Exhibit 10.71
CREDIT AGREEMENT
Dated as of April 10, 2008
between
QAD INC.
and
BANK OF AMERICA, N.A.

 

 

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TABLE OF CONTENTS

          Section   Page  
 
       
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
    1  
 
       
1.01 Defined Terms
    1  
1.02 Other Interpretive Provisions
    18  
1.03 Accounting Terms
    19  
1.04 Rounding
    20  
1.05 Times of Day
    20  
1.06 Letter of Credit Amounts
    20  
 
       
ARTICLE II. THE COMMITMENT AND CREDIT EXTENSIONS
    20  
 
       
2.01 Loans
    20  
2.02 Borrowings, Conversions and Continuations of Loans
    20  
2.03 Letters of Credit
    22  
2.04 Prepayments
    26  
2.05 Termination or Reduction of Commitment
    27  
2.06 Repayment of Loans
    27  
2.07 Interest
    27  
2.08 Fees
    28  
2.09 Computation of Interest and Fees
    28  
2.10 Evidence of Debt
    29  
2.11 Payments Generally
    29  
 
       
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
    29  
 
       
3.01 Taxes
    29  
3.02 Illegality
    30  
3.03 Inability to Determine Eurodollar Rate
    31  
3.04 Increased Costs; Reserves on Eurodollar Rate Loans
    31  
3.05 Compensation for Losses
    32  
3.06 Requests for Compensation
    33  
3.07 Survival
    33  
 
       
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
    33  
 
       
4.01 Conditions of Initial Credit Extension
    33  
4.02 Conditions to all Credit Extensions
    35  
 
       
ARTICLE V. REPRESENTATIONS AND WARRANTIES
    35  
 
       
5.01 Existence, Qualification and Power; Compliance with Laws
    35  
5.02 Authorization; No Contravention
    35  
5.03 Governmental Authorization; Other Consents
    36  

 

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          Section   Page  
 
       
5.04 Binding Effect
    36  
5.05 Financial Statements; No Material Adverse Effect
    36  
5.06 Litigation
    37  
5.07 No Default
    37  
5.08 Ownership of Property; Liens
    37  
5.09 Environmental Compliance
    37  
5.10 Insurance
    37  
5.11 Taxes
    37  
5.12 ERISA Compliance
    38  
5.13 Subsidiaries
    38  
5.14 Margin Regulations; Investment Company Act
    38  
5.15 Disclosure
    39  
5.16 Compliance with Laws
    39  
5.17 Intellectual Property; Licenses, Etc
    39  
5.18 Solvency
    39  
 
       
ARTICLE VI. AFFIRMATIVE COVENANTS
    40  
 
       
6.01 Financial Statements
    40  
6.02 Certificates; Other Information
    40  
6.03 Notices
    42  
6.04 Payment of Obligations
    42  
6.05 Preservation of Existence, Etc
    42  
6.06 Maintenance of Properties
    43  
6.07 Maintenance of Insurance
    43  
6.08 Compliance with Laws
    43  
6.09 Books and Records
    43  
6.10 Inspection Rights
    43  
6.11 Use of Proceeds
    43  
6.12 Additional Guarantors
    44  
 
       
ARTICLE VII. NEGATIVE COVENANTS
    44  
 
       
7.01 Liens
    44  
7.02 Investments
    45  
7.03 Indebtedness
    47  
7.04 Fundamental Changes
    48  
7.05 Dispositions
    48  
7.06 Restricted Payments
    49  
7.07 Change in Nature of Business
    49  
7.08 Transactions with Affiliates
    49  
7.09 Burdensome Agreements
    49  
7.10 Use of Proceeds
    50  
7.11 Financial Covenants
    50  

 

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          Section   Page  
 
       
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
    50  
 
       
8.01 Events of Default
    50  
8.02 Remedies Upon Event of Default
    53  
8.03 Application of Funds
    53  
 
       
ARTICLE IX. MISCELLANEOUS
    53  
 
       
9.01 Amendments; Etc
    53  
9.02 Notices and Other Communications; Facsimile Copies
    54  
9.03 No Waiver; Cumulative Remedies
    55  
9.04 Expenses; Indemnity; Damage Waiver
    55  
9.05 [Reserved]
    56  
9.06 Payments Set Aside
    56  
9.07 Successors and Assigns
    56  
9.08 Treatment of Certain Information; Confidentiality
    58  
9.09 Right of Setoff
    59  
9.10 Interest Rate Limitation
    60  
9.11 Counterparts; Integration; Effectiveness
    60  
9.12 Survival of Representations and Warranties
    60  
9.13 Severability
    60  
9.14 Governing Law; Jurisdiction; Etc
    61  
9.15 Waiver of Jury Trial
    62  
9.16 USA PATRIOT Act Notice
    62  
9.17 Time of the Essence
    62  
9.18 ENTIRE AGREEMENT
    62  
 
       
SIGNATURES
    S-1  

 

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SCHEDULES
5.05 Supplement to Interim Financial Statements
5.13 Subsidiaries and Other Equity Investments
7.01 Existing Liens
7.02 Existing Investments
7.03 Existing Indebtedness
9.02 Notice Addresses and Lending Office
EXHIBITS
Form of
A Loan Notice
B Note
C Compliance Certificate
D Guaranty

 

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CREDIT AGREEMENT
This CREDIT AGREEMENT (“Agreement”) is entered into as of April 10, 2008 by and
between QAD INC., a Delaware corporation (the “Borrower”) and Bank of America,
N.A. (the “Lender”).
The Borrower has requested that the Lender provide a revolving credit facility,
and the Lender is willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:
“Acquired Entity” means (a) any Person that becomes a Subsidiary of the Borrower
as a result of an Acquisition or (b) any business entity or division thereof,
all or substantially all of the assets and business of which are acquired by a
Subsidiary of the Borrower pursuant to an Acquisition.
“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person (other than a Person that is a Subsidiary), (b) the acquisition of
in excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person (other than a Person that is a Subsidiary), or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary).
“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
“Agreement” means this Credit Agreement.

 

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“Applicable Rate” means the following percentages per annum, based upon the
Consolidated Total Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Lender pursuant to Section 6.02(a):
APPLICABLE RATE

                                              Eurodollar                        
Rate + /             Consolidated Total   Commitment     Letters of     Base
Rate   Pricing Level   Leverage Ratio   Fee     Credit     +  
 
                           
1
  < 0.75:1     0.25 %     0.75 %     -0.25 %
2
  >0.75:1 but < 1.25:1     0.375 %     1.25 %     0.0 %
3
  >1.25:1     0.50 %     1.75 %     0.25 %

Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Total Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(a); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, the next
higher Pricing Level shall apply as of the fifth Business Day after the date on
which such Compliance Certificate was required to have been delivered, with the
next higher Pricing Level to apply as of each Business Day thereafter that the
Compliance Certificate was not delivered until the applicable Pricing Level is
Pricing Level 3; provided, further, that as of the first Business Day after the
date on which such Compliance Certificate is delivered, the Pricing Level shall
revert to the applicable Pricing Level pursuant to such Compliance Certificate.
The Applicable Rate in effect from the Closing Date through the date the
Compliance Certificate in respect of the fiscal quarter ending January 31, 2008
is delivered or required to be delivered shall be determined based upon Pricing
Level 1.
“Approved Fund” has the meaning specified in Section 9.07(f).
“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.
“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended January 31, 2007,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.
“Authorized Signatory” has the meaning specified in Section 2.02(a).
“Availability Period” means the period from and including the Closing Date to
the earlier of (a) the Maturity Date and (b) the date of termination of the
Commitment.

 

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“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by the Lender as its
“prime rate.” The “prime rate” is a rate set by the Lender based upon various
factors including the Lender’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by the Lender shall take effect at the opening of
business on the day specified in the public announcement of such change.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Borrower” has the meaning specified in the introductory paragraph hereto.
“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type
and, in the case of Eurodollar Rate Loans, having the same Interest Period made
by the Lender pursuant to Section 2.01.
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Lending Office is located and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.
“Capital Expenditures” means, in respect of any Person, for any period: (i) any
payment that is made during such period by a Person plus (ii) the aggregate
amount of any Indebtedness incurred by such Person during such period, in each
case for (or in connection with) the rental, lease, purchase, construction or
use of any property the value or cost of which, under GAAP should be capitalized
or appear on such Person’s balance sheet, without regard to the manner in which
such payments (or the instrument pursuant to which they are made) are
characterized by such Person or any other Person.
“Cash Collateralize” has the meaning specified in Section 2.03(f).
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

 

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“Change of Control” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding (x) any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan
and (y) Ms. Pamela Lopker, Mr. Karl Lopker, the Lopker Living Trust, the Lopker
Family 1997 Charitable Remainder Trust, the Lopker Family Foundation, and any
testamentary or intervivos trust as to which Pamela Lopker or Karl Lopker are
trustees and as to which they, or any of their children or descendants and their
respective spouses are the majority beneficiaries) (such Persons under this
clause (y), collectively, the “Controlling Shareholders”) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire (such right, an “option right”), whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 35%
or more of the equity securities of the Borrower entitled to vote for members of
the board of directors or equivalent governing body of the Borrower on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right);
(b) a majority of the members of the board of directors or other equivalent
governing body of the Borrower cease to be composed of the Controlling
Shareholders or individuals whose election or nomination to that board or
equivalent governing body was approved by the Controlling Shareholders; or
(c) any Person or two or more Persons (other than the Controlling Shareholders
or any of them) acting in concert shall have acquired by contract or otherwise,
or shall have entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of the Borrower, or control over the equity securities of the Borrower entitled
to vote for members of the board of directors or equivalent governing body of
the Borrower on a fully-diluted basis (and taking into account all such
securities that such Person or group has the right to acquire pursuant to any
option right) representing 35% or more of the combined voting power of such
securities.
“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived by the Lender.
“Code” means the Internal Revenue Code of 1986.
“Commitment” means the obligation of the Lender to make Loans and L/C Credit
Extensions hereunder in an aggregate principal amount at any one time not to
exceed $20,000,000, as such amount may be adjusted from time to time in
accordance with this Agreement.
“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

 

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“Consolidated EBITDA” means, for any Subject Period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income, without duplication: (i) Consolidated Interest
Charges for such period, (ii) the provision for Federal, state, local and
foreign income taxes payable by the Borrower and its Subsidiaries for such
period (net of income tax credits for such period), (iii) depreciation and
amortization expense, and (iv) charges incurred during such period under
Financial Accounting Standard 123R which do not represent a cash item in such
period or any future period; provided, however, that if there has occurred an
Acquisition during the relevant period, Consolidated EBITDA shall be calculated,
at the option of the Borrower on a pro forma basis in accordance with the SEC
pro forma reporting rules under the Exchange Act, as if such Acquisition
occurred on the first day of the applicable period; provided that once elected
in respect of an Acquisition, such election shall remain in effect at all times
thereafter for such Acquisition.
“Consolidated Fixed Charge Coverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated EBITDA for the Subject Period then
ending, less Capital Expenditures made by the Borrower and its consolidated
Subsidiaries during such period, to the sum of (b) Consolidated Interest Charges
for the Subject Period then ending plus scheduled principal and interest
payments in respect of Indebtedness made by the Borrower and its consolidated
Subsidiaries during the Subject Period plus the current portion of long term
debt (other than the Obligations) as of such date.
“Consolidated Funded Indebtedness” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, excluding
Indebtedness that is under applicable law or contract non-recourse (subject to a
carve-out for “Non-Recourse Carveout Obligations” as defined in the Ortega Deed
of Trust, in the form existing on the date hereof) to the Borrower and its
Subsidiaries and is secured only by real property of the Borrower or its
Subsidiaries, the sum of (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, (b) all purchase money
Indebtedness, (c) all direct obligations arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, (d) all obligations in respect of the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business), (e) Attributable Indebtedness in
respect of capital leases and Synthetic Lease Obligations, (f) without
duplication, all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (e) above of Persons other than the
Borrower or any Subsidiary, and (g) all Indebtedness of the types referred to in
clauses (a) through (f) above of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability company) in
which the Borrower or a Subsidiary is a general partner or joint venturer,
unless such Indebtedness is under applicable law or contract non-recourse to the
Borrower or such Subsidiary, as the case may be.
“Consolidated Interest Charges” means, for any Subject Period, for the Borrower
and its Subsidiaries on a consolidated basis, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses of the
Borrower and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of the Borrower and its Subsidiaries with
respect to such period under capital leases that is treated as interest in
accordance with GAAP; provided, however, that if there has occurred an
Acquisition during the relevant period, and the Borrower has elected to adjust
its Consolidated EBITDA on a pro forma basis (in accordance with the definition
of such term) in respect of such Acquisition, Consolidated Interest Charges
shall be calculated in accordance with the SEC pro forma reporting rules under
the Exchange Act, as if such Acquisition occurred (and all Indebtedness acquired
or arising in connection therewith was incurred) on the first day of the
applicable period.

