Exhibit 10.2

Execution

REVOLVING CREDIT

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION

(AS AGENT)

THE LENDERS PARTY HERETO

(AS LENDERS)

WITH

QUANTUM CORPORATION

(AS BORROWER)

October 21, 2016

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TABLE OF CONTENTS

 

          Page   

I.

 

DEFINITIONS

     1     

1.1

  

Accounting Terms

     1     

1.2

  

General Terms

     2     

1.3

  

Uniform Commercial Code Terms

     59     

1.4

  

Certain Matters of Construction

     59   

II.

 

ADVANCES, PAYMENTS

     60     

2.1

  

Revolving Advances

     60     

2.2

   Procedures for Requesting Revolving Advances; Procedures for Selection of
Applicable Interest Rates for All Advances      61     

2.3

  

Reserved

     63     

2.4

  

Swing Loans

     63     

2.5

  

Disbursement of Advance Proceeds

     64     

2.6

  

Making and Settlement of Advances

     64     

2.7

  

Maximum Advances

     66     

2.8

  

Manner and Repayment of Advances

     66     

2.9

  

Repayment of Excess Advances

     67     

2.10

  

Statement of Account

     67     

2.11

  

Letters of Credit

     68     

2.12

  

Issuance of Letters of Credit

     68     

2.13

  

Requirements For Issuance of Letters of Credit

     69     

2.14

  

Disbursements, Reimbursement

     70     

2.15

  

Repayment of Participation Advances

     71     

2.16

  

Documentation

     71     

2.17

  

Determination to Honor Drawing Request

     72     

2.18

  

Nature of Participation and Reimbursement Obligations

     72     

2.19

  

Liability for Acts and Omissions

     74     

2.20

  

Mandatory Prepayments; Voluntary Commitment Reductions and Prepayments

     75     

2.21

  

Use of Proceeds

     76     

2.22

  

Defaulting Lender

     77     

2.23

  

Payment of Obligations

     79     

2.24

  

Increase in Maximum Revolving Advance Amount

     79   

III.    

 

INTEREST AND FEES

     82     

3.1    

  

Interest

     82     

3.2

  

Letter of Credit Fees

     83     

3.3

  

Facility Fee

     84     

3.4

  

Fee Letter

     84     

3.5

  

Computation of Interest and Fees

     84   

 

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3.6

  

Maximum Charges

     84     

3.7

  

Increased Costs

     84     

3.8

  

Basis for Determining Interest Rate Inadequate or Unfair

     86     

3.9

  

Capital Adequacy

     86     

3.10

  

Taxes

     87     

3.11

  

Replacement of Lenders

     89     

3.12

  

Designation of a Different Lending Office

     90   

IV.    

 

COLLATERAL: GENERAL TERMS

     90     

4.1    

  

Security Interest in the Collateral

     90     

4.2

  

Perfection of Security Interest

     91     

4.3

  

Preservation of Collateral

     91     

4.4

  

Ownership and Location of Collateral

     92     

4.5

  

Defense of Agent’s and Lenders’ Interests

     92     

4.6

  

Inspection of Premises

     93     

4.7

  

Appraisals

     93     

4.8

  

Receivables; Deposit Accounts and Securities Accounts

     94     

4.9

  

Inventory

     97     

4.10

  

Maintenance of Equipment

     97     

4.11

  

Exculpation of Liability

     97     

4.12

  

Financing Statements

     98     

4.13

  

Investment Property Collateral

     98     

4.14

  

Provisions Regarding Certain Investment Property Collateral

     98   

V.

 

REPRESENTATIONS AND WARRANTIES

     99     

5.1

  

Authority

     99     

5.2

  

Formation and Qualification

     99     

5.3

  

Survival of Representations and Warranties

     100     

5.4

  

Tax Returns

     100     

5.5

  

Financial Statements

     100     

5.6

  

Entity Names

     101     

5.7

  

O.S.H.A. Environmental Compliance; Flood Insurance

     101     

5.8

  

Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance

     102     

5.9

  

Intellectual Property

     104     

5.10

  

Licenses and Permits

     104     

5.11

  

Reserved

     105     

5.12

  

No Default

     105     

5.13

  

No Burdensome Restrictions

     105     

5.14

  

No Labor Disputes

     105     

5.15

  

Margin Regulations

     105     

5.16

  

Investment Company Act

     105     

5.17

  

Swaps

     105     

5.18

  

Business and Property of the Loan Parties

     105     

5.19

  

Reserved

     105   

 

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5.20

  

Reserved

     105     

5.21

  

Equity Interests

     106     

5.22

  

Commercial Tort Claims

     106     

5.23

  

Letter of Credit Rights

     106     

5.24

  

Material Contracts

     106     

5.25

  

Investment Property Collateral

     106     

5.26

  

Convertible Subordinated Debt Documents

     107     

5.27

  

Term Loan Documents

     107     

5.28

  

Disclosure

     107   

VI.    

 

AFFIRMATIVE COVENANTS

     107     

6.1

  

Compliance with Laws

     107     

6.2

  

Conduct of Business and Maintenance of Existence and Assets

     108     

6.3

  

Books and Records

     108     

6.4

  

Payment of Taxes

     108     

6.5

  

Financial Covenants

     108     

6.6

  

Insurance

     110     

6.7

  

Payment of Indebtedness and Leasehold Obligations

     111     

6.8

  

Environmental Matters

     111     

6.9

  

Standards of Financial Statements

     112     

6.10

  

Federal Securities Laws

     112     

6.11

  

Execution of Supplemental Instruments

     112     

6.12

  

Government Receivables

     112     

6.13

  

Keepwell

     112     

6.14

  

Post-Closing Covenants

     113   

VII.

 

NEGATIVE COVENANTS

     114     

7.1    

  

Merger, Consolidation, Acquisition and Sale of Assets

     114     

7.2

  

Creation of Liens

     115     

7.3

  

Guarantees

     115     

7.4

  

Investments

     115     

7.5

  

Loans

     116     

7.6

  

Capital Expenditures

     116     

7.7

  

Restricted Payments

     116     

7.8

  

Indebtedness

     116     

7.9

  

Nature of Business

     117     

7.10

  

Transactions with Affiliates

     117     

7.11

  

Reserved

     118     

7.12

  

Subsidiaries

     118     

7.13

  

Fiscal Year and Accounting Changes

     118     

7.14

  

Reserved

     118     

7.15

  

Amendment of Organizational Documents

     118     

7.16

  

Compliance with ERISA

     119     

7.17

  

Prepayment of Indebtedness

     119     

7.18

  

Convertible Subordinated Debt

     121     

7.19

  

Amendments to Certain Documents

     121   

 

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VIII.   

 

CONDITIONS PRECEDENT

     121     

8.1    

  

Conditions to Initial Advances

     121     

8.2

  

Conditions to Each Advance

     125   

IX.

 

INFORMATION AS TO BORROWERS

     126     

9.1

  

Reserved

     126     

9.2

  

Schedules

     126     

9.3

  

Environmental Reports

     127     

9.4

  

Litigation

     128     

9.5

  

Material Occurrences

     128     

9.6

  

Government Receivables

     128     

9.7

  

Annual Financial Statements

     128     

9.8

  

Quarterly Financial Statements

     129     

9.9

  

Monthly Financial Statements

     129     

9.10

  

Other Reports

     129     

9.11

  

Additional Information

     130     

9.12

  

Projected Operating Budget

     130     

9.13

  

Variances From Operating Budget

     130     

9.14

  

Reserved

     130     

9.15

  

ERISA Notices and Requests

     130     

9.16

  

Additional Documents

     131     

9.17

  

Updates to Certain Schedules

     131     

9.18

  

Financial Disclosure

     131   

X.

 

EVENTS OF DEFAULT

     132     

10.1

  

Nonpayment

     132     

10.2

  

Breach of Representation

     132     

10.3

  

Financial Information

     132     

10.4

  

Reserved

     132     

10.5

  

Noncompliance

     132     

10.6

  

Judgments

     133     

10.7

  

Bankruptcy

     133     

10.8

  

Reserved

     133     

10.9

  

Lien Priority

     133     

10.10

  

Reserved

     133     

10.11

  

Cross Default

     133     

10.12

  

Termination or Limitation of Guaranty, Guarantor Security Agreement or Pledge
Agreement

     134     

10.13

  

Change of Control

     134     

10.14

  

Invalidity

     134     

10.15

  

Reserved

     134     

10.16

  

Pension Plans

     134   

 

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XI.  

 

LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

     134     

11.1  

  

Rights and Remedies

     134     

11.2

  

Agent’s Discretion

     137     

11.3

  

Setoff

     137     

11.4

  

Rights and Remedies not Exclusive

     137     

11.5

  

Allocation of Payments After Event of Default

     137   

XII.

 

WAIVERS AND JUDICIAL PROCEEDINGS

     139     

12.1

  

Waiver of Notice

     139     

12.2

  

Delay

     139     

12.3

  

Jury Waiver

     139   

XIII.

 

EFFECTIVE DATE AND TERMINATION

     139     

13.1

  

Term

     139     

13.2

  

Termination

     139   

XIV.

 

REGARDING AGENT

     140     

14.1

  

Appointment

     140     

14.2

  

Nature of Duties

     140     

14.3

  

Lack of Reliance on Agent

     141     

14.4

  

Resignation of Agent; Successor Agent

     141     

14.5

  

Certain Rights of Agent

     142     

14.6

  

Reliance

     142     

14.7

  

Notice of Default

     142     

14.8

  

Indemnification

     142     

14.9

  

Agent in its Individual Capacity

     143     

14.10

  

Delivery of Documents

     143     

14.11

  

Loan Parties Undertaking to Agent

     143     

14.12

  

No Reliance on Agent’s Customer Identification Program

     143     

14.13

  

Other Agreements

     143   

XV.

 

BORROWING AGENCY

     144     

15.1

  

Borrowing Agency Provisions

     144     

15.2

  

Waiver of Subrogation

     145   

XVI.

 

MISCELLANEOUS

     145     

16.1

  

Governing Law

     145     

16.2

  

Entire Understanding

     145     

16.3

  

Successors and Assigns; Participations; New Lenders

     148     

16.4

  

Application of Payments

     151     

16.5

  

Indemnity

     151     

16.6

  

Notice

     153   

 

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16.7

  

Survival

     154     

16.8

  

Severability

     154     

16.9

  

Expenses

     154     

16.10

  

Injunctive Relief

     155     

16.11

  

Consequential Damages

     155     

16.12

  

Captions

     155     

16.13

  

Counterparts; Facsimile Signatures

     155     

16.14

  

Construction

     155     

16.15

  

Confidentiality; Sharing Information

     155     

16.16

  

Publicity

     156     

16.17

  

Certifications From Banks and Participants; USA PATRIOT Act

     156     

16.18

  

Anti-Terrorism Laws

     157     

16.19

  

Acknowledgment and Consent to Bail-In of EEA Financial Institutions

     157   

XVII.

 

GUARANTY

     158     

17.1

  

Guaranty

     158     

17.2

  

Waivers

     158     

17.3

  

No Defense

     158     

17.4

  

Guaranty of Payment

     158     

17.5

  

Liabilities Absolute

     159     

17.6

  

Waiver of Notice

     160     

17.7

  

Agent’s Discretion

     160     

17.8

  

Reinstatement

     160   

 

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LIST OF EXHIBITS AND SCHEDULES

Exhibits

 

Exhibit 1.2(a)    Form of Borrowing Base Certificate Exhibit 1.2(b)    Form of
Compliance Certificate Exhibit 2.1    Form of Revolving Credit Note Exhibit 2.4
   Form of Swing Loan Note Exhibit 2.24    Form of Lender Joinder and Assumption
Agreement Exhibit 8.1(d)    Form of Financial Condition Certificate Exhibit 16.3
   Form of Commitment Transfer Supplement

Schedules

 

Schedule 1.1    Commitments Schedule 4.4    Equipment and Inventory Locations;
Place of Business, Chief Executive Office, Real Property Schedule 4.8(j)   
Deposit and Investment Accounts Schedule 5.1    Consents Schedule 5.2(a)   
States of Qualification and Good Standing Schedule 5.2(b)    Subsidiaries
Schedule 5.4    Federal Tax Identification Number Schedule 5.6    Prior Names
Schedule 5.7    Environmental Schedule 5.8(b)    Litigation Schedule 5.8(e)   
Plans Schedule 5.9    Intellectual Property Schedule 5.10    Licenses and
Permits Schedule 5.14    Labor Disputes Schedule 5.21    Equity Interests
Schedule 5.22    Commercial Tort Claims Schedule 5.23    Letter of Credit Rights
Schedule 5.24    Material Contracts Schedule 7.2    Permitted Encumbrances
Schedule 7.3    Guarantees Schedule 7.4    Permitted Investments Schedule 7.8   
Permitted Indebtedness

 

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REVOLVING CREDIT

AND

SECURITY AGREEMENT

Revolving Credit and Security Agreement, dated as of October 21, 2016, by and
among QUANTUM CORPORATION, a Delaware corporation (“Quantum” and together with
each Person joined hereto as a borrower from time to time, collectively, the
“Borrowers” and each a “Borrower”), each Person joined hereto as a guarantor
from time to time (collectively, the “Guarantors”, and each a “Guarantor” and
together with the Borrowers, collectively the “Loan Parties” and each a “Loan
Party”), the financial institutions which are now or which hereafter become a
party hereto (together with their respective successors and assigns,
collectively, the “Lenders” and each individually a “Lender”), and PNC BANK,
NATIONAL ASSOCIATION (“PNC”), in its capacity as agent for Lenders (in such
capacity, together with its successors and assigns, the “Agent”).

IN CONSIDERATION of the mutual covenants and undertakings set forth herein, the
Loan Parties, Lenders and Agent hereby agree as follows:

 

I. DEFINITIONS.

1.1 Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 hereof or elsewhere in
this Agreement and accounting terms partly defined in Section 1.2 hereof to the
extent not defined shall have the respective meanings given to them under GAAP;
provided that, whenever such accounting terms are used for the purposes of
determining compliance with financial covenants in this Agreement, such
accounting terms shall be defined in accordance with GAAP; provided that,
notwithstanding the foregoing, if there occurs after March 31, 2016 any change
in GAAP that affects in any respect the calculation of any covenant set forth in
this Agreement or the definition of any term defined under GAAP used in such
calculations, and either Agent or Borrowing Agent so request, Agent and
Borrowing Agent shall negotiate in good faith to amend the provisions of this
Agreement that relate to the calculation of such covenants with the intent of
having the respective positions of Agent, Lenders and the Loan Parties after
such change in GAAP conform as nearly as possible to their respective positions
as of the Closing Date, provided that, until any such amendments have been
agreed upon, the covenants in this Agreement shall be calculated as if no such
change in GAAP had occurred and the Loan Parties shall provide additional
financial statements or supplements thereto, attachments to Compliance
Certificates and/or calculations regarding financial covenants as Agent may
reasonably require in order to provide the appropriate financial information
required hereunder with respect to the Loan Parties both reflecting any
applicable changes in GAAP and as necessary to demonstrate compliance with the
financial covenants before giving effect to the applicable changes in GAAP. The
term “without qualification” as used herein to refer to opinions or reports
provided by accountants shall mean an opinion or report that is (i) unqualified
(other than qualifications pertaining solely to changes in GAAP to the extent
any such change has no effect on the calculation of, or compliance with, any
financial covenant contained herein or the determination of the Formula Amount),
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.

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1.2 General Terms. For purposes of this Agreement the following terms shall have
the following meanings:

“ABL Priority Collateral” shall have the meaning given to such term in the
Intercreditor Agreement.

“Accountants” shall have the meaning set forth in Section 9.7 hereof.

“Acquired Indebtedness” shall mean Indebtedness of a Person whose assets or
Equity Interests are acquired by a Loan Party or any of its Subsidiaries in a
Permitted Acquisition; provided that such Indebtedness: (a) was in existence
prior to the date of such Permitted Acquisition, and (b) was not incurred in
connection with, or in contemplation of, such Permitted Acquisition.

“Additional Reporting Liquidity Triggering Event” shall mean Liquidity is less
than $35,000,000 on any Business Day.

“Additional Reporting Period” shall mean the period commencing upon the
occurrence of an Additional Reporting Triggering Event and ending on the
occurrence of an Additional Reporting Satisfaction Event.

“Additional Reporting Satisfaction Event” shall mean the earliest date on which
all of the following conditions precedent have been satisfied: (a) if the
Additional Reporting Triggering Event shall have occurred as a result of the
occurrence of an Additional Reporting Liquidity Triggering Event, Liquidity is
equal to or greater than $35,000,000 for thirty (30) consecutive days; and (b)
if the Additional Reporting Triggering Event shall have occurred as a result of
the occurrence of an Event of Default, such Event of Default shall have been
waived in writing by Agent and all of the Lenders or the Required Lenders, as
applicable.

“Additional Reporting Triggering Event” shall mean any of the following: (a) an
Additional Reporting Liquidity Triggering Event has occurred or (b) an Event of
Default has occurred and is continuing.

“Adjusted Funded Debt” shall mean, with respect to any Person on any date of
determination, the result of (a) the Funded Debt of such Person on such date,
minus (b) the Convertible Subordinated Debt of such Person outstanding on such
date, minus (c) all Qualified Cash of such Person and all PNC Other Cash of such
Person on such date in an aggregate amount of up to the Specified Adjusted
Funded Debt Amount.

“Advance Rates” shall mean the advance rates in respect of Eligible Receivables
and Eligible Inventory set forth in Section 2.1(a) hereof.

“Advances” shall mean and include the Revolving Advances, Letters of Credit and
the Swing Loans.

 

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“Affected Lender” shall have the meaning set forth in Section 3.11 hereof.

“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director, manager, member, managing
member, general partner or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote ten percent (10%) or more of the Equity Interests having
ordinary voting power for the election of directors of such Person or other
Persons performing similar functions for any such Person, or (y) to direct or
cause the direction of the management and policies of such Person whether by
ownership of Equity Interests, contract or otherwise.

“Agent” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and permitted assigns.

“Agreement” shall mean this Revolving Credit and Security Agreement, as the same
may be amended, modified, supplemented, renewed, restated or replaced from time
to time.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
highest of (a) the Base Rate in effect on such day, (b) the sum of the Federal
Funds Open Rate in effect on such day plus one half of one percent (0.5%), and
(c) the sum of the Daily LIBOR Rate in effect on such day plus one percent
(1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful.

“Alternate Source” shall have the meaning set forth in the definition of
“Federal Funds Open Rate”.

“Anti-Terrorism Laws” shall mean any Laws applicable to any Loan Party relating
to terrorism, trade sanctions programs and embargoes, import/export licensing,
money laundering or bribery, and any regulation, order, or directive
promulgated, issued or enforced pursuant to such Laws, all as amended, modified,
supplemented or replaced from time to time.

“Applicable Law” shall mean all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant, Other Document or contract in question,
including all applicable common law and equitable principles, all provisions of
all applicable state, federal and foreign constitutions, statutes, rules,
regulations, treaties, directives and orders of any Governmental Body, and all
orders, judgments and decrees of all courts and arbitrators.

“Applicable Margin” shall mean (a) an amount equal to one and one-half percent
(1.50%) for (i) Revolving Advances consisting of Domestic Rate Loans and (ii)
Swing Loans, and (b) an amount equal to two and one-half percent (2.50%) for
Revolving Advances consisting of LIBOR Rate Loans.

“Application Date” shall have the meaning set forth in Section 2.8(b) hereof.

“Approvals” shall have the meaning set forth in Section 5.7(b) hereof.

 

3

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“Approved Electronic Communication” shall mean each notice, demand,
communication, information, document and other material transmitted, posted or
otherwise made or communicated by e-mail, e-fax, the Pinnacle System, or any
other equivalent electronic service agreed to by Agent, whether owned, operated
or hosted by Agent, any Lender, any of their Affiliates or any other Person,
that any party is obligated to, or otherwise chooses to, provide to Agent
pursuant to this Agreement or any Other Document, including any financial
statement, financial and other report, notice, request, certificate and other
information material; provided that Approved Electronic Communications shall not
include any notice, demand, communication, information, document or other
material that Agent specifically instructs a Person to deliver in physical form.

“Average Liquidity” shall mean, for any period of determination, the quotient
obtained by dividing (a) the sum of Liquidity for each day during the applicable
period ending on the day immediately preceding such date of determination, by
(b) the number of days in such period.

“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers
by the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” shall mean, with respect to any EEA Member Country
implementing Article 44 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation
Schedule.

“Base Rate” shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such
rate. This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.

“Benefited Lender” shall have the meaning set forth in Section 2.6(e) hereof.

“Blocked Account Banks” shall have the meaning set forth in Section 4.8(h)
hereof.

“Blocked Accounts” shall have the meaning set forth in Section 4.8(h) hereof.

“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.

“Borrowers’ Account” shall have the meaning set forth in Section 2.10 hereof.

“Borrowing Agent” shall mean Quantum.

“Borrowing Base Certificate” shall mean a certificate in substantially the form
of Exhibit 1.2(a) hereto duly executed by the Chief Executive Officer, Chief
Financial Officer, Treasurer or Controller of the Borrowing Agent and delivered
to Agent, appropriately completed, by which such officer shall certify to Agent
the Formula Amount and calculation thereof as of the date of such certificate.

 

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“Business Day” shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in East Brunswick, New Jersey and, if the applicable Business Day
relates to any LIBOR Rate Loans, such day must also be a day on which dealings
are carried on in the London interbank market.

“Capital Expenditures” shall mean (a) expenditures made or liabilities incurred
for the acquisition of any fixed assets or improvements (or of any replacements
or substitutions thereof or additions thereto) which have a useful life of more
than one year and which, in accordance with GAAP, would be classified as capital
expenditures and (b) purchases of Service Inventory and net transfers of
Manufacturing Inventory into Service Inventory. Capital Expenditures for any
period shall include the principal portion of Capitalized Lease Obligations paid
in such period.

“Capitalized Lease Obligation” shall mean, with respect to any Person,
obligations of such Person under a Capital Lease.

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

“Cash Dominion Liquidity Triggering Event” shall mean Liquidity is less than the
following amount on any Business Day: (a) for the period from the Closing Date
until the date of satisfaction of clause (c) of the Specified Convertible
Subordinated Debt Condition, $30,000,000, (b) for the period from the date of
the satisfaction of clause (c) of the Specified Convertible Subordinated Debt
Condition to March 31, 2018, $22,000,000, and (c) from and after April 1, 2018,
$30,000,000.

“Cash Dominion Period” shall mean the period commencing upon the occurrence of a
Cash Dominion Triggering Event and ending on the occurrence of a Cash Dominion
Satisfaction Event.

“Cash Dominion Satisfaction Event” shall mean the earliest date on which all of
the following conditions precedent have been satisfied: (a) if the Cash Dominion
Triggering Event shall have occurred as a result of the occurrence of a Cash
Dominion Liquidity Triggering Event, Liquidity is equal to or greater than the
following amount for thirty (30) consecutive days: (i) for the period from the
Closing Date until the date of satisfaction of clause (c) of the Specified
Convertible Subordinated Debt Condition, $30,000,000, (ii) for the period from
the date of the satisfaction of clause (c) of the Specified Convertible
Subordinated Debt Condition to March 31, 2018, $22,000,000, and (iii) from and
after April 1, 2018, $30,000,000; and (b) if the Cash Dominion Triggering Event
shall have occurred as a result of the occurrence of an Event of Default, such
Event of Default shall have been waived in writing by Agent and all of the
Lenders or the Required Lenders, as applicable.

“Cash Dominion Triggering Event” shall mean any of the following: (a) a Cash
Dominion Liquidity Triggering Event has occurred or (b) an Event of Default has
occurred and is continuing.

 

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“Cash Equivalents” shall mean (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 one 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 one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
either S&P or 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
one 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 $500,000,000, (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 $500,000,000, 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 Liabilities” shall mean the indebtedness, obligations and
liabilities of any Loan Party to the provider of any Cash Management Products
and Services (including all obligations and liabilities owing to such provider
in respect of any returned items deposited with such provider). For purposes of
this Agreement and all of the Other Documents, all Cash Management Liabilities
of any Loan Party owing to any of the Secured Parties shall be “Obligations”
hereunder and under the Other Documents, and the Liens securing such Cash
Management Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents, subject to the express
provisions of Section 11.5 hereof.

“Cash Management Policy” shall mean that certain Domestic Investment Policy of
Quantum, as approved by its board of directors and as in effect on the Closing
Date.

“Cash Management Products and Services” shall mean agreements or other
arrangements under which Agent or any Lender or any Affiliate of Agent or a
Lender provides any of the following products or services to any Loan Party:
(a) credit cards; (b) credit card processing services; (c) debit cards and
stored value cards; (d) commercial cards; (e) ACH transactions; and (f) cash
management and treasury management services and products, including without
limitation controlled disbursement accounts or services, lockboxes, automated
clearinghouse transactions, overdrafts, interstate depository network services.

 

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“CEA” shall mean the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended
from time to time, and any successor statute.

“CFTC” shall mean the Commodity Futures Trading Commission.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

“Change in Law” shall mean the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any Applicable Law; (b) any
change in any Applicable Law or in the administration, implementation,
interpretation or application thereof by any Governmental Body; or (c) the
making or issuance of any request, rule, guideline or directive (whether or not
having the force of law) by any Governmental Body; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, regulations, guidelines,
interpretations or directives thereunder or issued in connection therewith
(whether or not having the force of Applicable Law) and (y) all requests, rules,
regulations, guidelines, interpretations or directives 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 (whether or not having the force of law), in each case pursuant to
Basel III, shall in each case be deemed to be a Change in Law regardless of the
date enacted, adopted, issued, promulgated or implemented.

“Change of Control” shall mean:

(a) any person or group of persons (within the meaning of Section 13(d) or 14(a)
of the Exchange Act) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of
thirty-five percent (35%) or more of the voting Equity Interests of Quantum;

(b) any person or group of persons shall have acquired, by contract or
otherwise, or shall have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of Quantum or control over the Equity Interests of such persons
entitled to vote for members of the board of directors of Quantum (on a fully
diluted basis and taking into account all such Equity Interests that such person
or group of persons has the right to acquire pursuant to any option right)
representing thirty-five percent (35%) or more of the combined voting power of
such Equity Interests;

(c) the failure of Quantum to beneficially own, directly or indirectly (on a
fully diluted basis), one hundred percent (100%) of the voting Equity Interests
of any other Loan Party; or

(d) while the Convertible Subordinated Debt is outstanding, the occurrence of a
“Change in Control” under (and as such term is defined in) the Convertible
Subordinated Debt Documents.

 

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“Charges” shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing authority or other Governmental Body, domestic or foreign (including
the PBGC or any environmental agency or superfund), upon the Collateral, any
Loan Party or any of its Subsidiaries or Affiliates.

“CIP Regulations” shall have the meaning set forth in Section 14.12 hereof.

“Claims” shall have the meaning set forth in Section 16.5 hereof.

“Closing Date” shall mean the date of this Agreement.

“Closing Date Projections” shall have the meaning set forth in Section 5.5(b)
hereof.

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended,
modified or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.

“Collateral” shall mean and include all right, title and interest of each Loan
Party in all of the following property and assets of such Loan Party, in each
case whether now existing or hereafter arising or created and whether now owned
or hereafter acquired and wherever located:

(a) all Receivables and all supporting obligations relating thereto;

(b) all Equipment and fixtures;

(c) all general intangibles (including all payment intangibles and all software)
and all supporting obligations related thereto;

(d) all Inventory;

(e) all Subsidiary Stock, securities, Investment Property, and financial assets;

(f) all Real Property;

(g) all Leasehold Interests;

(h) all contract rights, rights of payment which have been earned under a
contract rights, chattel paper (including electronic chattel paper and tangible
chattel paper), commercial tort claims (whether now existing or hereafter
arising); documents (including all warehouse receipts and bills of lading),
deposit accounts, goods, instruments (including promissory notes), letters of
credit (whether or not the respective letter of credit is evidenced by a
writing) and letter-of-credit rights, cash, certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), security agreements,
eminent domain proceeds, condemnation proceeds, tort claim proceeds and all
supporting obligations;

 

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(i) all ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software (owned by any Loan Party
or in which it has an interest), computer programs, tapes, disks and documents,
including all of such property relating to the property described in clauses (a)
through and including (h) of this definition; and

(j) all proceeds and products of the property described in clauses (a) through
and including (i) of this definition, in whatever form. It is the intention of
the parties that if Agent shall fail to have a perfected Lien in any particular
property or assets of any Loan Party for any reason whatsoever, but the
provisions of this Agreement and/or of the Other Documents, together with all
financing statements and other public filings relating to Liens filed or
recorded by Agent against the Loan Parties, would be sufficient to create a
perfected Lien in any property or assets that such Loan Party may receive upon
the Disposition of such particular property or assets, then all such “proceeds”
of such particular property or assets shall be included in the Collateral as
original collateral that is the subject of a direct and original grant of a
security interest as provided for herein and in the Other Documents (and not
merely as proceeds (as defined in Article 9 of the Uniform Commercial Code) in
which a security interest is created or arises solely pursuant to Section 9-315
of the Uniform Commercial Code).

Notwithstanding the forgoing, Collateral shall not include any Excluded
Property.

“Commitments” shall mean the Revolving Commitments.

“Commitment Transfer Supplement” shall mean a document in the form of Exhibit
16.3 hereto, properly completed and otherwise in form and substance reasonably
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.

“Compliance Certificate” shall mean a compliance certificate substantially in
the form of Exhibit 1.2(b) hereto to be signed by the Chief Financial Officer,
Treasurer or Controller of Borrowing Agent.

“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Loan Party’s
business or necessary (including to avoid a conflict or breach under any
agreement, instrument, other document, license, permit or other authorization)
for the execution, delivery or performance of this Agreement, the Other
Documents, or the Term Loan Documents, including any Consents required under all
applicable federal, state or other Applicable Law.

“Consigned Inventory” shall mean Inventory of any Loan Party that is in the
possession of another Person on a consignment, sale or return, or other basis
that does not constitute a final sale and acceptance of such Inventory.

“Contract Rate” shall have the meaning set forth in Section 3.1 hereof.

 

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“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by a Loan Party, Agent, Term Loan
Agent and the applicable depository bank (with respect to a Blocked Account or
Depository Account) or securities intermediary (with respect to a securities
account).

“Controlled Group” shall mean, at any time, each Loan Party and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
any Loan Party, are treated as a single employer under Section 414 of the Code.

“Convertible Subordinated Debt” shall mean the Indebtedness owing by Borrowers
to the “Holders” (as defined in Convertible Trust Indenture) pursuant to the
Convertible Subordinated Debt Documents.

