Exhibit 10.1

 

 

 

 

LOGO [g431998exacov001.jpg]

  

 

 

CREDIT AGREEMENT

 

by and among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

 

THE LENDERS THAT ARE PARTIES HERETO

as the Lenders,

                    

and

MODUSLINK GLOBAL SOLUTIONS, INC.

MODUSLINK CORPORATION

and MODUSLINK PTS, INC.

as Borrowers

Dated as of October 31, 2012

 

 

 

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TABLE OF CONTENTS

 

              Page  

1.

  DEFINITIONS AND CONSTRUCTION.      1      1.1    Definitions.      1     

1.2

   Accounting Terms.      1     

1.3

   Code.      1     

1.4

   Construction.      1     

1.5

   Time References.      2     

1.6

   Schedules and Exhibits.      2   

2.

  LOANS AND TERMS OF PAYMENT.      2     

2.1

   Revolving Loans.      2     

2.2

   Reserved.      3     

2.3

   Borrowing Procedures and Settlements.      3     

2.4

   Payments; Reductions of Commitments; Prepayments.      9     

2.5

   Promise to Pay; Promissory Notes.      12     

2.6

   Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.
     13     

2.7

   Crediting Payments.      14     

2.8

   Designated Account.      14     

2.9

   Maintenance of Loan Account; Statements of Obligations.      14     

2.10

   Fees.      14     

2.11

   Letters of Credit.      15     

2.12

   LIBOR Option.      21     

2.13

   Capital Requirements.      22     

2.14

   Accordion.      24     

2.15

   Joint and Several Liability of Borrowers.      25   

3.

  CONDITIONS; TERM OF AGREEMENT.      27     

3.1

   Conditions Precedent to the Initial Extension of Credit.      27     

3.2

   Conditions Precedent to all Extensions of Credit.      27     

3.3

   Maturity.      27     

3.4

   Effect of Maturity.      27     

3.5

   Early Termination by Borrowers.      27     

3.6

   Conditions Subsequent.      27   

4.

  REPRESENTATIONS AND WARRANTIES.      28     

4.1

   Due Organization and Qualification; Subsidiaries.      28     

4.2

   Due Authorization; No Conflict.      28     

4.3

   Governmental Consents.      29     

4.4

   Binding Obligations; Perfected Liens.      29     

4.5

   Title to Assets; No Encumbrances.      29     

4.6

   Litigation.      29     

4.7

   Compliance with Laws.      30     

4.8

   No Material Adverse Effect.      30     

4.9

   Solvency.      30     

4.10

   Employee Benefits.      30     

4.11

   Environmental Condition.      31     

4.12

   Complete Disclosure.      31   

 

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TABLE OF CONTENTS

(continued)

 

               Page     

4.13

   Patriot Act.      31      

4.14

   Indebtedness.      32      

4.15

   Payment of Taxes.      32      

4.16

   Margin Stock.      32      

4.17

   Governmental Regulation.      32      

4.18

   OFAC.      32      

4.19

   Employee and Labor Matters.      32      

4.20

   Reserved.      33      

4.21

   Leases.      33      

4.22

   Eligible Accounts.      33      

4.23

   Eligible Inventory.      33      

4.24

   Location of Inventory.      33      

4.25

   Inventory Records.      33      

4.26

   Material Contracts.      33   

5.

   AFFIRMATIVE COVENANTS.      33      

5.1

   Financial Statements, Reports, Certificates.      33      

5.2

   Reporting.      34      

5.3

   Existence.      34      

5.4

   Maintenance of Properties.      34      

5.5

   Taxes.      34      

5.6

   Insurance.      34      

5.7

   Inspection.      35      

5.8

   Compliance with Laws.      35      

5.9

   Environmental.      35      

5.10

   Disclosure Updates.      36      

5.11

   Formation of Subsidiaries.      36      

5.12

   Further Assurances.      36      

5.13

   Lender Meetings.      37      

5.14

   Location of Inventory.      37      

5.15

   Compliance with ERISA and the IRC.      37      

5.16

   Material Contracts.      37   

6.

   NEGATIVE COVENANTS.      37      

6.1

   Indebtedness.      37      

6.2

   Liens.      38      

6.3

   Restrictions on Fundamental Changes.      38      

6.4

   Disposal of Assets.      38      

6.5

   Nature of Business.      38      

6.6

   Prepayments and Amendments.      38      

6.7

   Restricted Payments.      39      

6.8

   Accounting Methods.      39      

6.9

   Investments.      39      

6.10

   Transactions with Affiliates.      39      

6.11

   Use of Proceeds.      40      

6.12

   Limitation on Issuance of Equity Interests.      40      

6.13

   Inventory with Bailees.      41      

6.14

   Employee Benefits.      41   

7.

   FINANCIAL COVENANTS.      42   

 

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TABLE OF CONTENTS

(continued)

 

               Page  

8.

   EVENTS OF DEFAULT.      42      

8.1

   Payments.      42      

8.2

   Covenants.      43      

8.3

   Judgments.      43      

8.4

   Voluntary Bankruptcy, etc.      43      

8.5

   Involuntary Bankruptcy, etc.      43      

8.6

   Default Under Other Agreements.      43      

8.7

   Representations, etc.      43      

8.8

   Guaranty.      44      

8.9

   Security Documents.      44      

8.10

   Loan Documents.      44      

8.11

   Change of Control.      44      

8.12

   ERISA.      44   

9.

   RIGHTS AND REMEDIES.      44      

9.1

   Rights and Remedies.      44      

9.2

   Remedies Cumulative.      45   

10.

   WAIVERS; INDEMNIFICATION.      45      

10.1

   Demand; Protest; etc.      45      

10.2

   The Lender Group’s Liability for Collateral.      45      

10.3

   Indemnification.      45   

11.

   NOTICES.      46   

12.

   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.   
  47   

13.

   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.      49      

13.1

   Assignments and Participations.      49      

13.2

   Successors.      52   

14.

   AMENDMENTS; WAIVERS.      52      

14.1

   Amendments and Waivers.      52      

14.2

   Replacement of Certain Lenders.      53      

14.3

   No Waivers; Cumulative Remedies.      54   

15.

   AGENT; THE LENDER GROUP.      54      

15.1

   Appointment and Authorization of Agent.      54      

15.2

   Delegation of Duties.      55      

15.3

   Liability of Agent.      55      

15.4

   Reliance by Agent.      55      

15.5

   Notice of Default or Event of Default.      55      

15.6

   Credit Decision.      56      

15.7

   Costs and Expenses; Indemnification.      56      

15.8

   Agent in Individual Capacity.      57      

15.9

   Successor Agent.      57      

15.10

   Lender in Individual Capacity.      57      

15.11

   Collateral Matters.      58      

15.12

   Restrictions on Actions by Lenders; Sharing of Payments.      59   

 

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TABLE OF CONTENTS

(continued)

 

              Page     15.13    Agency for Perfection.      59     

15.14

   Payments by Agent to the Lenders.      60     

15.15

   Concerning the Collateral and Related Loan Documents.      60     

15.16

   Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information.      60     

15.17

   Several Obligations; No Liability.      61    16.   WITHHOLDING TAXES.     
61     

16.1

   Payments.      61     

16.2

   Exemptions.      61     

16.3

   Reductions.      62     

16.4

   Refunds.      63    17.   GENERAL PROVISIONS.      63     

17.1

   Effectiveness.      63     

17.2

   Section Headings.      63     

17.3

   Interpretation.      63     

17.4

   Severability of Provisions.      63     

17.5

   Bank Product Providers.      63     

17.6

   Debtor-Creditor Relationship.      64     

17.7

   Counterparts; Electronic Execution.      64     

17.8

   Revival and Reinstatement of Obligations; Certain Waivers.      64     

17.9

   Confidentiality.      65     

17.10

   Survival.      66     

17.11

   Patriot Act.      66     

17.12

   Integration.      66     

17.13

   ModusLink Global Solutions, Inc. as Agent for Borrowers.      66   

 

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EXHIBITS AND SCHEDULES

 

Exhibit A-1

   Form of Assignment and Acceptance

Exhibit B-1

   Form of Borrowing Base Certificate

Exhibit C-1

   Form of Compliance Certificate

Exhibit L-1

   Form of LIBOR Notice

Exhibit P-1

   Form of Perfection Certificate

Schedule A-1

   Agent’s Account

Schedule A-2

   Authorized Persons

Schedule C-1

   Commitments

Schedule D-1

   Designated Account

Schedule E-1

   Eligible Inventory Locations

Schedule P-1

   Permitted Investments

Schedule P-2

   Permitted Liens

Schedule 3.1

   Conditions Precedent

Schedule 3.6

   Conditions Subsequent

Schedule 4.1(b)

   Capitalization of Borrowers

Schedule 4.1(c)

   Capitalization of Borrowers’ Subsidiaries

Schedule 4.1(d)

   Subscriptions, Options, Warrants, Calls

Schedule 4.6(b)

   Litigation

Schedule 4.10

   Benefit Plans

Schedule 4.11

   Environmental Matters

Schedule 4.14

   Permitted Indebtedness

Schedule 4.24

   Location of Inventory

Schedule 5.1

   Financial Statements, Reports, Certificates

Schedule 5.2

   Collateral Reporting

Schedule 6.5

   Nature of Business

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of October 31,
2012, by and among the lenders identified on the signature pages hereof (each of
such lenders, together with its successors and permitted assigns, is referred to
hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS
FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for each member of the Lender Group and the Bank Product
Providers (in such capacity, together with its successors and assigns in such
capacity, “Agent”), MODUSLINK GLOBAL SOLUTIONS, INC., a Delaware corporation
(“ModusLink Global”), MODUSLINK CORPORATION, a Delaware corporation
(“ModusLink”), and MODUSLINK PTS, INC., a Delaware corporation (“ModusLink PTS”,
together with ModusLink Global and ModusLink, are referred to hereinafter each
individually as a “Borrower”, and individually and collectively, jointly and
severally, as the “Borrowers”).

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, that if Borrowers notify Agent
that Borrowers request an amendment to any provision hereof to eliminate the
effect of any Accounting Change occurring after the Closing Date or in the
application thereof on the operation of such provision (or if Agent notifies
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such Accounting Change or in the application thereof, then Agent and
Borrowers agree that they will negotiate in good faith amendments to the
provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrowers after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrowers” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Borrowers and their Subsidiaries on a consolidated basis, unless the
context clearly requires otherwise. Notwithstanding anything to the contrary
contained herein, (a) all financial statements delivered hereunder shall be
prepared, and all financial covenants contained herein shall be calculated,
without giving effect to any election under the Statement of Financial
Accounting Standards No. 159 (or any similar accounting principle) permitting a
Person to value its financial liabilities or Indebtedness at the fair value
thereof, and (b) the term “unqualified opinion” as used herein to refer to
opinions or reports provided by accountants shall mean an opinion or report that
is (i) unqualified, and (ii) does not include any explanation, supplemental
comment, or other comment concerning the ability of the applicable Person to
continue as a going concern or concerning the scope of the audit

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, that to the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the

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case may be. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). 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. Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Obligations shall mean
(a) the payment or repayment in full in immediately available funds of (i) the
principal amount of, and interest accrued and unpaid with respect to, all
outstanding Loans, together with the payment of any premium applicable to the
repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are
unpaid regardless of whether demand has been made therefor, (iii) all fees or
charges that have accrued hereunder or under any other Loan Document (including
the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (b) in the
case of contingent reimbursement obligations with respect to Letters of Credit,
providing Letter of Credit Collateralization, (c) in the case of obligations
with respect to Bank Products (other than Hedge Obligations), providing Bank
Product Collateralization, (d) the receipt by Agent of cash collateral in order
to secure any other contingent Obligations for which a claim or demand for
payment has been made on or prior to such time or in respect of matters or
circumstances known to Agent or a Lender at such time that are reasonably
expected to result in any loss, cost, damage, or expense (including attorneys
fees and legal expenses), such cash collateral to be in such amount as Agent
reasonably determines is appropriate to secure such contingent Obligations,
(e) the payment or repayment in full in immediately available funds of all other
outstanding Obligations (including the payment of any termination amount then
applicable (or which would or could become applicable as a result of the
repayment of the other Obligations) under Hedge Agreements provided by Hedge
Providers) other than (i) unasserted contingent indemnification Obligations,
(ii) any Bank Product Obligations (other than Hedge Obligations) that, at such
time, are allowed by the applicable Bank Product Provider to remain outstanding
without being required to be repaid or cash collateralized, and (iii) any Hedge
Obligations that, at such time, are allowed by the applicable Hedge Provider to
remain outstanding without being required to be repaid, and (f) the termination
of all of the Commitments of the Lenders. Any reference herein to any Person
shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record.

1.5 Time References. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, all references to time of day refer to
Eastern standard time or Eastern daylight saving time, as in effect in Boston,
Massachusetts on such day. For purposes of the computation of a period of time
from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to and including”;
provided that, with respect to a computation of fees or interest payable to
Agent or any Lender, such period shall in any event consist of at least one full
day.

1.6 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

2. LOANS AND TERMS OF PAYMENT.

2.1 Revolving Loans.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Revolving Lender agrees (severally, not jointly or
jointly and severally) to make revolving loans (“Revolving Loans”) to Borrowers
in an amount at any one time outstanding not to exceed the lesser of:

(i) such Lender’s Commitment, or

(ii) such Lender’s Pro Rata Share of an amount equal to the lesser of:

(A) the amount equal to (1) the Maximum Revolver Amount less (2) the sum of
(y) the Letter of Credit Usage at such time, plus (z) the principal amount of
Swing Loans outstanding at such time, and

 

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(B) the amount equal to (1) the Borrowing Base as of such date (based upon the
most recent Borrowing Base Certificate delivered by Borrowers to Agent) less the
sum of (1) the Letter of Credit Usage at such time, plus (2) the principal
amount of Swing Loans outstanding at such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Revolving Loans,
together with interest accrued and unpaid thereon, shall constitute Obligations
and shall be due and payable on the Maturity Date or, if earlier, on the date on
which they are declared due and payable pursuant to the terms of this Agreement.

(c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall
have the right (but not the obligation), in the exercise of its Permitted
Discretion, to establish and increase or decrease Receivable Reserves, Inventory
Reserves, Bank Product Reserves, and other Reserves against the Borrowing Base
or the Maximum Revolver Amount. The amount of any Receivable Reserve, Inventory
Reserve, Bank Product Reserve, or other Reserve established by Agent shall have
a reasonable relationship to the event, condition, other circumstance, or fact
that is the basis for such reserve and shall not be duplicative of any other
reserve established and currently maintained.

2.2 Reserved.

2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing Revolving Loans. Each Borrowing shall be made by a
written request by an Authorized Person delivered to Agent and received by Agent
no later than 10:00 a.m. (i) on the Business Day that is the requested Funding
Date in the case of a request for a Swing Loan, and (ii) on the Business Day
that is 1 Business Day prior to the requested Funding Date in the case of all
other requests, specifying (A) the amount of such Borrowing, and (B) the
requested Funding Date (which shall be a Business Day); provided, that Agent
may, in its sole discretion, elect to accept as timely requests that are
received later than 10:00 a.m. on the applicable Business Day. At Agent’s
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time. In such circumstances, Borrowers agree that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.

(b) Making of Swing Loans. In the case of a request for a Revolving Loan and so
long as either (i) the aggregate amount of Swing Loans made since the last
Settlement Date, minus all payments or other amounts applied to Swing Loans
since the last Settlement Date, plus the amount of the requested Swing Loan does
not exceed $5,000,000, or (ii) Swing Lender, in its sole discretion, agrees to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make a Revolving Loan (any such Revolving Loan made by Swing Lender pursuant to
this Section 2.3(b) being referred to as a “Swing Loan” and all such Revolving
Loans being referred to as “Swing Loans”) available to Borrowers on the Funding
Date applicable thereto by transferring immediately available funds in the
amount of such requested Borrowing to the Designated Account. Each Swing Loan
shall be deemed to be a Revolving Loan hereunder and shall be subject to all the
terms and conditions (including Section 3) applicable to other Revolving Loans,
except that all payments (including interest) on any Swing Loan shall be payable
to Swing Lender solely for its own account. Subject to the provisions of
Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to
make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date. Swing
Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the Funding
Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by Agent’s Liens, constitute Revolving Loans and Obligations, and bear
interest at the rate applicable from time to time to Revolving Loans that are
Base Rate Loans.

 

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(c) Making of Revolving Loans.

(i) In the event that Swing Lender is not obligated to make a Swing Loan, then
after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent
shall notify the Lenders by telecopy, telephone, email, or other electronic form
of transmission, of the requested Borrowing; such notification to be sent on the
Business Day that is 1 Business Day prior to the requested Funding Date. If
Agent has notified the Lenders of a requested Borrowing on the Business Day that
is 1 Business Day prior to the Funding Date, then each Lender shall make the
amount of such Lender’s Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent’s Account, not later than 10:00
a.m. on the Business Day that is the requested Funding Date. After Agent’s
receipt of the proceeds of such Revolving Loans from the Lenders, Agent shall
make the proceeds thereof available to Borrowers on the applicable Funding Date
by transferring immediately available funds equal to such proceeds received by
Agent to the Designated Account; provided, that, subject to the provisions of
Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving
Loan, if (1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.

(ii) Unless Agent receives notice from a Lender prior to 9:30 a.m. on the
Business Day that is the requested Funding Date relative to a requested
Borrowing as to which Agent has notified the Lenders of a requested Borrowing
that such Lender will not make available as and when required hereunder to Agent
for the account of Borrowers the amount of that Lender’s Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount
available to Agent in immediately available funds on the Funding Date and Agent
may (but shall not be so required), in reliance upon such assumption, make
available to Borrowers a corresponding amount. If, on the requested Funding
Date, any Lender shall not have remitted the full amount that it is required to
make available to Agent in immediately available funds and if Agent has made
available to Borrowers such amount on the requested Funding Date, then such
Lender shall make the amount of such Lender’s Pro Rata Share of the requested
Borrowing available to Agent in immediately available funds, to Agent’s Account,
no later than 10:00 a.m. on the Business Day that is the first Business Day
after the requested Funding Date (in which case, the interest accrued on such
Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s
separate account). If any Lender shall not remit the full amount that it is
required to make available to Agent in immediately available funds as and when
required hereby and if Agent has made available to Borrowers such amount, then
that Lender shall be obligated to immediately remit such amount to Agent,
together with interest at the Defaulting Lender Rate for each day until the date
on which such amount is so remitted. A notice submitted by Agent to any Lender
with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive,
absent manifest error. If the amount that a Lender is required to remit is made
available to Agent, then such payment to Agent shall constitute such Lender’s
Revolving Loan for all purposes of this Agreement. If such amount is not made
available to Agent on the Business Day following the Funding Date, Agent will
notify Borrowers of such failure to fund and, upon demand by Agent, Borrowers
shall pay such amount to Agent for Agent’s account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Revolving Loans
composing such Borrowing.

(d) Protective Advances and Optional Overadvances.

(i) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), at any time (A) after the
occurrence and during the continuance of a Default or an Event of Default, or
(B) that any of the other applicable conditions precedent set forth in Section 3
are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from
time to time, in Agent’s sole discretion, to make Revolving Loans to, or for the
benefit of, Borrowers, on behalf of the Revolving Lenders, that Agent, in its
Permitted Discretion, deems necessary or desirable (1) to preserve or protect
the Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product Obligations) (the
Revolving Loans described in this Section 2.3(d)(i) shall be referred to as
“Protective Advances”). Notwithstanding the foregoing, the aggregate amount of
all Protective Advances outstanding at any one time shall not exceed $5,000,000.

 

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(ii) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize
Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Revolving Loans (including Swing Loans) to Borrowers notwithstanding
that an Overadvance exists or would be created thereby, so long as (A) after
giving effect to such Revolving Loans, the outstanding Revolver Usage does not
exceed the Borrowing Base by more than $5,000,000, and (B) after giving effect
to such Revolving Loans, the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount. In the event Agent
obtains actual knowledge that the Revolver Usage exceeds the amounts permitted
by the immediately foregoing provisions, regardless of the amount of, or reason
for, such excess, Agent shall notify the Lenders as soon as practicable (and
prior to making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value, in which case Agent may make such
Overadvances and provide notice as promptly as practicable thereafter), and the
Lenders with Commitments thereupon shall, together with Agent, jointly determine
the terms of arrangements that shall be implemented with Borrowers intended to
reduce, within a reasonable time, the outstanding principal amount of the
Revolving Loans to Borrowers to an amount permitted by the preceding sentence.
In such circumstances, if any Lender with a Commitment objects to the proposed
terms of reduction or repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the determination of the
Required Lenders. The foregoing provisions are meant for the benefit of the
Lenders and Agent and are not meant for the benefit of Borrowers, which shall
continue to be bound by the provisions of Section 2.4(e)(i). Each Lender with a
Commitment shall be obligated to settle with Agent as provided in Section 2.3(e)
(or Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata
Share of any unintentional Overadvances by Agent reported to such Lender, any
intentional Overadvances made as permitted under this Section 2.3(d)(ii), and
any Overadvances resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance (each, an “Extraordinary
Advance”) shall be deemed to be a Revolving Loan hereunder, except that no
Extraordinary Advance shall be eligible to be a LIBOR Rate Loan and, prior to
Settlement therefor, all payments on the Extraordinary Advances shall be payable
to Agent solely for its own account. The Extraordinary Advances shall be
repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder,
and bear interest at the rate applicable from time to time to Revolving Loans
that are Base Rate Loans. The provisions of this Section 2.3(d) are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers (or any other Loan Party) in any way.

(iv) Notwithstanding anything contained in this Agreement or any other Loan
Document to the contrary: (A) no Extraordinary Advance may be made by Agent if
such Extraordinary Advance would cause the aggregate principal amount of
Extraordinary Advances outstanding to exceed an amount equal to 10% of the
Maximum Revolver Amount; and (B) to the extent that the making of any
Extraordinary Advance causes the aggregate Revolver Usage to exceed the Maximum
Revolver Amount, such portion of such Extraordinary Advance shall be for Agent’s
sole and separate account and not for the account of any Lender and shall be
entitled to priority in repayment in accordance with Section 2.4(b).

 

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(e) Settlement. It is agreed that each Lender’s funded portion of the Revolving
Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata
Share of the outstanding Revolving Loans. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of Borrowers) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Revolving Loans, the Swing Loans, and the Extraordinary Advances shall take
place on a periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent in its sole
discretion (1) on behalf of Swing Lender, with respect to the outstanding Swing
Loans, (2) for itself, with respect to the outstanding Extraordinary Advances,
and (3) with respect to Borrowers’ or any of their Subsidiaries’ payments or
other amounts received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested Settlement,
no later than 5:00 p.m. on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being the
“Settlement Date”). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Revolving Loans, Swing Loans, and
Extraordinary Advances for the period since the prior Settlement Date. Subject
to the terms and conditions contained herein (including Section 2.3(g)): (y) if
the amount of the Revolving Loans (including Swing Loans, and Extraordinary
Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s
Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary
Advances) as of a Settlement Date, then Agent shall, by no later than 3:00 p.m.
on the Settlement Date, transfer in immediately available funds to a Deposit
Account of such Lender (as such Lender may designate), an amount such that each
such Lender shall, upon receipt of such amount, have as of the Settlement Date,
its Pro Rata Share of the Revolving Loans (including Swing Loans, and
Extraordinary Advances), and (z) if the amount of the Revolving Loans (including
Swing Loans, and Extraordinary Advances) made by a Lender is less than such
Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans, and
Extraordinary Advances) as of a Settlement Date, such Lender shall no later than
12:00 p.m. on the Settlement Date transfer in immediately available funds to
Agent’s Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving
Loans (including Swing Loans and Extraordinary Advances). Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loans or Extraordinary
Advances and, together with the portion of such Swing Loans or Extraordinary
Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Revolving Loans, Swing
Loans, and Extraordinary Advances is less than, equal to, or greater than such
Lender’s Pro Rata Share of the Revolving Loans, Swing Loans, and Extraordinary
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest, fees payable by
Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.

(iii) Between Settlement Dates, Agent, to the extent Extraordinary Advances or
Swing Loans are outstanding, may pay over to Agent or Swing Lender, as
applicable, any payments or other amounts received by Agent, that in accordance
with the terms of this Agreement would be applied to the reduction of the
Revolving Loans, for application to the Extraordinary Advances or Swing Loans.
Between Settlement Dates, Agent, to the extent no Extraordinary Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments or other
amounts received by Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to
Swing Lender’s Pro Rata Share of the Revolving Loans. If, as of any Settlement
Date, payments or other amounts of Borrowers or their Subsidiaries received
since the then immediately preceding Settlement Date have been applied to Swing
Lender’s Pro Rata Share of the Revolving Loans other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent for the
accounts of the Lenders, and Agent shall pay to the Lenders (other than a
Defaulting Lender if Agent has implemented the provisions of Section 2.3(g)), to
be applied to the outstanding Revolving Loans of such Lenders, an amount such
that each such Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Extraordinary Advances, and each Lender with respect to the Revolving
Loans other than Swing Loans and Extraordinary Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.

 

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(iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the
event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain
from remitting settlement amounts to the Defaulting Lender and, instead, shall
be entitled to elect to implement the provisions set forth in Section 2.3(g).

(f) Notation. Agent, as a non-fiduciary agent for Borrowers, shall maintain a
register showing the principal amount of the Revolving Loans, owing to each
Lender, including the Swing Loans owing to Swing Lender, and Extraordinary
Advances owing to Agent, and the interests therein of each Lender, from time to
time and such register shall, absent manifest error, conclusively be presumed to
be correct and accurate.

(g) Defaulting Lenders.

(i) Notwithstanding the provisions of Section 2.4(b)(ii), Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by Borrowers to
Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that
would otherwise be remitted hereunder to the Defaulting Lender, and, in the
absence of such transfer to the Defaulting Lender, Agent shall transfer any such
payments (A) first, to Swing Lender to the extent of any Swing Loans that were
made by Swing Lender and that were required to be, but were not, paid by the
Defaulting Lender, (B) second, to Issuing Bank, to the extent of the portion of
a Letter of Credit Disbursement that was required to be, but was not, paid by
the Defaulting Lender, (C) third, to each Non-Defaulting Lender ratably in
accordance with their Commitments (but, in each case, only to the extent that
such Defaulting Lender’s portion of a Revolving Loan (or other funding
obligation) was funded by such other Non-Defaulting Lender), (D) to a suspense
account maintained by Agent, the proceeds of which shall be retained by Agent
and may be made available to be re-advanced to or for the benefit of Borrowers
(upon the request of Borrowers and subject to the conditions set forth in
Section 3.2) as if such Defaulting Lender had made its portion of Revolving
Loans (or other funding obligations) hereunder, and (E) from and after the date
on which all other Obligations have been paid in full, to such Defaulting Lender
in accordance with tier (L) of Section 2.4(b)(ii). Subject to the foregoing,
Agent may hold and, in its discretion, re-lend to Borrowers for the account of
such Defaulting Lender the amount of all such payments received and retained by
Agent for the account of such Defaulting Lender. Solely for the purposes of
voting or consenting to matters with respect to the Loan Documents (including
the calculation of Pro Rata Share in connection therewith) and for the purpose
of calculating the fee payable under Section 2.10(b), such Defaulting Lender
shall be deemed not to be a “Lender” and such Lender’s Commitment shall be
deemed to be zero; provided, that the foregoing shall not apply to any of the
matters governed by Section 14.1(a)(i) through (iii). The provisions of this
Section 2.3(g) shall remain effective with respect to such Defaulting Lender
until the earlier of (y) the date on which all of the Non-Defaulting Lenders,
Agent, Issuing Bank, and Borrowers shall have waived, in writing, the
application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on
which such Defaulting Lender makes payment of all amounts that it was obligated
to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in
respect of the amounts that it was obligated to fund hereunder, and, if
requested by Agent, provides adequate assurance of its ability to perform its
future obligations hereunder (on which earlier date, so long as no Event of
Default has occurred and is continuing, any remaining cash collateral held by
Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers). The
operation of this Section 2.3(g) shall not be construed to increase or otherwise
affect the Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by any Borrower of its duties
and obligations hereunder to Agent, Issuing Bank, or to the Lenders other than
such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that
it was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrowers, at their
option, upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute Lender to be
reasonably acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being paid its share of the outstanding Obligations (other
than Bank Product Obligations, but including (1) all interest, fees, and other
amounts that may be due and payable in respect thereof, and (2) an assumption of
its Pro Rata Share of its participation in the Letters of Credit); provided,
that any such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’
rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund. In the event of a direct

 

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conflict between the priority provisions of this Section 2.3(g) and any other
provision contained in this Agreement or any other Loan Document, it is the
intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.3(g) shall control and
govern.

(ii) If any Swing Loan or Letter of Credit is outstanding at the time that a
Lender becomes a Defaulting Lender then:

(A) such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure
shall be reallocated among the Non-Defaulting Lenders in accordance with their
respective Pro Rata Shares but only to the extent (x) the sum of all
Non-Defaulting Lenders’ Revolving Loan Exposures plus such Defaulting Lender’s
Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of
all Non-Defaulting Lenders’ Commitments and (y) the conditions set forth in
Section 3.2 are satisfied at such time;

(B) if the reallocation described in clause (A) above cannot, or can only
partially, be effected, Borrowers shall within one Business Day following notice
by the Agent (x) first, prepay such Defaulting Lender’s Swing Loan Exposure
(after giving effect to any partial reallocation pursuant to clause (A) above)
and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit
Exposure (after giving effect to any partial reallocation pursuant to clause
(A) above), pursuant to a cash collateral agreement to be entered into in form
and substance reasonably satisfactory to the Agent, for so long as such Letter
of Credit Exposure is outstanding; provided, that Borrowers shall not be
obligated to cash collateralize any Defaulting Lender’s Letter of Credit
Exposure if such Defaulting Lender is also the Issuing Bank;

(C) if Borrowers cash collateralize any portion of such Defaulting Lender’s
Letter of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall
not be required to pay any Letter of Credit Fees to Agent for the account of
such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash
collateralized portion of such Defaulting Lender’s Letter of Credit Exposure
during the period such Letter of Credit Exposure is cash collateralized;

(D) to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is
reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees
payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be
adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit
Exposure;

(E) to the extent any Defaulting Lender’s Letter of Credit Exposure is neither
cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then,
without prejudice to any rights or remedies of the Issuing Bank or any Lender
hereunder, all Letter of Credit Fees that would have otherwise been payable to
such Defaulting Lender under Section 2.6(b) with respect to such portion of such
Letter of Credit Exposure shall instead be payable to the Issuing Bank until
such portion of such Defaulting Lender’s Letter of Credit Exposure is cash
collateralized or reallocated;

(F) so long as any Lender is a Defaulting Lender, the Swing Lender shall not be
required to make any Swing Loan and the Issuing Bank shall not be required to
issue, amend, or increase any Letter of Credit, in each case, to the extent
(x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter of
Credit cannot be reallocated pursuant to this Section 2.3(g)(ii) or (y) the
Swing Lender or Issuing Bank, as applicable, has not otherwise entered into
arrangements reasonably satisfactory to the Swing Lender or Issuing Bank, as
applicable, and Borrowers to eliminate the Swing Lender’s or Issuing Bank’s risk
with respect to the Defaulting Lender’s participation in Swing Loans or Letters
of Credit; and

(G) Agent may release any cash collateral provided by Borrowers pursuant to this
Section 2.3(g)(ii) to the Issuing Bank and the Issuing Bank may apply any such
cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any
Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to
Section 2.11(d).

 

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(h) Independent Obligations. All Revolving Loans (other than Swing Loans and
Extraordinary Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Revolving Loan (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.

2.4 Payments; Reductions of Commitments; Prepayments.

(a) Payments by Borrowers.

(i) Except as otherwise expressly provided herein, all payments by Borrowers
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 1:30 p.m. on the date
specified herein. Any payment received by Agent later than 1:30 p.m. shall be
deemed to have been received (unless Agent, in its sole discretion, elects to
credit it on the date received) on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.

(ii) Unless Agent receives notice from Borrowers prior to the date on which any
payment is due to the Lenders that Borrowers will not make such payment in full
as and when required, Agent may assume that Borrowers have made (or will make)
such payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrowers do not make such payment in full
to Agent on the date when due, each Lender severally shall repay to Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such amount is distributed
to such Lender until the date repaid.

(b) Apportionment and Application.

(i) So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by Agent shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent’s separate
account or for the separate account of Issuing Bank) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee or expense relates. Subject to
Section 2.4(b)(iv) and Section 2.4(e), all payments to be made hereunder by
Borrowers shall be remitted to Agent and all such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Application Event
has occurred and is continuing and except as otherwise provided herein with
respect to Defaulting Lenders, to reduce the balance of the Revolving Loans
outstanding and, thereafter, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.

(ii) At any time that an Application Event has occurred and is continuing and
except as otherwise provided herein with respect to Defaulting Lenders, all
payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:

(A) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until
paid in full,

(B) second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

(C) third, to pay interest due in respect of all Protective Advances until paid
in full,

 

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(D) fourth, to pay the principal of all Protective Advances until paid in full,

(E) fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents, until paid in full,

(F) sixth, ratably, to pay any fees or premiums then due to any of the Lenders
under the Loan Documents until paid in full,

(G) seventh, to pay interest accrued in respect of the Swing Loans until paid in
full,

(H) eighth, to pay the principal of all Swing Loans until paid in full,

(I) ninth, ratably, to pay interest accrued in respect of the Revolving Loans
(other than Protective Advances) until paid in full,

(J) tenth, ratably

i. to pay the principal of all Revolving Loans until paid in full,

ii. to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the
ratable benefit of each of the Lenders that have an obligation to pay to Agent,
for the account of Issuing Bank, a share of each Letter of Credit Disbursement),
as cash collateral in an amount up to 105% of the Letter of Credit Usage (to the
extent permitted by applicable law, such cash collateral shall be applied to the
reimbursement of any Letter of Credit Disbursement as and when such disbursement
occurs and, if a Letter of Credit expires undrawn, the cash collateral held by
Agent in respect of such Letter of Credit shall, to the extent permitted by
applicable law, be reapplied pursuant to this Section 2.4(b)(ii), beginning with
tier (A) hereof),

iii. ratably, up to the amount (after taking into account any amounts previously
paid pursuant to this clause iii. during the continuation of the applicable
Application Event) of the most recently established Bank Product Reserve to
(y) the Bank Product Providers based upon amounts then certified by the
applicable Bank Product Provider to Agent (in form and substance satisfactory to
Agent) to be due and payable to such Bank Product Providers on account of Bank
Product Obligations, and (z) with any balance to be paid to Agent, to be held by
Agent, for the ratable benefit of the Bank Product Providers, as cash collateral
(which cash collateral may be released by Agent to the applicable Bank Product
Provider and applied by such Bank Product Provider to the payment or
reimbursement of any amounts due and payable with respect to Bank Product
Obligations owed to the applicable Bank Product Provider as and when such
amounts first become due and payable and, if and at such time as all such Bank
Product Obligations are paid or otherwise satisfied in full, the cash collateral
held by Agent in respect of such Bank Product Obligations shall be reapplied
pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof,

(K) eleventh, to pay any other Obligations other than Obligations owed to
Defaulting Lenders (including being paid, ratably, to the Bank Product Providers
on account of all amounts then due and payable in respect of Bank Product
Obligations, with any balance to be paid to Agent, to be held by Agent, for the
ratable benefit of the Bank Product Providers, as cash collateral (which cash
collateral may be released by Agent to the applicable Bank Product Provider and
applied by such Bank Product Provider to the payment or reimbursement of any
amounts due and payable with respect to Bank Product Obligations owed to the
applicable Bank Product Provider as and when such amounts first become due and
payable and, if and at such time as all such Bank Product Obligations are paid
or otherwise satisfied in full, the cash collateral held by Agent in respect of
such Bank Product Obligations shall be reapplied pursuant to this
Section 2.4(b)(ii), beginning with tier (A) hereof),

(L) twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and

 

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(M) thirteenth, to Borrowers (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in
Section 2.3(e).

(iv) In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers
to Agent and specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement or any other Loan Document.

(v) For purposes of Section 2.4(b)(ii), “paid in full” of a type of Obligation
means payment in cash or immediately available funds of all amounts owing on
account of such type of Obligation, including interest accrued after the
commencement of any Insolvency Proceeding, default interest, interest on
interest, and expense reimbursements, irrespective of whether any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

(vi) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4 shall control and govern.

(c) Reduction of Commitments. The Commitments shall terminate on the Maturity
Date. Borrowers may reduce the Commitments to an amount not less than the
greater of (1) $40,000,000 (unless the Commitments are being reduced to zero and
this Agreement is being terminated in accordance with the terms hereof), and
(2) the sum of (A) the Revolver Usage as of such date, plus (B) the principal
amount of all Revolving Loans not yet made as to which a request has been given
by Borrowers under Section 2.3(a), plus (C) the amount of all Letters of Credit
not yet issued as to which a request has been given by Borrowers pursuant to
Section 2.11(a). Each such reduction shall be in an amount which is not less
than $5,000,000 (unless the Commitments are being reduced to zero and the amount
of the Commitments in effect immediately prior to such reduction are less than
$5,000,000), shall be made by providing not less than 10 Business Days prior
written notice to Agent together with payment of the Applicable Prepayment
Premium, if applicable, and shall be irrevocable. Once reduced, the Commitments
may not be increased. Each such reduction of the Commitments shall reduce the
Commitments of each Lender proportionately in accordance with its ratable share
thereof.

(d) Optional Prepayments. Borrowers may prepay the principal of any Revolving
Loan at any time in whole or in part, without premium or penalty.

(e) Mandatory Prepayments.

(i) Borrowing Base. If, at any time, (A) the Revolver Usage on such date exceeds
(B) the Borrowing Base reflected in the Borrowing Base Certificate most recently
delivered by Borrowers to Agent, then Borrowers shall immediately prepay the
Obligations in accordance with Section 2.4(f)(i) in an aggregate amount equal to
the amount of such excess.

(ii) Dispositions. Within 5 Business Days of the date of receipt by any Loan
Party, or within 15 days of the date of receipt by any Subsidiary that is not a
Loan Party, of the Net Cash Proceeds of any voluntary or involuntary sale or
disposition by such Borrower or any of its Subsidiaries of assets (including
casualty losses or condemnations but excluding (x) any sale or disposition
pursuant to subsections (c) or (s) of the definition of Permitted Dispositions
by a Subsidiary of a Borrower that is not a Loan Party and (y) any sale or
disposition of a Subsidiary of a Borrower that is not a Loan Party of assets in
the ordinary course of business that results in Net

 

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Cash Proceeds that do not exceed $250,000 in the aggregate), Borrowers shall
prepay the outstanding principal amount of the Obligations in accordance with
Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including
condemnation awards and payments in lieu thereof) received by such Person in
connection with such sales or dispositions. Nothing contained in this
Section 2.4(e)(ii) shall permit any Borrower or any of its Subsidiaries to sell
or otherwise dispose of any assets other than in accordance with Section 6.4.

(iii) Extraordinary Receipts. So long as any Obligations are outstanding and
(1) within 5 Business Days of the date of receipt by any Loan Party of any
Extraordinary Receipts or (2) within 15 days of the date of receipt by any
Subsidiary of a Borrower that is not a Loan Party of any Extraordinary Receipts
to the extent such Extraordinary Receipts individually or in the aggregate
exceed $250,000, Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f) in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts.

(iv) Indebtedness. So long as any Obligations are outstanding and within 5
Business Days of the date of incurrence by any Borrower or any of its
Subsidiaries of any Indebtedness (other than Permitted Indebtedness incurred by
a Subsidiary of a Borrower that is not a Loan Party), Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with
Section 2.4(f) in an amount equal to 100% of the Net Cash Proceeds received by
such Person in connection with such incurrence. The provisions of this
Section 2.4(e)(iv) shall not be deemed to be implied consent to any such
incurrence otherwise prohibited by the terms of this Agreement.

(v) Equity. So long as any Obligations are outstanding and within 5 Business
Days of the date of the issuance by any Borrower or any of its Subsidiaries of
any Equity Interests, Borrowers shall prepay the outstanding principal amount of
the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such issuance.
The provisions of this Section 2.4(e)(v) shall not be deemed to be implied
consent to any such issuance otherwise prohibited by the terms of this
Agreement.

(f) Application of Payments. Each prepayment pursuant to Section 2.4(e) shall,
(A) so long as no Application Event shall have occurred and be continuing, be
applied, first, to the outstanding principal amount of the Revolving Loans until
paid in full, and second, at the election of Agent, to cash collateralize the
Letters of Credit in an amount equal to 105% of the then outstanding Letter of
Credit Usage, and (B) if an Application Event shall have occurred and be
continuing, be applied in the manner set forth in Section 2.4(b)(ii).

2.5 Promise to Pay; Promissory Notes.

(a) Borrowers agree to pay the Lender Group Expenses on the earlier of (i) the
first day of the month following the date on which the applicable Lender Group
Expenses were first incurred or (ii) the date on which demand therefor is made
by Agent (it being acknowledged and agreed that any charging of such costs,
expenses or Lender Group Expenses to the Loan Account pursuant to the provisions
of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for
the purposes of this subclause (ii)). Borrowers promise to pay all of the
Obligations (including principal, interest, premiums, if any, fees, costs, and
expenses (including Lender Group Expenses)) in full on the Maturity Date or, if
earlier, on the date on which the Obligations (other than the Bank Product
Obligations) become due and payable pursuant to the terms of this Agreement.
Borrowers agree that their obligations contained in the first sentence of this
Section 2.5(a) shall survive payment or satisfaction in full of all other
Obligations.