 

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“Consolidated Liquidity Ratio” means, as of any date of determination, in
respect of the Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) the sum of cash plus cash equivalents plus trade accounts receivable net
of doubtful or uncollectible accounts to (b) the sum of current liabilities
(excluding deferred revenues) plus, without duplication, the Total Outstandings,
as of such date.
“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries for that period.
“Consolidated Total Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness as of such date to
(b) Consolidated EBITDA for the Subject Period most recently ended.
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Foreign Corporation” means a Subsidiary of the Borrower which is a
“controlled foreign corporation” as defined in Section 957(a) of the Code or any
successor provision thereto.
“Credit Extension” means each of the following: (a) a borrowing of a Loan and
(b) an L/C Credit Extension.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

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“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used
with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus
2% per annum.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
“Dollar” and “$” mean lawful money of the United States.
“Eligible Assignee” has the meaning specified in Section 9.07(f).
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Eurocurrency liabilities” has the meaning specified in Section 3.04(e).
“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as published by Reuters (or other commercially available
source providing quotations of BBA LIBOR as designated by the Lender from time
to time) at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period, for Dollar deposits (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason, then the
“Eurodollar Rate” for such Interest Period shall be the rate per annum
determined by the Lender to be the rate at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by the Lender and with a term equivalent to such Interest Period would
be offered by Lender’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.
“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.
“Event of Default” has the meaning specified in Section 8.01.
“Exchange Act” means the Securities Exchange Act of 1934.
“Excluded Taxes” means, with respect to the Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder,
(a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of the Lender, in which its applicable Lending Office is
located, and (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located.

 

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“Existing Credit Agreement” means that certain Credit Agreement dated as of
April 7, 2005 between the Borrower and Comerica Bank, as amended prior to the
date hereof.
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender
on such day on such transactions as determined by the Lender.
“Foreign Subsidiary” means any Subsidiary, other than one organized and existing
under the laws of the United States or any state thereof.
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
“Fund” has the meaning specified in Section 9.07(f).
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital,

 

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equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
“Guarantors” means, collectively, each Subsidiary obligated to execute a
Guaranty pursuant to Section 6.12.
“Guaranty” means the Guaranty made by the Guarantors in favor of the Lender, in
substantially the form attached hereto as Exhibit D.
“Hazardous Materials” means any substance or material that is regulated, or
referred to, as a toxic or hazardous substance, waste or material, or as a
pollutant, contaminant or infectious waste, under any applicable Environmental
Laws, or chemicals, biological agents, or compounds that are otherwise subject
to regulation, control or remediation under applicable Environmental Laws, and
includes asbestos, lead, petroleum (including crude oil or any fraction or
additive thereof, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel, or any mixture thereof), polychlorinated
biphenyls, urea formaldehyde, radon gas, and radioactive matter. The term
“Hazardous Materials” includes any and all “hazardous substances” as defined by
or under Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. § 9601, et seq. (“CERCLA”) and all “hazardous wastes” as defined
by or under the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et
seq. (“RCRA”).
“Honor Date” has the meaning specified in Section 2.03(c)(i).
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract;

 

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(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than 60 days after the date
on which such trade account payable was created);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(f) capital leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is under
applicable law or contract non-recourse to such Person. The amount of any net
obligation under any Swap Contract on any date shall be deemed to be the Swap
Termination Value thereof as of such date. The amount of any capital lease or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Indemnitees” has the meaning specified in Section 9.04(b).
“Information” has the meaning specified in Section 9.08.
“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date.

 

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“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Loan Notice; provided that:
(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person and any arrangement pursuant to which the investor
Guarantees Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.
“IP Rights” has the meaning specified in Section 5.17.
“IRS” means the United States Internal Revenue Service.
“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the Lender and the Borrower (or any Subsidiary) or in favor the Lender
and relating to any such Letter of Credit.
“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

 

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“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.
“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.
“Lender” has the meaning specified in the introductory paragraph hereto.
“Lending Office” means the office or offices of the Lender described as such on
Schedule 9.02, or such other office or offices as the Lender may from time to
time notify the Borrower.
“Letter of Credit” means any standby letter of credit issued hereunder.
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the Lender.
“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).
“Letter of Credit Fee” has the meaning specified in Section 2.03(h).
“Letter of Credit Sublimit” means an amount equal to $2,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Commitment.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
“Loan” has the meaning specified in Section 2.01.
“Loan Documents” means this Agreement, any Note, each Issuer Document, and the
Guaranty.
“Loan Notice” means a notice of (a) a borrowing of a Loan, (b) a conversion of a
Loan from one Type to the other, or (c) a continuation of a Eurodollar Rate Loan
as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit A.

 

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“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), on condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of any
Loan Party to perform its obligations under any Loan Document to which it is a
party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party of any Loan Document to which it
is a party.
“Material Subsidiary” means, at any time, any Subsidiary that meets either of
the following conditions at such time: (a) such Subsidiary’s consolidated total
revenues for the period of the immediately preceding fiscal year is equal to or
greater than 5% of the consolidated total revenues of the Borrower and its
Subsidiaries for such period, determined in accordance with GAAP, consistently
applied, in each case as reflected in the most recent annual financial
statements referenced in Section 5.05(a) or required to be delivered pursuant to
Section 6.01(a), or (b) such Subsidiary’s total consolidated assets, as of the
last day of the immediately preceding fiscal year, are equal to or greater than
5% of the consolidated total assets of the Borrower and its Subsidiaries as of
such date, determined in accordance with GAAP, consistently applied; in each
case as reflected in the most recent annual financial statements of the Borrower
referenced in Section 5.05(a) or required to be delivered pursuant to
Section 6.01(a), provided, however, that if there occurs any Acquisition, the
foregoing tests (a) and (b) shall initially be undertaken, based upon pro forma
financial information for such Acquired Entity, as of the fiscal quarter end
immediately following such date of Acquisition, as though such quarter end date
were a fiscal year end date for purposes hereof.
“Maturity Date” means April 10, 2011.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
“Note” means a promissory note made by the Borrower in favor of the Lender
evidencing Loans made by the Lender, substantially in the form of Exhibit B.
“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.

 

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“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
“Ortega Deed of Trust” has the meaning specified in Schedule 7.01.
“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
“Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements by the Borrower of
Unreimbursed Amounts.
“Participant” has the meaning specified in Section 9.07(c).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.
“Permitted Acquisitions” has the meaning specified in Section 7.02(f).
“Permitted Lien” has the meaning specified in Section 7.01.
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of the Borrower as prescribed by the Securities
Laws.

 

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“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30-day notice period has been waived.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of a Loan, a Loan Notice, and (b) with respect to an L/C Credit
Extension, a Letter of Credit Application.
“Responsible Officer” means the chief executive officer, president, chief
financial officer or treasurer of the Borrower. Any document delivered hereunder
that is signed on behalf of a Loan Party by (x) two or more Responsible Officers
or (y) a Responsible Officer and one other officer of the Borrower shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Borrower’s stockholders, partners or members (or
the equivalent Person thereof).
“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the Public Company Accounting Oversight Board, as each of the foregoing may
be amended and in effect on any applicable date hereunder.
“Solvent” means, with respect to any Person as of a particular date, that on
such date (a) such Person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (b) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or transaction, and is not about to engage in a business
or a transaction, for which such Person’s assets would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair value of
the assets of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person, and

 

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(e) the aggregate fair saleable value (i.e., the amount that may be realized
within a reasonable time, considered to be six months to one year, either
through collection or sale at the regular market value, conceiving the latter as
the amount that could be obtained for the assets in question within such period
by a capable and diligent businessman from an interested buyer who is willing to
purchase under ordinary selling conditions) of the assets of such Person will
exceed its debts and other liabilities (including contingent, subordinated,
unmatured and unliquidated debts and liabilities). For purposes of this
definition, “debt” means any liability on a claim, and “claim” means (i) a right
to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (ii) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right is an equitable remedy, is reduced judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
“Subject Period” means, as of any date of determination for any Person, the
period of four consecutive fiscal quarters of such Person ending on such date.
“Subordinated Debt” means unsecured indebtedness having a maturity date not
earlier than six months after the Maturity Date, providing for no optional or
mandatory amortization or prepayment, and containing subordination terms
reasonably satisfactory to the Lender in its sole discretion.
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

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“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).
“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.
“Threshold Amount” means $2,000,000.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.
“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.
“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:
(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,

 

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supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall
be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property” shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.
1.03 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Lender shall so request, the Lender and
the Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Lender not to be unreasonably withheld), provided that,
until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Lender financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.
(c) Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the Borrower and its Subsidiaries or to the
determination of any amount for the Borrower and its Subsidiaries on a
consolidated basis or any similar reference shall, in each case, be deemed to
include each variable interest entity that the Borrower is required to
consolidate pursuant to FASB Interpretation No. 46 — Consolidation of Variable
Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such
variable interest entity were a Subsidiary as defined herein.

 

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1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).
1.05 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Pacific time (daylight or standard, as applicable).
1.06 Letter of Credit Amounts. Unless otherwise specified herein, the amount of
a Letter of Credit at any time shall be deemed to be the stated amount of such
Letter of Credit in effect at such time; provided, however, that with respect to
any Letter of Credit that, by its terms or the terms of any Issuer Document
related thereto, provides for one or more automatic increases in the stated
amount thereof, the amount of such Letter of Credit shall be deemed to be the
maximum stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
THE COMMITMENT AND CREDIT EXTENSIONS
2.01 Loans. Subject to the terms and conditions set forth herein, the Lender
agrees to make loans (each such loan, a “Loan”) to the Borrower from time to
time, on any Business Day during the Availability Period, in an aggregate amount
not to exceed at any time outstanding the amount of the Commitment; provided,
however, that after giving effect to any borrowing, the Total Outstandings shall
not exceed the Commitment. Within the limits of the Commitment, and subject to
the other terms and conditions hereof, the Borrower may borrow under this
Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. A
Loan may be a Base Rate Loan or a Eurodollar Rate Loan, as further provided
herein.
2.02 Borrowings, Conversions and Continuations of Loans.
(a) Each borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable notice to the Lender, which may be given by telephone. Each such
notice must be received by the Lender not later than 3:00 p.m. (i) three
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate
Loans to a Base Rate Loans, and (ii) on the requested date of any Borrowing of
Base Rate Loans. Each telephonic notice by the Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Lender of a
written Loan Notice, appropriately completed and signed by two officers, at
least one of whom shall be a Responsible Officer, and the other(s) who may be
another Responsible Officer, or an assistant treasurer, or the controller of the
Borrower (each such officer of Borrower, an “Authorized Signatory” and,
collectively, the “Authorized Signatories”). Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall

 

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be in a minimum principal amount of $1,000,000. Except as provided in
Section 2.03(c), each Borrowing of or conversion to Base Rate Loans shall be in
a minimum principal amount of $100,000. Each Loan Notice (whether telephonic or
written) shall specify (i) whether the Borrower is requesting a Borrowing, a
conversion of Loans from one Type to the other, or a continuation of Eurodollar
Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of the Loans to be borrowed, converted or continued, (iv) the
Type of Loans to be borrowed or to which existing Loans are to be converted, and
(v) if applicable, the duration of the Interest Period with respect thereto. If
the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower
fails to give a timely notice requesting a conversion or continuation, then the
applicable Loans shall be made as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loan. If the Borrower requests a borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.
(b) Upon satisfaction of the applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section 4.01), the
Lender shall make the proceeds of each Loan available to the Borrower either by
(i) crediting the account of the Borrower on the books of the Lender with the
amount of such proceeds or (ii) wire transfer of such proceeds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Lender by the Borrower; provided, however, that if, on the date of the Loan
Notice given with respect to such Borrowing, there are L/C Borrowings
outstanding, then the proceeds of such Borrowing, first, shall be applied to the
payment in full of any such unreimbursed drawings, and second, to the Borrower
as provided above.
(c) Except as otherwise provided herein, Eurodollar Rate Loans may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loans. During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Lender.
(d) The Lender shall promptly notify the Borrower of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon determination
of such interest rate. At any time that Base Rate Loans are outstanding, the
Lender shall notify the Borrower of any change in the Lender’s prime rate used
in determining the Base Rate promptly following the public announcement of such
change.