“Convertible Subordinated Debt Documents” shall mean, collectively, the
following (as the same may be amended, modified, supplemented, renewed, restated
or replaced from time to time in accordance with the terms hereof and thereof):
(a) the Convertible Trust Indenture, including all of the exhibits and schedules
thereto, and (b) all of the other agreements, documents and instruments executed
and delivered in connection therewith or related to the Convertible Subordinated
Debt.

“Convertible Subordinated Debt Maturity Date” shall mean November 15, 2017.

“Convertible Subordinated Debt Payment Conditions” shall mean, on any applicable
date of determination: (a) Liquidity shall be equal to or greater than
$27,000,000 on such date, and (b) no Event of Default shall exist or shall have
occurred and be continuing on such date.

“Convertible Trust Indenture” shall mean the Indenture, dated as of October 31,
2012, between Quantum and U.S. Bank National Association, as trustee.

“Covered Entity” shall mean (a) each Loan Party, each Subsidiary of each Loan
Party, all Guarantors and all pledgors of Collateral and (b) each Person that,
directly or indirectly, is in control of a Person described in clause (a)
above. For purposes of this definition, control of a Person shall mean the
direct or indirect (x) ownership of, or power to vote, twenty-five percent (25%)
or more of the issued and outstanding equity interests having ordinary voting
power for the election of directors of such Person or other Persons performing
similar functions for such Person, or (y) power to direct or cause the direction
of the management and policies of such Person whether by ownership of equity
interests, contract or otherwise.

“Customer” shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Loan Party,
pursuant to which such Loan Party is to deliver any personal property or perform
any services.

“Customs” shall have the meaning set forth in Section 2.13(b) hereof.

 

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“Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by
Agent by dividing (a) the Published Rate by (b) a number equal to 1.00 minus the
Reserve Percentage.

“Debt Payments” shall mean for any Person for any period, all cash actually
expended by such Person to make:

(a) Interest Expense for such period (including, without limitation, interest
payments on any Advances hereunder or any other Indebtedness but excluding
interest paid-in-kind, amortization of financing fees and other non-cash
Interest Expense), plus

(b) regularly scheduled principal payments in respect of the Term Loans made by
such Person during such period and, to the extent accompanied by a permanent
reduction of the applicable underlying commitment, all regularly scheduled
principal payments made by such Person during such period in respect of any
other Indebtedness for borrowed money (which shall exclude, for the avoidance of
doubt, the repayment of the Convertible Subordinated Debt on the Convertible
Subordinated Debt Maturity Date), plus

(c) regularly scheduled principal payments in respect of Capitalized Lease
Obligations during such period, plus

(d) payments of any fees, commissions and charges payable under this Agreement,
any of the Other Documents or any of the Term Loan Documents during such period.

“Default” shall mean an event, circumstance or condition which, with the giving
of notice or passage of time or both, would constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

“Defaulting Lender” shall mean any Lender that: (a) has failed, within two (2)
Business Days of the date required to be funded or paid, to (i) fund any portion
of its Revolving Commitment Percentage of Advances, (ii) if applicable, fund any
portion of its Participation Commitment in Letters of Credit or Swing Loans or
(iii) pay over to Agent, any Issuer, Swing Loan Lender or any Lender any other
amount required to be paid by it hereunder, unless, in the case of clause (i)
above, such Lender notifies Agent in writing that such failure is the result of
such Lender’s good faith determination that a condition precedent to funding
(specifically identified and including a particular Default or Event of Default,
if any) has not been satisfied; (b) has notified the Loan Parties or Agent in
writing, or has made a public statement to the effect, that it does not intend
or expect to comply with any of its funding obligations under this Agreement
(unless such writing or public statement indicates that such position is based
on such Lender’s good faith determination that a condition precedent
(specifically identified and including a particular Default or Event of Default,
if any) to funding a loan under this Agreement cannot be satisfied) or generally
under other agreements in which it commits to extend credit; (c) has failed,
within two (2) Business Days after request by Agent, acting in good faith, to
provide a certification in writing from an authorized officer of such Lender
that it will comply with its obligations (and is financially able to meet such
obligations) to fund prospective Advances and, if applicable, participations in
then outstanding Letters of Credit and Swing Loans under this Agreement,
provided that such Lender shall cease to be a Defaulting Lender pursuant to this

 

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clause (c) upon Agent’s receipt of such certification in form and substance
satisfactory to Agent; (d) has become the subject of an Insolvency Event; or (e)
has failed at any time to comply with the provisions of Section 2.6(e) hereof
with respect to purchasing participations from the other Lenders, whereby such
Lender’s share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
Lenders.

“Depository Accounts” shall have the meaning set forth in Section 4.8(h) hereof.

“Designated Lender” shall have the meaning set forth in Section 16.2(d) hereof.

“Disposition” shall mean, with respect to any particular property or asset
(other than cash or Cash Equivalents), the sale, lease, license, exchange,
transfer or other disposition of such property or asset, and to “Dispose” of any
particular property or asset shall mean to sell, lease, license, exchange,
transfer or otherwise dispose of such property or asset.

“Disqualified Equity Interests” shall mean any Equity Interests which, by their
terms (or by the terms of any security or other Equity Interests into which they
are convertible or for which they are exchangeable), or upon the happening of
any event or condition, (a) mature or are mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or are redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is one hundred
eighty (180) days following the Maturity Date (excluding any provisions
requiring redemption upon a “change of control” or similar event; provided that
such “change of control” or similar event results in the Payment in Full of the
Obligations), (b) are convertible into or exchangeable for (i) debt securities
or (ii) any Equity Interests referred to in (a) above, in each case, at any time
on or prior to the date that is one hundred eighty (180) days following the
Maturity Date, or (c) are entitled to receive scheduled dividends or
distributions in cash prior to the time that the Obligations are Paid in Full.

“Document” shall have the meaning given to the term “document” in the Uniform
Commercial Code.

“Dollar” and the sign “$” shall mean lawful money of the United States of
America.

“Dollar Equivalent” means, as of any date of determination, (a) as to any amount
denominated in Dollars, the amount thereof as of such date of determination, and
(b) as to any amount denominated in another currency, the equivalent amount
thereof in Dollars as determined by Agent on the basis of the Currency Exchange
Rate for the purchase of Dollars with such currency in effect on such date of
determination.

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.

“Drawing Date” shall have the meaning set forth in Section 2.14(b) hereof.

“EBITDA” shall mean, for any period, with respect to Quantum and its
Subsidiaries, on a consolidated basis, the result of:

(a) net income (or loss) for such period, minus

 

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(b) without duplication, the sum of the following amounts for such period (in
each case to the extent included in determining net income (or loss) for such
period):

(i) tax credits based on income, profits or capital, including federal, foreign,
state, franchise and similar taxes,

(ii) extraordinary, unusual, or non-recurring revenue, income and gains,

(iii) interest income,

(iv) income arising by reason of the application of FAS 141R,

(v) gains attributable to Investments in joint ventures and partnerships to the
extent not distributed in cash to Quantum and its Subsidiaries,

(vi) cash or non-cash exchange, translation or performance gains relating to any
Interest Rate Hedge or Foreign Currency Hedge, and

(vii) reserve reversals of production Inventory in the Permitted Discretion of
Agent based on excess or out of period adjustments in an amount not to exceed
$2,000,000 in any fiscal year, plus

(c) without duplication, the sum of the following amounts for such period (in
each case to the extent included in determining net income (or loss) for such
period):

(i) extraordinary, unusual, or non-recurring costs, expenses and losses,

(ii) Interest Expense,

(iii) cash or non-cash exchange, translation, or performance losses relating to
any Interest Rate Hedge or Foreign Currency Hedge,

(iv) tax expense based on income, profits or capital, including federal,
foreign, state, franchise and similar taxes (and for the avoidance of doubt,
specifically excluding any sales taxes or any other taxes held in trust for a
Governmental Body),

(v) depreciation and amortization expenses,

(vi) service parts lower of cost or market adjustment up to an aggregate amount
not to exceed $8,000,000 in any fiscal year,

(vii) reasonable transaction costs and expenses (whether or not capitalized
through amortization) incurred in connection with this Agreement and the Term
Loan Agreement on or prior to the Closing Date up to an aggregate amount not to
exceed $5,000,000,

 

 

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(viii) reasonable transaction costs and expenses (whether or not capitalized
through amortization) incurred in connection with this Agreement and the Term
Loan Agreement (x) during the period from the Closing Date through and including
the fiscal year ending on or about March 31, 2017 up to an aggregate amount not
to exceed $750,000, and (y) during any fiscal year ending thereafter up to an
aggregate amount not to exceed $500,000 in any fiscal year,

(ix) amortization or write-off of capitalized debt issuance costs arising with
respect to the Loan Parties’ existing credit facility under the Existing Credit
Agreement up to an aggregate amount not to exceed $150,000,

(x) amortization or write-off of capitalized debt issuance costs arising with
respect to any permitted Refinancing Indebtedness hereunder or the repayment of
the Convertible Subordinated Debt and permitted Refinancing Indebtedness in
respect thereof up to an aggregate amount not to exceed $1,000,000 in any fiscal
year,

(xi) reasonable fees, costs and expenses incurred prior to the Maturity Date in
connection with cash restructuring charges up to an aggregate amount not to
exceed $3,000,000 in any fiscal year and not to exceed $7,500,000 during the
Term,

(xii) reasonable fees, costs and expenses incurred prior to the Maturity Date in
connection with non-cash restructuring charges; provided, that to the extent any
such non-cash charges in any period results in a cash payment in such period or
in a subsequent period such cash charges shall be subject to the limitation set
forth in clause (c)(xi) above,

(xiii) non-cash compensation expenses (including deferred non-cash compensation
expenses), or other non-cash expenses or charges, arising from the sale or
issuance of Equity Interests, the granting of stock options, and the granting of
stock appreciation rights and similar arrangements (including any repricing,
amendment, modification, substitution, or change of any such Equity Interests,
stock option, stock appreciation rights, or similar arrangements), minus the
amount of any such expenses or charges when paid in cash to the extent not
deducted in the computation of net income (or loss),

(xiv) expenses reimbursed in cash by a third Person pursuant to an indemnity or
guaranty in favor of Quantum or any of its Subsidiaries to the extent such
amounts are actually received by Quantum or any of its Subsidiaries during such
period,

(xv) with respect to any Permitted Acquisition consummated after the Closing
Date:

(A) out-of pocket costs, fees, charges or expenses paid by Quantum or any of its
Subsidiaries to any Person for services performed by such Person in connection
with such Permitted Acquisition to the extent incurred on or within 180 days
prior to the consummation of such Permitted Acquisition, (1) up to an aggregate
amount for such Permitted Acquisition not to exceed the greater of (x)
$1,500,000 and (y) 1.50% of the purchase price of such Permitted Acquisition and
(2) in any amount to the extent such costs, fees, charges or expenses in this
clause (A) are paid with proceeds of new equity Investments in exchange for
Equity Interests of Quantum contemporaneously made by current shareholders of
Quantum;

 

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(B) purchase accounting adjustments, including, without limitation, a dollar for
dollar adjustment for that portion of revenue that would have been recorded in
the relevant period had the balance of deferred revenue (unearned income)
recorded on the closing balance sheet and before application of purchase
accounting not been adjusted downward to fair value to be recorded on the
opening balance sheet in accordance with GAAP purchase accounting rules; and

(C) non-cash adjustments in accordance with GAAP purchase accounting rules under
FASB Statement No. 141R and EITF Issue No. 01-3, in the event that such an
adjustment is required by Quantum’s independent auditors, in each case, as
determined in accordance with GAAP,

(xvi) non-cash losses attributable to Investments in joint ventures and
partnerships, and

(xvii) non-cash losses on sales of assets or write-downs of assets.

Notwithstanding the foregoing, for purposes of calculating EBITDA for any fiscal
period ending on December 31, 2016, March 31, 2017, June 30, 2017 and September
30, 2017, (a) EBITDA for the fiscal quarter ending on March 31, 2016 shall be
deemed to be $11,377,144; (b) EBITDA for the fiscal quarter ending on June 30,
2016 shall be deemed to be $4,720,666; (c) EBITDA for the fiscal quarter ending
on September 30, 2016 shall be deemed to be $8,429,074, and (d) EBITDA for the
fiscal quarter ending on December 31, 2016 shall be calculated in a manner
consistent with the adjustments set forth above. In addition, for the purposes
of calculating EBITDA for any period of four (4) consecutive fiscal quarters
(each, a “Reference Period”), if at any time during such Reference Period (and
after the Closing Date), Quantum 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 Borrower and Agent).

“EEA Financial Institution” shall mean (a) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member
Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (a) or (b)
of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” shall mean any of the member states of the European Union,
Iceland, Liechtenstein and Norway.

“EEA Resolution Authority” shall mean any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

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“Effective Date” shall mean the date indicated in a document or agreement to be
the date on which such document or agreement becomes effective, or, if there is
no such indication, the date of execution of such document or agreement.

“Eligibility Date” shall mean, with respect to each Loan Party and each Swap,
the date on which this Agreement or any Other Document becomes effective with
respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be
the Effective Date of such Swap if this Agreement or any Other Document is then
in effect with respect to such Loan Party, and otherwise it shall be the
Effective Date of this Agreement and/or such Other Documents to which such Loan
Party is a party).

“Eligible Contract Participant” shall mean an “eligible contract participant” as
defined in the CEA and regulations thereunder.

“Eligible Extended Terms Receivables” shall mean Receivables of a Borrower which
(a) are owing from a Specified Customer and (b) satisfy all of the criteria of
Eligible Receivables other than clause (c) of the definition thereof; provided,
however, that no Receivable shall be an Eligible Extended Term Receivable if
such Receivable is due or unpaid more than one hundred fifty (150) days after
the original invoice date.

“Eligible Insured Foreign Receivables” shall mean each Receivable of a Borrower
arising in the Ordinary Course of Business that (a) satisfies all of the
criteria of Eligible Receivables, other than clause (g) of the definition of
“Eligible Receivables” and (b) is credit insured (the insurance carrier, amount
and terms of such insurance shall be reasonably acceptable to Agent and shall
name Agent as beneficiary or loss payee, as applicable).

“Eligible Inventory” shall mean and include Inventory of a Borrower consisting
of finished goods or raw materials valued at the lower of cost or market value,
determined on a first-in-first-out basis, which is not, in Agent’s opinion,
obsolete, slow moving or unmerchantable and which Agent, in its Permitted
Discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate. In addition, Inventory shall not
be Eligible Inventory if it:

(a) consists of work in process;

(b) consists of Service Inventory;

(c) is not subject to a perfected, first priority Lien in favor of Agent or is
subject to any other Liens (other than a Permitted Encumbrance);

(d) does not conform to all standards imposed by any Governmental Body which has
regulatory authority over such goods or the use or sale thereof;

(e) constitutes Consigned Inventory;

(f) is subject to a License Agreement that prohibits the applicable Borrower or
Agent from Disposing of the Intellectual Property licensed under such License
Agreement, unless Agent is a party to a Licensor/Agent Agreement with the
Licensor under such License Agreement (or Agent shall agree otherwise in its
Permitted Discretion after establishing reserves against the Formula Amount with
respect thereto as Agent shall deem appropriate in its Permitted Discretion);

 

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(g) is located outside the continental United States or at a location that is
not otherwise in compliance with this Agreement;

(h) is in-transit within the United States or in transit from a location outside
the United States to a location of a Borrower or a Customer of such Borrower
within the United States;

(i) is situated at a location not owned by a Borrower unless the owner or
occupier of such location has executed in favor of Agent a Lien Waiver Agreement
(or Agent shall agree otherwise in its Permitted Discretion after establishing
reserves against the Formula Amount with respect thereto as Agent shall deem
appropriate in its sole discretion); provided that, (x) no Lien Waiver Agreement
shall be required and no reserve shall be established with respect to any
location if the aggregate amount of Eligible Inventory at such location is less
than $250,000; and (y) if no Lien Waiver Agreement has been executed and
delivered to Agent with respect to any such location, no reserve shall be
established with respect to such location until the date that is thirty (30)
days after the Closing Date so long as Borrowers are diligently working to
obtain a Lien Waiver Agreement with respect to such location; or

(j) if the sale of such Inventory would result in an ineligible Receivable.

“Eligible Receivables” shall mean and include each Receivable of a Borrower
arising in the Ordinary Course of Business and which Agent, in its Permitted
Discretion, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first
priority perfected Lien and no other Liens (other than Permitted
Encumbrances). In addition, no Receivable shall be an Eligible Receivable if:

(a) such Receivable arises from Recurring Royalty Revenue;

(b) such Receivable arises out of a sale made by any Borrower to an Affiliate of
any Borrower or to a Person controlled by an Affiliate of any Borrower;

(c) such Receivable is due or unpaid more than one hundred twenty (120) days
after the original invoice date or sixty (60) days after the original due date;

(d) such Receivable is due from a Customer with respect to which fifty
percent (50%) or more of the Receivables owing from such Customer are not deemed
Eligible Receivables hereunder (such percentage may, in Agent’s sole discretion,
be increased or decreased from time to time);

(e) any covenant, representation or warranty set forth in this Agreement with
respect to such Receivable has been breached;

 

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(f) such Receivable is due from a Customer with respect to which an Insolvency
Event shall have occurred;

(g) the sale giving rise to such Receivable is to a Customer outside the
continental United States of America, Puerto Rico and Canada, unless such sale
is on letter of credit, guaranty or acceptance terms, in each case acceptable to
Agent in its Permitted Discretion or such Receivable constitutes an Eligible
Insured Foreign Receivable;

(h) the sale giving rise to such Receivable is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis with the applicable Customer or is evidenced by chattel paper;

(i) Agent believes, in its Permitted Discretion, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer’s financial inability to pay;

(j) such Receivable is due from a Customer which is the United States of
America, any state or any department, agency or instrumentality of any of them,
unless the applicable Borrower assigns its right to payment of such Receivable
to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
complied with other applicable statutes or ordinances; provided that the amount
of such Receivables which shall be deemed ineligible under this clause (j) on
any date of determination shall be the amount of such Receivables in excess of
$500,000 on such date;

(k) the goods giving rise to such Receivable have not been delivered to and
accepted by the Customer, the services giving rise to such Receivable have not
been performed by the applicable Borrower and accepted by the Customer or such
Receivable otherwise does not represent a final sale;

(l) the Receivables of the Customer from which such Receivable is owing exceed a
credit limit determined by Agent, in its Permitted Discretion, to the extent
such Receivable exceeds such limit;

(m) such Receivable is owing from a Customer whose total obligations owing to
all Borrowers exceed 25% of all Eligible Receivables, to the extent of the
obligations owing by such Customer in excess of such percentage; provided,
however, such percentages, as applied to a particular Customer (x) may be
reduced at any time by Agent in its Permitted Discretion if the creditworthiness
of such Customer deteriorates in the determination of Agent, and (y) may be
increased at any time by Agent in its Permitted Discretion;

(n) the Receivable is subject to any offset, deduction, defense, dispute,
credits or counterclaim (because, among other reasons, the Customer is also a
creditor or supplier of a Borrower) or the Receivable is contingent in any
respect or for any reason (but such Receivable shall only be ineligible to the
extent of such offset, deduction, defense, counterclaim or contingency);

 

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(o) the applicable Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the Ordinary
Course of Business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;

(p) any return, rejection or repossession of the merchandise the sale of which
gave rise to such Receivable has occurred or the rendition of services giving
rise to such Receivable has been disputed;

(q) such Receivable is not payable to a Borrower;

(r) such Receivable is not evidenced by an invoice or other documentary evidence
satisfactory to Agent; or

(s) such Receivable is not otherwise satisfactory to Agent as determined in good
faith by Agent in the exercise of its Permitted Discretion.

“Environmental Complaint” shall have the meaning set forth in Section 9.3(b)
hereof.

“Environmental Laws” shall mean all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes as well as common laws, relating to the protection of the
environment, human health and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Materials and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal, state,
international and local governmental agencies and authorities with respect
thereto.

“Equipment” shall have the meaning given to the term “equipment” in the Uniform
Commercial Code.

“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase from such Person, options, warrants, general, limited or
limited liability partnership interests, member interests, participation or
other equivalents of or interest in (regardless of how designated) equity of
such Person, whether voting or nonvoting, including common stock, preferred
stock, convertible securities 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), including in each case all rights relating to such
Equity Interests, whether arising under the Organizational Documents of the
Person issuing such Equity Interests or under the Applicable Laws of such
issuer’s jurisdiction of organization relating to the formation, existence and
governance of corporations, limited liability companies or partnerships or
business trusts or other legal entities, as the case may be.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended, modified or supplemented from time to time and the rules
and regulations promulgated thereunder.

 

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“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

“Event of Default” shall have the meaning set forth in Article X hereof.

“Excess Cash Flow” shall mean, for any Person for any period of determination,
the result of:

(a) EBITDA of such Person for such period, plus

(b) the sum of the following:

(i) the cash portion of extraordinary, unusual, or non-recurring revenue, income
and gains received by such Person during such period,

(ii) the cash portion of interest income received by such Person during such
period, and

(iii) cash exchange, translation or performance gains relating to any Interest
Rate Hedge or Foreign Currency Hedge received by such Person during such period,
minus

(c) the sum of the following:

(i) the cash portion of extraordinary, unusual, or non-recurring costs, expenses
and losses of such Person during such period,

(ii) the cash portion of all Interest Expense paid by such Person during such
period,

(iii) the cash portion of all taxes paid by such Person during such period,

(iv) to the extent added back to net income in the calculation of EBITDA during
such period, the cash portion of the reasonable transaction costs and expenses
(whether or not capitalized through amortization) incurred in connection with
this Agreement and the Term Loan Agreement on or prior to the Closing Date which
is paid by such Person during such period,

(v) to the extent added back to net income in the calculation of EBITDA during
such period, the cash portion of the reasonable transaction costs and expenses
(whether or not capitalized through amortization) incurred in connection with
this Agreement and the Term Loan Agreement after the Closing Date which is paid
by such Person during such period,

(vi) to the extent added back to net income in the calculation of EBITDA during
such period, the cash portion of capitalized debt issuance costs arising with
respect to the Loan Parties’ existing credit facility under the Existing Credit
Agreement which is paid by such Person during such period,

 

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(vii) to the extent added back to net income in the calculation of EBITDA during
such period, the cash portion of capitalized debt issuance costs arising with
respect to any refinancing of Indebtedness permitted hereunder or the repayment
of the Convertible Subordinated Debt and permitted Refinancing Indebtedness in
respect thereof which is paid by such Person during such period,

(viii) to the extent added back to net income in the calculation of EBITDA
during such period, the cash portion of the reasonable fees, costs and expenses
incurred prior to the Maturity Date in connection with restructuring charges
which is paid by such Person during such period,

(ix) to the extent added back to net income in the calculation of EBITDA during
such period, the cash portion of out-of pocket costs, fees, charges or expenses
paid by Quantum or any of its Subsidiaries during such Period to any Person for
services performed by such Person in connection with a Permitted Acquisition
consummated after the Closing Date to the extent incurred on or within 180 days
prior to the consummation of such Permitted Acquisition,

(x) the cash portion of all Unfunded Capital Expenditures (net of any proceeds
of related financings with respect to such Capital Expenditures) made by such
Person during such period,

(xi) the cash portion of all regularly scheduled principal payments in respect
of the Term Loans made by such Person during such period and, to the extent
accompanied by a permanent reduction of the applicable underlying commitment,
the cash portion of all regularly scheduled principal payments made by such
Person during such period in respect of any other Indebtedness for borrowed
money (which shall exclude, for the avoidance of doubt, the repayment of the
Convertible Subordinated Debt on the Convertible Subordinated Debt Maturity
Date),

(xii) the cash portion of all regularly scheduled principal payments in respect
of Capitalized Lease Obligations made by such Person during such period,

(xiii) the cash portion of all fees, commissions and charges paid by such Person
during such period under this Agreement, any of the Other Documents or any of
the Term Loan Documents, and

(xiv) the cash portion of all Restricted Payments made by such Person during
such period (to the extent such Restricted Payments are permitted to be made
hereunder).

“Excess Cash Flow Due Date” shall have the meaning set forth in Section 7.17(b)
hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Excluded Accounts” shall mean (a) deposit accounts of Quantum and its
Subsidiaries maintained at a depository bank located in the United States having
an aggregate amount on deposit of not more than $250,000 at any one time, (b)
deposit accounts of Quantum and its Subsidiaries maintained at depository banks
located outside of the United States (other than the

 

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Swiss Blocked Accounts) having an aggregate amount on deposit of not more than
$2,000,000 at any one time, (c) deposit accounts specially and exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for employees of Quantum or any of its Subsidiaries, (d) the deposit account
maintained at Existing Agent for the sole purpose of cash collateralizing
letters of credit issued by Existing Agent in favor of Quantum up to an
aggregate amount, as of any date of determination, not to exceed the aggregate
undrawn amount of all such outstanding letters of credit as of such date of
determination, (e) deposit accounts or securities accounts of Quantum and its
Subsidiaries maintained for the sole purpose of cash collateralizing the German
Tax Obligations or bank guaranties issued in respect of the German Tax
Obligations, and (f) deposit accounts or securities accounts of Quantum and its
Subsidiaries maintained for the sole purpose of providing deposits permitted
pursuant to clause (k) of the definition of “Permitted Encumbrances”.

“Excluded Hedge Liability or Liabilities” shall mean, with respect to each Loan
Party, each of its Swap Obligations if, and only to the extent that, all or any
portion of this Agreement or any Other Document that relates to such Swap
Obligation is or becomes illegal under the CEA, or any rule, regulation or order
of the CFTC, solely by virtue of such Loan Party’s failure to qualify as an
Eligible Contract Participant on the Eligibility Date for such
Swap. Notwithstanding the foregoing or any other provision of this Agreement or
any Other Document to the contrary, the foregoing is subject to the following
provisos: (a) if a Swap Obligation arises under a master agreement governing
more than one Swap, this definition shall apply only to the portion of such Swap
Obligation that is attributable to Swaps for which such guaranty or security
interest is or becomes illegal under the CEA, or any rule, regulations or order
of the CFTC, solely as a result of the failure by such Loan Party for any reason
to qualify as an Eligible Contract Participant on the Eligibility Date for such
Swap; (b) if a guarantee of a Swap Obligation would cause such obligation to be
an Excluded Hedge Liability but the grant of a security interest would not cause
such obligation to be an Excluded Hedge Liability, such Swap Obligation shall
constitute an Excluded Hedge Liability for purposes of the guaranty but not for
purposes of the grant of the security interest; and (c) if there is more than
one Loan Party executing this Agreement or the Other Documents and a Swap
Obligation would be an Excluded Hedge Liability with respect to one or more of
such Persons, but not all of them, the definition of “Excluded Hedge Liability
or Liabilities” with respect to each such Person shall only be deemed applicable
to (i) the particular Swap Obligations that constitute Excluded Hedge
Liabilities with respect to such Person, and (ii) the particular Person with
respect to which such Swap Obligations constitute Excluded Hedge Liabilities.

“Excluded Property” shall mean (a) any lease, license, license agreement,
permit, contract or agreement to which any Loan Party is a party, and any of its
rights or interests thereunder, if and to the extent that a security interest
therein is prohibited by or in violation of (i) any Applicable Law, or (ii) a
term, provision or condition of any such lease, license, license agreement,
permit, contract or agreement (unless in each case, such Applicable Law, term,
provision or condition would be rendered ineffective with respect to the
creation of such security interest pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the Uniform Commercial Code (or any successor provision or provisions)
of any relevant jurisdiction or any other Applicable Law), provided, however,
that the foregoing shall cease to be treated as “Excluded Property” (and shall
constitute Collateral) immediately at such time as the contractual or legal
prohibition shall no longer be applicable and to the extent severable, such
security interest shall attach immediately

 

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to any portion of such lease, license, contract or agreement not subject to the
prohibitions specified in clauses (x) or (y) above, provided, further that
Excluded Property shall not include any proceeds of any such lease, license,
contract or agreement or any goodwill of the Loan Parties’ business associated
therewith or attributable thereto; (b) Excluded Accounts; (c) any Real Property
of any Loan Party with a fair market value of less than $500,000; (d) Equity
Interests issued by any Foreign Subsidiary other than Equity Interests described
in clause (b) of the definition of Subsidiary Stock; and (e) any United States
intent-to-use trademark applications to the extent that, and solely during the
period in which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark applications under
applicable federal law, provided that upon submission and acceptance by the
Patent and Trademark Office of an amendment to allege use pursuant to 15 U.S.C.
Section 1060(a) (or any successor provision), such intent-to-use trademark
application shall be considered Collateral.

“Excluded Taxes” shall mean, with respect to any Recipient, (a) Taxes imposed on
or measured by net income (however denominated) and franchise Taxes, in each
case (i) imposed by the jurisdiction (or any political subdivision thereof)
under the laws of which such Recipient is organized or in which its principal
office or applicable lending office is located or (ii) imposed as a result of a
present or former connection between such Recipient and the jurisdiction
imposing such Tax (other than any such connection arising solely from such
Recipient having executed, delivered or performed its obligations or received
payment under, or enforced its rights or remedies under, this Agreement or any
Other Document), (b) any branch profits Taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which any Loan
Party is or has been located, (c) in the case of a Lender, any withholding Tax
that is imposed on amounts payable to such Lender pursuant to a law in effect at
the time such Lender becomes a party hereto (or designates a new lending
office), except to the extent that such Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Loan Parties with respect to such
withholding Tax pursuant to Section 3.10(a) hereof, (d) Taxes attributable to
such Recipient’s failure to comply with Section 3.10(e) hereof, or (e) any Taxes
imposed under FACTA.

“Existing Agent” shall mean Wells Fargo Capital Finance, LLC, a Delaware limited
liability company, in its capacity as administrative agent under the Existing
Loan Documents.

“Existing Credit Agreement” shall mean the Credit Agreement, dated as of March
29, 2012, as heretofore amended, modified and supplemented, by and among
Quantum, Existing Agent and Existing Lenders.

“Existing Lenders” shall mean the financial institutions which are parties to
the Existing Credit Agreement as lenders.

“Existing Loan Documents” shall mean, collectively, the Existing Credit
Agreement and all of the other agreements, documents and instruments executed
and delivered in connection therewith or related thereto.

“Extraordinary Receipts” shall mean the Net Cash Proceeds received by any Loan
Party or any of its Subsidiaries not in the Ordinary Course of Business (and not
consisting of proceeds from the sale of Inventory), including, without
limitation, (a) proceeds under any insurance

 

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policy on account of damage or destruction of any assets or property of such
Loan Party or Subsidiary, (b) condemnation awards (and payments in lieu
thereof), (c) indemnity payments, (d) foreign, United States, state or local tax
refunds, (e) pension plan reversions and (f) judgments, proceeds of settlements
or other consideration of any kind in connection with any cause of action.