(b) Any Lender may request that any portion of its Commitments or the Loans made
by it be evidenced by one or more promissory notes. In such event, Borrowers
shall execute and deliver to such Lender the requested promissory notes payable
to the order of such Lender in a form furnished by Agent and reasonably
satisfactory to Borrowers. Thereafter, the portion of the Commitments and Loans
evidenced by such promissory notes and interest thereon shall at all times be
represented by one or more promissory notes in such form payable to the order of
the payee named therein.

 

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2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest as follows:

(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal
to the LIBOR Rate plus the LIBOR Rate Margin, and

(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate
Margin.

(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of
the Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”)
(which fee shall be in addition to the fronting fees and commissions, other
fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a
per annum rate equal to the LIBOR Rate Margin times the undrawn amount of all
outstanding Letters of Credit.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default and at the election of Agent or the Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest at
a per annum rate equal to 2 percentage points above the per annum rate otherwise
applicable thereunder, and

(ii) the Letter of Credit Fee shall be increased to 2 percentage points above
the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.10,
Section 2.11(k) or Section 2.12(a), (i) all interest, all Letter of Credit Fees
and all other fees payable hereunder or under any of the other Loan Documents
shall be due and payable, in arrears, on the first day of each month, and
(ii) all costs and expenses payable hereunder or under any of the other Loan
Documents, and all Lender Group Expenses shall be due and payable on the earlier
of (x) the first day of the month following the date on which the applicable
costs, expenses, or Lender Group Expenses were first incurred or (y) the date on
which demand therefor is made by Agent (it being acknowledged and agreed that
any charging of such costs, expenses or Lender Group Expenses to the Loan
Account pursuant to the provisions of the following sentence shall be deemed to
constitute a demand for payment thereof for the purposes of this subclause (y)).
Borrowers hereby authorize Agent, from time to time without prior notice to
Borrowers, to charge to the Loan Account (A) on the first day of each month, all
interest accrued during the prior month on the Revolving Loans hereunder, (B) on
the first day of each month, all Letter of Credit Fees accrued or chargeable
hereunder during the prior month, (C) as and when incurred or accrued, all fees
and costs provided for in Section 2.10 (a) or (c), (D) on the first day of each
month, the Unused Line Fee accrued during the prior month pursuant to
Section 2.10(b), (E) as and when due and payable, all other fees payable
hereunder or under any of the other Loan Documents, (F) as and when incurred or
accrued, the fronting fees and all commissions, other fees, charges and expenses
provided for in Section 2.11(k), (G) as and when incurred or accrued, all other
Lender Group Expenses, and (H) as and when due and payable all other payment
obligations payable under any Loan Document or any Bank Product Agreement
(including any amounts due and payable to the Bank Product Providers in respect
of Bank Products). All amounts (including interest, fees, costs, expenses,
Lender Group Expenses, or other amounts payable hereunder or under any other
Loan Document or under any Bank Product Agreement) charged to the Loan Account
shall thereupon constitute Revolving Loans hereunder, shall constitute
Obligations hereunder, and shall initially accrue interest at the rate then
applicable to Revolving Loans that are Base Rate Loans (unless and until
converted into LIBOR Rate Loans in accordance with the terms of this Agreement).

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue. In the
event the Base Rate is changed from time to time hereafter, the rates of
interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.

 

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(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, that, anything contained herein to the
contrary notwithstanding, if such rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrowers are and shall be liable only for the payment
of such maximum amount as is allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

2.7 Crediting Payments. The receipt of any payment item by Agent shall not be
required to be considered a payment on account unless such payment item is a
wire transfer of immediately available federal funds made to Agent’s Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrowers shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
Agent’s Account on a Business Day on or before 1:30 p.m. If any payment item is
received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a
Business Day (unless Agent, in its sole discretion, elects to credit it on the
date received), it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

2.8 Designated Account. Agent is authorized to make the Revolving Loans, and
Issuing Bank is authorized to issue the Letters of Credit, under this Agreement
based upon telephonic or other instructions received from anyone purporting to
be an Authorized Person or, without instructions, if pursuant to Section 2.6(d).
Borrowers agree to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Revolving Loans requested by Borrowers and made by Agent or the Lenders
hereunder. Unless otherwise agreed by Agent and Borrowers, any Revolving Loan or
Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder
shall be made to the Designated Account.

2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain
an account on its books in the name of Borrowers (the “Loan Account”) on which
Borrowers will be charged with all Revolving Loans (including Extraordinary
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by
Issuing Bank for Borrowers’ account, and with all other payment Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.7, the
Loan Account will be credited with all payments received by Agent from Borrowers
or for Borrowers’ account. Agent shall make available to Borrowers monthly
statements regarding the Loan Account, including the principal amount of the
Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder
or under the other Loan Documents, and a summary itemization of all charges and
expenses constituting Lender Group Expenses accrued hereunder or under the other
Loan Documents, and each such statement, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after Agent
first makes such a statement available to Borrowers, Borrowers shall deliver to
Agent written objection thereto describing the error or errors contained in such
statement.

2.10 Fees.

(a) Agent Fees. Borrowers shall pay to Agent, for the account of Agent, as and
when due and payable under the terms of the Fee Letter, the fees set forth in
the Fee Letter.

 

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(b) Unused Line Fee. Borrowers shall pay to Agent, for the ratable account of
the Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount
equal to 0.50% per annum times the result of (i) the aggregate amount of the
Commitments, less (ii) the average amount of the Revolver Usage during the
immediately preceding month (or portion thereof), which Unused Line Fee shall be
due and payable on the first day of each month; from and after the Closing Date
up to the first day of the month prior to the date on which the Obligations are
paid in full and on the date on which the Obligations are paid in full.

(c) Field Examination and Other Fees. Borrowers shall pay to Agent, field
examination, appraisal, and valuation fees and charges, as and when incurred or
chargeable, as follows (i) a fee of $1,000 per day, per examiner, plus
out-of-pocket expenses (including travel, meals, and lodging) for each field
examination of any Borrower performed by personnel employed by Agent, and
(ii) the fees or charges paid or incurred by Agent (but, in any event, no less
than a charge of $1,000 per day, per Person, plus out-of-pocket expenses
(including travel, meals, and lodging)) if it elects to employ the services of
one or more third Persons to perform field examinations of any Borrower or its
Subsidiaries, to establish electronic collateral reporting systems, to appraise
the Collateral, or any portion thereof, or to assess any Borrower’s or its
Subsidiaries’ business valuation; provided, that so long as no Event of Default
shall have occurred and be continuing, Borrower shall not be obligated to
reimburse Agent for more than 4 field examinations during any calendar year or
more than 2 appraisals of the Collateral during any calendar year.

2.11 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing
Bank agrees to issue a requested Letter of Credit for the account of Borrowers.
By submitting a request to Issuing Bank for the issuance of a Letter of Credit,
Borrowers shall be deemed to have requested that Issuing Bank issue the
requested Letter of Credit. Each request for the issuance of a Letter of Credit,
or the amendment, renewal, or extension of any outstanding Letter of Credit,
shall be irrevocable and shall be made in writing by an Authorized Person and
delivered to Issuing Bank via telefacsimile or other electronic method of
transmission reasonably acceptable to Issuing Bank and reasonably in advance of
the requested date of issuance, amendment, renewal, or extension. Each such
request shall be in form and substance reasonably satisfactory to Issuing Bank
and (i) shall specify (A) the amount of such Letter of Credit, (B) the date of
issuance, amendment, renewal, or extension of such Letter of Credit, (C) the
proposed expiration date of such Letter of Credit, (D) the name and address of
the beneficiary of the Letter of Credit, and (E) such other information
(including, the conditions to drawing, and, in the case of an amendment,
renewal, or extension, identification of the Letter of Credit to be so amended,
renewed, or extended) as shall be necessary to prepare, amend, renew, or extend
such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as
Agent or Issuing Bank may request or require, to the extent that such requests
or requirements are consistent with the Issuer Documents that Issuing Bank
generally requests for Letters of Credit in similar circumstances. Bank’s
records of the content of any such request will be conclusive. Anything
contained herein to the contrary notwithstanding, Issuing Bank may, but shall
not be obligated to, issue a Letter of Credit that supports the obligations of
Borrowers or one of their Subsidiaries in respect of (x) a lease of real
property, or (y) an employment contract.

(b) Issuing Bank shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested issuance:

(i) the Letter of Credit Usage would exceed $10,000,000, or

(ii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less
the outstanding amount of Revolving Loans (including Swing Loans), or

(iii) the Letter of Credit Usage would exceed the Borrowing Base at such time
less the outstanding principal balance of the Revolving Loans (inclusive of
Swing Loans) at such time.

(c) In the event there is a Defaulting Lender as of the date of any request for
the issuance of a Letter of Credit, the Issuing Bank shall not be required to
issue or arrange for such Letter of Credit to the extent (i)

 

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the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of
Credit may not be reallocated pursuant to Section 2.3(g)(ii), or (ii) the
Issuing Bank has not otherwise entered into arrangements reasonably satisfactory
to it and Borrowers to eliminate the Issuing Bank’s risk with respect to the
participation in such Letter of Credit of the Defaulting Lender, which
arrangements may include Borrowers cash collateralizing such Defaulting Lender’s
Letter of Credit Exposure in accordance with Section 2.3(g)(ii). Additionally,
Issuing Bank shall have no obligation to issue a 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 Issuing Bank from issuing such Letter
of Credit, or any law applicable to Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank
refrain from the issuance of letters of credit generally or such Letter of
Credit in particular, (B) the issuance of such Letter of Credit would violate
one or more policies of Issuing Bank applicable to letters of credit generally,
or (C) if amounts demanded to be paid under any Letter of Credit will or may not
be in United States Dollars.

(d) Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall
notify Agent in writing no later than the Business Day immediately following the
Business Day on which such Issuing Bank issued any Letter of Credit; provided
that (i) until Agent advises any such Issuing Bank that the provisions of
Section 3.2 are not satisfied, or (ii) unless the aggregate amount of the
Letters of Credit issued in any such week exceeds such amount as shall be agreed
by Agent and such Issuing Bank, such Issuing Bank shall be required to so notify
Agent in writing only once each week of the Letters of Credit issued by such
Issuing Bank during the immediately preceding week as well as the daily amounts
outstanding for the prior week, such notice to be furnished on such day of the
week as Agent and such Issuing Bank may agree. Each Letter of Credit shall be in
form and substance reasonably acceptable to Issuing Bank, including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to
Agent an amount equal to the applicable Letter of Credit Disbursement on the
Business Day such Letter of Credit Disbursement is made and, in the absence of
such payment, the amount of the Letter of Credit Disbursement immediately and
automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding
any failure to satisfy any condition precedent set forth in Section 3) and,
initially, shall bear interest at the rate then applicable to Revolving Loans
that are Base Rate Loans. If a Letter of Credit Disbursement is deemed to be a
Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter
of Credit Disbursement to Issuing Bank shall be automatically converted into an
obligation to pay the resulting Revolving Loan. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to Issuing Bank or, to the extent that Revolving Lenders
have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then
to such Revolving Lenders and Issuing Bank as their interests may appear.

(e) Promptly following receipt of a notice of a Letter of Credit Disbursement
pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata
Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same
terms and conditions as if Borrowers had requested the amount thereof as a
Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so
received by it from the Revolving Lenders. By the issuance of a Letter of Credit
(or an amendment, renewal, or extension of a Letter of Credit) and without any
further action on the part of Issuing Bank or the Revolving Lenders, Issuing
Bank shall be deemed to have granted to each Revolving Lender, and each
Revolving Lender shall be deemed to have purchased, a participation in each
Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata
Share of such Letter of Credit, and each such Revolving Lender agrees to pay to
Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share
of any Letter of Credit Disbursement made by Issuing Bank under the applicable
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to Agent,
for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each
Letter of Credit Disbursement made by Issuing Bank and not reimbursed by
Borrowers on the date due as provided in Section 2.11(d), or of any
reimbursement payment that is required to be refunded (or that Agent or Issuing
Bank elects, based upon the advice of counsel, to refund) to Borrowers for any
reason. Each Revolving Lender acknowledges and agrees that its obligation to
deliver to Agent, for the account of Issuing Bank, an amount equal to its
respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this
Section 2.11(e) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3. If any
such Revolving Lender fails to make available to Agent the amount of such
Revolving Lender’s Pro Rata Share of a

 

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Letter of Credit Disbursement as provided in this Section, such Revolving Lender
shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing
Bank) shall be entitled to recover such amount on demand from such Revolving
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.

(f) Each Borrower agrees to indemnify, defend and hold harmless each member of
the Lender Group (including Issuing Bank and its branches, Affiliates, and
correspondents) and each such Person’s respective directors, officers,
employees, attorneys and agents (each, including Issuing Bank, a “Letter of
Credit Related Person”) (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), which may be incurred by
or awarded against any such Letter of Credit Related Person (other than Taxes,
which shall be governed by Section 16) (the “Letter of Credit Indemnified
Costs”), and which arise out of or in connection with, or as a result of:

(i) any Letter of Credit or any pre-advice of its issuance;

(ii) any transfer, sale, delivery, surrender or endorsement of any Drawing
Document at any time(s) held by any such Letter of Credit Related Person in
connection with any Letter of Credit;

(iii) any action or proceeding arising out of, or in connection with, any Letter
of Credit (whether administrative, judicial or in connection with arbitration),
including any action or proceeding to compel or restrain any presentation or
payment under any Letter of Credit, or for the wrongful dishonor of, or honoring
a presentation under, any Letter of Credit;

(iv) any independent undertakings issued by the beneficiary of any Letter of
Credit;

(v) any unauthorized instruction or request made to Issuing Bank in connection
with any Letter of Credit or requested Letter of Credit or error in computer or
electronic transmission;

(vi) an adviser, confirmer or other nominated person seeking to be reimbursed,
indemnified or compensated;

(vii) any third party seeking to enforce the rights of an applicant,
beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds
or holder of an instrument or document;

(viii) the fraud, forgery or illegal action of parties other than the Letter of
Credit Related Person;

(ix) Issuing Bank’s performance of the obligations of a confirming institution
or entity that wrongfully dishonors a confirmation; or

(x) the acts or omissions, whether rightful or wrongful, of any present or
future de jure or de facto governmental or regulatory authority or cause or
event beyond the control of the Letter of Credit Related Person;

in each case, including that resulting from the Letter of Credit Related
Person’s own negligence; provided, however, that such indemnity shall not be
available to any Letter of Credit Related Person claiming indemnification under
clauses (i) through (x) above to the extent that such Letter of Credit
Indemnified Costs may be finally determined in a final, non-appealable judgment
of a court of competent jurisdiction to have resulted directly from the gross
negligence or willful misconduct of the Letter of Credit Related Person claiming
indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person
claiming indemnity on demand from time to time all amounts owing under this
Section 2.11(f). If and to the extent that the obligations of Borrowers under
this Section 2.11(f) are unenforceable for any reason, Borrowers agree to make
the maximum contribution to the Letter of Credit Indemnified Costs permissible
under applicable law. This indemnification provision shall survive termination
of this Agreement and all Letters of Credit.

 

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(g) The liability of Issuing Bank (or any other Letter of Credit Related Person)
under, in connection with or arising out of any Letter of Credit (or
pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by Borrowers that are
caused directly by Issuing Bank’s gross negligence or willful misconduct in
(i) honoring a presentation under a Letter of Credit that on its face does not
at least substantially comply with the terms and conditions of such Letter of
Credit, (ii) failing to honor a presentation under a Letter of Credit that
strictly complies with the terms and conditions of such Letter of Credit or
(iii) retaining Drawing Documents presented under a Letter of Credit. Issuing
Bank shall be deemed to have acted with due diligence and reasonable care if
Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice
or in accordance with this Agreement. Borrowers’ aggregate remedies against
Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a
presentation under any Letter of Credit or wrongfully retaining honored Drawing
Documents shall in no event exceed the aggregate amount paid by Borrowers to
Issuing Bank in respect of the honored presentation in connection with such
Letter of Credit under Section 2.11(d), plus interest at the rate then
applicable to Base Rate Loans hereunder. Borrowers shall take action to avoid
and mitigate the amount of any damages claimed against Issuing Bank or any other
Letter of Credit Related Person, including by enforcing its rights against the
beneficiaries of the Letters of Credit. Any claim by Borrowers under or in
connection with any Letter of Credit shall be reduced by an amount equal to the
sum of (x) the amount (if any) saved by Borrowers as a result of the breach or
alleged wrongful conduct complained of; and (y) the amount (if any) of the loss
that would have been avoided had Borrowers taken all reasonable steps to
mitigate any loss, and in case of a claim of wrongful dishonor, by specifically
and timely authorizing Issuing Bank to effect a cure.

(h) Borrowers are responsible for preparing or approving the final text of the
Letter of Credit as issued by Issuing Bank, irrespective of any assistance
Issuing Bank may provide such as drafting or recommending text or by Issuing
Bank’s use or refusal to use text submitted by Borrowers. Borrowers are solely
responsible for the suitability of the Letter of Credit for Borrowers’ purposes.
With respect to any Letter of Credit containing an “automatic amendment” to
extend the expiration date of such Letter of Credit, Issuing Bank, in its sole
and absolute discretion, may give notice of nonrenewal of such Letter of Credit
and, if Borrowers do not at any time want such Letter of Credit to be renewed,
Borrowers will so notify Agent and Issuing Bank at least 15 calendar days before
Issuing Bank is required to notify the beneficiary of such Letter of Credit or
any advising bank of such nonrenewal pursuant to the terms of such Letter of
Credit.

(i) Borrowers’ reimbursement and payment obligations under this Section 2.11 are
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever, including:

(i) any lack of validity, enforceability or legal effect of any Letter of Credit
or this Agreement or any term or provision therein or herein;

(ii) payment against presentation of any draft, demand or claim for payment
under any Drawing Document that does not comply in whole or in part with the
terms of the applicable Letter of Credit or which proves to be fraudulent,
forged or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, or which is signed, issued or presented by a Person
or a transferee of such Person purporting to be a successor or transferee of the
beneficiary of such Letter of Credit;

(iii) Issuing Bank or any of its branches or Affiliates being the beneficiary of
any Letter of Credit;

(iv) Issuing Bank or any correspondent honoring a drawing against a Drawing
Document up to the amount available under any Letter of Credit even if such
Drawing Document claims an amount in excess of the amount available under the
Letter of Credit;

 

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(v) the existence of any claim, set-off, defense or other right that any
Borrower or any of its Subsidiaries may have at any time against any
beneficiary, any assignee of proceeds, Issuing Bank or any other Person;

(vi) any other event, circumstance or conduct whatsoever, whether or not similar
to any of the foregoing that might, but for this Section 2.11(i), constitute a
legal or equitable defense to or discharge of, or provide a right of set-off
against, any Borrower’s or any of its Subsidiaries’ reimbursement and other
payment obligations and liabilities, arising under, or in connection with, any
Letter of Credit, whether against Issuing Bank, the beneficiary or any other
Person; or

(vii) the fact that any Default or Event of Default shall have occurred and be
continuing;

provided, however, that subject to Section 2.11(g) above, the foregoing shall
not release Issuing Bank from such liability to Borrowers as may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction against Issuing Bank following reimbursement or payment of the
obligations and liabilities, including reimbursement and other payment
obligations, of Borrowers to Issuing Bank arising under, or in connection with,
this Section 2.11 or any Letter of Credit.

(j) Without limiting any other provision of this Agreement, Issuing Bank and
each other Letter of Credit Related Person (if applicable) shall not be
responsible to Borrowers for, and Issuing Bank’s rights and remedies against
Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each
drawing under each Letter of Credit shall not be impaired by:

(i) honor of a presentation under any Letter of Credit that on its face
substantially complies with the terms and conditions of such Letter of Credit,
even if the Letter of Credit requires strict compliance by the beneficiary;

(ii) honor of a presentation of any Drawing Document that appears on its face to
have been signed, presented or issued (A) by any purported successor or
transferee of any beneficiary or other Person required to sign, present or issue
such Drawing Document or (B) under a new name of the beneficiary;

(iii) acceptance as a draft of any written or electronic demand or request for
payment under a Letter of Credit, even if nonnegotiable or not in the form of a
draft or notwithstanding any requirement that such draft, demand or request bear
any or adequate reference to the Letter of Credit;

(iv) the identity or authority of any presenter or signer of any Drawing
Document or the form, accuracy, genuineness or legal effect of any Drawing
Document (other than Issuing Bank’s determination that such Drawing Document
appears on its face substantially to comply with the terms and conditions of the
Letter of Credit);

(v) acting upon any instruction or request relative to a Letter of Credit or
requested Letter of Credit that Issuing Bank in good faith believes to have been
given by a Person authorized to give such instruction or request;

(vi) any errors, omissions, interruptions or delays in transmission or delivery
of any message, advice or document (regardless of how sent or transmitted) or
for errors in interpretation of technical terms or in translation or any delay
in giving or failing to give notice to Borrowers;

(vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary,
any nominated person or entity or any other Person or any breach of contract
between any beneficiary and any Borrower or any of the parties to the underlying
transaction to which the Letter of Credit relates;

(viii) assertion or waiver of any provision of the ISP or UCP that primarily
benefits an issuer of a letter of credit, including any requirement that any
Drawing Document be presented to it at a particular hour or place;

 

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(ix) payment to any paying or negotiating bank (designated or permitted by the
terms of the applicable Letter of Credit) claiming that it rightfully honored or
is entitled to reimbursement or indemnity under Standard Letter of Credit
Practice applicable to it;

(x) acting or failing to act as required or permitted under Standard Letter of
Credit Practice applicable to where Issuing Bank has issued, confirmed, advised
or negotiated such Letter of Credit, as the case may be;

(xi) honor of a presentation after the expiration date of any Letter of Credit
notwithstanding that a presentation was made prior to such expiration date and
dishonored by Issuing Bank if subsequently Issuing Bank or any court or other
finder of fact determines such presentation should have been honored;

(xii) dishonor of any presentation that does not strictly comply or that is
fraudulent, forged or otherwise not entitled to honor; or

(xiii) honor of a presentation that is subsequently determined by Issuing Bank
to have been made in violation of international, federal, state or local
restrictions on the transaction of business with certain prohibited Persons.

(k) Borrowers shall pay immediately upon demand to Agent for the account of
Issuing Bank as non-refundable fees, commissions, and charges (it being
acknowledged and agreed that any charging of such fees, commissions, and charges
to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed
to constitute a demand for payment thereof for the purposes of this
Section 2.11(k)): (i) a fronting fee which shall be imposed by Issuing Bank upon
the issuance of each Letter of Credit of .250% per annum of the face amount
thereof, plus (ii) any and all other customary commissions, fees and charges
then in effect imposed by, and any and all expenses incurred by, Issuing Bank,
or by any adviser, confirming institution or entity or other nominated person,
relating to Letters of Credit, at the time of issuance of any Letter of Credit
and upon the occurrence of any other activity with respect to any Letter of
Credit (including transfers, assignments of proceeds, amendments, drawings,
renewals or cancellations).

(l) If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or
any other member of the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Board of Governors as from
time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued or caused to be issued
hereunder or hereby, or

(ii) there shall be imposed on Issuing Bank or any other member of the Lender
Group any other condition regarding any Letter of Credit,

and the result of the foregoing is to increase, directly or indirectly, the cost
to Issuing Bank or any other member of the Lender Group of issuing, making,
participating in, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrowers, and Borrowers shall pay within 30
days after demand therefor, such amounts as Agent may specify to be necessary to
compensate Issuing Bank or any other member of the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall not
be required to provide any compensation pursuant to this Section 2.11(l) for any
such amounts incurred more than 180 days prior to the date on which the demand
for payment of such amounts is first made to Borrowers, and (B) if an event or
circumstance giving rise to such amounts is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof. The determination by Agent of any amount due pursuant to this
Section 2.11(l), as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

 

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(m) Unless otherwise expressly agreed by Issuing Bank and Borrowers when a
Letter of Credit is issued, (i) the rules of the ISP and the UCP shall apply to
each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each
commercial Letter of Credit.

(n) In the event of a direct conflict between the provisions of this
Section 2.11 and any provision contained in any Issuer Document, it is the
intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.11 shall control and
govern.

2.12 LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrowers shall have the option, subject to
Section 2.12(b) below (the “LIBOR Option”) to have interest on all or a portion
of the Revolving Loans be charged (whether at the time when made (unless
otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR
Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period applicable
thereto; provided, that, subject to the following clauses (ii) and (iii), in the
case of any Interest Period greater than 3 months in duration, interest shall be
payable at 3 month intervals after the commencement of the applicable Interest
Period and on the last day of such Interest Period), (ii) the date on which all
or any portion of the Obligations are accelerated pursuant to the terms hereof,
or (iii) the date on which this Agreement is terminated pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrowers
have properly exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Revolving Loans bear interest at a
rate based upon the LIBOR Rate.

(b) LIBOR Election.

(i) Borrowers may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 11:00 a.m. at least 1 Business Day prior to the
commencement of the proposed Interest Period (the “LIBOR Deadline”). Notice of
Borrowers’ election of the LIBOR Option for a permitted portion of the Revolving
Loans and an Interest Period pursuant to this Section shall be made by delivery
to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be confirmed
by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. on
the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall
provide a copy thereof to each of the affected Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and
hold Agent and the Lenders harmless against any loss, cost, or expense actually
incurred by Agent or any Lender as a result of (A) the payment of any principal
of any LIBOR Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (B) the
conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (C) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, or expenses, “Funding Losses”). A
certificate of Agent or a Lender delivered to Borrowers setting forth in
reasonable detail any amount or amounts that Agent or such Lender is entitled to
receive pursuant to this Section 2.12 shall be conclusive absent manifest error.
Borrowers shall pay such amount to Agent or the Lender, as applicable, within 30
days of the date of its receipt of such certificate. If a payment of a LIBOR
Rate Loan on a day other than the last day of the applicable Interest Period
would result in a Funding Loss, Agent may, in its sole discretion at the request
of Borrowers, hold

 

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the amount of such payment as cash collateral in support of the Obligations
until the last day of such Interest Period and apply such amounts to the payment
of the applicable LIBOR Rate Loan on such last day, it being agreed that Agent
has no obligation to so defer the application of payments to any LIBOR Rate Loan
and that, in the event that Agent does not defer such application, Borrowers
shall be obligated to pay any resulting Funding Losses.

(iii) Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall
have not more than 5 LIBOR Rate Loans in effect at any given time. Borrowers may
only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least
$1,000,000.

(c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate Loans at any
time; provided, that in the event that LIBOR Rate Loans are converted or prepaid
on any date that is not the last day of the Interest Period applicable thereto,
including as a result of any prepayment through the required application by
Agent of any payments or proceeds of Collateral in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with Section 2.12 (b)(ii).

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including any Changes in
Law (including any changes in tax laws (except changes of general applicability
in corporate income tax laws)) and changes in the reserve requirements imposed
by the Board of Governors, which additional or increased costs would increase
the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In
any such event, the affected Lender shall give Borrowers and Agent notice of
such a determination and adjustment and Agent promptly shall transmit the notice
to each other Lender and, upon its receipt of the notice from the affected
Lender, Borrowers may, by notice to such affected Lender (A) require such Lender
to furnish to Borrowers a statement setting forth in reasonable detail the basis
for adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to
which such adjustment is made (together with any amounts due under
Section 2.12(b)(ii)).

(ii) In the event that any change in market conditions or any Change in Law
shall at any time after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to fund or maintain
LIBOR Rate Loans or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall give notice of such
changed circumstances to Agent and Borrowers and Agent promptly shall transmit
the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of
such Lender that are outstanding, the date specified in such Lender’s notice
shall be deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall
accrue interest at the rate then applicable to Base Rate Loans, and
(z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender
determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.

2.13 Capital Requirements.

(a) If, after the date hereof, Issuing Bank or any Lender determines that
(i) any Change in Law regarding capital or reserve requirements for banks or
bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or
their respective parent bank holding companies, with any guideline, request or
directive of any Governmental Authority regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on Issuing
Bank’s, such Lender’s, or such holding companies’ capital as a consequence of

 

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Issuing Bank’s or such Lender’s commitments hereunder to a level below that
which Issuing Bank, such Lender, or such holding companies could have achieved
but for such Change in Law or compliance (taking into consideration Issuing
Bank’s, such Lender’s, or such holding companies’ then existing policies with
respect to capital adequacy and assuming the full utilization of such entity’s
capital) by any amount deemed by Issuing Bank or such Lender to be material,
then Issuing Bank or such Lender may notify Borrowers and Agent thereof.
Following receipt of such notice, Borrowers agree to pay Issuing Bank or such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 30 days after presentation by
Issuing Bank or such Lender of a statement in the amount and setting forth in
reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Issuing Bank or such Lender may use any reasonable averaging and attribution
methods. Failure or delay on the part of Issuing Bank or any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of Issuing
Bank’s or such Lender’s right to demand such compensation; provided that
Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant
to this Section for any reductions in return incurred more than 180 days prior
to the date that Issuing Bank or such Lender notifies Borrowers of such Change
in Law giving rise to such reductions and of such Lender’s intention to claim
compensation therefor; provided further that if such claim arises by reason of
the Change in Law that is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.

(b) If Issuing Bank or any Lender requests additional or increased costs
referred to in Section 2.11(l) or Section 2.12(d)(i) or amounts under
Section 2.13(a) or sends a notice under Section 2.12(d)(ii) relative to changed
circumstances (such Issuing Bank or Lender, an “Affected Lender”), then such
Affected Lender shall use reasonable efforts to promptly designate a different
one of its lending offices or to assign its rights and obligations hereunder to
another of its offices or branches, if (i) in the reasonable judgment of such
Affected Lender, such designation or assignment would eliminate or reduce
amounts payable pursuant to Section 2.11(l), Section 2.12(d)(i) or
Section 2.13(a), as applicable, or would eliminate the illegality or
impracticality of funding or maintaining LIBOR Rate Loans and (ii) in the
reasonable judgment of such Affected Lender, such designation or assignment
would not subject it to any material unreimbursed cost or expense and would not
otherwise be materially disadvantageous to it. Borrowers agree to pay all
reasonable out-of-pocket costs and expenses incurred by such Affected Lender in
connection with any such designation or assignment. If, after such reasonable
efforts, such Affected Lender does not so designate a different one of its
lending offices or assign its rights to another of its offices or branches so as
to eliminate Borrowers’ obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.11(l), Section 2.12(d)(i) or Section 2.13(a), as
applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers
(without prejudice to any amounts then due to such Affected Lender under
Section 2.11(l), Section 2.12(d)(i) or Section 2.13(a), as applicable) may,
unless prior to the effective date of any such assignment the Affected Lender
withdraws its request for such additional amounts under Section 2.11(l),
Section 2.12(d)(i) or Section 2.13(a), as applicable, or indicates that it is no
longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may
designate a different Issuing Bank or substitute a Lender, in each case,
reasonably acceptable to Agent to purchase the Obligations owed to such Affected
Lender and such Affected Lender’s commitments hereunder (a “Replacement
Lender”), and if such Replacement Lender agrees to such purchase, such Affected
Lender shall assign to the Replacement Lender its Obligations and commitments,
and upon such purchase by the Replacement Lender, which such Replacement Lender
shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for
purposes of this Agreement and such Affected Lender shall cease to be “Issuing
Bank” or a “Lender” (as the case may be) for purposes of this Agreement.

(c) Notwithstanding anything herein to the contrary, the protection of Sections
2.11(l), 2.12(d), and 2.13 shall be available to Issuing Bank and each Lender
(as applicable) regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, judicial ruling, judgment,
guideline, treaty or other change or condition which shall have occurred or been
imposed, so long as it shall be customary for issuing banks or lenders affected
thereby to comply therewith. Notwithstanding any other provision herein, neither
Issuing Bank nor any Lender shall demand compensation pursuant to this
Section 2.13 if it shall not at the time be the general policy or practice of
Issuing Bank or such Lender (as the case may be) to demand such compensation in
similar circumstances under comparable provisions of other credit agreements, if
any.

 

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2.14 Accordion.

(a) At any time during the period from and after the Closing Date, at the option
of Borrowers (but subject to the conditions set forth in clause (b) below), the
Commitments and the Maximum Revolver Amount may be increased by an amount in the
aggregate for all such increases of the Commitments and the Maximum Revolver
Amount not to exceed the Available Increase Amount (each such increase, an
“Increase”). Agent shall invite each Lender to increase its Commitments (it
being understood that no Lender shall be obligated to increase its Commitments)
in connection with a proposed Increase at the interest margin proposed by
Borrowers, and if sufficient Lenders do not agree to increase their Commitments
in connection with such proposed Increase, then Agent or Borrowers may invite
any prospective lender who is reasonably satisfactory to Agent and Borrowers to
become a Lender in connection with a proposed Increase. Any Increase shall be in
an amount of at least $10,000,000 and integral multiples of $5,000,000 in excess
thereof. In no event may the Commitments and the Maximum Revolver Amount be
increased pursuant to this Section 2.14 more than one time per calendar year or
on more than 2 occasions in the aggregate for all such Increases. Additionally,
for the avoidance of doubt, it is understood and agreed that in no event shall
the aggregate amount of the Increases to the Commitments exceed $20,000,000.

(b) Each of the following shall be conditions precedent to any Increase of the
Commitments and the Maximum Revolver Amount in connection therewith:

(i) Agent or Borrowers have obtained the commitment of one or more Lenders (or
other prospective lenders) reasonably satisfactory to Agent and Borrowers to
provide the applicable Increase and any such Lenders (or prospective lenders),
Borrowers, and Agent have signed a joinder agreement to this Agreement (an
“Increase Joinder”), in form and substance reasonably satisfactory to Agent, to
which such Lenders (or prospective lenders), Borrowers, and Agent are party,

(ii) each of the conditions precedent set forth in Section 3.2 are satisfied,

(iii) [reserved], and

(iv) Borrowers shall have reached agreement with the Lenders (or prospective
lenders) agreeing to the increased Commitments with respect to the
interest margins applicable to Revolving Loans to be made pursuant to the
increased Commitments (which interest margins may be higher than or equal to the
interest margins applicable to Revolving Loans set forth in this Agreement
immediately prior to the date of the increased Commitments (the date of the
effectiveness of the increased Commitments and the Maximum Revolver Amount, the
“Increase Date”)) and shall have communicated the amount of such interest
margins to Agent. Any Increase Joinder may, with the consent of Agent, Borrowers
and the Lenders or prospective lenders agreeing to the proposed Increase, effect
such amendments to this Agreement and the other Loan Documents as may be
necessary or appropriate to effectuate the provisions of this Section 2.14
(including any amendment necessary to effectuate the interest margins for the
Revolving Loans to be made pursuant to the increased Commitments). Anything to
the contrary contained herein notwithstanding, if the interest margin that is to
be applicable to the Revolving Loans to be made pursuant to the increased
Commitments are higher than the interest margin applicable to the Revolving
Loans hereunder immediately prior to the applicable Increase Date (the amount by
which the interest margin is higher, the “Excess”), then the interest margin
applicable to the Revolving Loans immediately prior to the Increase Date shall
be increased by the amount of the Excess, effective on the applicable Increase
Date, and without the necessity of any action by any party hereto.

(c) Reserved.

(d) Unless otherwise specifically provided herein, all references in this
Agreement and any other Loan Document to Revolving Loans shall be deemed, unless
the context otherwise requires, to include Revolving Loans made pursuant to the
increased Commitments and Maximum Revolver Amount pursuant to this Section 2.14.

 

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(e) Each of the Lenders having a Commitment prior to the Increase Date (the
“Pre-Increase Revolver Lenders”) shall assign to any Lender which is acquiring a
new or additional Commitment on the Increase Date (the “Post-Increase Revolver
Lenders”), and such Post-Increase Revolver Lenders shall purchase from each
Pre-Increase Revolver Lender, at the principal amount thereof, such interests in
the Revolving Loans and participation interests in Letters of Credit on such
Increase Date as shall be necessary in order that, after giving effect to all
such assignments and purchases, such Revolving Loans and participation interests
in Letters of Credit will be held by Pre-Increase Revolver Lenders and
Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share
after giving effect to such increased Commitments.

(f) The Revolving Loans, Commitments, and Maximum Revolver Amount established
pursuant to this Section 2.14 shall constitute Revolving Loans, Commitments, and
Maximum Revolver Amount under, and shall be entitled to all the benefits
afforded by, this Agreement and the other Loan Documents, and shall, without
limiting the foregoing, benefit equally and ratably from any guarantees and the
security interests created by the Loan Documents. Borrowers shall take any
actions reasonably required by Agent to ensure and demonstrate that the Liens
and security interests granted by the Loan Documents continue to be perfected
under the Code or otherwise after giving effect to the establishment of any such
new Commitments and Maximum Revolver Amount.

2.15 Joint and Several Liability of Borrowers.

(a) Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including any Obligations arising under this
Section 2.15), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation until such time as all of the Obligations are paid in full.

(d) The Obligations of each Borrower under the provisions of this Section 2.15
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each Borrower to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of the
provisions of this Agreement (other than this Section 2.15(d)) or any other
circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
any Revolving Loans or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the

 

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foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the failure by
any Borrower to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 2.15 afford
grounds for terminating, discharging or relieving any Borrower, in whole or in
part, from any of its Obligations under this Section 2.15, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of each Borrower under this Section 2.15
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Borrower under this Section 2.15 shall
not be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any other Borrower or any Agent or Lender.

(f) Each Borrower represents and warrants to Agent and Lenders that such
Borrower is currently informed of the financial condition of Borrowers and of
all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers’ financial
condition and of all other circumstances which bear upon the risk of nonpayment
or nonperformance of the Obligations.

(g) The provisions of this Section 2.15 are made for the benefit of Agent, each
member of the Lender Group, each Bank Product Provider, and their respective
successors and assigns, and may be enforced by it or them from time to time
against any or all Borrowers as often as occasion therefor may arise and without
requirement on the part of Agent, any member of the Lender Group, any Bank
Product Provider, or any of their successors or assigns first to marshal any of
its or their claims or to exercise any of its or their rights against any
Borrower or to exhaust any remedies available to it or them against any Borrower
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by Agent or any Lender upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, the provisions of
this Section 2.15 will forthwith be reinstated in effect, as though such payment
had not been made.

(h) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations
have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to any Agent or any member of
the Lender Group hereunder or under any of the Bank Product Agreements are
hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations and, in the
event of any insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or distribution of
any character, whether in cash, securities or other property, shall be made to
any other Borrower therefor.

(i) Each Borrower hereby agrees that after the occurrence and during the
continuance of any Default or Event of Default, such Borrower will not demand,
sue for or otherwise attempt to collect any indebtedness of any other Borrower
owing to such Borrower until the Obligations shall have been paid in full in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Borrower as trustee for Agent,
and such Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).

 

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3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make the initial extensions of credit provided for hereunder is
subject to the fulfillment, to the satisfaction of Agent and each Lender, of
each of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extensions of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent ).

3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Revolving Loans hereunder (or
to extend any other credit hereunder) at any time shall be subject to the
following conditions precedent:

(a) the representations and warranties of each Borrower or its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date); and

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof.

3.3 Maturity. This Agreement shall continue in full force and effect for a term
ending on the Maturity Date.

3.4 Effect of Maturity. On the Maturity Date, all commitments of the Lender
Group to provide additional credit hereunder shall automatically be terminated
and all of the Obligations immediately shall become due and payable without
notice or demand and Borrowers shall be required to repay all of the Obligations
in full. No termination of the obligations of the Lender Group (other than
payment in full of the Obligations and termination of the Commitments) shall
relieve or discharge any Loan Party of its duties, obligations, or covenants
hereunder or under any other Loan Document and Agent’s Liens in the Collateral
shall continue to secure the Obligations and shall remain in effect until all
Obligations have been paid in full and the Commitments have been terminated.
When all of the Obligations have been paid in full and the Lender Group’s
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and
deliver any termination statements, lien releases, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record,
Agent’s Liens and all notices of security interests and liens previously filed
by Agent.

3.5 Early Termination by Borrowers. Borrowers have the option, at any time upon
10 Business Days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder by repaying to Agent all of the Obligations
in full together with payment of the Applicable Prepayment Premium, if
applicable. The foregoing notwithstanding, (a) Borrowers may rescind termination
notices relative to proposed payments in full of the Obligations with the
proceeds of third party Indebtedness if the closing for such issuance or
incurrence does not happen on or before the date of the proposed termination (in
which case, a new notice shall be required to be sent in connection with any
subsequent termination), and (b) Borrowers may extend the date of termination at
any time with the consent of Agent (which consent shall not be unreasonably
withheld or delayed).

3.6 Conditions Subsequent. The obligation of the Lender Group (or any member
thereof) to continue to make Revolving Loans (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of the conditions subsequent set forth on Schedule 3.6 (the failure by
Borrowers to so perform or cause to be performed such conditions subsequent as
and when required by the terms thereof (unless such date is extended, in
writing, by Agent, which Agent may do without obtaining the consent of the other
members of the Lender Group), shall constitute an Event of Default).

 

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4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof), as of the date of the making of
each Revolving Loan (or other extension of credit) made thereafter, as though
made on and as of the date of such Revolving Loan (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:

4.1 Due Organization and Qualification; Subsidiaries.

(a) Each Loan Party (i) is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is qualified to do
business in any state where the failure to be so qualified could reasonably be
expected to result in a Material Adverse Effect, and (iii) has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.

