the Company, such Subsidiary and the parent of such Subsidiary pursuant to which (A) such Subsidiary shall become a Borrower hereunder, (B) such Subsidiary shall become a Grantor under the Security Agreement and (C) such Subsidiary shall become an Issuer or Partnership/LLC under the Pledge Agreement, (ii) replacement Notes duly executed by such Subsidiary and each other Borrower then party hereto, (iii) such closing documents and closing certificates consistent with Section 6.2 hereof as may reasonably be requested by the Administrative Agent (including, without limitation, favorable legal opinions of counsel to the Company addressed to the Administrative Agent and the Lenders in form and substance satisfactory to the Administrative Agent with respect to the Joinder Agreement and the Collateral relating thereto) and (iv) such other documents reasonably requested by the Administrative Agent in order that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Credit Agreement, the Security Agreement, the Pledge Agreement and any other Loan Document applicable to such Subsidiary (provided that, as of the end of any semi-annual period ending June 15 or December 15 (as applicable), to the extent that the aggregate Pro Forma EBITDA of those Subsidiaries which have not delivered all relevant joinder documents required to be delivered pursuant to this Section 9.12 is less than two percent (2%) of Consolidated Pro Forma EBITDA (in each case for the most recent period of four (4) consecutive fiscal quarters), such Subsidiaries shall not be required to deliver the relevant joinder documents under this Section 9.12(a) until the next semi-annual period ending June 15 or December 15 (as applicable)). (b) Notwithstanding anything to the contrary contained in subsection (a) above, (i) with respect to any Subsidiary acquired or created by any Borrower with Pro Forma EBITDA in excess of five percent (5%) of the Consolidated Pro Forma 66 EBITDA (in each case for the most recent period of four (4) consecutive fiscal quarters), the Administrative Agent may request that the Borrowers and such Subsidiary deliver all relevant joinder documents required to be delivered pursuant to this Section 9.12 within twenty (20) Business Days of such creation or acquisition; and (ii) to the extent that the Pro Forma EBITDA of those Subsidiaries which have not delivered all relevant joinder documents required to be delivered pursuant to this Section 9.12 exceeds ten percent (10%) of Consolidated Pro Forma EBITDA (in each case for the most recent period of four (4) consecutive fiscal quarters), the Administrative Agent may request that the Borrowers and such Subsidiaries deliver all relevant joinder documents required to be delivered pursuant to this Section 9.12 within twenty (20) Business Days of such determination. SECTION 9.13 Additional Real Property Collateral. Promptly at the request of the Administrative Agent or the Required Lenders, grant to the Administrative Agent for the ratable benefit of itself and the Lenders a security interest in any real property owned or leased by any Borrower or any Subsidiary thereof on which is located Inventory with a value in excess of $1,000,000 and/or assign to the Administrative Agent for the ratable benefit of itself and the Lenders all rights of any Borrower or any Subsidiary thereof under any such real property owned or leased by any Borrower or any Subsidiary thereof pursuant to documentation reasonably satisfactory to the Administrative Agent and the Required Lenders, and take all actions reasonably requested by the Administrative Agent or the Required Lenders in connection with consummating such assignments and the granting of such security interests including, without limitation, the obtaining of landlord or lessor consents, mortgagee title insurance policies, title surveys and real estate appraisals satisfying the requirements of all Applicable Laws, duly recording each document related thereto in such manner and in such places as are required by the law to perfect and preserve the Liens in favor of the Administrative Agent and the Lenders granted pursuant to such documents. SECTION 9.14 Vendor-Provided Financing. Within sixty (60) days of the creation, incurrence or assumption of any Vendor-Provided Financing or any other trade payable which is secured by a Lien which covers assets of any applicable Borrower or any Subsidiary thereof other than or in addition to the property or product lines and the related receivables financed by such financing or trade payable, in each case which Lien is not permitted by clause (x) of Section 11.3(i)(iv), (i) the applicable Borrower or Subsidiary thereof shall deliver to the Administrative Agent UCC termination statements and other applicable release documents, in form and substance satisfactory to the Administrative Agent, with respect to all Liens securing such financing or trade payable, (ii) the applicable Borrower or Subsidiary thereof shall deliver to the Administrative Agent an intercreditor agreement, in form and substance satisfactory to the Administrative Agent, with each applicable financial institution which has provided such financing or trade payable or (iii) the applicable Borrower or Subsidiary thereof shall deliver to the Administrative Agent a modification to the security documents of each applicable financial institution which has provided such financing or trade payable, which modification shall limit the collateral security for such financing or trade payable to the property and related receivables financed thereby and which modification shall be in form and substance satisfactory to the Administrative Agent (provided that the applicable Borrower or Subsidiary thereof may enter 67 into a VPF Intercompany Subordination Agreement in connection with clauses (i), (ii) and (iii) of this Section 9.14 if, and only if, such VPF Intercompany Subordination Agreement (1) provides that the ability of the applicable VPF Customer to make dividends, advances or other distributions of any kind whatsoever to the applicable VPF Intercompany Noteholder or any other Borrower or Subsidiary thereof (other than, to the extent that that applicable VPF Intercompany Subordination Agreement is in effect, payments by the applicable VPF Customer to the applicable VPF Noteholder on or under the applicable VPF Intercompany Note) shall not be restricted or otherwise limited, and (2) is in form and substance satisfactory to the Administrative Agent). SECTION 9.15 Interest Rate Protection. Maintain, commencing within one hundred twenty (120) days of the Closing Date, a Hedging Agreement with a minimum notional amount equal to the lesser of (a) $70,000,000 or (b) fifty percent (50%) of the outstanding Term Loans and at an interest rate and upon other terms and conditions satisfactory to the Administrative Agent. SECTION 9.16 Primary Deposit Accounts. Maintain its primary deposit account at Wachovia. SECTION 9.17 Further Assurances. Make, execute and deliver all such additional and further acts, things, deeds and instruments as the Administrative Agent or any Lender may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Administrative Agent and the Lenders their respective rights under this Agreement, the Notes, the Letters of Credit and the other Loan Documents. ARTICLE X FINANCIAL COVENANTS Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, the Company and its Subsidiaries on a Consolidated basis will not: SECTION 10.1 Leverage Ratio. As of the end of any fiscal quarter during any period set forth below, permit the ratio of (a) Funded Debt as of such date less cash and Cash Equivalents as of such date to (b) Pro Forma EBITDA for the period of four (4) consecutive fiscal quarters ending on such date, to exceed the corresponding ratio set forth below: 68 Period Ratio --------------------- ------------ Closing Date through June 30, 2004 3.00 to 1.00 July 1, 2004 through June 30, 2005 2.75 to 1.00 July 1, 2005 through June 30, 2006 2.50 to 1.00 Thereafter 2.25 to 1.00 SECTION 10.2 Senior Leverage Ratio. As of the end of any fiscal quarter during any period set forth below, permit the ratio of (a) Senior Funded Debt as of such date less cash and Cash Equivalents as of such date to (b) Pro Forma EBITDA for the period of four (4) consecutive fiscal quarters ending on such date, to exceed the corresponding ratio set forth below: Period Ratio --------------------- ------------ Closing Date through June 30, 2004 2.50 to 1.00 July 1, 2004 through June 30, 2005 2.25 to 1.00 July 1, 2005 through June 30, 2006 2.00 to 1.00 Thereafter 1.75 to 1.00 SECTION 10.3 Fixed Charge Coverage Ratio. As of the end of any fiscal quarter during any period set forth below, permit the ratio of (a) (i) EBITDA for the period of four (4) consecutive fiscal quarters ending on such date plus (ii) Operating Lease Expense for such period of four (4) consecutive fiscal quarters to (b) Fixed Charges for such period of four (4) consecutive fiscal quarters, to be less than the corresponding ratio set forth below: 69 Period Ratio --------------------- ------------ Closing Date through June 30, 2004 1.65 to 1.00 July 1, 2004 through June 30, 2005 1.70 to 1.00 Thereafter 1.75 to 1.00 SECTION 10.4 Maximum Capital Expenditures. During any Fiscal Year, permit Restricted Capital Expenditures to exceed 1.75% of the revenue of the Company and its Subsidiaries for the prior Fiscal Year (such amount for each prior Fiscal Year, the "Baseline Amount"); provided that, notwithstanding the foregoing, so long as no Default or Event of Default has occurred and is continuing or would result from any Restricted Capital Expenditure, commencing with the Fiscal Year ending March 31, 2004, the maximum amount of Restricted Capital Expenditures permitted during any Fiscal Year may be increased by an amount equal to twenty-five percent (25%) of the amount by which the Baseline Amount for the prior Fiscal Year exceeds the amount of Restricted Capital Expenditures made during the prior Fiscal Year. ARTICLE XI NEGATIVE COVENANTS Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11 hereof, each Borrower will not, and will not permit any of its Subsidiaries to: SECTION 11.1 Limitations on Debt. Create, incur, assume or suffer to exist any Debt except: (a) the Obligations (excluding Hedging Obligations permitted pursuant to Section 11.1(b)); (b) Debt incurred in connection with a non-speculative Hedging Agreement with a counterparty and upon terms and conditions (including interest rate) reasonably satisfactory to the Administrative Agent; provided, that any counterparty that is a Lender shall be deemed satisfactory to the Administrative Agent; (c) (i) Subordinated Debt of the Company evidenced by the Existing Subordinated Notes in an aggregate principal amount not to