“Facility Fee” shall have the meaning set forth in Section 3.3(b) hereof.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the Closing
Date (or any amended or successor version that is substantively comparable and
not materially more onerous to comply with), any current or future regulations
thereunder or official interpretations thereof, any agreement entered into
pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement
between a non-U.S. jurisdiction and the United States with respect to the
foregoing, and any law, regulation or practice adopted pursuant to any such
intergovernmental agreement.

“Federal Funds Effective Rate” shall mean for any day the rate per annum (based
on a year of 360 days and actual days elapsed and rounded upward to the nearest
1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the Closing Date; provided that if such Federal Reserve
Bank (or its successor) does not announce such rate on any day, the “Federal
Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for
the last day on which such rate was announced.

“Federal Funds Open Rate” shall mean for any day the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day
does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on
any Alternate Source, or if there shall at any time, for any reason, no longer
exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by PNC at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day. If and when
the Federal Funds Open Rate changes, the rate of interest with respect to any
advance to which the Federal Funds Open Rate applies will change automatically
without notice to the Loan Parties, effective on the date of any such change.

“Fee Letter” shall mean the fee letter dated the Closing Date among Borrowers
and Agent.

 

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“Fixed Charge Coverage Ratio” shall mean, with respect to any Person for any
fiscal period, the ratio of (a) the result of (i) EBITDA for such Person for
such period, minus (ii) Unfunded Capital Expenditures made by such Person during
such period, to (b) the sum of all Fixed Charges made by such Person during such
period.

“Fixed Charges” shall mean, with respect to any Person for any fiscal period,
the sum of the following, without duplication (in each case determined in
accordance with GAAP): (a) all Debt Payments made by such Person during such
period, plus (b) all federal, state, and local income taxes paid in cash during
such period (other than the German Tax Obligations in an amount not to exceed
the Dollar Equivalent of €1,313,582.12 during the Term), plus (c) all Restricted
Payments paid (whether in cash or other property, other than common Equity
Interests) during such period; plus (d) all rent paid in cash during such period
for restructured facilities; provided that, notwithstanding the foregoing,
“Fixed Charges” shall not include any prepayments or repayments of the
Convertible Subordinated Debt made in accordance with Section 7.18 hereof during
such period. Notwithstanding the foregoing, for purposes of calculating the
Fixed Charge Coverage Ratio of Quantum and its Subsidiaries for any fiscal
period ending on December 31, 2016, March 31, 2017, June 30, 2017 and September
30, 2017: (a) the Fixed Charges of Quantum and its Subsidiaries for the fiscal
quarter ending on March 31, 2016 shall be deemed to be $2,023,330; (b) the Fixed
Charges of Quantum and its Subsidiaries for the fiscal quarter ending on
June 30, 2016 shall be deemed to be $1,972,516; and (c) the Fixed Charges of
Quantum and its Subsidiaries for the fiscal quarter ending on September 30, 2016
shall be deemed to be $1,945,712.

“Flood Laws” shall mean all Applicable Laws relating to policies and procedures
that address requirements placed on federally regulated lenders under the
National Flood Insurance Reform Act of 1994 and other Applicable Laws related
thereto.

“Foreign Cash Equivalents” shall mean (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United Kingdom or any European Union
Central Bank or issued by any agency thereof and backed by the full faith and
credit of the United Kingdom or any European Union Central Bank, in each case
maturing within one year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state, province or
territory of the United Kingdom or any European Union Central Bank, or any
political subdivision of any such state, province, territory or country or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody’s, (c) certificates of
deposit, time deposits, overnight bank deposits or bankers’ acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United Kingdom or any European Union Central
Bank at the date of acquisition thereof combined capital and surplus of not less
than the Dollar Equivalent of $500,000,000, (d) deposit accounts maintained with
(i) any bank that satisfies the criteria described in clause (c) above, or (ii)
any other bank organized under the laws of the United Kingdom so long as the
full amount maintained with any such other bank is insured by the Financial
Services Compensation Scheme, (e) repurchase obligations of any commercial bank
satisfying the requirements of clause (c) of this definition or recognized
securities dealer having combined capital and surplus of not less than the
Dollar Equivalent of $500,000,000, having a term of not more than seven days,
with respect to securities satisfying the criteria in clauses (a)

 

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or (c) above, (f) 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 (c) above, and (g) Investments
in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (f) above.

“Foreign Currency Hedge” shall mean any foreign exchange transaction, including
spot and forward foreign currency purchases and sales, listed or
over-the-counter options on foreign currencies, non-deliverable forwards and
options, foreign currency swap agreements, currency exchange rate price hedging
arrangements, and any other similar transaction providing for the purchase of
one currency in exchange for the sale of another currency.

“Foreign Currency Hedge Liabilities” shall mean the liabilities of the Loan
Parties and their Subsidiaries owing to the provider of a Foreign Currency
Hedge. For purposes of this Agreement and all of the Other Documents, all
Foreign Currency Hedge Liabilities of any Loan Party or Subsidiary that is party
to any Lender-Provided Foreign Currency Hedge shall, for purposes of this
Agreement and all of the Other Documents, be “Obligations” of such Person and of
each other Loan Party, be guaranteed obligations under any Guaranty and secured
obligations under any Guarantor Security Agreement, as applicable, and otherwise
treated as Obligations for purposes of the Other Documents, except to the extent
constituting Excluded Hedge Liabilities of such Person. The Liens securing the
Foreign Currency Hedge Liabilities shall be pari passu with the Liens
securing all other Obligations under this Agreement and the Other Documents,
subject to the express provisions of Section 11.5 hereof.

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

“Foreign Subsidiary” shall mean (a) any Subsidiary of any Person that is not
organized or incorporated in the United States, any State or territory thereof
or the District of Columbia, or (b) any Subsidiary of any Person that is
organized or incorporated in the United States, any State or territory thereof
or the District of Columbia that owns (directly or indirectly) no assets other
than Equity Interests and/or debt interests of one or more Subsidiaries
described in clause (a) above and other de minimis assets.

“Format Development Agreement” shall mean: (a) the Format Development Agreement,
dated March 10, 2016, among Quantum, Hewlett-Packard Company (“HP”) and
International Business Machines Corporation (“IBM”) relating to LTO8; (b) the
Format Development Agreement, dated August 20, 2012, between Quantum, HP, and
IBM relating to LTO7; (c) the Format Development Agreement, dated August 24,
2009, between Quantum, HP and IBM relating to LTO6; (d) the Format Development
Agreement, dated March 23, 2007, between Quantum, HP and IBM relating to LTO 5;
(e) the Format Development Agreement, dated August 18, 2005, between Quantum, HP
and IBM relating to LTO4; (f) the Format Development Agreement, dated January
22, 2003, between Certance LLC, HP and IBM relating to LTO3; and (g) any prior
or subsequent format development agreement relating to LTO to which Quantum or
any Subsidiary is a party.

 

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“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.

“Funded Debt” shall mean, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person’s
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capitalized Lease Obligations,
current maturities of long-term debt, revolving credit and short term debt
extendible beyond one year at the option of the debtor, and also including, in
the case of the Loan Parties, the Obligations and, without duplication,
Indebtedness consisting of guaranties of Funded Debt of other Persons; provided
however that for purposes of determining the amount of Funded Debt with respect
to the Obligations, the amount of Funded Debt shall be equal to the quotient of
(x) the sum of the outstanding Revolving Advances, Swing Loans and the Maximum
Undrawn Amount of all outstanding Letters of Credit for each day of the most
recently ended fiscal quarter, divided by (y) the number of such days in such
fiscal quarter.

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

“German Tax Obligations” shall mean the potential tax obligations of Quantum
Böhmenkirch GmbH & Co. KG and Advanced Digital Information Corp. resulting from
a tax audit covering the fiscal years 2004 through 2011 in an aggregate amount
of up to the Dollar Equivalent of $3,200,000.

“Governmental Acts” shall mean any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body.

“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).

“Guarantor” or “Guarantors” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.

“Guarantor Security Agreement” shall mean any security agreement executed by any
Guarantor in favor of Agent securing the Obligations or the Guaranty of such
Guarantor, in form and substance reasonably satisfactory to Agent.

“Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in
favor of Agent for its benefit and for the ratable benefit of Lenders, in form
and substance reasonably satisfactory to Agent, including Article XVII hereof.

 

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“Hazardous Discharge” shall have the meaning set forth in Section 9.3(b) hereof.

“Hazardous Materials” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in or subject to regulation under Environmental Laws.

“Hazardous Wastes” shall mean all waste materials subject to regulation under
CERCLA, RCRA or applicable state law, and any other applicable Federal and state
laws now in force or hereafter enacted relating to hazardous waste disposal.

“Hedge Liabilities” shall mean collectively, the Foreign Currency Hedge
Liabilities and the Interest Rate Hedge Liabilities.

“Immaterial Subsidiary” shall mean, at any time, any Subsidiary of any Loan
Party (a) designated as such by Borrowing Agent after the Closing Date in a
written notice delivered to Agent and (b) which does not (x) own or generate any
Receivables or Inventory, (y) have revenues in any fiscal year in excess of
$250,000 (other than, in the case of Quantum International, revenue generated
through foreign branch offices pursuant to the Transfer Pricing Program) and
(z) receive or generate any royalty revenue; it being understood that, as of the
Closing Date, each of (1) Advanced Digital Information Corporation, a Washington
corporation, (2) Certance (US) Holdings, Inc., a Delaware corporation, (3)
Certance Holdings Corporation, a Delaware corporation, (4) Certance LLC, a
Delaware limited liability company, (5) Quantum International, (6) Quantum India
Development Center Private Ltd. and (7) Quantum Storage Mexico S. de R.L. de
C.V. shall be deemed to be an “Immaterial Subsidiary”.

“Increasing Lender” shall have the meaning set forth in Section 2.24(a) hereof.

“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities of such Person (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect
of: (a) borrowed money; (b) amounts received under or liabilities in respect of
any note purchase or acceptance credit facility, and all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments; (c)
all Capitalized Lease Obligations; (d) reimbursement obligations (contingent or
otherwise) under any letter of credit agreement, banker’s acceptance agreement
or similar arrangement; (e) obligations under any Interest Rate Hedge, Foreign
Currency Hedge, or other interest rate management device, foreign currency
exchange agreement, currency swap agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement; (f) any other advances of credit made to or on behalf of such
Person or any other transaction (including forward sale or purchase agreements
and conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements including to finance the purchase price of property or services and
all obligations of such Person to pay the deferred purchase price of property or
services (but not including trade payables and accrued expenses incurred in the
Ordinary Course of Business which are not represented by a promissory note or
other evidence of indebtedness and which are not more than

 

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thirty (30) days past due (and, for the avoidance of doubt, any royalty payments
payable in the Ordinary Course of Business in respect of non-exclusive
licenses); (g) all Equity Interests of such Person subject to repurchase or
redemption rights or obligations (excluding repurchases or redemptions at the
sole option of such Person); (h) all indebtedness, obligations or liabilities
secured by a Lien on any asset of such Person, whether or not such indebtedness,
obligations or liabilities are otherwise an obligation of such Person; (i) all
obligations of such Person for “earnouts”, purchase price adjustments, profit
sharing arrangements, deferred purchase money amounts and similar payment
obligations or continuing obligations of any nature of such Person arising out
of purchase and sale contracts; (j) off-balance sheet liabilities of such
Person; (k) obligations arising under bonus, deferred compensation, incentive
compensation or similar arrangements, other than those arising in the Ordinary
Course of Business; and (l) any guaranty of any indebtedness, obligations or
liabilities of a type described in the foregoing clauses (a) through (k).

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

“Insolvency Event” shall mean, with respect to any Person, including without
limitation any Lender, such Person or such Person’s direct or indirect Parent
(a) becomes the subject of a bankruptcy or insolvency proceeding (including any
proceeding under Title 11 of the United States Code), or regulatory
restrictions, (b) has had a receiver, conservator, trustee, administrator,
custodian, assignee for the benefit of creditors or similar Person charged with
the reorganization or liquidation of its business appointed for it or has called
a meeting of its creditors, (c) admits in writing its inability, or be generally
unable, to pay its debts as they become due or ceases operations of its present
business, (d) with respect to a Lender, such Lender is unable to perform
hereunder due to the application of Applicable Law, or (e) in the good faith
determination of Agent, has taken any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any such proceeding or
appointment of a type described in clauses (a) or (b), provided that an
Insolvency Event shall not result solely by virtue of any ownership interest, or
the acquisition of any ownership interest, in such Person or such Person’s
direct or indirect Parent by a Governmental Body or instrumentality thereof if,
and only if, such ownership interest does not result in or provide such Person
with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such
Person (or such Governmental Body or instrumentality) to reject, repudiate,
disavow or disaffirm any contracts or agreements made by such Person.

“Intellectual Property” shall mean property constituting a patent, copyright,
trademark (or any application in respect of the foregoing), service mark, trade
name, mask work, trade secrets or design right under Applicable Law, including
any such property to which a Loan Party has a license or other right to use any
of the foregoing under Applicable Law.

“Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated
as of the Closing Date among Agent, Term Loan Agent and the Loan Parties, as the
same may be amended, modified, supplemented, renewed, restated or replaced in
accordance with the terms thereof.

“Interest Expense” shall mean, for any period, the aggregate interest expense of
Quantum and its Subsidiaries, for such period, determined in accordance with
GAAP.

 

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“Interest Period” shall mean the period provided for any LIBOR Rate Loan
pursuant to Section 2.2(b) hereof.

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or
similar agreements entered into by any Loan Party or any of its Subsidiaries in
order to provide protection to, or minimize the impact upon, any Loan Party or
its Subsidiaries of increasing floating rates of interest applicable to
Indebtedness.

“Interest Rate Hedge Liabilities” shall mean the liabilities owing to the
provider of any Interest Rate Hedge. For purposes of this Agreement and all of
the Other Documents, all Interest Rate Hedge Liabilities of any Loan Party or
Subsidiary that is party to any Lender-Provided Interest Rate Hedge shall be
“Obligations” hereunder and under the Other Documents, except to the extent
constituting Excluded Hedge Liabilities of such Person, and the Liens securing
such Interest Rate Hedge Liabilities shall be pari passu with the Liens securing
all other Obligations under this Agreement and the Other Documents, subject to
the express provisions of Section 11.5 hereof.

“Inventory” shall mean and include as to each Loan Party all of such Loan
Party’s inventory (as defined in Article 9 of the Uniform Commercial Code) and
all of such Loan Party’s goods, merchandise and other personal property,
wherever located, to be furnished under any consignment arrangement, contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Loan Party’s business or used in selling or
furnishing such goods, merchandise and other personal property, and all
Documents.

“Investment” shall mean, 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,
moving expenses 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.

“Investment Property” shall mean and include, with respect to any Person, all of
such Person’s now owned or hereafter acquired securities (whether certificated
or uncertificated), securities entitlements, securities accounts, commodities
contracts and commodities accounts, and any other asset or right that would
constitute “investment property” under the Uniform Commercial Code.

“Issuers” shall mean, collectively: (a) Agent, in its capacity as the issuer of
Letters of Credit hereunder and (b) any other Lender which is requested by
Borrowing Agent and is acceptable to Agent in its sole discretion to become an
issuer of Letter of Credits hereunder; each an “Issuer”.

 

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“Law(s)” shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Governmental Body, foreign or domestic.

“Leasehold Interests” shall mean all of each Loan Party’s right, title and
interest in and to, and as lessee of, the premises identified as leased Real
Property on Schedule 4.4 hereto.

“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
permitted transferee, successor or assign of any Lender. For the purposes of any
provision of this Agreement or any Other Document which provides for the
granting of a security interest or other Lien to Agent for the benefit of
Lenders as security for the Obligations, “Lenders” shall include any Affiliate
of a Lender to which such Obligation (specifically including any Hedge
Liabilities in respect of Lender-Provided Hedges and any Cash Management
Liabilities) is owed.

“Lender-Provided Hedges” shall mean, collectively, all Lender-Provided Foreign
Currency Hedges and all Lender-Provided Interest Rate Hedges.

“Lender-Provided Foreign Currency Hedge” shall mean a Foreign Currency Hedge
which is provided by any Lender to any Loan Party or any Subsidiary of a Loan
Party and for which such Lender confirms to Agent in writing prior to the
execution thereof that it: (a) is documented in a standard International Swap
Dealers Association, Inc. Master Agreement or another reasonable and customary
manner; (b) provides for the method of calculating the reimbursable amount of
the provider’s credit exposure in a reasonable and customary manner; and (c) is
entered into for hedging (rather than speculative) purposes.

“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender to any Loan Party or any Subsidiary of a Loan Party and
with respect to which such Lender confirms to Agent in writing prior to the
execution thereof that it: (a) is documented in a standard International Swap
Dealers Association, Inc. Master Agreement or another reasonable and customary
manner; (b) provides for the method of calculating the reimbursable amount of
the provider’s credit exposure in a reasonable and customary manner; and (c) is
entered into for hedging (rather than speculative) purposes.

“Letter of Credit Application” shall have the meaning set forth in Section
2.12(a) hereof.

“Letter of Credit Borrowing” shall have the meaning set forth in Section 2.14(d)
hereof.

“Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.

“Letter of Credit Sublimit” shall mean $3,000,000.

“Letters of Credit” shall have the meaning set forth in Section 2.11 hereof.

 

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“LIBOR Alternate Source” shall have the meaning set forth in the definition of
“LIBOR Rate”.

“LIBOR Rate” shall mean for any LIBOR Rate Loan for then current Interest Period
relating thereto, the interest rate per annum determined by Agent by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum) (a) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which U.S. dollar
deposits are offered by leading banks in the London interbank deposit market),
or the rate which is quoted by another source selected by Agent as an authorized
information vendor for the purpose of displaying rates at which U.S. dollar
deposits are offered by leading banks in the London interbank deposit market (a
“LIBOR Alternate Source”), at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period as the London
interbank offered rate for U.S. Dollars for an amount comparable to such LIBOR
Rate Loan and having a borrowing date and a maturity comparable to such Interest
Period (or if there shall at any time, for any reason, no longer exist a
Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a
comparable replacement rate determined by Agent at such time (which
determination shall be conclusive absent manifest error)), by (b) a number equal
to 1.00 minus the Reserve Percentage; provided, however, that if the LIBOR Rate
determined as provided above would be less than zero, such rate shall be deemed
to be zero for purposes of this Agreement. The LIBOR Rate shall be adjusted with
respect to any LIBOR Rate Loan that is outstanding on the effective date of any
change in the Reserve Percentage as of such effective date. Agent shall give
reasonably prompt notice to the Borrowing Agent of the LIBOR Rate as determined
or adjusted in accordance herewith, which determination shall be conclusive
absent manifest error.

“LIBOR Rate Loan” shall mean any Advance that bears interest based on the LIBOR
Rate.

“License Agreement” shall mean any agreement between any Loan Party and a
Licensor pursuant to which such Loan Party is authorized to use any Intellectual
Property in connection with the manufacturing, marketing, sale or other
distribution of any Inventory of such Loan Party or otherwise in connection with
such Loan Party’s business operations.

“Licensor” shall mean any Person from whom any Loan Party obtains the right to
use (whether on an exclusive or non-exclusive basis) any Intellectual Property
in connection with such Loan Party’s manufacture, marketing, sale or other
distribution of any Inventory or otherwise in connection with such Loan Party’s
business operations.

“Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor,
in form and substance reasonably satisfactory to Agent, by which Agent is given
the unqualified right, vis-à-vis such Licensor, to enforce Agent’s Liens with
respect to and to Dispose of any Loan Party’s Inventory with the benefit of any
Intellectual Property applicable thereto, irrespective of such Loan Party’s
default under any License Agreement with such Licensor.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), delinquent
Charge, claim or encumbrance, or preference, priority or other security
agreement or preferential arrangement held or asserted in

 

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respect of any asset of any kind or nature whatsoever including any conditional
sale or other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction.

“Lien Waiver Agreement” shall mean an agreement which is executed in favor of
Agent and Term Loan Agent by a Person who owns or occupies premises at which any
Collateral may be located from time to time in form and substance reasonably
satisfactory to Agent.

“Liquidity” shall mean, as of any date of determination, the sum of (a) Undrawn
Availability on such date, plus (b) the aggregate amount of all Qualified Cash
on such date, plus (c) the aggregate amount of all PNC Other Cash on such date.

“Loan Party” or “Loan Parties” shall have the meaning set forth in the preamble
to this Agreement and shall extend to all permitted successors and assigns of
such Persons.

“LTO Consortium” shall mean any Person party to a Format Development Agreement.

“LTO Program” shall mean assets (including Intellectual Property) and revenue
directly related and attributable to the Linear Tape-Open (“LTO”) format for
which a Format Development Agreement exists.

“Manufacturing Inventory” shall mean Inventory classified on any Loan Party’s
balance sheet as manufacturing inventory in accordance with GAAP.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
condition (financial or otherwise), results of operations, assets, business,
properties or prospects of either (i) Quantum or (ii) the Loan Parties, taken as
a whole, (b) the ability of either (i) Quantum or (ii) the Loan Parties, taken
as a whole, to duly and punctually pay or perform the Obligations in accordance
with the terms hereof, (c) Agent’s Liens on the Collateral or the priority of
any such Lien on all or a material portion of the Collateral or (d) the
practical realization of the benefits of Agent’s and each Lender’s rights and
remedies under this Agreement and the Other Documents.

“Material Contract” shall mean any contract, agreement, instrument, permit,
lease or license, written or oral, of any Loan Party, which is material to any
Loan Party’s business or which the failure to comply with could reasonably be
expected to result in a Material Adverse Effect.

“Material Customers” shall mean as of any date of determination, the top five
(5) Customers of Quantum and its Subsidiaries for the trailing twelve (12) month
period ending on the last day of the month most recently ended, as measured by
royalty revenue received by Quantum and its Subsidiaries in the aggregate.

“Maturity Date” shall mean the earliest of (a) October 21, 2021, and (b)
September 15, 2017, unless, as of September 13, 2017, either (i) the Convertible
Subordinated Debt Maturity Date shall have been extended to a date that is no
earlier than the later of (x) January 21, 2022 and (y) the date which is
ninety-one (91) days after the last day of the Term, in either case in
accordance with the terms of the Convertible Subordinated Debt Documents;
(ii) all of the

 

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Convertible Subordinated Debt has been converted to Qualified Equity Interests
in Quantum in a cashless exchange (with cash payment made in exchange for
fractional shares) in accordance with the terms of the Convertible Subordinated
Debt Documents, (iii) the Convertible Subordinated Debt has been paid in full in
accordance with Section 7.18 hereof, or (iv) Agent shall have received evidence,
in form and substance reasonably satisfactory to Agent, that on the Convertible
Subordinated Debt Maturity Date, (A) no Default or Event of Default will exist
or will have occurred and be continuing, (B) Quantum and its Subsidiaries, on a
consolidated basis, will be in compliance on a pro forma basis with the
financial covenants set forth in Section 6.5 hereof for the four (4) fiscal
quarter period ending on September 30, 2017, (C) the Senior Net Leverage Ratio
for Quantum and its Subsidiaries, on a consolidated basis, will be not greater
than 3.00 to 1.00 for the twelve (12) fiscal month period ending on October 31,
2017 after giving pro forma effect to the payment in full of the Convertible
Subordinated Debt, and (D) immediately after giving to the satisfaction of the
requirements set forth in the proviso set forth in Section 7.18 hereof, each of
the Payment Conditions will be satisfied.

“Maximum Revolving Advance Amount” shall mean $80,000,000, as such amount may be
increased in accordance with Section 2.24 hereof.

“Maximum Swing Loan Advance Amount” shall mean $8,000,000; provided that, upon
the effective date of each increase in the Maximum Revolving Advance Amount in
accordance with Section 2.24 hereof, the Maximum Swing Loan Advance Amount shall
increase by an amount equal to ten percent (10%) of the amount of such increase
in the Maximum Revolving Advance Amount.

“Maximum Undrawn Amount” shall mean, with respect to any outstanding Letter of
Credit as of any date, the amount of such Letter of Credit that is or may become
available to be drawn, including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.

“Minimum PNC Qualified Cash Amount” shall mean: (a) for the period from the
Closing Date until the date of satisfaction of clause (c) of the Specified
Convertible Subordinated Debt Condition, $20,000,000, (b) for the period from
the date of the satisfaction of clause (c) of the Specified Convertible
Subordinated Debt Condition to March 31, 2018, $12,000,000, and (c) from and
after April 1, 2018, $20,000,000.

“Modified Commitment Transfer Supplement” shall have the meaning set forth in
Section 16.3(d) hereof.

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
3(37) or 4001(a)(3) of ERISA to which contributions are required or, within the
preceding five plan years, were required by any Loan Party or any member of the
Controlled Group.

“Multiple Employer Plan” shall mean a Plan which has two or more contributing
sponsors (including any Loan Party or any member of the Controlled Group) at
least two of whom are not under common control, as such a plan is described in
Section 4063 or 4064 of ERISA.

 

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“Negotiable Document” shall mean a Document that is “negotiable” within the
meaning of Article 7 of the Uniform Commercial Code.

“Net Cash Proceeds” shall mean:

(a) with respect to any Disposition by any Loan Party or any of its Subsidiaries
of any 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 Loan Party or Subsidiary in
connection therewith after deducting therefrom only (i) the amount of any
Indebtedness secured by any Permitted Encumbrance on any asset (other than
(A) the Obligations and (B) Indebtedness assumed by the purchaser of such asset)
which is required to be, and is, repaid in connection with such Disposition,
(ii) reasonable fees, commissions and expenses related thereto and required to
be paid by such Loan Party or such Subsidiary in connection with such
Disposition, (iii) taxes paid or payable to any taxing authorities by such Loan
Party or such Subsidiary in connection with such 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 Loan Party 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 Disposition;

(b) with respect to the issuance or incurrence of any Indebtedness by any Loan
Party or any of its Subsidiaries, or the issuance by any Loan Party 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 Loan Party 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 Loan Party or such
Subsidiary in connection with such issuance or incurrence, (ii) taxes paid or
payable to any taxing authorities by such Loan Party 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
Loan Party or any of its Subsidiaries, and are properly attributable to such
transaction; and

(c) with respect to any Extraordinary Receipts received by any Loan Party or any
of its Subsidiaries, 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 Loan Party or
Subsidiary in connection therewith after deducting therefrom only (i) the amount
of any Indebtedness secured by any Permitted Encumbrance on any asset (other
than the Obligations) and which is required to be, and is, repaid in connection
with such Extraordinary Receipt; (ii) reasonable fees, commissions and expenses
related thereto and required to be paid by such Loan Party or such Subsidiary in
connection with such Extraordinary Receipt; and (iii) taxes paid or payable to
any taxing authorities by such Loan Party or such Subsidiary in connection with
such Extraordinary Receipt, 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 proceeds,
actually paid or payable to a Person that is not an Affiliate of any Loan Party
or any of its Subsidiaries, and are properly attributable to such transaction.

 

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“New Lender” shall have the meaning set forth in Section 2.24(a) hereof.

“Non-Defaulting Lender” shall mean, at any time, any Lender holding a Revolving
Commitment that is not a Defaulting Lender at such time.

“Non-Qualifying Party” shall mean any Loan Party that on the Eligibility Date
fails for any reason to qualify as an Eligible Contract Participant.

“Notes” shall mean collectively, the Revolving Credit Note and the Swing Loan
Note.

“Obligations” shall mean and include any and all loans (including without
limitation, all Advances), advances, debts, liabilities, obligations (including
without limitation all reimbursement obligations and cash collateralization
obligations with respect to Letters of Credit), covenants and duties owing by
any Loan Party or any Subsidiary of any Loan Party to Issuers, Swing Loan
Lender, Lenders or Agent (or to any other direct or indirect subsidiary or
affiliate of any Issuer, Swing Loan Lender, any Lender or Agent) of any kind or
nature, present or future (including any interest or other amounts accruing
thereon, any fees accruing under or in connection therewith, any costs and
expenses of any Person payable by any Loan Party and any indemnification
obligations payable by any Loan Party arising or payable after maturity, or
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to any Loan Party,
whether or not a claim for post-filing or post-petition interest, fees or other
amounts is allowable or allowed in such proceeding), whether or not evidenced by
any note, guaranty or other instrument, arising under this Agreement, any of the
Other Documents or any Cash Management Products and Services, in each case
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening or issuance of a letter of credit, loan,
establishment of any commercial card or similar facility or guarantee, under any
interest or currency swap, future, option or other similar agreement, or in any
other manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of Agent’s or any Lender’s non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated. Notwithstanding
anything to the contrary contained in the foregoing, the Obligations shall not
include any Excluded Hedge Liabilities.

“Ordinary Course of Business” shall mean, with respect to any Loan Party or any
Subsidiary of a Loan Party, the ordinary course of the business of such Loan
Party or such Subsidiary, as applicable.

“Organizational Documents” shall mean, with respect to any Person, any charter,
articles or certificate of incorporation, certificate of organization,
registration or formation, certificate of partnership or limited partnership,
bylaws, operating agreement, limited liability company agreement, or partnership
agreement of such Person and any and all other applicable documents

 

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relating to such Person’s formation, organization or entity governance matters
(including any shareholders’ or equity holders’ agreement or voting trust
agreement) and specifically includes, without limitation, any certificates of
designation for preferred stock or other forms of preferred equity.

“Other Documents” shall mean the Notes, the Fee Letter, any Guaranty, any
Guarantor Security Agreement, any Pledge Agreement, any Lender-Provided Hedge,
the Intercreditor Agreement, and any and all other agreements, instruments and
documents, including any subordination agreements, guaranties, pledges, powers
of attorney, consents, interest or currency swap agreements or other similar
agreements and all other agreements, documents or instruments heretofore, now or
hereafter executed by any Loan Party and/or delivered to Agent or any Lender in
respect of the transactions contemplated by this Agreement, in each case
together with all amendments, modifications, supplements, renewals, extensions,
restatements, substitutions and replacements thereto and thereof.

“Other Taxes” shall mean all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any Other Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
Other Document.

“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(e)
hereof.

“Parent” of any Person shall mean a corporation or other entity owning, directly
or indirectly, fifty percent (50%) or more of the Equity Interests issued by
such Person having ordinary voting power to elect a majority of the directors of
such Person, or other Persons performing similar functions for any such Person.

“Participant” shall mean each Person who shall be granted the right by any
Lender to participate in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.

“Participant Register” shall have the meaning set forth in Section 16.3(b)
hereof.

“Participation Advance” shall have the meaning set forth in Section 2.14(d)
hereof.

“Participation Commitment” shall mean the obligation hereunder of each Lender
holding a Revolving Commitment to buy a participation equal to its Revolving
Commitment Percentage (subject to any reallocation pursuant to Section
2.22(b)(iii) hereof) in the Swing Loans made by Swing Loan Lender hereunder as
provided for in Section 2.4(c) hereof and in the Letters of Credit issued
hereunder as provided for in Section 2.14(a) hereof.