 

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2.03 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, the Lender agrees
(A) from time to time on any Business Day during the period from the Closing
Date until the Letter of Credit Expiration Date, to issue Letters of Credit for
the account of the Borrower, and to amend Letters of Credit previously issued by
it, in accordance with subsection (b) below, and (B) to honor drawings under the
Letters of Credit; provided that the Lender shall not be obligated to make any
L/C Credit Extension with respect to any Letter of Credit if as of the date of
such L/C Credit Extension, (y) the Total Outstandings would exceed the
Commitment or (z) the Outstanding Amount of the L/C Obligations would exceed the
Letter of Credit Sublimit. Each request by the Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by the
Borrower that the L/C Credit Extension so requested complies with the conditions
set forth in the proviso to the preceding sentence. Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to obtain
Letters of Credit shall be fully revolving, and accordingly the Borrower may,
during the foregoing period, obtain Letters of Credit to replace Letters of
Credit that have expired or that have been drawn upon and reimbursed.
(ii) The Lender shall not issue any Letter of Credit if:
(A) the expiry date of such requested Letter of Credit would occur more than
twelve months after the date of issuance, unless the Lender has approved such
expiry date; or
(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless the Lender has approved such expiry
date.
(iii) The Lender shall not be under any obligation to issue any Letter of Credit
if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Lender from issuing such
Letter of Credit, or any Law applicable to the Lender or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Lender shall prohibit, or request that the
Lender refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Lender with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
Lender is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the Lender any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Lender in good faith
deems material to it;
(B) the issuance of such Letter of Credit would violate one or more policies of
the Lender;
(C) except as otherwise agreed by the Lender, such Letter of Credit is in an
initial stated amount less than $500,000;
(D) such Letter of Credit is to be denominated in a currency other than Dollars;
or
(E) such Letter of Credit contains any provisions for automatic reinstatement of
the stated amount after any drawing thereunder.

 

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(iv) The Lender shall not amend any Letter of Credit if the Lender would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.
(v) The Lender shall be under no obligation to amend any Letter of Credit if
(A) the Lender would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.
(b) Procedures for Issuance and Amendment of Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the Lender in the form of a Letter of
Credit Application, appropriately completed and signed by two Authorized
Signatories. Such Letter of Credit Application must be received by the Lender
not later than 3:00 p.m., at least two Business Days (or such later date and
time as the Lender may agree in a particular instance in its sole discretion)
prior to the proposed issuance date or date of amendment, as the case may be. In
the case of a request for an initial issuance of a Letter of Credit, such Letter
of Credit Application shall specify in form and detail satisfactory to the
Lender: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the Lender may require. In the
case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the Lender (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the Lender may require.
Additionally, the Borrower shall furnish to the Lender such other documents and
information pertaining to such requested Letter of Credit issuance or amendment,
including any Issuer Documents, as the Lender may require.
(ii) Upon the Lender’s determination that the requested issuance or amendment is
permitted in accordance with the terms hereof, then, subject to the terms and
conditions hereof, the Lender shall, on the requested date, issue a Letter of
Credit for the account of the Borrower or enter into the applicable amendment,
as the case may be, in each case in accordance with the Lender’s usual and
customary business practices.
(iii) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the Lender will also deliver to the Borrower a true and complete copy
of such Letter of Credit or amendment.

 

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(c) Drawings and Reimbursements.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Lender shall notify the Borrower
thereof. Not later than 3:00 p.m. on the date of any payment by the Lender under
a Letter of Credit (each such date, an “Honor Date”), the Borrower shall
reimburse the Lender in an amount equal to the amount of such drawing. If the
Borrower fails to so reimburse the Lender (any such unreimbursed amount, an
“Unreimbursed Amount”), the Borrower shall be deemed to have requested a
Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to such Unreimbursed Amount, without regard to the minimum and multiples
specified in Section 2.02 for the principal amount of Base Rate Loans, but
subject to the amount of the unutilized portion of the Commitment and the
conditions set forth in Section 4.02 (other than the delivery of a Loan Notice).
(ii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the Lender an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default Rate.
(d) Obligations Absolute. The obligation of the Borrower to reimburse the Lender
for each drawing under each Letter of Credit and to repay each L/C Borrowing
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:
(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Lender or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

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(iv) any payment by the Lender under such Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the Lender under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any
Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the Lender. The Borrower shall be conclusively
deemed to have waived any such claim against the Lender and its correspondents
unless such notice is given as aforesaid.
(e) Role of Lender. The Borrower agrees that, in paying any drawing under a
Letter of Credit, the Lender shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrower’s pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. None of the Lender, any of its Affiliates, any of the respective
officers, directors, employees, agents or attorneys-in-fact of the Lender and
its Affiliates, nor any of the respective correspondents, participants or
assignees of the Lender shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.03(d); provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against the Lender, and the Lender may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower which the Borrower proves were
caused by the Lender’s willful misconduct or gross negligence or the Lender’s
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the Lender may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the Lender shall
not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.

 

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(f) Cash Collateral. Upon the request of the Lender, (i) if the Lender has
honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
Expiration Date, any L/C Obligation for any reason remains outstanding, the
Borrower shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. Sections 2.05 and 8.02(c) set forth
additional requirements to deliver Cash Collateral hereunder. For purposes of
this Section 2.03 and Sections 2.04 and 8.02(c), “Cash Collateralize” means to
pledge and deposit with or deliver to the Lender, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Lender. Derivatives of such term have
corresponding meanings. The Borrower hereby grants to the Lender a security
interest in all such cash, deposit accounts and all balances therein and all
proceeds of the foregoing. Cash Collateral shall be maintained in blocked,
non-interest bearing deposit accounts at the Lender.
(g) Applicability of ISP. Unless otherwise expressly agreed by the Lender and
the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply
to each Letter of Credit.
(h) Letter of Credit Fees. The Borrower shall pay to the Lender a Letter of
Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the
Applicable Rate in respect of Eurodollar Rate Loans times the daily amount
available to be drawn under such Letter of Credit. For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.
Letter of Credit Fees shall be (A) computed on a quarterly basis in arrears and
(B) due and payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand. If there is any change in the Applicable Rate during any
quarter, the daily amount available to be drawn under each Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.
Notwithstanding anything to the contrary contained herein, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Documentary and Processing Charges Payable to Lender. The Borrower shall pay
directly to the Lender for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.
Such customary fees and standard costs and charges are due and payable on demand
and are nonrefundable.
(j) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.
2.04 Prepayments. (a) The Borrower may, upon notice to the Lender, at any time
or from time to time voluntarily prepay any Loan in whole or in part without
premium or penalty; provided that (i) such notice must be received by the Lender
not later than 8:00 a.m. (A) three Business Days prior to any date of prepayment
of Eurodollar Rate Loans, and (B) on the date of prepayment of Base Rate Loans;
(ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of $100,000 or a
whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loans to be prepaid.
If such notice is given by the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein. Any prepayment of Eurodollar Rate Loans shall be
accompanied by all accrued interest on the amount repaid, together with any
additional amounts required pursuant to Section 3.05.

 

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(b) If for any reason the Total Outstandings at any time exceed the Commitment
then in effect, the Borrower shall immediately prepay Loans and/or Cash
Collateralize the L/C Obligations in an aggregate amount equal to such excess;
provided, however, that the Borrower shall not be required to Cash Collateralize
the L/C Obligations pursuant to this Section 2.04(b) unless after the prepayment
in full of the Loans the Total Outstandings exceed the Commitment then in
effect.
2.05 Termination or Reduction of Commitment. The Borrower may, upon notice to
the Lender, terminate the Commitment, or from time to time permanently reduce
the Commitment; provided that (i) any such notice shall be received by the
Lender not later than 8:00 a.m., five Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an
aggregate minimum amount of $1,000,000, (iii) the Borrower shall not terminate
or reduce the Commitment if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the Commitment, and
(iv) if, after giving effect to any reduction of the Commitment, the Letter of
Credit Sublimit exceeds the amount of the Commitment, such Sublimit shall be
automatically reduced by the amount of such excess. All commitment fees accrued
until the effective date of any termination of the Commitment shall be paid on
the effective date of such termination.
2.06 Repayment of Loans. The Borrower shall repay to the Lender on the Maturity
Date the aggregate principal amount of Loans outstanding on such date.
2.07 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.
(b) (i) If any amount of principal of any Loan is not paid when due, whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by the Borrower
under any Loan Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, then
such amount shall thereafter bear interest at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

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(iii) While any Event of Default exists, the Borrower shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.
(iv) Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable on demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.
2.08 Fees. In addition to certain fees described in subsections (h) and (i) of
Section 2.03:
(a) Commitment Fee. The Borrower shall pay to the Lender a commitment fee equal
to the Applicable Rate times the actual daily amount by which the Commitment
exceeds the Total Outstandings. The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date. The commitment fee shall be calculated quarterly in
arrears.
(b) Other Fees. The Borrower shall pay to the Lender such further fees as
separately agreed in any fee letter or other agreement pertaining hereto.
2.09 Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by the Lender’s “prime rate” shall
be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
fees or interest, as applicable, being paid than if computed on the basis of a
365-day year). Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.11(a), bear
interest for one day. Each determination by the Lender of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.

 

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2.10 Evidence of Debt. The Credit Extensions made by the Lender shall be
evidenced by one or more accounts or records maintained by the Lender in the
ordinary course of business. The accounts or records maintained by the Lender
shall be conclusive absent manifest error of the amount of the Credit Extensions
made by the Lender to the Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. Upon the request of the Lender, the
Borrower shall execute and deliver to the Lender a Note, which shall evidence
the Lender’s Loans in addition to such accounts or records. The Lender may
attach schedules to the Note and endorse thereon the date, Type (if applicable),
amount and maturity of Loans and payments with respect thereto.
2.11 Payments Generally.
(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Lender at the applicable Lending Office in Dollars and in
immediately available funds not later than 2:30 p.m. on the date specified
herein. All payments received by the Lender after 2:30 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.
(b) If any payment to be made by the Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.
(c) Nothing herein shall be deemed to obligate the Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by the Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if the Borrower shall be required by
applicable law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

 

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(c) Indemnification by the Borrower. The Borrower shall indemnify the Lender
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Lender and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by the Lender shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Lender the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Lender.
(e) Treatment of Certain Refunds. If the Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Lender, agrees to
repay the amount so paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Lender in
the event the Lender is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require the Lender to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.
3.02 Illegality. If the Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for the Lender
or its Lending Office to make, maintain or fund Eurodollar Rate Loans, or to
determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of the
Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by the Lender to the Borrower, any
obligation of the Lender to make or continue Eurodollar Rate Loans or to convert
Base Rate Loans to Eurodollar Rate Loans shall be suspended until the Lender
notifies the Borrower that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, the Borrower shall, upon demand
from the Lender, prepay or, if applicable, convert all Eurodollar Rate Loans to
Base Rate Loans, either on the last day of the Interest Period therefor, if the
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if the Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

 

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3.03 Inability to Determine Eurodollar Rate. If the Lender determines that for
any reason in connection with any request for Eurodollar Rate Loans or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loans, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
the Lender of funding such Loan, the Lender will promptly so notify the
Borrower. Thereafter, the obligation of the Lender to make or maintain
Eurodollar Rate Loans shall be suspended until the Lender revokes such notice.
Upon receipt of such notice, the Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing
that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.
3.04 Increased Costs; Reserves on Eurodollar Rate Loans.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, the Lender
(except any reserve requirement contemplated by Section 3.04(e));
(ii) subject the Lender to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit or any Eurodollar Rate Loan made by it, or
change the basis of taxation of payments to the Lender in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by the
Lender); or
(iii) impose on the Lender or the London interbank market any other condition,
cost or expense affecting this Agreement or Eurodollar Rate Loans made by the
Lender or any Letter of Credit;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to the Lender of
issuing or maintaining any Letter of Credit (or of maintaining its obligation to
issue any Letter of Credit), or to reduce the amount of any sum received or
receivable by the Lender hereunder (whether of principal, interest or any other
amount) then, upon request of the Lender, the Borrower will pay to the Lender
such additional amount or amounts as will compensate the Lender for such
additional costs incurred or reduction suffered.