exceed $100,000,000 (provided that such Subordinated Debt shall be redeemed, and all amounts outstanding thereunder paid in full, on June 26, 2003) and (ii) Subordinated Debt evidenced by the Convertible Subordinated Notes in an aggregate principal amount of $57,500,000 (provided that, so long as no Default or Event of Default exists and is continuing or would be caused thereby and the Company has not exercised its conversion option on the Convertible Subordinated Notes, the Company may refinance the 70 Convertible Subordinated Notes if (1) the proceeds of the refinancing of the Convertible Subordinated Notes are used solely to issue replacement notes, (2) the terms and conditions of the replacement notes and the documents evidencing such refinancing shall be in form and substance satisfactory to the Administrative Agent and (3) the principal amount of the replacement notes shall not exceed the principal amount of the Convertible Subordinated Notes on the date of such refinancing); (d) Debt set forth on Schedule 11.1 which is existing on the Closing Date and is not otherwise referred to in this Section 11.1, and the renewal and refinancing (but not the increase in the aggregate principal amount thereof) thereof; (e) Debt of the Borrowers and their Subsidiaries incurred in connection with Capital Leases in an aggregate amount not to exceed $5,000,000 on any date of determination; (f) purchase money Debt of the Borrowers and their Subsidiaries with respect to Capital Assets in an aggregate amount not to exceed $5,000,000 on any date of determination; (g) intercompany Debt between any Borrower and any other Borrower and intercompany Debt in connection with intercompany loans and advances permitted under Section 11.4(f) hereof; (h) seller financing constituting Subordinated Debt existing on the Closing Date or entered into in conjunction with any Permitted Acquisition in an amount not to exceed $20,000,000 on any date of determination; (i) unsecured obligations with respect to accrued and unpaid cash earnout payments reflected on the Consolidated balance sheet of the Company and its Subsidiaries and created in connection with any Permitted Acquisition in an amount not to exceed $20,000,000; (j) Debt consisting of Guaranty Obligations permitted by Section 11.2; (k) additional Subordinated Debt of the Company in an aggregate principal amount not to exceed $50,000,000 so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom as of the date of issuance of such Subordinated Debt and (ii) the terms and conditions of such Subordinated Debt shall be in form and substance satisfactory to the Administrative Agent (including, without limitation, a maturity date that is no earlier than six (6) months after the Term Loan Maturity Date); provided that the Company may refinance such Subordinated Debt if (A) no Default or Event of Default exists and is continuing or would be caused thereby, (B) the proceeds of the refinancing of such Subordinated Debt are used solely to issue replacement Subordinated Debt, (C) the terms and conditions of the replacement Subordinated Debt and the documents evidencing such refinancing shall be in form and substance satisfactory to the Administrative Agent and (D) the principal amount of the replacement Subordinated Debt shall not exceed the principal amount of the original Subordinated Debt on the date of such refinancing; and 71 provided, that none of the Debt permitted to be incurred by this Section 11.1 (other than (1) the Subordinated Debt of the Company evidenced by the Existing Subordinated Notes and (2) intercompany Debt of any Borrower which is evidenced by a VPF Intercompany Note and in connection with which a VPF Intercompany Subordination Agreement is executed) shall restrict, limit or otherwise encumber (by covenant or otherwise) the ability of any Subsidiary of any Borrower to make any payment to any Borrower or any of its Subsidiaries (in the form of dividends, intercompany advances or otherwise) for the purpose of enabling such Borrower to pay the Obligations. SECTION 11.2 Limitations on Guaranty Obligations. Create, incur, assume or suffer to exist any Guaranty Obligations except: (a) Guaranty Obligations in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders; (b) Guaranty Obligations in an amount not to exceed $15,000,000 to secure payment or performance of customer service contracts incurred in the ordinary course of business (including, without limitation, reimbursement or similar agreements entered in the ordinary course of business between a Borrower and a third party issuer of surety or performance bonds which are issued for such Borrower's account for the benefit of a customer of such Borrower); (c) Guaranty Obligations of the Company with respect to the Debt of any Subsidiary Borrower permitted by Section 11.1; (d) Guaranty obligations of Southern Business Communications, Inc. pursuant to that Guaranty Agreement dated as of November 1, 2000 entered in favor of National Build to Suit Brookside 500/600, L.L.C. (the "Landlord") with respect to certain obligations of AV Presentations, Inc. under the lease agreement dated as of November 7, 2000 by and between AV Presentations, Inc. and Landlord, a copy of which lease agreement and guaranty agreement have been delivered to the Administrative Agent; (e) (i) Guaranty Obligations of certain Subsidiaries of the Company with respect to the Subordinated Debt of the Company evidenced by the Existing Subordinated Notes (provided that such Guaranty Obligations shall be released and terminated on June 26, 2003), (ii) Guaranty Obligations of certain Subsidiaries of the Company with respect to the Subordinated Debt of the Company permitted pursuant to Section 11.1(c) and (iii) Guaranty Obligations of certain Subsidiaries of the Company with respect to Subordinated Debt permitted pursuant to Section 11.1(k); and (f) Guaranty Obligations of the Company with respect to Operating Leases entered into in the ordinary course of business by the other Borrowers. SECTION 11.3 Limitations on Liens. Create, incur, assume or suffer to exist, any Lien on or with respect to any of its assets or properties (including, without limitation, shares of capital stock or other ownership interests), real or personal, whether now owned or hereafter acquired, except: 72 (a) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) not yet due or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (b) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, (i) which are not overdue for a period of more than thirty (30) days or (ii) which are being contested in good faith and by appropriate proceedings; (c) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers' compensation, unemployment insurance or similar legislation; (d) Liens consisting of deposits or pledges made in the ordinary course of business to secure the performance of bids, tenders, customer service contracts trade contracts, liability to insurance carriers and leases (other than Debt), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds, contractual or warranty obligations and other obligations of a like nature; (e) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, detract from the value of such property or impair the use thereof in the ordinary conduct of business; (f) Liens of the Administrative Agent for the benefit of the Administrative Agent and the Lenders; (g) Liens not otherwise referred to in this Section 11.3 and in existence on the Closing Date and described on Schedule 11.3(g); (h) Liens securing Debt permitted under Section 11.1(e); (i) Liens securing obligations of the Company or any applicable Subsidiary under Vendor-Provided Financing or Trade Financing, including, without limitation, those described on Schedule 11.3(i); provided that the Company agrees to deliver a restated Schedule 11.3(i) showing all Liens in connection with Vendor-Provided Financing or Trade Financing (including the aggregate amount of Vendor-Provided Financing or Trade Financing secured by any Lien which is permitted pursuant to item (x) of the proviso to clause (iv) below) on each date that joinder documents are required to be delivered pursuant to Section 9.12); provided further that (i) such Liens shall be created substantially simultaneously with the acquisition of the related property or product lines, (ii) the principal amount of the obligations secured by any such Lien shall at no time exceed one hundred percent (100%) of the original purchase price of such property or product lines at the time it was acquired, (iii) the obligations with respect to which 73 such Liens are created shall not exceed fifty percent (50%) of the fair market value of the Inventory at any time and (iv) such Liens do not at any time encumber any property or product lines other than the property or product lines and related receivables of the applicable creditor financed by such financing (provided that such Liens may encumber property or product lines other than the property and related receivables of the applicable creditor financed by such financing if (x) the aggregate amount of Vendor-Provided Financing and Trade Financing secured thereby does not exceed $500,000 with respect any single financing or $1,000,000 with respect to all such financings or (y) the applicable Borrower or Subsidiary thereof complies with Section 9.14, with respect to such Liens); and (j) Liens securing Debt permitted under Section 11.1(f); provided that (i) such Liens shall be created substantially simultaneously with the acquisition of the related asset, (ii) such Liens do not at any time encumber any property other than the property financed by such Debt, (iii) the amount of Debt secured thereby is not increased and (iv) the principal amount of Debt secured by any such Lien shall at no time exceed one hundred percent (100%) of the original purchase price of such property at the time it was acquired. SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions. Purchase, own, invest in or otherwise acquire, directly or indirectly, any capital stock, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Debt or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person except: (a) (i) investments in Borrowers (other than Permitted Acquisitions with respect to which the Borrowers must comply with Section 11.4(e)), (ii) investments in Subsidiaries which are not Borrowers in an aggregate amount not to exceed $2,000,000 at any time (other than Permitted Acquisitions with respect to which the Borrowers must comply with Section 11.4(e)), and (iii) the existing loans, advances and investments not otherwise referred to in this Section 11.4 described on Schedule 11.4; (b) investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within 120 days from the date of acquisition thereof, (ii) commercial