Secured Term Loan Agreement SECURED TERM LOAN AGREEMENT Dated as of ^, 19^ ^, an individual residing in ^, Illinois (the "Borrower"), and ^, an Illinois corporation (the "Lender"), agree as of the date stated above that: W H E R E A S, [If appropriate, describe the background and reasons for the transaction.] N O W T H E R E F O R E, in consideration of the premises and the representations, warranties, covenants and acts referred to herein, the Borrower and the Lender agree as follows: SECTION 1. COMMITMENT. Subject to the terms and conditions of this Agreement, the Lender has loaned to the Borrower, and the Borrower has borrowed from the Lender, on the date hereof, the amount of $^ (herein called the "Loan"). SECTION 2. THE NOTE. The Loan shall be evidenced by a promissory note of the Borrower (herein, together with any promissory note given in extension, renewal, replacement or substitution thereof or therefor, called the "Note"), substantially in the form set forth in Exhibit A hereto, with appropriate insertions, payable to the order of the Lender in the original principal amount of $^ in eight consecutive quarterly principal installments of $^ payable on the last Business Day of ^, ^, ^, and ^ of each year, commencing ^, 19^ to and including ^, 19^ (provided that the final installment shall be in an amount sufficient to pay in full all unpaid principal of and accrued interest on the Note). Payments of both principal of and interest on the Note are to be made in lawful money of the United States of America in immediately available funds. SECTION 3. INTEREST. The unpaid principal amount from time to time outstanding of the Note shall bear interest at the following rates: (a) prior to maturity, at ^% per annum; and (b) after maturity of any installment, whether by acceleration or otherwise, until paid at ^% per annum. Accrued interest shall be payable on the last Business Day of ^, ^, ^, and ^ of each year and at maturity, beginning with the first of such dates to occur after the date hereof. After maturity of any installment, whether by acceleration or otherwise, accrued interest on such installment shall be 2 payable on demand. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. SECTION 4. PREPAYMENTS. The Borrower may from time to time prepay the Note in whole or in part, without premium or penalty; provided, that any partial prepayment shall be in an aggregate principal amount of $^ or an integral multiple thereof and shall be applied to the eight scheduled quarterly principal installments in the order of maturity, and provided further that any prepayment of principal of the Note shall include accrued interest to the date of prepayment on the principal amount being prepaid. SECTION 5. MAKING OF PAYMENTS; OFFSET. §5.1 Making of Payments. All payments (including those made pursuant to the terms of Section 4 hereof) of principal of, or interest on, the Note shall be made in immediately available funds by the Borrower to the Lender at such bank account as the Lender shall have designated by notice to the Borrower or, if no such notice is given, at the Lender's principal office in ^, Illinois. §5.2 Offset. In addition to and not in limitation of all rights of offset that the Lender or other holder of the Note may have under applicable law, the Lender or other holder of the Note shall, upon the occurrence of any Event of Default, have the right to appropriate and apply to the payment of the Note any and all balances, credits, deposits, accounts or moneys of any Borrower then or thereafter with the Lender or other holder. SECTION 6. COLLATERAL SECURITY. Payment of the Note and all other obligations of the Borrower hereunder is secured by a pledge agreement in the form of Exhibit B hereto (said document, as the same may be amended from time to time, being herein called the "Pledge Agreement") by which the Borrower has pledged and agreed to pledge to the Lender all of the issued and outstanding shares of capital stock of ^, an Illinois corporation (the "Company") now owned or hereafter acquired by the Borrower (herein collectively called the "Pledged Shares"). SECTION 7. REPRESENTATIONS AND WARRANTIES. To induce the Lender to enter into this Agreement, the Borrower represents and warrants to the Lender that: §7.1 Organization, Etc. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois; each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its respective organization; and the Company is duly qualified and in good standing as a foreign corporation authorized to 3 do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required. §7.2 Authorization; No Conflict. The execution and delivery of this Agreement, the borrowing hereunder, the execution and delivery of the Note and the Pledge Agreement and the performance by the Borrower of his obligations hereunder and thereunder, are fully within the Borrower's legal authority, and do not and will not contravene or conflict with any provision of law or of any agreement binding upon the Borrower. §7.3 Validity and Binding Nature. This Agreement, the Note and the Pledge Agreement have been duly executed and delivered and are the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms except as such enforceability may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles which may limit the right to obtain the remedy of specific performance of executory covenants. §7.4 Financial Statements. The Borrower's personal financial statement as at ^, 19^, a copy of which has been furnished to the Lender, presents fairly the financial condition of the Borrower as at such date and since such date there has been no material adverse change in his financial condition. The Company's audited consolidated financial statement as at ^, 19^, consisting of a balance sheet as at such date and a statement of income and retained earnings for the twelve months ended such date, copies of all of which have been furnished to the Lender, have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of preceding fiscal years, and present fairly the financial condition of the Company and its Subsidiaries as at such date and the results of their operations for the period then ended, and since such date there has been no material adverse change in their financial condition or operations. §7.5 Pending or Threatened Litigation and Contingent Liabilities. No litigation, arbitration proceedings or governmental proceedings are pending or threatened against any Borrower or the Company or any Subsidiary which would, if adversely determined, materially adversely affect the financial condition of the Borrower or the Company or any Subsidiary. §7.6 Existing Liens. None of the assets of the Borrower, the Company or any Subsidiary is subject to any Lien, except (i) for current taxes not delinquent or taxes being contested in good faith and by appropriate proceedings, (ii) mechanics', materialmen's or similar liens arising in the ordinary course of business for sums not past due, (iii) those in favor of the Lender, and (iv) those identified in Exhibit C hereto. 