 

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(b) Capital Requirements. If the Lender determines that any Change in Law
affecting the Lender or any Lending Office of the Lender or the Lender’s holding
company, if any, regarding capital requirements has or would have the effect of
reducing the rate of return on the Lender’s capital or on the capital of the
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitment of the Lender or the Loans made by, or the Letters of Credit issued
by, the Lender, to a level below that which the Lender or such Lender’s holding
company could have achieved but for such Change in Law (taking into
consideration the Lender’s policies and the policies of the Lender’s holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to the Lender such additional amount or amounts as will compensate the
Lender or such Lender’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of the Lender setting forth
the amount or amounts necessary to compensate the Lender or its holding company,
as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower shall be conclusive absent manifest error. The
Borrower shall pay the Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of the Lender’s right to demand such compensation, provided
that the Borrower shall not be required to compensate the Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that the Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of the Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).
(e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to the Lender, as
long as the Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency liabilities”), additional interest on the
unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by the
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Borrower shall have received at least 10 days’ prior notice of such
additional interest from the Lender. If the Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of the Lender from time to time, the
Borrower shall promptly compensate the Lender for and hold the Lender harmless
from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise) or, in the case of interest payments, other than an Interest Payment
Date relating thereto; or

 

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(b) any failure by the Borrower (for a reason other than the failure of the
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower,
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by the
Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lender under
this Section 3.05, the Lender shall be deemed to have funded each Eurodollar
Rate Loan at the Eurodollar base rate used in determining the Eurodollar Rate
for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.
3.06 Requests for Compensation. A certificate of the Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Lender may use any reasonable
averaging and attribution methods.
3.07 Survival. All of the Borrower’s obligations under this Article III shall
survive termination of the Commitment and repayment of all other Obligations
hereunder.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Initial Credit Extension. The obligation of the Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:
(a) The Lender’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each dated
the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Lender and its legal counsel:
(i) executed counterparts of this Agreement, sufficient in number for
distribution to the Lender and the Borrower;
(ii) if requested by the Lender, a Note executed by the Borrower in favor of the
Lender;
(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of the Borrower as the Lender
may reasonably require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which the
Borrower is a party;

 

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(iv) such documents and certifications as the Lender may reasonably require to
evidence that the Borrower is duly organized or formed, and is validly existing,
in good standing and qualified to engage in business in the States of California
and Delaware;
(v) a certificate of a Responsible Officer of the Borrower either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by such Loan Party and the validity against
the Borrower of the Loan Documents to which it is a party, and such consents,
licenses and approvals shall be in full force and effect, or (B) stating that no
such consents, licenses or approvals are so required;
(vi) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since the date
of the Audited Financial Statements that has had or could be reasonably expected
to have, either individually or in the aggregate, a Material Adverse Effect;
(vii) a duly completed Compliance Certificate as of the last day of the fiscal
quarter of the Borrower ended on October 31, 2007, signed by a Responsible
Officer of the Borrower;
(viii) evidence satisfactory to the Lender that the Existing Credit Agreement
has been terminated or cancelled, with all amounts owing thereunder paid, all
letter of credit thereunder cancelled and returned, and all Liens, if any,
securing such facility terminated and released; and
(ix) such other assurances, certificates, documents, or consents as the Lender
reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall have been
paid.
(c) The Borrower shall have paid all fees, charges and disbursements of counsel
to the Lender to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of such fees, charges and disbursements as shall constitute
its reasonable estimate of such fees, charges and disbursements incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrower
and the Lender).

 

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4.02 Conditions to all Credit Extensions. The obligation of the Lender to honor
any Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type, or a continuation of Eurodollar Rate
Loans) is subject to the following conditions precedent:
(a) The representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith,
shall be true and correct in all material respects on and as of the date of such
Credit Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01.
(b) No Default shall exist, or would result from such proposed Credit Extension
or from the application of the proceeds thereof.
(c) The Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.
Each Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate
Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that:
5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party
and each Material Subsidiary thereof (a) is duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to
(i) own or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party,
(c) is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all applicable Laws; except in each case referred to in clause
(b)(i), (c) or (d), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any material Contractual Obligation to which such Person is a
party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any Law. Each Loan Party and each Material Subsidiary thereof is
in compliance with all material Contractual Obligations referred to in clause
(b)(i), except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

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5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, and similar laws
generally affecting creditors’ rights and to general principles of equity.
5.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of the
Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other material
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of
the date thereof, including material liabilities for taxes, material commitments
and Indebtedness.
(b) The unaudited consolidated balance sheet of the Borrower and its
Subsidiaries dated October 31, 2007, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments. Schedule 5.05
sets forth all material indebtedness and other material liabilities, direct or
contingent, of the Borrower and its consolidated Subsidiaries as of the date of
such financial statements not set forth on such financial statements (including
footnotes thereto), including material liabilities for taxes, material
commitments and Indebtedness.
(c) Since the date of the Audited Financial Statements, there has been no event
or circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect.

 

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5.06 Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the actual knowledge of any Responsible Officer of the Borrower
(on the basis of Borrower’s ordinary course monitoring of such matters,
consistent with its obligations under the Securities Laws), threatened in
writing (other than threats as to which there exists no reasonable likelihood of
further action or reasonable likelihood of a meritorious claim), at law, in
equity, in arbitration or before any Governmental Authority, by or against the
Borrower or any of its Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby, or (b) either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect.
5.07 No Default. Neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation that could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.
5.08 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all material real property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Liens permitted by Section 7.01.
5.09 Environmental Compliance. The Borrower and its Subsidiaries are in
compliance with all applicable Environmental Laws and do not have knowledge of
any Environmental Liability, except to the extent that such liability could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Borrower, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable Subsidiary
operates.
5.11 Taxes. The Borrower and its Subsidiaries have filed all U.S. Federal, U.S.
state and other material tax returns and reports required to be filed, and have
paid all U.S. Federal, U.S. state and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.

 

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5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination or (in the case of any standardized prototype plans) opinion
letter from the IRS or an application for such a letter is currently being
processed by the IRS with respect thereto and, to the best knowledge of the
Borrower, nothing has occurred which would prevent, or cause the loss of, such
qualification. The Borrower and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.
5.13 Subsidiaries. As of the Closing Date, (i) the Borrower has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.13, (ii) all
of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and nonassessable and except as noted in Part (a) of
Schedule 5.13 are wholly-owned, directly or indirectly, by the Borrower, free
and clear of all Liens, (iii) all Material Subsidiaries existing as of the
Closing Date are disclosed in Part (b) of Schedule 5.13, (iv) the Borrower has
no equity investments in any other corporation or entity other than those
specifically disclosed in Part (c) of Schedule 5.13, and (v) all of the
outstanding Equity Interests in the Borrower have been validly issued, and are
fully paid and nonassessable. QAD Ortega LLC is engaged solely in the business
of owning and operating real property used or usable by the Borrower and its
Subsidiaries.
5.14 Margin Regulations; Investment Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock. Following the application of
the proceeds of each Borrowing or drawing under each Letter of Credit, not more
than 25% of the value of the assets (either of the Borrower only or of the
Borrower and its Subsidiaries on a consolidated basis) subject to the provisions
of Section 7.01 or Section 7.05 or subject to any restriction contained in any
agreement or instrument between the Borrower and the Lender or any Affiliate of
the Lender relating to Indebtedness and within the scope of Section 8.01(e) will
be margin stock.

 

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(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary
is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.
5.15 Disclosure. The Borrower has disclosed to the Lender all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. No report, financial statement, certificate or other information
furnished (whether in writing or orally) by or on behalf of any Loan Party to
the Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the totality of the circumstances under
which they were made, not misleading; provided that, with respect to projected
financial information, the Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
5.16 Compliance with Laws. Each of the Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
5.17 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries
own, or possess the right to use, all of the material trademarks, service marks,
trade names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, in each case, except to the extent that
such absence of ownership or possession, or such conflict could not reasonably
be expected to have a Material Adverse Effect.
5.18 Solvency. Each Loan Party is Solvent.

 

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ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02 and 6.03) cause each Subsidiary to:
6.01 Financial Statements. Deliver to the Lender, in form and detail
satisfactory to the Lender:
(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ended January 31,
2008, a consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated and
consolidating statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, audited (in the case of the consolidated statements) and
accompanied by a report and opinion of a Registered Public Accounting Firm of
nationally recognized standing reasonably acceptable to the Lender, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and applicable Securities Laws and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as
to the scope of such audit; and
(b) as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower
(commencing with the fiscal quarter ending April 30, 2008), a consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal quarter, and the related consolidated and consolidating
statements of income or operations, shareholders’ equity and cash flows for such
fiscal quarter and for the portion of the Borrower’s fiscal year then ended,
setting forth in each case in comparative form the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such consolidated statements to
be certified by an Authorized Signatory of the Borrower as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes and such
consolidating statements to be certified by a Responsible Officer of the
Borrower to the effect that such statements are fairly stated in all material
respects when considered in relation to the consolidated financial statements of
the Borrower and its Subsidiaries.
As to any information contained in materials furnished pursuant to
Section 6.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.
6.02 Certificates; Other Information. Deliver to the Lender, in form and detail
satisfactory to the Lender:
(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b) (commencing with the delivery of the financial
statements for the fiscal quarter ending April 30, 2008), a duly completed
Compliance Certificate signed by a Responsible Officer of the Borrower;

 

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(b) promptly after request by the Lender, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any
Subsidiary, or any audit of any of them;
(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Borrower, and copies of all annual, regular, periodic and special reports
and registration statements which the Borrower may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
and not otherwise required to be delivered to the Lender pursuant hereto;
(d) promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party or any Subsidiary
thereof pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Lender pursuant to
Section 6.01 or any other clause of this Section 6.02;
(e) promptly after receipt thereof by any Loan Party or any Subsidiary thereof,
copies of each notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation or other inquiry by such agency
regarding financial or other operational results of any Loan Party or any
Subsidiary thereof; and
(f) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Lender may from time to time reasonably
request.
Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 9.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet
or intranet website, if any, to which the Lender has access (whether a
commercial, third-party website); provided that the Borrower shall notify the
Lender (by telecopier or electronic mail) of the posting of any such documents
and provide to the Lender by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything contained herein, in every
instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(a) to the Lender. Except for
such Compliance Certificates, the Lender shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and the Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

 

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6.03 Notices. Promptly notify the Lender:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a material Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;
(c) of the occurrence of any ERISA Event; and
(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action, if any, the Borrower has taken and
proposes to take with respect thereto. Each notice pursuant to Section 6.03(a)
shall describe with reasonable particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.
6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its material obligations and liabilities, including (a) all
material tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets, unless the same are being contested in good faith
by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful material claims which, if unpaid, would by law become a Lien upon
its property (other than a Permitted Lien); and (c) all material Indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Indebtedness.
6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence (i) and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05, and, (ii) good standing in each jurisdiction in which its
ownership, lease or operation of properties or the conduct of its business
requires it to be so qualified, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect; (b) take all
commercially reasonable action to maintain all rights, privileges, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) take all commercially
reasonable actions to preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

 

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6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted, except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) use the standard of care typical in the industry in the
operation and maintenance of its facilities.
6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrower, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons.
6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.
6.09 Books and Records. (a) Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be; and
(b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary, as the case may be.
6.10 Inspection Rights. Permit representatives and independent contractors of
the Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its directors, officers,
and independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that (i) when an Event of
Default exists the Lender (or any of its representatives or independent
contractors) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice, and (ii) the
Lender shall comply with Section 9.08 in connection with any such visit and
inspection.
6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for working
capital, capital expenditures and other general corporate purposes not in
contravention of any Loan Document and not for any illegal use.