“Payment Conditions” shall mean, on any applicable date of determination:
(a) Liquidity shall be equal to or greater than $30,000,000 on such date, and
(b) no Event of Default shall exist or shall have occurred and be continuing on
such date.

“Payment in Full” or “Paid in Full” shall mean (a) the final payment and
satisfaction in full of all of the Obligations (other than (i) contingent
indemnification Obligations which pursuant to the express terms of this
Agreement or any of the Other Documents survive the

 

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termination hereof or thereof but are not then due and payable, (ii) Obligations
with respect to any Lender-Provided Hedge with respect to which the counterparty
providing such Lender-Provided Hedge has agreed that such Lender-Provided Hedge
may remain outstanding, and (iii) Obligations with respect to any Cash
Management Products and Services with respect to which the Person providing such
Cash Management Products and Services has agreed that such Cash Management
Products and Services may remain outstanding), and (b) the termination of all of
the Commitments. If after receipt of any payment of, or proceeds of Collateral
applied to the payment of, any of the Obligations, Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue as if such payment or proceeds had not
been received by Agent or such Lender.

“Payment Office” shall mean initially Two Tower Center Boulevard, East
Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.

“Pension Benefit Plan” shall mean at any time any “employee pension benefit
plan” as defined in Section 3(2) of ERISA (including a Multiple Employer Plan,
but not a Multiemployer Plan) which is covered by Title IV of ERISA or is
subject to the minimum funding standards under Section 412, 430 or 436 of the
Code and either (a) is maintained or to which contributions are required by Loan
Party or any member of the Controlled Group or (b) has at any time within the
preceding five years been maintained or to which contributions have been
required by a Loan Party or any entity which was at such time a member of the
Controlled Group.

“Permitted Acquisition” shall mean an acquisition by a Loan Party of the assets,
Equity Interests or of any division or line of business of another Person (the
“Target”); provided that:

(a) such acquisition shall not be consummated prior to the satisfaction of the
Specified Convertible Subordinated Debt Condition;

(b) at least fifteen (15) Business Days prior to the anticipated closing date of
the proposed acquisition, Borrowing Agent has provided Agent with written notice
of the proposed acquisition,

(c) the board of directors (or other comparable governing body) of the Target
shall have duly approved the acquisition;

(d) if such acquisition includes general partnership interests or any other
Equity Interest that does not have a corporate (or similar) limitation on
liability of the owners thereof, then such acquisition shall be effected by
having such Equity Interests acquired by a corporate holding company directly or
indirectly wholly-owned by a Loan Party and newly formed for the sole purpose of
effecting such acquisition;

(e) the Target or assets acquired shall be used or useful in the business of the
Borrowers, and Borrowing Agent shall have provided Agent all memoranda and
presentations delivered to the board of directors of Quantum or the applicable
Subsidiary describing the rationale for such acquisition;

 

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(f) no Indebtedness will be incurred, assumed or would exist with respect to
Quantum or its Subsidiaries as a result of such acquisition, other than
Indebtedness permitted under clauses (f), (g) and (h) of the definition of
“Permitted Indebtedness”, and no Liens will be incurred, assumed or would exist
with respect to the assets of Quantum or its Subsidiaries as a result of such
acquisition, other than Permitted Encumbrances;

(g) Agent shall have received a first priority Lien in all acquired assets or
Equity Interests which do not constitute Excluded Property, subject to
documentation satisfactory to Agent;

(h) the Loan Parties shall have delivered to Agent, in form and substance
reasonably acceptable to Agent, financial statements of the acquired entity for
the two (2) most recent fiscal years then ended;

(i) in connection with the acquisition of Equity Interests, the Target shall
(1) have EBITDA, calculated in accordance with GAAP immediately prior to such
acquisition, of at least negative $1,000,000 (or such other minimum amount as
Agent shall agree), (2) be projected to have positive EBITDA within twelve (12)
months following the date of such acquisition, calculated in accordance with
GAAP, and (3) be added as a Borrower or a Guarantor (as Agent shall determine in
its Permitted Discretion) and be jointly and severally liable for all
Obligations;

(j) Borrowing Agent shall have delivered to Agent a pro forma balance sheet, pro
forma financial statements and a Compliance Certificate demonstrating by
reasonably detailed calculations that, upon giving effect to such acquisition on
a pro forma basis (including pro forma adjustments arising out of events which
are directly attributable to such 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 reasonably agreed upon by
Borrowing Agent and Agent) created by adding the historical combined financial
statements of Quantum and its Subsidiaries (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 Target (or the historical financial statements
related to the assets to be acquired) pursuant to the proposed acquisition,
Quantum and its Subsidiaries, on a consolidated basis, (1) would have been in
compliance with each of the financial covenants set forth in Section 6.5 hereof
for the four (4) fiscal quarter period ended immediately prior to the proposed
date of consummation of the proposed acquisition, and (2) are projected to be in
compliance with each of the financial covenants set forth in Section 6.5 hereof
for the four (4) fiscal quarter period ended one year after the proposed date of
consummation of the proposed acquisition;

(k) if the total consideration, including the purchase price and liabilities
assumed (including, without limitation, all Acquired Indebtedness, Indebtedness
under Permitted Seller Notes and Permitted Earnouts), of any such acquisition
shall exceed $10,000,000, Borrowing Agent shall have delivered to Agent a
quality of earnings report performed by a third party firm acceptable to Agent;

 

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(l) immediately after giving effect to the consummation of the proposed
acquisition, Quantum and its Subsidiaries, on a consolidated basis, shall be in
compliance on a pro forma basis with the financial covenants set forth in
Section 6.5 hereof, recomputed for the most recently ended fiscal month for
which financial statements are required to be delivered pursuant to Section 9.9
hereof;

(m) on the date of any such acquisition, Borrowers shall have Average Liquidity
for the thirty (30) days immediately preceding the date of such acquisition of
not less than $30,000,000;

(n) on the date of any such acquisition and after giving pro forma effect
thereto, each of the Payment Conditions shall have been satisfied;

(o) the total consideration, including the purchase price and liabilities
assumed (including, without limitation, all Acquired Indebtedness, Indebtedness
under Permitted Seller Notes and Permitted Earnouts but excluding consideration
in the form of issuance of Equity Interests permitted hereunder or paid with the
proceeds of the issuance of Equity Interests permitted hereunder), of all such
acquisitions shall not exceed $20,000,000 in the aggregate during the Term;

(p) not later than five (5) Business Days prior to the anticipated closing date
of the proposed acquisition, Borrowing Agent has provided Agent with copies of
the most recent drafts of the acquisition agreement and other material
agreements, documents and instruments related to the proposed acquisition,
including, without limitation, any related management, non-compete, employment,
option or other material agreements (the “Acquisition Documents”), and, in any
event, promptly following the closing date of the acquisition, Borrowing Agent
shall provide Agent with a true, correct and complete copies of the Acquisition
Documents, in each case duly authorized, executed and delivered by the parties
thereto, together with any schedules to such Acquisition Documents;

(q) such assets shall be located in the United States or such Target shall be
incorporated in a state within the United States; and

(r) no assets acquired in any such acquisition shall be included in the Formula
Amount until Agent has received a field examination and/or appraisal of such
assets, in form and substance acceptable to Agent.

For the purposes of calculating Liquidity and Average Liquidity under this
definition, any assets being acquired in the proposed acquisition shall be
included in the Formula Amount on the date of closing of such acquisition so
long as Agent has received an audit or appraisal of such assets as set forth in
clause (o) above and so long as such assets satisfy the applicable eligibility
criteria described herein.

 

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“Permitted Assignees” shall mean: (a) Agent, any Lender or any of their direct
or indirect Affiliates; and (b) any fund that is administered or managed by
Agent or any Lender, an Affiliate of Agent or any Lender or a related entity.

“Permitted Discretion” shall mean a determination made in good faith and in the
exercise (from the perspective of a secured asset-based lender) of commercially
reasonable business judgment.

“Permitted Dispositions” shall mean:

(a) Dispositions of Equipment that is substantially worn, damaged or obsolete or
no longer used or useful in the Ordinary Course of Business of the Loan Parties
or their Subsidiaries and leases or subleases of Real Property that is not
useful in the conduct of the business of the Loan Parties or their Subsidiaries;

(b) sales of Inventory to Customers in the Ordinary Course of Business;

(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of this Agreement or any of the Other Documents;

(d) the licensing of patents, trademarks, copyrights, and other Intellectual
Property rights (i) on a non-exclusive basis in the Ordinary Course of Business
or (ii) on a non-exclusive basis (other than with respect to exclusivity for
specific geographic locations), in each case under this clause (ii), in the
Ordinary Course of Business to the extent consistent with past practice;

(e) the granting of Permitted Encumbrances;

(f) the sale or discount, in each case without recourse, of Receivables arising
in the Ordinary Course of Business, but only in connection with the compromise
or collection thereof;

(g) any involuntary loss, damage or destruction of property;

(h) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property;

(i) the leasing or subleasing of assets of any Loan Party or its Subsidiaries in
the Ordinary Course of Business;

(j) (i) the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of Quantum, (ii) the sale or issuance of Equity Interests (other than
Disqualified Equity Interests) of any wholly-owned Subsidiary of a Loan Party
that is itself a Loan Party to such Loan Party and (iii) the sale or issuance of
Equity Interests (other than Disqualified Equity Interests) of any Subsidiary
that is not a Loan Party to any Subsidiary that is not a Loan Party;

 

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(k) (i) the lapse of registered patents, trademarks, copyrights and other
Intellectual Property of any Loan Party or 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 so long as
(in each case under clauses (i) and (ii)), (A) such patents, trademarks,
copyrights or other Intellectual Property rights do not generate material
revenue, (B) such lapse or abandonment would not reduce the recurring royalty
revenue stream of assets not Disposed of, and (C) such lapse or abandonment is
not materially adverse to the interests of Agent and the other Secured Parties;

(l) the making of Restricted Payments that are expressly permitted to be made
pursuant to this Agreement;

(m) the making of Permitted Investments;

(n) Dispositions of assets acquired by any Loan Party or its Subsidiaries
pursuant to a Permitted Acquisition consummated within twelve (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 (as
determined in good faith by such Loan Party or the applicable Subsidiary) of
such assets, (ii) the assets to be so Disposed are not necessary or economically
desirable in connection with the business of the Loan Parties and their
Subsidiaries, and (iii) the assets to be so Disposed are readily identifiable as
assets acquired pursuant to the subject Permitted Acquisition;

(o) transfers of assets (i) from any Loan Party or any of its Subsidiaries to a
Loan Party and (ii) from any Subsidiary of any Loan Party that is not a Loan
Party to a Loan Party, in each case, to the extent made in accordance with
Section 7.10 hereof;

(p) Dispositions of intangible assets not otherwise permitted in clauses
(a) through (o) above, so long as (i) no Default or Event of Default then exists
or would arise therefrom, (ii) such Disposition would not reduce the recurring
royalty revenue stream of assets not Disposed of, (iii) such intangible assets
do not generate material revenue, (iv) any such Disposition would not result in
a material increase in any costs or expenses of Quantum and its Subsidiaries,
(v) such Disposition is made at fair market value (as determined in good faith
by Borrowing Agent or the applicable Subsidiary), and (vi) the aggregate fair
market value of all such intangible assets Disposed of in any fiscal year
(including the proposed Disposition) would, together with the aggregate fair
market value of all assets Disposed of pursuant to clause (q) of this
definition, not exceed $20,000,000; and

(q) Dispositions of fixed assets not otherwise permitted in clauses (a) through
(o) above, so long as (i) such Disposition would not reduce the recurring
royalty revenue stream of assets not Disposed of, (ii) no Default or Event of
Default then exists or would arise therefrom, (iii) such Disposition is made at
fair market value (as determined in good faith by Borrowing Agent or the
applicable Subsidiary), (iv) the aggregate fair market value of all such assets
Disposed of in any fiscal year (including the proposed Disposition) would,
together with the aggregate fair market value of all assets Disposed of pursuant
to clause (p) of this definition, not exceed $20,000,000, (v) in any such
Disposition, at least 75% of the purchase price is paid to such Loan Party or
Subsidiary in cash, and (vi) within five (5) Business Days of the consummation
of any single Disposition or series of related Dispositions in which the
aggregate fair market value of all such assets Disposed of exceeds $5,000,000,
Borrowing Agent shall deliver to Agent an updated Borrowing Base Certificate.

 

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“Permitted Earnouts” shall mean, with respect to a Loan Party, any obligations
of such Loan Party arising from a Permitted Acquisition which are payable to the
seller based on the achievement of specified financial results over time and are
subject to subordination terms (or a Subordination Agreement in favor of Agent
and Lenders) reasonably acceptable to Agent.

“Permitted Encumbrances” shall mean:

(a) Liens in favor of Agent, for the benefit of the Secured Parties, to secure
the Obligations, including without limitation, Liens securing Hedge Liabilities
and Cash Management Products and Services;

(b) Liens in favor of Term Loan Agent, for the benefit of the Term Loan Lenders,
to secure the Term Loan Indebtedness;

(c) 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
being Properly Contested;

(d) 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 10.6
hereof;

(e) Liens set forth on Schedule 7.2 hereof; provided that such Liens shall
secure only the Indebtedness or other obligations which they secure on the
Closing Date (and any Refinancing Indebtedness in respect thereof permitted
hereunder) and shall not subsequently apply to any other property or assets of
any Loan Party other than the property and assets to which they apply as of the
Closing Date.

(f) the interests of lessors (and interests in the title of such lessors) under
operating leases and non-exclusive licensors (and interests in the title of such
licensors) under license agreements;

(g) 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;

(h) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers or suppliers arising 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 being Properly
Contested;

(i) Liens on amounts deposited to secure obligations of the Loan Parties and
their Subsidiaries in connection with worker’s compensation or other
unemployment insurance;

 

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(j) Liens on amounts deposited to secure obligations of the Loan Parties and
their Subsidiaries 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;

(k) Liens on amounts deposited to secure reimbursement obligations of the Loan
Parties and their Subsidiaries with respect to surety or appeal bonds obtained
in the Ordinary Course of Business;

(l) 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;

(m) to the extent constituting a Permitted Disposition, licenses of patents,
trademarks, copyrights and other Intellectual Property rights;

(n) Liens that are replacements of Permitted Encumbrances 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;

(o) 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 deposit accounts of the Loan Parties and their
Subsidiaries in the Ordinary Course of Business;

(p) Liens granted in the Ordinary Course of Business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
such financing is permitted under the definition of “Permitted Indebtedness”;

(q) 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;

(r) Liens solely on any cash earnest money deposits made by the Loan Parties and
their Subsidiaries in connection with any letter of intent or purchase agreement
with respect to a Permitted Acquisition;

(s) Liens that secure Indebtedness of Foreign Subsidiaries permitted under
clause (q) of the definition of “Permitted Indebtedness”; and

(t) other Liens as to which the aggregate amount of the obligations secured
thereby does not exceed $2,500,000.

“Permitted Indebtedness” shall mean:

(a) the Obligations;

(b) Indebtedness as of the Closing Date set forth on Schedule 7.8 hereto and any
Refinancing Indebtedness in respect of such Indebtedness;

 

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(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness; provided that the aggregate outstanding principal
amount of such Indebtedness shall not exceed $5,000,000 at any time;

(d) endorsement of instruments or other payment items for deposit;

(e) Indebtedness consisting of guarantees permitted under Section 7.3 hereof;

(f) Indebtedness incurred on the date of the consummation of a Permitted
Acquisition solely for the purpose of consummating such Permitted Acquisition;
provided that (i) such Indebtedness shall at all times be unsecured, (ii) such
Indebtedness is not incurred for working capital purposes, (iii) such
Indebtedness shall not amortize or mature prior to the date that is six (6)
months after the Maturity Date and such Indebtedness shall not provide for the
payment of interest thereon in cash or Cash Equivalents prior to the date that
is six (6) months after the Maturity Date, (iv) such Indebtedness shall be
subordinated in right of payment to the Obligations on terms and conditions
reasonably satisfactory to Agent; and (v) the aggregate outstanding principal
amount of such Indebtedness shall not exceed $20,000,000 at any time;

(g) Acquired Indebtedness and any Refinancing Indebtedness in respect of such
Acquired Indebtedness; provided that (i) such Indebtedness shall at all times be
unsecured, and (ii) the aggregate outstanding principal amount of such
Indebtedness shall not exceed $10,000,000 at any time;

(h) Indebtedness (x) constituting deferred purchase price obligations arising in
connection with Permitted Acquisitions, (y) under Permitted Seller Notes and
Permitted Earnouts arising in connection with Permitted Acquisitions, and (z)
under non-compete payment obligations arising in connection with Permitted
Acquisitions, provided that, (i) such Indebtedness shall at all times be
unsecured, (ii) such Indebtedness described in clauses (x) and (y) above (other
than, with respect to any Permitted Acquisition, deferred purchase price
obligations arising in connection therewith, the payment of which are not
subject to any condition or contingency, other than the passage of time, in an
amount not to exceed 15% of the purchase price for such Permitted Acquisition)
shall be subordinated in right of payment to the Obligations on terms and
conditions reasonably satisfactory to Agent and in no event shall the Loan
Parties make any payments in respect of such Indebtedness unless, as of the date
of any such payment and after giving effect thereto, (A) each of the Payment
Conditions shall have been satisfied; and (B) Quantum and its Subsidiaries, on a
consolidated basis, are projected to be in compliance with each of the financial
covenants set forth in Section 6.5 hereof for the four (4) fiscal quarter period
ended one year after the proposed date of such payment; and; and (iii) the
aggregate outstanding principal amount of such Indebtedness shall not exceed
$20,000,000 at any time;

(i) Indebtedness in respect of the Convertible Subordinated Debt and any
Refinancing Indebtedness in respect thereof; provided that the aggregate
outstanding principal amount of such Indebtedness shall not exceed $100,000,000
at any time;

(j) Indebtedness incurred in the Ordinary Course of Business under performance,
surety, bid, statutory, or appeal bonds;

 

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(k) Indebtedness owed to any Person providing property, casualty, liability or
other insurance to any Loan Party 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;

(l) Indebtedness consisting of Interest Rate Hedges and Foreign Currency Hedges
that is incurred for the bona fide purpose of hedging the interest rate,
commodity or foreign currency risks associated with the operations of the Loan
Parties and their Subsidiaries and not for speculative purposes;

(m) Cash Management Liabilities;

(n) unsecured Indebtedness of Quantum 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 Quantum of the Equity Interests of
Quantum that has been issued to such Persons, so long as (i) such Indebtedness
shall at all times be unsecured; (ii) such Indebtedness shall be subordinated in
right of payment to the Obligations on terms and conditions reasonably
acceptable to Agent; and (iii) the aggregate outstanding principal amount of
such Indebtedness shall not exceed $1,000,000 at any time;

(o) Indebtedness constituting 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) Indebtedness of any Foreign Subsidiaries of Quantum; provided that (i) the
aggregate outstanding principal amount of such Indebtedness shall not exceed
$2,500,000 at any time, and (ii) such Indebtedness is not directly or indirectly
recourse to any of the Loan Parties or of their respective assets;

(r) Indebtedness of any Loan Party or its Subsidiaries in respect of Permitted
Intercompany Advances;

(s) the 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) any other Indebtedness which is unsecured (or, to the extent a Lien securing
such Indebtedness constitutes a Permitted Encumbrance, secured Indebtedness)
incurred by any Loan Party or any of its Subsidiaries, not otherwise permitted
in clauses (a) through (s) above, and any Refinancing Indebtedness in respect of
such Indebtedness; provided that the aggregate principal amount of such
Indebtedness outstanding at any one time shall not exceed $5,000,000;

(u) any other unsecured Subordinated Indebtedness incurred by any Loan Party or
any of its Subsidiaries (and any Refinancing Indebtedness in respect of such
Subordinated Indebtedness) not otherwise permitted in clauses (a) through (t)
above; provided

 

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that (i) on the date such Indebtedness is incurred and immediately after giving
effect thereto, no Default or Event of Default shall exist or shall have
occurred and be continuing or would result therefrom, and (ii) the aggregate
principal amount of such Indebtedness outstanding at any one time shall not
exceed $15,000,000; and

(v) the Term Loan Indebtedness.

“Permitted Intercompany Advances” shall mean any loans and/or advances made:

(a) pursuant to, and in accordance with, the Transfer Pricing Program;

(b) by a Loan Party to another Loan Party;

(c) by a Subsidiary of a Loan Party that is not a Loan Party to another
Subsidiary of a Loan Party that is not a Loan Party;

(d) by a Subsidiary of a Loan Party that is not a Loan Party to a Loan Party;
and

(e) by a Loan Party to a Subsidiary of a Loan Party that is not a Loan Party;
provided that (i) the aggregate amount of all such loans and advances made after
the Closing Date at any one time outstanding shall not exceed $2,500,000; (ii)
immediately after giving effect to the making of such loan or advance, Quantum
and its Subsidiaries, on a consolidated basis, shall be in compliance on a pro
forma basis with the financial covenants set forth in Section 6.5 hereof,
recomputed for the most recently ended fiscal month for which financial
statements are required to be delivered pursuant to Section 9.9 hereof; (iii) on
the date any such loan or advance is made and after giving effect thereto, each
of the Payment Conditions shall have been satisfied; and (iv) in connection with
any loan or advance made for purposes of funding a Permitted Acquisition, such
loan or advance shall immediately be repaid in full by such Subsidiary to such
Loan Party if such Permitted Acquisition is not consummated within thirty (30)
days of the making of such loan or advance.

“Permitted Investments” shall mean:

(a) Investments in (i) cash and Cash Equivalents, (ii) Foreign Cash Equivalents,
and (iii) readily marketable United States corporate securities that are made in
compliance with the Cash Management Policy;

(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;

(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 an Insolvency Event
involving a Customer 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 7.4 hereto;

(f) guarantees permitted under Section 7.3 hereof;

(g) Permitted Intercompany Advances, so long as, at the request of Agent,
(i) the applicable loan or advance is evidenced by a promissory note on terms
and conditions (including terms subordinating payment of the Indebtedness
evidenced by such note to the prior Payment in Full of all of the Obligations)
acceptable to Agent in its Permitted Discretion and (ii) such note has been
delivered to Agent either endorsed in blank or together with an undated
instrument of transfer executed in blank by the applicable the Loan Parties that
are the payees on such note;

(h) 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 Quantum);

(i) 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;

(j) deposits of cash made in the Ordinary Course of Business to secure
performance of operating leases;

(k) (i) non-cash loans and advances to employees, officers and directors of any
Quantum or any of its Subsidiaries for the purpose of purchasing Equity
Interests in Quantum, so long as the proceeds of such loans or advances are used
in their entirety to purchase such Equity Interests in Quantum, and (ii) loans
and advances to employees and officers of any Loan Party or any of its
Subsidiaries in the Ordinary Course of Business for any other business purpose
and in an aggregate amount not to exceed $1,000,000 at any one time;

(l) Permitted Acquisitions;

(m) Investments resulting from entering into (i) Interest Rate Hedges, Foreign
Currency Hedges or Cash Management Products and Services, 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 Applicable 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;

 

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(p) any Investment by way of (i) merger, consolidation, reorganization or
recapitalization, (ii) reclassification of Equity Interests; or (iii) transfer
of assets, in each case solely to the extent permitted by Section 7.1 hereof;

(q) to the extent constituting an Investment, any Restricted Payment to the
extent permitted by Section 7.7 hereof; and

(r) any other Investments in an aggregate amount not to exceed $10,000,000
outstanding at any time; provided that (i) on the date any Investment is made
and after giving effect thereto, no Event of Default shall have occurred and be
continuing or would result therefrom, and (ii) on the date any Investment is
made which would cause the aggregate amount of all Investments outstanding under
this clause (r) to exceed $1,000,000, and after giving effect to such
Investment, each of the other Payment Conditions shall have been satisfied.

“Permitted Purchase Money Indebtedness” shall mean, 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 ninety (90) days after, the acquisition of any fixed assets for
the purpose of financing all or any part of the acquisition cost thereof.

“Permitted Seller Note” shall mean a promissory note containing subordination
terms (or subject to a subordination agreement in favor of Agent and Lenders)
and other terms and conditions reasonably satisfactory to Agent, with respect to
unsecured Indebtedness of any Loan Party incurred in connection with a Permitted
Acquisition and payable to the seller in connection therewith (excluding
Indebtedness arising from deferred purchase price obligations).

“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, limited liability
partnership, institution, public benefit corporation, joint venture, entity or
Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Benefit Plan and a Multiemployer Plan, as defined
herein) maintained by any Loan Party or any member of the Controlled Group or to
which any Loan Party or any member of the Controlled Group is required to
contribute.

“Pledge Agreement” shall mean any pledge agreement executed and delivered by any
Loan Party or other Person in favor of Agent subsequent to the Closing Date to
secure the Obligations.

“PNC” shall have the meaning set forth in the preamble to this Agreement and
shall extend to all of its successors and assigns.

“PNC Other Cash” shall mean all unrestricted cash and Cash Equivalents of the
Borrowers which is maintained in a Depository Account at PNC and is subject to a
Control Agreement.

 

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“PNC Qualified Cash” all unrestricted cash and Cash Equivalents of the Borrowers
which is maintained in a Blocked Account at PNC and is subject to a Control
Agreement.

“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a)
hereof.

“Pro Forma Financial Statements” shall have the meaning set forth in Section
5.5(b) hereof.

“Properly Contested” shall mean, in the case of any Indebtedness, Lien or Taxes,
as applicable, of any Person that are not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay the
same or concerning the amount thereof: (a) such Indebtedness, Lien or Taxes, as
applicable, are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (b) such Person has
established appropriate reserves as shall be required in conformity with GAAP;
(c) the non-payment of such Indebtedness or Taxes will not have a Material
Adverse Effect or will not result in the forfeiture of any assets of such
Person; (d) no Lien is imposed upon any of such Person’s assets with respect to
such Indebtedness or taxes unless such Lien (x) does not attach to any
Receivables or Inventory, (y) is at all times junior and subordinate in priority
to the Liens in favor of Agent (except only with respect to property Taxes that
have priority as a matter of applicable state law) and, (z) enforcement of such
Lien is stayed during the period prior to the final resolution or disposition of
such dispute; and (e) if such Indebtedness or Lien, as applicable, results from,
or is determined by the entry, rendition or issuance against a Person or any of
its assets of a judgment, writ, order or decree, enforcement of such judgment,
writ, order or decree is stayed pending a timely appeal or other judicial
review.

“Protective Advances” shall have the meaning set forth in Section 16.2(f)
hereof.

“Published Rate” shall mean the rate of interest published each Business Day in
the Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the LIBOR
Rate for a one month period as published in another publication selected by
Agent).

“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.

“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.

“Qualified Cash” shall mean, as of any date of determination, the sum of:

(a) so long as Quantum is in compliance with Section 6.14(a)(i) hereof, for the
period from the Closing Date to March 31, 2017, all unrestricted cash and Cash
Equivalents of Quantum which is maintained in a Blocked Account at a Specified
Domestic Blocked Account Bank and which is subject to a Control Agreement, in
form and substance reasonably satisfactory to Agent, among Agent, Term Loan
Agent, such Specified Domestic Blocked Account Bank and Quantum, duly
authorized, executed and delivered by Term Loan Agent, such Specified Domestic
Blocked Account Bank and Quantum;

 

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(b) so long as Quantum is in compliance with Section 6.14(a)(ii) hereof, all
unrestricted cash and Cash Equivalents of Quantum in an amount not to exceed
$5,000,000 which is maintained in the Swiss Blocked Accounts; and

(c) all PNC Qualified Cash.

“Qualified ECP Loan Party” shall mean each Loan Party that on the Eligibility
Date is (a) a corporation, partnership, proprietorship, organization, trust, or
other entity other than a “commodity pool” as defined in Section 1a(10) of the
CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000
or (b) an Eligible Contract Participant that can cause another person to qualify
as an Eligible Contract Participant on the Eligibility Date under
Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a
“letter of credit or keepwell, support, or other agreement” for purposes of
Section 1a(18)(A)(v)(II) of the CEA.

“Qualified Equity Interests” shall mean Equity Interests issued by Quantum (and
not by one or more of its Subsidiaries) that is not a Disqualified Equity
Interest.

“Quantum” shall have the meaning set forth in the preamble to this Agreement.

“Quantum International” shall mean Quantum International, Inc., a Delaware
corporation.

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as same may be amended, modified or supplemented from time to time.

“Real Property” shall mean all of the real property owned, leased or operated by
any Loan Party on or after the Closing Date, together with, in each case, all
improvements and appurtenant fixtures, equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof.

“Receivables” shall mean and include, as to each Loan Party, all of such Loan
Party’s accounts (as defined in Article 9 of the Uniform Commercial Code) and
all of such Loan Party’s contract rights, instruments (including those
evidencing indebtedness owed to such Loan Party by its Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, contract rights, instruments, documents and chattel paper, and
drafts and acceptances, credit card receivables and all other forms of
obligations owing to such Loan Party arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.

“Recipient” shall mean (a) Agent, (b) any Lender, (c) Swing Loan Lender, (d) any
Issuer, (e) any Participant, or (f) any other recipient of any payment to be
made by or on account of any Obligations.

“Recurring Royalty Revenue” shall mean revenue received and recognized by
Quantum or any of its Subsidiaries pursuant to a Format Development Agreement
relating to the LTO Program.

 

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“Refinancing Indebtedness” shall mean any financing, renewal or extension of
Indebtedness so long as:

(a) such refinancing, renewal or extension does 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 refinancing, renewal or extension does not result in a shortening of
the average weighted maturity (measured as of the date of the refinancing,
renewal or extension) of the Indebtedness so refinanced, renewed or extended,
and such refinancing, renewal or extension is not on terms or conditions that,
taken as a whole, are less favorable to the interests of the Secured Parties
than the terms and conditions of the Indebtedness being refinanced, renewed or
extended;

(c) if the Indebtedness that is refinanced, renewed or extended was Subordinated
Indebtedness, then the terms and conditions of the refinancing, renewal or
extension shall include subordination terms and conditions that are at least as
favorable to the Secured Parties 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.

“Register” shall have the meaning set forth in Section 16.3(e) hereof.

“Reimbursement Obligation” shall have the meaning set forth in Section 2.14(b)
hereof.

“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.

“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any material aspect of its operations is in actual or probable violation of
any Anti-Terrorism Law.

“Reportable ERISA Event” shall mean a reportable event described in Section 4043
of ERISA or the regulations promulgated thereunder, other than an event for
which the 30-day notice period is waived.