4 §7.7 Ownership of the Company. The Borrower owns ^% of the outstanding capital stock of all classes of the Company. §7.8 Taxes. The Borrower, the Company and each Subsidiary have filed all federal, state, and local tax returns, if any, which are required to be filed, and have paid or have caused to be paid all taxes, including those shown on such returns or on any assessment received by them, to the extent that such taxes have become due (except for current taxes not delinquent and taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been provided on the books of the Company or the appropriate Subsidiary). §7.9 Purpose. The proceeds of the Loan will be used solely for ^[if appropriate, state the purpose.] SECTION 8. COVENANTS. Until all obligations of the Borrower hereunder and under the Note are paid and performed in full, the Borrower agrees that, unless at any time the Lender shall otherwise expressly consent in writing, he will: §8.1 Reports, Certificates and Other Information. Furnish to the Lender: §8.1.1 Borrower's Personal Financial Statements. On or before ^ of each year, a personal financial statement of the Borrower as of the then-immediately preceding ^ certified by the Borrower in the form of the statement referred to in §7.4. §8.1.2 The Company's Financial Statements. On or before ^ of each year, a copy of the annual audit report of the Company and its Subsidiaries (including at least a balance sheet as of the then-preceding ^ and a statement of earnings for the twelve months then ended) prepared on a consolidated basis and in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements of the Company and its Subsidiaries referred to in §7.4, duly certified by independent certified public accountants. §8.1.3 Changes in Subsidiaries. From time to time a written report of any changes in the list of the Subsidiaries of the Company. §8.1.4 Other Information. From time to time such other information concerning the Borrower, the Company and its Subsidiaries as the Lender may reasonably request. §8.2 Taxes, Assessments and Liabilities. Pay, and cause the Company and each Subsidiary to pay, when due all taxes, assessments and other liabilities except and so long as contested in good faith by appropriate proceedings. 5 SECTION 9. EVENTS OF DEFAULT AND THEIR EFFECT. §9.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement: §9.1.1 Non-Payment of the Note, Etc. Default, and continuance thereof for five days, in the payment when due of any principal of or interest on the Note payable by the Borrower hereunder. §9.1.2 Default under the Pledge Agreement. A default shall occur and be continuing under the terms of the Pledge Agreement. §9.1.3 Cessation of Force and Effect of the Pledge Agreement. The Pledge Agreement shall at any time and for any reason cease to be in full force and effect. §9.1.4 Non-Payment of Other Indebtedness for Borrowed Money. Default in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of all or any part of any other indebtedness for borrowed money (which indebtedness has a principal amount of $^ or more) of, or guaranteed by, the Borrower. §9.1.5 Bankruptcy, Insolvency, Etc. The Borrower becomes insolvent or generally fails to pay, or admits in writing his inability to pay, debts as they become due; or the Borrower applies for, consents to, or acquiesces in the appointment of, a trustee, receiver or other custodian for the Borrower or his property, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Borrower or for a substantial part of his property and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding in respect of the Borrower, and if such case or proceeding is not commenced by the Borrower, consented to or acquiesced in by the Borrower or remains for sixty days undismissed; or the Borrower takes any action to authorize, or in furtherance of, any of the foregoing. §9.2 Effect of Event of Default. If any Event of Default described in §9.1.5 hereof shall occur, the Note and all other amounts under this Agreement shall become immediately due and payable, all without notice of any kind; and, in the case of any other Event of Default, the Lender may declare the Loan (if it has not theretofore terminated) to be terminated and the Note and all other amounts under this Agreement to be due and payable, whereupon the Note and all other amounts under this Agreement shall become immediately due and payable, all without notice of any kind. SECTION 10. CERTAIN DEFINITIONS. When used herein, the following terms shall have the following meanings: Business Day means any day on which banks are open for business in ^, Illinois, other than a Saturday or Sunday. 6 Lien means with respect to any assets, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. Subsidiary means any corporation or entity of which the Company and its Subsidiaries own, directly or indirectly, such number of outstanding shares or other interests as have more than fifty percent (50%) of the ordinary voting power for the election of directors or other persons having policy or management control. SECTION 11. MISCELLANEOUS PROVISIONS. §11.1 No Waiver; Amendments in Writing. No delay on the part of the Lender or the holder of other Note in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other for further exercise thereof, or the exercise of any other right, power or remedy. §11.2 Notices. Any notice hereunder to the Borrower or the Lender shall be in writing and, if by telefax or telex, shall be deemed to have been given when sent and if mailed shall be deemed to have been given three days after the date when sent by registered or certified mail, postage prepaid, and addressed to the Borrower or the Lender at the address shown below his or its signature hereto, or at such other address as he or it may, by written notice received by the other party hereto, have designated as his or its address for such purpose. §11.3 Governing Law. This Agreement and the Note have been executed and delivered in Illinois and are made under and governed by the internal laws of the State of Illinois. §11.4 Successors and Assigns. This Agreement shall be binding upon the Borrower and the Lender and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Lender and the successors and assigns of the Lender. Delivered at ^, Illinois, as of the day and year first above written. _____________________________ _________________________________ Witness ^A.B.C. _____________________________ Witness ATTEST: ^ABC Inc. _____________________________ By: _____________________________ 7 Corporate Secretary Its: ^ 8 EXHIBIT A TO SECURED TERM LOAN AGREEMENT ^[Set forth the text of the Note.] 9 EXHIBIT B TO SECURED TERM LOAN AGREEMENT ^[Set forth the text of the Pledge Agreement.] 10 EXHIBIT C TO SECURED TERM LOAN AGREEMENT ^[List existing and permitted liens.]