 

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6.12 Additional Guarantors. Notify the Lender at the time that any Person (other
than QAD Ortega Hill, LLC, provided QAD Ortega Hill, LLC does not acquire any
significant assets other than real property used or usable by the Borrower and
its Subsidiaries) becomes a Material Subsidiary, and promptly thereafter (and in
any event within 30 days after (x) the date the Borrower’s financial statements
are required to be delivered under Section 6.01(a) and (y) in the case of any
Material Subsidiary resulting from an Acquisition, the date the Borrower’s
financial statements are first required to be delivered under Section 6.01(a) or
6.01(b) after the date of such Acquisition), unless the Borrower certifies that
such Subsidiary is a Controlled Foreign Corporation, cause such Person to
(a) become a Guarantor by executing and delivering to the Lender a counterpart
of the Guaranty or such other document as the Lender shall deem appropriate for
such purpose, and (b) deliver to the Lender documents of the types referred to
in clauses (iii) and (iv) of Section 4.01(a) (substituting for this purpose the
term “Guarantor” for “Borrower”), all in form, content and scope reasonably
satisfactory to the Lender.
ARTICLE VII.
NEGATIVE COVENANTS
So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly:
7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following (each, a “Permitted Lien”):
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof that are (x) listed on Schedule 7.01, (y)
in favor of the Lender, or (z) encumber only assets of Foreign Subsidiaries and
do not secure, individually or in the aggregate Indebtedness exceeding the
Threshold Amount; together with any renewals or extensions of any of the
foregoing, provided that (i) the property covered thereby is not changed, (ii)
the amount secured or benefited thereby is not increased, (iii) the direct or
any contingent obligor with respect thereto is not changed, and (iv) any renewal
or extension of the obligations secured or benefited thereby is permitted by
Section 7.03(b);
(c) Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

 

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(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
(f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;
(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h);
(i) Liens securing Indebtedness permitted under Section 7.03(e); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition; and
(j) banker’s liens and similar Liens (including rights of set off) in respect of
bank deposits and financial instruments, arising in connection with the
Borrower’s or any Subsidiary’s deposit, cash management or securities account
relationships maintained with any bank or financial institution, and not
securing Indebtedness.
7.02 Investments. Make any Investments, except:
(a) Investments held by the Borrower or any Subsidiary (i) in the form of cash
equivalents, or short-term marketable securities, or (ii) as set forth on
Schedule 7.02 hereto;
(b) advances to officers, directors and employees of the Borrower and
Subsidiaries for travel, entertainment, relocation and analogous ordinary
business purposes;
(c) Investments of the Borrower or any Subsidiary in any direct or indirect
wholly-owned Subsidiary and Investments of any direct or indirect wholly-owned
Subsidiary in the Borrower or in another direct or indirect wholly-owned
Subsidiary, other than for purposes of undertaking Acquisitions;
(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

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(e) Guarantees permitted by Section 7.03;
(f) Acquisitions by the Borrower or any of its direct or indirect wholly-owned
Subsidiaries, provided that (i) the total consideration paid or agreed to be
paid by the Borrower and its Subsidiaries in connection with any such
Acquisition, other than consideration consisting of common stock of the Borrower
(“total non-equity consideration”), including for this purpose any debt
(contingent or otherwise) assumed or acquired directly in connection with any
such Acquisition (or series of related transactions constituting, in the
reasonable opinion of the Lender, an Acquisition) and including any payments in
connection therewith that are contingent upon future performance or revenues and
regardless of whether the entire amount of such cash consideration is actually
paid at the time of any such Acquisition, shall not (x) exceed $5,000,000 for
any such Acquisition or (y) together with the amount of total non-equity
consideration in respect of all other Acquisitions consummated during any fiscal
year, exceed $10,000,000; (ii) the Acquired Entity related to any such
Acquisition is not engaged in any material lines of business substantially
different from those lines of business conducted by the Borrower and its
Subsidiaries on the date such Acquisition is consummated and businesses
incidental thereto (together, “Non-Complying Businesses”), provided that the
Borrower and its Subsidiaries may acquire Acquired Entities having Non-Complying
Businesses that are not their principal line of business so long as such
Non-Complying Businesses are disposed of no later than 12 months after such date
of Acquisition; (iii) the Borrower shall cause all Acquired Entities to comply
with Section 6.12, as applicable; (iv) no Default would result from the
consummation of such Acquisition; (v) prior to the commencement of any such
Acquisition, or attempted Acquisition, the board of directors or other governing
body of the Person being acquired shall have approved the terms of the
Acquisition; and (vi) the Borrower has provided to the Lender such financial and
other information regarding the Person who is being so acquired, including
historical financial statements and a description of such Person, as the Lender
shall reasonably request (such acquisitions, “Permitted Acquisitions”);
(g) joint venture Investments and other Investments (not comprising
Acquisitions) by the Borrower or any direct or indirect Subsidiary not exceeding
$2,000,000 in the aggregate for all such Persons together in any fiscal year of
the Borrower; and
(h) other Investments (other than Investments comprising Acquisitions) not
exceeding $2,000,000 in the aggregate for all such Investments together in any
fiscal year of the Borrower.

 

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7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that the
amount of such Indebtedness is not increased at the time of such refinancing,
refunding, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder;
(c) Guarantees of the Borrower or any Guarantor in respect of Indebtedness
otherwise permitted hereunder of the Borrower or any other Guarantor;
(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;
(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness at any one time outstanding shall not exceed $2,000,000;
(f) unsecured Indebtedness owing by the Borrower or any Subsidiary in favor of
the Borrower or any wholly-owned Subsidiary, incurred in the ordinary course of
business;
(g) Indebtedness constituting trade accounts payable incurred by the Borrower or
its Subsidiaries in the ordinary course of business;
(h) Indebtedness constituting Subordinated Debt; and
(i) other unsecured Indebtedness in an aggregate principal amount not exceeding
at any one time outstanding $2,000,000.

 

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7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:
(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower
shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary, the Guarantor shall be the continuing or surviving Person;
(b) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary;
provided that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Borrower or a Guarantor; and
(c) in order to consummate a Permitted Acquisition, the Borrower and any
Guarantor may merge with any Person, provided that the Borrower and any such
Guarantor shall be the continuing or surviving Person in connection therewith.
7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;
(d) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary; provided that if the transferor of such property is a
Guarantor, the transferee thereof must either be the Borrower or a Guarantor;
(e) Dispositions permitted by Section 7.04;
(f) licenses of IP Rights in the ordinary course of business; and
(g) Dispositions by the Borrower and its Subsidiaries not otherwise permitted
under this Section 7.05; provided that (i) at the time of such Disposition, no
Default shall exist or would result from such Disposition and (ii) the aggregate
book value of all property Disposed of in reliance on this clause (h) in any
fiscal year shall not exceed $2,000,000;
provided, however, that any Disposition pursuant to clauses (a) through
(g) shall be for fair market value.

 

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7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that, so long as no Event of Default shall have occurred and be
continuing at the time of any action described below or would result therefrom:
(a) each Subsidiary may make Restricted Payments to the Borrower, the Guarantors
and any other Person that owns an Equity Interest in such Subsidiary, ratably
according to their respective holdings of the type of Equity Interest in respect
of which such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common Equity
Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire
Equity Interests issued by it with the proceeds received from the substantially
concurrent issue of new shares of its common stock or other common Equity
Interests; and
(d) the Borrower may declare or pay cash dividends to its stockholders pursuant
to plans approved by the Borrower’s board of directors in an amount not to
exceed 5 cents ($0.05) per share per fiscal quarter; and the Borrower may
repurchase its equity stock in an aggregate amount not exceeding, for any
Subject Period (or portion thereof, commencing from the Closing Date),
$30,000,000.
7.07 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and its Material Subsidiaries on the date hereof or any business substantially
related or incidental thereto.
7.08 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
the Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall not apply
to transactions between or among the Borrower and any Guarantor or between and
among any Guarantors.
7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than
this Agreement, any other Loan Document or any Contractual Obligation in favor
of the Lender or any of its Related Parties) that (a) limits the ability (i) of
any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or
to otherwise transfer property to the Borrower or any Guarantor, (ii) of any
Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the
Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on
property of such Person; provided, however, that this clause (iii) shall not
prohibit any negative pledge (x) incurred or provided in favor of any holder of
Indebtedness permitted under Section 7.03(e) solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness, or (y) incurred or provided prior to the Closing Date in favor of
any holder of Indebtedness permitted under Section 7.03(b); or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.

 

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7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry margin stock (within the meaning of Regulation U of the FRB) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund indebtedness originally incurred for such purpose.
7.11 Financial Covenants.
(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total Leverage
Ratio as of the last day of any fiscal quarter of the Borrower (commencing with
the fiscal quarter ended January 31, 2008) to be greater than 1.50:1.00.
(b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio as of the last day of any fiscal quarter of the Borrower
(commencing with the fiscal quarter ended January 31, 2008) to be less than
2.00:1.00.
(c) Consolidated Liquidity Ratio. Permit the Consolidated Liquidity Ratio at any
time (commencing with the fiscal quarter ended January 31, 2008) to be less than
1.30:1.00.
(d) Consolidated EBITDA. Permit as of the last day of any fiscal quarter of the
Borrower (commencing with the fiscal quarter ended January 31, 2008)
Consolidated EBITDA for the Subject Period then ending to be less than
$10,000,000.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an Event of
Default:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within five days after the same becomes due, any interest on
any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within
five days after the same becomes due, any other amount payable hereunder or
under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02(a) and (b),
6.03(a), 6.05 (solely as to legal existence of a Loan Party), 6.10, 6.11 or 6.12
or Article VII; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

 

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(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect when made or deemed made; or
(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount and such failure continues
beyond any cure or grace period provided under the applicable documents
governing such Contractual Obligations (other than cure or grace periods agreed
in connection with or in anticipation of any such failure), or (B) with respect
to Indebtedness or a Guarantee having an aggregate principal amount (including
undrawn, committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than the
Threshold Amount, fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or
(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; provided no Event of Default shall exist under this subsection if
relating solely to one or more Subsidiaries other than Guarantors or Material
Subsidiaries unless such event or circumstance would have, or reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect; or

 

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(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; provided no Event of Default shall exist under
this subsection if relating solely to one or more Subsidiaries other than
Guarantors or Material Subsidiaries unless such event or circumstance would
have, or reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect; or
(h) Judgments. There is entered against the Borrower or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 20 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; provided no Event of Default shall exist
under this subsection if relating solely to one or more Subsidiaries other than
Guarantors or Material Subsidiaries unless such event or circumstance would
have, or reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases
to be in full force and effect; or any Loan Party or any other Person contests
in any manner the validity or enforceability of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or

 

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(k) Change of Control. There occurs any Change of Control with respect to the
Borrower.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Lender may take any or all of the following actions:
(a) declare the Commitment to be terminated, whereupon the Commitment shall be
terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and
(d) exercise all rights and remedies available to it under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the Commitment shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of the
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Lender.
8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Lender in such
order as it elects in its sole discretion.
ARTICLE IX.
MISCELLANEOUS
9.01 Amendments; Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Lender and the Borrower or the applicable Loan Party, as the case may be,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

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9.02 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the address, facsimile number or (subject to subsection (c) below)
electronic mail address specified for notices to the applicable party on
Schedule 9.02; or to such other address, facsimile number or electronic mail
address as shall be designated by such party in a notice to the other party. All
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the telephone number specified for notices to the
applicable party on Schedule 9.02, or to such other telephone number as shall be
designated by such party in a notice to the other party. All such notices and
other communications shall be deemed to be given or made upon the earlier to
occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has
been confirmed by telephone; and (D) if delivered by electronic mail (which form
of delivery is subject to the provisions of subsection (c) below), when
delivered; provided, however, that notices and other communications to the
Lender pursuant to Article II shall not be effective until actually received by
the Lender. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on all Loan Parties and the
Lender. The Lender may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.
(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose.
(d) Reliance by Lender. The Lender shall be entitled to rely and act upon any
notices (including telephonic Loan Notices) purportedly given by or on behalf of
the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
the Lender, its Affiliates, and their respective officers, directors, employees,
agents and attorneys-in-fact from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of the Borrower. All telephonic notices to and other communications
with the Lender may be recorded by the Lender, and the Borrower hereby consents
to such recording.