“Required Lenders” shall mean Lenders (not including Swing Loan Lender (in its
capacity as such Swing Loan Lender) or any Defaulting Lender) holding at least
fifty-one percent (51%) of either (a) the aggregate of the Revolving Commitment
Amounts of all Lenders (excluding any Defaulting Lender), or (b) after the
termination of all of the Commitments, the sum of (x) the outstanding Revolving
Advances and Swing Loans, plus (y) the Maximum Undrawn Amount of all outstanding
Letters of Credit; provided, however, if there are fewer than three (3) Lenders,
Required Lenders shall mean all Lenders (excluding any Defaulting Lender).

 

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“Reserve Percentage” shall mean as of any day the maximum effective percentage
in effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

“Restricted Payment” shall mean (a) the declaration or payment of any dividend
or the making of any other payment or distribution, directly or indirectly, on
account of Equity Interests issued by any Loan Party (including any payment in
connection with any merger or consolidation involving any Loan Party) or to the
direct or indirect holders of Equity Interests issued by any Loan Party in their
capacity as such holders (other than dividends or distributions payable in
Qualified Equity Interests issued by Quantum), (b) the purchase, redemption or
making of any sinking fund or similar payment, or otherwise acquisition or
retirement for value (including in connection with any merger or consolidation
involving any Loan Party) any Equity Interests issued by any Loan Party, or
(c) the making of any payment to retire, or to obtain the surrender of, any
outstanding warrants, options, or other rights to acquire Equity Interests of
any Loan Party now or hereafter outstanding.

“Revolving Advances” shall mean Advances other than Letters of Credit and the
Swing Loans.

“Revolving Commitment” shall mean, as to any Lender, the obligation of such
Lender (if applicable), to make Revolving Advances and participate in Swing
Loans and Letters of Credit, in an aggregate principal and/or face amount not to
exceed the Revolving Commitment Amount (if any) of such Lender.

“Revolving Commitment Amount” shall mean, (a) as to any Lender other than a New
Lender, the Revolving Commitment amount set forth opposite such Lender’s name on
Schedule 1.1 hereto (or, in the case of any Lender that became party to this
Agreement after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the
Revolving Commitment amount of such Lender as set forth in the applicable
Commitment Transfer Supplement), and (b) as to any Lender that is a New Lender,
the Revolving Commitment amount provided for in the joinder signed by such New
Lender under Section 2.24(a)(x) hereof, in each case as the same may be adjusted
upon any increase by such Lender pursuant to Section 2.24 hereof, or any
assignment by or to such Lender pursuant to Section 16.3(c) or (d) hereof.

“Revolving Commitment Percentage” shall mean, (a) as to any Lender other than a
New Lender, the Revolving Commitment Percentage set forth opposite such Lender’s
name on Schedule 1.1 hereto (or, in the case of any Lender that became party to
this Agreement after the Closing Date pursuant to Section 16.3(c) or (d) hereof,
the Revolving Commitment Percentage of such Lender as set forth in the
applicable Commitment Transfer Supplement), and (b) as to any Lender that is a
New Lender, the Revolving Commitment Percentage provided for in the joinder
signed by such New Lender under Section 2.24(a)(ix) hereof, in each case as the
same may be adjusted upon any increase in the Maximum Revolving Advance Amount
pursuant to Section 2.24 hereof, or any assignment by or to such Lender pursuant
to Section 16.3(c) or (d) hereof.

 

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“Revolving Credit Note” shall mean, collectively, the promissory notes referred
to in Section 2.1(a) hereof.

“Revolving Interest Rate” shall mean (a) with respect to Revolving Advances that
are Domestic Rate Loans and Swing Loans, an interest rate per annum equal to the
sum of the Applicable Margin for Revolving Advances and Swing Loans plus
the Alternate Base Rate, and (b) with respect to Revolving Advances that are
LIBOR Rate Loans, an interest rate per annum equal to the sum of the Applicable
Margin for Revolving Advances plus the greater of (i) the LIBOR Rate and
(ii) zero percent (0.00%).

“S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business, or any successor.

“Sanctioned Country” shall mean a country subject to a sanctions program
maintained under any Anti-Terrorism Law.

“Sanctioned Person” shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred person, group, regime, entity or thing, or subject to any
limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any Anti-Terrorism Law.

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

“Secured Parties” shall mean, collectively, Agent, Issuers, Swing Loan Lender
and Lenders, together with any Affiliates of Agent or any Lender to whom any
Hedge Liabilities or Cash Management Liabilities are owed and with each other
holder of any of the Obligations, and the respective successors and assigns of
each of them.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Senior Net Leverage Ratio” shall mean, for any Person on any date of
determination, the ratio of (a) the Adjusted Funded Debt of such Person on such
date, to (b) EBITDA of such Person for the four (4) fiscal quarter period ending
on or immediately prior to such date.

“Service Inventory” shall mean Inventory consisting of (a) component parts used
to repair defective products and (b) finished units provided for Customer use
either permanently or on a temporary basis while a defective product is being
repaired and, in each case, specified as “service parts inventories” (or with a
similar description) on the balance sheets of the Loan Parties.

“Settlement” shall have the meaning set forth in Section 2.6(d) hereof.

“Settlement Date” shall have the meaning set forth in Section 2.6(d) hereof.

 

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“Specified Adjusted Funded Debt Amount” shall mean (a) at all times prior to and
on the date of the satisfaction of the Specified Convertible Subordinated Debt
Condition, $20,000,000, and (b) after the date of the satisfaction of the
Specified Convertible Subordinated Debt Condition, $35,000,000.

“Specified Convertible Subordinated Debt Condition” shall mean that Quantum
shall have either (a) extended the Convertible Subordinated Debt Maturity Date
(either through an extension or a refinancing of the Convertible Subordinated
Debt which constitutes permitted Refinancing Indebtedness) to a date no earlier
than the later of (x) January 21, 2022 and (y) the date which is ninety-one (91)
days after the last day of the Term, in either case in accordance with the terms
of the Convertible Subordinated Debt Documents, (b) converted the Convertible
Subordinated Debt to Qualified Equity Interests in Quantum in a cashless
exchange (with cash payment made in exchange for fractional shares) in
accordance with the terms of the Convertible Subordinated Debt Documents, or
(c) repaid, prepaid, repurchased, redeemed, retired or otherwise acquired the
Convertible Subordinated Debt in full (in one or more transactions) in
accordance with Section 7.18 hereof.

“Specified Customers” shall mean the following Customers of the Borrowers
(together with their respective Affiliates): (a) Apple Computer, Inc., (b)
Accutech Data Supplies, Inc., (c) Jeff Burgess & Associates, Inc., (d) Synnex
Corporation, (e) CNCR Group SAS-SSI Informatique and (f) any other Customer
which Agent may approve after the Closing Date in its Permitted Discretion.

“Specified Domestic Blocked Account Banks” shall mean, collectively, the
following (together with their respective successors and assigns): (a) Wells
Fargo Bank, National Association, (b) Silicon Valley Bank, and (c) PNC.

“Specified Swiss Blocked Account Bank” shall mean UBS Switzerland AG,
Max-Hoegger-Strasse 80, P.O. Box CH-8098, Zurich, Switzerland, and its
successors and permitted assigns.

“Subordinated Indebtedness” shall mean: (a) the Convertible Subordinated Debt,
(b) Indebtedness under any Permitted Seller Notes, (c) Indebtedness in respect
of Permitted Earnouts, and (d) any other unsecured Indebtedness of any Loan
Party or its Subsidiaries incurred from time to time that is subordinated in
right of payment to the Obligations and that (i) is guaranteed by the Loan
Parties, (ii) 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 (6) months after the Maturity Date, (iii) does not
include any covenant (including without limitation any financial covenant) or
agreement that is more restrictive or onerous on any Loan Party in any material
respect than any comparable covenant in the Agreement; provided that with
respect to any financial covenant, such covenant shall not be more restrictive
or onerous on any Loan Party in any respect, and (iv) contains customary
subordination (including customary payment blocks during a payment default under
any “senior debt” designated thereunder) and turnover provisions and shall be
limited to cross-payment default and cross-acceleration to other “senior debt”
designated thereunder.

 

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“Subordination Agreement” shall mean any subordination agreement by and among
Agent, any Loan Party and any holder of Subordinated Indebtedness, as the same
may be amended, modified, supplemented, renewed, restated or replaced from time
to time.

“Subsidiary” shall mean of any Person a corporation or other entity of whose
Equity Interests having ordinary voting power (other than Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by such
Person.

“Subsidiary Stock” shall mean (a) with respect to the Equity Interests issued to
a Loan Party by any Subsidiary (other than a Foreign Subsidiary), 100% of such
issued and outstanding Equity Interests, and (b) with respect to any Equity
Interests issued to a Loan Party by any Foreign Subsidiary (i) 100% of such
issued and outstanding Equity Interests not entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2)) and (ii) 65% (or such greater percentage
that could not reasonably be expected to cause any material adverse tax
consequences to Quantum or any of its Subsidiaries) of such issued and
outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)).

“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and
regulations thereunder other than (a) a swap entered into on, or subject to the
rules of, a board of trade designated as a contract market under Section 5 of
the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation
32.3(a).

“Swap Obligation” shall mean any obligation to pay or perform under any
agreement, contract or transaction that constitutes a Swap which is also a
Lender-Provided Hedge.

“Swing Loan Lender” shall mean PNC, in its capacity as lender of the Swing
Loans.

“Swing Loan Note” shall mean the promissory note described in Section 2.4(a)
hereof.

“Swing Loans” shall mean the Advances made pursuant to Section 2.4 hereof.

“Swiss Blocked Accounts” shall mean the Blocked Accounts of Quantum maintained
at Specified Swiss Blocked Account Bank.

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Body, including any interest, additions to tax or penalties
applicable thereto.

“Term” shall have the meaning set forth in Section 13.1 hereof.

“Term Loan Agent” shall mean TCW Asset Management Company LLC, a Delaware
limited liability company, in its capacity as administrative agent under the
Term Loan Agreement, and its successors and permitted assigns.

 

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“Term Loan Agreement” shall mean the Term Loan Credit and Security Agreement,
dated as of the Closing Date, by and among Term Loan Agent, Term Loan Lenders
and the Loan Parties.

“Term Loan Documents” shall mean, collectively, the following (as the same may
be amended, modified, supplemented, renewed, restated or replaced): (a) the Term
Loan Agreement, all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto, if any, (b) all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof, and (c) all of the other agreements, documents and instruments
executed and delivered in connection therewith or related thereto.

“Term Loan Indebtedness” shall mean the “Obligations” (or any such similar term)
(as defined in the Term Loan Agreement) of the Loan Parties owing to Term Loan
Agent, Term Loan Lenders and the other Secured Parties (as defined in the Term
Loan Agreement) under the Term Loan Documents.

“Term Loan Lenders” shall mean the financial institutions from time to time
party to the Term Loan Agreement as lenders.

“Term Loan ECF Mandatory Prepayment Conditions” shall mean, on any applicable
date of determination: (a) Liquidity shall be equal to or greater than
$30,000,000 on such date, and (b) no Event of Default shall exist or shall have
occurred and be continuing on such date.

“Term Loans” shall mean the term loans made by Term Loan Lenders to the
Borrowers on or after the Closing Date under the Term Loan Agreement.

“Termination Event” shall mean: (a) a Reportable ERISA Event with respect to any
Plan; (b) the withdrawal of any Loan Party or any member of the Controlled Group
from a Pension Benefit Plan or Multiemployer Plan during a plan year in which
such entity was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) the providing of notice of intent to terminate a
Pension Benefit Plan or Multiemployer Plan in a distress termination described
in Section 4041(c) of ERISA; (d) the commencement of proceedings by the PBGC to
terminate a Plan; (e) any event or condition (i) which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Benefit Plan or Multiemployer Plan, or (ii)
that may result in the termination of a Multiemployer Plan pursuant to Section
4041A of ERISA; (f) the partial or complete withdrawal, within the meaning of
Section 4203 or 4205 of ERISA, of any Loan Party or any member of the Controlled
Group from a Multiemployer Plan; (g) notice that a Multiemployer Plan is subject
to Section 4245 of ERISA; or (h) the imposition of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent, upon any Loan
Party or any member of the Controlled Group.

“Total Leverage Ratio” shall mean, for any Person on any date of determination,
the ratio of (a) Funded Debt of such Person on such date to (b) EBITDA of such
Person for the four (4) fiscal quarter period ending on or immediately prior to
such date.

 

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“Toxic Substance” shall mean and include any material present on any Real
Property owned or leased by any Loan Party (including the Leasehold Interests)
which has been shown to have significant adverse effect on human health or which
is subject to regulation under the Toxic Substances Control Act (TSCA), 15
U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or
state laws now in force or hereafter enacted relating to toxic
substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.

“Transactions” shall mean the transactions under or contemplated by this
Agreement, the Other Documents and the Term Loan Documents to occur on the
Closing Date.

“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.

“Transfer Pricing Program” shall mean the transactions between Quantum and any
of its Subsidiaries or between any Subsidiaries of Quantum pursuant to which
Quantum, directly or indirectly, reimburses expenses incurred by its
Subsidiaries in the operation of the business, in each case, in accordance with
applicable law, in the Ordinary Course of Business and in a manner consistent
with past practice.

“Undrawn Availability” at a particular date shall mean an amount equal to (a)
the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount, minus (b) the outstanding amount of all Revolving Advances and Swing
Loans, minus (c) the Maximum Undrawn Amount of all outstanding Letters of
Credit, minus (d) the sum of (i) all amounts due and owing to any Borrower’s
trade creditors which are outstanding sixty (60) days or more past their due
date, plus (ii) all fees and expenses incurred in connection with the
Transactions for which Borrowers are liable but which have not been paid or
charged to Borrowers’ Account.

“Unfunded Capital Expenditures” shall mean, as to any Loan Party, without
duplication, Capital Expenditures funded (a) from such Loan Party’s internally
generated cash flow or (b) with the proceeds of a Revolving Advance or Swing
Loan. Notwithstanding the foregoing, for purposes of calculating the Fixed
Charge Coverage Ratio of Quantum and its Subsidiaries for any fiscal period
ending on December 31, 2016, March 31, 2017, June 30, 2017 and September 30,
2017: (a) the Unfunded Capital Expenditures of Quantum and its Subsidiaries for
the fiscal quarter ending on March 31, 2016 shall be deemed to be $1,710,550;
(b) the Unfunded Capital Expenditures of Quantum and its Subsidiaries for the
fiscal quarter ending on June 30, 2016 shall be deemed to be $1,631,630; and (c)
the Unfunded Capital Expenditures of Quantum and its Subsidiaries for the fiscal
quarter ending on September 30, 2016 shall be deemed to be $2,175,836.

“Uniform Commercial Code” shall have the meaning set forth in Section 1.3
hereof.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, amended,
modified, supplemented, renewed, extended or replaced.

“Write-Down and Conversion Powers” shall mean, with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

 

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1.3 Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform Commercial Code as adopted in the State of New York from time to time
(the “Uniform Commercial Code”) shall have the meaning given therein unless
otherwise defined herein. Without limiting the foregoing, the terms “accounts”,
“chattel paper” (and “electronic chattel paper” and “tangible chattel paper”),
“commercial tort claims”, “deposit accounts”, “financial asset”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “letter-of-credit rights”,
“payment intangibles”, “proceeds”, “promissory note” “securities”, “software”
and “supporting obligations” as and when used in the description of Collateral
shall have the meanings given to such terms in Articles 8 or 9 of the Uniform
Commercial Code. To the extent the definition of any category or type of
collateral is expanded by any amendment, modification or revision to the Uniform
Commercial Code, such expanded definition will apply automatically as of the
date of such amendment, modification or revision.

1.4 Certain Matters of Construction. The terms “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. All references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement,
except where the context clearly requires otherwise. Any pronoun used shall be
deemed to cover all genders. Wherever appropriate in the context, terms used
herein in the singular also include the plural and vice versa. All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. Unless otherwise provided, all references to
any instruments or agreements, including references to any of the Other
Documents, shall include any and all modifications, supplements or amendments
thereto, any and all restatements or replacements thereof and any and all
extensions or renewals thereof. Except as otherwise expressly provided for
herein, all references herein to the time of day shall mean the time in New
York, New York. Whenever the words “including” or “include” shall be used, such
words shall be understood to mean “including, without limitation” or “include,
without limitation”. A Default or an Event of Default shall be deemed to exist
at all times during the period commencing on the date that such Default or Event
of Default occurs to the date on which such Default or Event of Default is
waived in writing pursuant to this Agreement or, in the case of a Default, is
cured within any period of cure expressly provided for in this Agreement; and an
Event of Default shall “continue” or be “continuing” until such Event of Default
has been waived in writing by Required Lenders. Any Lien referred to in this
Agreement or any of the Other Documents as having been created in favor of
Agent, any agreement entered into by Agent pursuant to this Agreement or any of
the Other Documents, any payment made by or to or funds received by Agent
pursuant to or as contemplated by this Agreement or any of the Other Documents,
or any act taken or omitted to be taken by Agent, shall, unless otherwise
expressly provided, be created, entered into, made or received, or taken or
omitted, for the benefit or account of Agent and Lenders. Wherever the phrase
“to the Borrowers’ knowledge” or “to the Loan Parties’ knowledge” or words of
similar import relating to the knowledge or the awareness of any Borrower or any
Loan Party are used in this Agreement or Other Documents, such phrase shall mean
and refer to (i) the actual knowledge of a senior officer of any Loan Party or
(ii) the knowledge that a senior officer would have obtained if he/she had
engaged in a good faith and diligent performance of his/her duties. All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or otherwise within the limitations of,
another covenant shall not avoid the occurrence of a default

 

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if such action is taken or condition exists. In addition, all representations
and warranties hereunder shall be given independent effect so that if a
particular representation or warranty proves to be incorrect or is breached, the
fact that another representation or warranty concerning the same or similar
subject matter is correct or is not breached will not affect the incorrectness
of a breach of a representation or warranty hereunder.

 

II. ADVANCES, PAYMENTS.

2.1 Revolving Advances.

(a) Amount of Revolving Advances. Subject to the terms and conditions set forth
in this Agreement, each Lender holding a Revolving Commitment, severally and not
jointly, will make Revolving Advances to Borrowers in aggregate amounts
outstanding at any time equal to such Lender’s Revolving Commitment Percentage
of the lesser of (x) the Maximum Revolving Advance Amount, less the outstanding
amount of Swing Loans, less the aggregate Maximum Undrawn Amount of all
outstanding Letters of Credit or (y) an amount equal to the result of the
following (hereinafter, the “Formula Amount”):

(i) the sum of (A) up to 90% of Eligible Receivables (other than Eligible
Extended Terms Receivables) and (B) up to 90% of Eligible Insured Foreign
Receivables, plus

(ii) the lesser of (A) up to 90% of Eligible Extended Terms Receivables and (B)
$4,000,000; plus

(iii) the least of (A) up to 60% of the cost of the Eligible Inventory, (B) up
to 85% of the appraised net orderly liquidation value of Eligible Inventory (as
evidenced by an Inventory appraisal satisfactory to Agent in its Permitted
Discretion), or (C) $17,500,000 in the aggregate at any one time, plus

(iv) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit,
minus

(v) such reserves as Agent may reasonably deem proper and necessary from time to
time.

The Revolving Advances shall be evidenced by one or more secured promissory
notes (collectively, the “Revolving Credit Note”) substantially in the form
attached hereto as Exhibit 2.1(a) hereto. Notwithstanding anything to the
contrary in this Section or otherwise in this Agreement, the outstanding
aggregate principal amount of Swing Loans and the Revolving Advances at any one
time outstanding shall not exceed an amount equal to the lesser of (i) the
Maximum Revolving Advance Amount less the Maximum Undrawn Amount of all
outstanding Letters of Credit or (ii) the Formula Amount.

(b) Discretionary Rights. The Advance Rates may be increased or decreased by
Agent at any time and from time to time in the exercise of its Permitted
Discretion. Each Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing or imposing
reserves may limit or restrict Advances requested by

 

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Borrowing Agent. Prior to the occurrence of an Event of Default, Agent shall
give Borrowing Agent five (5) Business Days prior written notice of its
intention to decrease any of the Advance Rates. The rights of Agent under this
subsection are subject to the provisions of Section 16.2(b) hereof.

2.2 Procedures for Requesting Revolving Advances; Procedures for Selection of
Applicable Interest Rates for All Advances.

(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to
1:00 p.m. on a Business Day of a Borrower’s request to incur, on that day, a
Revolving Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation under
this Agreement, become due, same shall be deemed a request for a Revolving
Advance maintained as a Domestic Rate Loan as of the date such payment is due,
in the amount required to pay in full such interest, fee, charge or Obligation,
and such request shall be irrevocable.

(b) Notwithstanding the provisions of subsection (a) above, in the event any
Borrower desires to obtain a LIBOR Rate Loan for any Advance (other than a Swing
Loan), Borrowing Agent shall give Agent written notice by no later than 1:00
p.m. on the day which is three (3) Business Days prior to the date such LIBOR
Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing
(which shall be a Business Day), (ii) the type of borrowing and the amount of
such Advance to be borrowed, which amount shall be in a minimum amount of
$1,000,000 and in integral multiples of $250,000 thereafter, and (iii) the
duration of the first Interest Period therefor. Interest Periods for LIBOR Rate
Loans shall be for one, two, three or six months; provided that, if an Interest
Period would end on a day that is not a Business Day, it shall end on the next
succeeding Business Day unless such day falls in the next succeeding calendar
month in which case the Interest Period shall end on the next preceding Business
Day. No LIBOR Rate Loan shall be made available to any Borrower during the
continuance of an Event of Default. After giving effect to each requested LIBOR
Rate Loan, including those which are converted from a Domestic Rate Loan under
Section 2.2(e) below, there shall not be outstanding more than ten (10) LIBOR
Rate Loans, in the aggregate at any time.

(c) Each Interest Period of a LIBOR Rate Loan shall commence on the date such
LIBOR Rate Loan is made and shall end on such date as Borrowing Agent may elect
as set forth in subsection (b)(iii) above, provided that the exact length of
each Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the Maturity Date.

(d) Borrowing Agent shall elect the initial Interest Period applicable to a
LIBOR Rate Loan by its notice of borrowing given to Agent pursuant to Section
2.2(b) above or by its notice of conversion given to Agent pursuant to Section
2.2(e) below, as the case may be. Borrowing Agent shall elect the duration of
each succeeding Interest Period by giving irrevocable written notice to Agent of
such duration not later than 1:00 p.m. on the day which is three (3) Business
Days prior to the last day of the then current Interest Period applicable to
such LIBOR Rate Loan. If Agent does not receive timely notice of the Interest
Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert such LIBOR Rate Loan to a Domestic Rate Loan as of the last
day of the Interest Period applicable to such LIBOR Rate Loan subject to Section
2.2(e) below.

 

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(e) Provided that no Event of Default shall have occurred and be continuing,
Borrowing Agent may, on the last Business Day of the then current Interest
Period applicable to any outstanding LIBOR Rate Loan, or on any Business Day
with respect to Domestic Rate Loans, convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a LIBOR Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such LIBOR Rate Loan. If Borrowing Agent
desires to convert a loan, Borrowing Agent shall give Agent written notice by no
later than 1:00 p.m. (i) on the day which is three (3) Business Days prior to
the date on which such conversion is to occur with respect to a conversion from
a Domestic Rate Loan to a LIBOR Rate Loan, or (ii) on the day which is one (1)
Business Day prior to the date on which such conversion is to occur (which date
shall be the last Business Day of the Interest Period for the applicable LIBOR
Rate Loan) with respect to a conversion from a LIBOR Rate Loan to a Domestic
Rate Loan, specifying, in each case, the date of such conversion, the loans to
be converted and if the conversion is to a LIBOR Rate Loan, the duration of the
first Interest Period therefor.

(f) At its option and upon written notice given prior to 1:00 p.m. at least
three (3) Business Days prior to the date of such prepayment, Borrowers may,
subject to Section 2.2(g) below, prepay the LIBOR Rate Loans in whole at any
time or in part from time to time with accrued interest on the principal being
prepaid to the date of such prepayment. Borrowing Agent shall specify the date
of prepayment of Advances which are LIBOR Rate Loans and the amount of such
prepayment. In the event that any prepayment of a LIBOR Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, Borrowers shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(g) below.

(g) Each Loan Party shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence of any prepayment, conversion of or any
default by any Borrower in the payment of the principal of or interest on any
LIBOR Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a LIBOR Rate Loan after notice thereof has
been given (in each case other than any such failure that arises as a result of
a Lender failing to fund such LIBOR Rate Loan or as a result of a notice
pursuant to Section 3.8 hereof), including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds obtained by it in order to make
or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or any
Lender to Borrowing Agent shall be conclusive absent manifest error.

(h) Notwithstanding any other provision hereof, if any Applicable Law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, including without limitation any Change in Law, shall make
it unlawful for Lenders or any Lender (for purposes of this subsection (h), the
term “Lender” shall include any Lender and the office or branch where any Lender
or any Person controlling such Lender makes or maintains any LIBOR Rate Loans)
to make or maintain its LIBOR Rate Loans, the obligation of Lenders (or such
affected Lender) to make LIBOR Rate Loans hereunder shall forthwith be cancelled
and

 

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Borrowers shall, if any affected LIBOR Rate Loans are then outstanding, promptly
upon request from Agent, either pay all such affected LIBOR Rate Loans or
convert such affected LIBOR Rate Loans into loans of another type. If any such
payment or conversion of any LIBOR Rate Loan is made on a day that is not the
last day of the Interest Period applicable to such LIBOR Rate Loan, Borrowers
shall pay Agent, upon Agent’s request, such amount or amounts set forth in
clause (g) above. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Lenders to Borrowing Agent shall be
conclusive absent manifest error.

2.3 Reserved.

2.4 Swing Loans.

(a) Subject to the terms and conditions set forth in this Agreement, and in
order to minimize the transfer of funds between Lenders and Agent for
administrative convenience, Agent, Lenders holding Revolving Commitments and
Swing Loan Lender agree that in order to facilitate the administration of this
Agreement, Swing Loan Lender may, at its election and option made in its sole
discretion cancelable at any time for any reason whatsoever, make swing loan
advances (“Swing Loans”) available to Borrowers as provided for in this Section
2.4 at any time or from time to time after the Closing Date to, but not
including, the Maturity Date, in an aggregate principal amount up to but not in
excess of the Maximum Swing Loan Advance Amount, provided that the outstanding
aggregate principal amount of Swing Loans and the Revolving Advances at any one
time outstanding shall not exceed an amount equal to the lesser of (i) the
Maximum Revolving Advance Amount less the Maximum Undrawn Amount of all
outstanding Letters of Credit or (ii) the Formula Amount. All Swing Loans shall
be Domestic Rate Loans only. Borrowers may borrow (at the option and election of
Swing Loan Lender), repay and re-borrow (at the option and election of Swing
Loan Lender) Swing Loans and Swing Loan Lender may make Swing Loans as provided
in this Section 2.4 during the period between Settlement Dates. All Swing Loans
shall be evidenced by a secured promissory note (the “Swing Loan Note”)
substantially in the form attached as Exhibit 2.4(a) hereto. Swing Loan Lender’s
agreement to make Swing Loans under this Agreement is cancelable at any time for
any reason whatsoever and the making of Swing Loans by Swing Loan Lender from
time to time shall not create any duty or obligation, or establish any course of
conduct, pursuant to which Swing Loan Lender shall thereafter be obligated to
make Swing Loans in the future.

(b) Upon either (i) any request by Borrowing Agent for a Revolving Advance made
pursuant to Section 2.2(a) hereof or (ii) the occurrence of any deemed request
by Borrowers for a Revolving Advance pursuant to the provisions of the last
sentence of Section 2.2(a) hereof, Swing Loan Lender may elect, in its sole
discretion, to have such request or deemed request treated as a request for a
Swing Loan, and may advance same day funds to Borrowers as a Swing Loan;
provided that notwithstanding anything to the contrary provided for herein,
Swing Loan Lender may not make Swing Loan Advances if Swing Loan Lender has been
notified by Agent or by Required Lenders that one or more of the applicable
conditions set forth in Section 8.2 hereof have not been satisfied or the
Revolving Commitments have been terminated for any reason.

 

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(c) Upon the making of a Swing Loan (whether before or after the occurrence of a
Default or an Event of Default and regardless of whether a Settlement has been
requested with respect to such Swing Loan), each Lender holding a Revolving
Commitment shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from Swing Loan Lender, without
recourse or warranty, an undivided interest and participation in such Swing Loan
in proportion to its Revolving Commitment Percentage. Swing Loan Lender or Agent
may, at any time, require the Lenders holding Revolving Commitments to fund such
participations by means of a Settlement as provided for in Section 2.6(d)
hereof. From and after the date, if any, on which any Lender holding a Revolving
Commitment is required to fund, and funds, its participation in any Swing Loans
purchased hereunder, Agent shall promptly distribute to such Lender its
Revolving Commitment Percentage of all payments of principal and interest and
all proceeds of Collateral received by Agent in respect of such Swing Loan;
provided that no Lender holding a Revolving Commitment shall be obligated in any
event to make Revolving Advances in an amount in excess of its Revolving
Commitment Amount minus its Participation Commitment (taking into account any
reallocations under Section 2.22 hereof) of the Maximum Undrawn Amount of all
outstanding Letters of Credit.

2.5 Disbursement of Advance Proceeds. All Advances shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of the Loan Parties to Agent or
Lenders, shall be charged to Borrowers’ Account on Agent’s books. The proceeds
of each Revolving Advance or Swing Loan requested by Borrowing Agent on behalf
of any Borrower or deemed to have been requested by any Borrower under Section
2.2(a), 2.6(b) or 2.14 hereof shall, (i) with respect to requested Revolving
Advances, to the extent Lenders make such Revolving Advances in accordance with
Section 2.2(a), 2.6(b) or 2.14 hereof, and with respect to Swing Loans made upon
any request by Borrowing Agent for a Revolving Advance to the extent Swing Loan
Lender makes such Swing Loan in accordance with Section 2.4(b) hereof, be made
available to the applicable Borrower on the day so requested by way of credit to
such Borrower’s operating account at PNC, or such other bank as Borrowing Agent
may designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, (ii) with respect to Revolving
Advances deemed to have been requested by any Borrower or Swing Loans made upon
any deemed request for a Revolving Advance by any Borrower, be disbursed to
Agent to be applied to the outstanding Obligations giving rise to such deemed
request. During the Term, Borrowers may use the Revolving Advances and Swing
Loans by borrowing, prepaying and re-borrowing, all in accordance with the terms
and conditions hereof.

2.6 Making and Settlement of Advances.

(a) Each borrowing of Revolving Advances shall be advanced according to the
applicable Revolving Commitment Percentages of Lenders holding the Revolving
Commitments (subject to any contrary terms of Section 2.22 hereof). Each
borrowing of Swing Loans shall be advanced by Swing Loan Lender alone.