paper maturing no more than 120 days from the date of creation thereof and currently having the highest rating obtainable from either Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc., (iii) certificates of deposit maturing no more than 120 days from the date of creation thereof issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $500,000,000 and having a rating of "A" or better by a nationally recognized rating agency; provided, that the aggregate amount invested in such certificates of deposit shall not at any time exceed $5,000,000 for any one such certificate of deposit and $10,000,000 for any one such bank, or (iv) time deposits maturing no more than 30 days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts 74 not exceeding the maximum amounts of insurance thereunder (any such investment, a "Cash Equivalent"); (c) loans and advances to employees in the ordinary course of business in an aggregate amount not to exceed $750,000 at any time; (d) intercompany loans and advances in connection with intercompany Debt, permitted under Section 11.1(g) hereof; and (e) investments by the Company or any Subsidiary thereof in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of capital stock, assets or any combination thereof) of any other Person; provided that (i) the Person to be acquired shall engage in a business or the assets to be acquired shall be used in a business described in Section 9.10 hereof, (ii) a Borrower or any Subsidiary thereof shall be the surviving Person and no Change in Control shall have been effected thereby, (iii) no Default or Event of Default shall have occurred and be continuing both before and after giving effect to the acquisition, (iv) the Borrowers shall have obtained the prior written consent of the Required Lenders prior to the consummation of such acquisition if the cash portion of the Permitted Acquisition Value of such acquisition or series of related acquisitions exceeds $50,000,000 or the aggregate Permitted Acquisition Value of such acquisition or series of related acquisitions exceeds $75,000,000 (to the extent that such consent is required to be provided hereby and to the extent the Borrowers comply with all applicable provisions of paragraph (C) below, such written consent, or written notice (or verbal notice subsequently confirmed in writing) that such consent shall not be given by the Required Lenders, to be delivered to the Company no later than five (5) Business Days after receipt by the Lenders of such information), and (v) the Borrowers must comply with the following requirements: (A) with respect to any such investment for which the prior written consent of the Required Lenders is not required, the Borrowers must comply with the following additional requirements (provided that the Borrowers shall not be required to comply with the following additional requirements with respect to any acquisition or series of related acquisitions having a Permitted Acquisition Value of less than $5,000,000): (1) the Borrowers shall have delivered to the Administrative Agent an Officer's Compliance Certificate dated as of the closing date of the acquisition demonstrating, in form and substance reasonably satisfactory thereto, (I) pro forma compliance with each covenant contained in Articles X and XI and (II) that the Person to be acquired shall have positive pro forma cash flow; (2) the Borrowers shall have delivered to the Administrative Agent on or before the closing date of the acquisition a description of the acquisition (including, without limitation, a description of the Person or assets to be acquired, the purchase price, the manner of acquisition, the payment structure and any other terms and conditions reasonably required by the Administrative Agent) and 75 draft copies of the governing documentation (including, without limitation, the purchase agreement) with respect to the acquisition; (3) the Borrowers shall have delivered to the Administrative Agent copies of the final governing documentation (including, without limitation, the purchase agreement and all opinions of counsel to the seller and/or the Person to be acquired) with respect to the acquisition within thirty (30) days after the closing of the acquisition; and (4) the Borrowers shall have provided to the Administrative Agent such other documents reasonably requested by the Administrative Agent in connection with such acquisition; (B) with respect to any such investment for which the prior written consent of the Required Lenders is required, the Borrowers must comply with the following additional requirements: (1) the Borrowers shall have delivered to the Lenders, not less than ten (10) calendar days prior to the proposed closing date of the acquisition, a description of the acquisition (including, without limitation, a description of the Person or assets to be acquired, the purchase price, the manner of acquisition, the payment structure and any other terms and conditions reasonably required by the Administrative Agent) and draft copies of the governing documentation (including, without limitation, the purchase agreement) with respect to the acquisition; (2) the Borrowers shall have delivered to the Lenders, not less than ten (10) calendar days prior to the proposed closing date of the acquisition, all due diligence reports prepared by or on behalf of the Company or the applicable Subsidiary thereof; (3) the Borrowers shall have delivered to the Lenders, not less than ten (10) calendar days prior to the proposed closing date of the acquisition, the historical financial statements of the Person to be acquired, if applicable, for the most recent two (2) year period and the most recent interim financial statements of the Person to be acquired; (4) the Borrowers shall have delivered to the Lenders, not less than ten (10) calendar days prior to the proposed closing date of the acquisition, a projected income statement, statement of cash flows and balance sheet (including, without limitation, a summary of assumptions and pro forma adjustments made in connection 76 therewith) of the Person to be acquired, if applicable, prepared on a quarterly basis for the ensuing three (3) year period; (5) the Borrowers shall have delivered to the Lenders, not less than ten (10) calendar days prior to the proposed closing date of the acquisition, an Officer's Compliance Certificate demonstrating, in form and substance reasonably satisfactory thereto, (I) pro forma compliance with each covenant contained in Articles X and XI and (II) that the Person to be acquired shall have positive pro forma cash flow; (6) the Borrowers shall have delivered to the Lenders, on or before the closing date of the acquisition, copies of all opinions of counsel to the seller and/or the Person to be acquired which are delivered in connection with the acquisition; (7) the Borrowers shall have delivered to the Lenders evidence of the approval of the acquisition by the board of directors or equivalent governing body (or the shareholders) of the seller and/or the Person to be acquired, in form and substance satisfactory to the Administrative Agent, within twenty (20) days after the closing of the acquisition; (8) the Borrowers shall have delivered to the Lenders copies of the final governing documentation (including, without limitation, the purchase agreement) with respect to the acquisition within twenty (20) days after the closing of the acquisition; and (9) the Borrowers shall have provided to the Lenders such other documents reasonably requested by the Administrative Agent in connection with such acquisition; (f) intercompany loans and advances to a Wholly-Owned Subsidiary of any Borrower if the following requirements are satisfied: (i) such Wholly-Owned Subsidiary must be created solely for the purpose of consummating a Permitted Acquisition under Section 11.4, (ii) such loan or advance must be made solely for the purpose of consummating a Permitted Acquisition under Section 11.4 and shall be made in compliance with Section 6.3(d) and (iii) the Borrowers and such Wholly-Owned Subsidiary must comply with the Sections 6.3(d), 9.12, 9.13, 9.14 and 11.4; and (g) Hedging Agreements permitted pursuant to Section 11.1. SECTION 11.5 Limitations on Mergers and Liquidation. Merge, consolidate or enter into any similar combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except: 77 (a) any Subsidiary Borrower may merge with another Subsidiary Borrower and any Subsidiary of any Borrower (that is not then a Borrower) may merge with any Borrower or any Wholly-Owned Subsidiary of any Borrower (that is not then a Borrower); (b) any Wholly-Owned Subsidiary may merge into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with an acquisition permitted by Section 11.4(e); and (c) any Wholly-Owned Subsidiary of any Borrower may wind-up into any Borrower or any other Wholly-Owned Subsidiary of any Borrower; provided that, in each case noted above, (i) if a Borrower or the Company is party to such transaction, such Borrower or the Company shall be the surviving entity and (ii) no Default or Event of Default shall have occurred or be continuing both before and after giving effect to such transaction. SECTION 11.6 Limitations on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, the sale of any receivables and leasehold interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired except: (a) the sale of Inventory in the ordinary course of business; (b) the sale of obsolete assets no longer used or usable in the business of any Borrower or any Subsidiary thereof; (c) the transfer of assets to any Borrower or any Wholly-Owned Subsidiary of any Borrower pursuant to Section 11.5(c); (d) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; (e) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, any other sale or disposition of assets by any Borrower in the ordinary course of business in an aggregate amount not to exceed $5,000,000 in any Fiscal Year; (f) any other sale or disposition of assets by any Borrower in the ordinary course of business; provided that the Net Cash Proceeds from each such sale or disposition shall be applied to the mandatory repayment of the Extensions of Credit in the manner set forth in Sections 4.4 and 2.6 hereof; and (g) the disposition of any Hedging Agreement. SECTION 11.7 Limitations on Dividends, Distributions and Redemptions. Declare or pay any dividends upon any of its capital stock; purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its capital stock, or make any distribution of cash, 78 property or assets among the holders of shares of its capital stock, or, to the extent that such change could reasonably be expected to have a Material Adverse Effect, make any change in its capital structure; provided that: (a) any Borrower or any Subsidiary