(b) Set forth on Schedule 4.1(b) (as such Schedule may be updated from time to
time to reflect changes resulting from transactions permitted under this
Agreement) is a complete and accurate description of the authorized Equity
Interests of each Borrower, by class, and, as of the Closing Date, a description
of the number of shares of each such class that are issued and outstanding. No
Borrower is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its Equity Interests or any security
convertible into or exchangeable for any of its Equity Interests.

(c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to
time to reflect changes resulting from transactions permitted under this
Agreement), is a complete and accurate list of the Loan Parties’ direct and
indirect Subsidiaries, showing: (i) the number of shares of each class of common
and preferred Equity Interests authorized for each of such Subsidiaries, and
(ii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Administrative Borrower. All of the outstanding
Equity Interests of each such Subsidiary has been validly issued and is fully
paid and non-assessable.

(d) Except as set forth on Schedule 4.1(d), there are no subscriptions, options,
warrants, or calls relating to any shares of any Borrower’s or any of its
Subsidiaries’ Equity Interests, including any right of conversion or exchange
under any outstanding security or other instrument.

4.2 Due Authorization; No Conflict.

(a) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of any Loan Party
or its Subsidiaries where any such conflict, breach or default could
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect,

 

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(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any assets of any Loan Party, other than Permitted Liens, or
(iv) require any approval of any holder of Equity Interests of a Loan Party or
any approval or consent of any Person under any Material Contract of any Loan
Party, other than consents or approvals that have been obtained and that are
still in force and effect and except, in the case of Material Contracts, for
consents or approvals, the failure to obtain could not individually or in the
aggregate reasonably be expected to cause a Material Adverse Effect.

4.3 Governmental Consents. The execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date.

4.4 Binding Obligations; Perfected Liens.

(a) Each Loan Document has been duly executed and delivered by each Loan Party
that is a party thereto and is the legally valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally.

(b) Agent’s Liens are validly created, perfected (other than (i) in respect of
motor vehicles that are subject to a certificate of title, (ii) money,
(iii) letter-of-credit rights (other than supporting obligations),
(iv) commercial tort claims (other than those that, by the terms of the Guaranty
and Security Agreement, are required to be perfected), and (v) any Deposit
Accounts and Securities Accounts not subject to a Control Agreement as permitted
by Section 7(k)(iv) of the Guaranty and Security Agreement, and subject only to
the filing of financing statements, and the recordation of the Trademark
Security Agreement, in each case, in the appropriate filing offices), and first
priority Liens, subject only to Permitted Liens which are non-consensual
Permitted Liens, permitted purchase money Liens, or the interests of lessors
under Capital Leases.

4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens. @ Ventures does not own any
assets other than loans to or the Equity Interests of its Subsidiaries and
Portfolio Companies.

4.6 Litigation.

(a) There are no actions, suits, or proceedings pending or, to the knowledge of
any Borrower, after due inquiry, threatened in writing against a Loan Party or
any of its Subsidiaries that either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Effect, other than as set
forth on Schedule 4.6(b).

(b) Schedule 4.6(b) sets forth a complete and accurate description, with respect
to each of the actions, suits, or proceedings with asserted liabilities in
excess of, or that could reasonably be expected to result in liabilities in
excess of, $500,000 that, as of the Closing Date, is pending or, to the
knowledge of any Borrower, after due inquiry, threatened against a Loan Party or
any of its Subsidiaries, of (i) the parties to such actions, suits, or
proceedings, (ii) the nature of the dispute that is the subject of such actions,
suits, or proceedings, (iii) the procedural status, as of the Closing Date, with
respect to such actions, suits, or proceedings, and (iv) whether any liability
of the Loan Parties’ and their Subsidiaries in connection with such actions,
suits, or proceedings is covered by insurance.

 

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4.7 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.

4.8 No Material Adverse Effect. Except to the extent they may be impacted by the
Restatement, all historical financial statements relating to the Loan Parties
and their Subsidiaries that have been delivered by Borrowers to Agent have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, the Loan Parties’ and
their Subsidiaries’ consolidated financial condition as of the date thereof and
results of operations for the period then ended. Since July 31, 2011, except for
the contemplated Restatement and the other matters directly related thereto, no
event, circumstance, or change has occurred that has or could reasonably be
expected to result in a Material Adverse Effect with respect to the Loan Parties
and their Subsidiaries.

4.9 Solvency.

(a) Each Borrower is Solvent and the Loan Parties, on a consolidated basis, are
Solvent.

(b) No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

4.10 Employee Benefits.

(a) Except as set forth on Schedule 4.10 (as such Schedule may be updated from
time to time, without the consent of any Lender or Agent, to include retirement
and severance plans that are required by a Governmental Authority outside of the
United States so long as such updated Schedule is delivered together with
written notice thereof to Agent), no Loan Party, none of their Subsidiaries, nor
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

(b) Each Loan Party and each of the ERISA Affiliates has complied in all
material respects with ERISA, the IRC and all applicable laws regarding each
Employee Benefit Plan.

(c) Each Employee Benefit Plan is, and has been, maintained in substantial
compliance with ERISA, the IRC, all applicable laws and the terms of each such
Employee Benefit Plan.

(d) Each Employee Benefit Plan that is intended to qualify under Section 401(a)
of the IRC has received a favorable determination letter from the Internal
Revenue Service or an application for such letter is currently being processed
by the Internal Revenue Service. To the best knowledge of each Loan Party and
the ERISA Affiliates after due inquiry, nothing has occurred which would
prevent, or cause the loss of, such qualification.

(e) No material liability to the PBGC (other than for the payment of current
premiums which are not past due) by any Loan Party or ERISA Affiliate has been
incurred or is expected by any Loan Party or ERISA Affiliate to be incurred with
respect to any Pension Plan.

(f) No Notification Event exists or has occurred in the past six (6) years.

 

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(g) No Loan Party or ERISA Affiliate sponsors, maintains, or contributes to any
Employee Benefit Plan, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities that may not be
terminated by any Loan Party or ERISA Affiliate in its sole discretion at any
time without material liability.

(h) No Loan Party or ERISA Affiliate has provided any security under Section 436
of the IRC.

4.11 Environmental Condition. Except as set forth on Schedule 4.11, (a) to each
Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or
assets has ever been used by a Loan Party, its Subsidiaries, or by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such disposal, production,
storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to each Borrower’s
knowledge, after due inquiry, no Loan Party’s nor any of its Subsidiaries’
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by a Loan Party or its Subsidiaries, and
(d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent
decree, or settlement agreement with any Person relating to any Environmental
Law or Environmental Liability that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

4.12 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about Borrowers’ industry) furnished by
or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement or
the other Loan Documents, and all other such factual information taken as a
whole (other than forward-looking information and projections and information of
a general economic nature and general information about Borrowers’ industry)
hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in
writing to Agent or any Lender will be, true and accurate, in all material
respects, on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. The Projections
delivered to Agent on October 5, 2012 represent, and as of the date on which any
other Projections are delivered to Agent, such additional Projections represent,
Borrowers’ good faith estimate, on the date such Projections are delivered, of
the Loan Parties’ and their Subsidiaries’ future performance for the periods
covered thereby based upon assumptions believed by Borrowers to be reasonable at
the time of the delivery thereof to Agent (it being understood that such
Projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Loan Parties and their Subsidiaries, and no
assurances can be given that such Projections will be realized, and although
reflecting Borrowers’ good faith estimate, projections or forecasts based on
methods and assumptions which Borrowers believed to be reasonable at the time
such Projections were prepared, are not to be viewed as facts, and that actual
results during the period or periods covered by the Projections may differ
materially from projected or estimated results).

4.13 Patriot Act. To the extent applicable, each Loan Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the
proceeds of the loans made hereunder will be used by any Loan Party or any of
their Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

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4.14 Indebtedness. Set forth on Schedule 4.14 is a true and complete list of all
Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding immediately
after giving effect to the closing hereunder on the Closing Date and such
Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.

4.15 Payment of Taxes. Except as otherwise permitted under Section 5.5, all tax
returns and reports of each Loan Party and its Subsidiaries required to be filed
by any of them have been timely filed, and all taxes shown on such tax returns
to be due and payable and all assessments, fees and other governmental charges
upon a Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable. No
Borrower knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

4.16 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrowers will be used to purchase or carry
any Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock or for any purpose that violates the provisions of
Regulation T, U or X of the Board of Governors.

4.17 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

4.18 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or
a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or
(c) derives revenues from investments in, or transactions with Sanctioned
Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

4.19 Employee and Labor Matters. There is (i) no unfair labor practice complaint
pending or, to the knowledge of any Borrower, threatened against any Borrower or
its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against any Borrower or its
Subsidiaries which arises out of or under any collective bargaining agreement
and that could reasonably be expected to result in a material liability, (ii) no
strike, labor dispute, slowdown, stoppage or similar action or grievance pending
or threatened in writing against any Borrower or its Subsidiaries that could
reasonably be expected to result in a material liability, or (iii) to the
knowledge of any Borrower, after due inquiry, no union representation question
existing with respect to the employees of any Borrower or its Subsidiaries and
no union organizing activity taking place with respect to any of the employees
of any Borrower or its Subsidiaries. None of any Borrower or its Subsidiaries
has incurred any liability or obligation under the Worker Adjustment and
Retraining Notification Act or similar state law, which remains unpaid or
unsatisfied. The hours worked and payments made to employees of each Borrower
and its Subsidiaries have not been in violation of the Fair Labor Standards Act
or any other applicable legal requirements, except to the extent such violations
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. All material payments due from any Borrower or its
Subsidiaries on account of wages and employee health and welfare insurance and
other benefits have been paid or accrued as a liability on the books of
Borrowers, except where the failure to do so could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

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4.20 Reserved.

4.21 Leases. Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and, subject to Permitted Protests,
all of such material leases are valid and subsisting and no material default by
the applicable Loan Party or its Subsidiaries exists under any of them.

4.22 Eligible Accounts. As to each Account that is identified by Borrowers as an
Eligible Domestic Account or Eligible Foreign Account in a Borrowing Base
Certificate submitted to Agent, such Account is (a) a bona fide existing payment
obligation of the applicable Account Debtor created by the sale and delivery of
Inventory or the rendition of services to such Account Debtor in the ordinary
course of the Borrowers’ business, (b) owed to a Borrower without any known
defenses, disputes, offsets, counterclaims, or rights of return or cancellation,
and (c) not excluded as ineligible by virtue of one or more of the excluding
criteria (other than any Agent-discretionary criteria) set forth in the
definitions of Eligible Domestic Accounts or Eligible Foreign Accounts, as
applicable.

4.23 Eligible Inventory. As to each item of Inventory that is identified by
Borrowers as Eligible Finished Goods Inventory in a Borrowing Base Certificate
submitted to Agent, such Inventory is (a) of good and merchantable quality, free
from known defects, and (b) not excluded as ineligible by virtue of one or more
of the excluding criteria (other than any Agent-discretionary criteria) set
forth in the definition of Eligible Inventory.

4.24 Location of Inventory. The Inventory of the Loan Parties is not stored with
a bailee, warehouseman, or similar party and is located only at, or in-transit
between, the locations identified on Schedule 4.24 (as such Schedule may be
updated pursuant to Section 5.14). The chief executive office of the Loan
Parties is located at the location identified as such on Schedule 4.24 (as such
Schedule may be updated pursuant to Section 5.14).

4.25 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries’ Inventory and the book value thereof.

4.26 Material Contracts. Set forth on Schedule 4.26 (as such Schedule may be
updated from time to time in accordance herewith) is a list of the Material
Contracts of each Loan Party and its Subsidiaries as of the most recent date on
which Borrowers provided the Compliance Certificate pursuant to Section 5.1;
provided, however, that Borrowers may amend Schedule 4.26 to add additional
Material Contracts so long as such amendment occurs by written notice to Agent
on the date that Borrowers provide the Compliance Certificate. Except for
matters which, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, each Material Contract (other
than those that have expired at the end of their normal terms) (a) is in full
force and effect and is binding upon and enforceable against the applicable Loan
Party or its Subsidiary and, to each Borrower’s knowledge, after due inquiry,
each other Person that is a party thereto in accordance with its terms, (b) has
not been otherwise amended or modified (other than amendments or modifications
permitted by Section 6.6(b)), and (c) is not in default due to the action or
inaction of the applicable Loan Party or its Subsidiary.

5. AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations:

5.1 Financial Statements, Reports, Certificates. Borrowers (a) will deliver to
Agent, with copies to each Lender, each of the financial statements, reports,
and other items set forth on Schedule 5.1 no later than the times specified
therein, (b) agree that no Subsidiary of a Loan Party will have a fiscal year
different from that of Administrative Borrower, (c) agree to maintain a system
of accounting that enables Borrowers to produce financial statements in
accordance with GAAP, and (d) agree that they will, and will cause each other
Loan Party to, (i) keep a reporting system that shows all additions, sales,
claims, returns, and allowances with respect to their and their Subsidiaries’
sales, and (ii) maintain their billing systems and practices, in the case of
clauses (i) and (ii) of this Section 5.1(d) substantially as in effect as of the
Closing Date and shall only make material modifications thereto with notice to,
and with the consent of, Agent.

 

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5.2 Reporting. Borrowers (a) will deliver to Agent (and if so requested by
Agent, with copies for each Lender) each of the reports set forth on Schedule
5.2 at the times specified therein, (b) agree to use commercially reasonable
efforts in cooperation with Agent to facilitate and implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth on such Schedule, (c) promptly after the filing thereof
with the United States Secretary of Labor, the Internal Revenue Service or the
PBGC, deliver to Agent (and if so requested by Agent, with copies for each
Lender) copies of each annual and other report with respect to each Pension Plan
or any trust created thereunder, (d) promptly upon becoming aware of the
occurrence of any Notification Event or of any “prohibited transaction,” as
described in section 406 of ERISA or in section 4975 of the IRC in connection
with any Pension Plan or any trust created thereunder, deliver to Agent (and if
so requested by Agent, with copies for each Lender) a written notice signed by a
chief financial officer of each Borrower, specifying the nature thereof, what
action the Loan Parties propose to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, (e) promptly upon receipt thereof,
deliver to Agent (and if so requested by Agent, with copies for each Lender)
copies of any notice of the PBGC’s intention to terminate or to have a trustee
appointed to administer any Pension Plan, (f) no later than March 15 of each
year during the term of the Agreement, deliver to Agent (and if so requested by
Agent, with copies for each Lender) proof that each Loan Party submitted a
request for a Withdrawal Liability estimate to each Multiemployer Plan no later
than February 15 of each year during the term of the Agreement, and (g) promptly
upon its receipt thereof, deliver to Agent (and if so requested by Agent, with
copies for each Lender) a copy of each estimate of Withdrawal Liability received
by any Loan Party or ERISA Affiliate from a Multiemployer Plan.

5.3 Existence. Except as otherwise permitted under Section 6.3 or Section 6.4,
each Borrower will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect such Person’s valid existence and
good standing in its jurisdiction of organization and, except as could not
reasonably be expected to result in a Material Adverse Effect, good standing
with respect to all other jurisdictions in which it is qualified to do business
and any rights, franchises, permits, licenses, accreditations, authorizations,
or other approvals material to their businesses.

5.4 Maintenance of Properties. Each Borrower will, and will cause each of its
Subsidiaries to, maintain and preserve all of its assets that are necessary or
useful in the proper conduct of its business in good working order and
condition, ordinary wear, tear, casualty, and condemnation and Permitted
Dispositions excepted.

5.5 Taxes. Each Borrower will, and will cause each of its Subsidiaries to, pay
in full before delinquency or before the expiration of any extension period all
material governmental assessments and taxes imposed, levied, or assessed against
it, or any of its assets or in respect of any of its income, businesses, or
franchises, except to the extent that the validity of such governmental
assessment or tax is the subject of a Permitted Protest.

5.6 Insurance. Each Borrower will, and will cause each of its Subsidiaries to,
at Borrowers’ expense, (a) maintain insurance respecting each of each Borrower’s
and its Subsidiaries’ assets wherever located, covering liabilities, losses or
damages as are customarily are insured against by other Persons engaged in same
or similar businesses and similarly situated and located. All such policies of
insurance shall be with financially sound and reputable insurance companies
acceptable to Agent (it being agreed that, as of the Closing Date, the insurance
companies currently used by the Borrowers are acceptable to Agent) and in such
amounts as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and located and, in any
event, in amount, adequacy, and scope reasonably satisfactory to Agent (it being
agreed that the amount, adequacy, and scope of the policies of insurance of
Borrowers in effect as of the Closing Date are acceptable to Agent). All
property insurance policies covering the Collateral are to be made payable to
Agent for the benefit of Agent and the Lenders, as their interests may appear,
in case of loss, pursuant to a standard loss payable endorsement with a standard
non contributory “lender” or “secured party” clause and are to contain such
other provisions as Agent may reasonably require to fully protect the Lenders’
interest in the Collateral and to any

 

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payments to be made under such policies. All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days (10 days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation. If any Borrower or its Subsidiaries fails to maintain such
insurance, Agent may arrange for such insurance, but at Borrowers’ expense and
without any responsibility on Agent’s part for obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims. Borrowers shall give Agent prompt notice of any loss
exceeding $250,000 covered by their or their Subsidiaries’ casualty or business
interruption insurance. Upon the occurrence and during the continuance of an
Event of Default, Agent shall have the sole right to file claims under any
property and general liability insurance policies in respect of the Collateral,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.

5.7 Inspection.

(a) Each Borrower will, and will cause each of its Subsidiaries to, permit
Agent, any Lender, and each of their respective duly authorized representatives
or agents to visit any of its properties and inspect any of its assets or books
and records, to examine and make copies of its books and records, and to discuss
its affairs, finances, and accounts with, and to be advised as to the same by,
its officers and employees (provided an authorized representative of a Borrower
shall be allowed to be present) at such reasonable times and intervals as Agent
or any Lender, as applicable, may designate and, so long as no Default or Event
of Default has occurred and is continuing, with reasonable prior notice to
Borrowers and during regular business hours.

(b) Each Borrower will, and will cause each of its Subsidiaries to, permit Agent
and each of its duly authorized representatives or agents to conduct appraisals
and valuations at such reasonable times and intervals as Agent may designate.

5.8 Compliance with Laws. Each Borrower will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations, and orders of any Governmental Authority, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

5.9 Environmental. Each Borrower will, and will cause each of its Subsidiaries
to,

(a) Keep any property either owned or operated by any Borrower or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

(b) Comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests,

(c) Promptly notify Agent of any release of which any Borrower has knowledge of
a Hazardous Material in any reportable quantity from or onto property owned or
operated by any Borrower or its Subsidiaries and which could reasonably be
expected to result in a Material Adverse Effect and take any Remedial Actions
required to abate said release or otherwise to come into compliance, in all
material respects, with applicable Environmental Law, and

(d) Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of a Borrower or its Subsidiaries, (ii) commencement of any Environmental Action
or written notice that an Environmental Action will be filed against a Borrower
or its Subsidiaries, and (iii) written notice of a violation, citation, or other
administrative order from a Governmental Authority.

 

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5.10 Disclosure Updates. Each Borrower will, promptly and in no event later than
5 Business Days after an Authorized Person obtains knowledge thereof, notify
Agent if any written information, exhibit, or report furnished to Agent or the
Lenders contained, at the time it was furnished, any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made. The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the effect of amending or modifying this
Agreement or any of the Schedules hereto.

5.11 Formation of Subsidiaries. Each Borrower will, at the time that any Loan
Party forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, within 30 days of such formation or
acquisition (or such later date as permitted by Agent in its sole discretion)
(a) cause such new Subsidiary to provide to Agent a joinder to the Guaranty and
Security Agreement, together with such other security agreements (including
mortgages with respect to any Real Property owned in fee of such new Subsidiary)
as well as appropriate financing statements (and with respect to all property
subject to a mortgage, fixture filings), all in form and substance reasonably
satisfactory to Agent (including being sufficient to grant Agent a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary); provided, that the joinder to the Guaranty and
Security Agreement, and such other security agreements shall not be required to
be provided to Agent with respect to any Subsidiary of any Borrower that is a
CFC if providing such agreements would result in material adverse tax
consequences or the costs to the Loan Parties of providing such guaranty or such
security agreements are unreasonably excessive (as determined by Agent in
consultation with Borrowers) in relation to the benefits to Agent and the
Lenders of the security or guarantee afforded thereby, (b) provide, or cause the
applicable Loan Party to provide, to Agent a pledge agreement (or an addendum to
the Guaranty and Security Agreement) and appropriate certificates and powers or
financing statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary in form and substance reasonably satisfactory to
Agent; provided, that only 65% of the total outstanding voting Equity Interests
of any first tier Subsidiary of a Borrower that is a CFC (and none of the Equity
Interests of any Subsidiary of such CFC) shall be required to be pledged if
pledging a greater amount would result in material adverse tax consequences or
the costs to the Loan Parties of providing such pledge are unreasonably
excessive (as determined by Agent in consultation with Borrowers) in relation to
the benefits to Agent and the Lenders of the security afforded thereby (which
pledge, if reasonably requested by Agent, shall be governed by the laws of the
jurisdiction of such Subsidiary); provided further, that @Ventures shall not be
required to pledge the Equity Interests of its Subsidiaries or Portfolio
Companies pursuant to the foregoing subsection (b); and (c) provide to Agent all
other documentation, including one or more opinions of counsel reasonably
satisfactory to Agent, which, in its opinion, is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all Real Property owned in fee and subject to a mortgage). Any document,
agreement, or instrument executed or issued pursuant to this Section 5.11 shall
constitute a Loan Document.

5.12 Further Assurances. Each Borrower will, and will cause each of the other
Loan Parties to, at any time upon the reasonable request of Agent, execute or
deliver to Agent any and all financing statements, fixture filings, security
agreements, pledges, assignments, mortgages, deeds of trust, opinions of
counsel, and all other documents (the “Additional Documents”) that Agent may
reasonably request in form and substance reasonably satisfactory to Agent, to
create, perfect, and continue perfected or to better perfect Agent’s Liens in
all of the assets of each Borrower and its Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by any
Borrower or any other Loan Party, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents; provided
that the foregoing shall not apply to any Subsidiary of a Borrower that is a CFC
if providing such documents would result in adverse tax consequences or the
costs to the Loan Parties of providing such documents are unreasonably excessive
(as determined by Agent in consultation with Borrowers) in relation to the
benefits to Agent and the Lenders of the security afforded thereby. To the
maximum extent permitted by applicable law, if any Borrower or any other Loan
Party refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time following the request to do so,
each Borrower and each other Loan Party hereby authorizes Agent to execute any
such Additional Documents in the applicable Loan Party’s name and authorizes
Agent to file such executed Additional Documents in any appropriate filing

 

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office. In furtherance of, and not in limitation of, the foregoing, each Loan
Party shall take such actions as Agent may reasonably request from time to time
to ensure that the Obligations are guaranteed by the Guarantors and are secured
by substantially all of the assets of each Borrower and its Subsidiaries,
including all of the outstanding capital Equity Interests of each Borrower
(other than the Administrative Borrower) and each Borrower’s Subsidiaries
(subject to exceptions and limitations set forth in Section 5.11 with respect to
the Subsidiaries of @Ventures and those contained in the Loan Documents with
respect to CFCs).

5.13 Lender Meetings. Borrowers will, within 90 days after the close of each
fiscal year of Administrative Borrower, but only upon the request of Agent or of
the Required Lenders and only upon reasonable prior notice, hold a meeting (at a
mutually agreeable location and time or, at the option of Agent, by conference
call) with all Lenders who choose to attend such meeting at which meeting shall
be reviewed the financial results of the previous fiscal year and the financial
condition of Borrowers and their Subsidiaries and the projections presented for
the current fiscal year of Administrative Borrower.

5.14 Location of Inventory. Each Loan Party will keep its Inventory only at the
locations identified on Schedule 4.24 and their chief executive offices only at
the locations identified on Schedule 4.24; provided, that Borrowers may amend
Schedule 4.24 so long as such amendment occurs by written notice to Agent not
less than 10 days prior to the date on which such Inventory is moved to such new
location or such chief executive office is relocated and so long as such new
location is within the continental United States.

5.15 Compliance with ERISA and the IRC. In addition to and without limiting the
generality of Section 5.8, (a) comply in all material respects with applicable
provisions of ERISA and the IRC with respect to all Employee Benefit Plans,
(b) without the prior written consent of Agent and the Required Lenders, not
take any action or fail to take action the result of which could result in a
Loan Party or ERISA Affiliate incurring a material liability to the PBGC or to a
Multiemployer Plan (other than to pay contributions or premiums payable in the
ordinary course), (c) allow any facts or circumstances to exist with respect to
one or more Employee Benefit Plans that, in the aggregate, reasonably could be
expected to result in a Material Adverse Effect, (d) not participate in any
prohibited transaction that could result in other than a de minimis civil
penalty excise tax, fiduciary liability or correction obligation under ERISA or
the IRC, (e) operate each Employee Benefit Plan in such a manner that will not
incur any material tax liability under the IRC (including Section 4980B of the
IRC), and (e) furnish to Agent upon Agent’s written request such additional
information about any Employee Benefit Plan for which any Loan Party or ERISA
Affiliate could reasonably expect to incur any material liability. With respect
to each Pension Plan (other than a Multiemployer Plan) except as could not
reasonably be expected to result in liability to the Loan Parties, the Loan
Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely
manner, without incurring any late payment or underpayment charge or penalty and
without giving rise to any Lien, all of the contribution and funding
requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the
PBGC in a timely manner, without incurring any late payment or underpayment
charge or penalty, all premiums required pursuant to ERISA.

5.16 Material Contracts. Contemporaneously with the delivery of each Compliance
Certificate pursuant to Section 5.1, Borrowers will provide Agent with copies of
(a) each Material Contract entered into since the delivery of the previous
Compliance Certificate, and (b) each material amendment or modification of any
Material Contract entered into since the delivery of the previous Compliance
Certificate.

6. NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations:

6.1 Indebtedness. Each Borrower will not, and will not permit any of its
Subsidiaries to create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.

 

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6.2 Liens. Each Borrower will not, and will not permit any of its Subsidiaries
to create, incur, assume, or suffer to exist, directly or indirectly, any Lien
on or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

6.3 Restrictions on Fundamental Changes. Each Borrower will not, and will not
permit any of its Subsidiaries to,

(a) Other than in order to consummate a Permitted Acquisition, enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
Equity Interests, except for (i) any merger between Loan Parties, provided, that
a Borrower must be the surviving entity of any such merger to which it is a
party, (ii) any merger between a Loan Party and a Subsidiary of such Loan Party
that is not a Loan Party so long as such Loan Party is the surviving entity of
any such merger, and (iii) any merger between Subsidiaries of any Borrower that
are not Loan Parties,

(b) liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of any Borrower with nominal assets and nominal liabilities,
(ii) the liquidation or dissolution of a Loan Party (other than any Borrower) or
any of its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Equity Interests) of such liquidating or dissolving Loan Party
or Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of any
Borrower that is not a Loan Party (other than any such Subsidiary the Equity
Interests of which (or any portion thereof) is subject to a Lien in favor of
Agent) so long as all of the assets of such liquidating or dissolving Subsidiary
are transferred to a Subsidiary of a Borrower that is not liquidating or
dissolving, or

(c) suspend or cease operating a substantial portion of its or their business,
except as permitted pursuant to clauses (a) or (b) above or in connection with a
transaction permitted under Section 6.4.

6.4 Disposal of Assets. Other than Permitted Dispositions or transactions
expressly permitted by Sections 6.3 or 6.9, each Borrower will not, and will not
permit any of its Subsidiaries to convey, sell, lease, license, assign,
transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license, assign, transfer, or otherwise dispose of) any of its or their
assets. Notwithstanding the foregoing, each Borrower will not, and will not
permit any of its Subsidiaries (other than @Ventures) to convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement
to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any
of its or their assets to @Ventures.

6.5 Nature of Business. Each Borrower will not, and will not permit any of its
Subsidiaries to make any change in the nature of its or their business as
described in Schedule 6.5 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities; provided, that
the foregoing shall not prevent any Borrower and its Subsidiaries from engaging
in any business that is reasonably related or ancillary to their business.

6.6 Prepayments and Amendments. Each Borrower will not, and will not permit any
of its Subsidiaries to,

(a) Except in connection with Refinancing Indebtedness permitted by Section 6.1,

(i) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or its Subsidiaries, other than (A) the Obligations
in accordance with this Agreement, and (B) Permitted Intercompany Advances, or

(ii) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the Obligations if such payment is not
permitted at such time under the subordination terms and conditions, or

 

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(b) Directly or indirectly, amend, modify, or change any of the terms or
provisions of

(i) any agreement, instrument, document, indenture, or other writing evidencing
or concerning Permitted Indebtedness other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Advances, and
(C) Indebtedness permitted under clauses (c), (h), (j) and (k) of the definition
of Permitted Indebtedness,

(ii) the Governing Documents of any Loan Party or any of its Subsidiaries if the
effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of the Lenders, or

(iii) any Material Contract except to the extent that such amendment,
modification, or change could not, individually or in the aggregate, reasonably
be expected to be materially adverse to the interests of the Lenders; provided
that any amendment, modification or change that increases the amount payable by
any Loan Party under the Chinese Contract Services Agreement or any Chinese
Contact Manufacturing Services Agreement (other than an increase in the amount
payable by any Loan Party under any contracts due to an amendment, modification
or change in the cost plus percentage rate, so long as the cost plus percentage
rate does not exceed 8% unless consented to in writing by Agent) imposes any
additional obligations on any Loan Party shall be considered materially adverse
to the interests of the Lenders.

6.7 Restricted Payments. Each Borrower will not, and will not permit any of its
Subsidiaries to make any Restricted Payment; provided, that, so long as it is
permitted by law, and so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom,

(a) Administrative Borrower may make distributions to former employees,
officers, or directors of Administrative Borrower (or any spouses, ex-spouses,
or estates of any of the foregoing) on account of repurchases of Equity
Interests of Administrative Borrower held by such Persons, provided, that the
aggregate amount of such repurchases made by Administrative Borrower during the
term of this Agreement plus the amount of Indebtedness outstanding under clause
(l) of the definition of Permitted Indebtedness, does not exceed $250,000 in the
aggregate,

(b) Administrative Borrower may make distributions to former employees,
officers, or directors of Administrative Borrower (or any spouses, ex-spouses,
or estates of any of the foregoing), solely in the form of forgiveness of
Indebtedness of such Persons owing to Administrative Borrower on account of
repurchases of the Equity Interests of Administrative Borrower held by such
Persons; provided that such Indebtedness was incurred by such Persons solely to
acquire Equity Interests of Administrative Borrower; and

(c) Administrative Borrower may, in accordance with the terms of its various
equity incentive plans, implement (or continue to implement) programs with its
officers and employees whereby an officer or employee may deliver shares of
common stock of Administrative Borrower to Administrative Borrower whose value
approximates the amount of taxes that are owed by such officer or employee as a
result of the vesting or lapse of a risk of forfeiture on shares of common stock
that had been granted or issued to the officer or employee by Administrative
Borrower, with Administrative Borrower then remitting withholding taxes due as a
result of such vesting, so long as the aggregate amount of withholding taxes
remitted by Administrative Borrower pursuant hereto does not exceed $500,000 in
the aggregate in a fiscal year.

6.8 Accounting Methods. Each Borrower will not, and will not permit any of its
Subsidiaries to modify or change its fiscal year (other than with the prior
written consent of Agent, not to be unreasonably withheld) or its method of
accounting (other than as may be required to conform to GAAP).

6.9 Investments. Each Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make or acquire any Investment or incur
any liabilities (including contingent obligations) for or in connection with any
Investment except for Permitted Investments.

6.10 Transactions with Affiliates. Each Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction with any Affiliate of any Borrower or any of its
Subsidiaries except for:

(a) transactions (other than the payment of management, consulting, monitoring,
or advisory fees) between such Borrower or its Subsidiaries, on the one hand,
and any Affiliate of such Borrower or its Subsidiaries, on the other hand, so
long as such transactions (i) are fully disclosed to Agent prior to the
consummation thereof, if they involve one or more payments by such Borrower or
its Subsidiaries in excess of $250,000 for any single transaction or series of
related transactions, and (ii) are no less favorable, taken as a whole, to such
Borrower or its Subsidiaries, as applicable, than would be obtained in an arm’s
length transaction with a non-Affiliate,

 

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(b) so long as it has been approved by such Borrower’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, any indemnity provided for the benefit of directors (or
comparable managers) of such Borrower or its applicable Subsidiary,

(c) so long as it has been approved by such Borrower’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, the payment of reasonable compensation, severance, or
employee benefit arrangements to employees, officers, and outside directors of
such Borrower and its Subsidiaries in the ordinary course of business and
consistent with industry practice,

(d) transactions permitted by Section 6.3 or Section 6.7, or any Permitted
Intercompany Advance,

(e) the making of cash payments by ModusLink to the applicable contract
counterparty pursuant to the Chinese Contract Manufacturing Services Agreements
shall be permitted so long as (i) no Event of Default has occurred and is
continuing or would immediately result therefrom, (ii) the aggregate amount of
cash payments made by ModusLink to the applicable contract counterparty shall
not exceed the lesser of (1) the payment requirements set forth in the
applicable Chinese Contract Manufacturing Services Agreement as in effect on the
date of this Agreement, and (2) the costs of performing under the applicable
Chinese Contract Manufacturing Services Agreement plus 5%, or the percentage
rate then in effect, of such costs so long as such percentage does not exceed 8%
unless consented to in writing by Agent, and (iii) cash payments made by
ModusLink to the applicable contract counterparty shall be made in the ordinary
course of business consistent with past practices, and

(f) the making of cash payments by ModusLink to the contract counterparty
pursuant to the Chinese Contract Services Agreement shall be permitted so long
as (i) no Event of Default has occurred and is continuing or would immediately
result therefrom, (ii) the aggregate amount of cash payments made by ModusLink
to the contract counterparty shall not exceed the lesser of (1) the payment
requirements set forth in the Chinese Contract Services Agreement as in effect
on the date of this Agreement, and (2) the costs of performing under the Chinese
Contract Services Agreement plus 7%, or the percentage rate then in effect, of
such costs so long as such percentage does not exceed 8% unless consented to in
writing by Agent, and (iii) cash payments made by ModusLink to the contract
counterparty shall be made in the ordinary course of business consistent with
past practices.

6.11 Use of Proceeds. Each Borrower will not, and will not permit any of its
Subsidiaries to use the proceeds of any loan made hereunder for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing under or in
connection with the Existing Credit Facility, and (ii) to pay the fees, costs,
and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, in each case,
as set forth in the Funds Flow Agreement, and (b) thereafter, consistent with
the terms and conditions hereof, for their lawful and permitted purposes
(including that no part of the proceeds of the loans made to Borrowers will be
used to purchase or carry any such Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any such Margin Stock or for any
purpose that violates the provisions of Regulation T, U or X of the Board of
Governors).

6.12 Limitation on Issuance of Equity Interests. Except for the issuance of
Qualified Equity Interests by Administrative Borrower, each Borrower will not,
and will not permit any of its Subsidiaries (other than the Subsidiaries and
Portfolio Companies of @Ventures) to issue or enter into any agreement or
arrangement for the issuance of any of its Equity Interests.

 

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6.13 Inventory with Bailees. Each Borrower will not, and will not permit any of
its Subsidiaries to store its Inventory at any time with a bailee, warehouseman,
or similar party.

6.14 Employee Benefits.

(a) Terminate, or permit any ERISA Affiliate to terminate, any Pension Plan in a
manner, or take any other action with respect to any Pension Plan, which could
reasonably be expected to result in any material liability of any Loan Party or
ERISA Affiliate to the PBGC.

(b) Fail to make, or permit any ERISA Affiliate to fail to make, full payment
when due of all amounts which, under the provisions of any Benefit Plan,
agreement relating thereto or applicable laws, rules, regulations, judicial
rulings or judgments, any Loan Party or ERISA Affiliate is required to pay if
such failure could reasonably be expected to have a Material Adverse Effect.

(c) Permit to exist, or allow any ERISA Affiliate to permit to exist, any
accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan.

(d) Acquire, or permit any ERISA Affiliate to acquire, an interest in any Person
that causes such Person to become an ERISA Affiliate with respect to a Loan
Party or with respect to any ERISA Affiliate if such Person sponsors, maintains
or contributes to, or at any time in the six-year period preceding such
acquisition has sponsored, maintained, or contributed to, (i) any Pension or
(ii) any Multiemployer Plan.

(e) Contribute to or assume an obligation to contribute to, or permit any ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
Multiemployer Plan not set forth on Schedule 4.10.

(f) Amend, or permit any ERISA Affiliate to amend, a Pension Plan resulting in a
material increase in current liability such that a Loan Party or ERISA Affiliate
is required to provide security to such Plan under the IRC.

 

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7. FINANCIAL COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, commencing on the date on
which a Financial Covenant Triggering Event has occurred and measured as of the
end of the month immediately preceding the date on which a Financial Covenant
Triggering Event first occurs and as of each month end thereafter until (i) the
Excess Availability plus Qualified Cash is equal to or greater than $40,000,000
and (ii) Excess Availability is equal to or greater than $20,000,000 in each
case for 90 consecutive days, Borrowers will:

(a) Minimum EBITDA. Achieve EBITDA, measured on a month-end basis, of at least
the required amount set forth in the following table for the applicable period
set forth opposite thereto:

 

Applicable Amount

   

Applicable Period

$ (2,000,000 )   

For the 1 month period ending October 31, 2012

$ (2,000,000 )   

For the 2 month period ending November 30, 2012

$ (2,000,000 )   

For the 3 month period ending December 31, 2012

$ (2,000,000 )   

For the 4 month period ending January 31, 2013

$ (2,000,000 )   

For the 5 month period ending February 28, 2013

$ (2,000,000 )   

For the 6 month period ending March 31, 2013

$ (2,000,000 )   

For the 7 month period ending April 30, 2013

$ (2,000,000 )   

For the 8 month period ending May 31, 2013

$ 2,000,000     

For the 9 month period ending June 30, 2013

$ 4,000,000     

For the 10 month period ending July 31, 2013

$ 6,000,000     

For the 11 month period ending August 31, 2013

$ 8,000,000     

For the 12 month period ending September 30, 2013

$ 10,000,000     

For the 12 month period ending October 31, 2013

$ 12,000,000     

For the 12 month period ending November 30, 2013

$ 12,000,000     

For the 12 month period ending December 31, 2013

$ 15,000,000     

For the 12 month period ending January 31, 2014

$ 15,000,000     

For the 12 month period ending February 28, 2014

$ 15,000,000     

For the 12 month period ending March 31, 2014

$ 17,500,000     

For the 12 month period ending each month thereafter

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1 Payments. If Borrowers fail to pay when due and payable, or when declared
due and payable, (a) all or any portion of the Obligations consisting of
interest, fees, or charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts (other than any portion thereof constituting
principal) constituting Obligations (including any portion thereof that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), and such failure continues for a period of 3 Business Days, (b) all
or any portion of the principal of the Loans, or (c) any amount payable to
Issuing Bank in reimbursement of any drawing under a Letter of Credit;

 

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8.2 Covenants. If any Loan Party or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if any Borrower is not in good
standing in its jurisdiction of organization), 5.6, 5.7 (solely if any Borrower
refuses to allow Agent or its representatives or agents to visit any Borrower’s
properties, inspect its assets or books or records, examine and make copies of
its books and records, or discuss Borrowers’ affairs, finances, and accounts
with officers and employees of any Borrower), 5.10, 5.11, 5.13, 5.14, or 5.15 of
this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this
Agreement, or (iv) Section 7 of the Guaranty and Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any
of Sections 5.3 (other than if any Borrower is not in good standing in its
jurisdiction of organization), 5.4, 5.5, 5.8, and 5.12 of this Agreement and
such failure continues for a period of 10 days after the earlier of (i) the date
on which such failure shall first become known to any officer of any Borrower or
(ii) the date on which written notice thereof is given to Borrowers by Agent; or

(c) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is the subject of another provision of this
Section 8 (in which event such other provision of this Section 8 shall govern),
and such failure continues for a period of 30 days after the earlier of (i) the
date on which such failure shall first become known to any Authorized Person or
(ii) the date on which written notice thereof is given to Borrowers by Agent;

8.3 Judgments. If one or more judgments, orders, or awards for the payment of
money involving an aggregate amount of $500,000, or more (except to the extent
fully covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive days at
any time after the entry of any such judgment, order, or award during which
(1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or
(2) a stay of enforcement thereof is not in effect, or (b) enforcement
proceedings are commenced upon such judgment, order, or award;

8.4 Voluntary Bankruptcy, etc. If an Insolvency Proceeding is commenced by a
Loan Party or any of its Subsidiaries;

8.5 Involuntary Bankruptcy, etc. If an Insolvency Proceeding is commenced
against a Loan Party or any of its Subsidiaries and any of the following events
occur: (a) such Loan Party or such Subsidiary consents to the institution of
such Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition commencing
the Insolvency Proceeding is not dismissed within 60 calendar days of the date
of the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, such Loan Party or its
Subsidiary, or (e) an order for relief shall have been issued or entered
therein;

8.6 Default Under Other Agreements. If there is (a) a default in one or more
agreements to which a Loan Party or any of its Subsidiaries is a party with one
or more third Persons relative to a Loan Party’s or any of its Subsidiaries’
Indebtedness involving an aggregate amount of $500,000 or more, and such default
(i) occurs at the final maturity of the obligations thereunder, or (ii) results
in a right by such third Person, irrespective of whether exercised, to
accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations
thereunder, or (b) a default in or an involuntary early termination of one or
more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a
party.