(b) Promptly after receipt by Agent of a request or a deemed request for a
Revolving Advance pursuant to Section 2.2(a) hereof and, to the extent Agent
elects not to provide a Swing Loan or the making of a Swing Loan would result in
the aggregate amount of all outstanding Swing Loans exceeding the maximum amount
permitted in Section 2.4(a) hereof, Agent shall notify Lenders holding the
Revolving Commitments of its receipt of such request specifying the information
provided by Borrowing Agent and the apportionment among Lenders

 

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of the requested Revolving Advance as determined by Agent in accordance with the
terms hereof. Each Lender shall remit the principal amount of each Revolving
Advance to Agent such that Agent is able to, and Agent shall, to the extent the
applicable Lenders have made funds available to it for such purpose and subject
to Section 8.2 hereof, fund such Revolving Advance to Borrowers in U.S. Dollars
and immediately available funds at the Payment Office prior to the close of
business, on the applicable borrowing date; provided that if any applicable
Lender fails to remit such funds to Agent in a timely manner, Agent may elect in
its sole discretion to fund with its own funds the Revolving Advance of such
Lender on such borrowing date, and such Lender shall be subject to the repayment
obligation in Section 2.6(c) hereof.

(c) Unless Agent shall have been notified by telephone, confirmed in writing, by
any Lender holding a Revolving Commitment that such Lender will not make the
amount which would constitute its applicable Revolving Commitment Percentage of
the requested Revolving Advance available to Agent, Agent may (but shall not be
obligated to) assume that such Lender has made such amount available to Agent on
such date in accordance with Section 2.6(b) hereof and may, in reliance upon
such assumption, make available to Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its applicable Revolving Commitment
Percentage of the requested Revolving Advance available to Agent, then the
applicable Lender and Borrowers severally agree to pay to Agent on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to Borrowers through but excluding the date
of payment to Agent, at (i) in the case of a payment to be made by such Lender,
the greater of (A) (x) the daily average Federal Funds Effective Rate (computed
on the basis of a year of 360 days) during such period as quoted by Agent, times
(y) such amount or (B) a rate determined by Agent in accordance with banking
industry rules on interbank compensation, and (ii) in the case of a payment to
be made by Borrowers, the Revolving Interest Rate for Revolving Advances that
are Domestic Rate Loans. If such Lender pays its share of the applicable
Revolving Advance to Agent, then the amount so paid shall constitute such
Lender’s Revolving Advance. Any payment by Borrowers shall be without prejudice
to any claim Borrowers may have against a Lender holding a Revolving Commitment
that shall have failed to make such payment to Agent. A certificate of Agent
submitted to any Lender or Borrowers with respect to any amounts owing under
this paragraph (c) shall be conclusive, in the absence of manifest error.

(d) Agent, on behalf of Swing Loan Lender, shall demand settlement (a
“Settlement”) of all or any Swing Loans with Lenders holding the Revolving
Commitments on at least a weekly basis, or on any more frequent date that Agent
elects or that Swing Loan Lender at its option exercisable for any reason
whatsoever may request, by notifying Lenders holding the Revolving Commitments
of such requested Settlement by facsimile, telephonic or electronic transmission
no later than 3:00 p.m. on the date of such requested Settlement (the
“Settlement Date”). Subject to any contrary provisions of Section 2.22 hereof,
each Lender holding a Revolving Commitment shall transfer the amount of such
Lender’s Revolving Commitment Percentage of the outstanding principal amount
(plus interest accrued thereon to the extent requested by Agent) of the
applicable Swing Loan with respect to which Settlement is requested by Agent, to
such account of Agent as Agent may designate not later than 5:00 p.m. on such
Settlement Date if requested by Agent by 3:00 p.m., otherwise not later than
5:00 p.m. on the next Business Day. Settlements may occur at any time
notwithstanding that the conditions precedent to making Revolving Advances set
forth in Section 8.2 hereof have not been satisfied

 

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or the Revolving Commitments shall have otherwise been terminated at such
time. All amounts so transferred to Agent shall be applied against the amount of
outstanding Swing Loans and, when so applied shall constitute Revolving Advances
of such Lenders accruing interest as Domestic Rate Loans. If any such amount is
not transferred to Agent by any Lender holding a Revolving Commitment on such
Settlement Date, Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon as specified in Section 2.6(c)
hereof.

(e) If any Lender or Participant (a “Benefited Lender”) shall at any time
receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such Benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under Applicable Law, that each
Lender so purchasing a portion of another Lender’s Advances may exercise all
rights of payment (including rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion, and the
obligations owing to each such purchasing Lender in respect of such
participation and such purchased portion of any other Lender’s Advances shall be
part of the Obligations secured by the Collateral, and the obligations owing to
each such purchasing Lender in respect of such participation and such purchased
portion of any other Lender’s Advances shall be part of the Obligations secured
by the Collateral.

2.7 Maximum Advances. The aggregate balance of Revolving Advances plus Swing
Loans outstanding at any time shall not exceed the lesser of (a) the Maximum
Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all issued
and outstanding Letters of Credit or (b) the Formula Amount.

2.8 Manner and Repayment of Advances.

(a) The Revolving Advances and Swing Loans shall be due and payable in full on
the Maturity Date subject to earlier prepayment as herein
provided. Notwithstanding the foregoing, all Advances shall be subject to
earlier repayment upon (x) acceleration upon the occurrence of an Event of
Default under this Agreement or (y) termination of this Agreement. Each payment
(including each prepayment) by any Borrower on account of the principal of and
interest on the Advances shall be applied, first to the outstanding Swing Loans
and next, pro rata according to the applicable Revolving Commitment Percentages
of Lenders, to the outstanding Revolving Advances (subject to any contrary
provisions of Section 2.22 hereof).

 

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(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts
or any other items of payment relating to and/or proceeds of Collateral may not
be collectible by Agent on the date received by Agent. Agent shall conditionally
credit Borrowers’ Account for each item of payment on the next Business Day
after the Business Day on which such item of payment is received by Agent (and
the Business Day on which each such item of payment is so credited shall be
referred to, with respect to such item, as the “Application Date”). Agent is
not, however, required to credit Borrowers’ Account for the amount of any item
of payment which is unsatisfactory to Agent and Agent may charge Borrowers’
Account for the amount of any item of payment which is returned, for any reason
whatsoever, to Agent unpaid. Subject to the foregoing, Borrowers agree that for
purposes of computing the interest charges under this Agreement, each item of
payment received by Agent shall be deemed applied by Agent on account of the
Obligations on its respective Application Date. The Loan Parties further agree
that during a Cash Dominion Period there is a monthly float charge payable to
Agent for Agent’s sole benefit, in an amount equal to (y) the face amount of all
items of payment received during the prior month (including items of payment
received by Agent as a wire transfer or electronic depository check) multiplied
by (z) the Revolving Interest Rate with respect to Domestic Rate Loans for one
(1) Business Day. All proceeds received by Agent shall be applied to the
Obligations in accordance with Section 4.8(h) hereof.

(c) All payments of principal, interest and other amounts payable hereunder, or
under any of the Other Documents shall be made to Agent at the Payment Office
not later than 1:00 p.m. on the due date therefor in Dollars in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment of any and all Obligations due and owing hereunder by
charging Borrowers’ Account or by making Advances as provided in Section 2.2
hereof.

(d) Except as expressly provided herein, all payments (including prepayments) to
be made by any Borrower on account of principal, interest, fees and other
amounts payable hereunder shall be made without deduction, setoff or
counterclaim and shall be made to Agent on behalf of Lenders to the Payment
Office, in each case on or prior to 1:00 p.m., in Dollars and in immediately
available funds.

2.9 Repayment of Excess Advances. If at any time the aggregate balance of
outstanding Revolving Advances, Swing Loans, and/or Advances taken as a whole
exceeds the maximum amount of such type of Advances and/or Advances taken as a
whole (as applicable) permitted hereunder, such excess Advances shall be
immediately due and payable without the necessity of any demand, at the Payment
Office, whether or not a Default or an Event of Default has occurred.

2.10 Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent or Lenders and the date and amount of each payment in respect thereof;
provided, however, the failure by Agent to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall
send to Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions
between Agent, Lenders and Borrowers during such month. The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’

 

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specific exceptions thereto within thirty (30) days after such statement is
received by Borrowing Agent. The records of Agent with respect to Borrowers’
Account shall be conclusive evidence absent manifest error of the amounts of
Advances and other charges thereto and of payments applicable thereto.

2.11 Letters of Credit.

(a) Subject to the terms and conditions hereof, the applicable Issuer shall
issue or cause the issuance of standby and/or trade letters of credit
denominated in Dollars (“Letters of Credit”) for the account of any Borrower
except to the extent that the issuance thereof would then cause the sum of (i)
the outstanding Revolving Advances plus (ii) the outstanding Swing Loans, plus
(iii) the Maximum Undrawn Amount of all outstanding Letters of Credit, plus (iv)
the Maximum Undrawn Amount of the Letter of Credit to be issued to exceed the
lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount
(calculated without giving effect to the deductions provided for in
Section 2.1(a) hereof). The Maximum Undrawn Amount of all outstanding Letters of
Credit shall not exceed in the aggregate at any time the Letter of Credit
Sublimit. All disbursements or payments related to Letters of Credit shall be
deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear
interest at the Revolving Interest Rate for Domestic Rate Loans. Letters of
Credit that have not been drawn upon shall not bear interest (but fees shall
accrue in respect of outstanding Letters of Credit as provided in Section 3.2
hereof).

(b) Notwithstanding any provision of this Agreement, no Issuer shall be under
any obligation to issue any Letter of Credit if (i) any order, judgment or
decree of any Governmental Body or arbitrator shall by its terms purport to
enjoin or restrain such Issuer from issuing any Letter of Credit, or any Law
applicable to such Issuer or any request or directive (whether or not having the
force of law) from any Governmental Body with jurisdiction over such Issuer
shall prohibit, or request that such Issuer refrain from, the issuance of
letters of credit generally or the Letter of Credit in particular or shall
impose upon such Issuer with respect to the Letter of Credit any restriction,
reserve or capital requirement (for which such Issuer is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall impose upon
such Issuer any unreimbursed loss, cost or expense which was not applicable on
the Closing Date, and which such Issuer in good faith deems material to it, or
(ii) the issuance of the Letter of Credit would violate one or more policies of
such Issuer applicable to letters of credit generally.

2.12 Issuance of Letters of Credit.

(a) Borrowing Agent, on behalf of any Borrower, may request any Issuer to issue
or cause the issuance of a Letter of Credit by delivering to such Issuer, with a
copy to Agent at the Payment Office, prior to 1:00 p.m., at least five (5)
Business Days prior to the proposed date of issuance, such Issuer’s form of
letter of credit application (the “Letter of Credit Application”) completed to
the reasonable satisfaction of Agent and such Issuer and, such other
certificates, documents and other papers and information as Agent or such Issuer
may reasonably request. No Issuer shall issue any requested Letter of Credit if
such Issuer has received notice from Agent or any Lender that one or more of the
applicable conditions set forth in Section 8.2 hereof have not been satisfied or
the Revolving Commitments have been terminated for any reason.

 

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(b) Each Letter of Credit shall, among other things, (i) provide for the payment
of sight drafts, or other written demands for payment, or acceptances of drafts
when presented for honor thereunder in accordance with the terms thereof and
when accompanied by the documents described therein and (ii) have an expiry date
not later than twelve (12) months after such Letter of Credit’s date of issuance
and in no event later than Maturity Date; provided that any Letter of Credit may
provide that it will be automatically extended to a date not later than the
Maturity Date so long as the applicable Issuer has the right to give a notice of
extension within an agreed upon period prior to the then expiry date of such
Letter of Credit. Each standby Letter of Credit shall be subject either to the
Uniform Customs and Practice for Documentary Credits as most recently published
by the International Chamber of Commerce at the time a Letter of Credit is
issued (the “UCP”) or the International Standby Practices (International Chamber
of Commerce Publication Number 590), or any subsequent revision thereof at the
time a standby Letter of Credit is issued, as determined by the applicable
Issuer, and each trade Letter of Credit shall be subject to the UCP. In
addition, no trade Letter of Credit may permit the presentation of an ocean bill
of lading that includes a condition that the original bill of lading is not
required to claim the goods shipped thereunder.

(c) Agent shall use its reasonable efforts to notify Lenders of the request by
Borrowing Agent for a Letter of Credit hereunder.

2.13 Requirements For Issuance of Letters of Credit.

(a) Borrowing Agent shall authorize and direct the applicable Issuer to name the
applicable Borrower as the “Applicant” or “Account Party” of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct the applicable Issuer to deliver to Agent all
agreements, documents or instruments and property received by such Issuer
pursuant to the Letter of Credit and to accept and rely upon Agent’s
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor.

(b) In connection with all trade Letters of Credit issued or caused to be issued
by any Issuer under this Agreement, each Borrower hereby appoints such Issuer,
or its designee, as its attorney, with full power and authority if an Event of
Default shall have occurred and be continuing: (i) to sign and/or endorse such
Borrower’s name upon any warehouse or other receipts, and acceptances; (ii) to
sign such Borrower’s name on bills of lading; (iii) to clear Inventory through
the United States of America Customs Department (“Customs”) in the name of such
Borrower or such Issuer or such Issuer’s designee, and to sign and deliver to
Customs officials powers of attorney in the name of such Borrower for such
purpose; and (iv) to complete in such Borrower’s name or in the name of such
Issuer or such Issuer’s designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds
thereof. Neither Agent, nor any Issuer, nor their attorneys will be liable for
any acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent’s, such Issuer’s or their respective attorney’s gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.

 

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2.14 Disbursements, Reimbursement.

(a) Immediately upon the issuance of each Letter of Credit, each Lender holding
a Revolving Commitment shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the applicable Issuer a participation
in each Letter of Credit and each drawing thereunder in an amount equal to such
Lender’s Revolving Commitment Percentage of the Maximum Undrawn Amount of such
Letter of Credit (as in effect from time to time) and the amount of such
drawing, respectively.

(b) In the event of any request for a drawing under a Letter of Credit by the
beneficiary or transferee thereof, the applicable Issuer will promptly notify
Agent and Borrowing Agent. Following receipt of such notice, Borrowers shall
reimburse such Issuer in an amount equal to the amount so paid by such Issuer
(such obligation to reimburse such Issuer shall sometimes be referred to as a
“Reimbursement Obligation”) prior to 12:00 Noon, on each date that an amount is
paid by such Issuer under such Letter of Credit (each such date, a “Drawing
Date”). In the event Borrowers fail to reimburse such Issuer for the full amount
of any drawing under any Letter of Credit by 12:00 Noon, on the Drawing Date,
such Issuer will promptly notify Agent and each Lender holding a Revolving
Commitment thereof, and Borrowers shall be automatically deemed to have
requested that a Revolving Advance maintained as a Domestic Rate Loan be made by
Lenders to be disbursed on the Drawing Date under such Letter of Credit, and
Lenders holding the Revolving Commitments shall be unconditionally obligated to
fund such Revolving Advance (all whether or not the conditions specified in
Section 8.2 hereof are then satisfied or the Revolving Commitments have been
terminated for any reason) as provided for in Section 2.14(c) below. Any notice
given by any Issuer pursuant to this Section 2.14(b) may be oral if promptly
confirmed in writing; provided that the lack of such a confirmation shall not
affect the conclusiveness or binding effect of such notice.

(c) Each Lender holding a Revolving Commitment shall upon any notice pursuant to
Section 2.14(b) above make available to the applicable Issuer through Agent at
the Payment Office an amount in immediately available funds equal to its
Revolving Commitment Percentage (subject to any contrary provisions of Section
2.22 hereof) of the amount of the drawing, whereupon the participating Lenders
shall (subject to Section 2.14(d) hereof) each be deemed to have made a
Revolving Advance maintained as a Domestic Rate Loan to Borrowers in that
amount. If any Lender holding a Revolving Commitment so notified fails to make
available to Agent, for the benefit of the applicable Issuer, the amount of such
Lender’s Revolving Commitment Percentage of such amount by 2:00 p.m. on the
Drawing Date, then interest shall accrue on such Lender’s obligation to make
such payment, from the Drawing Date to the date on which such Lender makes such
payment (i) at a rate per annum equal to the Federal Funds Effective Rate during
the first three (3) days following the Drawing Date and (ii) at a rate per annum
equal to the rate applicable to Revolving Advances maintained as a Domestic Rate
Loan on and after the fourth day following the Drawing Date. Agent and the
applicable Issuer will promptly give notice of the occurrence of the Drawing
Date, but failure of Agent or such Issuer to give any such notice on the Drawing
Date or in sufficient time to enable any Lender holding a Revolving Commitment
to effect such payment on such date shall not relieve such Lender from its
obligations under this Section 2.14(c), provided that such Lender shall not be
obligated to pay interest as provided in this Section 2.14(c) until and
commencing from the date of receipt of notice from Agent or such Issuer of a
drawing.

 

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(d) With respect to any unreimbursed drawing that is not converted into a
Revolving Advance maintained as a Domestic Rate Loan to Borrowers in whole or in
part as contemplated by Section 2.14(b) hereof for any reason (other than the
failure of a Lender to fund its Revolving Commitment), Borrowers shall be deemed
to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in
the amount of such drawing. Such Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the rate
per annum applicable to a Revolving Advance maintained as a Domestic Rate
Loan. Each applicable Lender’s payment to Agent pursuant to Section 2.14(c)
hereof shall be deemed to be a payment in respect of its participation in such
Letter of Credit Borrowing and shall constitute a “Participation Advance” from
such Lender in satisfaction of its Participation Commitment in respect of the
applicable Letter of Credit under this Section 2.14.

(e) Each applicable Lender’s Participation Commitment in respect of the Letters
of Credit shall continue until the last to occur of any of the following events:
(x) all Issuers cease to be obligated to issue or cause to be issued Letters of
Credit hereunder; (y) no Letter of Credit issued or created hereunder remains
outstanding and uncanceled; and (z) all Persons (other than Borrowers) have been
fully reimbursed for all payments made under or relating to Letters of Credit.

2.15 Repayment of Participation Advances.

(a) Upon (and only upon) receipt by Agent for the account of the applicable
Issuer of immediately available funds from Borrowers (i) in reimbursement of any
payment made by such Issuer or Agent under the Letter of Credit with respect to
which any Lender has made a Participation Advance to Agent, or (ii) in payment
of interest on such a payment made by such Issuer or Agent under such a Letter
of Credit, Agent will pay to each Lender holding a Revolving Commitment, in the
same funds as those received by Agent, the amount of such Lender’s Revolving
Commitment Percentage of such funds, except Agent shall retain the amount of the
Revolving Commitment Percentage of such funds of any Lender holding a Revolving
Commitment that did not make a Participation Advance in respect of such payment
by Agent (and, to the extent that any of the other Lenders holding the Revolving
Commitment have funded any portion such Defaulting Lender’s Participation
Advance in accordance with the provisions of Section 2.22 hereof, Agent will pay
over to such Non-Defaulting Lenders a pro rata portion of the funds so withheld
from such Defaulting Lender).

(b) If any Issuer or Agent is required at any time to return to any Borrower, or
to a trustee, receiver, liquidator, custodian, or any official in any insolvency
proceeding, any portion of the payments made by Borrowers to such Issuer or
Agent pursuant to Section 2.15(a) hereof in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each applicable Lender
shall, on demand of Agent, forthwith return to such Issuer or Agent the amount
of its Revolving Commitment Percentage of any amounts so returned by such Issuer
or Agent plus interest at the Federal Funds Effective Rate.

2.16 Documentation. Each Borrower agrees to be bound by the terms of each Letter
of Credit Application and by the applicable Issuer’s interpretations of any
Letter of Credit issued on behalf of such Borrower and by such Issuer’s written
regulations and customary practices relating to letters of credit, though such
Issuer’s interpretations may be different from such

 

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Borrower’s own. In the event of a conflict between any Letter of Credit
Application and this Agreement, this Agreement shall govern. It is understood
and agreed that, except in the case of gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final non-appealable
judgment), no Issuer shall be liable for any error, negligence and/or mistakes,
whether of omission or commission, in following Borrowing Agent’s or any
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments or supplements thereto.

2.17 Determination to Honor Drawing Request. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, the
applicable Issuer shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit and that any other drawing condition appearing on the face of
such Letter of Credit has been satisfied in the manner so set forth.

2.18 Nature of Participation and Reimbursement Obligations. The obligation of
each Lender holding a Revolving Commitment in accordance with this Agreement to
make the Revolving Advances or Participation Advances as a result of a drawing
under a Letter of Credit, and the obligations of Borrowers to reimburse the
applicable Issuer upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Section 2.18 under all circumstances, including the
following circumstances:

(i) any set-off, counterclaim, recoupment, defense or other right which such
Lender or any Borrower, as the case may be, may have against any Issuer, Agent,
any Borrower or any Lender, as the case may be, or any other Person for any
reason whatsoever;

(ii) the failure of any Borrower or any other Person to comply, in connection
with a Letter of Credit Borrowing, with the conditions set forth in this
Agreement for the making of a Revolving Advance, it being acknowledged that such
conditions are not required for the making of a Letter of Credit Borrowing and
the obligation of Lenders to make Participation Advances under Section 2.14
hereof;

(iii) any lack of validity or enforceability of any Letter of Credit;

(iv) any claim of breach of warranty that might be made by any Borrower, Agent,
any Issuer or any Lender against the beneficiary of a Letter of Credit, or the
existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense
or other right which any Borrower, Agent, any Issuer or any Lender may have at
any time against a beneficiary, any successor beneficiary or any transferee of
any Letter of Credit or assignee of the proceeds thereof (or any Persons for
whom any such transferee or assignee may be acting), any Issuer, Agent or any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or any Subsidiaries of such Borrower
and the beneficiary for which any Letter of Credit was procured);

 

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(v) the lack of power or authority of any signer of (or any defect in or forgery
of any signature or endorsement on) or the form of or lack of validity,
sufficiency, accuracy, enforceability or genuineness of any draft, demand,
instrument, certificate or other document presented under or in connection with
any Letter of Credit, or any fraud or alleged fraud in connection with any
Letter of Credit, or the transport of any property or provision of services
relating to a Letter of Credit, in each case even if any Issuer or any of its
Affiliates has been notified thereof;

(vi) payment by any Issuer under any Letter of Credit against presentation of a
demand, draft or certificate or other document which is forged or does not fully
comply with the terms of such Letter of Credit (provided that the foregoing
shall not excuse such Issuer from any obligation under the terms of any
applicable Letter of Credit to require the presentation of documents that on
their face appear to satisfy any applicable requirements for drawing under such
Letter of Credit prior to honoring or paying any such draw);

(vii) the solvency of, or any acts or omissions by, any beneficiary of any
Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;

(viii) any failure by any Issuer or any of its Affiliates to issue any Letter of
Credit in the form requested by Borrowing Agent, unless Agent and such Issuer
have each received written notice from Borrowing Agent of such failure within
three (3) Business Days after such Issuer shall have furnished Agent and
Borrowing Agent a copy of such Letter of Credit and such error is material and
no drawing has been made thereon prior to receipt of such notice;

(ix) the occurrence of any Material Adverse Effect;

(x) any breach of this Agreement or any Other Document by any party thereto;

(xi) the occurrence or continuance of an insolvency proceeding with respect to
any Loan Party;

(xii) the fact that a Default or an Event of Default shall have occurred and be
continuing;

(xiii) the fact that the Term shall have expired or this Agreement or the
obligations of Lenders to make Advances have been terminated; and

(xiv) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.

 

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2.19 Liability for Acts and Omissions.

(a) As between Borrowers and Issuers, Swing Loan Lender, Agent and Lenders, each
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, no Issuer shall be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if such Issuer or any of its Affiliates shall have
been notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuer, including any Governmental Acts,
and none of the above shall affect or impair, or prevent the vesting of, any of
such Issuer’s rights or powers hereunder. Nothing in the preceding sentence
shall relieve any Issuer from liability for such Issuer’s gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment) in connection with actions or omissions described
in such clauses (i) through (viii) of such sentence. In no event shall any
Issuer or its Affiliates be liable to any Borrower for any indirect,
consequential, incidental, punitive, exemplary or special damages or expenses
(including without limitation attorneys’ fees), or for any damages resulting
from any change in the value of any property relating to a Letter of Credit.

(b) Without limiting the generality of the foregoing, each Issuer and each of
its Affiliates: (i) may rely on any oral or other communication believed in good
faith by such Issuer or such Affiliate to have been authorized or given by or on
behalf of the applicant for a Letter of Credit; (ii) may honor any presentation
if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a
previously dishonored presentation under a Letter of Credit, whether such
dishonor was pursuant to a court order, to settle or compromise any claim of
wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the
same extent as if such presentation had initially been honored, together with
any interest paid by such Issuer or its Affiliates; (iv) may honor any drawing
that is payable upon presentation of a statement advising negotiation or
payment, upon receipt of such statement (even if such statement indicates that a
draft or other document is being delivered separately), and shall not be liable
for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or practices
of the place where such bank is located; and (vi) may settle or adjust any claim
or demand made on such Issuer or its Affiliate in any way related to any order
issued at the applicant’s request to an air carrier, a letter of guarantee or of
indemnity issued to a steamship agent or carrier or any document or instrument
of like import (each an “Order”) and honor any drawing in connection with any
Letter of Credit that is the subject of such Order, notwithstanding that any
drafts or other documents presented in connection with such Letter of Credit
fail to conform in any way with such Letter of Credit.

 

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(c) In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by any Issuer under or
in connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence (as determined by a court of competent jurisdiction in a final
non-appealable judgment), shall not put such Issuer under any resulting
liability to any Borrower, Agent or any Lender.

2.20 Mandatory Prepayments; Voluntary Commitment Reductions and Prepayments.

(a) Subject to Section 7.1 hereof and the provisions of the Intercreditor
Agreement, upon the receipt by any Loan Party of the Net Cash Proceeds of any
Disposition of any Collateral which constitutes ABL Priority Collateral pursuant
to clauses (h), (n), (p) or (q) of the definition of “Permitted Dispositions”,
Borrowers shall prepay the Advances in an amount equal to the Net Cash Proceeds
of such Disposition promptly, but in no event more than one (1) Business Day
following the receipt thereof, and until the date of payment, such proceeds
shall be held in trust for Agent. Such prepayments shall be applied to the
Advances (including cash collateralization of all Obligations relating to any
outstanding Letters of Credit in accordance with the provisions of Section
3.2(b); provided however that if no Default or Event of Default has occurred and
is continuing, such prepayments shall be applied to cash collateralize any
Obligations related to outstanding Letters of Credit last) in such order as
Agent may determine, subject to Borrowers’ ability to re-borrow Advances in
accordance with the terms hereof. The foregoing shall not be deemed to be
implied consent to any Disposition otherwise prohibited by the terms and
conditions hereof.

(b) Subject to Section 6.6 hereof and the provisions of the Intercreditor
Agreement, upon the receipt by any Loan Party of any Extraordinary Receipts
which constitute ABL Priority Collateral in an aggregate amount equal to or in
excess of $500,000 in any fiscal year, the Borrowers shall prepay the Advances
in an amount equal to the amount of such Extraordinary Receipts promptly, but in
no event more than one (1) Business Day following the receipt thereof, and until
the date of payment, such proceeds shall be held in trust for Agent. Such
prepayments shall be applied to the Advances in the manner described in Section
2.20(a) hereof. Notwithstanding the foregoing, (A) so long as no Default or
Event of Default has occurred and is continuing, on the date any Loan Party or
any of its Subsidiaries receives Extraordinary Receipts which constitute ABL
Priority Collateral consisting of insurance proceeds from one or more policies
covering, or proceeds from any judgment, settlement, condemnation or other cause
of action in respect of, the loss, damage, taking or theft of any property or
assets, such Extraordinary Receipts may, at the option of Borrowing Agent, be
applied to repair, refurbish or replace such property or assets or acquire
replacement property or assets for the property or assets so lost, damaged or
stolen or other property or assets used or useful in the business of any
Borrower for the property or assets so disposed, provided that (x) Agent has a
Lien on such replacement (or repaired or restored) property or assets, (y)
Borrowing Agent delivers to Agent within ten (10) days after the date of receipt
of such Extraordinary Receipts a certificate stating that such Extraordinary
Receipts shall be used to repair or refurbish

 

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such property or assets or to acquire such replacement property or assets for
the property or assets so lost, damaged or stolen or such other property or
assets used or useful in the business of any Borrower within one hundred
eighty (180) days after the date of receipt of such Extraordinary Receipts
(which certificate shall set forth an estimate of the Extraordinary Receipts to
be so expended), (B) pending any such reinvestment or payment of expenses
described in clause (A) above, such Extraordinary Receipts shall be applied as a
prepayment of Revolving Advances, and (C) any Extraordinary Receipts applied to
repair, refurbish or replace Collateral pursuant to and in accordance with this
Section 2.20(b) shall not be deemed Capital Expenditures for purposes of this
Agreement.

(c) Borrowers may, at their option from time to time (but in no event more than
three (3) times during the Term), permanently reduce or terminate the aggregate
Revolving Commitments upon at least ten (10) days’ prior written notice to
Agent, which notice shall specify the amount and effective date of the reduction
or termination and, once given, shall be irrevocable, except that such notice
may be conditional in connection with a Payment in Full of the Obligations. Each
reduction (i) shall be in a minimum amount of $5,000,000 or an increment of
$1,000,000 in excess thereof, (ii) shall not reduce the aggregate Revolving
Commitment Amounts to an amount less than the sum of (A) the aggregate principal
amount of Revolving Advances and Swing Loans outstanding at such time plus (B)
the Maximum Undrawn Amount of all Letters of Credit at such time (unless
accompanied by a corresponding prepayment of such outstanding Revolving Advances
and Swing Loans and/or cash collateralization or backstopping by a backstop
letter of credit, in each case reasonably satisfactory to Agent), and (iii)
shall not reduce the aggregate Revolving Commitment Amounts to an amount less
than $60,000,000.

(d) Borrowers may, at any time and from time to time, prepay the principal of
any Revolving Advances, in whole or in part, without premium or penalty.

2.21 Use of Proceeds.

(a) Borrowers shall apply the proceeds of Advances to (i) repay the Indebtedness
owing to Existing Agent and Existing Lenders under the Existing Loan Documents,
(ii) pay fees and expenses relating to the Transactions, (iii) repay a portion
of the Convertible Subordinated Debt (to the extent permitted under Section 7.18
hereof), and (iv) provide for their working capital needs and other general
corporate purposes, including to reimburse drawings under Letters of Credit.

(b) Without limiting the generality of Section 2.21(a) above, neither the Loan
Parties nor any other Person which may in the future become party to this
Agreement or the Other Documents as a Loan Party, intends to use nor shall they
use any portion of the proceeds of the Advances, directly or indirectly, for any
purpose in violation in any material respect of Applicable Law.