thereof may pay dividends in shares of its own capital stock; (b) any Borrower or any Subsidiary thereof may pay cash dividends to any Borrower; (c) any Borrower or any Subsidiary thereof may reacquire shares of its capital stock which have been placed into escrow in connection with an acquisition and which are reacquired pursuant to an escrow or other indemnification claim under the documentation governing such acquisition; and (d) the Company may redeem certain shares of its capital stock and place such shares in treasury for reissuance as partial consideration for future Permitted Acquisitions; provided that the aggregate purchase price of the capital stock redeemed by Company (including all fees and expenses related thereto) shall not exceed $20,000,000. SECTION 11.8 Limitations on Exchange and Issuance of Capital Stock. Issue, sell or otherwise dispose of any class or series of capital stock that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or passage of time would be, (a) convertible or exchangeable into Debt or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or passage of time would have, a redemption or similar payment due. SECTION 11.9 Transactions with Affiliates. Directly or indirectly (a) make any loan or advance to, or purchase or assume any note or other obligation to or from, any of its officers, directors, shareholders or other Affiliates, or to or from any member of the immediate family of any of its officers, directors, shareholders or other Affiliates, or subcontract any operations to any of its Affiliates or (b) enter into, or be a party to, any other transaction not described in clause (a) above with any of its Affiliates, except in each case pursuant to the reasonable requirements of its business and upon fair and reasonable terms that are fully disclosed to and approved in writing by the Required Lenders prior to the consummation thereof and are no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not its Affiliate. SECTION 11.10 Certain Accounting Changes; Organizational Documents. (a) Change its Fiscal Year end, or make any change in its accounting treatment and reporting practices except as required by GAAP; or (b) Amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner adverse in any material respect to the rights or interests of the Lenders. 79 SECTION 11.11 Amendments; Payments and Prepayments of Subordinated Debt. Amend or modify (or permit the modification or amendment of) any of the terms or provisions of any Subordinated Debt (unless such amendment or modification does not, in the reasonable judgment of the Administrative Agent, adversely affect the Lenders), or cancel or forgive, make any voluntary or optional payment or prepayment on, make any other payment on (except, solely with respect to any mandatory payment, as permitted by the subordination provisions applicable thereto), purchase, redeem or acquire for value (including, without limitation, by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due) any Subordinated Debt; provided that the Company may convert the Convertible Subordinated Notes to common stock of Company (plus cash in lieu of fractional shares of common stock of the Company) in accordance with the terms thereof. SECTION 11.12 Restrictive Agreements. Enter into any Debt (other than the Subordinated Debt of the Company evidenced by the Existing Subordinated Notes) which contains any negative pledge on assets or any covenants more restrictive than the provisions of Articles VIII, IX and X hereof, or which restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties other than the assets or properties securing such Debt. SECTION 11.13 Impairment of Security Interests. Take or omit to take any action, which action or omission might or would have the result of materially impairing the security interests in favor of the Administrative Agent with respect to the Collateral or grant to any Person (other than the Administrative Agent for the benefit of itself and the Lenders pursuant to the Security Documents) any interest whatsoever in the Collateral, except for Liens permitted under Section 11.3 and asset sales permitted under Section 11.6. ARTICLE XII DEFAULT AND REMEDIES SECTION 12.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority or otherwise: (a) Default in Payment of Principal of Loans and Reimbursement Obligations. Any Borrower shall default in any payment of principal of any Loan, Note or Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or otherwise). (b) Other Payment Default. Any Borrower shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan, Note or Reimbursement Obligation or the payment of any other Obligation, and such default shall continue unremedied for three (3) Business Days. 80 (c) Misrepresentation. Any representation or warranty made or deemed to be made by any Borrower or any Subsidiary thereof under this Agreement, any Loan Document or any amendment hereto or thereto, shall at any time prove to have been incorrect or misleading in any material respect when made or deemed made. (d) Default in Performance of Certain Covenants. Any Borrower shall default in the performance or observance of any covenant or agreement contained in Sections 6.4, 8.1(a) or (b), 8.2, 8.5(e), 8.6, 9.1 or 9.12 or Articles X or XI of this Agreement. (e) Default in Performance of Other Covenants and Conditions. Any Borrower or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for otherwise in this Section 12.1) or any other Loan Document and such default shall continue for a period of thirty (30) days after written notice thereof has been given to the Borrowers by the Administrative Agent. (f) Hedging Agreement. The Borrowers shall default in the performance or observance of any terms, covenants, condition or agreement (after giving effect to any applicable grace or cure period) under any Hedging Agreement involving monetary liability of any Borrower in an amount in excess of $1,000,000 and such default causes the termination of such Hedging Agreement or permits any counterparty to such Hedging Agreement to terminate any such Hedging Agreement. (g) Debt Cross-Default. Any Borrower or any Subsidiary thereof shall (i) default in the payment of any Debt (other than the Notes or any Reimbursement Obligation) the aggregate outstanding amount of which Debt is in excess of $5,000,000 beyond the period of grace if any, provided in the instrument or agreement under which such Debt was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Debt (other than the Notes or any Reimbursement Obligation) the aggregate outstanding amount of which Debt is in excess of $5,000,000 or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Debt to become due prior to its stated maturity (any applicable grace period having expired). (h) Other Cross-Defaults. Any Borrower or any Subsidiary thereof shall default in the payment when due, or in the performance or observance, of any obligation or condition of any Material Contract the result of which would involve monetary liability in an amount in excess of $5,000,000 unless, but only as long as, the existence of any such default is being contested by such Borrower or such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect thereof have been established on the books of such Borrower or such Subsidiary to the extent required by GAAP. (i) Change in Control. (i) Any person or group of persons (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) shall obtain ownership or 81 control in one or more series of transactions of (A) more than thirty-five percent (35%) of the common stock or (B) more than thirty-five percent (35%) of the voting power of the Company entitled to vote in the election of members of the board of directors of the Company or (C) such lesser percentage of such voting power of any Borrower which through its by-laws, a voting agreement or otherwise entitles any such person or group of person to elect a majority of the members of the board of directors of such Borrower, (ii) any Borrower (other than the Company) shall fail to be a Wholly-Owned Subsidiary of the Company or (iii) there shall have occurred under any indenture or other instrument evidencing any Debt in excess of $5,000,000 any "change of control" (as defined in such indenture or other evidence of Debt) obligating any Borrower to repurchase, redeem or repay all or any part of such Debt or capital stock provided for therein (any such event, a "Change in Control"). (j) Voluntary Bankruptcy Proceeding. Any Borrower or any Subsidiary thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing. (k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Borrower or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Borrower or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue undismissed or unstayed for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered. (l) Failure of Agreements. Any material provision of this Agreement or of any other Loan Document shall for any reason cease to be valid and binding on any Borrower or any Subsidiary thereof party thereto or any such Person shall so state in writing, or this Agreement or any other Loan Document shall for any reason cease to create a valid and perfected first priority Lien on, or security interest in, any of the collateral purported to be covered thereby, in each case other than in accordance with the express terms hereof or thereof. (m) Termination Event. The occurrence of any of the following events: (i) any Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the Code, any Borrower or any ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated funding 82 deficiency in excess of $5,000,000 occurs or exists, whether or not waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) any Borrower or any ERISA Affiliate as employers under one or more Multiemployer Plan makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of any such Multiemployer Plan notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $5,000,000. (n) Judgment. A judgment or order for the payment of money which causes the aggregate amount of all such judgments to exceed $5,000,000 in any Fiscal Year shall be entered against any Borrower or any of Subsidiary thereof by any court and such judgment or order shall continue undischarged or unstayed for a period of thirty (30) days. (o) Environmental. Any one or more Environmental Claims shall have been asserted against any Borrower or any of its Subsidiaries; any Borrower or any of its Subsidiaries would be reasonably likely to incur liability as a result thereof; and such liability would be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. SECTION 12.