8.7 Representations, etc. If any warranty, representation, certificate,
statement, or Record made herein or in any other Loan Document or delivered in
writing to Agent or any Lender in connection with this Agreement or any other
Loan Document proves to be untrue in any material respect (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of issuance or making or deemed making thereof;

 

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8.8 Guaranty. If the obligation of any Guarantor under the guaranty contained in
the Guaranty and Security Agreement is limited or terminated by operation of law
or by such Guarantor (other than in accordance with the terms of this
Agreement);

8.9 Security Documents. If the Guaranty and Security Agreement or any other Loan
Document that purports to create a Lien, shall, for any reason, fail or cease to
create a valid and perfected and, except to the extent of Permitted Liens which
are non-consensual Permitted Liens, permitted purchase money Liens or the
interests of lessors under Capital Leases, first priority Lien on the Collateral
covered thereby, except (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement, or (b) as the result
of an action or failure to act on the part of Agent;

8.10 Loan Documents. The validity or enforceability of any Loan Document shall
at any time for any reason (other than solely as the result of an action or
failure to act on the part of Agent) be declared to be null and void, or a
proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any
Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or a Loan Party or its Subsidiaries shall deny that such Loan Party or its
Subsidiaries has any liability or obligation purported to be created under any
Loan Document; or

8.11 Change of Control. A Change of Control shall occur, whether directly or
indirectly.

8.12 ERISA. The occurrence of any of the following events: (a) any Loan Party or
ERISA Affiliate fails to make full payment when due of all amounts which any
Loan Party or ERISA Affiliate is required to pay as contributions, installments,
or otherwise to or with respect to a Pension Plan or Multiemployer Plan, and
such failure could reasonably be expected to result in liability in excess of
$250,000, (b) an accumulated funding deficiency or funding shortfall occurs or
exists, whether or not waived, with respect to any Pension Plan, individually or
in the aggregate, (c) a Notification Event, which could reasonably be expected
to result in liability in excess of $250,000, either individually or in the
aggregate, or (d) any Loan Party or ERISA Affiliate completely or partially
withdraws from one or more Multiemployer Plans and incurs Withdrawal Liability
in excess of $250,000 in the aggregate, or fails to make any Withdrawal
Liability payment when due.

9. RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuation of an
Event of Default, Agent may, and, at the instruction of the Required Lenders,
shall (in each case under clauses (a) or (b) by written notice to Borrowers), in
addition to any other rights or remedies provided for hereunder or under any
other Loan Document or by applicable law, do any one or more of the following:

(a) (i) declare the principal of, and any and all accrued and unpaid interest
and fees in respect of, the Loans and all other Obligations (other than the Bank
Product Obligations), whether evidenced by this Agreement or by any of the other
Loan Documents to be immediately due and payable, whereupon the same shall
become and be immediately due and payable and Borrowers shall be obligated to
repay all of such Obligations in full, without presentment, demand, protest, or
further notice or other requirements of any kind, all of which are hereby
expressly waived by each Borrower, and (ii) direct Borrowers to provide (and
Borrowers agree that upon receipt of such notice Borrowers will provide) Letter
of Credit Collateralization to Agent to be held as security for Borrowers’
reimbursement obligations for drawings that may subsequently occur under issued
and outstanding Letters of Credit;

(b) declare the Commitments terminated, whereupon the Commitments shall
immediately be terminated together with (i) any obligation of any Revolving
Lender to make Revolving Loans, (ii) the obligation of the Swing Lender to make
Swing Loans, and (iii) the obligation of Issuing Bank to issue Letters of
Credit; and

(c) exercise all other rights and remedies available to Agent or the Lenders
under the Loan Documents, under applicable law, or in equity.

 

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The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations (other than the Bank Product Obligations), inclusive of the
principal of, and any and all accrued and unpaid interest and fees in respect
of, the Loans and all other Obligations (other than the Bank Product
Obligations), whether evidenced by this Agreement or by any of the other Loan
Documents, shall automatically become and be immediately due and payable and
Borrowers shall automatically be obligated to repay all of such Obligations in
full (including Borrowers being obligated to provide (and Borrowers agree that
they will provide) (1) Letter of Credit Collateralization to Agent to be held as
security for Borrowers’ reimbursement obligations in respect of drawings that
may subsequently occur under issued and outstanding Letters of Credit and
(2) Bank Product Collateralization to be held as security for Borrowers’ or
their Subsidiaries’ obligations in respect of outstanding Bank Products),
without presentment, demand, protest, or notice or other requirements of any
kind, all of which are expressly waived by Borrowers.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral. Each Borrower hereby agrees
that: (a) so long as Agent complies with its obligations, if any, under the
Code, the Lender Group shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrowers
shall not be liable for costs and expenses (including attorney’s fees) of any
Lender (other than Wells Fargo) incurred in advising, structuring, drafting,
reviewing, administering or syndicating the Loan Documents), enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of Borrowers’ and
their Subsidiaries’ compliance with the terms of the Loan Documents (provided,
that the indemnification in this clause (a) shall not extend to (i) disputes
solely between or among the Lenders that do not involve any acts or omissions of
any Loan Party, or (ii) disputes solely between or among the Lenders and their
respective Affiliates that do not involve any acts or omissions of any Loan
Party; it being understood and agreed that the indemnification in this clause
(a) shall extend to Agent (but not the Lenders) relative to disputes between or
among Agent on the one hand, and one or more Lenders, or one or more of their
Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to
Taxes, which shall be governed by Section 16), (b) with respect to any actual or
prospective investigation,

 

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litigation, or proceeding related to this Agreement, any other Loan
Document, the making of any Loans or issuance of any Letters of Credit
hereunder, or the use of the proceeds of the Loans or the Letters of Credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto, and (c) in connection with or arising out of any presence or release of
Hazardous Materials at, on, under, to or from any assets or properties owned,
leased or operated by any Borrower or any of its Subsidiaries or any
Environmental Actions, Environmental Liabilities or Remedial Actions related in
any way to any such assets or properties of any Borrower or any of its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The
foregoing to the contrary notwithstanding, no Borrower shall have any obligation
to any Indemnified Person under this Section 10.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person or its officers, directors, employees, attorneys, or agents.
This provision shall survive the termination of this Agreement and the repayment
in full of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile. In the case of notices or
demands to any Borrower or Agent, as the case may be, they shall be sent to the
respective address set forth below:

 

If to any Borrower:  

c/o Administrative Borrower

ModusLink Global Solutions, Inc.

  1601 Trapelo Road, Suite 170   Waltham, MA 02451   Attn: Chief Financial
Officer   Fax No.: 781-663-5045 with copies to:   BRL Law Group LLC   425
Boylston Street, 3rd Floor   Boston, MA 02116   Attn: Thomas B. Rosedale, Esq.  
Fax No.: 617-399-6930 If to Agent:   WELLS FARGO BANK, NATIONAL ASSOCIATION  
One Boston Place, 18th Floor   Boston, MA 02108   Attn: Relationship Manager,
ModusLink   Fax No.: 855-216-0898 with copies to:   Choate Hall & Stewart LLP  
Two International Place   Boston, MA 02110   Attn: Kevin J. Simard, Esq.   Fax
No.: 617-248-4000

 

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Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY
CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF SUFFOLK, COMMONWEALTH OF MASSACHUSETTS; PROVIDED, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH
MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A
JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A
“CLAIM”). EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

(d) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
SUFFOLK AND THE COMMONWEALTH OF MASSACHUSETTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN

 

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DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

(e) NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE AGENT, THE SWING LENDER,
ANY OTHER LENDER, ISSUING BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE,
COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE
UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN
OR SUSPECTED TO EXIST IN ITS FAVOR.

(f) IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF
CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY
CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE IS NOT ENFORCEABLE IN SUCH
PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

(i) WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY
CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH
THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1.
THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY
ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS
ANGELES, CALIFORNIA.

(ii) THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE
PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR
PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR
RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR
ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION,
TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES
NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND
REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES
NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING
PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

(iii) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE
REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE
UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL
HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT
WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE
COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.

 

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(iv) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL
DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING
THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL
OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE
PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT
FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO
REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE
USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE
PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE
COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S
FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED
BY THE REFEREE.

(v) THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES
HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY
IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY
ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE
STATE OF CALIFORNIA.

(vi) THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT
LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH
CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO
ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE
AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY
JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO
INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A
DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE
REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME
MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER
FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY
APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

(vii) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL
REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A
JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR
MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE
BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender
may assign and delegate all or any portion of its rights and duties under the
Loan Documents (including the Obligations owed to it and its Commitments) to one
or more assignees (each, an “Assignee”), with the prior written consent (such
consent not be unreasonably withheld or delayed) of:

(A) Borrowers; provided, that no consent of Borrowers shall be required (1) if
an Event of Default has occurred and is continuing, (2) if such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition
of all or a substantial portion of the business or loan portfolio of

 

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such Lender, or (3) in connection with an assignment to a Person that is a
Lender or an Affiliate (other than natural persons) of a Lender; provided
further, that Borrowers shall be deemed to have consented to a proposed
assignment unless they object thereto by written notice to Agent within 5
Business Days after having received notice thereof; and

(B) Agent, Swing Lender, and Issuing Bank.

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

(A) no assignment may be made to a natural person,

(B) no assignment may be made to a Loan Party or an Affiliate of a Loan Party,

(C) the amount of the Commitments and the other rights and obligations of the
assigning Lender hereunder and under the other Loan Documents subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to Agent) shall be in a minimum amount
(unless waived by Agent) of $5,000,000 (except such minimum amount shall not
apply to (I) an assignment or delegation by any Lender to any other Lender, an
Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new
Lenders, each of which is an Affiliate of each other or a Related Fund of such
new Lender to the extent that the aggregate amount to be assigned to all such
new Lenders is at least $5,000,000),

(D) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,

(E) the parties to each assignment shall execute and deliver to Agent an
Assignment and Acceptance; provided, that Borrowers and Agent may continue to
deal solely and directly with the assigning Lender in connection with the
interest so assigned to an Assignee until written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrowers and Agent by such Lender
and the Assignee,

(F) unless waived by Agent, the assigning Lender or Assignee has paid to Agent,
for Agent’s separate account, a processing fee in the amount of $3,500, and

(G) the assignee, if it is not a Lender, shall deliver to Agent an
Administrative Questionnaire in a form approved by Agent (the “Administrative
Questionnaire”).

(b) From and after the date that Agent receives the executed Assignment and
Acceptance and, if applicable, payment of the required processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a “Lender” and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, that nothing contained
herein shall release any assigning Lender from obligations that survive the
termination of this Agreement, including such assigning Lender’s obligations
under Section 15 and Section 17.9(a).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii)

 

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such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower or the
performance or observance by any Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (v) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all
or any portion of its Obligations, its Commitment, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, that (i) the Originating Lender shall remain a
“Lender” for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a “Lender” hereunder or under the other Loan
Documents and the Originating Lender’s obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender (other than a waiver of default interest), or
(E) decreases the amount or postpones the due dates of scheduled principal
repayments or prepayments or premiums payable to such Participant through such
Lender, (v) no participation shall be sold to a natural person, (vi) no
participation shall be sold to a Loan Party or an Affiliate of a Loan Party, and
(vii) all amounts payable by Borrowers hereunder shall be determined as if such
Lender had not sold such participation, except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.

(f) In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose all documents and information which it
now or hereafter may have relating to any Borrower and its Subsidiaries and
their respective businesses.

 

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(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, that no
Borrower may assign this Agreement or any rights or duties hereunder without the
Lenders’ prior written consent and any prohibited assignment shall be absolutely
void ab initio. No consent to assignment by the Lenders shall release any
Borrower from its Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by any Borrower is required in connection with any such
assignment.

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers.

(a) No amendment, waiver or other modification of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements or the
Fee Letter), and no consent with respect to any departure by any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders directly
affected thereby and all of the Loan Parties that are party thereto, do any of
the following:

(i) increase the amount of or extend the expiration date of any Commitment of
any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c),

(ii) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.6(c) (which waiver shall be effective with
the written consent of the Required Lenders), and (z) that any amendment or
modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees
for purposes of this clause (iii)),

(iv) amend, modify, or eliminate this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

(v) amend, modify, or eliminate Section 3.1 or 3.2,

(vi) amend, modify, or eliminate Section 15.11,

(vii) other than as permitted by Section 15.11, release Agent’s Lien in and to
any of the Collateral,

(viii) amend, modify, or eliminate the definitions of “Required Lenders” or “Pro
Rata Share”,

 

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(ix) contractually subordinate any of Agent’s Liens,

(x) other than in connection with a merger, liquidation, dissolution or sale of
such Person expressly permitted by the terms hereof or the other Loan Documents,
release any Borrower or any Guarantor from any obligation for the payment of
money or consent to the assignment or transfer by any Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents,
or

(xi) amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or
(ii) or Section 2.4(e) or (f);

(b) No amendment, waiver, modification, or consent shall amend, modify, waive,
or eliminate,

(i) the definition of, or any of the terms or provisions of, the Fee Letter,
without the written consent of Agent and Borrowers (and shall not require the
written consent of any of the Lenders),

(ii) any provision of Section 15 pertaining to Agent, or any other rights or
duties of Agent under this Agreement or the other Loan Documents, without the
written consent of Agent, Borrowers, and the Required Lenders;

(c) No amendment, waiver, modification, elimination, or consent shall amend,
without written consent of Agent, Borrowers and the Supermajority Lenders,
modify, or eliminate the definition of Borrowing Base or any of the defined
terms (including the definitions of Eligible Domestic Accounts, Eligible Foreign
Accounts, Eligible Finished Goods Inventory and Eligible Inventory) that are
used in such definition to the extent that any such change results in more
credit being made available to Borrowers based upon the Borrowing Base, but not
otherwise, or the definition of Maximum Revolver Amount, or change
Section 2.1(c);

(d) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under
this Agreement or the other Loan Documents, without the written consent of
Issuing Bank, Agent, Borrowers, and the Required Lenders;

(e) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Swing Lender, or any other rights or duties of Swing Lender under
this Agreement or the other Loan Documents, without the written consent of Swing
Lender, Agent, Borrowers, and the Required Lenders; and

(f) Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any Borrower,
shall not require consent by or the agreement of any Loan Party, and (ii) any
amendment, waiver, modification, elimination, or consent of or with respect to
any provision of this Agreement or any other Loan Document may be entered into
without the consent of, or over the objection of, any Defaulting Lender.

14.2 Replacement of Certain Lenders.

(a) If (i) any action to be taken by the Lender Group or Agent hereunder
requires the consent, authorization, or agreement of all Lenders or all Lenders
affected thereby and if such action has received the consent, authorization, or
agreement of the Required Lenders but not of all Lenders or all Lenders affected
thereby, or (ii) any Lender makes a claim for compensation under Section 16,
then Borrowers or Agent, upon at least 5 Business Days prior irrevocable notice,
may permanently replace any Lender that failed to give its consent,
authorization, or agreement (a “Non-Consenting Lender”) or any Lender that made
a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders,
and the Non-Consenting Lender or Tax Lender, as applicable, shall have no right
to refuse to be replaced hereunder. Such notice to replace the Non-Consenting
Lender or Tax Lender, as applicable, shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.

 

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(b) Prior to the effective date of such replacement, the Non-Consenting Lender
or Tax Lender, as applicable, and each Replacement Lender shall execute and
deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender
or Tax Lender, as applicable, being repaid in full its share of the outstanding
Obligations (without any premium or penalty of any kind whatsoever, but
including (i) all interest, fees and other amounts that may be due in payable in
respect thereof, and (ii) an assumption of its Pro Rata Share of participations
in the Letters of Credit). If the Non-Consenting Lender or Tax Lender, as
applicable, shall refuse or fail to execute and deliver any such Assignment and
Acceptance prior to the effective date of such replacement, Agent may, but shall
not be required to, execute and deliver such Assignment and Acceptance in the
name or and on behalf of the Non-Consenting Lender or Tax Lender, as applicable,
and irrespective of whether Agent executes and delivers such Assignment and
Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be
deemed to have executed and delivered such Assignment and Acceptance. The
replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be
made in accordance with the terms of Section 13.1. Until such time as one or
more Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Non-Consenting Lender
or Tax Lender, as applicable, hereunder and under the other Loan Documents, the
Non-Consenting Lender or Tax Lender, as applicable, shall remain obligated to
make the Non-Consenting Lender’s or Tax Lender’s, as applicable, Pro Rata Share
of Revolving Loans and to purchase a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of participations in such Letters of
Credit.

14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints Wells Fargo as its agent under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to designate,
appoint, and authorize) Agent to execute and deliver each of the other Loan
Documents on its behalf and to take such other action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to Agent by the terms
of this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Agent agrees to act as agent for and on behalf of
the Lenders (and the Bank Product Providers) on the conditions contained in this
Section 15. Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Loan Documents, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender (or Bank Product Provider), and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent. Without limiting the generality of the foregoing, the use of the
term “agent” in this Agreement or the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only a representative relationship between independent contracting
parties. Each Lender hereby further authorizes (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to authorize)
Agent to act as the secured party under each of the Loan Documents that create a
Lien on any item of Collateral. Except as expressly otherwise provided in this
Agreement, Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions that Agent expressly is entitled to take or
assert under or pursuant to this

 

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Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent shall have the right to exercise
the following powers as long as this Agreement remains in effect: (a) maintain,
in accordance with its customary business practices, ledgers and records
reflecting the status of the Obligations, the Collateral, payments and proceeds
of Collateral, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Revolving Loans, for itself or on behalf of
Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and
distribute payments and proceeds of the Collateral as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce
any and all other rights and remedies of the Lender Group with respect to any
Borrower or its Subsidiaries, the Obligations, the Collateral, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.

15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

15.3 Liability of Agent. None of the Agent-Related Persons shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders (or Bank Product
Providers) for any recital, statement, representation or warranty made by any
Borrower or any of its Subsidiaries or Affiliates, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Borrower or its Subsidiaries or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lenders (or Bank Product Providers) to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the books and records or properties of any Borrower or its Subsidiaries.

15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders (and, if it so elects, the Bank Product Providers)
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders (and Bank Product Providers).

15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to

 

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Events of Default of which Agent has actual knowledge, unless Agent shall have
received written notice from a Lender or Borrowers referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a
“notice of default.” Agent promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which Agent has actual knowledge.
If any Lender obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to Section 15.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, that unless and until Agent has received
any such request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.

15.6 Credit Decision. Each Lender (and Bank Product Provider) acknowledges that
none of the Agent-Related Persons has made any representation or warranty to it,
and that no act by Agent hereinafter taken, including any review of the affairs
of any Borrower and its Subsidiaries or Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender (or Bank Product Provider). Each Lender represents (and by entering into
a Bank Product Agreement, each Bank Product Provider shall be deemed to
represent) to Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such due diligence, documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and
creditworthiness of each Borrower or any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers. Each Lender also represents (and by entering into
a Bank Product Agreement, each Bank Product Provider shall be deemed to
represent) that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of each Borrower or any other Person
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender (or Bank Product
Provider) with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any Borrower or any other Person party to a Loan Document
that may come into the possession of any of the Agent-Related Persons. Each
Lender acknowledges (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to acknowledge) that Agent does not have any
duty or responsibility, either initially or on a continuing basis (except to the
extent, if any, that is expressly specified herein) to provide such Lender (or
Bank Product Provider) with any credit or other information with respect to any
Borrower, its Affiliates or any of their respective business, legal, financial
or other affairs, and irrespective of whether such information came into Agent’s
or its Affiliates’ or representatives’ possession before or after the date on
which such Lender became a party to this Agreement (or such Bank Product
Provider entered into a Bank Product Agreement).

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrowers are obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from payments or
proceeds of the Collateral received by Agent to reimburse Agent for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders (or Bank Product Providers). In the event Agent is not reimbursed for
such costs and expenses by Borrowers or their Subsidiaries, each Lender hereby
agrees that it is and shall be obligated to pay to Agent such Lender’s ratable
portion thereof. Whether or not the transactions contemplated hereby are
consummated, each of the Lenders, on a ratable basis, shall indemnify and defend
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrowers and without limiting the obligation of Borrowers to do so) from and
against any and all Indemnified Liabilities; provided, that no Lender

 

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shall be liable for the payment to any Agent-Related Person of any portion of
such Indemnified Liabilities resulting solely from such Person’s gross
negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make a Revolving Loan or
other extension of credit hereunder. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender’s ratable share of any
costs or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any other Loan Document to the extent that Agent is not reimbursed for such
expenses by or on behalf of Borrowers. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Agent.

15.8 Agent in Individual Capacity. Wells Fargo and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, provide
Bank Products to, acquire Equity Interests in, and generally engage in any kind
of banking, trust, financial advisory, underwriting, or other business with any
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Document as though Wells Fargo were not Agent hereunder, and, in each case,
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that,
pursuant to such activities, Wells Fargo or its Affiliates may receive
information regarding a Borrower or its Affiliates or any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
such Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders (or Bank Product Providers), and the Lenders
acknowledge (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to acknowledge) that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. The terms “Lender” and “Lenders”
include Wells Fargo in its individual capacity.

15.9 Successor Agent. Agent may resign as Agent upon 30 days (10 days if an
Event of Default has occurred and is continuing) prior written notice to the
Lenders (unless such notice is waived by the Required Lenders) and Borrowers
(unless such notice is waived by Borrowers) and without any notice to the Bank
Product Providers. If Agent resigns under this Agreement, the Required Lenders
shall be entitled, with (so long as no Event of Default has occurred and is
continuing) the consent of Borrowers (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders
(and the Bank Product Providers). If, at the time that Agent’s resignation is
effective, it is acting as Issuing Bank or the Swing Lender, such resignation
shall also operate to effectuate its resignation as Issuing Bank or the Swing
Lender, as applicable, and it shall automatically be relieved of any further
obligation to issue Letters of Credit, or to make Swing Loans. If no successor
Agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with the Lenders and Borrowers, a successor
Agent. If Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace Agent with a successor Agent from among the
Lenders with (so long as no Event of Default has occurred and is continuing) the
consent of Borrowers (such consent not to be unreasonably withheld, delayed, or
conditioned). In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term “Agent” shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, provide Bank Products to, acquire Equity Interests in and generally engage
in any kind of banking, trust, financial advisory, underwriting, or other
business with any Borrower and its Subsidiaries and Affiliates and any other
Person party to any Loan Documents as though such

 

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Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group (or the Bank Product Providers). The other members
of the Lender Group acknowledge (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to acknowledge) that, pursuant to
such activities, such Lender and its respective Affiliates may receive
information regarding a Borrower or its Affiliates or any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
such Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.

15.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to authorize)
Agent to release any Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrowers of all of the
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Borrowers certify to
Agent that the sale or disposition is permitted under Section 6.4 (and Agent may
rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower or its Subsidiaries owned any
interest at the time Agent’s Lien was granted nor at any time thereafter,
(iv) constituting property leased or licensed to a Borrower or its Subsidiaries
under a lease or license that has expired or is terminated in a transaction
permitted under this Agreement, or (v) in connection with a credit bid or
purchase authorized under this Section 15.11. The Loan Parties and the Lenders
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to authorize) Agent, based upon the
instruction of the Required Lenders, to (a) consent to, credit bid or purchase
(either directly or indirectly through one or more entities) all or any portion
of the Collateral at any sale thereof conducted under the provisions of the
Bankruptcy Code, including Section 363 of the Bankruptcy Code, (b) credit bid or
purchase (either directly or indirectly through one or more entities) all or any
portion of the Collateral at any sale or other disposition thereof conducted
under the provisions of the Code, including pursuant to Sections 9-610 or 9-620
of the Code, or (c) credit bid or purchase (either directly or indirectly
through one or more entities) all or any portion of the Collateral at any other
sale or foreclosure conducted or consented to by Agent in accordance with
applicable law in any judicial action or proceeding or by the exercise of any
legal or equitable remedy. In connection with any such credit bid or purchase,
(i) the Obligations owed to the Lenders and the Bank Product Providers shall be
entitled to be, and shall be, credit bid on a ratable basis (with Obligations
with respect to contingent or unliquidated claims being estimated for such
purpose if the fixing or liquidation thereof would not impair or unduly delay
the ability of Agent to credit bid or purchase at such sale or other disposition
of the Collateral and, if such contingent or unliquidated claims cannot be
estimated without impairing or unduly delaying the ability of Agent to credit
bid at such sale or other disposition, then such claims shall be disregarded,
not credit bid, and not entitled to any interest in the Collateral that is the
subject of such credit bid or purchase) and the Lenders and the Bank Product
Providers whose Obligations are credit bid shall be entitled to receive
interests (ratably based upon the proportion of their Obligations credit bid in
relation to the aggregate amount of Obligations so credit bid) in the Collateral
that is the subject of such credit bid or purchase (or in the Equity Interests
of the any entities that are used to consummate such credit bid or purchase),
and (ii) Agent, based upon the instruction of the Required Lenders, may accept
non-cash consideration, including debt and equity securities issued by any
entities used to consummate such credit bid or purchase and in connection
therewith Agent may reduce the Obligations owed to the Lenders and the Bank
Product Providers (ratably based upon the proportion of their Obligations credit
bid in relation to the aggregate amount of Obligations so credit bid) based upon
the value of such non-cash consideration. Except as provided above, Agent will
not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders (without requiring the authorization of
the Bank Product Providers), or (z) otherwise, the Required Lenders (without
requiring the authorization of the Bank Product Providers). Upon request by
Agent or Borrowers at any time, the Lenders will (and if so requested, the Bank
Product Providers will) confirm in writing Agent’s authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 15.11;
provided, that (1) anything to the contrary contained in any of the Loan
Documents notwithstanding, Agent shall not be required to execute any

 

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document or take any action necessary to evidence such release on terms that, in
Agent’s opinion, could expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly released) upon (or obligations of Borrowers in respect of) any and all
interests retained by any Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral. Each Lender further
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to irrevocably authorize) Agent, at
its option and in its sole discretion, to subordinate any Lien granted to or
held by Agent under any Loan Document to the holder of any Permitted Lien on
such property if such Permitted Lien secures Permitted Purchase Money
Indebtedness.

(b) Agent shall have no obligation whatsoever to any of the Lenders (or the Bank
Product Providers) (i) to verify or assure that the Collateral exists or is
owned by Borrowers or their Subsidiaries or is cared for, protected, or insured
or has been encumbered, (ii) to verify or assure that Agent’s Liens have been
properly or sufficiently or lawfully created, perfected, protected, or enforced
or are entitled to any particular priority, (iii) to verify or assure that any
particular items of Collateral meet the eligibility criteria applicable in
respect thereof, (iv) to impose, maintain, increase, reduce, implement, or
eliminate any particular reserve hereunder or to determine whether the amount of
any reserve is appropriate or not, or (v) to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent’s
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender (or Bank
Product Provider) as to any of the foregoing, except as otherwise expressly
provided herein.

15.12 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to any Borrower or its Subsidiaries or any deposit
accounts of any Borrower or its Subsidiaries now or hereafter maintained with
such Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings to
enforce any Loan Document against any Borrower or any Guarantor or to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided, that to
the extent that such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

15.13 Agency for Perfection. Agent hereby appoints each other Lender (and each
Bank Product Provider) as its agent (and each Lender hereby accepts (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to accept) such appointment) for the purpose of perfecting Agent’s Liens
in assets which, in accordance with Article 8 or Article 9, as applicable, of
the Code can be perfected by possession or control. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent’s request therefor shall deliver possession or
control of such Collateral to Agent or in accordance with Agent’s instructions.

 

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15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders (or Bank Product Providers) shall be made by bank wire transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.

15.15 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
agree) that any action taken by Agent in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders (and such Bank Product Provider).

15.16 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information. By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field examination report respecting any
Borrower or its Subsidiaries (each, a “Report”) prepared by or at the request of
Agent, and Agent shall so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any field
examination will inspect only specific information regarding Borrowers and their
Subsidiaries and will rely significantly upon Borrowers’ and their Subsidiaries’
books and records, as well as on representations of Borrowers’ personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding Borrowers and their Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.9, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

(f) In addition to the foregoing, (x) any Lender may from time to time request
of Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Borrower or its Subsidiaries to Agent that has not been
contemporaneously provided by such Borrower or such Subsidiary to such Lender,
and, upon receipt of such request, Agent promptly shall provide a copy of same
to such Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from any
Borrower or its Subsidiaries, any Lender may, from time to time, reasonably
request Agent to exercise such right as specified in such Lender’s notice to
Agent, whereupon Agent promptly shall request of Borrowers the additional
reports or information reasonably specified by such Lender, and, upon receipt
thereof

 

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from such Borrower or such Subsidiary, Agent promptly shall provide a copy of
same to such Lender, and (z) any time that Agent renders to Borrowers a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

15.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 15.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender (or Bank Product Provider) to fulfill its obligations to make credit
available hereunder, nor to advance for such Lender (or Bank Product Provider)
or on its behalf, nor to take any other action on behalf of such Lender (or Bank
Product Provider) hereunder or in connection with the financing contemplated
herein.

16. WITHHOLDING TAXES.

16.1 Payments. All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Indemnified Taxes, and in
the event any deduction or withholding of Indemnified Taxes is required,
Borrowers shall comply with the next sentence of this Section 16.1. If any
Indemnified Taxes are so levied or imposed, Borrowers agree to pay the full
amount of such Indemnified Taxes and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.1 after
withholding or deduction for or on account of any Indemnified Taxes, will not be
less than the amount provided for herein; provided, that Borrowers shall not be
required to increase any such amounts to the extent that the increase in such
amount payable results from Agent’s or such Lender’s own willful misconduct or
gross negligence (as finally determined by a court of competent jurisdiction).
Borrowers will furnish to Agent as promptly as possible after the date the
payment of any Indemnified Tax is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by Borrowers. Borrowers agree to
pay any present or future stamp, value added or documentary taxes or any other
excise or property taxes, charges, or similar levies that arise from any payment
made hereunder or from the execution, delivery, performance, recordation, or
filing of, or otherwise with respect to this Agreement or any other Loan
Document.

16.2 Exemptions.

(a) If a Lender or Participant is entitled to claim an exemption or reduction
from United States withholding tax, such Lender or Participant agrees with and
in favor of Agent, to deliver to Agent (or, in the case of a Participant, to the
Lender granting the participation only) one of the following before receiving
its first payment under this Agreement:

(i) if such Lender or Participant is entitled to claim an exemption from United
States withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender or Participant, signed under penalty of perjury, that it
is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder of Administrative Borrower (within the meaning of
Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to Borrowers within the meaning of Section 864(d)(4) of the IRC, and
(B) a properly completed and executed IRS Form W-8BEN or Form W-8IMY (with
proper attachments);

 

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(ii) if such Lender or Participant is entitled to claim an exemption from, or a
reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN;

(iii) if such Lender or Participant is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, a
properly completed and executed copy of IRS Form W-8ECI;

(iv) if such Lender or Participant is entitled to claim that interest paid under
this Agreement is exempt from United States withholding tax because such Lender
or Participant serves as an intermediary, a properly completed and executed copy
of IRS Form W-8IMY (with proper attachments); or

(v) a properly completed and executed copy of any other form or forms, including
IRS Form W-9, as may be required under the IRC or other laws of the United
States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

(b) Each Lender or Participant shall provide new forms (or successor forms) upon
the expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

(c) If a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, that
nothing in this Section 16.2(c) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns). Each Lender and each Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

(d) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender or Participant, such Lender or Participant agrees to
notify Agent (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrowers to such Lender or
Participant. To the extent of such percentage amount, Agent will treat such
Lender’s or such Participant’s documentation provided pursuant to
Section 16.2(a) or 16.2(c) as no longer valid. With respect to such percentage
amount, such Participant or Assignee may provide new documentation, pursuant to
Section 16.2(a) or 16.2(c), if applicable. Borrowers agree that each Participant
shall be entitled to the benefits of this Section 16 with respect to its
participation in any portion of the Commitments and the Obligations so long as
such Participant complies with the obligations set forth in this Section 16 with
respect thereto.

16.3 Reductions.

(a) If a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Agent (or, in the case of a Participant, to the Lender granting
the participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
Section 16.2(a) or 16.2(c) are not delivered to Agent (or, in the case of a
Participant, to the Lender granting the participation), then Agent (or, in the
case of a Participant, to the Lender granting the participation) may withhold
from any interest payment to such Lender or such Participant not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax.

 

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(b) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent (or, in the case of a Participant, to
the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the Lender granting the participation only) under this
Section 16, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.

16.4 Refunds. If Agent or a Lender determines, in its sole discretion, that it
has received a refund of any Indemnified Taxes to which Borrowers have paid
additional amounts pursuant to this Section 16, so long as no Default or Event
of Default has occurred and is continuing, it shall pay over such refund to
Borrowers (but only to the extent of payments made, or additional amounts paid,
by Borrowers under this Section 16 with respect to Indemnified Taxes giving rise
to such a refund), net of all out-of-pocket expenses of Agent or such Lender and
without interest (other than any interest paid by the applicable Governmental
Authority with respect to such a refund); provided, that Borrowers, upon the
request of Agent or such Lender, agrees to repay the amount paid over to
Borrowers (plus any penalties, interest or other charges, imposed by the
applicable Governmental Authority, other than such penalties, interest or other
charges imposed as a result of the willful misconduct or gross negligence of
Agent hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund to such Governmental Authority. Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Agent or any Lender to make available its tax returns (or
any other information which it deems confidential) to Borrowers or any other
Person.

17. GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by each Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or any Borrower, whether
under any rule of construction or otherwise. On the contrary, this Agreement has
been reviewed by all parties and shall be construed and interpreted according to
the ordinary meaning of the words used so as to accomplish fairly the purposes
and intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 Bank Product Providers.

Each Bank Product Provider in its capacity as such shall be deemed a third party
beneficiary hereof and of the provisions of the other Loan Documents for
purposes of any reference in a Loan Document to the parties for whom Agent is
acting. Agent hereby agrees to act as agent for such Bank Product Providers and,
by virtue of entering into a Bank Product Agreement, the applicable Bank Product
Provider shall be automatically deemed to

 

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have appointed Agent as its agent and to have accepted the benefits of the Loan
Documents. It is understood and agreed that the rights and benefits of each Bank
Product Provider under the Loan Documents consist exclusively of such Bank
Product Provider’s being a beneficiary of the Liens and security interests (and,
if applicable, guarantees) granted to Agent and the right to share in payments
and collections out of the Collateral as more fully set forth herein. In
addition, each Bank Product Provider, by virtue of entering into a Bank Product
Agreement, shall be automatically deemed to have agreed that Agent shall have
the right, but shall have no obligation, to establish, maintain, relax, or
release reserves in respect of the Bank Product Obligations and that if reserves
are established there is no obligation on the part of Agent to determine or
insure whether the amount of any such reserve is appropriate or not. In
connection with any such distribution of payments or proceeds of Collateral,
Agent shall be entitled to assume no amounts are due or owing to any Bank
Product Provider unless such Bank Product Provider has provided a written
certification (setting forth a reasonably detailed calculation) to Agent as to
the amounts that are due and owing to it and such written certification is
received by Agent a reasonable period of time prior to the making of such
distribution. Agent shall have no obligation to calculate the amount due and
payable with respect to any Bank Products, but may rely upon the written
certification of the amount due and payable from the applicable Bank Product
Provider. In the absence of an updated certification, Agent shall be entitled to
assume that the amount due and payable to the applicable Bank Product Provider
is the amount last certified to Agent by such Bank Product Provider as being due
and payable (less any distributions made to such Bank Product Provider on
account thereof). Borrowers may obtain Bank Products from any Bank Product
Provider, although Borrowers are not required to do so. Each Borrower
acknowledges and agrees that no Bank Product Provider has committed to provide
any Bank Products and that the providing of Bank Products by any Bank Product
Provider is in the sole and absolute discretion of such Bank Product Provider.
Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no provider or holder of any Bank Product shall have any voting or
approval rights hereunder (or be deemed a Lender) solely by virtue of its status
as the provider or holder of such agreements or products or the Obligations
owing thereunder, nor shall the consent of any such provider or holder be
required (other than in their capacities as Lenders, to the extent applicable)
for any matter hereunder or under any of the other Loan Documents, including as
to any matter relating to the Collateral or the release of Collateral or
Guarantors.

17.6 Creditor Relationship. The relationship between the Lenders and Agent, on
the one hand, and the Loan Parties, on the other hand, is solely that of
creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Loan Parties, on the other hand, by
virtue of any Loan Document or any transaction contemplated therein.

17.7 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.8 Revival and Reinstatement of Obligations; Certain Waivers. If any member of
the Lender Group or any Bank Product Provider repays, refunds, restores, or
returns in whole or in part, any payment or property (including any proceeds of
Collateral) previously paid or transferred to such member of the Lender Group or
such Bank Product Provider in full or partial satisfaction of any Obligation or
on account of any other obligation of any Loan Party under any Loan Document or
any Bank Product Agreement, because the payment, transfer, or the incurrence of
the obligation so satisfied is asserted or declared to be void, voidable, or
otherwise recoverable under any law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent transfers, preferences,
or other voidable or recoverable obligations or transfers (each, a “Voidable
Transfer”), or because such member of the Lender Group or Bank Product Provider
elects to do so on the

 

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reasonable advice of its counsel in connection with a claim that the payment,
transfer, or incurrence is or may be a Voidable Transfer, then, as to any such
Voidable Transfer, or the amount thereof that such member of the Lender Group or
Bank Product Provider elects to repay, restore, or return (including pursuant to
a settlement of any claim in respect thereof), and as to all reasonable costs,
expenses, and attorneys fees of such member of the Lender Group or Bank Product
Provider related thereto, (i) the liability of the Loan Parties with respect to
the amount or property paid, refunded, restored, or returned will automatically
and immediately be revived, reinstated, and restored and will exist and
(ii) Agent’s Liens securing such liability shall be effective, revived, and
remain in full force and effect, in each case, as fully as if such Voidable
Transfer had never been made. If, prior to any of the foregoing, (A) Agent’s
Liens shall have been released or terminated or (B) any provision of this
Agreement shall have been terminated or cancelled, Agent’s Liens, or
such provision of this Agreement, shall be reinstated in full force and effect
and such prior release, termination, cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect the obligation of any
Loan Party in respect of such liability or any Collateral securing
such liability.

17.9 Confidentiality.

(a) Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Borrowers and
their Subsidiaries, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group and to employees, directors and officers of any
member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.9, (iii) as may be required by regulatory authorities so long as such
authorities are informed of the confidential nature of such information, (iv) as
may be required by statute, decision, or judicial or administrative order, rule,
or regulation; provided that (x) prior to any disclosure under this clause (iv),
the disclosing party agrees to provide Borrowers with prior notice thereof, to
the extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior notice to Borrowers pursuant to the
terms of the applicable statute, decision, or judicial or administrative order,
rule, or regulation and (y) any disclosure under this clause (iv) shall be
limited to the portion of the Confidential Information as may be required by
such statute, decision, or judicial or administrative order, rule, or
regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, provided, that, (x) prior to any disclosure under this
clause (vi) the disclosing party agrees to provide Borrowers with prior written
notice thereof, to the extent that it is practicable to do so and to the extent
that the disclosing party is permitted to provide such prior written notice to
Borrowers pursuant to the terms of the subpoena or other legal process and
(y) any disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group
Representatives), (viii) in connection with any assignment, participation or
pledge of any Lender’s interest under this Agreement, provided that prior to
receipt of Confidential Information any such assignee, participant, or pledgee
shall have agreed in writing to receive such Confidential Information either
subject to the terms of this Section 17.9 or pursuant to confidentiality
requirements substantially similar to those contained in this Section 17.9 (and
such Person may disclose such Confidential Information to Persons employed or
engaged by them as described in clause (i) above), (ix) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents;
provided, that, prior to any disclosure to any Person (other than any Loan
Party, Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (ix) with respect to litigation involving
any Person (other than any Borrower, Agent, any Lender, any of their respective
Affiliates, or their respective counsel), the disclosing party agrees to provide
Borrowers with prior written notice thereof, and (x) in connection with, and to
the extent reasonably necessary for, the exercise of any secured creditor remedy
under this Agreement or under any other Loan Document.

 

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(b) Anything in this Agreement to the contrary notwithstanding, Agent may
disclose information concerning the terms and conditions of this Agreement and
the other Loan Documents to loan syndication and pricing reporting services or
in its marketing or promotional materials, with such information to consist of
deal terms and other information customarily found in such publications or
marketing or promotional materials and may otherwise use the name, logos, and
other insignia of any Borrower or the other Loan Parties and the Commitments
provided hereunder in any “tombstone” or other advertisements, on its website or
in other marketing materials of the Agent.