 

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9.03 No Waiver; Cumulative Remedies. No failure by the Lender to exercise, and
no delay by the Lender in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.04 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out of pocket
expenses incurred by the Lender and its Affiliates (including the reasonable
fees, charges and disbursements of counsel for the Lender), in connection with
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out of
pocket expenses incurred by the Lender in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out of pocket expenses incurred by the Lender
(including the fees, charges and disbursements of any counsel for the Lender),
in connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out of pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) Indemnification by the Borrower. The Borrower shall indemnify the Lender and
each Related Party of Lender (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by the Borrower or any
other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or, in the case
of the Lender and its Related Parties only, the administration of this Agreement
and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Lender to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by the
Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if
the Borrower or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.

 

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(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.
(d) Payments. All amounts due under this Section shall be payable not later than
ten Business Days after demand therefor.
(e) Survival. The agreements in this Section shall survive the termination of
the Commitment and the repayment, satisfaction or discharge of all the other
Obligations.
9.05 [Reserved]
9.06 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Lender, or the Lender exercises its right of set-off,
and such payment or the proceeds of such set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Lender in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then,
to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred.
9.07 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender and the Lender may not assign or otherwise transfer any of its rights
or obligations hereunder except (i) to an Eligible Assignee in accordance with
the provisions of subsection (b) of this Section, (ii) by way of participation
in accordance with the provisions of subsection (c) of this Section, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (e) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (c) of this Section and, to
the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

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(b) Subject to subsection (f) of this Section, the Lender may at any time, with
the written consent of the Borrower in its sole discretion (provided that such
consent shall not be required if there exists at such time an Event of Default),
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of the Commitment,
the Loans and L/C Obligations at the time owing to it) pursuant to documentation
acceptable to the Lender and the assignee, it being understood and agreed that
with respect to any Letters of Credit outstanding at the time of any such
assignment, the Lender may sell to the assignee a ratable participation in such
Letters of Credit. From and after the effective date specified in such
documentation, such Eligible Assignee shall be a party to this Agreement and, to
the extent of the interest assigned by the Lender, have the rights and
obligations of the Lender under this Agreement, and the Lender shall, to the
extent of the interest so assigned, be released from its obligations under this
Agreement (and, in the case of an assignment of all of the Lender’s rights and
obligations under this Agreement, shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 9.04 and
9.05 with respect to facts and circumstances occurring prior to the effective
date of such assignment, and shall continue to have all of the rights provided
hereunder to the Lender in its capacity as issuer of any Letters of Credit
outstanding at the time of such assignment). Upon request, the Borrower (at its
expense) shall execute and deliver new or replacement Notes to the Lender and
the assignee, and shall execute and deliver any other documents reasonably
necessary or appropriate to give effect to such assignment and to provide for
the administration of this Agreement after giving effect thereto.
(c) Subject to subsection (f) of this Section, the Lender may at any time,
without the consent of, or notice to, the Borrower, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of the
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the outstanding Letters of Credit and/or the
Loans and/or the reimbursement obligations in respect of Letters of Credit);
provided that (i) the Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the Borrower for
the performance of such obligations and (iii) the Borrower shall continue to
deal solely and directly with the Lender in connection with the Lender’s rights
and obligations under this Agreement. Any agreement or instrument pursuant to
which the Lender sells such a participation shall provide that the Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that the Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
that would (A) postpone any date upon which any payment of money is scheduled to
be made to such Participant, or (B) reduce the principal, interest, fees or
other amounts payable to such Participant. Subject to subsection (d) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were the
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.09 as though it were the Lender.

 

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(d) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that is not a “United States person” within the meaning
of Section 7701(a)(30) of the Code shall not be entitled to the benefits of
Section 3.01 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
provide to the Lender such tax forms prescribed by the IRS as are necessary or
desirable to establish an exemption from, or reduction of, U.S. withholding tax.
(e) The Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under the Note, if
any) to secure obligations of the Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.
(f) Notwithstanding the foregoing, the Lender shall at all times retain Loans
and/or a Commitment, not subject to any assignment or participation, in an
amount not less than 50.1% of the outstanding Loans and/or Commitment.
(g) As used herein, the following terms have the following meanings:
“Eligible Assignee” means (a) an Affiliate of the Lender; (b) an Approved Fund;
and (c) any other Person (other than a natural person) approved by the Borrower
in its sole discretion; provided that no such approval shall be required if an
Event of Default has occurred and is continuing.
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
“Approved Fund” means any Fund that is administered or managed by (a) the Lender
or (b) an Affiliate of the Lender, and as to which the Lender or such Affiliate
(as the case may be) does not intend to transfer or cease such administration or
management relationship during the term of this Agreement.
9.08 Treatment of Certain Information; Confidentiality. The Lender agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent

 

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required by applicable laws or regulations or by any subpoena or similar legal
process (provided that the Lender shall exercise commercially reasonable
efforts, to the extent practicable and not contrary to any request or order of
any Governmental Authority or to applicable Law, to provide prompt prior written
notice thereof to the Borrower to enable the Borrower to seek a protective order
or otherwise prevent or condition such disclosure), (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Lender or any of its Affiliates on
a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, “Information” means all information received from
the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any
of their respective businesses, other than any such information that is
available to the Lender on a nonconfidential basis prior to disclosure by the
Borrower or any Subsidiary. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
The Lender acknowledges that (a) the Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
information and (c) it will handle such material non-public information in
accordance with applicable Law, including Federal and state securities Laws.
9.09 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by applicable law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by the Lender or any such
Affiliate to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement or any other Loan Document to the Lender, irrespective of whether or
not the Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may be
contingent or unmatured or are owed to a branch or office of the Lender
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of the Lender and its respective Affiliates under this
Section are in addition to other rights and remedies (including other rights of
setoff) that the Lender or its respective Affiliates may have. The Lender agrees
to notify the Borrower promptly after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.

 

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9.10 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by the Lender exceeds the Maximum Rate, the
Lender may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.
9.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Lender and when the Lender shall have received counterparts
hereof that, when taken together, bear the signatures of each of the other
parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
9.12 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Lender,
regardless of any investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge of any Default
at the time of any Credit Extension, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.
9.13 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

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9.14 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE
BOROUGH OF MANHATTAN, NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN
PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

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9.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.16 USA PATRIOT Act Notice. The Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow the Lender to identify the Borrower in accordance with the Act.
9.17 Time of the Essence. Time is of the essence of the Loan Documents.
9.18 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

            QAD INC.
      By:   /s/ DANIEL LENDER         Name:   Daniel Lender         Title:  
Chief Financial Officer              By:   /s/ JOHN NEALE         Name:   John
Neale         Title:   Vice President & Treasurer   

 

S-1

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            BANK OF AMERICA, N.A.
      By:   /s/ KEVIN MCMAHON         Name:   Kevin McMahon         Title:  
Senior Vice President   

 

S-2

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SCHEDULE 5.05
SUPPLEMENT TO INTERIM FINANCIAL STATEMENTS
[None]
Schedule 5.05

 

1

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SCHEDULE 5.13
SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
Part (a): Subsidiaries.

              Percentage Owned, Directly   Country/Jurisdiction Name of
Subsidiary   or Indirectly, by Borrower   of Organization  
QAD Australia Pty. Ltd.
  100%   Australia
QAD Europe NV/SA
  100%   Belgium
QAD Brasil Ltda.
  100%   Brazil
QAD Bermuda Ltd.
  100%   Bermuda
QAD Canada ULC
  100%   Canada
QAD China Ltd.
  100%   China
QAD Europe s.r.o.
  100%   Czech Republic
QAD Europe SAS
  100%   France
QAD Europe GmbH
  100%   Germany
QAD Asia Limited
  100%   Hong Kong
QAD India Private Limited
  100%   India
Columbus Software Systems Limited
  100%   Ireland
Precision Software Limited
  100%   Ireland
QAD Ireland Limited
  100%   Ireland
QAD Italy S.r.l.
  100%   Italy
QAD Japan k.k.
  100%   Japan
QAD Korea Limited
  100%   Korea
QAD Mexicana, S.A. de C.V.
  100%   Mexico
QAD Sistemas Integrados Servicios de Consultoria, S.A. de C.V.
  100%   Mexico
QAD EMEA Holdings B.V.
  100%   Netherlands
QAD Europe B.V.
  100%   Netherlands
QAD Holland Holdings B.V.
  100%   Netherlands
QAD Netherlands B.V.
  100%   Netherlands
QAD NZ Limited
  100%   New Zealand
QAD Polska Sp. zo.o.
  100%   Poland
QAD Lusitana Lda.
  100%   Portugal
QAD Singapore Private Limited
  100%   Singapore
QAD Software South Africa (Pty) Ltd.
  100%   South Africa
QAD Europe S.L.
  100%   Spain
QAD Europe A.G.
  100%   Switzerland
QAD I&I Company Limited
  100%   Thailand
QAD Bilgisayar Yazilim Ltd. Sirketi
  100%   Turkey
Bisgen Ltd.
  100%   United Kingdom
Precision Distribution Systems Limited
  100%   United Kingdom
Precision Solutions Limited
  100%   United Kingdom
QAD EMEA Limited
  100%   United Kingdom

 

Schedule 5.13

1

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              Percentage Owned, Directly   Country/Jurisdiction Name of
Subsidiary   or Indirectly, by Borrower   of Organization  
QAD Europe Limited
  100%   United Kingdom
QAD Holding Limited
  100%   United Kingdom
QAD Ltd.
  100%   United Kingdom
QAD United Kingdom Ltd.
  100%   United Kingdom
Enterprise Engines, Inc.
  100%   California
FBO Systems, Inc.
  100%   Georgia
QAD Brazil Inc.
  100%   Delaware
QAD Holdings Inc.
  100%   Delaware
QAD Japan Inc.
  100%   Delaware
QAD Ortega Hill, LLC
  100%   Delaware

Part (b): Material Subsidiaries.