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrowers: (a) Acceleration; Termination of Facilities. Declare the principal of and interest on the Loans, the Notes and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, all L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations (other than any Hedging Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrowers to request borrowings or Letters of Credit thereunder; provided, that upon the occurrence of an Event of Default specified in Section 12.1(j) or (k), the Credit Facility shall be automatically terminated and all Obligations (other than any Hedging Obligations) shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or in any other Loan Document to the contrary notwithstanding. (b) Letters of Credit. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, require the Borrowers at such time to deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement 83 Obligation shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrowers. (c) Rights of Collection. Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Obligations of the Borrowers. SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist in law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between any Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. ARTICLE XIII THE ADMINISTRATIVE AGENT SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably designates and appoints Wachovia as Administrative Agent of such Lender under this Agreement and the other Loan Documents for the term hereof and each such Lender irrevocably authorizes Wachovia as Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or such other Loan Documents, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Loan Documents or otherwise exist against the Administrative Agent. Any reference to the Administrative Agent in this Article XIII shall be deemed to refer to the Administrative Agent solely in its capacity as Administrative Agent and not in its capacity as a Lender. SECTION 13.2 Delegation of Duties. The Administrative Agent may execute any of its respective duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to 84 such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by the Administrative Agent with reasonable care. SECTION 13.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the other Loan Documents (except for actions occasioned solely by its or such Person's own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Borrower or any Subsidiary thereof or any officer thereof contained in this Agreement or the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or the other Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents or for any failure of any Borrower or any Subsidiary thereof to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of any Borrower or any Subsidiary thereof. SECTION 13.4 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 14.10 hereof. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement and the other Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders (or, when expressly required hereby or by the relevant other Loan Document, all the Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except for its own gross negligence or willful misconduct. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a request of the Required Lenders (or, when expressly required hereby, all the Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. SECTION 13.5 Notice of Default. Except for any Default or Event of Default under Section 12.1(a) or Section 12.1(b), the Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless it has received notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that 85 the Administrative Agent receives such a notice, it shall promptly give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, when expressly required hereby, all of the Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may, but shall not be obligated to take such action, or refrain from taking such action with respect to such Default or Event of Default as it shall deem advisable and in the best interests of the Lenders, except to the extent other provisions of this Agreement expressly require that any such action be taken or not be taken only with the consent and authorization or the request of the Lenders or Required Lenders as applicable. SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrowers or any of their Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent 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 appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries and made its own decision to make its Loans and issue or participate in Letters of Credit hereunder and enter into this Agreement. Each Lender also represents 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 deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder or by the other Loan Documents, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrowers or any of their Subsidiaries which may come into the possession of the Administrative Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates. SECTION 13.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such and (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to the respective amounts of their Revolving Credit Commitment Percentages or Term Loan Percentages, as applicable, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes or any Reimbursement Obligation) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents, or 86 any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent's bad faith, gross negligence or willful misconduct. The agreements in this Section 13.7 shall survive the payment of the Notes, any Reimbursement Obligation and all other amounts payable hereunder and the termination of this Agreement. SECTION 13.8 The Administrative Agent in Its Individual Capacity. The Administrative Agent and its respective Subsidiaries and Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Borrower as though the Administrative Agent were not the Administrative Agent hereunder. With respect to any Loans made or renewed by it and any Note issued to it and with respect to any Letter of Credit issued by it or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent. Subject to the appointment and acceptance of a successor as provided below, the Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Company, which consent shall not be unreasonably withheld, to appoint a successor Administrative Agent, which successor shall have minimum capital and surplus of at least $500,000,000. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the Administrative Agent's giving of notice of resignation, then the Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which successor shall have minimum capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 13.9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. SECTION 13.10 Documentation Agent and Syndication Agent. The Documentation Agent and the Syndication Agent, in their respective capacities as documentation and syndication agents, shall have no duties or responsibilities under this Agreement or any other Loan Document. 87 ARTICLE XIV MISCELLANEOUS SECTION 14.1 Notices. (a) Method of Communication. Except as otherwise provided in this Agreement, all notices and communications hereunder shall be in writing (for purposes hereof, the term "writing" shall include information in electronic format such as electronic mail and internet web pages), or by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand delivery or sent via electronic mail, posting on an internet web page, telecopy, recognized overnight courier service or certified mail, return receipt requested, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand, or sent by electronic mail, posting on the Intralinks internet web page or any similar internet or intranet sites (provided the recipients of such notice have been made specifically aware of the posting of such notice by any other method permitted by this Section 14.1(a)) or telecopy, (ii) on the next Business Day if sent by recognized overnight courier service and (iii) on the third Business Day following the date sent by certified mail, return receipt requested. A telephonic notice to the Administrative Agent as understood by the Administrative Agent will be deemed to be the controlling and proper notice in the event of a discrepancy with or failure to receive a confirming written notice. Notwithstanding the foregoing, electronic mail and internet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 8.1, and to distribute Loan Documents for execution by the parties thereto, and may not be effective for any other purpose. (b) Addresses for Notices. Notices to any party shall be sent to it at the following addresses, or any other address as to which all the other parties are notified in writing. If to the Borrowers: Global Imaging Systems, Inc. 3820 Northdale Boulevard Suite 200A Tampa, Florida 33624 Attention: Ray Schilling Chief Financial Officer Telephone: (813) 960-5508 Telecopy: (813) 264-7877 Email: schillingr@global-imaging.com If to Wachovia as Wachovia Bank, National Association Administrative Charlotte Plaza, CP-8 Agent: 201 South College Street Charlotte, North Carolina 28288-0608 Attention: Syndication Agency Services Telephone: (704) 374-2698 Telecopy: (704) 383-0288 Email: elizabeth.dunn@wachovia.com 88 Wachovia Bank, National Association One Wachovia Center, 5th Floor 301 South College Street Charlotte, North Carolina 28288-0760 Attention: Mark Felker Telephone: (704) 374-7074 Telecopy: (704) 383-7611 Email: mark.felker@wachovia.com If to any Lender: To the address (including the email address) set forth in the Register (c) Administrative Agent's Office. The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrowers and the Lenders, as the Administrative Agent's Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit issued. SECTION 14.2 Expenses; Indemnity. The Borrowers will (a) pay all reasonable out-of-pocket expenses (including, without limitation, all costs of electronic or internet distribution of any information hereunder) of the Administrative Agent in connection with (i) the preparation, execution and delivery of this Agreement and each other Loan Document, whenever the same shall be executed and delivered, including without limitation all out-of-pocket syndication and due diligence expenses and reasonable fees and disbursements of counsel for the Administrative Agent and (ii) the preparation, execution and delivery of any waiver, amendment or consent by the Administrative Agent or the Lenders relating to this Agreement or any other Loan Document, including, without limitation, reasonable fees and disbursements of counsel for the Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the Administrative Agent and each Lender actually incurred in connection with the administration and enforcement of any rights and remedies of the Administrative Agent and Lenders