(c) The Loan Parties hereby acknowledge that Agent or its Affiliates may make
available to the Lenders materials or information provided by or on behalf of
Borrowers hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks, SyndTrak or another similar electronic system (the
“Platform”) and certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Loan Parties or their securities) (each, a “Public Lender”). The Loan
Parties shall be deemed to have authorized Agent and its Affiliates and the
Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time
filed with the SEC as not containing any material non-public information with
respect to the Loan Parties or their securities for purposes of United States
federal and state securities laws. All Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated as
“Public Investor” (or another similar term). Agent and its Affiliates and the
Lenders shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” or that are not at any time filed with the SEC as being suitable only
for posting on a portion of the Platform not marked as “Public Investor” (or
such other similar term).

17.10 Survival. All representations and warranties made by the Loan Parties in
the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that Agent,
Issuing Bank, or any Lender may have had notice or knowledge of any Default or
Event of Default or incorrect representation or warranty at the time any credit
is extended hereunder, and shall continue in full force and effect as long as
the principal of, or any accrued interest on, any Loan or any fee or any other
amount payable under this Agreement is outstanding or unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or been
terminated.

17.11 Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrowers that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of each Borrower
and other information that will allow such Lender to identify each Borrower in
accordance with the Patriot Act. In addition, if Agent is required by law or
regulation or internal policies to do so, it shall have the right to
periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary
individual background checks for the Loan Parties and (b) OFAC/PEP searches and
customary individual background checks for the Loan Parties’ senior management
and key principals, and each Borrower agrees to cooperate in respect of the
conduct of such searches and further agrees that the reasonable costs and
charges for such searches shall constitute Lender Group Expenses hereunder and
be for the account of Borrowers.

17.12 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof. The foregoing to
the contrary notwithstanding, all Bank Product Agreements, if any, are
independent agreements governed by the written provisions of such Bank Product
Agreements, which will remain in full force and effect, unaffected by any
repayment, prepayments, acceleration, reduction, increase, or change in the
terms of any credit extended hereunder, except as otherwise expressly provided
in such Bank Product Agreement.

17.13 ModusLink Global Solutions, Inc. as Agent for Borrowers. Each Borrower
hereby irrevocably appoints ModusLink Global Solutions, Inc. as the borrowing
agent and attorney-in-fact for all Borrowers (the

 

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“Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (a) to provide Agent with
all notices with respect to Revolving Loans and Letters of Credit obtained for
the benefit of any Borrower and all other notices and instructions under this
Agreement and the other Loan Documents (and any notice or instruction provided
by Administrative Borrower shall be deemed to be given by Borrowers hereunder
and shall bind each Borrower), (b) to receive notices and instructions from
members of the Lender Group (and any notice or instruction provided by any
member of the Lender Group to the Administrative Borrower in accordance with the
terms hereof shall be deemed to have been given to each Borrower), and (c) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Revolving Loans and Letters of Credit and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loan Account and Collateral
in a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender Group shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (i) the handling of the
Loan Account and Collateral of Borrowers as herein provided, or (ii) the Lender
Group’s relying on any instructions of the Administrative Borrower, except that
Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this Section 17.13 with respect to any liability
that has been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.

[Signature pages to follow.]

 

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

BORROWERS:

 

MODUSLINK GLOBAL SOLUTIONS, INC. By:  

/s/ Steven G. Crane

Name:   Steven G. Crane Title:   Chief Financial Officer MODUSLINK CORPORATION
By:  

/s/ Steven G. Crane

Name:   Steven G. Crane Title:   President MODUSLINK PTS, INC. By:  

/s/ Steven G. Crane

Name:   Steven G. Crane Title:   Chief Financial Officer

WELLS FARGO BANK, NATIONAL ASSOCIATION,

a national banking association, as Agent and as a Lender

By:  

/s/ Katherine L. Andersen

Name:   Katherine L. Andersen   Its Authorized Signatory

[Signature Page to Credit Agreement]

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EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                      between                      (“Assignor”) and
                     (“Assignee”). Reference is made to the Agreement described
in Annex I hereto (the “Credit Agreement”). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.

1. In accordance with the terms and conditions of Section 13 of the Credit
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor’s rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor’s
portion of the Commitments, all to the extent specified on Annex I.

2. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim and (ii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby;
(b) makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, representations or warranties made in or in
connection with the Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower or any Guarantor or the performance or
observance by any Borrower or any Guarantor of any of their respective
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto, and (d) represents and warrants that the amount set
forth as the Purchase Price on Annex I represents the amount owed by the
Borrowers to Assignor with respect to Assignor’s share of the Revolving Loans
assigned hereunder, as reflected on Assignor’s books and records.

3. The Assignee (a) confirms that it has received copies of the Credit Agreement
and the other Loan Documents, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement; (b) agrees that it will, independently and without
reliance upon Agent, Assignor, or any other Lender, based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under the Loan
Documents; (c) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (d) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender; [and (e) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee’s status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement or such other documents as are necessary to indicate that
all such payments are subject to such rates at a rate reduced by an applicable
tax treaty.]

4. Following the execution of this Assignment Agreement by the Assignor and
Assignee, the Assignor will deliver this Assignment Agreement to the Agent for
recording by the Agent. The effective date of this Assignment (the “Settlement
Date”) shall be the latest to occur of (a) the date of

--------------------------------------------------------------------------------

the execution and delivery hereof by the Assignor and the Assignee, (b) the
receipt by Agent for its sole and separate account a processing fee in the
amount of $3,500, (c) the receipt of any required consent of the Agent, and
(d) the date specified in Annex I.

5. As of the Settlement Date (a) the Assignee shall be a party to the Credit
Agreement and, to the extent of the interest assigned pursuant to this
Assignment Agreement, have the rights and obligations of a Lender thereunder and
under the other Loan Documents, and (b) the Assignor shall, to the extent of the
interest assigned pursuant to this Assignment Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement and the other
Loan Documents, provided, however, that nothing contained herein shall release
any assigning Lender from obligations that survive the termination of this
Agreement, including such assigning Lender’s obligations under Article 15 and
Section 17.9(a) of the Credit Agreement.

6. Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price
(as set forth in Annex I). From and after the Settlement Date, Agent shall make
all payments that are due and payable to the holder of the interest assigned
hereunder (including payments of principal, interest, fees and other amounts) to
Assignor for amounts which have accrued up to but excluding the Settlement Date
and to Assignee for amounts which have accrued from and after the Settlement
Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to
the portion of any interest, fee, or any other charge that was paid to Assignor
prior to the Settlement Date on account of the interest assigned hereunder and
that are due and payable to Assignee with respect thereto, to the extent that
such interest, fee or other charge relates to the period of time from and after
the Settlement Date.

7. This Assignment Agreement may be executed in counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument. This Assignment Agreement may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same were a fully executed and delivered original manual counterpart.

8. THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE
OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION
12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS
REFERENCE, MUTATIS MUTANDIS.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

 

[NAME OF ASSIGNOR]

 

as Assignor

By  

 

  Name:   Title:

[NAME OF ASSIGNEE]

 

as Assignee

By  

 

  Name:   Title:

 

ACCEPTED THIS          DAY OF              WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, as Agent By  

 

  Name:   Title:

--------------------------------------------------------------------------------

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

 

1. Borrowers: ModusLink Global Solutions, Inc., ModusLink Corporation and
ModusLink PTS, Inc.

 

2. Name and Date of Credit Agreement:

Credit Agreement dated as of October 31, 2012 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”)
by and among Wells Fargo Bank, National Association, a national banking
association (“Wells Fargo”), as administrative agent for each member of the
Lender Group and the Bank Product Providers, the lenders that are parties
thereto, as the “Lenders”, and the Borrowers.

 

3.    Date of Assignment Agreement:                    4.    Amounts:         
a.      Assigned Amount of Commitment    $                   b.      Assigned
Amount of Revolving Loans    $                5.    Settlement Date:   
                6.    Purchase Price    $                7.    Notice and
Payment Instructions, etc.      

 

   Assignee:       Assignor:         

 

     

 

        

 

     

 

        

 

     

 

     

--------------------------------------------------------------------------------

EXHIBIT B-1

FORM OF BORROWING BASE CERTIFICATE

On file with the Agent.

--------------------------------------------------------------------------------

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Administrative Borrower’s letterhead]

 

To: Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, MA 02108

Attn:                     

 

  Re: Compliance Certificate dated                  , 20    

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of October 31, 2012
(as amended, restated, supplemented, or otherwise modified from time to time,
the “Credit Agreement”) by and among Wells Fargo Bank, National Association, a
national banking association (“Wells Fargo”), as administrative agent for each
member of the Lender Group and the Bank Product Providers (in such capacity,
together with its successors and assigns in such capacity, the “Agent”), the
lenders that are parties thereto, as the “Lenders” (each of such Lenders,
together with its successors and permitted assigns, is referred to hereinafter
as a “Lender”), and ModusLink Global Solutions, Inc., ModusLink Corporation, and
ModusLink PTS, Inc., as borrowers (the “Borrowers” and each a “Borrower”).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.

Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of
Administrative Borrower hereby certifies as of the date hereof that:

1. The financial information of the Borrowers and their Subsidiaries furnished
in Schedule 1 attached hereto, has been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for year-end audit
adjustments and the lack of footnotes), and fairly presents in all material
respects the financial condition of the Borrowers and their Subsidiaries as of
the date set forth therein.

2. Such officer has reviewed the terms of the Credit Agreement and has made, or
caused to be made under his/her supervision, a review in reasonable detail of
the transactions and financial condition of the Borrowers and their Subsidiaries
during the accounting period covered by the financial statements delivered
pursuant to Section 5.1 of the Credit Agreement.

3. Such review has not disclosed the existence on and as of the date hereof, and
the undersigned does not have knowledge of the existence as of the date hereof,
of any event or condition that constitutes a Default or Event of Default, except
for such conditions or events listed on Schedule 2 attached hereto, in each case
specifying the nature and period of existence thereof and what action the
Borrowers and/or their Subsidiaries have taken, are taking, or propose to take
with respect thereto.

--------------------------------------------------------------------------------

4. Except as set forth on Schedule 3 attached hereto, the representations and
warranties of the Borrowers and their Subsidiaries set forth in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date hereof, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of such earlier date.

5. During the period covered by the financial statements in Schedule 1 attached
hereto, no Financial Covenant Triggering Event occurred. As of the date hereof,
the Borrowers and their Subsidiaries are in compliance with the applicable
covenants contained in Section 7 of the Credit Agreement as demonstrated on
Schedule 4 hereof.

[Signature page follows.]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this      day of             , 20    .

 

                             ,

a             , as Administrative Borrower

By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

SCHEDULE 1

Financial Information

--------------------------------------------------------------------------------

SCHEDULE 2

Default or Event of Default

--------------------------------------------------------------------------------

SCHEDULE 3

Representations and Warranties

--------------------------------------------------------------------------------

SCHEDULE 4

Financial Covenants

 

1. Minimum EBITDA.

The Borrowers’ and their Subsidiaries’ EBITDA, measured on a month-end basis,
for the      month period ending                  , 20    , is $        , which
amount [is/is not] greater than or equal to the amount set forth in Section 7(a)
of the Credit Agreement for the corresponding period.

--------------------------------------------------------------------------------

EXHIBIT L-1

FORM OF LIBOR NOTICE

Wells Fargo Bank, National Association, as Agent

under the below referenced Credit Agreement

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attn:                     

Ladies and Gentlemen:

Reference hereby is made to that certain Credit Agreement dated as of
October 31, 2012 (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”) by and among Wells Fargo Bank, National
Association, a national banking association (“Wells Fargo”), as administrative
agent for each member of the Lender Group and the Bank Product Providers (in
such capacity, together with its successors and assigns in such capacity, the
“Agent”), the lenders that are parties thereto, as the “Lenders”, and ModusLink
Global Solutions, Inc., ModusLink Corporation and ModusLink PTS, Inc., as
borrowers (the “Borrowers” and each a “Borrower”). Capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement.

This LIBOR Notice represents the Borrowers’ request to elect the LIBOR Option
with respect to outstanding Revolving Loans in the amount of $         (the
“LIBOR Rate Advance”)[, and is a written confirmation of the telephonic notice
of such election given to Agent].

The LIBOR Rate Advance will have an Interest Period of 1, 2 or 3 month(s)
commencing on                     .

This LIBOR Notice further confirms the Borrowers’ acceptance, for purposes of
determining the rate of interest based on the LIBOR Rate under the Credit
Agreement, of the LIBOR Rate as determined pursuant to the Credit Agreement.

Each Borrower represents and warrants that (i) the representations and
warranties of such Borrower or its Subsidiaries contained in the Credit
Agreement and in the other Loan Documents are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date hereof, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of such earlier date)), (ii) each of the covenants and agreements
contained in any Loan Document have

--------------------------------------------------------------------------------

Wells Fargo Bank, National Association, as Agent

Page 2

 

been performed (to the extent required to be performed on or before the date
hereof), and (iii) no Default or Event of Default has occurred and is continuing
on the date hereof, nor will any thereof occur after giving effect to the
request above.

 

Dated:  

 

                             , a

                                 , as Borrower

By  

 

Name:  

 

Title:  

 

Acknowledged by:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Agent
By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT P-1

FORM OF PERFECTION CERTIFICATE

Reference is hereby made to (a) that certain Credit Agreement dated as of
October 31, 2012 (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”) by and among ModusLink Global Solutions,
Inc., a Delaware corporation, ModusLink Corporation, a Delaware corporation and
ModusLink PTS, Inc., a Delaware corporation, collectively as borrowers
(“Borrowers”), CMG Securities Corporation, a Massachusetts corporation, CMG
@Ventures Capital Corp., a Delaware corporation, @Ventures V, LLC, a Delaware
limited liability company, CMGI @Ventures IV, LLC, a Delaware limited liability
company, CMG@Ventures Securities Corp., a Delaware corporation, CMG @Ventures,
Inc., a Delaware corporation, SalesLink LLC, a Delaware limited liability
company, Sol Holdings, Inc., a Delaware corporation, SalesLink Mexico Holding
Corp., a Delaware corporation, Modus Media International (Ireland) Limited, a
Delaware corporation, Modus Media International Documentation Services
(Ireland), Limited, a Delaware corporation and Tech For Less LLC, a Delaware
limited liability company, collectively as guarantors (“Guarantors”), the
lenders party thereto as “Lenders” (each of such Lenders, together with its
successors and permitted assigns, is referred to hereinafter as a “Lender”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells
Fargo”), in its capacity as administrative agent for each member of the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, “Agent”)[, [and] Wells Fargo and
            , as joint lead arrangers][, [and] Wells Fargo and             , as
joint book runners][, [and] Wells Fargo and             , as co-syndication
agents] [, [and] Wells Fargo and             , as co-documentation agents], and
(b) that certain Guaranty and Security Agreement dated as of             , 2012
(as amended, restated, supplemented, or otherwise modified from time to time,
the “Guaranty and Security Agreement”) by and among Borrowers, certain
Subsidiaries of Borrowers parties thereto as “Grantors”, and Agent.

All initially capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Credit Agreement. Any terms (whether
capitalized or lower case) used in this Perfection Certificate that are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein or in the Credit Agreement; provided that to the extent
that the Code is used to define any term used herein and if such term is defined
differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern. As used herein, the term “Loan
Parties” shall mean the “Loan Parties” as that term is defined in the Credit
Agreement and “Code” shall mean the “Code” as that term is defined in the
Guaranty and Security Agreement.

--------------------------------------------------------------------------------

The undersigned, the          of                      1, hereby certifies (in my
capacity as              and not in my individual capacity) to Agent and each of
the other members of the Lender Group and the Bank Product Providers as follows
as of             , 2012:

1. Names.

(a) The exact legal name of each Loan Party, as such name appears in its
certified certificate of incorporation, articles of incorporation, certificate
of formation, or any other organizational document, is set forth in Schedule
1(a). Each Loan Party is (i) the type of entity disclosed next to its name in
Schedule 1(a) and (ii) a registered organization except to the extent disclosed
in Schedule 1(a). Also set forth in Schedule 1(a) is the organizational
identification number, if any, of each Loan Party that is a registered
organization, the Federal Taxpayer Identification Number of each Loan Party and
the jurisdiction of formation of each Loan Party. Each Loan Party has qualified
to do business in the states listed on Schedule 1(a).

(b) Set forth in Schedule 1(b) hereto is a list of any other legal names each
Loan Party has had in the past five years, together with the date of the
relevant name change.

(c) Set forth in Schedule 1(c) is a list of all other names used by each Loan
Party in connection with any business or organization to which such Loan Party
became the successor by merger, consolidation, acquisition, change in form,
nature or jurisdiction of organization or otherwise or on any filings with the
Internal Revenue Service, in each case, at any time in the past five years.
Except as set forth in Schedule 1(c), no Loan Party has changed its jurisdiction
of organization at any time during the past four months.

2. Chief Executive Offices. The chief executive office of each Loan Party is
located at the address set forth in Schedule 2 hereto.

3. Real Property.

(a) Attached hereto as Schedule 3(a) is a list of all (i) Real Property (as
defined in the Guaranty and Security Agreement) of each Loan Party, (ii) filing
offices for any mortgages encumbering the Real Property or to encumber, the Real
Property as of the Closing Date, (iii) common names, addresses and uses of each
parcel of Real Property (stating improvements located thereon) and (iv) other
information relating thereto required by such Schedule. Except as described on
Schedule 3(a) attached hereto: (A) no Loan Party has entered into any leases,
subleases, tenancies, franchise agreements, licenses or other occupancy
arrangements as owner, lessor, sublessor, licensor, franchisor or grantor with
respect to any of the real property described on Schedule 3(a) and (B) no Loan
Party has any leases which require the consent of the landlord, tenant or other
party thereto to the transactions contemplated by the Loan Documents.

(b) Schedule 3(b) sets forth all third parties (“Bailees”) with possession of
any Collateral (including inventory and equipment) of the Loan Parties,
including the name and address of such Bailee, a description of the inventory
and equipment in such Bailee’s possession and the location of such inventory and
equipment (if none please so state).

4. Extraordinary Transactions. Except for those purchases, mergers,
acquisitions, consolidations, and other transactions described on Schedule 4
attached hereto, all of the Collateral has been originated by each Loan Party in
the ordinary course of business or consists of goods which have been acquired by
such Loan Party in the ordinary course of business from a person in the business
of selling goods of that kind.

5. File Search Reports. Attached hereto as Schedule 5 is a true and accurate
summary of certified file search reports from (a) the Uniform Commercial Code
filing offices (i) in each jurisdiction of formation identified in Section 1(a)
and in each location identified Section 2 with respect to each legal name set
forth in Section 1 and (ii) in each jurisdiction described in Schedule 1(c) or
Schedule 3 relating to any of the transactions described in Schedule 1(c) or
Schedule 4 with respect to each legal

 

1  Insert appropriate officer(s), as applicable.

 

- 2 -

--------------------------------------------------------------------------------

name of the person or entity from which each Loan Party purchased or otherwise
acquired any assets and (b) each filing office in each real estate recording
office identified on Schedule 3(a) for any Real Property Collateral. A true copy
of each financing statement, including judgment and tax liens, bankruptcy and
pending lawsuits or other filing identified in such file search reports has been
delivered to Agent.

6. UCC Filings. The financing statements (duly authorized by each Loan Party
constituting the debtor therein), including the indications of the collateral,
attached as Schedule 6 relating to the Guaranty and Security Agreement or the
Real Property, are in the appropriate forms for filing in the filing offices in
the jurisdictions identified in Schedule 6 hereof.

7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule of (i) the
appropriate filing offices for the financing statements attached hereto as
Schedule 6 and (ii) the appropriate filing offices for the filings described in
Schedule 11(c) and (iii) any other actions required to create, preserve, protect
and perfect the security interests in the Collateral (as defined in the Guaranty
and Security Agreement) granted, assigned or pledged to Agent pursuant to the
Guaranty and Security Agreement or any other Loan Document. No other filings or
actions are required to create, preserve, protect and perfect the security
interests in the Collateral granted, assigned or pledged to Agent pursuant to
the Loan Documents.

8. Termination Statements. Attached hereto as Schedule 8 are the duly authorized
termination statements in the appropriate form for filing in each applicable
jurisdiction identified in Schedule 8 hereto with respect to each Lien described
therein.

9. Stock Ownership and Other Equity Interests. Attached hereto as Schedule 9(a)
is a true and correct list of each of all of the authorized, and the issued and
outstanding, Equity Interests of each Loan Party and its Subsidiaries and the
record and beneficial owners of such Equity Interests. Also set forth on
Schedule 9(a) is each equity investment of each Loan Party that represents 50%
or less of the equity of the entity in which such investment was made. Attached
hereto as Schedule 9(b) is a true and correct organizational chart of Borrowers
and their Subsidiaries.

10. Instruments and Chattel Paper. Attached hereto as Schedule 10 is a true and
correct list of all promissory notes, instruments (other than checks to be
deposited in the ordinary course of business), tangible chattel paper,
electronic chattel paper and other evidence of Indebtedness held by each Loan
Party as of             , 20     having an aggregate value or face amount in
excess of $100,000, including all intercompany notes between or among any two or
more Loan Parties or any of their Subsidiaries.

11. Intellectual Property.

(a) Schedule 11(a) provides a complete and correct list of all registered
Copyrights (as defined in the Guaranty and Security Agreement) owned by any Loan
Party, all applications for registration of Copyrights owned by any Loan Party,
and all other Copyrights owned by any Loan Party and material to the conduct of
the business of any Loan Party. Schedule 11(a) provides a complete and correct
list of all Patents (as defined in the Guaranty and Security Agreement) owned by
any Loan Party and all applications for Patents owned by any Loan Party.
Schedule 11(a) provides a complete and correct list of all registered Trademarks
(as defined in the Guaranty and Security Agreement) owned by any Loan Party, all
applications for registration of Trademarks owned by any Loan Party, and all
other Trademarks owned by any Loan Party and material to the conduct of the
business of any Loan Party.

(b) Schedule 11(b) provides a complete and correct list of all Intellectual
Property Licenses (as defined in the Guaranty and Security Agreement) entered
into by any Loan Party pursuant to

 

- 3 -

--------------------------------------------------------------------------------

which (i) any Loan Party has provided any license or other rights in
Intellectual Property (as defined in the Guaranty and Security Agreement) owned
or controlled by such Loan Party to any other Person (other than non-exclusive
software licenses granted in the ordinary course of business) or (ii) any Person
has granted to any Loan Party any license or other rights in Intellectual
Property owned or controlled by such Person that is material to the business of
such Loan Party, including any Intellectual Property that is incorporated in any
Inventory, software, or other product marketed, sold, licensed, or distributed
by such Loan Party;

(c) Attached hereto as Schedule 11(c) in proper form for filing with the United
States Patent and Trademark Office and United States Copyright Office (as
applicable) are the filings necessary to preserve, protect and perfect the
security interests in the United States Trademarks, United Patents, United
States Copyrights and Intellectual Property Licenses set forth on Schedule 11(a)
and Schedule 11(b), including duly signed copies of each of the Patent Security
Agreement, Trademark Security Agreement and the Copyright Security Agreement, as
applicable.

12. Commercial Tort Claims. Attached hereto as Schedule 12 is a true and correct
list of all commercial tort claims that exceed $100,000 held by each Loan Party,
including a brief description thereof.

13. Deposit Accounts and Securities Accounts. Attached hereto as Schedule 13 is
a true and complete list of all Deposit Accounts and Securities Accounts (each
as defined in the Guaranty and Security Agreement) maintained by each Loan
Party, including the name of each institution where each such account is held,
the name of each such account and the name of each entity that holds each
account.

14. Letter-of-Credit Rights. Attached hereto as Schedule 14 is a true and
correct list of all letters of credit issued in favor of any Loan Party, as
beneficiary thereunder, having an aggregate value or face amount in excess of
$50,000.

15. Motor Vehicles. Attached hereto as Schedule 15 is a true and correct list of
all motor vehicles and other goods (covered by certificates of title or
ownership) having an aggregate fair market value in excess of $25,000 and owned
by any Loan Party, and the owner and approximate fair market value of such motor
vehicles.

16. Other Assets: A Loan Party owns the following kinds of assets:

 

Aircraft:

   Yes         No        

Vessels, boats or ships:

   Yes         No        

Railroad rolling stock:

   Yes         No        

If the answer is yes to any of these other types of assets, please describe on
Schedule 16.

[The Remainder of this Page has been intentionally left blank]

 

- 4 -

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IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of
this      day of             , 20    .

 

[BORROWERS] By:  

 

  Name:   Title: [Each of the Guarantors] By:  

 

  Name:   Title:

 

- 5 -

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Schedule 1(a)

Legal Names, Etc.

 

Legal Name

  

Type of Entity

  

Registered
Organization
(Yes/No)

  

Organizational
Number2

  

Federal Taxpayer
Identification Number

  

Jurisdiction of Formation

                                            

 

2 

If none, so state.

 

- 6 -

--------------------------------------------------------------------------------

Schedule 1(b)

Prior Names

 

Loan Party/Subsidiary

  

Prior Name

  

Date of Change

                       

 

- 7 -

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Schedule 1(c)

Changes in Corporate Identity; Other Names

 

Loan

Party/Subsidiary

  

Name of Entity

  

Action

  

Date of

Action

  

Jurisdiction

of Formation

  

List of All Other

Names Used on Any

Filings with the

Internal Revenue

Service or

Applicable Foreign

Tax Authorities

During Past Five

Years

                                                                                
                                                     

[Add Information required by Section 1 to the extent required by Section 1(c) of
the Perfection Certificate]

 

- 8 -

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Schedule 2

Chief Executive Offices

 

Loan

Party/Subsidiary

  

Address

  

County

  

State

                                                     

 

- 9 -

--------------------------------------------------------------------------------

Schedule 3(a)

Real Property

 

Entity of
Record

  

Common
Name and
Address

  

Owned,
Leased or
Other
Interest

  

Landlord

/ Owner

if Leased
or Other
Interest

  

Description

of Lease or
Other
Documents
Evidencing
Interest

  

Purpose/

Use

  

Improvements
Located on
Real
Property

  

Legal
Description

  

Encumbered
or to be

Encumbered

by Mortgage

  

Filing

Office for

Mortgage

  

Option to
Purchase/Right

of First Refusal

[    ]    [    ]    [    ]    [    ]    [    ]    [    ]    [    ]   

[SEE

EXHIBIT A-[    ] ATTACHED HERETO]

   [YES/NO]    [    ]    [YES/NO]                              

 

- 10 -

--------------------------------------------------------------------------------

Schedule 3(a)

Real Property (cont.)

Required Consents; Loan Party Held Landlord/ Grantor Interests

I. Landlord’s / Tenant’s Consent Required

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE LANDLORD’S / TENANT’S CONSENT IS
REQUIRED].

II. Leases, Subleases, Tenancies, Franchise Agreements, Licenses or Other
Occupancy Agreements Pursuant to which any Loan Party holds Landlord’s /
Grantor’s Interest

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE ANY LOAN PARTY HOLDS LANDLORD’S /
GRANTOR’S INTEREST]

 

- 11 -

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Schedule 3(b)

Bailees

 

- 12 -

--------------------------------------------------------------------------------

Schedule 4

Transactions Other Than in the Ordinary Course of Business

 

Loan Party/Subsidiary

  

Description of Transaction Including Parties
Thereto

  

Date of

Transaction

                 

 

- 13 -

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Schedule 5

Certified File Search Reports

 

Loan Party/Subsidiary

  

Search Report dated

  

Prepared by

  

Jurisdiction

                          

See attached.

 

- 14 -

--------------------------------------------------------------------------------

Schedule 6

Copy of Financing Statements To Be Filed

See attached.

 

- 15 -

--------------------------------------------------------------------------------

Schedule 7

Filings/Filing Offices

 

Type of Filing3

  

Entity

  

Applicable Collateral

Document -
Mortgage, Security

Agreement or Other

  

Jurisdictions

                                   

 

3 

UCC-1 financing statement, fixture filing, mortgage, intellectual property
filing or other necessary filing.

 

- 16 -

--------------------------------------------------------------------------------

Schedule 8

Attached hereto is a true copy of each termination statement filing duly
acknowledged or otherwise identified by the filing officer.

Termination Statement Filings

 

Debtor

  

Jurisdiction

  

Secured Party

  

Type of Collateral

  

UCC-1

File Date

  

UCC-1

File

Number

                                                           

 

- 17 -

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Schedule 9(a)

(a) Equity Interests of Loan Parties and Subsidiaries

 

Current Legal

Entities Owned

  

Record Owner

  

Certificate No.

  

No. Shares/Interest

  

Percent

Pledged

                                               

(b) Other Equity Interests

 

- 18 -

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Schedule 9(b)

Organizational Chart

 

- 19 -

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Schedule 10

Instruments and Chattel Paper

 

1. Promissory Notes:

 

Entity

  

Principal

Amount

  

Date of Issuance

  

Interest Rate

  

Maturity Date

                                   

 

2. Chattel Paper:

 

- 20 -

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Schedule 11(a)

Copyrights, Patents and Trademarks

UNITED STATES COPYRIGHTS

Registrations:

 

OWNER    TITLE    REGISTRATION NUMBER                       

Applications:

 

OWNER    APPLICATION NUMBER                            

OTHER COPYRIGHTS

Registrations:

 

OWNER    COUNTRY/STATE    TITLE    REGISTRATION NUMBER                  

Applications:

 

OWNER    COUNTRY/STATE    APPLICATION NUMBER                       

 

- 21 -

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Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

UNITED STATES PATENTS:

Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

DESCRIPTION

                                   

Applications:

 

OWNER

  

APPLICATION

NUMBER

  

DESCRIPTION

                                   

OTHER PATENTS:

Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

COUNTRY/STATE

  

DESCRIPTION

                             

Applications:

 

OWNER

  

APPLICATION

NUMBER

  

COUNTRY/STATE

  

DESCRIPTION

                             

 

- 22 -

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Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

UNITED STATES TRADEMARKS:

Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

TRADEMARK

                                   

Applications:

 

OWNER

  

APPLICATION

NUMBER

  

TRADEMARK

                                   

OTHER TRADEMARKS:

Registrations:

 

OWNER

  

REGISTRATION

NUMBER

  

COUNTRY/STATE

  

TRADEMARK

                             

Applications:

 

OWNER

  

APPLICATION

NUMBER

  

COUNTRY/STATE

  

TRADEMARK

                             

 

- 23 -

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Schedule 11(b)

Intellectual Property Licenses

 

LICENSEE

  

LICENSOR

  

COUNTRY/STATE

  

REGISTRATION/
APPLICATION

NUMBER, IF

ANY

  

DESCRIPTION

                                                                                

 

- 24 -

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Schedule 11(c)

Intellectual Property Filings

 

- 25 -

--------------------------------------------------------------------------------

Schedule 12

Commercial Tort Claims

 

- 26 -

--------------------------------------------------------------------------------

Schedule 13

Deposit Accounts and Securities Accounts

 

OWNER    TYPE OF ACCOUNT   

BANK OR

INTERMEDIARY

  

ACCOUNT

NUMBERS

                                                                   

 

- 27 -

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Schedule 14

Letter of Credit Rights

 

- 28 -

--------------------------------------------------------------------------------

Schedule 15

Motor Vehicles

 

- 29 -

--------------------------------------------------------------------------------

Schedule 16

Other Assets

 

- 30 -

--------------------------------------------------------------------------------

FORM OF SUPPLEMENT TO PERFECTION CERTIFICATE

Supplement (this “Supplement”), dated as of             , 2012, to the
Perfection Certificate, dated as of October 31, 2012 (as amended, restated,
supplemented or otherwise modified from time to time, the “Perfection
Certificate”) by each of the parties listed on the signature pages thereto and
those additional entities that thereafter become Loan Parties (collectively,
jointly and severally, “Grantors” and each individually “Grantor”).

Reference is hereby made to (a) that certain Credit Agreement dated as of
October 31, 2012 (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”) by and among ModusLink Global Solutions,
Inc., a Delaware corporation, ModusLink Corporation, a Delaware corporation and
ModusLink PTS, Inc., a Delaware corporation, collectively as borrowers
(“Borrowers”), CMG Securities Corporation, a Massachusetts corporation, CMG
@Ventures Capital Corp., a Delaware corporation, @Ventures V, LLC, a Delaware
limited liability company, CMGI @Ventures IV, LLC, a Delaware limited liability
company, CMG@Ventures Securities Corp., a Delaware corporation, CMG @Ventures,
Inc., a Delaware corporation, SalesLink LLC, a Delaware limited liability
company, Sol Holdings, Inc., a Delaware corporation, SalesLink Mexico Holding
Corp., a Delaware corporation, Modus Media International (Ireland) Limited, a
Delaware corporation, Modus Media International Documentation Services
(Ireland), Limited, a Delaware corporation and Tech For Less LLC, a Delaware
limited liability company, collectively as guarantors (“Guarantors”), the
lenders party thereto as “Lenders” (each of such Lenders, together with its
successors and permitted assigns, is referred to hereinafter as a “Lender”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells
Fargo”), in its capacity as administrative agent for each member of the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, “Agent”)[, [and] Wells Fargo and
                    , as joint lead arrangers][, [and] Wells Fargo and
                    , as joint book runners][, [and] Wells Fargo and
                    , as co-syndication agents] [, [and] Wells Fargo and
                    , as co-documentation agents], and (b) that certain Guaranty
and Security Agreement dated as of             , 2012 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Guaranty and
Security Agreement”) by and among Borrowers, certain Subsidiaries of Borrowers
parties thereto as “Grantors”, and Agent.

All initially capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Credit Agreement. Any terms (whether
capitalized or lower case) used in this Perfection Certificate that are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein or in the Credit Agreement; provided that to the extent
that the Code is used to define any term used herein and if such term is defined
differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern. As used herein, the term “Code”
shall mean the “Code” as that term is defined in the Guaranty and Security
Agreement.

WHEREAS, pursuant to Section 5.2 of the Credit Agreement, the Loan Parties must
execute and deliver a Perfection Certificate and the execution and delivery of
the Perfection Certificate may be accomplished by the execution of this
Supplement in favor of Agent, for the benefit of each member of the Lender Group
and the Bank Product Providers;

In accordance with Section 5.2 of the Credit Agreement, the undersigned, the
                     of                     , hereby certify (in my capacity as
                     and not in my individual capacity) to Agent and each of the
other members of the Lender Group and the Bank Product Providers as follows as
of             , 20    : [the information in the Perfection Certificate
delivered on or prior to the Closing Date is true, correct, and complete on and
as of the date hereof.] [Schedule 1(a), “Legal Names, Etc.”, Schedule 1(b),
“Prior Names”, Schedule 1(c), “Changes in Corporate Identity; Other Names”,
Schedule 2, “Chief Executive Offices”, Schedule 3(a), “Real Property”, Schedule
3(b), “Bailees”, Schedule 4, “Transactions

 

- 31 -

--------------------------------------------------------------------------------

Other Than in the Ordinary Course of Business”, Schedule 9(a), “Equity
Interests”, Schedule 9(b), “Organizational Chart” Schedule 10, “Instruments and
Chattel Paper”, Schedule 11(a), “Copyrights, Patents and Trademarks”, Schedule
11(b), “Intellectual Property Licenses”, Schedule 12, “Commercial Tort Claims”,
Schedule 13, “Deposit Accounts and Securities Accounts”, Schedule 14,
“Letter-of-Credit Rights”, Schedule 15, “Motor Vehicles”, and Schedule 16,
“Other Assets” attached hereto supplement Schedule 1(a), Schedule (1(b),
Schedule 1(c), Schedule 2, Schedule 3, Schedule 4, Schedule 9(a), Schedule 9(b),
Schedule 10, Schedule 11(a), Schedule 11(b), Schedule 12, Schedule 13, Schedule
14, Schedule 15, and Schedule 16 respectively, to the Perfection Certificate and
shall be deemed a part thereof for all purposes of the Perfection Certificate.]

The undersigned officers of each of the Loan Parties hereby certify as of the
date hereof on behalf of the Loan Parties in their capacity as officers of the
Loan Parties and not in their individual capacities that no additional filings
or actions are required to create, preserve or perfect the security interests in
the Collateral granted, assigned or pledged to Agent pursuant to the Loan
Documents.

Except as expressly supplemented hereby, the Perfection Certificate shall remain
in full force and effect.

IN WITNESS WHEREOF, we have hereunto signed this Supplement to Perfection
Certificate as of this      day of             , 20    .

 

[BORROWERS] By:  

 

  Name:   Title: [Each of the Guarantors] By:  

 

  Name:   Title:

 

- 32 -

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Schedule 1(a)

Legal Names, Etc.

 

Legal Name

  

Type of Entity

  

Registered
Organization

(Yes/No)

  

Organizational
Number4

  

Federal Taxpayer

Identification Number

  

Jurisdiction of Formation

                                            

 

4 

If none, so state.

 

- 33 -

--------------------------------------------------------------------------------

Schedule 1(b)

Prior Names

 

Loan Party/Subsidiary

  

Prior Name

  

Date of Change

                       

 

- 34 -

--------------------------------------------------------------------------------

Schedule 1(c)

Changes in Corporate Identity; Other Names

 

Loan

Party/Subsidiary

  

Name of Entity

  

Action

  

Date of

Action

  

Jurisdiction

of Formation

  

List of All Other

Names Used on Any

Filings with the

Internal Revenue

Service or

Applicable Foreign

Tax Authorities

During Past Five

Years

                                                                                
                                                     

[Add Information required by Section 1 to the extent required by Section 1(c) of
the Perfection Certificate]

 

- 35 -

--------------------------------------------------------------------------------

Schedule 2

Chief Executive Offices

 

Loan

Party/Subsidiary

  

Address

  

County

  

State

                                                     

 

- 36 -

--------------------------------------------------------------------------------

Schedule 3(a)

Real Property

 

Entity of
Record

  

Common
Name and
Address

  

Owned,
Leased or

Other
Interest

  

Landlord

/ Owner
if Leased

or Other
Interest

  

Description of
Lease or
Other
Documents
Evidencing
Interest

  

Purpose/

Use

  

Improvements
Located on
Real

Property

  

Legal
Description

  

Encumbered
or to be

Encumbered

by Mortgage

  

Filing
Office for

Mortgage

  

Option to

Purchase/Right

of First Refusal

[    ]

   [    ]    [    ]    [    ]    [    ]    [    ]    [    ]    [SEE EXHIBIT
A-[    ] ATTACHED HERETO]    [YES/NO]    [    ]    [YES/NO]                     
        

 

- 37 -

--------------------------------------------------------------------------------

Schedule 3(a)

Real Property (cont.)

 

Required Consents; Loan Party Held Landlord/ Grantor Interests

I. Landlord’s / Tenant’s Consent Required

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE LANDLORD’S / TENANT’S CONSENT IS
REQUIRED].

II. Leases, Subleases, Tenancies, Franchise Agreements, Licenses or Other
Occupancy Agreements Pursuant to which any Loan Party holds Landlord’s /
Grantor’s Interest

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE ANY LOAN PARTY HOLDS LANDLORD’S /
GRANTOR’S INTEREST

 

- 38 -

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Schedule 3(a)

Real Property (cont.)

 

Required Consents; Loan Party Held Landlord/ Grantor Interests

I. Landlord’s / Tenant’s Consent Required

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE LANDLORD’S / TENANT’S CONSENT IS
REQUIRED].

II. Leases, Subleases, Tenancies, Franchise Agreements, Licenses or Other
Occupancy Agreements Pursuant to which any Loan Party holds Landlord’s /
Grantor’s Interest

1. [LIST EACH LEASE OR OTHER INSTRUMENT WHERE ANY LOAN PARTY HOLDS LANDLORD’S /
GRANTOR’S INTEREST]

 

- 39 -

--------------------------------------------------------------------------------

Schedule 3(b)

Bailees

 

- 40 -

--------------------------------------------------------------------------------

Schedule 4

Transactions Other Than in the Ordinary Course of Business

 

Loan Party/Subsidiary

  

Description of Transaction Including Parties Thereto

  

Date of

Transaction

                 

 

- 41 -

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Schedule 9(a)

(a) Equity Interests of Loan Parties and Subsidiaries

 

Current Legal

Entities Owned

  

Record Owner

  

Certificate No.