              Percentage Owned, Directly   Country/Jurisdiction Name of
Subsidiary   or Indirectly, by Borrower   of Organization  
QAD Netherlands B.V.
  100%   Netherlands
QAD Europe Limited
  100%   United Kingdom
QAD Ireland Limited
  100%   Ireland
QAD Australia Pty. Ltd.
  100%   Australia
QAD Europe B.V.
  100%   Netherlands
QAD EMEA Limited
  100%   United Kingdom
QAD Ortega Hill, LLC
  100%   Delaware

Part (c): Other Equity Investments of Borrower.
None
Schedule 5.13

 

2

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SCHEDULE 7.01
EXISTING LIENS
Deed of Trust dated July 28, 2004 among QAD Ortega Hill, LLC, as Trustor,
Mid-State Bank & Trust (now Rabobank, N.A.), as Beneficiary, and MSB Properties,
Inc., as Trustee (the “Ortega Deed of Trust”), encumbering the real property
commonly known as 211 Ortega Hill Road, Summerland, CA 93067, as more
particularly described in Exhibit “One” thereto, owned by QAD Ortega Hill, LLC.
Schedule 7.01

 

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SCHEDULE 7.02
EXISTING INVESTMENTS

          Money Market Funds as of 03-31-08   Principal    
Monarch Funds – Cash Institutional Shares
  $ 640,423.17  
Western Asset Institutional Money Market Fund Class A
  $ 697,321.06  
Citi Institutional Liquid Reserves Class A
  $ 21,069,236.05  
Bank of America Global Liquidity U.S. Dollar Fund
  $ 6,028,407.29  
Bank of America Global Liquidity Euro Fund
  € 975,000.00  
 
       
Employee Loans principal amount as of 3-31-08 — $288,000
       

Schedule 7.02

 

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SCHEDULE 7.03
EXISTING INDEBTEDNESS

      Description of Indebtedness   Outstanding Amount as of 03/31/08  
Document: Business Loan Agreement dated July 28, 2004 between
Mid-State Bank & Trust (now Rabobank, N.A.) and QAD Ortega Hill, LLC
  $17,201,799.56
Loan Number: 9417427988
   
Principal: $18,000,000
   
Maturity: 07/28/2014
   
 
   
Document: Lease Agreement dated October 13, 2003 between
BSL Leasing Company Limited, as Lessor, and QAD I&I Co., LTD,
as Leasee (Agreement No. LE03/576)
  681,895.65 Thai Baht
Leased Property: New passenger car (Jaguar XJ63.0 Executive)
   
Payments: 60 (monthly basis)
   
Amount of Each Payment: 93,850.00 Thai Baht
   
Expiration Date: 10/13/2008
   

Schedule 7.03

 

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SCHEDULE 9.02
NOTICE ADDRESSES AND LENDING OFFICE
QAD INC.:
100 Innovation Place
Santa Barbara, CA 93108
Attention: John Curl
Telephone: (805) 566-6118
Facsimile: (805) 565-4202
Electronic Mail: ujc@qad.com
Website Address: www.qad.com
LENDER
Lending Office for Loans, payments with respect thereto and payments of fees
other than Letter of Credit fees:
BANK OF AMERICA, N.A.
2001 Clayton Rd. 2nd Floor
Mail Code: CA4-702-02-25
Concord, CA 94520
Attn: Adam Stoner
Telephone: (925) 675-8825
Facsimile: (888) 206-6220
Electronic Mail: adam.j.stoner@bankofamerica.com
Account No. 003750836479
Ref: QAD, Inc.
ABA# 026009593
Lending Office for Letters of Credit and payments with respect thereto,
including Letter of Credit fees:
BANK OF AMERICA, N.A.
Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor
Mail Code: CA9-703-19-23
Los Angeles, CA 90017-1466
Notices (other than Requests for Credit Extensions):
BANK OF AMERICA, N.A.
315 Montgomery Street, 6th Floor
Mail Code: CA5-704-06-37
San Francisco, CA 94104
Attn: Kevin M. McMahon
Telephone: (415) 622-8088
Facsimile: (415) 622-4057
Electronic Mail: kevin.mcmahon@bankofamerica.com
Schedule 9.02

 

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EXHIBIT A
FORM OF LOAN NOTICE
Date:                     ,
To: Bank of America, N.A.
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of April 10, 2008
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), between QAD INC., a Delaware corporation, and Bank of
America, N.A..
The undersigned hereby requests (select one):

         
 
  o A Loan   o A Conversion or Continuation of a Loan

  1.   On                                                    
                                                   (a Business Day).     2.   In
the amount of $                                                                 
             .     3.   Comprised of
                                                              
                       .

[Type of Loan requested]

  4.   For a Eurodollar Rate Loan: with an Interest Period of
                     months.

[The borrowing requested herein complies with the proviso to the first sentence
of Section 2.01 of the Agreement.]

           
QAD INC.
      By:           Name:           Title:                 By:           Name:  
        Title:      

 

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EXHIBIT B
FORM OF NOTE

      $20,000,000   April 10, 2008

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to
the order of Bank of America, N.A. or registered assigns (the “Lender”), on the
Maturity Date (as defined in the Credit Agreement referred to below) the
principal amount of Twenty Million Dollars ($20,000,000), or such lesser
principal amount of Loans (as defined in such Credit Agreement) due and payable
by the Borrower to the Lender on the Maturity Date under that certain Credit
Agreement, dated as of April 10, 2008 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
between the Borrower and the Lender.
The Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates, and at such times as are specified in the Agreement. All
payments of principal and interest shall be made to the Lender in Dollars in
immediately available funds at the Lender’s Lending Office. If any amount is not
paid in full when due hereunder, such unpaid amount shall bear interest, to be
paid upon demand, from the due date thereof until the date of actual payment
(and before as well as after judgment) computed at the per annum rate set forth
in the Agreement.
This Note is the Note referred to in the Agreement, is entitled to the benefits
thereof and is subject to prepayment in whole or in part as provided therein.
This Note is also entitled to the benefits of the Guaranty. Upon the occurrence
and continuation of one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Agreement.
Loans made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender in the ordinary course of business. The Lender
may also attach schedules to this Note and endorse thereon the date, amount and
maturity of the Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

B-1

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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

           
QAD INC.
      By:           Name:           Title:                 By:           Name:  
        Title:      

 

B-2

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LOANS AND PAYMENTS WITH RESPECT THERETO

                                          Amount of   Outstanding              
  End of   Principal or   Principal         Type of   Amount of   Interest  
Interest Paid   Balance   Notation Date   Loan Made   Loan Made   Period   This
Date   This Date   Made By                                                      
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
 

 

B-3

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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date:                     ,
To: Bank of America, N.A.
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of April 10, 2008
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), between QAD INC., a Delaware corporation, (the “Borrower”)
and Bank of America, N.A. (the “Lender”).
The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the                      of the Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Lender on the behalf
of the Borrower, and that:
[Use following paragraph 1 for fiscal year-end financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.
[Use following paragraph 1 for fiscal quarter-end financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended
as of the above date. Such financial statements fairly present the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.
2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by the attached financial
statements.
3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and

 

C-1

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[select one:]
[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it and no Default has occurred and is continuing.]
—or—
[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]
4. The representations and warranties of the Borrower contained in Article V of
the Agreement and any representations and warranties of any Loan Party that are
contained in any document furnished at any time under or in connection with the
Loan Documents, are true and correct on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date, and
except that for purposes of this Compliance Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 of the Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including
the statements in connection with which this Compliance Certificate is
delivered.
5. The financial covenant analyses and information set forth on Schedule 2 and
Schedule 3 attached hereto are true and accurate on and as of the date of this
Certificate.
6. Attached hereto as Schedule 4 is a true and complete listing of all Material
Subsidiaries.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
                    ,                     .

           
QAD INC.
      By:           Name:           Title:                 By:           Name:  
        Title:        

 

C-2

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For the Quarter/Year ended                     (“Statement Date”)
SCHEDULE 2
to the Compliance Certificate
($ in 000’s)

         
I. Section 7.11 (a) — Consolidated Total Leverage Ratio.
       
 
       
A. Consolidated Funded Indebtedness at Statement Date:
  $                       
 
       
B. Consolidated EBITDA for four consecutive fiscal quarters ending on above date
(“Subject Period”):
  $                       
 
       
1. Consolidated Net Income for Subject Period:
  $                       
2. Consolidated Interest Charges for Subject Period
  $                       
3. Provision for income taxes (net of credits) for Subject Period:
  $                       
4. Depreciation expenses for Subject Period:
  $                       
5. Amortization expenses for Subject Period:
  $                       
6. Financial Accounting Standard 123R charges incurred for Subject Period not
representing cash items in Subject Period or future period (“FAS 123R Charges”):
  $                       
7. Consolidated EBITDA (Lines I.B.1 + 2 + 3 + 4 +5 + 6):
  $                       
 
       
C. Consolidated Total Leverage Ratio (Line I.A ÷ Line I.B.7):
                         to 1
 
       
Maximum Permitted:
  1.50:1.00  
 
       
II. Section 7.11 (b) — Consolidated Fixed Charge Coverage Ratio.
       
 
       
A. Consolidated EBITDA for Subject Period (Line I.B.7):
  $                       
 
       
B. Capital Expenditures for Subject Period:
  $                       
 
       
C. Consolidated Interest Charges for Subject Period:
  $                       
 
       
D. Scheduled principal and interest payments for Indebtedness for Subject
Period:
  $                       
 
       
E. Current portion of long term debt (excluding Obligations) at Statement Date:
  $                       
 
       
F. Consolidated Fixed Charge Coverage Ratio ((Lines II.A – B) ÷ (Lines II.C + D
+ E)):
                         to 1
 
       
Minimum Permitted:
    2.00:1.00  

 

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III. Section 7.11 (c) — Consolidated Liquidity Ratio.
       
 
       
A. Cash and cash equivalents at Statement Date:
  $                       
 
       
B. Trade accounts receivable net of doubtful or uncollectible accounts at
Statement Date:
  $                       
 
       
C. Current liabilities (excluding deferred revenues) at Statement Date:
  $                       
 
       
D. Total Outstandings (excluding current liabilities) at Statement Date:
  $                       
 
       
E. Consolidated Liquidity Ratio
((Lines III.A + B) ÷ (Lines III.C + D)):
                         to 1
 
       
Minimum Permitted:
    1.30:1.00  
 
       
IV. Section 7.11 (d) — Minimum Consolidated EBITDA.
       
 
       
A. Consolidated EBITDA for Subject Period (Line I.B.7):
  $                       
 
       
Minimum Permitted::
  $ 10,000,000.  

 

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For the Quarter/Year ended                      (“Statement Date”)
SCHEDULE 3
to the Compliance Certificate
($ in 000’s)
Consolidated EBITDA
(in accordance with the definition of Consolidated EBITDA as set forth in the
Agreement)

                                                                             
Twelve       Quarter     Quarter     Quarter     Quarter     Months  
Consolidated EBITDA   Ended     Ended     Ended     Ended     Ended  
 
                                       
Consolidated Net Income
                                       
 
                                       
+ Consolidated Interest Charges
                                       
 
                                       
+ income taxes (net of credits)
                                       
 
                                       
+ depreciation expense
                                       
 
                                       
+ amortization expense
                                       
 
                                       
+ Financial Accounting Standard 123R charges (non-cash items)
                                       
 
                                       
= Consolidated EBITDA
                                       

 

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SCHEDULE 4
to the Compliance Certificate
Material Subsidiaries

 

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EXHIBIT D
FORM OF GUARANTY
FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in
consideration of credit and/or financial accommodation heretofore or hereafter
from time to time made or granted to QAD INC., a Delaware corporation, (the
“Borrower”) by Bank Of America, N.A. and any other subsidiaries or affiliates of
Bank of America Corporation and its successors and assigns (collectively the
“Lender”), the undersigned Guarantor (whether one or more the “Guarantor”, and
if more than one jointly and severally) hereby furnishes its guaranty (this
“Guaranty”) of the Guaranteed Obligations (as hereinafter defined) as follows:
1. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as
a guaranty of payment and performance and not merely as a guaranty of
collection, prompt payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all times thereafter,
of any and all existing and future indebtedness and liabilities of every kind,
nature and character, direct or indirect, absolute or contingent, liquidated or
unliquidated, voluntary or involuntary and whether for principal, interest,
premiums, fees indemnities, damages, costs, expenses or otherwise, of the
Borrower to the Lender arising (a) under that certain Credit Agreement dated
April 10, 2008 between the Borrower and the Lender (the “Credit Agreement”) and
any instruments, agreements or other documents of any kind or nature now or
hereafter executed in connection with the Credit Agreement (including all
renewals, extensions, amendments, refinancings and other modifications thereof
and all costs, attorneys’ fees and expenses incurred by the Lender in connection
with the collection or enforcement thereof); (b) out of the Lender providing
treasury management services to, for the benefit of or otherwise in respect of
the Borrower, including, without limitation, intraday credit, Automated Clearing
House (ACH) services, foreign exchange services, daylights overdrafts and zero
balance arrangements; or (c) under any rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond option, interest rate option, spot or forward foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option, credit swap or default transaction, or any other similar transaction
(including an option to enter into any of the foregoing) (each, a “Transaction”
and collectively, the “Transactions”) with the Borrower (including any renewals,
extensions or modifications thereof) arising out of or relating to any and all
Transactions, including, without limitation, under any master agreement relating
thereto or governing any such Transaction, entered into between the Lender and
the Borrower; and in any case whether recovery upon such indebtedness and
liabilities may be or hereafter become unenforceable or shall be an allowed or
disallowed claim under any proceeding or case commenced by or against the
Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States
Code), any successor statute or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and including interest that accrues after the commencement by or against
the Borrower of any proceeding under any Debtor Relief Laws (collectively, the
“Guaranteed Obligations”).