under the Credit Facility, including, without limitation, in connection with any workout, restructuring, bankruptcy or similar preceding, creating and perfecting Liens in favor of the Administrative Agent on behalf of the Lenders pursuant to any Security Document, enforcing any Obligations of, or collecting any payments due from, any Borrower by reason of an Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral), consulting with appraisers, accountants, engineers, attorneys and other Persons concerning the nature, scope or value of any right or remedy of the Administrative Agent or any Lender hereunder or under any other Loan Document or any factual matters in connection therewith, which expenses shall include without limitation the reasonable fees and disbursements of such Persons, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, trustees, advisors, officers and directors, from and against any losses, penalties, fines, liabilities, settlements, damages, costs and expenses, suffered by any such Person in connection with any claim, investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Agreement, 89 any other Loan Document or any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including, without limitation, reasonable attorney's and consultant's fees, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 14.3 Set-off. In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default and during the continuance thereof, the Lenders and any assignee or participant of a Lender in accordance with Section 14.10 are hereby authorized by the Borrowers at any time or from time to time, without notice to the Borrowers or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Lenders, or any such assignee or participant to or for the credit or the account of the Borrowers against and on account of the Obligations irrespective of whether or not (a) the Lenders shall have made any demand under this Agreement or any of the other Loan Documents or (b) the Administrative Agent shall have declared any or all of the Obligations to be due and payable as permitted by Section 12.2 and although such Obligations shall be contingent or unmatured. Notwithstanding the foregoing, each Lender agrees to notify the Company, on behalf of the Borrowers, and the Administrative Agent after any such set-off and application; provided that the failure to give such notice shall not affect the validity of such set-off and application. SECTION 14.4 Governing Law. This Agreement, the Notes and the other Loan Documents, unless otherwise expressly set forth therein, shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without reference to the conflicts or choice of law principles thereof. SECTION 14.5 Jurisdiction and Venue. (a) Jurisdiction. The Borrowers hereby irrevocably consent to the personal jurisdiction of the state and federal courts located in Mecklenburg County, North Carolina (and any courts from which an appeal from any of such courts must or may be taken), in any action, claim or other proceeding arising out of any dispute in connection with this Agreement, the Notes and the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations. The Borrowers hereby irrevocably consent to the service of a summons and complaint and other process in any action, claim or proceeding brought by the Administrative Agent or any Lender in connection with this Agreement, the Notes or the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner specified in Section 14.1. Nothing in this Section 14.5 shall affect the right of the Administrative Agent or any Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of the Administrative Agent or any Lender to bring any action or proceeding against any Borrower or its properties in the courts of any other jurisdictions. 90 (b) Venue. The Borrowers hereby irrevocably waive any objection they may have now or in the future to the laying of venue in the aforesaid jurisdiction in any action, claim or other proceeding arising out of or in connection with this Agreement, any other Loan Document or the rights and obligations of the parties hereunder or thereunder. The Borrowers irrevocably waive, in connection with such action, claim or proceeding, any plea or claim that the action, claim or other proceeding has been brought in an inconvenient forum. SECTION 14.6 Binding Arbitration; Waiver of Jury Trial. (a) Binding Arbitration. Upon demand of any party, whether made before or after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this Agreement or any other Loan Document ("Disputes"), between or among parties hereto and to the other Loan Documents shall be resolved by binding arbitration as provided herein. Institution of a judicial proceeding by a party does not waive the right of that party to demand arbitration hereunder. Disputes may include, without limitation, tort claims, counterclaims, claims brought as class actions, claims arising from Loan Documents executed in the future, disputes as to whether a matter is subject to arbitration, or claims concerning any aspect of the past, present or future relationships arising out of or connected with the Loan Documents. Arbitration shall be conducted under and governed by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration Association (the "AAA") and the Federal Arbitration Act. All arbitration hearings shall be conducted in Charlotte, North Carolina. The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply to any Dispute. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding anything foregoing to the contrary, any arbitration proceeding demanded hereunder shall begin within ninety (90) days after such demand thereof and shall be concluded within one hundred twenty (120) days after such demand. These time limitations may not be extended unless a party hereto shows cause for extension and then such extension shall not exceed a total of sixty (60) days. The panel from which all arbitrators are selected shall be comprised of licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected for expedited procedure shall be a retired judge from the highest court of general jurisdiction, state or federal, of the state where the hearing will be conducted. The parties hereto do not waive any applicable Federal or state substantive law except as provided herein. Notwithstanding the foregoing, this paragraph shall not apply to any Hedging Agreement. (b) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. 91 (c) Preservation of Certain Remedies. Notwithstanding the preceding binding arbitration provisions, the parties hereto and the other Loan Documents preserve, without diminution, certain remedies that such Persons may employ or exercise freely, either alone, in conjunction with or during a Dispute. Each such Person shall have and hereby reserves the right to proceed in any court of proper jurisdiction or by self help to exercise or prosecute the following remedies, as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted in the Loan Documents or under Applicable Law or by judicial foreclosure and sale, including a proceeding to confirm the sale, (ii) all rights of self help including peaceful occupation of property and collection of rents, set off, and peaceful possession of property, (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute. SECTION 14.7 Reversal of Payments. To the extent any Borrower makes a payment or payments to the Administrative Agent for the ratable benefit of the Lenders or the Administrative Agent receives any payment or proceeds of the collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent. SECTION 14.8 Injunctive Relief; Punitive Damages. (a) The Borrowers recognize that, in the event the Borrowers fail to perform, observe or discharge any of their obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, the Borrowers agree that the Lenders, at the Lenders' option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. (b) The Administrative Agent, the Lenders and the Borrowers (on behalf of themselves and their Subsidiaries) hereby agree that no such Person shall have a remedy of punitive or exemplary damages against any other party to a Loan Document and each such Person hereby waives any right or claim to punitive or exemplary damages that they may now have or may arise in the future in connection with any Dispute, whether such Dispute is resolved through arbitration or judicially. SECTION 14.9 Accounting Matters. All financial and accounting terms, calculations, measurements and computations made for any purpose relating to this Agreement, including, without limitation, all computations utilized by the Borrowers or any of their Subsidiaries to determine compliance with any covenant contained herein, shall, except as otherwise expressly contemplated hereby or unless there is an express written direction by the Administrative Agent to the contrary agreed to by the Borrowers, be performed or construed in 92 accordance with GAAP as in effect on the Closing Date. In the event that changes in GAAP shall be mandated by the Financial Accounting Standards Board, or any similar accounting body of comparable standing, or shall be recommended by the certified public accountants of the Borrowers, to the extent that such changes would modify such accounting terms or the interpretation or computation thereof, such changes shall be followed in defining such accounting terms only from and after the date the Borrowers and the Lenders shall have amended this Agreement to the extent necessary to reflect any such changes in the financial covenants and other terms and conditions of this Agreement. SECTION 14.10 Successors and Assigns; Participations. (a) Benefit of Agreement. This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Administrative Agent and the Lenders, all future holders of the Notes, and their respective successors and assigns, except that no Borrower shall assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Assignment by Lenders. Each Lender may, in the ordinary course of its business and in accordance with Applicable Law, sell or assign to (1) any Lender, any Affiliate of a Lender or, in the case of the Term Loans, any Approved Fund and (2) with the consent of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Company on behalf of the Borrowers (provided that no such consents shall be required for assignments of Term Loans by the Administrative Agent to an Eligible Assignee that are completed within ten (10) Business Days of the Closing Date or the Additional Term Loan Effective Date, as applicable), which consents shall not be unreasonably withheld, assign to one or more other Eligible Assignees (any of the foregoing assignees or purchasers, a "Purchasing Lender") all or a portion of its interests, rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of