  

No. Shares/Interest

  

Percent

Pledged

                                               

(b) Other Equity Interests

 

- 42 -

--------------------------------------------------------------------------------

Schedule 9(b)

Organizational Chart

 

- 43 -

--------------------------------------------------------------------------------

Schedule 10

Instruments and Chattel Paper

 

1. Promissory Notes:

 

Entity

  

Principal

Amount

  

Date of Issuance

  

Interest Rate

  

Maturity Date

                                   

 

2. Chattel Paper:

 

- 44 -

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Schedule 11(a)

Copyrights, Patents and Trademarks

UNITED STATES COPYRIGHTS

Registrations:

 

OWNER   TITLE   REGISTRATION NUMBER        

Applications:

 

OWNER   APPLICATION NUMBER          

OTHER COPYRIGHTS

Registrations:

 

OWNER   COUNTRY/STATE   TITLE   REGISTRATION NUMBER      

Applications:

 

OWNER   COUNTRY/STATE   APPLICATION NUMBER        

 

- 45 -

--------------------------------------------------------------------------------

Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

 

UNITED STATES PATENTS:

Registrations:

 

OWNER

 

REGISTRATION

NUMBER

 

DESCRIPTION

          

Applications:

 

OWNER

 

APPLICATION

NUMBER

 

DESCRIPTION

          

OTHER PATENTS:

Registrations:

 

OWNER

 

REGISTRATION

NUMBER

 

COUNTRY/STATE

 

DESCRIPTION

     

Applications:

 

OWNER

 

APPLICATION

NUMBER

 

COUNTRY/STATE

 

DESCRIPTION

     

 

- 46 -

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Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

 

UNITED STATES TRADEMARKS:

Registrations:

 

OWNER

 

REGISTRATION

NUMBER

 

TRADEMARK

          

Applications:

 

OWNER

 

APPLICATION

NUMBER

 

TRADEMARK

          

OTHER TRADEMARKS:

Registrations:

 

OWNER

 

REGISTRATION

NUMBER

 

COUNTRY/STATE

 

TRADEMARK

     

Applications:

 

OWNER

 

APPLICATION

NUMBER

 

COUNTRY/STATE

 

TRADEMARK

     

 

- 47 -

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Schedule 11(b)

Intellectual Property Licenses

 

LICENSEE

 

LICENSOR

 

COUNTRY/STATE

 

REGISTRATION/
APPLICATION

NUMBER, IF

ANY

 

DESCRIPTION

                                               

 

- 48 -

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Schedule 12

Commercial Tort Claims

 

- 49 -

--------------------------------------------------------------------------------

Schedule 13

Deposit Accounts and Securities Accounts

 

OWNER   TYPE OF ACCOUNT  

BANK OR

INTERMEDIARY

 

ACCOUNT

NUMBERS

                       

 

- 50 -

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Schedule 14

Letter of Credit Rights

 

- 51 -

--------------------------------------------------------------------------------

Schedule 15

Motor Vehicles

 

- 52 -

--------------------------------------------------------------------------------

Schedule 16

Other Assets

 

- 53 -

--------------------------------------------------------------------------------

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

“@Ventures” means each of @Ventures V, LLC, a Delaware limited liability company
and CMGI @Ventures IV, LLC, a Delaware limited liability company.

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity
Interests are acquired by a Borrower or any of its Subsidiaries in a Permitted
Acquisition; provided, that such Indebtedness (a) is either purchase money
Indebtedness or a Capital Lease with respect to Equipment or mortgage financing
with respect to Real Property, (b) was in existence prior to the date of such
Permitted Acquisition, and (c) was not incurred in connection with, or in
contemplation of, such Permitted Acquisition.

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Equity Interests of any other
Person.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Administrative Borrower” has the meaning specified therefor in Section 17.13 of
the Agreement.

“Administrative Questionnaire” has the meaning specified therefor in
Section 13.1(a) of the Agreement.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of the definitions of Eligible Domestic
Accounts and Eligible Foreign Accounts and Section 6.10 of the Agreement:
(a) any Person which owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person.

--------------------------------------------------------------------------------

“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1
to this Agreement (or such other Deposit Account of Agent that has been
designated as such, in writing, by Agent to Borrowers and the Lenders).

“Agent’s Liens” means the Liens granted by each Borrower or its Subsidiaries to
Agent under the Loan Documents and securing the Obligations.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

“Applicable Margin” means (a) in the case of a Base Rate Loan, 1.50 percent (the
“Base Rate Margin”), and (b) in the case of a LIBOR Rate Loan, 2.50 percent (the
“LIBOR Rate Margin”).

“Applicable Prepayment Premium” has the meaning specified therefor in the Fee
Letter.

“Application Event” means the occurrence of (a) a failure by Borrowers to repay
all of the Obligations in full on the Maturity Date, or (b) an Event of Default
and the election by Agent or the Required Lenders to require that payments and
proceeds of Collateral be applied pursuant to Section 2.4(b)(ii) of the
Agreement.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1 to the Agreement.

“Authorized Person” means any one of the individuals identified on Schedule A-2
to the Agreement, as such schedule is updated from time to time by Borrowers
with the consent of Agent not to be unreasonably withheld.

“Availability” means, as of any date of determination, the amount that Borrowers
are entitled to borrow as Revolving Loans under Section 2.1 of the Agreement
(after giving effect to the then outstanding Revolver Usage).

“Available Increase Amount” means, as of any date of determination, an amount
equal to the result of (a) $20,000,000 minus (b) the aggregate principal amount
of Increases to the Commitments previously made pursuant to Section 2.14 of the
Agreement.

“Bank Product” means any one or more of the following financial products or
accommodations extended to a Borrower or its Subsidiaries by a Bank Product
Provider: (a) credit cards (including commercial cards (including so-called
“purchase cards”, “procurement cards” or “p-cards”)), (b) credit card processing
services, (c) debit cards, (d) stored value cards, (e) Cash Management Services,
or (f) transactions under Hedge Agreements.

 

- 2 -

--------------------------------------------------------------------------------

“Bank Product Agreements” means those agreements entered into from time to time
by a Borrower or its Subsidiaries with a Bank Product Provider in connection
with the obtaining of any of the Bank Products.

“Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the
benefit of the Bank Product Providers (other than the Hedge Providers) in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure with respect to the then existing Bank Product Obligations
(other than Hedge Obligations).

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by each Borrower and its Subsidiaries to
any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or
any Lender is obligated to pay to a Bank Product Provider as a result of Agent
or such Lender purchasing participations from, or executing guarantees or
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to a
Borrower or its Subsidiaries.

“Bank Product Provider” means Wells Fargo or any of its Affiliates, including
each of the foregoing in its capacity, if applicable, as a Hedge Provider.

“Bank Product Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate to establish (based upon the Bank
Product Providers’ determination of the liabilities and obligations of each
Borrower and its Subsidiaries in respect of Bank Product Obligations) in respect
of Bank Products then provided or outstanding.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Base Rate” means the greatest of (a) 3.25 percent per annum, (b) the Federal
Funds Rate plus  1/2%, (c) the LIBOR Rate (which rate shall be calculated based
upon an Interest Period of 1 month and shall be determined on a daily basis),
plus 1 percentage point, and (d) the rate of interest announced, from time to
time, within Wells Fargo at its principal office in San Francisco as its “prime
rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.

“Base Rate Loan” means each portion of the Revolving Loans that bears interest
at a rate determined by reference to the Base Rate.

“Base Rate Margin” has the meaning set forth in the definition of Applicable
Margin.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which any Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Board of Directors” means, as to any Person, the board of directors (or
comparable managers) of such Person, or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

 

- 3 -

--------------------------------------------------------------------------------

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

“Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to the Agreement.

“Borrower Materials” has the meaning specified therefor in Section 17.9(c) of
the Agreement.

“Borrowing” means a borrowing consisting of Revolving Loans made on the same day
by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of an Extraordinary Advance.

“Borrowing Base” means, as of any date of determination, the result of:

(a) the sum of

(i) 85% of the amount of Eligible Domestic Accounts, less the amount, if any, of
the Dilution Reserve, plus

(ii) 85% of the amount of Eligible Foreign Accounts, less the amount if any, of
the Dilution Reserve, plus

(b) the lowest of

(i) 50% of the current amount of Availability generated pursuant to
subsection (a) above,

(ii) the product of 60% multiplied by the value (calculated at the lower of cost
or market on a basis consistent with Borrowers’ historical accounting practices)
of Eligible Finished Goods Inventory and Eligible Raw Material Inventory at such
time, and

(iii) the product of 85% multiplied by the Net Recovery Percentage identified in
the most recent inventory appraisal ordered and obtained by Agent multiplied by
the value (calculated at the lower of cost or market on a basis consistent with
Borrowers’ historical accounting practices) of Eligible Finished Goods Inventory
and Eligible Raw Material Inventory (such determination may be made as to
different categories of Eligible Finished Goods Inventory and Eligible Raw
Material Inventory based upon the Net Recovery Percentage applicable to such
categories) at such time, minus

(c) the aggregate amount of reserves, if any, established by Agent under
Section 2.1(c) of the Agreement.

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the Commonwealth of
Massachusetts, except that, if a determination of a Business Day shall relate to
a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.

 

- 4 -

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“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $1,000,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $1,000,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and
(h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above.

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“Change in Control” means that:

(a) any Person or two or more Persons acting in concert, shall have acquired
beneficial ownership, directly or indirectly, of Equity Interests of
Administrative Borrower (or other securities convertible into such Equity
Interests) representing 33% or more of the combined voting power of all Equity
Interests of Administrative Borrower entitled (without regard to the occurrence
of any contingency) to vote for the election of members of the Board of
Directors of Administrative Borrower;

(b) any Person or two or more Persons acting in concert, shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will

 

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result in its or their acquisition of the power to exercise, directly or
indirectly, control over the management or policies of Administrative Borrower
or control over the Equity Interests of such Person entitled to vote for members
of the Board of Directors of Administrative Borrower on a fully-diluted basis
(and taking into account all such Equity Interests that such Person or group has
the right to acquire pursuant to any option right) representing 33% or more of
the combined voting power of such Equity Interests;

(c) the occurrence of a change in the composition of the Board of Directors of
Administrative Borrower such that a majority of the members of such Board of
Directors are not Continuing Directors; or

(d) Borrowers fail to own and control, directly or indirectly, (1) 100% of the
Equity Interests of each other Loan Party (other than Tech for Less LLC to the
extent otherwise permitted in this Agreement and @Ventures), (2) 95% of
@Ventures V, LLC except to the extent otherwise permitted in this Agreement, or
(3) all of the rights of the sole Class A Member of CMGI @Ventures IV, LLC
except to the extent otherwise permitted in this Agreement.

“Change in Law” means the occurrence after the date of the Agreement of: (a) the
adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation, judicial
ruling, judgment or treaty or in the administration, interpretation,
implementation or application by any Governmental Authority of any law, rule,
regulation, guideline or treaty, or (c) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or
not having the force of law; provided that notwithstanding anything in the
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (ii) all requests, rules, guidelines or
directives concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities shall,
in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

“Chinese Contract Services Agreement” means the Services Agreement dated
February 1, 2009 between ModusLink and ModusLink Software (Shenzhen) Co. Ltd.

“Chinese Contract Manufacturing Services Agreements” means each of the following
agreements:

(a) the Contract Manufacturing/Assembly Services Agreement dated February 1,
2012 between ModusLink and ModusLink (Waigaoqiao) Co. Ltd.;

(b) the Contract Manufacturing/Assembly Services Agreement dated May 1, 2011
between ModusLink and ModusLink (Chongqing) Co. Ltd.;

(c) the Contract Manufacturing/Assembly Services Agreement dated August 1, 2011
between ModusLink and ModusLink (Futian) Co. Ltd.;

(d) the Contract Manufacturing/Assembly Services Agreement dated August 1, 2011
between ModusLink and ModusLink (Kunshan) Co. Ltd.;

(e) the Contract Manufacturing/Assembly Services Agreement dated August 1, 2011
between ModusLink and ModusLink (Pudong) Co. Ltd.;

 

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(f) the Contract Manufacturing/Assembly Services Agreement dated August 1, 2011
between ModusLink and ModusLink (Songjiang) Co. Ltd.; and

(g) any future Contract Manufacturing/Assembly Services Agreement entered into
by and between a Borrower and a Subsidiary incorporated in China in
substantially the same form as the contracts listed above or as otherwise
acceptable to Agent.

“Closing Date” means the date of the making of the initial Revolving Loan (or
other extension of credit) under the Agreement.

“Code” means the Massachusetts Uniform Commercial Code, as in effect from time
to time.

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by any Borrower or its Subsidiaries in or upon which
a Lien is granted by such Person in favor of Agent or the Lenders under any of
the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in any Borrower’s or its Subsidiaries’ books and records, Equipment, or
Inventory, in each case, in form and substance reasonably satisfactory to Agent.

“Commitment” means, with respect to each Lender, its Commitment, and, with
respect to all Lenders, their Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender’s name under the
applicable heading on Schedule C-1 to the Agreement or in the Assignment and
Acceptance pursuant to which such Lender became a Lender under the Agreement, as
such amounts may be reduced or increased from time to time pursuant to
assignments made in accordance with the provisions of Section 13.1 of the
Agreement.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 to the Agreement delivered by the chief financial officer of
Administrative Borrower to Agent.

“Confidential Information” has the meaning specified therefor in Section 17.9(a)
of the Agreement.

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Administrative Borrower on the Closing Date,
and (b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was approved, appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Administrative Borrower and whose initial assumption of
office resulted from such contest or the settlement thereof.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by a Borrower or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

 

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“Copyright Security Agreement” has the meaning specified therefor in the
Guaranty and Security Agreement.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement on the date that it is required
to do so under the Agreement (including the failure to make available to Agent
amounts required pursuant to a Settlement or to make a required payment in
connection with a Letter of Credit Disbursement), (b) notified Borrowers, Agent,
or any Lender in writing that it does not intend to comply with all or any
portion of its funding obligations under the Agreement, (c) has made a public
statement to the effect that it does not intend to comply with its funding
obligations under the Agreement or under other agreements generally (as
reasonably determined by Agent) under which it has committed to extend credit,
(d) failed, within 1 Business Day after written request by Agent, to confirm
that it will comply with the terms of the Agreement relating to its obligations
to fund any amounts required to be funded by it under the Agreement,
(e) otherwise failed to pay over to Agent or any other Lender any other amount
required to be paid by it under the Agreement on the date that it is required to
do so under the Agreement, or (f) (i) becomes or is insolvent or has a parent
company that has become or is insolvent or (ii) becomes the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, or custodian or appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the Deposit Account of Administrative Borrower
identified on Schedule D-1 to the Agreement (or such other Deposit Account of
Administrative Borrower located at Designated Account Bank that has been
designated as such, in writing, by Borrowers to Agent).

“Designated Account Bank” has the meaning specified therefor in Schedule D-1 to
the Agreement (or such other bank that is located within the United States that
has been designated as such, in writing, by Borrowers to Agent).

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 12 months, that is the result of dividing
the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Borrowers’ Accounts
during such period, by (b) Borrowers’ billings with respect to Accounts during
such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Domestic Accounts or Eligible
Foreign Accounts by 1 percentage point for each percentage point by which
Dilution is in excess of 5%.

 

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“Disqualified Equity Interests” shall mean any Equity Interest that, by its
terms (or by the terms of any security or other Equity Interests into which it
is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures or is mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Loans
and all other Obligations that are accrued and payable and the termination of
the Commitments), (b) is redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests), in whole or in part, (c) provides
for the scheduled payments of dividends in cash, or (d) is or becomes
convertible into or exchangeable for Indebtedness or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is 180 days after the Maturity Date.

“Dollars” or “$” means United States dollars.

“Drawing Document” means any Letter of Credit or other document presented for
purposes of drawing under any Letter of Credit.

“Earn-Outs” shall mean unsecured liabilities of a Loan Party arising under an
agreement to make any deferred payment as a part of the Purchase Price for a
Permitted Acquisition, including performance bonuses or consulting payments in
any related services, employment or similar agreement, in an amount that is
subject to or contingent upon the revenues, income, cash flow or profits (or the
like) of the target of such Permitted Acquisition.

“EBITDA” means, with respect to any fiscal period,

 

  (a) Borrowers’ consolidated net earnings (or loss),

minus

 

  (b) without duplication, the sum of the following amounts of Borrowers for
such period to the extent included in determining consolidated net earnings (or
loss) for such period:

 

  (i) extraordinary gains,

 

  (ii) non-cash foreign exchange gains,

 

  (iii) and interest income,

plus

 

  (i) non-cash extraordinary losses,

 

  (ii) Interest Expense,

 

  (iii) income taxes,

 

  (iv) non-cash foreign exchange losses in an amount not to exceed $2,500,000
per month,

 

  (v) and depreciation and amortization for such period, in each case,
determined on a consolidated basis in accordance with GAAP.

 

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For the purposes of calculating EBITDA for any period of one month or
consecutive months (each, a “Reference Period”), if at any time during such
Reference Period (and after the Closing Date), any Borrower or any of its
Subsidiaries shall have made a Permitted Acquisition, EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto (including pro
forma adjustments arising out of events which are directly attributable to such
Permitted Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case to be mutually and reasonably agreed upon by
Borrowers and Agent) or in such other manner acceptable to Agent as if any such
Permitted Acquisition or adjustment occurred on the first day of such Reference
Period.

“Eligible Domestic Accounts” means those Accounts created by a Borrower in the
ordinary course of its business, that arise out of such Borrower’s sale of goods
or rendition of services, that comply with each of the representations and
warranties respecting Eligible Domestic Accounts made in the Loan Documents, and
that are not excluded as ineligible by virtue of one or more of the excluding
criteria set forth below; provided, that such criteria may be revised from time
to time by Agent in Agent’s Permitted Discretion to address the results of any
field examination performed by (or on behalf of) Agent from time to time after
the Closing Date. In determining the amount to be included, Eligible Domestic
Accounts shall be calculated net of customer deposits, unapplied cash, taxes,
discounts, credits, allowances, and rebates. Eligible Domestic Accounts shall
not include the following:

(a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date or Accounts with selling terms of more than 90 days,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of any
Borrower or an employee or agent of any Borrower or any Affiliate of any
Borrower,

(d) Accounts arising in a transaction wherein goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a
bill and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

(e) Accounts that are not payable in Dollars,

(f) Accounts with respect to which the Account Debtor either (i) is not a
resident or citizen of or otherwise located in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof,

(g) Accounts with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which Borrowers have complied,
to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31
USC §3727), or (ii) any state of the United States,

(h) Accounts with respect to which the Account Debtor is a creditor of a
Borrower, has or has asserted a right of recoupment or setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of recoupment or setoff, or dispute,

(i) Accounts with respect to an Account Debtor whose total obligations owing to
Borrowers exceed 10% (such percentage, as applied to a particular Account
Debtor, being subject to

 

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reduction by Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Domestic Accounts and Eligible
Foreign Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage; provided, that, in each case, the amount of
Eligible Domestic Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Agent based on all of the otherwise Eligible
Domestic Accounts and Eligible Foreign Accounts prior to giving effect to any
eliminations based upon the foregoing concentration limit; provided further that
the percentage set forth above in this subsection (i) shall be 20% with respect
to Sony Corporation and its Subsidiaries, 20% with respect to Hewlett-Packard
Company and its Subsidiaries (other than Compaq and its Subsidiaries), 20% with
respect to Compaq and its Subsidiaries (provided that the percentage set forth
above in this subsection (i) shall be 35% for Hewlett-Packard Company and its
Subsidiaries and Compaq and its Subsidiaries in the aggregate), 20% with respect
to Advanced Micro Devices, Inc., and 12.5% with respect to E-Recycling, LLC
(such percentages, as applied to a particular Account Debtor, being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates or if there is a negative change in any rating of
such Account Debtor provided by a third party rating agency).

(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
any Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

(k) Accounts, the collection of which, Agent, in its Permitted Discretion,
believes to be doubtful, including by reason of the Account Debtor’s financial
condition,

(l) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

(m) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account
Debtor,

(n) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity,

(o) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by the
applicable Borrower of the subject contract for goods or services, or

(p) Accounts owned by a target acquired in connection with a Permitted
Acquisition, until the completion of an appraisal and field examination with
respect to such target, in each case, reasonably satisfactory to Agent (which
appraisal and field examination may be conducted prior to the closing of such
Permitted Acquisition).

“Eligible Finished Goods Inventory” shall mean Inventory that qualifies as
Eligible Inventory and consists of first quality finished goods held for sale in
the ordinary course of Borrowers’ business.

“Eligible Foreign Accounts” means those Accounts (i) created by a Borrower in
the ordinary course of its business, (ii) that arise out of such Borrower’s sale
of goods or rendition of services to Woodman Labs, Inc., Sony Corporation,
Hewlett-Packard Company, Advanced Micro Devices, Inc. or their respective
Subsidiaries, so long as Agent, in its Permitted Discretion, believes the
collection of such Accounts from such Account Debtors are not doubtful,
(iii) that comply with each of the representations

 

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and warranties respecting Eligible Foreign Accounts made in the Loan Documents,
(iv) with respect to which the Account Debtor either (A) is not a resident or
citizen of or otherwise located in the United States, or (B) is not organized
under the laws of the United States or any state thereof, (v) that are billed
and collected in the United States, and (vi) that are not excluded as ineligible
by virtue of one or more of the excluding criteria set forth below; provided,
that such criteria may be revised from time to time by Agent in Agent’s
Permitted Discretion to address the results of any field examination performed
by (or on behalf of) Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Foreign Accounts shall be
calculated net of customer deposits, unapplied cash, taxes, discounts, credits,
allowances, and rebates. Eligible Foreign Accounts shall not include the
following:

(a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date or Accounts with selling terms of more than 90 days,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of any
Borrower or an employee or agent of any Borrower or any Affiliate of any
Borrower,

(d) Accounts arising in a transaction wherein goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a
bill and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

(e) Accounts that are not payable in Dollars,

(f) Accounts with respect to which the Account Debtor is a creditor of a
Borrower, has or has asserted a right of recoupment or setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of recoupment or setoff, or dispute,

(g) Accounts with respect to an Account Debtor whose total obligations owing to
Borrowers exceed 10% (such percentage, as applied to a particular Account
Debtor, being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Foreign
Accounts and Eligible Domestic Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage; provided, that, in each
case, the amount of Eligible Foreign Accounts that are excluded because they
exceed the foregoing percentage shall be determined by Agent based on all of the
otherwise Eligible Foreign Accounts and Eligible Domestic Accounts prior to
giving effect to any eliminations based upon the foregoing concentration limit;
provided further that the percentage set forth above in this subsection
(i) shall be 20% with respect to Sony Corporation and its Subsidiaries, 20% with
respect to Hewlett-Packard Company and its Subsidiaries (other than Compaq and
its Subsidiaries), 20% with respect to Compaq and its Subsidiaries (provided
that the percentage set forth above in this subsection (i) shall be 35% for
Hewlett-Packard Company and its Subsidiaries and Compaq and its Subsidiaries in
the aggregate), 20% with respect to Advanced Micro Devices, Inc., and 12.5% with
respect to E-Recycling, LLC (such percentages, as applied to a particular
Account Debtor, being subject to reduction by Agent in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates or if there is a
negative change in any rating of such Account Debtor provided by a third party
rating agency),

(h) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
any Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

 

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(i) Accounts, the collection of which, Agent, in its Permitted Discretion,
believes to be doubtful, including by reason of the Account Debtor’s financial
condition,

(j) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

(k) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account
Debtor,

(l) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity, or

(m) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by the
applicable Borrower of the subject contract for goods or services.

“Eligible Inventory” means Inventory of a Borrower, that complies with each of
the representations and warranties respecting Eligible Inventory made in the
Loan Documents, and that is not excluded as ineligible by virtue of one or more
of the excluding criteria set forth below; provided, that such criteria may be
revised from time to time by Agent in Agent’s Permitted Discretion to address
the results of any field examination or appraisal performed by Agent from time
to time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrowers’ historical accounting practices. An item of Inventory shall not
be included in Eligible Inventory if:

(a) a Borrower does not have good, valid, and marketable title thereto,

(b) a Borrower does not have actual and exclusive possession thereof (either
directly or through a bailee or agent of a Borrower),

(c) it is not located at one of the locations in the continental United States
set forth on Schedule E-1 to the Agreement (or in-transit from one such location
to another such location),

(d) it is in-transit to or from a location of a Borrower (other than in-transit
from one location set forth on Schedule E-1 to the Agreement to another location
set forth on Schedule E-1 to the Agreement),

(e) it is located on real property leased by a Borrower or in a contract
warehouse, in each case, unless it is subject to a Collateral Access Agreement
executed by the lessor or warehouseman, as the case may be, and unless it is
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises,

(f) it is the subject of a bill of lading or other document of title,

(g) it is not subject to a valid and perfected first priority Agent’s Lien,

(h) it consists of goods returned or rejected by a Borrower’s customers,

(i) it consists of goods that are obsolete or slow moving, restrictive or custom
items, work-in-process, raw materials, or goods that constitute spare parts,
packaging and shipping materials, supplies used or consumed in Borrowers’
business, bill and hold goods, defective goods, “seconds,” or Inventory acquired
on consignment,

 

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(j) it is subject to third party trademark, licensing or other proprietary
rights, unless Agent is satisfied that such Inventory can be freely sold by
Agent on and after the occurrence of an Event of a Default despite such third
party rights,

(k) it consists of goods that are considered “aged inventory”, “excess
inventory”, or similar types of Inventory as such terms are defined in customer
contracts, or

(l) it was acquired in connection with a Permitted Acquisition, until the
completion of an appraisal and field examination of such Inventory, in each
case, reasonably satisfactory to Agent (which appraisal and field examination
may be conducted prior to the closing of such Permitted Acquisition).

“Eligible Raw Material Inventory” shall mean Inventory that qualifies as
Eligible Inventory and consists of goods that are first quality raw materials.

“Employee Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within
the preceding six (6) years has been sponsored, maintained or contributed to by
any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA
Affiliate has, or has had at any time within the preceding six (6) years, any
liability, contingent or otherwise.

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Borrower, any Subsidiary of any Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
any Borrower, any Subsidiary of any Borrower, or any of their predecessors in
interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended
from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

 

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“Equity Interest” means, with respect to a Person, all of the shares, options,
warrants, interests, participations, or other equivalents (regardless of how
designated) of or in such Person, whether voting or nonvoting, including capital
stock (or other ownership or profit interests or units), preferred stock, or any
other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statutes, and all regulations and guidance promulgated
thereunder. Any reference to a specific section of ERISA shall be deemed to be a
reference to such section of ERISA and any successor statutes, and all
regulations and guidance promulgated thereunder.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Borrower or its Subsidiaries under IRC Section 414(c),
(c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Borrower or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with any Borrower or any of its Subsidiaries and whose employees are
aggregated with the employees of such Borrower or its Subsidiaries under IRC
Section 414(o).

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess” has the meaning specified therefor in Section 2.14 of the Agreement.

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Borrowers and their Subsidiaries aged in excess of historical levels with
respect thereto and all book overdrafts of Borrowers and their Subsidiaries in
excess of historical practices with respect thereto, in each case as determined
by Agent in its Permitted Discretion.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes), in each case
imposed by the jurisdiction (or by any political subdivision or taxing authority
thereof) in which such Lender or such Participant is organized or the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender’s or such Participant’s principal office is located in each
case as a result of a present or former connection between such Lender or such
Participant and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from such Lender or such Participant
having executed, delivered or performed its obligations or received payment
under, or enforced its rights or remedies under the Agreement or any other Loan
Document); (ii) taxes resulting from a Lender’s or a Participant’s failure to
comply with the requirements of Section 16.2 of the Agreement, and (iii) any
United States federal withholding taxes that would be imposed on amounts payable
to a Foreign Lender based upon the applicable withholding rate in effect at the
time such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), except that Taxes shall include (A) any amount that such
Foreign Lender (or its assignor, if any) was previously entitled to receive
pursuant to Section 16.1 of the Agreement, if any, with respect to such
withholding tax at the time such Foreign Lender becomes a party to the Agreement
(or designates a new lending office), and (B) additional United States federal

 

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withholding taxes that may be imposed after the time such Foreign Lender becomes
a party to the Agreement (or designates a new lending office), as a result of a
change in law, rule, regulation, order or other decision with respect to any of
the foregoing by any Governmental Authority.

“Existing Credit Facility” means the revolving credit facility outstanding
pursuant to the Amended and Restated Credit Agreement dated as of February 1,
2010 by and among the Administrative Borrower, certain of its Subsidiaries, Bank
of America, N.A., Silicon Valley Bank and HSBC Business Credit (USA) Inc., as
amended.

“Extraordinary Advances” has the meaning specified therefor in
Section 2.3(d)(iii) of the Agreement.

“Extraordinary Receipts” means any payments received by any Borrower or any of
its Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of
(i) proceeds of judgments, proceeds of settlements, or other consideration of
any kind received in connection with any cause of action or claim,
(ii) indemnity payments (other than to the extent such indemnity payments are
immediately payable to a Person that is not an Affiliate of any Borrower or any
of its Subsidiaries), and (iii) any purchase price adjustment received in
connection with any purchase agreement.

“Fee Letter” means that certain fee letter, dated as of even date with the
Agreement, among Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.

“Financial Covenant Triggering Event” means (a) on the last day of any month
that Excess Availability plus Qualified Cash is less than $40,000,000 or Excess
Availability is less than $20,000,000 and (b) at any other time that Excess
Availability plus Qualified Cash is less than $35,000,000 or Excess Availability
is less than $20,000,000.

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date
herewith, in form and substance reasonably satisfactory to Agent, executed and
delivered by each Loan Party and Agent.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.

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

 

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“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
municipal or any other level, 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).

“Guarantor” means (a) each domestic Subsidiary of each Borrower to the extent
not already a Borrower, and (b) each other Person that becomes a guarantor after
the Closing Date pursuant to Section 5.11 of the Agreement.

“Guaranty and Security Agreement” means a guaranty and security agreement, dated
as of even date with the Agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by each of the Borrowers and each
of the Guarantors to Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of each Borrower and its Subsidiaries arising under, owing pursuant to, or
existing in respect of Hedge Agreements entered into with one or more of the
Hedge Providers.

“Hedge Provider” means Wells Fargo or any of its Affiliates.

“Increase” has the meaning specified therefor in Section 2.14.

“Increase Date” has the meaning specified therefor in Section 2.14.

“Increase Joinder” has the meaning specified therefor in Section 2.14.

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase

 

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price of assets (other than trade payables incurred in the ordinary course of
business and repayable in accordance with customary trade practices and, for the
avoidance of doubt, other than royalty payments payable in the ordinary course
of business in respect of non-exclusive licenses), (f) all monetary obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Disqualified Equity
Interests of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above. For
purposes of this definition, (i) the amount of any Indebtedness represented by a
guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for
which the guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness
which is limited or is non-recourse to a Person or for which recourse is limited
to an identified asset shall be valued at the lesser of (A) if applicable, the
limited amount of such obligations, and (B) if applicable, the fair market value
of such assets securing such obligation.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Indemnified Taxes” means, any Taxes other than Excluded Taxes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, dated as of even date with the Agreement, executed and delivered by
each Borrower, each of its Subsidiaries each of the other Loan Parties, and
Agent, the form and substance of which is reasonably satisfactory to Agent.

“Interest Expense” means, for any period, the aggregate of the interest expense
of Borrowers for such period, determined on a consolidated basis in accordance
with GAAP.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2 or 3 months thereafter or, if agreed to by all
Lenders, 6, 9 or 12 months thereafter; provided, that (a) interest shall accrue
at the applicable rate based upon the LIBOR Rate from and including the first
day of each Interest Period to, but excluding, the day on which any Interest
Period expires, (b) any Interest Period that would 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, (c) with respect to an 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), the Interest Period shall end on the last Business Day
of the calendar month that is 1, 2, 3, 6, 9, or 12 months after the date on
which the Interest Period began, as applicable, and (d) Borrowers may not elect
an Interest Period which will end after the Maturity Date.

 

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“Inventory” means inventory (as that term is defined in the Code).

“Inventory Reserves” means, as of any date of determination, (a) Landlord
Reserves, and (b) those reserves that Agent deems necessary or appropriate, in
its Permitted Discretion and subject to Section 2.1(c), to establish and
maintain (including reserves for slow moving Inventory and Inventory shrinkage)
with respect to Eligible Inventory or the Maximum Revolver Amount.

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustment for increases or
decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“ISP” means, with respect to any Letter of Credit, the International Standby
Practices 1998 (International Chamber of Commerce Publication No. 590) and any
subsequent revision thereof adopted by the International Chamber of Commerce on
the date such Letter of Credit is issued.

“Issuer Document” means, with respect to any Letter of Credit, a letter of
credit application, a letter of credit agreement, or any other document,
agreement or instrument entered into (or to be entered into) by a Borrower in
favor of Issuing Bank and relating to such Letter of Credit.

“Issuing Bank” means Wells Fargo or any other Lender that, at the request of
Borrowers and with the consent of Agent, agrees, in such Lender’s sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2.11 of the Agreement, and Issuing Bank shall be a
Lender.

“Landlord Reserve” means, as to each location at which a Borrower has Inventory
or books and records located and as to which a Collateral Access Agreement has
not been received by Agent, a reserve in an amount equal to the greater of
(a) the number of months rent for which the landlord will have, under applicable
law, a Lien in the Inventory of such Borrower to secure the payment of rent or
other amounts under the lease relative to such location, or (b) 3 months rent
under the lease relative to such location.

“Lender” has the meaning set forth in the preamble to the Agreement, shall
include Issuing Bank and the Swing Lender, and shall also include any other
Person made a party to the Agreement pursuant to the provisions of Section 13.1
of the Agreement and “Lenders” means each of the Lenders or any one or more of
them.

“Lender Group” means each of the Lenders (including Issuing Bank and the Swing
Lender) and Agent, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by any Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) documented out-of-pocket fees or charges paid

 

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or incurred by Agent in connection with the Lender Group’s transactions with
each Borrower and its Subsidiaries under any of the Loan Documents, including,
photocopying, notarization, couriers and messengers, telecommunication, public
record searches, filing fees, recording fees, publication, real estate surveys,
real estate title policies and endorsements, and environmental audits,
(c) Agent’s customary fees and charges imposed or incurred in connection with
any background checks or OFAC/PEP searches related to any Borrower or its
Subsidiaries, (d) Agent’s customary fees and charges (as adjusted from time to
time) with respect to the disbursement of funds (or the receipt of funds) to or
for the account of any Borrower (whether by wire transfer or otherwise),
together with any out-of-pocket costs and expenses incurred in connection
therewith, (e) customary charges imposed or incurred by Agent resulting from the
dishonor of checks payable by or to any Loan Party, (f) reasonable documented
out-of-pocket costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or during the
continuance of an Event of Default, in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (g) field examination, appraisal, and valuation
fees and expenses of Agent related to any field examinations, appraisals, or
valuation to the extent of the fees and charges (and up to the amount of any
limitation) provided in Section 2.10 of the Agreement, (h) Agent’s reasonable
costs and expenses (including reasonable documented attorneys fees and expenses)
relative to third party claims or any other lawsuit or adverse proceeding paid
or incurred, whether in enforcing or defending the Loan Documents or otherwise
in connection with the transactions contemplated by the Loan Documents, Agent’s
Liens in and to the Collateral, or the Lender Group’s relationship with any
Borrower or any of its Subsidiaries, (i) Agent’s reasonable documented costs and
expenses (including reasonable documented attorneys fees and due diligence
expenses) incurred in advising, structuring, drafting, reviewing, administering
(including travel, meals, and lodging), syndicating (including reasonable costs
and expenses relative to the rating of CUSIP, DXSyndicate™, SyndTrak or other
communication costs incurred in connection with a syndication of the loan
facilities), or amending, waiving, or modifying the Loan Documents, and
(j) Agent’s and each Lender’s reasonable documented costs and expenses
(including reasonable documented attorneys, accountants, consultants, and other
advisors fees and expenses) incurred in terminating, enforcing (including
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning any Borrower or any of its Subsidiaries or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether a lawsuit or other adverse proceeding is brought, or in
taking any enforcement action or any Remedial Action with respect to the
Collateral.

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Issuing Bank.

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit Fees and all commissions,
fees, charges and expenses provided for in Section 2.11(k) of the Agreement
(including any fronting fees) will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of the Revolving
Lenders in an amount equal to 105% of the then existing Letter of Credit Usage,
(b) delivering to Agent documentation executed by all beneficiaries under the
Letters of Credit, in form and substance reasonably satisfactory to Agent and
Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of
Credit, or (c) providing Agent with a standby letter of

 

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credit, in form and substance reasonably satisfactory to Agent, from a
commercial bank acceptable to Agent (in its sole discretion) in an amount equal
to 105% of the then existing Letter of Credit Usage (it being understood that
the Letter of Credit Fee and all fronting fees set forth in the Agreement will
continue to accrue while the Letters of Credit are outstanding and that any such
fees that accrue must be an amount that can be drawn under any such standby
letter of credit).

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

“Letter of Credit Exposure” means, as of any date of determination with respect
to any Lender, such Lender’s Pro Rata Share of the Letter of Credit Usage on
such date.

“Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of
the Agreement.

“Letter of Credit Indemnified Costs” has the meaning specified therefor in
Section 2.11(f) of the Agreement.

“Letter of Credit Related Person” has the meaning specified therefor in
Section 2.11(f) of the Agreement.

“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the
Agreement.

“LIBOR Notice” means a written notice in the form of Exhibit L-1 to the
Agreement.

“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the
Agreement.

“LIBOR Rate” means the rate per annum rate appearing on Macro*World’s
(www.mworld.com; the “Service”) Page BBA LIBOR—USD (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service) 2 Business Days prior to the commencement of the requested Interest
Period, for a term, and in an amount, comparable to the Interest Period and the
amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan
or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan
to a LIBOR Rate Loan) by Borrowers in accordance with the Agreement (and, if any
such rate is below zero, the LIBOR Rate shall be deemed to be zero), which
determination shall be made by Agent and shall be conclusive in the absence of
manifest error.

“LIBOR Rate Loan” means each portion of a Revolving Loan that bears interest at
a rate determined by reference to the LIBOR Rate.

“LIBOR Rate Margin” has the meaning set forth in the definition of Applicable
Margin.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

 

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“Loan” shall mean any Revolving Loan, Swing Loan, or Extraordinary Advance made
(or to be made) hereunder.

“Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

“Loan Documents” means the Agreement, the Control Agreements, the Copyright
Security Agreement, any Borrowing Base Certificate, the Fee Letter, the Guaranty
and Security Agreement, the Intercompany Subordination Agreement, any Issuer
Documents, the Letters of Credit, the Mortgages, if any, the Patent Security
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrowers in connection with the Agreement and payable to any member of the
Lender Group, and any other instrument or agreement entered into, now or in the
future, by any Borrower or any of its Subsidiaries and any member of the Lender
Group in connection with the Agreement.

“Loan Party” means any Borrower or any Guarantor.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect
from time to time.

“Material Adverse Effect” means (a) a material adverse effect in the business,
operations, results of operations, assets, liabilities or financial condition of
Borrowers and their Subsidiaries, taken as a whole, (b) a material impairment of
Borrowers’ and their Subsidiaries ability to perform their obligations under the
Loan Documents to which they are parties or of the Lender Group’s ability to
enforce the Obligations or realize upon the Collateral (other than as a result
of an action taken or not taken that is solely in the control of Agent), or
(c) a material impairment of the enforceability or priority of Agent’s Liens
with respect to all or a material portion of the Collateral.

“Material Contract” means, with respect to any Person, (a) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$5,000,000 or more in any year (other than purchase orders and customer
contracts in the ordinary course of the business of such Person or such
Subsidiary and other than contracts that by their terms may be terminated by
such Person or Subsidiary in the ordinary course of its business upon less than
60 days’ notice without penalty or premium), and (b) all other contracts or
agreements, the loss of which could reasonably be expected to result in a
Material Adverse Effect. For purposes of this Agreement only, the Chinese
Contract Services Agreement and the Chinese Contract Manufacturing Services
Agreements, which are intercompany agreements, shall be considered “Material
Contracts” of ModusLink.

“Maturity Date” means October 31, 2015.

“Maximum Revolver Amount” means $50,000,000, decreased by the amount of
reductions in the Commitments made in accordance with Section 2.4(c) of the
Agreement and increased by any additional Commitments added in accordance with
Section 2.14 of the Agreement.

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by a Borrower or one
of its Subsidiaries in favor of Agent, in form and substance reasonably
satisfactory to Agent, that encumber any Real Property Collateral.

 

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“Multiemployer Plan” means any multiemployer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or
ERISA Affiliate has an obligation to contribute or has any liability, contingent
or otherwise or could be assessed withdrawal liability assuming a complete
withdrawal from any such multiemployer plan.

“Net Cash Proceeds” means:

(a) with respect to any sale or disposition by any Borrower or any of its
Subsidiaries of assets, the amount of cash proceeds received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Borrower or such
Subsidiary, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under the Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such sale or
disposition, (ii) reasonable fees, commissions, and expenses related thereto and
required to be paid by such Borrower or such Subsidiary in connection with such
sale or disposition, (iii) taxes paid or payable to any taxing authorities by
such Borrower or such Subsidiary in connection with such sale or disposition, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of any Borrower or any of its Subsidiaries, and are
properly attributable to such transaction; and (iv) all amounts that are set
aside as a reserve (A) for adjustments in respect of the purchase price of such
assets, (B) for any liabilities associated with such sale or casualty, to the
extent such reserve is required by GAAP, and (C) for the payment of unassumed
liabilities relating to the assets sold or otherwise disposed of at the time of,
or within 30 days after, the date of such sale or other disposition, to the
extent that in each case the funds described above in this clause (iv) are
(x) deposited into escrow with a third party escrow agent or set aside in a
separate Deposit Account that is subject to a Control Agreement in favor of
Agent and (y) paid to Agent as a prepayment of the applicable Obligations in
accordance with Section 2.4(e) of the Agreement at such time when such amounts
are no longer required to be set aside as such a reserve; and

(b) with respect to the issuance or incurrence of any Indebtedness by any
Borrower or any of its Subsidiaries, or the issuance by any Borrower or any of
its Subsidiaries of any Equity Interests, the aggregate amount of cash received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment or disposition of deferred consideration) by or on behalf of
such Borrower or such Subsidiary in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and expenses
related thereto and required to be paid by such Borrower or such Subsidiary in
connection with such issuance or incurrence, (ii) taxes paid or payable to any
taxing authorities by such Borrower or such Subsidiary in connection with such
issuance or incurrence, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
or payable to a Person that is not an Affiliate of any Borrower or any of its
Subsidiaries, and are properly attributable to such transaction

“Net Recovery Percentage” means, as of any date of determination, the percentage
of the book value of Borrowers’ Inventory that is estimated to be recoverable in
an orderly liquidation of such Inventory net of all associated costs and
expenses of such liquidation, such percentage to be determined as to each
category of Inventory and to be as specified in the most recent appraisal
received by Agent from an appraisal company selected by Agent.

“Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of
the Agreement.

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

 

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“Notification Event” means (a) the occurrence of a “reportable event” described
in Section 4043 of ERISA for which the 30-day notice requirement has not been
waived by applicable regulations issued by the PBGC, (b) the withdrawal of any
Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination,
under Section 4041 of ERISA, if the plan assets are not sufficient to pay all
plan liabilities, (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC or any
Pension Plan or Multiemployer Plan administrator, (e) any other event or
condition that would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
(f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any
Employee Benefit Plan or the existence of any facts or circumstances that could
reasonably be expected to result in the imposition of a Lien, (g) the partial or
complete withdrawal of any Loan Party or ERISA Affiliate from a Multiemployer
Plan (other than any withdrawal that would not constitute an Event of Default
under Section 8.12), (h) any event or condition that results in the
reorganization or insolvency of a Multiemployer Plan under Sections of ERISA,
(i) any event or condition that results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings
to terminate or to appoint a trustee to administer a Multiemployer Plan under
ERISA, (j) any Pension Plan being in “at risk status” within the meaning of IRC
Section 430(i), (k) any Multiemployer Plan being in “endangered status” or
“critical status” within the meaning of IRC Section 432(b) or the determination
that any Multiemployer Plan is or is expected to be insolvent or in
reorganization within the meaning of Title IV of ERISA, (l) with respect to any
Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial
cessation of operations within the meaning of ERISA Section 4062(e), (m) an
“accumulated funding deficiency” within the meaning of the IRC or ERISA
(including Section 412 of the IRC or Section 302 of ERISA) or the failure of any
Pension Plan or Multiemployer Plan to meet the minimum funding standards within
the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302
of ERISA), in each case, whether or not waived, (n) the filing of an application
for a waiver of the minimum funding standards within the meaning of the IRC or
ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to
any Pension Plan or Multiemployer Plan, (o) the failure to make by its due date
a required payment or contribution with respect to any Pension Plan or
Multiemployer Plan, (p) any event that results in or could reasonably be
expected to result in a liability by a Loan Party pursuant to Title I of ERISA
or the excise tax provisions of the IRC relating to Employee Benefit Plans or
any event that results in or could reasonably be expected to result in a
liability to any Loan Party or ERISA Affiliate pursuant to Title IV of ERISA or
Section 401(a)(29) of the IRC, or (q) any of the foregoing is reasonably likely
to occur in the following 30 days.

“Obligations” means (a) all loans (including the Revolving Loans (inclusive of
Extraordinary Advances and Swing Loans)), debts, principal, interest (including
any interest that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), reimbursement or indemnification obligations with
respect to Letters of Credit (irrespective of whether contingent), premiums,
liabilities (including all amounts charged to the Loan Account pursuant to the
Agreement), obligations (including indemnification obligations), fees (including
the fees provided for in the Fee Letter), Lender Group Expenses (including any
fees or expenses that accrue after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), guaranties, and all covenants and duties of any
other kind and description owing by any Loan Party arising out of, under,
pursuant to, in connection with, or evidenced by the Agreement or any of the
other Loan Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that Borrowers are required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents, and

 

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(b) all Bank Product Obligations. Without limiting the generality of the
foregoing, the Obligations of Borrowers under the Loan Documents include the
obligation to pay (i) the principal of the Revolving Loans, (ii) interest
accrued on the Revolving Loans, (iii) the amount necessary to reimburse Issuing
Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of
Credit commissions, fees (including fronting fees) and charges, (v) Lender Group
Expenses, (vi) fees payable under the Agreement or any of the other Loan
Documents, and (vii) indemnities and other amounts payable by any Loan Party
under any Loan Document. Any reference in the Agreement or in the Loan Documents
to the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Overadvance” means, as of any date of determination, that the Revolver Usage is
greater than any of the limitations set forth in Section 2.1 or Section 2.11.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Guaranty
and Security Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.13 of the
Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV or Section 302 of ERISA or
Sections 412 or 430 of the IRC sponsored, maintained, or contributed to by any
Loan Party or ERISA Affiliate or to which any Loan Party or ERISA Affiliate has
any liability, contingent or otherwise.

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the
Agreement.

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
any Borrower or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clauses (f) or (g) of the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of any Borrower or its Subsidiaries as a result or such
Acquisition other than Permitted Liens,

(c) Borrowers have provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and

 

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reasonably agreed upon by Borrowers and Agent) created by adding the historical
combined financial statements of Borrowers (including the combined financial
statements of any other Person or assets that were the subject of a prior
Permitted Acquisition during the relevant period) to the historical consolidated
financial statements of the Person to be acquired (or the historical financial
statements related to the assets to be acquired) pursuant to the proposed
Acquisition, Borrowers and their Subsidiaries (i) would have been in compliance
with the financial covenants in Section 7 of the Agreement for the trailing 12
month period ended immediately prior to the proposed date of consummation of
such proposed Acquisition, and (ii) are projected to be in compliance with the
financial covenants in Section 7 of the Agreement for the trailing 12 month
period ended one year after the proposed date of consummation of such proposed
Acquisition,

(d) Borrowers have provided Agent with its due diligence package relative to the
proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person or assets to be acquired, all
prepared on a basis consistent with such Person’s (or assets’) historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 1 year period following the date of
the proposed Acquisition, on a month by month basis), in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
Agent,

(e) Borrowers shall have (i) Excess Availability plus Qualified Cash in an
amount equal to or greater than $50,000,000, and (ii) Excess Availability of at
least $35,000,000, in each case immediately after giving effect to the
consummation of the proposed Acquisition,

(f) the assets being acquired or the Person whose Equity Interests are being
acquired did not have negative EBITDA during the 12 consecutive month period
most recently concluded prior to the date of the proposed Acquisition,

(g) Borrowers have provided Agent with written notice of the proposed
Acquisition at least 15 Business Days prior to the anticipated closing date of
the proposed Acquisition and, not later than 5 Business Days prior to the
anticipated closing date of the proposed Acquisition, copies of the acquisition
agreement and other material documents relative to the proposed Acquisition,
which agreement and documents must be reasonably acceptable to Agent,

(h) the assets being acquired (other than a de minimis amount of assets in
relation to Borrowers’ and their Subsidiaries’ total assets), or the Person
whose Equity Interests are being acquired, are useful in or engaged in, as
applicable, the business of Borrowers and their Subsidiaries or a business
reasonably related thereto,

(i) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
the Person whose Equity Interests are being acquired is organized in a
jurisdiction located within the United States,

(j) the subject assets or Equity Interests, as applicable, are being acquired
directly by a Borrower or one of its Subsidiaries that is a Loan Party, and, in
connection therewith, the applicable Loan Party shall have complied with
Section 5.11 or 5.12 of the Agreement, as applicable, and, in the case of an
acquisition of Equity Interests, the applicable Loan Party shall have
demonstrated to Agent that the new Loan Parties have received consideration
sufficient to make the joinder documents binding and enforceable against such
new Loan Parties, and

(k) the purchase consideration payable in respect of all Permitted Acquisitions
(including deferred payment obligations) shall not exceed $15,000,000 in the
aggregate; provided, that the purchase consideration payable in respect of any
single Acquisition or series of related Acquisitions shall not exceed
$15,000,000 in the aggregate; and

 

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(l) such Acquisition is not consummated prior to the first anniversary of the
Closing Date.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.

“Permitted Dispositions” means:

(a) the sale of Tech for Less LLC (or a sale of all or substantially all of the
assets of Tech for Less LLC),

(b) sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, or obsolete or no longer used or useful in the ordinary course of
business and leases or subleases of Real Property not useful in the conduct of
the business of Borrowers and their Subsidiaries,

(c) sales of Inventory to buyers in the ordinary course of business,

(d) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(e) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business,

(f) the granting of Permitted Liens,

(g) the sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof,

(h) any involuntary loss, damage or destruction of property,

(i) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(j) the leasing or subleasing of assets of any Borrower or its Subsidiaries in
the ordinary course of business,

(k) the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of Administrative Borrower,

(l) (i) the lapse of registered patents, trademarks, copyrights and other
intellectual property of any Borrower or any of its Subsidiaries to the extent
not economically desirable in the conduct of its business or (ii) the
abandonment of patents, trademarks, copyrights, or other intellectual property
rights in the ordinary course of business so long as (in each case under clauses
(i) and (ii)), (A) with respect to copyrights, such copyrights are not material
revenue generating copyrights, and (B) such lapse is not materially adverse to
the interests of the Lender Group,

(m) the making of Restricted Payments that are expressly permitted to be made
pursuant to the Agreement,

 

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(n) the making of Permitted Investments,

(o) so long as no Event of Default has occurred and is continuing or would
immediately result therefrom, transfers of assets (i) from any Borrower or any
of its Subsidiaries to a Loan Party, and (ii) from any Subsidiary of any
Borrower that is not a Loan Party to any other Subsidiary of any Borrower,

(p) dispositions of assets acquired by Borrowers and their Subsidiaries pursuant
to a Permitted Acquisition consummated within 12 months of the date of the
proposed disposition so long as (i) the consideration received for the assets to
be so disposed is at least equal to the fair market value of such assets,
(ii) the assets to be so disposed are not necessary or economically desirable in
connection with the business of Borrowers and their Subsidiaries, and (iii) the
assets to be so disposed are readily identifiable as assets acquired pursuant to
the subject Permitted Acquisition,

(q) dispositions by @Ventures of their respective Investments,

(r) the sale of @Ventures (or a sale of all or substantially all of the assets
of @Ventures),

(s) dispositions by a Subsidiary of a Borrower that is not a Loan Party of
Accounts that are not Eligible Domestic Accounts or Eligible Foreign Accounts
and with respect to which the Account Debtor is not a resident or citizen of or
otherwise located in the United States, provided that (i) at the time of any
such disposition, no Default or Event of Default shall exist or would result
from such disposition, (ii) such disposition shall be made on a basis that is a
non-recourse to any Loan Party, and (iii) the purchase price for such property
disposed of shall be paid to such Subsidiary solely in cash,

(t) the sale of the facility located at 51 Ubi Avenue 3, Singapore 408858 so
long as the Net Cash Proceeds from the sale of such facility are at least 85% of
the net value of such facility as set forth in the business plan provided to
Agent prior to the Closing Date, and

(u) sales or dispositions of assets (other than Accounts, Inventory, Equity
Interests of Subsidiaries of any Borrower) not otherwise permitted in clauses
(a) through (o) above so long as made at fair market value and the aggregate
fair market value of all assets disposed of in fiscal year (including the
proposed disposition) would not exceed $500,000.

“Permitted Indebtedness” means:

(a) Indebtedness evidenced by the Agreement or the other Loan Documents,

(b) Indebtedness set forth on Schedule 4.14 to the Agreement and any Refinancing
Indebtedness in respect of such Indebtedness,

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

(d) endorsement of instruments or other payment items for deposit,

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, purchase orders, completion guarantee and similar
obligations; (ii) unsecured guarantees arising with respect to customary
indemnification obligations to purchasers in connection with Permitted
Dispositions;

 

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and (iii) unsecured guarantees with respect to Indebtedness of any Borrower or
one of its Subsidiaries, to the extent that the Person that is obligated under
such guaranty could have incurred such underlying Indebtedness,

(f) unsecured Indebtedness of any Borrower that is incurred on the date of the
consummation of a Permitted Acquisition solely for the purpose of consummating
such Permitted Acquisition so long as (i) no Event of Default has occurred and
is continuing or would result therefrom, (ii) such unsecured Indebtedness is not
incurred for working capital purposes, (iii) such unsecured Indebtedness does
not mature prior to the date that is 12 months after the Maturity Date,
(iv) such unsecured Indebtedness does not amortize until 12 months after the
Maturity Date, (v) such unsecured Indebtedness does not provide for the payment
of interest thereon in cash or Cash Equivalents prior to the date that is 12
months after the Maturity Date, and (vi) such Indebtedness is subordinated in
right of payment to the Obligations on terms and conditions reasonably
satisfactory to Agent,

(g) Acquired Indebtedness in an amount not to exceed $250,000 outstanding at any
one time,

(h) Indebtedness incurred in the ordinary course of business under performance,
surety, statutory, or appeal bonds,

(i) Indebtedness owed to any Person providing property, casualty, liability, or
other insurance to any Borrower or any of its Subsidiaries, so long as the
amount of such Indebtedness is not in excess of the amount of the unpaid cost
of, and shall be incurred only to defer the cost of, such insurance for the year
in which such Indebtedness is incurred and such Indebtedness is outstanding only
during such year,

(j) the incurrence by any Borrower or its Subsidiaries of Indebtedness under
Hedge Agreements that are incurred for the bona fide purpose of hedging the
interest rate, commodity, or foreign currency risks associated with Borrowers’
and their Subsidiaries’ operations and not for speculative purposes,

(k) Indebtedness incurred in the ordinary course of business in respect of
credit cards, credit card processing services, debit cards, stored value cards,
commercial cards (including so-called “purchase cards”, “procurement cards” or
“p-cards”), or Cash Management Services,

(l) unsecured Indebtedness of any Borrower owing to former employees, officers,
or directors (or any spouses, ex-spouses, or estates of any of the foregoing)
incurred in connection with the repurchase by such Borrower of the Equity
Interests of Administrative Borrower that has been issued to such Persons, so
long as (i) no Default or Event of Default has occurred and is continuing or
would result from the incurrence of such Indebtedness, (ii) the aggregate amount
of all such Indebtedness outstanding at any one time does not exceed $250,000,
and (iii) such Indebtedness is subordinated to the Obligations on terms and
conditions reasonably acceptable to Agent,

(m) unsecured Indebtedness owing to sellers of assets or Equity Interests to a
Loan Party that is incurred by the applicable Loan Party in connection with the
consummation of one or more Permitted Acquisitions so long as (i) the aggregate
principal amount for all such unsecured Indebtedness does not exceed $250,000 at
any one time outstanding, (ii) is subordinated to the Obligations on terms and
conditions reasonably acceptable to Agent, and (iii) is otherwise on terms and
conditions (including all economic terms and the absence of covenants)
reasonably acceptable to Agent,

 

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(n) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price, non-compete, or similar obligation of any Loan
Party incurred in connection with the consummation of one or more Permitted
Acquisitions,

(o) Indebtedness composing Permitted Investments,

(p) unsecured Indebtedness incurred in respect of netting services, overdraft
protection, and other like services, in each case, incurred in the ordinary
course of business,

(q) unsecured Indebtedness of any Borrower or its Subsidiaries in respect of
Earn-Outs owing to sellers of assets or Equity Interests to such Borrower or its
Subsidiaries that is incurred in connection with the consummation of one or more
Permitted Acquisitions so long as such unsecured Indebtedness is on terms and
conditions reasonably acceptable to Agent,

(r) Indebtedness in an aggregate outstanding principal amount not to exceed
$250,000 at any time outstanding for all Subsidiaries of each Borrower that are
CFCs; provided, that such Indebtedness is unsecured and is not directly or
indirectly recourse to any of the Loan Parties or of their respective assets,

(s) accrual of interest, accretion or amortization of original issue discount,
or the payment of interest in kind, in each case, on Indebtedness that otherwise
constitutes Permitted Indebtedness,

(t) Subordinated Indebtedness, the aggregate outstanding amount of which does
not exceed $250,000, and

(u) any other unsecured Indebtedness incurred by any Borrower or any of its
Subsidiaries in an aggregate outstanding amount not to exceed $250,000 at any
one time.

“Permitted Intercompany Advances” means loans made by (a) a Loan Party to
another Loan Party, (b) a Subsidiary of a Borrower that is not a Loan Party to
another Subsidiary of a Borrower that is not a Loan Party, and (c) a Subsidiary
of a Borrower that is not a Loan Party to a Loan Party, so long as the parties
thereto are party to the Intercompany Subordination Agreement.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c) advances made in connection with purchases of goods or services in the
ordinary course of business, provided that any advances of cash from ModusLink
to the applicable contract counterparty pursuant to the Chinese Contract
Services Agreement and the Chinese Contract Manufacturing Services Agreements
shall be subject to the conditions set forth in Section 6.10(e) or 6.10(f), as
applicable, of the Agreement,

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

 

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(e) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-1 to the Agreement,

(f) guarantees permitted under the definition of Permitted Indebtedness,

(g) Permitted Intercompany Advances,

(h) Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
outside the ordinary course of business) or as security for any such
Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,

(j) (i) non-cash loans and advances to employees, officers, and directors of a
Borrower or any of its Subsidiaries for the purpose of purchasing Equity
Interests in Administrative Borrower so long as the proceeds of such loans are
used in their entirety to purchase such Equity Interests in Administrative
Borrower, and (ii) loans and advances to employees and officers of a Borrower or
any of its Subsidiaries in the ordinary course of business for any other
business purpose and in an aggregate amount not to exceed $100,000 at any one
time,

(k) Permitted Acquisitions,

(l) Investments in the form of capital contributions and the acquisition of
Equity Interests made by any Loan Party in any other Loan Party (other than
capital contributions to or the acquisition of Equity Interests of
Administrative Borrower),

(m) Investments resulting from entering into (i) Bank Product Agreements, or
(ii) agreements relative to Indebtedness that is permitted under clause (j) of
the definition of Permitted Indebtedness,

(n) equity Investments by any Loan Party in any Subsidiary of such Loan Party
which is required by law to maintain a minimum net capital requirement or as may
be otherwise required by applicable law,

(o) Investments held by a Person acquired in a Permitted Acquisition to the
extent that such Investments were not made in contemplation of or in connection
with such Permitted Acquisition and were in existence on the date of such
Permitted Acquisition, and

(p) so long as no Default or Event of Default has occurred and is continuing or
would immediately result therefrom, Investments by @Ventures made after the
Closing Date in existing Subsidiaries and Portfolio Companies or their
successors in an amount not to exceed $3,000,000 in the aggregate.

“Permitted Liens” means

(a) Liens granted to, or for the benefit of, Agent to secure the Obligations,

 

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(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Agent’s Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests,

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 8.3
of the Agreement,

(d) Liens set forth on Schedule P-2 to the Agreement; provided, that to qualify
as a Permitted Lien, any such Lien described on Schedule P-2 to the Agreement
shall only secure the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof,

(e) the interests of lessors under operating leases and non-exclusive licensors
under license agreements,

(f) purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as (i) such Lien attaches only to the asset purchased or acquired
and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that
was incurred to acquire the asset purchased or acquired or any Refinancing
Indebtedness in respect thereof,

(g) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests,

(h) Liens on amounts deposited to secure any Borrower’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance,

(i) Liens on amounts deposited to secure any Borrower’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,

(j) Liens on amounts deposited to secure any Borrower’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof,

(l) non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

(m) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of permitted Refinancing Indebtedness and
so long as the replacement Liens only encumber those assets that secured the
original Indebtedness,

(n) rights of setoff or bankers’ liens upon deposits of funds in favor of banks
or other depository institutions, solely to the extent incurred in connection
with the maintenance of such Deposit Accounts in the ordinary course of
business,

 

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(o) Liens granted in the ordinary course of business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Indebtedness,

(p) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods,

(q) Liens solely on any cash earnest money deposits made by a Borrower or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
with respect to a Permitted Acquisition,

(r) Liens assumed by any Borrower or its Subsidiaries in connection with a
Permitted Acquisition that secure Acquired Indebtedness, and

(s) other Liens which do not secure Indebtedness for borrowed money or letters
of credit and as to which the aggregate amount of the obligations secured
thereby does not exceed $50,000.

“Permitted Protest” means the right of any Borrower or any of its Subsidiaries
to protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on such Borrower’s or its Subsidiaries’ books
and records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by such Borrower or its
Subsidiary, as applicable, in good faith, and (c) Agent is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred after the Closing Date and at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing all
or any part of the acquisition cost thereof, in an aggregate principal amount
outstanding at any one time not in excess of $2,500,000.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Platform” has the meaning specified therefor in Section 17.9(c) of the
Agreement.

“Portfolio Companies” means a corporation, partnership, limited liability
company, or other entity in which one of the @Ventures entities directly or
indirectly owns Equity Interests, but which are not Subsidiaries of one of the
@Ventures entities.

“Post-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.14 of the Agreement.

“Pre-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.14 of the Agreement.

“Projections” means Borrowers’ and their Subsidiaries’ forecasted (a) balance
sheets, (b) profit and loss statements, and (c) cash flow statements, all
prepared on a consolidated basis consistent with Borrowers’ and their
Subsidiaries’ historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

 

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“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make all or a portion of the
Revolving Loans, with respect to such Lender’s right to receive payments of
interest, fees, and principal with respect to the Revolving Loans, and with
respect to all other computations and other matters related to the Revolving
Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of
such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders,

(b) with respect to a Lender’s obligation to participate in the Letters of
Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and
with respect to such Lender’s right to receive payments of Letter of Credit
Fees, and with respect to all other computations and other matters related to
the Letters of Credit, the percentage obtained by dividing (i) the Revolving
Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of
all Lenders; provided, that if all of the Revolving Loans have been repaid in
full and all Commitments have been terminated, but Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined as if the
Commitments had not been terminated and based upon the Commitments as they
existed immediately prior to their termination, and

(c) [reserved]

(d) with respect to all other matters and for all other matters as to a
particular Lender (including the indemnification obligations arising under
Section 15.7 of the Agreement), the percentage obtained by dividing (i) the
Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan
Exposure of all Lenders, in any such case as the applicable percentage may be
adjusted by assignments permitted pursuant to Section 13.1; provided, that if
all of the Loans have been repaid in full, all Letters of Credit have been made
the subject of Letter of Credit Collateralization, and all Commitments have been
terminated, Pro Rata Share under this clause shall be determined as if the
Revolving Loan Exposures had not been repaid, collateralized, or terminated and
shall be based upon the Revolving Loan Exposures as they existed immediately
prior to their repayment, collateralization, or termination.

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

“Public Lender” has the meaning specified therefor in Section 17.9(c) of the
Agreement.

“Purchase Price” means, with respect to any Acquisition, an amount equal to the
aggregate consideration, whether cash, property or securities (including the
fair market value of any Equity Interests of Administrative Borrower issued in
connection with such Acquisition and including the maximum amount of Earn-Outs),
paid or delivered by a Borrower or one of its Subsidiaries in connection with
such Acquisition (whether paid at the closing thereof or payable thereafter and
whether fixed or contingent), but excluding therefrom (a) any cash of the seller
and its Affiliates used to fund any portion of such consideration and (b) any
cash or Cash Equivalents acquired in connection with such Acquisition.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrowers and their Subsidiaries that
is in Deposit Accounts or in Securities Accounts, or any combination thereof,
and which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities

 

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intermediary located within the United States provided, that for 30 days from
and after the Closing Date, in an amount not to exceed the amount of cash that
is wired by Borrowers to Agent on the Closing Date, the amount of unrestricted
cash and Cash Equivalents of Borrowers and their Subsidiaries that is in Deposit
Accounts or in Securities Accounts located in the United States at Bank of
America, N.A. or Silicon Valley Bank shall also constitute Qualified Cash (other
than any Deposit Accounts which provide cash collateral for outstanding letters
of credit issued by a bank other than Agent).

“Qualified Equity Interest” means and refers to any Equity Interests issued by
Administrative Borrower (and not by one or more of its Subsidiaries) that is not
a Disqualified Equity Interest.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Borrower or one of its Subsidiaries and the
improvements thereto.

“Real Property Collateral” means any Real Property hereafter acquired by any
Borrower or one of its Subsidiaries.

“Receivable Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate, in its Permitted Discretion and
subject to Section 2.1(c), to establish and maintain (including reserves for
rebates, discounts, warranty claims, and returns) with respect to the Eligible
Domestic Accounts, Eligible Foreign Accounts or the Maximum Revolver Amount.

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Reference Period” has the meaning set forth in the definition of EBITDA.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

 

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“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Availability” means that the sum of (a) Excess Availability, plus
(b) Qualified Cash exceeds $45,000,000.

“Required Lenders” means, at any time, Lenders having or holding more than 50%
of the aggregate Revolving Loan Exposure of all Lenders, provided, that (i) the
Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the
determination of the Required Lenders, and (ii) at any time there are 2 or more
Lenders, “Required Lenders” must include at least 2 Lenders (who are not
Affiliates of one another).

“Reserves” means, as of any date of determination, those reserves (other than
Receivable Reserves, Bank Product Reserves, and Inventory Reserves) that Agent
deems necessary or appropriate, in its Permitted Discretion and subject to
Section 2.1(c), to establish and maintain (including reserves with respect to
(a) sums that any Borrower or its Subsidiaries are required to pay under any
Section of the Agreement or any other Loan Document (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay, and (b) amounts owing by any
Borrower or its Subsidiaries to any Person to the extent secured by a Lien on,
or trust over, any of the Collateral (other than a Permitted Lien), which Lien
or trust, in the Permitted Discretion of Agent likely would have a priority
superior to the Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral) with respect to the
Borrowing Base or the Maximum Revolver Amount.

“Restatement” means the amendment of the consolidated financial statements for
the fiscal years ended July 31, 2009, July 31, 2010 and July 31, 2011, the
unaudited financial statements for the quarters ended October 31, 2011 and
January 31, 2012 and certain selected financial data for the years ended
July 31, 2007 and July 31, 2008, as a result of the matters disclosed in
ModusLink Global’s press release dated June 11, 2012.

“Restricted Payment” means to (a) declare or pay any dividend or make any other
payment or distribution, directly or indirectly, on account of Equity Interests
issued by Administrative Borrower (including any payment in connection with any
merger or consolidation involving Administrative Borrower) or to the direct or
indirect holders of Equity Interests issued by Administrative Borrower in their
capacity as such (other than dividends or distributions payable in Qualified
Equity Interests issued by Administrative Borrower, or (b) purchase, redeem,
make any sinking fund or similar payment, or otherwise acquire or retire for
value (including in connection with any merger or

 

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consolidation involving Administrative Borrower) any Equity Interests issued by
Administrative Borrower, (c) make any payment to retire, or to obtain the
surrender of, any outstanding warrants, options, or other rights to acquire
Equity Interests of Administrative Borrower now or hereafter outstanding, and
(d) make, or cause or suffer to permit any Borrower or any of its Subsidiaries
to make, any payment or prepayment of principal of, premium, if any, or interest
on, or redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Swing Loans and Protective
Advances), plus (b) the amount of the Letter of Credit Usage.

“Revolving Lender” means a Lender that has a Commitment or that has an
outstanding Revolving Loan.

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Commitments, the
amount of such Lender’s Commitment, and (b) after the termination of the
Commitments, the aggregate outstanding principal amount of the Revolving Loans
of such Lender.

“Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

“Securities Account” means a securities account (as that term is defined in the
Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Solvent” means, with respect to any Person as of any date of determination,
that (a) at fair valuations, the sum of such Person’s debts (including
contingent liabilities) is less than all of such Person’s assets, (b) such
Person is not engaged or about to engage in a business or transaction for which
the remaining assets of such Person are unreasonably small in relation to the
business or transaction or for which the property remaining with such Person is
an unreasonably small capital, and (c) such Person has

 

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not incurred and does not intend to incur, or reasonably believe that it will
incur, debts beyond its ability to pay such debts as they become due (whether at
maturity or otherwise), and (d) such Person is “solvent” or not “insolvent”, as
applicable within the meaning given those terms and similar terms under
applicable laws relating to fraudulent transfers and conveyances. For purposes
of this definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standard No. 5).

“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or
foreign law or letter of credit practices applicable in the city in which
Issuing Bank issued the applicable Letter of Credit or, for its branch or
correspondent, such laws and practices applicable in the city in which it has
advised, confirmed or negotiated such Letter of Credit, as the case may be, in
each case, (a) which letter of credit practices are of banks that regularly
issue letters of credit in the particular city, and (b) which laws or letter of
credit practices are required or permitted under ISP or UCP, as chosen in the
applicable Letter of Credit.

“Subordinated Indebtedness” means any unsecured Indebtedness of any Borrower or
its Subsidiaries incurred from time to time that is subordinated in right of
payment to the Obligations and (a) that is only guaranteed by the Guarantors,
(b) that is not subject to scheduled amortization, redemption, sinking fund or
similar payment and does not have a final maturity, in each case, on or before
the date that is six months after the Maturity Date, (c) that does not include
any financial covenants or any covenant or agreement that is more restrictive or
onerous on any Loan Party in any material respect than any comparable covenant
in the Agreement and is otherwise on terms and conditions reasonably acceptable
to Agent, (d) shall be limited to cross-payment default and cross-acceleration
to designated “senior debt” (including the Obligations”), and (e) the terms and
conditions of the subordination are reasonably acceptable to Agent.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

“Supermajority Lenders” means, at any time, Lenders having or holding more than
66 2/3% of the aggregate Revolving Loan Exposure of all Lenders, provided, that
(i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in
the determination of the Required Lenders, and (ii) at any time there are 2 or
more Lenders, “Supermajority Lenders” must include at least 2 Lenders (who are
not Affiliates of one another).

“Swing Lender” means Wells Fargo or any other Lender that, at the request of
Borrowers and with the consent of Agent agrees, in such Lender’s sole
discretion, to become the Swing Lender under Section 2.3(b) of the Agreement.

“Swing Loan” has the meaning specified therefor in Section 2.3(b) of the
Agreement.

“Swing Loan Exposure” means, as of any date of determination with respect to any
Lender, such Lender’s Pro Rata Share of the Swing Loans on such date.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

 

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“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Trademark Security Agreement” has the meaning specified therefor in the
Guaranty and Security Agreement.

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any subsequent revision thereof adopted by the
International Chamber of Commerce on the date such Letter of Credit is issued.

“United States” means the United States of America.

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the
Agreement.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

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

 

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Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided
for in the Agreement is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:

(a) the Closing Date shall occur on or before October 31, 2012;

(b) Agent shall have received a letter duly executed by each Loan Party
authorizing Agent to file appropriate financing statements in such office or
offices as may be necessary or, in the opinion of Agent, desirable to perfect
the security interests to be created by the Loan Documents;

(c) Agent shall have received evidence that appropriate financing statements
have been duly filed in such office or offices as may be necessary or, in the
opinion of Agent, desirable to perfect the Agent’s Liens in and to the
Collateral, and Agent shall have received searches reflecting the filing of all
such financing statements;

(d) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed and delivered, and each such
document shall be in full force and effect:

(i) the Control Agreements,

(ii) the Controlled Account Agreements (as defined in the Guaranty and Security
Agreement),

(iii) the Fee Letter,

(iv) the Flow of Funds Agreement,

(v) the Guaranty and Security Agreement,

(vi) the Intercompany Subordination Agreement,

(vii) the Perfection Certificates,

(viii) the Trademark Security Agreement, and

(ix) a letter, in form and substance satisfactory to Agent, from Bank of
America, N.A., in its capacity as administrative agent under the Existing Credit
Facility (“Existing Agent”) to Agent respecting the amount necessary to repay in
full all of the obligations of the Borrowers and their Subsidiaries owing under
the Existing Credit Facility and obtain a release of all of the Liens existing
in favor of Existing Agent in and to the assets of the Borrowers and their
Subsidiaries, together with termination statements and other documentation
evidencing the termination by Existing Agent of its Liens in and to the
properties and assets of the Borrowers and their Subsidiaries;

(e) Agent shall have received a certificate from the Secretary of each Loan
Party (i) attesting to the resolutions of such Loan Party’s board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which it is a party, (ii) authorizing specific officers of such Loan Party to
execute the same, and (iii) attesting to the incumbency and signatures of such
specific officers of such Loan Party;

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(f) Agent shall have received copies of each Loan Party’s Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Loan Party;

(g) Agent shall have received a certificate of status with respect to each Loan
Party, dated within 10 days of the Closing Date, such certificate to be issued
by the appropriate officer of the jurisdiction of organization of such Loan
Party, which certificate shall indicate that such Loan Party is in good standing
in such jurisdiction;

(h) Agent shall have received certificates of status with respect to each Loan
Party, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Loan Party) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Effect, which
certificates shall indicate that such Loan Party is in good standing in such
jurisdictions;

(i) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 5.6 of the Agreement, the form
and substance of which shall be satisfactory to Agent;

(j) Agent shall have received Collateral Access Agreements with respect to the
following locations:

(i) 7955 Zionsville Road, Indianapolis, IN 46268,

(ii) 2000 Midway Lane, Smyrna, TN 37167

(iii) 11010 N.W. 92 Terrace, Miami, FL 33178,

(iv) 2111 Eastridge Avenue, Riverside, CA,

(v) 151 East 3450 North, Spanish Fork, UT

(vi) 2000 S. Liberty Drive, Bloomington, IN

(vii) 1331 / 1425 South Curry Pike, Bloomington, IN,

(viii) 501 Innovation Ave., Suite 100, Morrisville, NC 27560, and

(ix) 1601 Trapelo Road, Suite 170, Waltham, MA 02451;

(k) Agent shall have received an opinion of the Loan Parties’ counsel in form
and substance satisfactory to Agent;

(l) Borrowers shall have the Required Availability after giving effect to the
initial extensions of credit under the Agreement and the payment of all fees and
expenses required to be paid by Borrowers on the Closing Date under the
Agreement or the other Loan Documents;

(m) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of each Borrower’s and
its Subsidiaries’ books and records and

 

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verification of each Borrower’s representations and warranties to Lender Group,
(ii) an inspection of each of the locations where each Borrower’s and its
Subsidiaries’ Inventory is located, and (iii) a review of each Borrower’s and
its Subsidiaries’ material agreements, in each case, the results of which shall
be satisfactory to Agent;

(n) Agent shall have completed (i) Patriot Act searches, OFAC/PEP searches and
customary individual background checks for each Loan Party, and (ii) OFAC/PEP
searches and customary individual background searches for each Loan Party’s
senior management and key principals, the results of which shall be satisfactory
to Agent;

(o) Agent shall have received an appraisal of the Net Recovery Percentage
applicable to each Borrower’s and its Subsidiaries’ Inventory and an appraisal
of each Borrower’s and its Subsidiaries’ trademarks and Equipment, the results
of which shall be satisfactory to Agent;

(p) Agent shall have received a set of Projections of each Borrower for the 2
year period following the Closing Date (on a year by year basis, and until
October 31, 2014 on a month by month basis), in form and substance (including as
to scope and underlying assumptions) satisfactory to Agent;

(q) The Borrowers shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by the Agreement and the other Loan
Documents;

(r) Agent shall have received copies of each of the Chinese Contract Services
Agreement and the Chinese Contract Manufacturing Services Agreements, together
with a certificate of the Secretary of ModusLink Corporation certifying each
such document as being a true, correct, and complete copy thereof;

(s) Each Borrower and each of its Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by each Borrower or its Subsidiaries
of the Loan Documents or with the consummation of the transactions contemplated
thereby; and

(t) all other documents and legal matters in connection with the transactions
contemplated by the Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agent.

 

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Schedule 3.6

Conditions Subsequent

1. On or before thirty (30) days after the date hereof, the Loan Parties shall
move certain of their cash management accounts (as agreed to between the Agent
and Borrowers) to Wells Fargo Bank, National Association, and shall deliver, or
cause to be delivered, Control Agreements with respect to such new accounts as
may be requested by the Agent, which agreements shall be in form and substance
acceptable to the Agent;

2. On or before thirty (30) days after the date hereof, the Borrowers shall
deliver, or cause to be delivered, to the Agent, in form and substance
satisfactory to the Agent, duly executed Collateral Access Agreements with
respect to the following locations; provided, that, up and until thirty
(30) days after the date hereof, any Inventory located at such locations shall
be considered Eligible Inventory; provided further, however, that thirty
(30) days after the date hereof, if the Borrowers are unable to deliver these
Collateral Access Agreements, any Inventory located at such locations shall not
be considered Eligible Inventory in the sole discretion of the Agent; provided,
further, that any failure to deliver a Collateral Access Agreement shall not
constitute an Event of Default under the Credit Agreement:

 

  a. 10990, 11000 and 11010 NW 92nd Terrace, Miami, FL

 

  b. 501 Innovation Avenue, Suite 100, Morrisville, NC

 

  c. 2000 Midway Lane, Smyrna, TN

 

  d. 2111 Eastridge Avenue, Riverside, CA 92501

 

  e. 151 East 3450 North, Spanish Fork, UT

 

  f. 1331 and 1425 S. Curry Pike, Bloomington, IN

 

  g. 1601 Trapelo Road, Suite 170, Waltham, MA

3. Within two (2) Business Days of the filing of the Restatement with the SEC,
each Borrower shall make the following representations and warranties to the
Lender Group by delivering a certificate to such effect, which representations
and warranties shall supersede the representations and warranties set forth in
Section 4.8 for all purposes, including but not limited to Section 3.2(a):

All historical financial statements relating to the Loan Parties and their
Subsidiaries included in the Restatement, or that have been delivered by
Borrowers to Agent after the Restatement has been filed with the SEC, have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, the Loan Parties’ and
their Subsidiaries’ consolidated financial condition as of the date thereof and
results of operations for the period then ended. Since the date the Restatement
was filed with the SEC, no event, circumstance, or change has occurred that has
or could reasonably be expected to result in a Material Adverse Effect with
respect to the Loan Parties and their Subsidiaries.

--------------------------------------------------------------------------------

4. On or before sixty (60) days after the date hereof, the Loan Parties shall
deliver, or cause to be delivered, to the Agent, original stock or share
certificates representing 65% of the outstanding voting Equity Interests of the
following entities:

 

  a. Logistix Holdings Europe Limited

 

  b. Modus Media International Leinster Unlimited

 

  c. ModusLink Corporation (India) Private Limited

 

  d. ModusLink Solution Services Pte. Ltd.

 

  e. SalesLink Servicios S de R.L. de C.V.

 

  f. ModusLink Japan K.K.

 

  g. ModusLink Company Limited

 

  h. ModusLink Australia Pty Limited

5. The Borrowers will file the Restatement with the SEC on or before the date
required by Nasdaq on the Closing Date.

6. On or before November 30, 2012 (or such later date as Agent agrees to in its
discretion), the Borrowers shall deliver, or cause to be delivered, an amendment
to the existing Services Agreement with Genpact International, Inc. in form and
substance satisfactory to Agent.

7. On or before November 2, 2012, the Borrowers shall deliver, or cause to be
delivered, evidence of filing of UCC-1 Financing Statements for the following
entities in form and substance and in the appropriate filing office for
perfection purposes in each case acceptable to Agent:

ModusLink Global Solutions, Inc.

ModusLink Corporation

ModusLink PTS, Inc.

Tech for Less LLC

CMG Securities Corporation

CMG @Ventures Capital Corp.

@Ventures V, LLC

CMGI @Ventures IV, LLC

CMG@Ventures Securities Corp.

CMG@Ventures, Inc.

SalesLink LLC

Sol Holdings, Inc.

SalesLink Mexico Holding Corp.

Modus Media International (Ireland) Limited

Modus Media International Documentation Services (Ireland), Limited

8. On or before November 2, 2012, the Loan Parties shall deliver, or cause to be
delivered, to the Agent, original executed copies of the following promissory
notes:

 

  a. Promissory Note, dated May 27, 2010 issued by Modus Media International
(Ireland) Limited to ModusLink Corporation in the original principal amount of
$23,370,000

--------------------------------------------------------------------------------

  b. Promissory Note, dated May 5, 2010, issued by Tech for Less LLC to
ModusLink Corporation in the original principal amount of $10,000,000

 

  c. Promissory Note, dated June 28, 2012, issued by ModusLink Czech Republic
s.r.o. to ModusLink Corporation in the original principal amount of €10,000,000

 

  d. Promissory Note, dated October 31, 2012, issued by ModusLink PTS, Inc. to
ModusLink Corporation in the original principal amount of $10,000,000

 

  e. Promissory Note, dated October 31, 2012, issued by SalesLink Solutions
International Ireland Limited to ModusLink Corporation in the original principal
amount of $1,000,000

 

  f. Senior Secured Promissory Note, dated March 7, 2003, issued by Tallan
Holding, Inc. to CMGI in the original principal amount of $10,090,168.33.

--------------------------------------------------------------------------------

Schedule 5.1

Deliver to Agent (and if so requested by Agent, with copies for each Lender)
each of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

 

   

as soon as available, but in any event within 30 days (45 days in the case of a
month that is the end of one of any Borrower’s fiscal quarters) after the end of
each month during each of Borrowers’ fiscal years, provided that if the 30th day
or 45th day, as applicable, falls on a Saturday, Sunday or holiday, on the next
Business Day thereafter,

 

  

(a) an unaudited consolidated and consolidating balance sheet and income
statement and an unaudited consolidated statement of cash flow covering
Borrowers’ and their Subsidiaries’ operations during such period and compared to
the prior period and plan, together with a corresponding discussion and analysis
of results from management*,

 

(b) a Compliance Certificate along with the underlying calculations, including
the calculations to arrive at EBITDA to the extent applicable, and

 

(c) an updated 13 week cash flow forecast.

    as soon as available, but in any event within 90 days after the end of each
of Borrowers’ fiscal years, provided that if the 90th day falls on a Saturday,
Sunday or holiday, on the next Business Day thereafter,   

(d) consolidated financial statements of Borrowers and their Subsidiaries for
each such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent (it being agreed that the independent certified
public accountants of the Borrowers and their Subsidiaries as of the Closing
Date are acceptable to Agent) and certified, without any qualifications
(including any (A) “going concern” or like qualification or exception, (B)
qualification or exception as to the scope of such audit, or (C) qualification
which relates to the treatment or classification of any item and which, as a
condition to the removal of such qualification, would require an adjustment to
such item, the effect of which would be to cause any noncompliance with the
provisions of Section 7 of the Agreement), by such accountants to have been
prepared in accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, statement of cash flow, and statement of
shareholder’s equity, and, if prepared, such accountants’ letter to
management)*, and

 

(e) a Compliance Certificate along with the underlying calculations, including
the calculations to arrive at EBITDA to the extent applicable.