 

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The Lender’s books and records showing the amount of the Guaranteed Obligations
shall be admissible in evidence in any action or proceeding, and shall be
binding upon the Guarantor and conclusive for the purpose of establishing the
amount of the Guaranteed Obligations. This Guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Guaranteed
Obligations or any instrument or agreement evidencing any Guaranteed
Obligations, or by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact or
circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to the obligations of the Guarantor under this Guaranty,
and the Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to any or all of the foregoing. Anything
contained herein to the contrary notwithstanding, the obligations of the
Guarantor hereunder at any time shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of the
Bankruptcy Code (Title 11, United States Code) or any comparable provisions of
any similar federal or state law.
2. No Setoff or Deductions; Taxes; Payments. The Guarantor shall make all
payments hereunder without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Guarantor is
compelled by law to make such deduction or withholding. If any such obligation
(other than Excluded Taxes, as defined in the Credit Agreement) is imposed upon
the Guarantor with respect to any amount payable by it hereunder, the Guarantor
will pay to the Lender, on the date on which such amount is due and payable
hereunder, such additional amount in U.S. dollars as shall be necessary to
enable the Lender to receive the same net amount which the Lender would have
received on such due date had no such obligation been imposed upon the
Guarantor. The Guarantor will deliver promptly to the Lender certificates or
other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Guarantor hereunder. The obligations of the
Guarantor under this paragraph shall survive the payment in full of the
Guaranteed Obligations and termination of this Guaranty.
3. Rights of Lender. The Guarantor consents and agrees that the Lender may, at
any time and from time to time, without notice or demand, and without affecting
the enforceability or continuing effectiveness hereof: (a) amend, extend, renew,
compromise, discharge, accelerate or otherwise change the time for payment or
the terms of the Guaranteed Obligations or any part thereof; (b) take, hold,
exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose
of any security for the payment of this Guaranty or any Guaranteed Obligations;
(c) apply such security and direct the order or manner of sale thereof as the
Lender in its sole discretion may determine; and (d) release or substitute one
or more of any endorsers or other guarantors of any of the Guaranteed
Obligations. Without limiting the generality of the foregoing, the Guarantor
consents to the taking of, or failure to take, any action which might in any
manner or to any extent vary the risks of the Guarantor under this Guaranty or
which, but for this provision, might operate as a discharge of the Guarantor.

 

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4. Certain Waivers. The Guarantor waives (a) any defense arising by reason of
any disability or other defense of the Borrower or any other guarantor, or the
cessation from any cause whatsoever (including any act or omission of the
Lender) of the liability of the Borrower; (b) any defense based on any claim
that the Guarantor’s obligations exceed or are more burdensome than those of the
Borrower; (c) the benefit of any statute of limitations affecting the
Guarantor’s liability hereunder; (d) any right to proceed against the Borrower,
proceed against or exhaust any security for the Indebtedness, or pursue any
other remedy in the Lender’s power whatsoever; (e) any benefit of and any right
to participate in any security now or hereafter held by the Lender; and (f) to
the fullest extent permitted by law, any and all other defenses or benefits that
may be derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties. The Guarantor expressly waives all setoffs
and counterclaims and all presentments, demands for payment or performance,
notices of nonpayment or nonperformance, protests, notices of protest, notices
of dishonor and all other notices or demands of any kind or nature whatsoever
with respect to the Guaranteed Obligations, and all notices of acceptance of
this Guaranty or of the existence, creation or incurrence of new or additional
Guaranteed Obligations.
5. Obligations Independent. The obligations of the Guarantor hereunder are those
of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.
6. Subrogation. The Guarantor shall not exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty have been indefeasibly paid and
performed in full and any commitments of the Lender or facilities provided by
the Lender with respect to the Guaranteed Obligations are terminated. If any
amounts are paid to the Guarantor in violation of the foregoing limitation, then
such amounts shall be held in trust for the benefit of the Lender and shall
forthwith be paid to the Lender to reduce the amount of the Guaranteed
Obligations, whether matured or unmatured.
7. Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are indefeasibly paid in full in cash and
any commitments of the Lender or facilities provided by the Lender with respect
to the Guaranteed Obligations are terminated. Notwithstanding the foregoing,
this Guaranty shall continue in full force and effect or be revived, as the case
may be, if any payment by or on behalf of the Borrower or the Guarantor is made,
or the Lender exercises its right of setoff, in respect of the Guaranteed
Obligations and such payment or the proceeds of such setoff or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Laws or
otherwise, all as if such payment had not been made or such setoff had not
occurred and whether or not the Lender is in possession of or has released this
Guaranty and regardless of any prior revocation, rescission, termination or
reduction. The obligations of the Guarantor under this paragraph shall survive
termination of this Guaranty.

 

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8. Subordination. The Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to the Guarantor, whether now
existing or hereafter arising, including but not limited to any obligation of
the Borrower to the Guarantor as subrogee of the Lender or resulting from the
Guarantor’s performance under this Guaranty, to the indefeasible payment in full
in cash of all Guaranteed Obligations. If the Lender so requests, any such
obligation or indebtedness of the Borrower to the Guarantor shall be enforced
and performance received by the Guarantor as trustee for the Lender and the
proceeds thereof shall be paid over to the Lender on account of the Guaranteed
Obligations, but without reducing or affecting in any manner the liability of
the Guarantor under this Guaranty.
9. Stay of Acceleration. In the event that acceleration of the time for payment
of any of the Guaranteed Obligations is stayed, in connection with any case
commenced by or against the Guarantor or the Borrower under any Debtor Relief
Laws, or otherwise, all such amounts shall nonetheless be payable by the
Guarantor immediately upon demand by the Lender.
10. Expenses. The Guarantor shall pay on demand all out-of-pocket expenses
(including attorneys’ fees and expenses and the allocated cost and disbursements
of internal legal counsel) in any way relating to the enforcement or protection
of the Lender’s rights under this Guaranty or in respect of the Guaranteed
Obligations, including any incurred during any “workout” or restructuring in
respect of the Guaranteed Obligations and any incurred in the preservation,
protection or enforcement of any rights of the Lender in any proceeding any
Debtor Relief Laws. The obligations of the Guarantor under this paragraph shall
survive the payment in full of the Guaranteed Obligations and termination of
this Guaranty.
11. Miscellaneous. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by the Lender
and the Guarantor. No failure by the Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law or in equity. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein. Unless otherwise
agreed by the Lender and the Guarantor in writing, this Guaranty is not intended
to supersede or otherwise affect any other guaranty now or hereafter given by
the Guarantor for the benefit of the Lender or any term or provision thereof.
12. Condition of Borrower. The Guarantor acknowledges and agrees that it has the
sole responsibility for, and has adequate means of, obtaining from the Borrower
and any other guarantor such information concerning the financial condition,
business and operations of the Borrower and any such other guarantor as the
Guarantor requires, and that the Lender has no duty, and the Guarantor is not
relying on the Lender at any time, to disclose to the Guarantor any information
relating to the business, operations or financial condition of the Borrower or
any other guarantor (the guarantor waiving any duty on the part of the Lender to
disclose such information and any defense relating to the failure to provide the
same).

 

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13. Setoff. If and to the extent any payment is not made when due hereunder, the
Lender may setoff and charge from time to time any amount so due against any or
all of the Guarantor’s accounts or deposits with the Lender.
14. Indemnification and Survival. Without limitation on any other obligations of
the Guarantor or remedies of the Lender under this Guaranty, the Guarantor
shall, to the fullest extent permitted by law, indemnify, defend and save and
hold harmless the Lender from and against, and shall pay on demand, any and all
damages, losses, liabilities and expenses (including attorneys’ fees and
expenses) that may be suffered or incurred by the Lender in connection with or
as a result of any failure of any Guaranteed Obligations to be the legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their terms. The obligations of the Guarantor under this
paragraph shall survive the payment in full of the Guaranteed Obligations and
termination of this Guaranty.
15. Assignment; Notices. This Guaranty shall (a) bind the Guarantor and its
successors and assigns, provided that the Guarantor may not assign its rights or
obligations under this Guaranty without the prior written consent of the Lender
(and any attempted assignment without such consent shall be void), and (b) inure
to the benefit of the Lender and its successors and assigns and the Lender may,
without notice to the Guarantor and without affecting the Guarantor’s
obligations hereunder, assign, sell or grant participations in the Guaranteed
Obligations and this Guaranty, in whole or in part. To the extent permitted
under the Credit Agreement, the Guarantor agrees that the Lender may disclose to
any assignee of or participant in, or any prospective assignee of or participant
in, any of its rights or obligations of all or part of the Guaranteed
Obligations any and all information in the Lender’s possession concerning the
Guarantor, this Guaranty and any security for this Guaranty. All notices and
other communications to the Guarantor under this Guaranty shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopier to the Guarantor at its address set
forth below or at such other address in the United States as may be specified by
the Guarantor in a written notice delivered to the Lender at such office as the
Lender may designate for such purpose from time to time in a written notice to
the Guarantor.
16. Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK
CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,

 

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AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST THE
GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO
IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02 OF THE CREDIT
AGREEMENT. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
17. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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18. USA PATRIOT Act Notice. The Lender hereby notifies the Guarantor that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Guarantor, which information
includes the name and address of the Guarantor and other information that will
allow the Lender to identify the Guarantor in accordance with the Act.
19. Judgment Currency. If, for the purposes of obtaining any arbitration award
or judgment in any court, it is necessary to convert a sum due hereunder in one
currency into another currency, the rate of exchange used shall be that at which
in accordance with normal banking procedures the Lender could purchase the first
currency with such other currency on the Business Day preceding that on which
the arbitration award or final judgment, as applicable, is given. The obligation
of the Guarantor in respect of any such sum due from it to the Lender hereunder
shall, notwithstanding any arbitration award or judgment in a currency (the
“Judgment Currency”) other than that in which such sum is denominated in
accordance with the applicable provisions of the Credit Agreement (the
“Agreement Currency”), be discharged only to the extent that on the Business Day
following receipt by the Lender of any sum deemed to be so due in the Judgment
Currency, the Lender may in accordance with normal banking procedures purchase
the Agreement Currency with the Judgment Currency. If the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Lender from the Guarantor in the Agreement Currency, the Guarantor agrees, as a
separate obligation and notwithstanding any such arbitration award or judgment,
to indemnify the Lender or the Person to whom such obligation was owing against
such loss. If the amount of the Agreement Currency so purchased is greater than
the sum originally due to the Lender in such currency, the Lender (by its
acceptance hereof) agrees to return the amount of any excess to the Guarantor
(or to any other Person who may be entitled thereto under applicable law). The
agreements in this Section 19 shall survive the termination of the Commitments
and repayment of all Guaranteed Obligations.
[Remainder of this page intentionally left blank]

 

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Executed as of the  _____  day of                     ,  _____.

            [NAME OF GUARANTOR(S)]
      By:           Name:           Title:           Address:          

[Signature Page to Guaranty]