 

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2.22 Defaulting Lender.

(a) Notwithstanding anything to the contrary set forth herein, in the event any
Lender is a Defaulting Lender, all rights and obligations hereunder of such
Defaulting Lender and of the other parties hereto shall be modified to the
extent of the express provisions of this Section 2.22 so long as such Lender is
a Defaulting Lender.

(b) (i) Except as otherwise expressly provided for in this Section 2.22,
(A) Revolving Advances shall be made pro rata from Lenders holding Revolving
Commitments which are not Defaulting Lenders based on their respective Revolving
Commitment Percentages, and no Revolving Commitment Percentage of any Lender or
any pro rata share of any Revolving Advances required to be advanced by any
Lender shall be increased as a result of any Lender being a Defaulting Lender;
(B) amounts received in respect of principal of any type of Revolving Advances
shall be applied to reduce such type of Revolving Advances of each Lender (other
than any Defaulting Lender) holding a Revolving Commitment in accordance with
their Revolving Commitment Percentages; provided that, Agent shall not be
obligated to transfer to a Defaulting Lender any payments received by Agent for
Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder (including any principal, interest or fees);
(C) amounts payable to a Defaulting Lender shall instead be paid to or retained
by Agent; and (D) Agent may hold and, in its discretion, re-lend to a Borrower
the amount of such payments received or retained by it for the account of such
Defaulting Lender.

(ii) Fees pursuant to Section 3.3(b) hereof shall cease to accrue in favor of
such Defaulting Lender.

(iii) If any Swing Loans are outstanding or any Letters of Credit (or drawings
under any Letter of Credit for which any Issuer has not been reimbursed) are
outstanding or exist at the time any such Lender holding a Revolving Commitment
becomes a Defaulting Lender, then:

(A) Defaulting Lender’s Participation Commitment in the outstanding Swing Loans
and of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be
reallocated among Non-Defaulting Lenders holding Revolving Commitments in
proportion to the respective Revolving Commitment Percentages of such
Non-Defaulting Lenders to the extent (but only to the extent) that (x) such
reallocation does not cause the aggregate sum of outstanding Revolving Advances
made by any such Non-Defaulting Lender holding a Revolving Commitment plus such
Lender’s reallocated Participation Commitment in the outstanding Swing Loans
plus such Lender’s reallocated Participation Commitment in the aggregate Maximum
Undrawn Amount of all outstanding Letters of Credit to exceed the Revolving
Commitment Amount of any such Non-Defaulting Lender, and (y) no Default or Event
of Default has occurred and is continuing 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 Agent (x) first, prepay any outstanding Swing Loans that cannot be
reallocated, and (y) second, cash collateralize for the benefit of the
applicable Issuer, Borrowers’ obligations corresponding to such Defaulting
Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters
of Credit (after giving effect to any partial reallocation pursuant to clause
(A) above) in accordance with Section 3.2(b) hereof until (I) reallocation of
such amounts under clause (A) is permitted, (II) such Lender ceases to be a
Defaulting Lender or (III) such Obligations are no longer outstanding;

 

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(C) if Borrowers cash collateralize any portion of such Defaulting Lender’s
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
pursuant to clause (B) above, Borrowers shall not be required to pay any fees to
such Defaulting Lender pursuant to Section 3.2(a) hereof with respect to such
Defaulting Lender’s Revolving Commitment Percentage of Maximum Undrawn Amount of
all Letters of Credit during the period such Defaulting Lender’s Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit are cash
collateralized;

(D) if Defaulting Lender’s Participation Commitment in the Maximum Undrawn
Amount of all Letters of Credit is reallocated pursuant to clause (A) above,
then the fees payable to Lenders holding Revolving Commitments pursuant to
Section 3.2(a) hereof shall be adjusted and reallocated to Non-Defaulting
Lenders holding Revolving Commitments in accordance with such reallocation; and

(E) if all or any portion of such Defaulting Lender’s Participation Commitment
in the Maximum Undrawn Amount of all Letters of Credit is neither reallocated
nor cash collateralized pursuant to clauses (A) or (B) above, then, without
prejudice to any rights or remedies of any Issuer or any other Lender hereunder,
all Letter of Credit Fees payable under Section 3.2(a) hereof with respect to
such Defaulting Lender’s Revolving Commitment Percentage of the Maximum Undrawn
Amount of all Letters of Credit shall be payable to such Issuer (and not to such
Defaulting Lender) until (and then only to the extent that) such Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated
and/or cash collateralized; and

(iv) so long as any Lender holding a Revolving Commitment is a Defaulting
Lender, Swing Loan Lender shall not be required to fund any Swing Loans and no
Issuer shall be required to issue, amend or increase any Letter of Credit,
unless such Issuer is satisfied that the related exposure and Defaulting
Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters
of Credit and all Swing Loans (after giving effect to any such issuance,
amendment, increase or funding) will be fully allocated to Non-Defaulting
Lenders holding Revolving Commitments and/or cash collateral for such Letters of
Credit will be provided by Borrowers in accordance with clause (A) and (B)
above, and participating interests in any newly made Swing Loan or any newly
issued or increased Letter of Credit shall be allocated among Non-Defaulting
Lenders in a manner consistent with Section 2.22(b)(iii)(A) above (and such
Defaulting Lender shall not participate therein).

(c) A Defaulting Lender shall not be entitled to give instructions to Agent or
to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents, and all amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall not be deemed to be a Lender, to have any
outstanding Advances or a Revolving Commitment Percentage provided that this
clause (c) shall not apply to the vote of a Defaulting Lender in the case of an
amendment, waiver or other modification described in clauses (i) or (ii) of
Section 16.2(b) hereof.

 

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(d) Other than as expressly set forth in this Section 2.22, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this Section
2.22 shall be deemed to release any Defaulting Lender from its obligations under
this Agreement and the Other Documents, shall alter such obligations, shall
operate as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which any Borrower, Agent or any Lender may have against
any Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.

(e) In the event that Agent, Borrowers, Swing Loan Lender and Issuers agree in
writing that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then Agent will so notify the parties
hereto, and, if such cured Defaulting Lender is a Lender holding a Revolving
Commitment, then Participation Commitments of Lenders holding Revolving
Commitments (including such cured Defaulting Lender) of the Swing Loans and
Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated
to reflect the inclusion of such Lender’s Revolving Commitment, and on such date
such Lender shall purchase at par such of the Revolving Advances of the other
Lenders as Agent shall determine may be necessary in order for such Lender to
hold such Revolving Advances in accordance with its Revolving Commitment
Percentage.

2.23 Payment of Obligations. Agent may charge to Borrowers’ Account as a
Revolving Advance or, at the discretion of Swing Loan Lender, as a Swing Loan
(i) all payments with respect to any of the Obligations required hereunder
(including without limitation principal payments, payments of interest, payments
of Letter of Credit Fees and all other fees provided for hereunder and payments
under Sections 16.5 and 16.9 hereof) as and when each such payment shall become
due and payable (whether as regularly scheduled, upon or after acceleration,
upon maturity or otherwise), (ii) without limiting the generality of the
foregoing clause (i), (a) all amounts expended by Agent or any Lender pursuant
to Sections 4.2 or 4.3 hereof and (b) all documented out-of-pocket expenses
which Agent incurs in connection with the forwarding of Advance proceeds and the
establishment and maintenance of any Blocked Accounts or Depository Accounts as
provided for in Section 4.8(h) hereof, and (iii) any sums expended by Agent or
any Lender due to any Loan Party’s failure to perform or comply with its
obligations under this Agreement or any Other Document including any Loan
Party’s obligations under Sections 3.3, 3.4, 4.4, 4.7, 6.4, 6.6, 6.7 and 6.8
hereof, and all amounts so charged shall be added to the Obligations and shall
be secured by the Collateral. To the extent Revolving Advances are not actually
funded by the other Lenders in respect of any such amounts so charged, all such
amounts so charged shall be deemed to be Revolving Advances made by and owing to
Agent and Agent shall be entitled to all rights (including accrual of interest)
and remedies of a Lender under this Agreement and the Other Documents with
respect to such Revolving Advances.

2.24 Increase in Maximum Revolving Advance Amount.

(a) Subject to the terms of the Term Loan Agreement and the Intercreditor
Agreement, Borrowers may, at any time, request that the Maximum Revolving
Advance Amount be increased by (1) one or more of the current Lenders increasing
their Revolving Commitment Amount (any current Lender which elects to increase
its Revolving Commitment Amount shall be referred to as an “Increasing Lender”)
or (2) one or more new lenders (each a “New Lender”) joining this Agreement and
providing a Revolving Commitment Amount hereunder , subject to the following
terms and conditions:

 

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(i) no current Lender shall be obligated to increase its Revolving Commitment
Amount and any increase in the Revolving Commitment Amount by any current Lender
shall be in the sole discretion of such current Lender;

(ii) Borrowers may not request the addition of a New Lender unless (and then
only to the extent that) there is insufficient participation on behalf of the
existing Lenders in the increased Revolving Commitments being requested by
Borrowers;

(iii) no Default or Event of Default or Default shall exist or shall have
occurred and be continuing on the effective date of such increase and after
giving effect to such increase;

(iv) the aggregate amount of such increase in the Maximum Revolving Advance
Amount shall not exceed $20,000,000, less the amount of any incremental term
loans made by Term Loan Lenders to Borrowers after the Closing Date pursuant to
the Term Loan Agreement (as in effect on the Closing Date hereof and as the same
may be amended in accordance with the terms of the Intercreditor Agreement);

(v) Borrowers may not request an increase in the Maximum Revolving Advance
Amount under this Section 2.24 more than three (3) times during the Term, and no
single such increase in the Maximum Revolving Advance Amount shall be for an
amount less than $5,000,000;

(vi) Borrowers shall deliver to Agent on or before the effective date of such
increase the following documents in form and substance reasonably satisfactory
to Agent: (1) certifications of their corporate secretaries with attached
resolutions certifying that the increase in the Revolving Commitment Amounts has
been approved by such Borrowers, (2) certificate dated as of the effective date
of such increase certifying that no Default or Event of Default shall have
occurred and be continuing and certifying that the representations and
warranties made by each Borrower herein and in the Other 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 such date
as if made on and as of such date, except to the extent any such representation
or warranty expressly relates only to any earlier and/or specified 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 or specified
date, (3) such other agreements, instruments and information (including
supplements or modifications to this Agreement and/or the Other Documents
executed by Borrowers as Agent reasonably deems necessary in order to document
the increase to the Maximum Revolving Advance Amount and to protect, preserve
and continue the perfection and priority of the liens, security interests,
rights and remedies of Agent and Lenders hereunder and under the Other Documents
in light of such increase, and (4) an opinion of counsel in form and substance
reasonably satisfactory to Agent which shall cover such matters related to such
increase as Agent may reasonably require and each Borrower hereby authorizes and
directs such counsel to deliver such opinions to Agent and the applicable
Increasing Lender or New Lender with respect to such increase;

 

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(vii) To the extent requested by any Increasing Lender or New Lender, Borrowers
shall execute and deliver (1) to such Increasing Lender a replacement Note
reflecting the new amount of such Increasing Lender’s Revolving Commitment
Amount after giving effect to the increase (and the prior Note issued to such
Increasing Lender shall be deemed to be cancelled) and (2) to such New Lender a
Note reflecting the amount of such New Lender’s Revolving Commitment Amount;

(viii) any New Lender shall be subject to the approval of Agent and each Issuer
to the extent such approval would be required for an assignment to such New
Lender under Section 16.3 hereof;

(ix) each Increasing Lender shall confirm its agreement to increase its
Revolving Commitment Amount pursuant to an acknowledgement in a form acceptable
to Agent, signed by it and each Borrower and delivered to Agent at least five
(5) days before the effective date of such increase; and

(x) each New Lender shall execute a lender joinder and assumption agreement in
substantially the form of Exhibit 2.24 hereto pursuant to which such New Lender
shall join and become a party to this Agreement and the Other Documents with a
Revolving Commitment Amount as set forth in such lender agreement.

(b) On the effective date of such increase, (i) Borrowers shall repay all
Revolving Advances then outstanding, subject to Borrowers’ obligations under
Sections 3.7, 3.9, or 3.10 hereof; provided that subject to the other conditions
of this Agreement, the Borrowing Agent may request new Revolving Advances on
such date; (ii) the Revolving Commitment Percentages of Lenders holding a
Revolving Commitment (including each Increasing Lender and/or New Lender) shall
be recalculated such that each such Lender’s Revolving Commitment Percentage is
equal to (x) the Revolving Commitment Amount of such Lender divided by (y) the
aggregate of the Revolving Commitment Amounts of all Lenders; (iii) each Lender
shall participate in any new Revolving Advances made on or after such date in
accordance with its Revolving Commitment Percentage after giving effect to the
increase in the Maximum Revolving Advance Amount and recalculation of the
Revolving Commitment Percentages contemplated by this Section 2.24; (iv) each
reference to the term “Maximum Revolving Advance Amount” herein and in any of
the Other Documents shall be deemed amended to mean the amount of the Maximum
Revolving Advance Amount as so increased pursuant to this Section 2.24; and (v)
each reference to a dollar threshold for Liquidity and Average Liquidity set
forth in this Agreement shall be automatically increased to an amount such that
the ratios of Liquidity and Average Liquidity to the Maximum Revolving Advance
Amount as so increased remains the same as prior to such increase.

(c) On the effective date of such increase, each Increasing Lender shall be
deemed to have purchased an additional/increased participation in, and each New
Lender will be deemed to have purchased a new participation in, each then
outstanding Letter of Credit and each drawing thereunder and each then
outstanding Swing Loan in an amount equal to such Lender’s Revolving Commitment
Percentage (as calculated pursuant to Section 2.24(b) above) of the Maximum
Undrawn Amount of each such Letter of Credit (as in effect from time to time)
and the amount of each drawing and of each such Swing Loan, respectively. As
necessary to

 

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effectuate the foregoing, each existing Lender holding a Revolving Commitment
that is not an Increasing Lender shall be deemed to have sold to each applicable
Increasing Lender and/or New Lender, as necessary, a portion of such existing
Lender’s participations in such outstanding Letters of Credit and drawings and
such outstanding Swing Loans such that, after giving effect to all such
purchases and sales, each Lender holding a Revolving Commitment (including each
Increasing Lender and/or New Lender) shall hold a participation in all Letters
of Credit (and drawings thereunder) and all Swing Loans in accordance with their
respective Revolving Commitment Percentages (as calculated pursuant to Section
2.24(b) above).

(d) On the effective date of such increase, Borrowers shall pay all reasonable
and documented out-of-pocket costs and expenses incurred by Agent in connection
with the negotiations regarding, and the preparation, negotiation, execution and
delivery of all agreements and instruments executed and delivered by any of
Agent, Borrowers, Increasing Lenders and/or New Lenders in connection with, such
increase (including all fees for any supplemental or additional public filings
of any Other Documents necessary to protect, preserve and continue the
perfection and priority of the liens, security interests, rights and remedies of
Agent and Lenders hereunder and under the Other Documents in light of such
increase and the reasonable and documented fees and expenses of counsel to
Agent).

 

III. INTEREST AND FEES.

3.1 Interest. Interest on Advances shall be payable in arrears (a) on the first
day of each month with respect to Domestic Rate Loans, (b) with respect to LIBOR
Rate Loans having an Interest Period of one, two or three months, at the end of
the applicable Interest Period, and (c) with respect to LIBOR Rate Loans having
an Interest Period of six months, at the end of each three month period during
such Interest Period, provided that all accrued and unpaid interest shall be due
and payable at the end of the Term. Interest charges shall be computed on the
actual principal amount of Advances outstanding during the applicable month at a
rate per annum equal to (i) with respect to Revolving Advances, the applicable
Revolving Interest Rate, and (ii) with respect to Swing Loans, the Revolving
Interest Rate for Domestic Rate Loans (as applicable, the “Contract
Rate”). Except as expressly provided otherwise in this Agreement, any
Obligations other than the Advances that are not paid when due shall accrue
interest at the Revolving Interest Rate for Domestic Rate Loans, subject to the
provision of the final sentence of this Section 3.1 regarding the Default
Rate. Whenever, subsequent to the Closing Date, the Alternate Base Rate is
increased or decreased, the applicable Contract Rate shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain
in effect. The LIBOR Rate shall be adjusted with respect to LIBOR Rate Loans
without notice or demand of any kind on the effective date of any change in the
Reserve Percentage as of such effective date. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, at the option of Agent
or at the direction of Required Lenders (or, in the case of any Event of Default
under Section 10.7 hereof, immediately and automatically upon the occurrence of
any such Event of Default without the requirement of any affirmative action by
any party), the Obligations shall bear interest at the applicable Contract Rate
plus two percent (2%) per annum (as applicable, the “Default Rate”).

 

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3.2 Letter of Credit Fees.

(a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders holding
Revolving Commitments, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by the Applicable Margin for Revolving Advances
consisting of LIBOR Rate Loans, such fees to be calculated on the basis of a
360-day year for the actual number of days elapsed and to be payable quarterly
in arrears on the first day of each calendar quarter and on the Maturity Date,
and (y) to the applicable Issuer, a fronting fee of one eighth of one percent
(0.125%) per annum times the average daily face amount of each outstanding
Letter of Credit for the period from and excluding the date of issuance of same
to and including the date of expiration or termination, to be payable quarterly
in arrears on the first day of each calendar quarter and on the Maturity Date
(all of the foregoing fees, the “Letter of Credit Fees”). In addition, Borrowers
shall pay to Agent, for the benefit of the applicable Issuer, any and all
administrative, issuance, amendment, payment and negotiation charges with
respect to Letters of Credit and all fees and expenses as agreed upon by the
applicable Issuer and Borrowing Agent in connection with any Letter of Credit,
including in connection with the opening, amendment or renewal of any such
Letter of Credit and any acceptances created thereunder, all such charges, fees
and expenses, if any, to be payable on demand. All such charges shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or pro-ration upon the termination of this Agreement
for any reason. Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in any Issuer’s prevailing charges for that type of
transaction. Upon and after the occurrence of an Event of Default, and during
the continuation thereof, at the option of Agent or at the direction of Required
Lenders (or, in the case of any Event of Default under Section 10.7 hereof,
immediately and automatically upon the occurrence of any such Event of Default
without the requirement of any affirmative action by any party), the Letter of
Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by
an additional two percent (2.0%) per annum.

(b) At any time following the occurrence and during the continuance of an Event
of Default, at the option of Agent or at the direction of Required Lenders (or,
in the case of any Event of Default under Section 10.7 hereof, immediately and
automatically upon the occurrence of such Event of Default, without the
requirement of any affirmative action by any party), or on the Maturity Date or
any other termination of this Agreement (and also, if applicable, in connection
with any mandatory prepayment under Section 2.20 hereof), Borrowers will cause
cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and three percent (103%) of the
Maximum Undrawn Amount of all outstanding Letters of Credit, and each Borrower
hereby irrevocably authorizes Agent, in its discretion, on such Borrower’s
behalf and in such Borrower’s name, to open such an account and to make and
maintain deposits therein, or in an account opened by such Borrower, in the
amounts required to be made by such Borrower, out of the proceeds of Receivables
or other Collateral or out of any other funds of such Borrower coming into any
Lender’s possession at any time. Agent may, in its discretion, invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree (or, in the absence of such
agreement, as Agent may reasonably select) and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon the occurrence of all of the following: (x) Payment in Full of all of the
Obligations; (y) expiration of all Letters of

 

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Credit; and (z) the termination of this Agreement. Borrowers hereby assign,
pledge and grant to Agent, for its benefit and the ratable benefit of Issuers,
Lenders and each other Secured Party, a continuing security interest in and to
and Lien on any such cash collateral and any right, title and interest of
Borrowers in any deposit account, securities account or investment account into
which such cash collateral may be deposited from time to time to secure the
Obligations, specifically including all Obligations with respect to any Letters
of Credit. Borrowers agree that upon the coming due of any Reimbursement
Obligations (or any other Obligations, including Obligations for Letter of
Credit Fees) with respect to the Letters of Credit, Agent may use such cash
collateral to pay and satisfy such Obligations.

3.3 Facility Fee. If, for any calendar quarter during the Term, the average
daily unpaid balance of the sum of Revolving Advances plus Swing Loans plus the
Maximum Undrawn Amount of all outstanding Letters of Credit for each day of such
calendar quarter does not equal the Maximum Revolving Advance Amount, then
Borrowers shall pay to Agent, for the ratable benefit of Lenders holding the
Revolving Commitments based on their Revolving Commitment Percentages, a fee at
a rate equal to three eighths of one percent (0.375%) per annum on the amount by
which the Maximum Revolving Advance Amount exceeds such average daily unpaid
balance (the “Facility Fee”). The Facility Fee shall be payable to Agent in
arrears on the first day of each calendar quarter with respect to the previous
calendar quarter and on the Maturity Date with respect to the period ending on
the Maturity Date.

3.4 Fee Letter. Borrowers shall pay the amounts required to be paid in the Fee
Letter in the manner and at the times required by the Fee Letter.

3.5 Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days (or, in the case of Domestic Rate
Loans, a year of 365/366 days) and for the actual number of days elapsed. If any
payment to be made hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the applicable Contract
Rate during such extension.

3.6 Maximum Charges. In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under Applicable Law. In
the event interest and other charges as computed hereunder would otherwise
exceed the highest rate permitted under Applicable Law: (i) the interest rates
hereunder will be reduced to the maximum rate permitted under Applicable Law;
(ii) such excess amount shall be first applied to any unpaid principal balance
owed by Borrowers; and (iii) if then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrowers and the provisions hereof shall be deemed amended to provide
for such permissible rate.

3.7 Increased Costs. In the event that any Change in Law or compliance by any
Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent,
Swing Loan Lender, any Issuer or Lender and any corporation or bank controlling
Agent, Swing Loan Lender, any Lender or any Issuer and the office or branch
where Agent, Swing Loan Lender, any Lender or any Issuer (as so defined) makes
or maintains any LIBOR Rate Loans) with any request or directive (whether or not
having the force of law) from any central bank or other financial, monetary or
other authority, shall:

 

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(a) subject Agent, Swing Loan Lender, any Lender or any Issuer to any tax of any
kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBOR Rate Loan, or change the basis
of taxation of payments to Agent, Swing Loan Lender, such Lender or such Issuer
in respect thereof (except for Indemnified Taxes or Other Taxes and the
imposition of, or any change in the rate of, any Excluded Taxes payable by
Agent, Swing Loan Lender, such Lender or such Issuer);

(b) impose, modify or deem applicable any reserve, special deposit, assessment,
compulsory loan, insurance charge or similar requirement against assets held by,
or deposits in or for the account of, advances or loans by, or other credit
extended by, any office of Agent, Swing Loan Lender, any Issuer or any Lender,
including pursuant to Regulation D of the Board of Governors of the Federal
Reserve System; or

(c) impose on Agent, Swing Loan Lender, any Lender or any Issuer or the London
interbank LIBOR market any other condition, loss or expense (other than Taxes)
affecting this Agreement or any Other Document or any Advance made by any
Lender, or any Letter of Credit or participation therein;

and the result of any of the foregoing is to increase the cost to Agent, Swing
Loan Lender, any Lender or any Issuer of making, converting to, continuing,
renewing or maintaining its Advances hereunder by an amount that Agent, Swing
Loan Lender, such Lender or such Issuer deems to be material or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Advances by an amount that Agent, Swing Loan Lender or such Lender
or such Issuer deems to be material, then, in any case Borrowers shall promptly
pay Agent, Swing Loan Lender, such Lender or such Issuer, upon its demand, such
additional amount as will compensate Agent, Swing Loan Lender or such Lender or
such Issuer for such additional cost or such reduction, as the case may be,
provided that the foregoing shall not apply to increased costs which are
reflected in the LIBOR Rate, as the case may be. Agent, Swing Loan Lender, such
Lender or such Issuer shall certify the amount of such additional cost or
reduced amount to Borrowing Agent, and such certification shall be conclusive
absent manifest error. Failure or delay on the part of Agent, Swing Loan Lender,
any Issuer or any Lender to demand compensation pursuant to this Section shall
not constitute a waiver of the right of Agent, Swing Loan Lender, any Issuer or
any Lender to demand such compensation; provided that Borrowers shall not be
required to compensate Agent, Swing Loan Lender, any Issuer or any Lender
pursuant to this Section for any reductions in return incurred more than 270
days prior to the date that Agent, Swing Loan Lender, such Issuer or such Lender
notifies Borrowing Agent of such law, rule, regulation or guideline giving rise
to such reductions and of the intention of Agent, Swing Loan Lender, such Issuer
or such Lender to claim compensation therefor; provided further that if such
claim arises by reason of the adoption of or change in any law, rule, regulation
or guideline that is retroactive, then the 270 day period referred to above
shall be extended to include the period of retroactive effect thereof.

 

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3.8 Basis for Determining Interest Rate Inadequate or Unfair. In the event that:

(a) Agent shall have determined that reasonable means do not exist for
ascertaining the LIBOR Rate applicable pursuant to Section 2.2 hereof for any
Interest Period; or

(b) Agent shall have determined that Dollar deposits in the relevant amount and
for the relevant maturity are not available in the London interbank LIBOR
market, with respect to an outstanding LIBOR Rate Loan, a proposed LIBOR Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a LIBOR Rate Loan;
or

(c) Agent shall have determined that (or any Lender shall have notified Agent
that) the making, maintenance or funding of any LIBOR Rate Loan has been made
impracticable or unlawful by compliance by Agent or such Lender in good faith
with any Applicable Law or any interpretation or application thereof by any
Governmental Body or with any request or directive of any such Governmental Body
(whether or not having the force of law); or

(d) the Required Lenders shall have notified Agent that the LIBOR Rate will not
adequately and fairly reflect the cost to the Lenders of the establishment or
maintenance of any LIBOR Rate Loan,

then Agent shall give Borrowing Agent prompt written or telephonic notice of
such notice or determination. If such notice is given, (i) any such requested
LIBOR Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent
shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to the
date of such proposed borrowing, that its request for such borrowing shall be
cancelled or made as an unaffected type of LIBOR Rate Loan, (ii) any Domestic
Rate Loan or LIBOR Rate Loan which was to have been converted to an affected
type of LIBOR Rate Loan shall be continued as or converted into a Domestic Rate
Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two
(2) Business Days prior to the proposed conversion, shall be maintained as an
unaffected type of LIBOR Rate Loan, and (iii) any outstanding affected LIBOR
Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent
shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the
last Business Day of the then current Interest Period applicable to such
affected LIBOR Rate Loan, shall be converted into an unaffected type of LIBOR
Rate Loan, on the last Business Day of the then current Interest Period for such
affected LIBOR Rate Loans (or sooner, if any Lender cannot continue to lawfully
maintain such affected LIBOR Rate Loan). Until such notice has been withdrawn,
Lenders shall have no obligation to make an affected type of LIBOR Rate Loan or
maintain outstanding affected LIBOR Rate Loans and no Borrower shall have the
right to convert a Domestic Rate Loan or an unaffected type of LIBOR Rate Loan
into an affected type of LIBOR Rate Loan.

3.9 Capital Adequacy.

(a) In the event that Agent, Swing Loan Lender, any Issuer or any Lender shall
have determined that any Change in Law, any change in any guideline regarding
capital adequacy or any change in the interpretation or administration thereof
by any Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent, Swing Loan
Lender, any Issuer or any Lender (for purposes of this Section 3.9, the term
“Lender” shall include Agent, Swing Loan Lender, any Issuer or any Lender and
any corporation or bank controlling Agent, Swing Loan Lender, any Issuer or any

 

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Lender and the office or branch where Agent, Swing Loan Lender, any Issuer or
any Lender (as so defined) makes or maintains any LIBOR Rate Loans) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Agent, Swing Loan Lender, any
Issuer or any Lender’s capital as a consequence of its obligations hereunder
(including the making of any Swing Loans) to a level below that which Agent,
Swing Loan Lender, such Issuer or such Lender could have achieved but for such
adoption, change or compliance (taking into consideration Agent’s, Swing Loan
Lender’s, such Issuer’s and such Lender’s policies with respect to capital
adequacy) by an amount deemed by Agent, Swing Loan Lender, any Issuer or any
Lender to be material, then, from time to time, Borrowers shall pay upon demand
to Agent, Swing Loan Lender, such Issuer or such Lender such additional amount
or amounts as will compensate Agent, Swing Loan Lender, such Issuer or such
Lender for such reduction. In determining such amount or amounts, Agent, Swing
Loan Lender, such Issuer or such Lender may use any reasonable averaging or
attribution methods. The protection of this Section 3.9 shall be available to
Agent, Swing Loan Lender, each Issuer and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the Applicable Law,
rule, regulation, guideline or condition.

(b) A certificate of Agent, Swing Loan Lender, such Issuer or such Lender
setting forth such amount or amounts as shall be necessary to compensate Agent,
Swing Loan Lender, such Issuer or such Lender with respect to Section 3.9(a)
hereof when delivered to Borrowing Agent shall be conclusive absent manifest
error. Failure or delay on the part of Agent, Swing Loan Lender, any Issuer or
any Lender to demand compensation pursuant to this Section shall not constitute
a waiver of the right of Agent, Swing Loan Lender, any Issuer or any Lender to
demand such compensation; provided that Borrowers shall not be required to
compensate Agent, Swing Loan Lender, any Issuer or any Lender pursuant to this
Section for any reductions in return incurred more than 270 days prior to the
date that Agent, Swing Loan Lender, such Issuer or such Lender notifies
Borrowing Agent of such law, rule, regulation or guideline giving rise to such
reductions and of the intention of Agent, Swing Loan Lender, such Issuer or such
Lender to claim compensation therefor; provided further that if such claim
arises by reason of the adoption of or change in any law, rule, regulation or
guideline that is retroactive, then the 270 day period referred to above shall
be extended to include the period of retroactive effect thereof.

3.10 Taxes.

(a) Any and all payments by or on account of any Obligations hereunder or under
any Other Document shall be made free and clear of and without reduction or
withholding for any Indemnified Taxes or Other Taxes; provided that if Borrowers
shall be required by Applicable Law to deduct any Indemnified Taxes (including
any Other Taxes) from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the applicable
Recipient receives an amount equal to the sum it would have received had no such
deductions been made, provided that Borrowers shall not be required to increase
any such amounts to the extent that the increase in such amount payable results
from such Recipient’s own willful misconduct or gross negligence (as finally
determined by a court of competent jurisdiction), (ii) Borrowers shall make such
deductions and (iii) Borrowers shall timely pay the full amount deducted to the
relevant Governmental Body in accordance with Applicable Law.

 

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(b) Without limiting the provisions of Section 3.10(a) above, Borrowers shall
timely pay any Other Taxes to the relevant Governmental Body in accordance with
Applicable Law.