 

    as soon as available, but in any event within 1 day prior to the start of
each of Borrowers’ fiscal years, provided that board-approved Projections of
Borrowers and their Subsidiaries, on a consolidated basis, will be delivered no
later than 60 days after the start of each of Borrowers’ fiscal years,    (f)
copies of Borrowers’ and their Subsidiaries Projections, on a consolidated
basis, in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent (it being agreed that the form and substance (including as
to scope and underlying assumptions) of Projections delivered to Agent prior to
Closing Date are satisfactory to Agent), in its Permitted Discretion, for the
forthcoming 2 fiscal years, year by year, and for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Borrowers as being
such officer’s good faith estimate of the financial performance of Borrowers
during the period covered thereby.

--------------------------------------------------------------------------------

if and when filed by any Borrower,   

(g) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports*,

 

(h) any other filings made by such Borrower with the SEC*, and

 

(i) any other information that is provided by such Borrower to its shareholders
generally*.

 

   

promptly, but in any event within 5 days after any Borrower has knowledge of any
event or condition that constitutes a Default or an Event of Default,

 

   (j) notice of such event or condition and a statement of the curative action
that Borrowers propose to take with respect thereto.    

promptly after the commencement thereof, but in any event within 5 days after
the service of process with respect thereto on any Borrower or any of its
Subsidiaries,

 

   (k) notice of all actions, suits, or proceedings brought by or against such
Borrower or any of its Subsidiaries before any Governmental Authority which
reasonably could be expected to result in a Material Adverse Effect.     upon
the request of Agent,   

(l) any other information reasonably requested relating to the financial
condition of any Borrower or its Subsidiaries.

 

 

* Documents or notices required to be delivered pursuant to Section 5.1(a), (d),
(g), (h) or (i) (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
Administrative Borrower posts such documents, or provides a link thereto on the
Administrative Borrower’s website on the Internet at the website address
www.moduslink.com; or (ii) on which such documents are posted on the
Administrative Borrower’s behalf on an Internet or intranet website, if any, to
which each Lender and the Agent have access (whether a commercial, third-party
website or whether sponsored by the Agent).

--------------------------------------------------------------------------------

Schedule 5.2

Provide Agent (and if so requested by Agent, with copies for each Lender) with
each of the documents set forth below at the following times in form
satisfactory to Agent:

 

    Monthly (no later than the 15th day of each month), provided that each of
the documents set forth herein (other than the reconciliation to each Borrower’s
general ledger accounts set forth in subsection (d)) shall be delivered weekly
if (x) on the last day of any month the Borrowers and their Subsidiaries
(1) Excess Availability is less than $25,000,000 or (2) Excess Availability plus
Qualified Cash is less than $40,000,000, or (y) at any other time the Borrowers
and their Subsidiaries (1) Excess Availability is less than $25,000,000 or
(2) Excess Availability plus Qualified Cash is less than $35,000,000   

(a) an executed Borrowing Base Certificate,

 

(b) a detailed aging, by total, of each Borrower’s Accounts, together with a
reconciliation and supporting documentation for any reconciling items noted
(delivered electronically in an acceptable format, if such Borrower has
implemented electronic reporting),

 

(c) a detailed calculation of those Accounts that are not eligible for the
Borrowing Base, if such Borrower has not implemented electronic reporting,

 

(d) a detailed Inventory system/perpetual report specifying the cost of each
Loan Party’s Inventory, by category, with additional detail showing additions to
and deletions therefrom, together with a reconciliation to each Borrower’s
general ledger accounts (delivered electronically in an acceptable format, if
such Borrower has implemented electronic reporting),

 

(e) a detailed calculation of Inventory categories that are not eligible for the
Borrowing Base, if such Borrower has not implemented electronic reporting,

 

(f) a summary aging, by vendor, of each Loan Party’s accounts payable and any
book overdraft (delivered electronically in an acceptable format, if such
Borrower has implemented electronic reporting) and an aging, by vendor, of any
held checks,

 

(g) a detailed report regarding each Borrower’s and its Subsidiaries’ cash and
Cash Equivalents broken down by entity, including an indication of which amounts
constitute Qualified Cash, and the name and address of each bank and the account
numbers for each Deposit Account holding the cash; provided that for Deposit
Accounts without amounts that constitute Qualified Cash, only the country in
which such Deposit Account is held shall be indicated,

 

(h) monthly Account roll-forward with supporting details supplied from sales
journals, collection journals, credit registers and any other records, in a
format acceptable to Agent in its discretion (it being agreed that the format of
the documents delivered to Agent with respect to the items listed in this clause
(h) prior to Closing Date is acceptable to Agent), tied to the beginning and
ending account receivable balances of each Borrower’s general ledger,

 

(i) notice of all claims, offsets, or disputes asserted by Account Debtors with
respect to each Loan Party’s Accounts, and

 

(j) a detailed Inventory report (in the same form and substance as the Inventory
report delivered to Agent as of Closing Date) specifying which Inventory is not
subject to a buyback requirement on the part of a customer of any Loan Party.

 

--------------------------------------------------------------------------------

Monthly (no later than the 30th day of each month)   

(k) a reconciliation of Accounts, trade accounts payable, and Inventory of each
Borrower’s general ledger accounts to its monthly financial statements including
any book reserves related to each category.

 

    Quarterly   

(l) a report regarding each Borrower’s and its Subsidiaries’ accrued, but
unpaid, ad valorem taxes, and

 

(m) Perfection Certificates or a supplement to the Perfection Certificates to
the extent such Perfection Certificates need to be supplemented.

 

    Annually   

(n) a detailed list of each Loan Party’s customers, with address and contact
information.

 

    Upon request by Agent   

(o) copies of purchase orders and invoices for Inventory and Equipment acquired
by each Loan Party,

 

(p) copies of invoices together with corresponding shipping and delivery
documents, and credit memos together with corresponding supporting
documentation, with respect to invoices and credit memos in excess of an amount
determined in the sole discretion of Agent, from time to time, and

 

(q) such other reports as to the Collateral or the financial condition of each
Borrower and its Subsidiaries, as Agent may reasonably request, and

 

(r) copies of all reports and notices generated by any Loan Party or sent by any
Loan Party to their customers, in each case with respect to “aged inventory” or
“excess inventory” (as defined in the applicable customer contract).

 

 

-2-

--------------------------------------------------------------------------------

Schedule A-1

Agent’s Account

An account at a bank designated by Agent from time to time as the account into
which each Borrower shall make all payments to Agent for the benefit of the
Lender Group and into which the Lender Group shall make all payments to Agent
under this Agreement and the other Loan Documents; unless and until Agent
notifies the Borrowers and the Lender Group to the contrary, Agent’s Account
shall be that certain deposit account bearing account number ##########,
reference ModusLink Global Solutions, Inc., and maintained by Agent with Wells
Fargo Bank, N.A., 420 Montgomery Street, San Francisco, CA, ABA #121-000-248.

--------------------------------------------------------------------------------

SCHEDULE A-2

Authorized Persons

Chief Financial Officer

General Counsel

Treasurer

Corporate Controller

--------------------------------------------------------------------------------

Schedule C-1

Commitments

 

Lender        Commitment                Applicable Percentage               

Wells Fargo Bank, National Association

 

   $50,000,000        

 

   100.00%        

 

     

TOTAL

 

   $50,000,000.00        

 

   100.00%        

 

--------------------------------------------------------------------------------

SCHEDULE D-1

Designated Account

To be set up with Wells Fargo Bank, National Association

--------------------------------------------------------------------------------

SCHEDULE E-1

Eligible Inventory Locations

Name of Landlord and Address of Leased Premises

Columbia Florida 92nd Industrial, LLC

10990, 11000 and 11010 N.W. 92 Terrace

Miami, FL 33178

Duke Realty Limited Partnership

501 Innovation Avenue

Suite 100

Morrisville, NC 27560

Western Liberty, LLC

2000 S. Liberty Drive

Bloomington, IN

Sycamore Business Park LLC

2111 East Ridge Ave.

Riverside, CA

SouthPark Warehouse III Acquisition Corporation

2000 Midway Lane

Smyrna, TN 37167

ProLogis NA2 U.S. LLC

7955 Zionsville Road

Indianapolis, IN

Provo Craft & Novelty, Inc.

151 East 3450 North

Spanish Fork, UT

1331 and 1425 S. Curry Pike

Bloomington, IN

--------------------------------------------------------------------------------

SCHEDULE P-1

Permitted Investments

 

1. Investments by @Ventures in Portfolio Companies as set forth on Schedule 9(a)
in that certain Perfection Certificate dated as of October 31, 2012.

 

2. See Schedules 4.1(b) and 4.1(c).

 

3. Investments by ModusLink Global Solutions, Inc. and ModusLink Corporation in
entities as set forth on Schedule 9(a) in that certain Perfection Certificate
dated as of October 31, 2012.

 

4. Tallan, Inc. Common Stock Purchase Warrant No. 1, dated March 7, 2003, issued
to ModusLink Global Solutions, Inc. (formerly CMGI, Inc.), and Tallan Holding,
Inc. $10,090,168.33 Senior Secured Promissory Note, dated March 7, 2003
to ModusLink Global Solutions, Inc. (formerly CMGI, Inc.), as amended by
Amendment No. 1 to Senior Secured Promissory Note dated April 15, 2008.

--------------------------------------------------------------------------------

SCHEDULE P-2

Permitted Liens

 

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

ModusLink Corporation

1.   UCC-1 Financing Statement   ModusLink Corporation   General Electric
Capital Corp   DE SOS   11/1/06   63809357   Equipment.       a.   UCC Amendment
Statement   —     —     —     8/23/11   13268052   Continuation       b.   UCC
Amendment Statement   —     —     —     8/23/11   13268060   Address change of
Secured Party 2.   UCC-1 Financing Statement   ModusLink Corporation   Crown
Credit Company   DE SOS   8/7/07   72994258   All of Lessee’s right, title and
interest in all equipment leased.       a.   UCC Amendment Statement   —     —  
  —     7/9/12   22621110   Continuation 3.   UCC-1 Financing Statement  
ModusLink Corporation   Saxon Business Systems, Inc.   DE SOS   2/29/08  
80747087   Filed for informational purposes (Lease).

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

4.  

UCC-1

Financing

Statement

  ModusLink Corporation   Wells Fargo Bank, N.A.   DE SOS   3/20/08   80987154  
Equipment. 5.  

UCC-1

Financing

Statement

  ModusLink Corporation   Crown Credit Company   DE SOS   5/20/08   81735479  
Equipment.       a.  

UCC

Amendment

Statement

  —     Crown Credit Company   —     12/01/09   93820682   Collateral
restatement (equipment) 6.  

UCC-1

Financing

Statement

  ModusLink Corporation   Marlin Leasing Corp.   DE SOS   5/30/08   81846540  
Equipment. 7.  

UCC-1

Financing

Statement

  ModusLink Corporation   Crown Credit Company   DE SOS   6/16/08   82051561  
Equipment. 8.  

UCC-1

Financing

Statement

  ModusLink Corporation   General Electric Capital Corp.   DE SOS   8/26/08  
82902458   Equipment. 9.  

UCC-1

Financing

Statement

  ModusLink Corporation   U.S. Bancorp   DE SOS   9/8/08   83035357   Equipment.
Filed for informational purposes only. 10.  

UCC-1

Financing

Statement

  ModusLink Corporation   Coactiv Capital Partners Inc.   DE SOS   1/7/09  
90047818   Equipment.

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

      a.   UCC Amendment Statement   —     —     —     7/27/09   92397674  
Amends the collateral description (adds collateral). 11.   UCC-1 Financing
Statement   ModusLink Corporation   CIT Technology Financing Services I LLC   DE
SOS   8/10/09   92555891   Equipment. 12.   UCC-1 Financing Statement  
ModusLink Corporation   General Electric Capital Corporation   DE SOS   10/16/09
  93338867   Equipment. 13.   UCC-1 Financing Statement   ModusLink Corporation
  Raymond Leasing Corporation   DE SOS   12/07/09   93904254   Equipment. 14.  
UCC-1 Financing Statement   ModusLink Corporation   Raymond Leasing Corporation
  DE SOS   12/07/09   93904262   Equipment. 15.   UCC-1 Financing Statement  
ModusLink Corporation   Raymond Leasing Corporation   DE SOS   12/07/09  
93904270   Equipment. 16.   UCC-1 Financing Statement   ModusLink Corporation  
Raymond Leasing Corporation   DE SOS   12/07/09   93910855   Equipment.

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

17.   UCC-1 Financing Statement   ModusLink Corporation   Raymond Leasing
Corporation   DE SOS   12/07/09   93911242   Equipment. 18.   UCC-1 Financing
Statement   ModusLink Corporation   Raymond Leasing Corporation   DE SOS  
1/14/10   00144042   Equipment. 19.   UCC-1 Financing Statement   ModusLink
Corporation   Raymond Leasing Corporation   DE SOS   1/14/10   00144059  
Equipment. 20.   UCC-1 Financing Statement   ModusLink Corporation   Raymond
Leasing Corporation   DE SOS   2/16/10   00507602   Equipment. 21.   UCC-1
Financing Statement   ModusLink Corporation   Packaging Corporation of America  
DE SOS   9/1/10   03060724   Consigned inventory. 22.   UCC-1 Financing
Statement   ModusLink Corporation   Raymond Leasing Corporation   DE SOS  
3/4/11   10810724   Equipment. 23.   UCC-1 Financing Statement   ModusLink
Corporation   Banc of America Leasing & Capital, LLC   DE SOS   4/12/11  
11368805   Equipment.

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

24.   UCC-1 Financing Statement   ModusLink Corporation   Raymond Leasing
Corporation   DE SOS   5/24/11   11972606   Equipment. 25.   UCC-1 Financing
Statement   ModusLink Corporation   Wells Fargo Bank, N.A.   DE SOS   7/18/11  
12758202   Equipment. 26.   UCC-1 Financing Statement   ModusLink Corporation  
General Electric Capital Corporation   DE SOS   8/19/11   13229039   Equipment.
27.   UCC-1 Financing Statement   ModusLink Corporation   Banc of America
Leasing & Capital, LLC   DE SOS   10/27/11   14144815   Equipment. 28.   UCC-1
Financing Statement   ModusLink Corporation   Wells Fargo Bank, N.A.   DE SOS  
10/31/11   14185255   Equipment. 29.   UCC-1 Financing Statement   ModusLink
Corporation   Wells Fargo Bank, N.A.   DE SOS   2/6/12   20455578   Equipment.
30.   UCC-1 Financing Statement   ModusLink Corporation   Wells Fargo Bank, N.A.
  DE SOS   3/7/12   20870859   Equipment. 31.   UCC-1 Financing Statement  
ModusLink Corporation   Wells Fargo Bank, N.A.   DE SOS   3/7/12   20870867  
Equipment.

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

32.   UCC-1 Financing Statement   ModusLink Corporation   Timepayment
Corporation   DE SOS   5/18/12   22150367   Equipment. 33.   UCC-1 Financing
Statement   ModusLink Corporation and ModusLink Global Solutions, Inc.   Micron
Technology, Inc.   DE SOS   9/4/12   23412048   All of Debtor’s right, title and
interest in all inventory and goods held by Debtor on behalf of Micron
Technology, Inc. pursuant to that certain Master Services Agreement. 34.   UCC-1
Financing Statement   ModusLink Global Solutions, Inc.   Wells Fargo Bank, N.A.
  DE SOS   9/26/11   13693218   Equipment. 35.   UCC-1 Financing Statement  
ModusLink Global Solutions, Inc.   Wells Fargo Bank, N.A.   DE SOS   4/26/12  
21629973   Equipment. 36.   UCC-1 Financing Statement   ModusLink PTS, Inc.  
Wells Fargo Bank, N.A.   DE SOS   11/1/10   03811134   Equipment. 37.   UCC-1
Financing Statement   ModusLink PTS, Inc.   Wells Fargo Bank, N.A.   DE SOS  
6/7/11   12164351   Equipment.

--------------------------------------------------------------------------------

Document

Number

 

Document Type

 

Debtor

 

Secured Party

 

Filing
Jurisdiction

 

Filing

Date

 

Filing

Number

 

Collateral

Description

38.   UCC-1 Financing Statement   ModusLink PTS, Inc.   Wells Fargo Bank, N.A.  
DE SOS   7/25/11   12855248   Equipment. 39.   UCC-1 Financing Statement  
SalesLink Corporation   NMHG Financial Services, Inc.   DE SOS   9/9/03  
32324963   Equipment       a.   UCC Amendment Statement   —     —     —    
4/8/08   81223112   Continuation 40.   UCC-1 Financing Statement   SalesLink
Corporation   Dell Financial Services, L.P.   DE SOS   5/10/04   41292905  
Continues effectiveness of a financing statement filed prior to effective dated
of revised Article 9       a.   UCC Amendment Statement   —     —     —    
2/10/09   90451499   Continuation 41.   UCC-1 Financing Statement   SalesLink
Corporation   Dell Financial Services, L.P.   DE SOS   5/10/04   41292913  
Continues effectiveness of a financing statement filed prior to effective dated
of revised Article 9       a.   UCC Amendment Statement   —     —     —    
2/10/09   90451507   Continuation

--------------------------------------------------------------------------------

1. Lien by HSBC Bank USA, National Association (“HSBC”) solely as to Deposit
Account No. [        ] in an amount not to exceed $500,000, pursuant to that
certain Pledge Agreement by and between ModusLink Global Solutions, Inc. and
HSBC, as in effect on the Closing Date, securing solely Permitted Indebtedness
set forth on item #15 on Schedule 4.14.

 

2. Lien by Bank of America, N.A. solely as to Letter of Credit #68074070 and
#68058314 in an amount not to exceed $191,300, pursuant to that certain Cash
Collateral Agreement by and among ModusLink Global Solutions, Inc., ModusLink
Corporation and Bank of America, N.A., as in effect on the Closing Date,
securing solely Permitted Indebtedness set forth on item #25 and item #26 on
Schedule 4.14.

 

3. See items #16, 17, 18, 19, 20, 21, 22, 23, 24 and 27 under Schedule 4.14.

--------------------------------------------------------------------------------

SCHEDULE 4.1(B)

Capitalization of Borrowers

 

Exact Legal Name

of Loan Party

  

Class or Type of Interest and

Par Value

  

Total Amount

Authorized

(by class or type)

  

Total Amount Issued

and Outstanding

(by class or type)

ModusLink Global Solutions, Inc.    Common Stock; par value $0.01 per share   
1,400,000,000 shares of Common Stock    43,841,342 ModusLink Global Solutions,
Inc.    Preferred Stock; par value $0.01 per share    5,000,000 shares of
Preferred Stock, 280,000 of which have been designated as set forth below   
None. ModusLink Global Solutions, Inc.    Series A Junior Participating
Preferred Stock; par value $0.01 per share    140,000 shares of Series A Junior
Participating Preferred Stock    None. ModusLink Global Solutions, Inc.   
Series B Junior Participating Preferred Stock; par value $0.01 per share   
140,000 shares of Series B Junior Participating Preferred Stock    None.
ModusLink PTS, Inc.    Common Stock; par value $0.01 per share    1,000 shares
of Common Stock    1,000 shares of Common Stock ModusLink Corporation    Common
Stock; par value $0.01 per share    3,000 shares of Common Stock    2,500 shares
of Common Stock

--------------------------------------------------------------------------------

SCHEDULE 4.1(C)

Capitalization of Borrowers’ Subsidiaries

The Administrative Borrower, either directly or indirectly, owns 100% of all
issued and outstanding shares of all Subsidiaries, except for @Ventures V, LLC,
CMGI @Ventures IV, LLC and Modus Media International Leinster Unlimited.

 

Exact Legal Name of

Subsidiary

  

Class or Type of Interest

and Par Value

  

Total Amount

Authorized

(by class or type)

  

Total Amount Issued

and Outstanding

(by class or type)

CMG Securities Corporation    Common Stock, no par value    200,000 shares of
Common Stock    100 shares of Common Stock CMG @Ventures Capital Corp.    Common
Stock, $0.01 par value    1,000 shares of Common Stock    1,000 shares of Common
Stock @Ventures V, LLC    Membership Interests; no par value    N/A    N/A CMGI
@Ventures IV, LLC    Membership Interests; no par value    N/A    N/A
CMG@Ventures Securities Corp.    Common Stock, $0.01 par value    3,000 shares
of Common Stock    3,000 shares of Common Stock CMG @Ventures, Inc.    Common
Stock, $0.01 par value    1,000 shares of Common Stock    1,000 shares of Common
Stock Sol Holdings, Inc.    Common Stock; par value $0.01 per share    1,000
shares of Common Stock    100 shares of Common Stock Modus Media International
(Ireland) Limited    Common Stock; par value $1.00 per share    1,000 shares of
Common Stock    1,000 shares of Common Stock SalesLink LLC    Membership
Interests; no par value    N/A    N/A SalesLink Mexico Holding Corp.    Common
Stock; par value $0.01 per share    1,000 shares of Common Stock    1,000 shares
of Common Stock Modus Media International Documentation Services (Ireland),
Limited    Common Stock; par value $1.00 per share    1,000 shares of Common
Stock    1,000 shares of Common Stock Tech for Less LLC    Membership Interests;
no par value    N/A    N/A ModusLink Mexico S.A. de C.V.    Ordinary Shares; par
value $1.00 MXN    50,000 Ordinary shares    50,000 Ordinary Shares Sol Services
Corporation, S.A. de C.V.    Ordinary shares; par value $1.00 MXN    50,000
Ordinary shares    50,000 Ordinary shares SalesLink Servicios S de R.L. de C.V.
   Ordinary shares; par value $1.00 MXN    2 quotas    2 quotas [additional
shares to be issued as certificates] ModusLink B.V.    Shares; par value €500   
€100,000    €20,000

--------------------------------------------------------------------------------

Exact Legal Name of

Subsidiary

  

Class or Type of Interest

and Par Value

  

Total Amount

Authorized

(by class or type)

  

Total Amount Issued

and Outstanding

(by class or type)

ModusLink Hungary Packaging Limited Liability Company (abbrv. ModusLink Hungary
Ltd.)    Total capital contribution of HUF 3,000,000    HUF 3,000,000    HUF
3,000,000 ModusLink France S.A.S.    100,000 Common    100,000 Common    100,000
Common ModusLink Czech Republic s.r.o    CZK 200,000    CZK 200,000    CZK
200,000 Logistix Holdings Europe Limited    Ordinary shares; par value €1.269738
   100,000 Ordinary shares    2 Ordinary shares Modus Media International
Leinster Unlimited    Ordinary shares; par value $1.00    10,000 Ordinary shares
  

2 Ordinary shares

 

1 Ordinary share held by Modus Media International Documentation Services
(Ireland), Limited

 

1 Ordinary share held by Tudor Nominees Limited

Modus Media International Ireland (Holdings)    Ordinary shares; Nominal Par
Value €1.26973808    12,200,000 Ordinary shares    10,188,728 Ordinary shares
ModusLink Pte. Ltd.    Ordinary shares and redeemable preference shares; par
value SGD 1.00    175,000 (115,000 Ordinary shares; 60,000 redeemable preference
shares)    100,000 Ordinary shares and 6,460 redeemable preference shares
ModusLink Solutions Services Pte. Ltd.    Ordinary shares; no par value    N/A
   SGD 200,000 Ordinary shares ModusLink Japan K.K.    Ordinary shares; no par
value    10,480 Ordinary shares authorized    6,020 Ordinary shares ModusLink
Corporation (India) Private Limited    Shares; par value Rs. 1,000    1,000,000
Authorized Capital (in Rs.); 100,000 shares    610 equity shares of Rs. 1,000
each ModusLink Australia Pty Limited    Ordinary shares; no par value    N/A   
61,716 shares ModusLink Company Limited    N/A    100 shares    100 shares

--------------------------------------------------------------------------------

SCHEDULE 4.1(D)

Outstanding Subscriptions, Warrants, Options or Calls

As of October 19, 2012, ModusLink Global Solutions, Inc. had options to purchase
2,224,971 shares of common stock of ModusLink Global Solutions, Inc. issued and
outstanding.

--------------------------------------------------------------------------------

SCHEDULE 4.6(B)

Litigation

On February 15, 2012, the staff of the Division of Enforcement for the Boston,
Massachusetts Office of the United States Securities and Exchange Commission
(“SEC”) initiated with the Company an informal inquiry, and later the formal
action In the Matter of ModusLink Global Solutions, Inc., regarding the
Company’s treatment of rebates associated with volume discounts provided by
vendors. The SEC inquiry is ongoing, and ModusLink is cooperating with requests
for information made by the staff. To date, the SEC has not asserted any formal
claims.

On June 9, 2012, the Audit Committee concluded that previously issued financial
statements from fiscal years 2009 through 2011, as well as the first two
quarters of fiscal 2012 and its unaudited selected financial data for fiscal
years 2007 and 2008, should no longer be relied upon and would need to be
restated. The Company publicly announced these determinations on June 11, 2012
(the “June 11 Announcement”).

Following the June 11, 2012 Announcement, shareholders of the Company commenced
three purported class actions in the United States District Court for the
District of Massachusetts arising from the circumstances described in the
June 11, 2012 Announcement (the “Securities Actions”), entitled, respectively:

 

  •  

Irene Collier, Individually And On Behalf Of All Others Similarly Situated v.
ModusLink Global Solutions, Inc., Joseph C. Lawler and Steven G. Crane, Case
1:12-CV-11044-DJC, filed June 12, 2012;

 

  •  

Alexander Shnerer Individually And On Behalf Of All Others Similarly Situated v.
ModusLink Global Solutions, Inc., Joseph C. Lawler and Steven G. Crane, Case
1:12-CV-11078-DJC, filed June 18, 2012; and

 

  •  

Harold Heszkel, Individually and on Behalf of All Others Similarly Situated v.
ModusLink Global Solutions, Inc., Joseph C. Lawler, and Steven G. Crane, Case
1:12-CV-11279-DJC, filed July 11, 2012.

On July 13, 2012, a fourth shareholder commenced a purported derivative action
in United States District Court for the District of Massachusetts against the
Company (as nominal defendant), and certain of its current and former directors
and officers, entitled, Samuel Montini, Derivatively On Behalf Of ModusLink
Global Solutions, Inc. v. Joseph C. Lawler, Steven G. Crane, Francis J. Jules,
Virginia G. Breen, Michael J. Mardy, Edward E. Lucente, Jeffrey J. Fenton,
Joseph M. O’Donnell, William R. McLennan, Thomas H. Johnson, and Anthony J. Bay,
Defendants, and ModusLink Global Solutions, Inc., A Delaware Corporation,
Nominal Defendant, Case 1:12-CV-11296-DJC, and on July 31, 2012, a fifth
shareholder commenced a purported derivative action in United States District
Court for the District of Massachusetts against the Company (as nominal
defendant), and certain of its current and former directors and officers,
entitled, Edward Tansey, Derivatively On Behalf Of Moduslink Global Solutions,
Inc. v. Joseph C. Lawler, Steven G. Crane, Francis J. Jules, Virginia G. Breen,
Michael J. Mardy, Edward E. Lucente,

--------------------------------------------------------------------------------

Jeffrey J. Fenton, Joseph M. O’Donnell, William R. McLennan, Thomas H. Johnson,
and Anthony J. Bay, Defendants, and ModusLink Global Solutions, Inc., A Delaware
Corporation, Nominal Defendant, Case. 1:12-CV-11399-DJC (collectively, the
“Derivative Actions”).

On October 10, 2012, a fifth shareholder, Donald Reith, served upon the
Company’s Board of Directors a demand to institute litigation and take other
purportedly necessary, but unidentified, remedial measures to redress and
prevent a recurrence of purported breaches of fiduciary duties on the part of
the Board and unspecified corporate officers allegedly arising from the same
facts and circumstances asserted in the Securities and Derivative Actions.

--------------------------------------------------------------------------------

SCHEDULE 4.10

Employee Benefits

ModusLink Global Solutions Savings & Retirement 401(k) Plan

--------------------------------------------------------------------------------

SCHEDULE 4.11

Environmental Matters

None.

--------------------------------------------------------------------------------

SCHEDULE 4.14

Permitted Indebtedness

 

1. ModusLink Pte. Ltd. has a facility with Bank of America, N.A. in Taiwan of up
to TWD 1,000,000.

 

2. Promissory Note, dated May 5, 2010, issued by Tech for Less LLC to ModusLink
Corporation in the original principal amount of $10,000,000.

 

3. Promissory Note, dated May 27, 2010 issued by Modus Media International
(Ireland) Limited to ModusLink Corporation in the original principal amount of
$23,370,000.

 

4. Promissory Note, dated June 28, 2012, issued by ModusLink Czech Republic
s.r.o. to ModsuLink B.V. in the original principal amount of €10,000,000.

 

5. Promissory Note, dated June 28, 2012, issued by ModusLink Czech Republic
s.r.o. to ModusLink Corporation in the original principal amount of €10,000,000,
provided that the principal amounts outstanding under such note at any time
shall not exceed $3,904,000, which is the principal amount outstanding on the
date hereof.

 

6. Promissory Note, dated November 25, 2011, issued by ModusLink Corporation to
ModusLink Pte. Ltd. in the original principal amount of $6,000,000.

 

7. Promissory Note, dated October 31, 2012, issued by ModusLink PTS, Inc. to
ModusLink Corporation in the original principal amount of $10,000,000.

 

8. Promissory Note, dated October 31, 2012, issued by SalesLink Solutions
International Ireland Limited to ModusLink Corporation in the original principal
amount of $695,000.

 

9. Indebtedness owed by ModusLink Kildare to ModusLink B.V. in the USD
equivalent of 5,723,000 as of September 30, 2012.

 

10. Indebtedness owed by ModusLink (Waigaoqiao) Co. Ltd. to ModusLink (Kunshan)
Co. Ltd. in the USD equivalent of 789,000 as of September 30, 2012.

 

11. Indebtedness owned by ModusLink (Waigaoqiao) Co. Ltd. to ModusLink
(Shanghai) Co. Ltd. in the USD equivalent of 1,657,000 as of September 30, 2012.

 

12. Indebtedness owed by Lieboch Limited to ModusLink Kildare in the USD
equivalent of 8,216,000 as of September 30, 2012.

 

13. Indebtedness owed by ModusLink Kildare to SalesLink Solutions International
Ireland Limited in the USD equivalent of 1,553,000 as of September 30, 2012.

--------------------------------------------------------------------------------

14. Indebtedness owed by ModusLink Kildare to Modus Media International Dublin
in the USD equivalent of 8,691,000 as of September 30, 2012.

 

15. Indebtedness pursuant to the Pledge Agreement by and between ModusLink
Global Solutions, Inc. and HSBC, as in effect on the Closing Date, in an amount
not to exceed $500,000.

 

16. Guarantee, dated June 9, 2006, by ModusLink Corporation in favor IMMORENT CR
s.r.o, a sublessor of ModusLink Czech Republic s.r.o, in an amount not to exceed
2 years rent due and payable under the sublease by and between IMMORENT CR s.r.o
and ModusLink Czech Republic s.r.o.

 

17. Guaranty, dated September 8, 2010, by ModusLink Corporation in favor of
Primax Electronics Ltd., a creditor of ModusLink Kildare, to guarantee all
obligations of ModusLink Kildare to Primax Electronics Ltd. in an amount not to
exceed $3,500,000.

 

18. Guaranty, dated December 15, 2008, by ModusLink Global Solutions, Inc. in
favor of Intel Corporation and its subsidiaries, a creditor of ModusLink
Corporation, ModusLink B.V. and ModusLink Singapore Pte., in an amount not to
exceed $3,000,000, as amended by Amendment No. 1 dated March 16, 2010 and as
further amended by Amendment No. 2 dated March 17, 2010.

 

19. Letter of Guarantee, by ModusLink Corporation in favor of Japan Pulp and
Paper Co., Ltd., a creditor of ModusLink Japan K.K., in an amount not to exceed
$15,000.

 

20. Guaranty, dated June 13, 2012, by ModusLink Corporation in favor of Sonah OG
VII B.V., a lessor of ModusLink B.V., in amount not to exceed the obligations of
ModusLink B.V. due and payable to Sonah OG VII B.V. pursuant to that certain
lease with Sonah OG VII B.V.

 

21. Parent Company Guaranty, dated August 1, 2011, by ModusLink Global
Solutions, Inc. in favor of Diversified Automotive, Inc., a subtenant of
SalesLink LLC, to guarantee the payment and performance of SalesLink LLC under
that certain sublease in an amount not to exceed $2,000,000.

 

22. Guaranty, dated March 29, 2012, by ModusLink Global Solutions, Inc. in favor
of NVIDIA Corporation, a creditor of ModusLink Corporation, in an amount not to
exceed $2,000,000.

 

23. Guaranty, dated July 20, 2012, by ModusLink Corporation in favor of AGI
Media Packaging Dublin Ltd., a creditor of ModusLink Kildare, in an amount not
to exceed €1,500,000.

--------------------------------------------------------------------------------

24. Guaranty, dated May 30, 2012, by ModusLink Global Solutions, Inc. in favor
of Sonopress Ireland Ltd., a creditor of ModusLink Corporation, in an amount not
to exceed €500,000.

 

25. Letter of Credit #68074070, in the original principal amount of $90,000
issued by Bank of America, N.A. on April 13, 2012.

 

26. Letter of Credit #68058314, in the original principal amount of $91,884,
issued by Bank of America, N.A. on May 10, 2011.

 

27. $50,000 Bank of America Treasury Management Line supporting treasury
management arrangements in Asia.

--------------------------------------------------------------------------------

SCHEDULE 4.19

Employee and Labor Matters

Certain subsidiaries in Asia have union organizing activity.

--------------------------------------------------------------------------------

SCHEDULE 4.24

Location of Inventory; Chief Executive Offices

Location of Inventory: Name of Landlord and Address of Leased Premises

Columbia Florida 92nd Industrial, LLC

10990, 11000 and 11010 N.W. 92 Terrace

Miami, FL 33178

Duke Realty Limited Partnership

501 Innovation Avenue

Suite 100

Morrisville, NC 27560

Western Liberty, LLC

2000 S. Liberty Drive

Bloomington, IN

Sycamore Business Park LLC

2111 East Ridge Ave.

Riverside, CA

SouthPark Warehouse III Acquisition Corporation

2000 Midway Lane

Smyrna, TN 37167

ProLogis NA2 U.S. LLC

7955 Zionsville Road

Indianapolis, IN

Provo Craft & Novelty, Inc.

151 East 3450 North

Spanish Fork, UT

1331 and 1425 S. Curry Pike

Bloomington, IN

20329 State Highway 249, Suite 230

Houston, TX

4501 Blalock Road

Houston, TX 77041

--------------------------------------------------------------------------------

Chief Executive Offices:

The Chief Executive Office of each Loan Party is located at 1601 Trapelo Road,
Suite 170, Waltham, MA 02451

--------------------------------------------------------------------------------

SCHEDULE 4.26

Material Contracts

Chinese Contract Services Agreement and Chinese Contract Manufacturing Services
Agreements

--------------------------------------------------------------------------------

SCHEDULE 6.5

Nature of Business

Overview

ModusLink Global Solutions, Inc. (together with its consolidated subsidiaries,
“ModusLink Global Solutions” or the “Company”), through its wholly owned
subsidiaries, ModusLink Corporation (“ModusLink”), ModusLink PTS, Inc.
(“ModusLink PTS”) and Tech For Less LLC (“TFL”), is a leader in global supply
chain business process management serving technology-based clients in markets
such as computing, software, consumer electronics, storage and communications.
The Company designs and executes critical elements in its clients’ global supply
chains to improve speed to market, product customization, flexibility, cost,
quality and service. These benefits are delivered through a combination of
industry expertise, innovative service solutions, integrated operations, proven
business processes, expansive global footprint and world-class technology.

The Company’s services and solutions span the forward supply chain, aftermarket
service requirements and e-business processes and leverage an integrated global
network of solution centers to manage all aspects of the end-to-end supply
chain. Over the past decade, the Company has expanded its services by acquiring
and developing businesses focused on supply chain management services,
entitlement, e-business management solutions, consumer-electronics repair
services and reverse logistics services. Open Channel Solutions, Inc. was
acquired on March 18, 2008 and changed its name to ModusLink Open Channel
Solutions, Inc. (“ModusLink OCS”) during fiscal year 2009. Effective August 1,
2010, ModusLink OCS was merged with the Company’s e-Business solutions. The
Company’s e-Business operations provides integrated e-commerce, customer
support, financial transaction processing, physical shipment and returns
processes on a global basis, and entitlement and e-business management
solutions. ModusLink PTS, acquired as PTS Electronics, Inc. on May 2, 2008,
provides consumer-electronics service repair and reverse logistics services.
TFL, acquired on December 4, 2009, processes and markets customer-returned
consumer electronics and business technology products.

The Company has six operating segments: Americas; Asia; Europe; e-Business;
ModusLink PTS and TFL. Each of these operating segments has designated
management teams with direct responsibility over the operations of the
respective operating segment. During the fiscal year ended July 31, 2011, the
Company determined that it has four reportable segments, Americas, Asia, Europe,
and TFL. The Company reports the ModusLink PTS operating segment in aggregation
with the Americas operating segment as part of the Americas reportable segment.
In addition to its four reportable segments, the Company reports an All other
category. The All other category represents the e-Business operating segment. As
of July 31, 2010, the Company’s e-Business solutions operated within each of the
Americas, Asia and Europe reportable segments. ModusLink OCS and TFL were each
their own reportable segments as of July 31, 2010. On August 1, 2010 the Company
merged ModusLink OCS with its e-Business solutions operations and the Company’s
reporting structure and reportable segments changed. All prior year segment
information has been restated to reflect this change. The Company also has
Corporate-level activity consisting primarily of costs associated with certain
corporate administrative functions such as legal and finance, which are not
allocated to the Company’s reportable segments and administration costs related
to the Company’s venture capital activities. The Corporate-level activity
balance sheet information includes cash and cash equivalents, available-for-sale
securities, investments and other assets, which are not identifiable to the
operations of the Company’s operating segments.

Supply Chain Management Services

Supply Chain Management Services and Solutions

ModusLink’s revenues primarily come from the sale of supply chain management
services performed for its clients. These services include the procurement of
clients’ raw component inventory, as well as the storage, manufacturing and
distribution of their proprietary products for sale by our clients to their own
customers.

--------------------------------------------------------------------------------

ModusLink’s supply chain management services and solutions are provided to the
technology industry on a global scale. ModusLink’s core capabilities are
categorized as sourcing and supply base management, manufacturing and product
configuration, fulfillment and distribution, e-Business, and aftermarket
services such as returns management and asset disposition. ModusLink is also a
Microsoft Authorized Replicator, further enhancing its position as a valued
supply chain services provider to leading technology hardware original equipment
manufacturers (“OEMs”).

ModusLink’s core solutions include:

Supply Chain

Factory Supply—The Factory Supply solution provides inbound supply of components
into one or more of ModusLink’s clients’ manufacturing or light assembly
operations on behalf of a client. The solution provides clients with a cost
effective means to ensure consistent component quality.

Optimized Configuration—The Optimized Configuration solution combines
ModusLink’s supply chain design expertise and the industry’s largest global
footprint with techniques, tools and processes in network optimization, discrete
event simulation and inventory optimization to execute a supply chain network
and inventory strategy that can manage the complexities of global supply and
demand.

ModusLink designs and executes a flexible global supply chain by employing
optimization methodologies such as postponement and deferred configuration that
leverage the best time and place in the supply chain to perform final
configuration, packaging and distribution of products. By executing these key
processes in-region and later in the cycle when demand is more established,
clients can often improve time to market, lower costs and optimize component and
finished goods inventory to better meet global demand. This reduces excess and
obsolescence and minimizes the need for rework if forecasts are inaccurate.

Aftermarket Services

The aftermarket services manage the complete range of post-sales activity
including customer service, technical support and multi-channel returns
management to testing, repair, and asset disposition enabling clients to gain
greater efficiency, cost reduction and asset value retention, while improving
customer satisfaction. With this combined expertise, services, technologies and
global operating infrastructure, clients are provided with an end to end
offering. Aftermarket services are delivered through ModusLink, ModusLink PTS
and TFL.

e-Business

ModusLink enables a direct end-user revenue channel for clients through its
e-Business solutions that include integrated e-commerce, customer support,
financial transaction processing and physical shipment and returns processes on
a global basis. e-Business also delivers entitlement management capabilities.
The entitlement management solutions facilitate revenue generation for software
publishers and related businesses by managing the complexities of multi-channel
subscription and customer access rights (entitlements) inherent in software
licensing through a line of technology, consulting and customer support
solutions.

ModusLink’s solutions seamlessly integrate with other supply chain service
providers such as contract manufacturing companies and third-party logistics
providers. ModusLink improves the efficiency and effectiveness of the supply
chain by optimizing and executing procurement, product customization,
multi-channel fulfillment, returns, repair and product value recovery processes.