the Extensions of Credit at the time owing to it and the Notes held by it); provided that: (i) each such assignment shall be of a constant, and not a varying percentage of, the applicable Commitment of the assigning Lender's rights and obligations under this Agreement; (ii) if less than all of the assigning Lender's Revolving Credit Commitment or Term Loan Commitment, as applicable, is to be assigned, (A) the Revolving Credit Commitment so assigned shall not be less than $1,000,000 and (B) the Term Loan Commitment and/or the Term Loans so assigned shall not be less than $1,000,000 (or any lesser amount otherwise agreed to by the Administrative Agent and the Borrowers); provided that no minimum assignment amount shall be applicable with respect to any assignment made to an existing Lender, to an Affiliate thereof, or (with respect to any Term Loan) to an Approved Fund; (iii) the Purchasing Lender shall have delivered to the Administrative Agent all United States Internal Revenue Service Forms required pursuant to Section 5.11(e) and all of the parties to each such assignment shall execute and deliver to the Administrative 93 Agent, for its acceptance and recording in the Register, an Assignment and Acceptance substantially in the form of Exhibit G attached hereto (an "Assignment and Acceptance"), together with (to the extent requested by any Purchasing Lender) any Note or Notes subject to such assignment; (iv) where consent of the Company to an assignment to a Purchasing Lender is required hereunder (including consent to an assignment to an Approved Fund), the Company shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been received by the Company (after delivery by the assigning Lender through the Administrative Agent) unless such consent is expressly refused by the Company prior to such fifth (5/th/) Business Day; (v) such assignment shall not, without the consent of the Company on behalf of the Borrowers, require the Borrowers to file a registration statement with the Securities and Exchange Commission or apply to or qualify the Loans or the Notes under the blue sky laws of any state; and (vi) the assigning Lender shall pay to the Administrative Agent an assignment fee of $3,500 upon the execution by such Lender of the Assignment and Acceptance; provided that no such fee shall be payable upon any assignment by a Lender to an Affiliate thereof; and provided further that, in any case of contemporaneous assignments by a Lender (including a group of affiliated Lenders that are funds managed by the same investment advisor) to a single assignee or more than one fund managed by the same investment advisor (which funds are not then Lenders hereunder), only a single $3,500 fee shall be payable for all such contemporaneous assignments. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (A) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereby and (B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement. (c) Rights and Duties Upon Assignment. By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Purchasing Lender thereunder confirm to and agree with each other and the other parties hereto as set forth in such Assignment and Acceptance. (d) Register. The Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders and the amount of the Extensions of Credit with respect to each Lender from time to time (the "Register"). The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Administrative Agent and the Lenders may treat each person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers at any reasonable time and from time to time upon reasonable prior notice. 94 (e) Issuance of New Notes. Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and a Purchasing Lender together with any Note or Notes (if applicable) subject to such assignment and (if applicable) the written consent to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is substantially in the form of Exhibit G: (i) accept such Assignment and Acceptance; (ii) record the information contained therein in the Register; (iii) give prompt notice thereof to the Borrowers; and (iv) promptly deliver a copy of such Assignment and Acceptance to the Borrowers. Within five (5) Business Days after receipt of notice, the Borrowers shall execute and deliver to the Administrative Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the order of the Purchasing Lender (to the extent requested thereby) in amounts equal to the Revolving Credit Commitment or the Term Loan Commitment, as applicable, assumed by it pursuant to such Assignment and Acceptance and a new Note or Notes to the order of the assigning Lender (to the extent requested thereby) in an amount equal to the Revolving Credit Commitment or the Term Loan Commitment, as applicable, retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be canceled and returned to the Company on behalf of the Borrowers. Notwithstanding anything in this Agreement to the contrary, any Lender which has not been issued a Note or Notes hereunder may at any time deliver a written request for a Note or Notes to the Administrative Agent and the Company. Within five (5) Business Days after receipt of notice (unless otherwise agreed to by such Lender), the Borrowers shall execute and deliver to the Administrative Agent, a Note or Notes (as applicable) to the order of such Lender in amounts equal to the Revolving Credit Commitment or the Term Loan Commitment, as applicable, of such Lender. Upon receipt thereby, the Administrative Agent shall promptly deliver such Note or Notes to such Lender. (f) Participations. Each Lender may, without notice to or the consent of the Borrowers or the Administrative Agent, in the ordinary course of its commercial banking business or financial institution business and in accordance with Applicable Law, sell participations to one or more banks or other entities (any such bank or other entity, a "Participant") in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Extensions of Credit and the Notes held by it); provided that: (i) such Lender's obligations under this Agreement (including, without limitation, its Revolving Credit Commitment and/or its Term Loan Commitment) shall remain unchanged; 95 (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iii) such Lender shall remain the holder of the Notes held by it for all purposes of this Agreement; (iv) the Borrowers, the Administrative Agent 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; (v) such Lender shall not permit such Participant the right to approve any waivers, amendments or other modifications to this Agreement or any other Loan Document other than waivers, amendments or modifications which would reduce the principal of or the interest rate on any Loan or any Reimbursement Obligation, extend the term or increase the amount of the Revolving Credit Commitment or the Term Loan Commitment of such Lender, reduce the amount of any fees to which such Participant is entitled, extend any scheduled payment date for principal of any Loan or, except as expressly contemplated hereby or thereby, release substantially all of the Collateral; and (vi) any such disposition shall not, without the consent of the Company on behalf of the Borrowers, require the Borrowers to file a registration statement with the Securities and Exchange Commission to apply to qualify the Loans or the Notes under the blue sky law of any state. The Borrowers agree that each Participant shall be entitled to the benefits of Section 5.7, Section 5.8, Section 5.9, Section 5.10, Section 5.11 and Section 14.3 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 14.10; provided that a Participant shall not be entitled to receive any greater payment under Section 5.7, Section 5.8, Section 5.9, Section 5.10, Section 5.11 and Section 14.3 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 and such Participant shall have delivered to the Administrative Agent all United States Internal Revenue Service Forms required pursuant to Section 5.11(e). (g) Disclosure of Information; Confidentiality. The Administrative Agent and the Lenders shall hold all non-public information with respect to the Borrowers obtained pursuant to the Loan Documents (or any Hedging Agreement with a Lender or the Administrative Agent) in accordance with their customary procedures for handling confidential information; provided, that the Administrative Agent may disclose information relating to this Agreement to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications and provided further, that the Administrative Agent or any Lender may disclose any such information to the extent such disclosure (i) is required by law or requested or required pursuant to any legal process, (ii) is requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority (including, without limitation, the National Association of Insurance Commissioners), (iii) is used in any suit, action or proceeding for the purpose of defending itself, reducing its liability or protecting 96 any of its claims, rights, remedies or interests under or in connection with the Loan Documents (or any Hedging Agreement with a Lender or the Administrative Agent) or (iv) relates to the "tax treatment" or "tax structure" (in each case within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment or tax structure. Any Lender may, in connection with any assignment, proposed assignment, participation or proposed participation pursuant to this Section 14.10, disclose to the Purchasing Lender, the proposed Purchasing Lender, the Participant, the proposed Participant or any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor, any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided, that prior to any such disclosure, each such Purchasing Lender, proposed Purchasing Lender, Participant, proposed Participant, contractual counterparty or professional advisor shall agree to be bound by the provisions of this Section 14.10(g). (h) Certain Pledges or Assignments. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement or any other Loan Document to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank; 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 14.11 Amendments, Waivers and Consents. Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Company, on behalf of itself and the other Borrowers; provided, that in addition no amendment, waiver or consent shall: (a) (i) increase the Revolving Credit Commitment of any Lender, (ii) reduce the rate of interest or fees payable on any Revolving Credit Loan or Reimbursement Obligation, (iii) reduce or forgive the principal amount of any Revolving Credit Loan or the amount of any Reimbursement Obligation, (iv) extend the originally scheduled time or times of payment of the principal of any Revolving Credit Loan or Reimbursement Obligation or the time or times of payment of interest on any Revolving Credit Loan or Reimbursement Obligation or any fee or commission with respect thereto (including, without limitation, the Revolving Credit Maturity Date), (v) permit any subordination of the principal or interest on any Revolving Credit Loan or Reimbursement Obligation or (vi) extend the time of the obligation of the Lenders to make or issue or participate in Letters of Credit, in any case, without the written consent of each Lender holding Revolving Credit Loans or a Revolving Credit Commitment; (b) (i) increase the Term Loan Commitment of any Lender, (ii) reduce the rate of interest or fees payable on any Term Loan, (iii) reduce or forgive the principal amount of 97 any Term Loan, (iv) permit any subordination of the principal or interest on any Term Loan or (v) extend the originally scheduled time or times of payment of the principal of any Term Loan or the time or times of payment of interest on any Term Loan or any fee or commission with respect thereto (including, without limitation, the Term Loan Maturity Date), in any case, without the written consent of each Lender holding a Term Loan or a Term Loan Commitment; (c) (i) release any Borrower from its Obligations (other than Hedging Obligations) hereunder or under any other Loan Document, (ii) permit any assignment (other than as specifically permitted or contemplated in this Agreement) of any of the Borrower's rights and obligations hereunder or under any other Loan Document, (iii) release any material portion of the Collateral or release any Security Document (other than the release of any Collateral pursuant to asset sales permitted pursuant to Section 11.6 and as otherwise specifically permitted or contemplated in this Agreement or the applicable Security Document, which release shall not require the consent of the Administrative Agent or any Lender), (iv) amend or waive any provision of this Agreement relating to prepayments or the allocation thereof, (v) amend or waive the provisions of Sections 9.12, 9.13 or 9.14 hereof, (vi) amend the provisions of Section 5.4 with respect to the pro rata treatment of payments, or Section 5.5 with respect to the order of application of proceeds or (vii) amend the provisions of this Section 14.11 or the definition of Required Lenders, without the prior written consent of each Lender. In addition, no amendment, waiver or consent to the provisions of (a) Article XIII shall be made without the written consent of the Administrative Agent and (b) Article III (as it relates to the L/C Facility) without the written consent of the Issuing Lenders. SECTION 14.12 Performance of Duties. The obligations of the Borrowers under this Agreement and each of the Loan Documents shall be performed by the Borrowers at their sole cost and expense. SECTION 14.13 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated. SECTION 14.14 Survival of Indemnities. Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XIV and any other provision of this Agreement and the Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before. SECTION 14.15 Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. 98 SECTION 14.16 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 14.17 Counterparts; Facsimile Signatures. (a) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. (b) A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto, and an executed copy of this Agreement may be delivered by one or more parties hereto by facsimile or similar instantaneous electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof. SECTION 14.18 Company as Agent for the Borrowers. The Borrowers hereby irrevocably appoint and authorize the Company (i) to provide the Administrative Agent with all notices with respect to Extensions of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents and (ii) to take such action on behalf of the Borrowers as the Company deems appropriate on its behalf to obtain Extensions of Credit and to exercise such other powers as are reasonably incidental to carry out the purposes of this Agreement and the other Loan Documents. SECTION 14.19 Obligations Joint and Several; Contribution. (a) The Borrowers shall be jointly and severally liable for the Obligations, however incurred. References to the Borrowers with respect to the Obligations or any portion thereof shall mean each Borrower on a joint and several basis. (b) To the extent any Borrower is required, by reason of its Obligations hereunder, to pay to the Administrative Agent or any Lender or to any other Borrower an amount greater than the amount of the Extensions of Credit actually made available to or for the account of such Borrower, such Borrower shall have an enforceable right of contribution and indemnity against the remaining Borrowers, and the remaining Borrowers shall be jointly and severally liable to such Borrower, for repayment of the full amount of such excess payment. Such Borrower shall be subrogated to any and all rights of the Administrative Agent and the Lenders against the remaining Borrowers to the extent of such excess payment. The rights of any Borrower to contribution, subrogation and indemnity under this Section 14.19 or under Applicable Law shall in all events and all respects be subject and subordinate to the rights of the Administrative Agent 99 and the Lenders under this Agreement and the other Loan Documents and subject to the prior full, final and indefeasible payment to the Administrative Agent and the Lenders of all Obligations. (c) Notwithstanding anything to the contrary in this Agreement, the amount of any Borrower's obligations under this Section 14.19 shall in all events be limited to, but not in excess of, the maximum amount thereof not subject to avoidance or recovery by operation of Applicable Law governing bankruptcy, reorganization, receivership, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. Section546, Section547, Section548, Section550 and other "avoidance" provisions of Title 11 of the United States Code) applicable at any time to such Borrower and this Agreement. SECTION 14.20 Term of Agreement. This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations shall have been paid and satisfied in full. The Administrative Agent is hereby permitted to release all Liens on the Collateral in favor of the Administrative Agent, for the ratable benefit of itself and the Lenders, upon repayment of the outstanding principal of and all accrued interest on the Loans, payment of all outstanding fees and expenses hereunder and the termination of the Lender's Commitments. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination. SECTION 14.21 Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Agreement with its counsel. SECTION 14.22 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. SECTION 14.23 Inconsistencies with Other Documents; Independent Effect of Covenants. (a) In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control; provided, that any provision of the Security Documents which imposes additional burdens on the Borrowers or their Subsidiaries or further restricts the rights of the Borrowers or their Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect. (b) The Borrowers expressly acknowledge and agree that each covenant contained in Articles IX, X, or XI hereof shall be given independent effect. Accordingly, the Borrowers shall not engage in any transaction or other act otherwise permitted under any covenant contained in 100 Articles IX, X, or XI if, before or after giving effect to such transaction or act, the Borrowers shall or would be in breach of any other covenant contained in Articles IX, X, or XI. [Signature Pages To Follow] 101 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. BORROWERS: GLOBAL IMAGING SYSTEMS, INC. By: /s/ Raymond Schilling ------------------------------------- Raymond Schilling CFO, Senior Vice President, Treasurer and Secretary GLOBAL OPERATIONS TEXAS, L.P. By: Global Imaging Systems, Inc. Its: General Partner By: /s/ Raymond Schilling ------------------------------------- Raymond Schilling CFO, Senior Vice President, Treasurer and Secretary of such Borrower [Signatures Continued on the Following Page] Second Amended and Restated Credit Agreement] BORROWERS: GLOBAL IMAGING OPERATIONS, LLC, GLOBAL IMAGING FINANCE COMPANY, LLC, AMERICAN PHOTOCOPY EQUIPMENT COMPANY OF PITTSBURGH, LLC, BERNEY OFFICE SOLUTIONS, LLC, BUSINESS EQUIPMENT UNLIMITED, CAMERON OFFICE PRODUCTS, LLC, CONNECTICUT BUSINESS SYSTEMS, LLC, CONWAY OFFICE PRODUCTS, LLC, COPY SERVICE AND SUPPLY, INC., DUPLICATING SPECIALTIES, INC., EASTERN COPY PRODUCTS, LLC, ELECTRONIC SYSTEMS, INC., ELECTRONIC SYSTEMS OF RICHMOND, INC., QUALITY BUSINESS SYSTEMS, INC., SOUTHERN BUSINESS COMMUNICATIONS, INC., CARR BUSINESS SYSTEMS, INC., CAPITOL OFFICE SOLUTIONS, LLC, DISTINCTIVE BUSINESS PRODUCTS, INC., LEWAN & ASSOCIATES, INC., PROVIEW, INC., CENTRE BUSINESS PRODUCTS, INC., DANIEL COMMUNICATIONS, INC., OFFICE TECH, LLC, COLUMN OFFICE EQUIPMENT, INC., PACIFIC OFFICE SOLUTIONS, INC., AVPRESENTATIONS, INC., ECOM-DIVISION, INC., N&L ENTERPRISES, LLC, NORTHEAST COPIER SYSTEMS, LLC, ARIZONA OFFICE TECHNOLOGIES, INC., COMMERCIAL EQUIPMENT COMPANY, MODERN BUSINESS MACHINES, LLC By: /s/ Raymond Schilling ------------------------------------- Raymond Schilling See Attached Schedule A [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] AGENTS AND LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as Administrative Agent and as Lender By: /s/ Mark B. Felker ------------------------------------- Mark B. Felker Managing Director [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent and as Lender By: /s/ Fridolf A. Hanson ------------------------------------- Fridolf A. Hanson Its Duly Authorized Signatory [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] SUNTRUST BANK, as Documentation Agent and as Lender By: /s/ Karen Copeland ------------------------------------- Karen Copeland Vice President [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] LASALLE BANK NATIONAL ASSOCIATION, as Lender By: /s/ Robert Lozano ------------------------------------- Robert Lozano First Vice President [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] FLEET NATIONAL BANK, as Lender By: /s/ Stephen M. Curran ------------------------------------- Stephen M. Curran Director [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] BANK LEUMI USA, as Lender By: /s/ Joung Hee Hong ------------------------------------- Joung Hee Hong Vice President [Signatures Continued On The Following Page] [Second Amended and Restated Credit Agreement] RAYMOND JAMES BANK, FSB, as Lender By: /s/ William C. Beiler ------------------------------------- William C. Beiler Executive Vice President [Second Amended and Restated Credit Agreement]