(c) Each Borrower shall indemnify each Recipient within ten (10) Business Days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by such Recipient and
any penalties, interest and reasonable and documented expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Body. A certificate as to the amount of such payment or liability delivered to
Borrowers by any Recipient (with a copy to Agent), or by Agent on its own behalf
or on behalf of a Recipient shall be conclusive absent manifest error.

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

(e) Any Recipient that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which any Borrower is
resident for tax purposes, or under any treaty to which such jurisdiction is a
party, with respect to payments hereunder or under any Other Document shall
deliver to Borrowers (with a copy to Agent), at the time or times prescribed by
Applicable Law or reasonably requested by Borrowers or Agent, such properly
completed and executed documentation prescribed by Applicable Law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Recipient, if requested by Borrowers or Agent,
shall deliver such other documentation prescribed by Applicable Law or
reasonably requested by the Borrowers or Agent as will enable Borrowers or Agent
to determine whether or not such Recipient is subject to backup withholding or
information reporting requirements. Without limiting the generality of the
foregoing, in the event that any Borrower is resident for tax purposes in the
United States of America, (x) any Recipient that is not a Foreign Lender shall
deliver to Borrowers and Agent two (2) duly completed valid copies of IRS Form
W-9 demonstrating that such Person is exempt from United States federal backup
withholding tax, and (y) any Foreign Lender shall deliver to Borrowers and Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the request of Borrowers or Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following is
applicable:

(i) duly completed valid copies of IRS Form W-8BEN or W-8BEN-E claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

 

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(ii) duly completed valid copies of IRS Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrowers
within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed valid copies of IRS Form W-8BEN or W-8BEN-E, or

(iv) any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in United States federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
Applicable Law to permit the Borrowers to determine the withholding or deduction
required to be made.

(f) If a payment made to a Recipient under this Agreement or any Other Document
would be subject to U.S. federal withholding Taxes imposed by FATCA if such
Person were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Recipient shall deliver to Agent and Borrowers (A) a
certification signed by the chief financial officer, principal accounting
officer, treasurer or controller of such Person, and (B) other documentation
reasonably requested by Agent or any Borrower sufficient for Agent and Borrowers
to comply with their obligations under FATCA and to determine that such
Recipient has complied with such applicable reporting requirements.

(g) Each Recipient agrees that if any form or certification it previously
delivered pursuant to this Section 3.10 expires or becomes obsolete or
inaccurate in any respect, it shall update such form or certification or
promptly notify the Borrowers and Agent in writing of its legal inability to do
so.

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

3.11 Replacement of Lenders. If any Lender (an “Affected Lender”) (a) makes
demand upon Borrowers for (or if Borrowers are otherwise required to pay)
amounts pursuant to Section 3.7, 3.9 or 3.10 hereof, (b) is unable to make or
maintain LIBOR Rate Loans as a result

 

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of a condition described in Section 2.2(h) hereof, (c) is a Defaulting Lender,
(d) denies any consent requested by Agent pursuant to Section 16.2(b) hereof, or
(e) gives a notice described in Section 3.8(c) hereof, Borrowers may, by notice
in writing to Agent and such Affected Lender (i) request the Affected Lender to
cooperate with Borrowers in obtaining a replacement Lender satisfactory to Agent
and Borrowers (the “Replacement Lender”); (ii) request the non-Affected Lenders
to acquire and assume all of the Affected Lender’s Advances and its Revolving
Commitment Percentage as provided herein, but none of such Lenders shall be
under any obligation to do so; or (iii) propose a Replacement Lender subject to
approval by Agent in its good faith business judgment. If any satisfactory
Replacement Lender shall be obtained, and/or if any one or more of the
non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender’s Advances and its Revolving Commitment Percentage, then such Affected
Lender shall assign, in accordance with Section 16.3 hereof, all of its Advances
and its Revolving Commitment Percentage and other rights and obligations under
this Agreement and the Other Documents to such Replacement Lender or
non-Affected Lenders, as the case may be, in exchange for payment of the
principal amount so assigned and all interest and fees accrued on the amount so
assigned, plus all other Obligations then due and payable to the Affected
Lender.

3.12 Designation of a Different Lending Office. If any Lender requests
compensation under Sections 3.7 or 3.9 hereof, or requires Borrowers to pay any
Indemnified Taxes, Other Taxes or additional amounts to any Lender or any
Governmental Body for the account of any Lender pursuant to Section 3.10 hereof,
then such Lender shall (at the request of Borrowing Agent) use reasonable
efforts to designate a different lending office for funding or booking its
Advances hereunder or to assign its rights and obligations hereunder to another
of its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (a) would eliminate or reduce amounts payable pursuant
to Sections 3.7, 3.9, or 3.10 hereof, as the case may be, in the future, and
(b) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Borrowers hereby agree to pay
all reasonable and documented costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

IV. COLLATERAL: GENERAL TERMS

4.1 Security Interest in the Collateral. To secure the prompt payment and
performance to Agent, each Issuer and each Lender (and each other holder of any
Obligations) of the Obligations, each Loan Party hereby assigns, pledges and
grants to Agent for its benefit and for the ratable benefit of each Lender, each
Issuer and each other Secured Party, a continuing security interest in and to
and Lien on all of its Collateral, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located. Each Loan Party shall
provide Agent with written notice of all commercial tort claims in an aggregate
amount in excess of $500,000 promptly upon the occurrence of any events giving
rise to any such claims (regardless of whether legal proceedings have yet been
commenced), such notice to contain a brief description of the claims, the events
out of which such claims arose and the parties against which such claims may be
asserted and, if applicable in any case where legal proceedings regarding such
claims have been commenced, the case title together with the applicable court
and docket number. Upon delivery of each such notice, such Loan Party shall be
deemed to thereby grant to Agent a security interest and lien in and to such
commercial tort claims described therein and all proceeds thereof. Each Loan
Party shall provide Agent with written notice promptly upon

 

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becoming the beneficiary under any letter of credit or otherwise obtaining any
right, title or interest in any letter of credit rights in an aggregate amount
in excess of $500,000, and at Agent’s request shall take such actions as Agent
may reasonably request for the perfection of Agent’s security interest therein.

4.2 Perfection of Security Interest. Each Loan Party shall take all action that
may be necessary, or that Agent may reasonably request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent’s
security interest in and Lien on the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) using commercially reasonable efforts to obtain Lien Waiver
Agreements, (iii) delivering to Agent, endorsed or accompanied by such
instruments of assignment as Agent may specify, and stamping or marking, in such
manner as Agent may specify, any and all chattel paper, instruments, letters of
credits and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) using commercially reasonable efforts to enter into
warehousing, lockbox, customs and freight agreements and other custodial
arrangements reasonably satisfactory to Agent, and (v) executing and delivering
financing statements, Control Agreements, instruments of pledge, mortgages,
notices and assignments, in each case in form and substance reasonably
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law. By its signature hereto, each
Loan Party hereby authorizes Agent to file against such Loan Party, one or more
financing, continuation or amendment statements pursuant to the Uniform
Commercial Code in form and substance satisfactory to Agent (which statements
may have a description of collateral which is broader than that set forth
herein, including without limitation a description of Collateral as “all assets”
and/or “all personal property” of any Loan Party). All documented out-of-pocket
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto, shall be charged to Borrowers’ Account as a
Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at
Agent’s option, shall be paid by the Borrowers to Agent for its benefit and for
the ratable benefit of Lenders not later than ten (10) Business Days after
written demand.

4.3 Preservation of Collateral. Following the occurrence of a Default or Event
of Default, in addition to the rights and remedies set forth in Section 11.1
hereof, Agent: (a) may at any time take such steps as Agent deems necessary to
protect Agent’s interest in and to preserve the Collateral, including the hiring
of security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) subject to the rights of the applicable landlords, may
employ and maintain at any of any Loan Party’s premises a custodian who shall
have full authority to do all acts necessary to protect Agent’s interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all or
part of the Collateral; (d) subject to the rights of the applicable lessors, may
use any Loan Party’s owned or leased lifts, hoists, trucks and other facilities
or Equipment for handling or removing the Collateral; and (e) subject to the
rights of the applicable landlords, shall have, and is hereby granted, a right
of ingress and egress to the places where the Collateral is located, and may
proceed over and through any of the Loan Parties’ owned or leased property. Each
Loan Party shall cooperate fully with all of Agent’s efforts to preserve the
Collateral and will take such actions to preserve the Collateral as Agent may
direct. All of Agent’s expenses of preserving the Collateral, including any
expenses relating

 

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to the bonding of a custodian, shall be charged to Borrowers’ Account as a
Revolving Advance maintained as a Domestic Rate Loan and added to the
Obligations or, at Agent’s option, shall be paid by the Borrowers to Agent for
its benefit and for the ratable benefit of Lenders not later than ten (10)
Business Days after written demand.

4.4 Ownership and Location of Collateral.

(a) With respect to the Collateral, at the time the Collateral becomes subject
to Agent’s security interest: (i) each Loan Party shall be fully authorized and
able to sell, transfer, pledge and/or grant a Lien upon each and every item of
its respective Collateral to Agent; and, except for Permitted Encumbrances, the
Collateral shall be free and clear of all Liens whatsoever; (ii) all signatures
and endorsements of each Loan Party that appear on such documents and agreements
shall be genuine and each Loan Party shall have full capacity to execute same;
and (iii) each Loan Party’s Equipment and each Loan Party’s Inventory (other
than (A) Inventory in transit, (B) Service Inventory and (C) Inventory at any
location where the value of all Inventory at such location is less than
$1,000,000) shall be located as set forth on Schedule 4.4 hereto, as such
Schedule may be updated from time to time in accordance with the terms hereof,
and shall not be removed from such locations without the prior written consent
of Agent except with respect to the sale of Inventory in the Ordinary Course of
Business and Equipment to the extent permitted in Section 7.1(b) hereof.

(b) (i) There is no location at which any Loan Party has any Inventory (except
for (A) Inventory in transit, (B) Service Inventory and (C) Inventory at any
location where the value of all Inventory at such location is less than
$1,000,000) or other Collateral other than those locations listed on Schedule
4.4 hereto; (ii) Schedule 4.4 hereto, as such Schedule may be updated from time
to time in accordance with the terms hereof, contains a correct and complete
list, as of the Closing Date, of the legal names and addresses of each warehouse
at which Inventory of any Loan Party is stored, and none of the receipts
received by any Loan Party from any warehouse states that the goods covered
thereby are to be delivered to bearer or to the order of a named Person or to a
named Person and such named Person’s assigns; (iii) Schedule 4.4 hereto sets
forth a correct and complete list as of the Closing Date of (A) each place of
business of each Loan Party and (B) the chief executive office of each Loan
Party; and (iv) Schedule 4.4 hereto sets forth a correct and complete list as of
the Closing Date of the location, by state and street address, of all Real
Property owned or leased by each Loan Party, identifying which Real Properties
are owned and which are leased, together with the names and addresses of any
landlords or other third parties in possession, custody or control of any
Collateral.

4.5 Defense of Agent’s and Lenders’ Interests. Until (a) the Payment in Full of
all of the Obligations and (b) the termination of this Agreement, Agent’s
interests in the Collateral shall continue in full force and effect. During such
period no Loan Party shall, without Agent’s prior written consent, pledge, sell
(except for Dispositions otherwise permitted in Section 7.1(b) hereof), assign,
transfer, create or suffer to exist a Lien upon or encumber or allow or suffer
to be encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Loan Party shall use commercially reasonable efforts to defend
Agent’s interests in the Collateral against any and all Persons whatsoever. At
any time following demand by Agent for payment of all Obligations following the
occurrence and during the continuance of an Event of Default, Agent shall have
the right to take possession of the indicia of the Collateral and the Collateral
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whatever physical form contained, including: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, the Loan Parties shall, upon demand, assemble it
in the best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other Applicable Law. Each
Loan Party shall, and Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehousers or others receiving or holding cash, checks,
Inventory, documents or instruments in which Agent holds a security interest to
deliver same to Agent and/or subject to Agent’s order and if they shall come
into any Loan Party’s possession, they, and each of them, shall be held by such
Loan Party in trust as Agent’s trustee, and such Loan Party will immediately
deliver them to Agent in their original form together with any necessary
endorsement.

4.6 Inspection of Premises. At all reasonable times and from time to time as
often as Agent shall elect in its Permitted Discretion, Agent and each Lender
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Loan Party’s books, records, audits,
correspondence and all other papers relating to the Collateral and the operation
of each Loan Party’s business. Agent, any Lender and their agents may enter upon
any premises of any Loan Party at any time during business hours and at any
other reasonable time, and from time to time as often as Agent shall elect in
its Permitted Discretion, for the purpose of inspecting the Collateral and any
and all books and records pertaining thereto and to the operation of such Loan
Party’s business. Notwithstanding the foregoing, (a) no more than one (1) such
inspection shall be conducted at the expense of the Borrowers during any
consecutive twelve (12) month period in which a Cash Dominion Period does not
exist, (b) during a Cash Dominion Period, no more than two (2) such inspections
shall be conducted at the expense of the Borrowers during any consecutive
twelve (12) month period, and (c) if an Event of Default shall exist, then
notwithstanding anything to the contrary in the foregoing clauses (a) and (b),
there shall be no limitation on the number or frequency of such inspections
which may be conducted at the expense of the Borrowers.

4.7 Appraisals. Agent may, in its Permitted Discretion, at any time after the
Closing Date and from time to time, engage the services of an independent
appraisal firm or firms of reputable standing, satisfactory to Agent, for the
purpose of appraising the then current values of the Loan Parties’ assets
(including without limitation Inventory, Intellectual Property and the LTO
Program). Absent the occurrence and continuance of an Event of Default at such
time, Agent shall consult with Borrowing Agent as to the identity of any such
firms; provided that it is agreed by the parties hereto that Gordon Brothers
Asset Advisors, LLC shall be deemed to be an acceptable firm for purposes of
appraising the value of the LTO Program. In the event the value of the Loan
Parties’ assets, as so determined pursuant to any such appraisal, is less than
anticipated by Agent, such that the Revolving Advances are in excess of such
Advances permitted hereunder, then, promptly upon Agent’s demand for same, the
Borrowers shall make mandatory prepayments of then outstanding Revolving
Advances so as to eliminate the excess Advances. All of the fees and
out-of-pocket costs and expenses of any appraisals conducted pursuant to this
Section 4.7 shall be paid for when due, in full and without deduction, off-set
or counterclaim by Borrowers. Notwithstanding the foregoing, (i) no more than
one (1) appraisal of Inventory and one (1) appraisal of Intellectual Property
(which shall include, without limitation, an appraisal of the LTO Program) shall
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consecutive twelve (12) month period in which a Cash Dominion Period does not
exist, (ii) during a Cash Dominion Period, no more than two (2) appraisals of
Inventory and two (2) appraisals of Intellectual Property shall be conducted at
the expense of the Borrowers during any consecutive twelve (12) month period,
and (iii) if an Event of Default shall exist, then notwithstanding anything to
the contrary in the foregoing clauses (i) and (ii), there shall be no limitation
on the number or frequency of appraisals which may be conducted at the expense
of the Borrowers.

4.8 Receivables; Deposit Accounts and Securities Accounts.

(a) The Receivables are and shall be bona fide and valid accounts representing a
bona fide indebtedness incurred by the Customers therein named, for fixed sums
as set forth in the invoices relating thereto (provided immaterial or
unintentional invoice errors shall not be deemed to be a breach hereof) with
respect to an absolute sale or lease and delivery of goods upon stated terms of
the Loan Parties, or work, labor or services theretofore rendered by the Loan
Parties as of the date the applicable Receivables were created.

(b) Each Customer, to each Loan Party’s knowledge, as of the date each
Receivable is created, is able to pay all Receivables on which the Customer is
obligated in full when due. With respect to such Customers of any Loan Party who
are not solvent, such Loan Party has set up on its books and in its financial
records bad debt reserves adequate to cover such Receivables.

(c) Each Loan Party’s chief executive office is located as set forth on
Schedule 4.4 hereto, as such Schedule may be updated from time to time in
accordance with the terms hereof. Until written notice is given to Agent by
Borrowing Agent of any other office at which any Loan Party keeps its records
pertaining to Receivables, all such records shall be kept at such executive
office.

(d) The Loan Parties shall instruct their Customers to deliver all remittances
upon Receivables (whether paid by check or by wire transfer of funds) to such
Blocked Accounts and/or Depository Accounts (and any associated lockboxes) as
Agent shall designate from time to time as contemplated by Section 4.8(h) hereof
or as otherwise agreed to from time to time by Agent. Notwithstanding the
foregoing, to the extent any Loan Party directly receives any remittances upon
Receivables, such Loan Party shall, at such Loan Party’s sole cost and expense,
but on Agent’s behalf and for Agent’s account, collect as Agent’s property and
in trust for Agent all amounts received on Receivables, and shall not commingle
such collections with any Loan Party’s funds or use the same except to pay the
Obligations, and shall as soon as possible and in any event no later than one
(1) Business Day after the receipt thereof (i) in the case of remittances paid
by check, deposit all such remittances in their original form (after supplying
any necessary endorsements) and (ii) in the case of remittances paid by wire
transfer of funds, transfer all such remittances, in each case, into such
Blocked Accounts and/or Depository Accounts. Each Loan Party shall deposit in
the Blocked Account and/or Depository Account or, upon request by Agent, deliver
to Agent, in original form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness. Prior to the occurrence of a Cash Dominion Triggering Event,
payments made by a Loan Party’s Customers remitted directly to Agent will be
deposited by Agent in the Blocked Accounts, and Customer remittances shall only
be treated as a repayment of Advances if the Borrowers so elect in a written
notice to Agent.

 

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(e) At any time following the occurrence and during the continuance of an Event
of Default, Agent shall have the right to send notice of the assignment of, and
Agent’s security interest in and Lien on, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the
Collateral, and thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent’s actual and
documented collection expenses, including, but not limited to, stationery and
postage, telephone, facsimile, telegraph, secretarial and clerical expenses and
the salaries of any collection personnel used for collection, may be charged to
Borrowers’ Account and added to the Obligations, or, at Agent’s option, shall be
paid by the Borrowers to Agent for its benefit and for the ratable benefit of
Lenders not later than ten (10) Business Days after written demand.

(f) Agent shall have the right to receive, endorse, assign and/or deliver in the
name of Agent or any Loan Party any and all checks, drafts and other instruments
for the payment of money relating to the Receivables, and each Loan Party hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Loan Party hereby constitutes Agent or Agent’s designee as such
Loan Party’s attorney with power (i) at any time: (A) to endorse such Loan
Party’s name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral; (B) to sign such Loan Party’s name on any
invoice or bill of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (C) to send
verifications of Receivables to any Customer; (D) to sign such Loan Party’s name
on all financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or perfect Agent’s
interest in the Collateral and to file same; and (E) to receive, open and
dispose of all mail addressed to any Loan Party at any post office box/lockbox
maintained by Agent for the Loan Parties or at any other business premises of
Agent; and (ii) at any time following the occurrence and during the continuance
of an Event of Default: (A) to demand payment of the Receivables; (B) to enforce
payment of the Receivables by legal proceedings or otherwise; (C) to exercise
all of such Loan Party’s rights and remedies with respect to the collection of
the Receivables and any other Collateral; (D) to sue upon or otherwise collect,
extend the time of payment of, settle, adjust, compromise, extend or renew the
Receivables; (E) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (F) to prepare, file and sign such Loan Party’s name on
a proof of claim in bankruptcy or similar document against any Customer; (G) to
prepare, file and sign such Loan Party’s name on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with the Receivables;
(H) to accept the return of goods represented by any of the Receivables; (I) to
change the address for delivery of mail addressed to any Loan Party to such
address as Agent may designate; and (J) to do all other acts and things
necessary to carry out the provisions of this Agreement. All acts of said
attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or of law, unless done maliciously or with
gross (not mere) negligence (as determined by a court of competent jurisdiction
in a final non-appealable judgment); this power being coupled with an interest
is irrevocable while any of the Obligations remain unpaid.

 

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(g) Neither Agent nor any Lender shall, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Receivables or
any instrument received in payment thereof, or for any damage resulting
therefrom.

(h) All proceeds of Collateral shall be deposited by the Loan Parties into
either (i) a lockbox account, dominion account or such other “blocked account”
(each a “Blocked Account” and collectively the “Blocked Accounts”) established
at a Specified Domestic Blocked Account Bank, Specified Swiss Blocked Account
Bank or such other bank or banks as may be acceptable to Agent in its Permitted
Discretion (each such bank, a “Blocked Account Bank” and collectively, “Blocked
Account Banks”) pursuant to an arrangement with such Blocked Account Bank as may
be acceptable to Agent in its Permitted Discretion or (ii) depository accounts
(“Depository Accounts”) established at Agent for the deposit of such
proceeds. Each applicable Loan Party shall deliver or cause to be delivered to
Agent a Control Agreement, in form and substance reasonably satisfactory to
Agent, among such Loan Party, Agent, Term Loan Agent and each bank at which each
Blocked Account, each Depository Account and any other deposit account (other
than any Swiss Blocked Account or any Excluded Account) of such Loan Party is
maintained that is sufficient to give Agent “control” (for purposes of Articles
8 and 9 of the Uniform Commercial Code) over such Blocked Accounts, Depository
Accounts and other deposit accounts. At any time during a Cash Dominion Period,
Agent shall have the sole and exclusive right to direct, and is hereby
authorized to give instructions pursuant to such Control Agreements directing,
the disposition of funds in the Blocked Accounts and Depository Accounts (any
such instructions, an “Activation Notice”) to Agent on a daily basis, either to
a deposit account maintained by Agent at PNC or by wire transfer to a deposit
account at PNC, which such funds may be applied by Agent to repay the
Obligations, and, if an Event of Default has occurred and is continuing, to cash
collateralize outstanding Letters of Credit in accordance with Section 3.2(b)
hereof. Prior to the occurrence of a Cash Dominion Triggering Event, the Loan
Parties shall retain the right to direct the disposition of funds in the Blocked
Accounts and Agent shall not deliver an Activation Notice. In the event that
Agent issues an Activation Notice, Agent agrees to rescind such Activation
Notice at such time that no Cash Dominion Period shall exist (it being
understood that, notwithstanding any such rescission, Agent shall have the right
and is authorized to issue an additional Activation Notice if a subsequent Cash
Dominion Triggering Event shall have occurred or a Cash Dominion Period shall
exist at any time thereafter). All funds deposited in the Blocked Accounts or
Depository Accounts shall immediately become subject to the security interest of
Agent, for its own benefit and the ratable benefit of the other Secured Parties,
and Borrowing Agent shall use commercially reasonable efforts to obtain the
agreement by each Blocked Account Bank to waive any offset rights against the
funds so deposited. Neither Agent nor any Lender assumes any responsibility for
such blocked account arrangements, including any claim of accord and
satisfaction or release with respect to deposits accepted by any Blocked Account
Bank thereunder. Agent shall apply all funds received by it from the Blocked
Accounts and/or Depository Accounts to the satisfaction of the Obligations
(including the cash collateralization of all Obligations relating to any
outstanding Letters of Credit in accordance with the provisions of Section
3.2(b) hereof) in such order as Agent shall determine in its sole discretion,
subject to Borrowers’ ability to re-borrow Revolving Advances in accordance with
the terms hereof; provided that, in the absence of any Event of Default, Agent
shall apply all such funds representing collection of Receivables first to the
prepayment of the principal amount of the Swing Loans, if any, and then to the
Revolving Advances.

 

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(i) No Loan Party will, without Agent’s consent, compromise or adjust any
material amount of the Receivables (or extend the time for payment thereof) or
accept any material returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the Ordinary Course of Business of such Loan Party.

(j) All deposit accounts (including all Blocked Accounts and Depository
Accounts), securities accounts and investment accounts of each Loan Party and
its Subsidiaries as of the Closing Date are set forth on Schedule 4.8(j)
hereto. No Loan Party shall open any new deposit account, securities account or
investment account (other than an Excluded Account) with a bank, depository
institution or securities intermediary other than Agent unless (i) the Loan
Parties shall have provided written notice thereof to Agent within five (5)
Business Days and (ii) if required by Agent in its sole discretion, such bank,
depository institution or securities intermediary, each applicable Loan Party,
Agent and Term Loan Agent shall within thirty (30) days following Agent’s
request, enter into a Control Agreement in form and substance reasonably
satisfactory to Agent and sufficient to give Agent “control” (for purposes of
Articles 8 and 9 of the Uniform Commercial Code) over such account.

(k) The aggregate amount on deposit in the Swiss Blocked Accounts shall not
exceed $6,000,000 for any period of five (5) or more consecutive Business Days,
on any date of determination.

4.9 Inventory. To the extent Inventory held for sale or lease has been produced
by any Loan Party, it has been and will be produced by such Loan Party in all
material respects in accordance with the Federal Fair Labor Standards Act of
1938, as amended, modified or supplemented, and all rules, regulations and
orders thereunder.

4.10 Maintenance of Equipment. The Loan Parties’ Equipment shall be maintained
in good operating condition and repair (reasonable wear and tear excepted) and
all necessary replacements of and repairs thereto shall be made. No Loan Party
shall use or operate its Equipment in violation in any material respect of any
law, statute, ordinance, code, rule or regulation.

4.11 Exculpation of Liability. Nothing set forth herein shall be construed to
constitute Agent or any Lender as any Loan Party’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Loan Party’s obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Loan Party of any of
the terms and conditions thereof.

 

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4.12 Financing Statements. Except as respects the financing statements filed by
Agent, financing statements described on Schedule 7.2 hereto, and financing
statements filed in connection with Permitted Encumbrances, no financing
statement covering any of the Collateral or any proceeds thereof is or will be
on file in any public office.

4.13 Investment Property Collateral.

(a) Each Loan Party has the right to transfer the Investment Property free of
any Liens other than Permitted Encumbrances and will use commercially reasonable
efforts to defend its title to the Investment Property against the contrary
claims of all Persons. Each Loan Party shall (i) ensure that each operating
agreement, limited partnership agreement and any other similar agreement permits
Agent’s Lien on the Equity Interests of wholly-owned Subsidiaries (other than
Foreign Subsidiaries) arising thereunder, foreclosure of Agent’s Lien and
admission of any transferee as a member, limited partner or other applicable
equity holder thereunder and (ii) use commercially reasonable efforts to provide
that each operating agreement, limited partnership agreement and any other
similar agreement with respect to any other Person permits Agent’s Lien on the
Investment Property of such Loan Party arising thereunder, foreclosure of
Agent’s Lien and admission of any transferee as a member, limited partner or
other applicable equity holder thereunder.

(b) Each Loan Party shall, if the Investment Property includes securities or any
other financial or other asset maintained in a securities account, cause the
custodian with respect thereto to execute and deliver a notification and Control
Agreement or other applicable agreement reasonably satisfactory to Agent in
order to perfect and protect Agent’s Lien in such Investment Property.

(c) Except as set forth in Article XI hereof or in the Pledge Agreement, (i) the
Loan Parties will have the right to exercise all voting rights with respect to
the Investment Property and (ii) the Loan Parties will have the right to receive
all cash dividends and distributions, interest and premiums declared and paid on
the Investment Property to the extent otherwise permitted under this Agreement
or any of the Other Documents. In the event any additional Equity Interests are
issued to any Loan Party as a stock dividend or distribution or in lieu of
interest on any of the Investment Property, as a result of any split of any of
the Investment Property, by reclassification or otherwise, then subject to the
Intercreditor Agreement, any certificates evidencing any such additional shares
will be delivered to Agent within fifteen (15) Business Days (or such later date
as Agent shall agree to in its Permitted Discretion) and such shares will be
subject to this Agreement and a part of the Investment Property to the same
extent as the original Investment Property.

4.14 Provisions Regarding Certain Investment Property Collateral. The operating
agreement or limited partnership agreement (as applicable) of any Subsidiary
(other than a Foreign Subsidiary) of any Loan Party hereafter formed or acquired
that is a limited liability company or a limited partnership, shall contain the
following language (or language to the same effect): “Notwithstanding anything
to the contrary set forth herein, no restriction upon any transfer of
{membership interests} {partnership interests} set forth herein shall apply, in
any way, to the pledge by any {member} {partner} of a security interest in and
to its {membership interests} {partnership interests} to PNC Bank, National
Association, as agent for certain lenders, or its successors and assigns in such
capacity (any such person, “Agent”), or to any foreclosure upon or subsequent
disposition of such {membership interests} {partnership

 

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interests} by Agent. Any transferee or assignee with respect to such foreclosure
or disposition shall automatically be admitted as a {member} {partner} of the
Company and shall have all of the rights of the {member} {partner} that
previously owned such {membership interests} {partnership interests}.”

 

V. REPRESENTATIONS AND WARRANTIES.

Each Loan Party represents and warrants as follows:

5.1 Authority. Each Loan Party has full power, authority and legal right to
enter into this Agreement and the Other Documents to which it is a party and to
perform all its respective Obligations hereunder and thereunder. This Agreement
and the Other Documents to which it is a party have been duly executed and
delivered by each Loan Party, and this Agreement and the Other Documents to
which it is a party constitute the legal, valid and binding obligation of such
Loan Party enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents to which
it is a party (a) are within such Loan Party’s corporate or company powers, as
applicable, have been duly authorized by all necessary corporate or company
action, as applicable, are not in contravention of law or the terms of such Loan
Party’s Organizational Documents or to the conduct of such Loan Party’s business
or of any Material Contract or undertaking to which such Loan Party is a party
or by which such Loan Party is bound, including without limitation the Term Loan
Documents, (b) will not conflict with or violate any material provisions of any
law or regulation, or any judgment, order or decree of any Governmental Body,
(c) will not require the Consent of any Governmental Body, any party to a
Material Contract or any other Person, except (i) any Consents of any party to a
Material Contract or any other Person (other than a Governmental Body) with
respect to which the failure to obtain could not reasonably be expected,
individually or in the aggregate to have a Material Adverse Effect, (ii) any
immaterial Consents of any Governmental Body, or (iii) those Consents set forth
on Schedule 5.1 hereto, all of which will have been duly obtained, made or
compiled prior to the Closing Date and which are in full force and effect and
(d) will not conflict with, nor result in any breach in any of the provisions of
or constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Loan Party under the provisions of
any material agreement, instrument, or other document to which such Loan Party
is a party or by which it or its property is a party or by which it may be
bound, including without limitation, the Term Loan Documents.

5.2 Formation and Qualification.

(a) Each Loan Party is duly incorporated or formed, as applicable, and in good
standing under the laws of the state of its incorporation or formation, as
applicable, in each case as listed on Schedule 5.2(a) hereto, as such Schedule
may be updated from time to time in accordance with the terms hereof, and each
Loan Party is qualified to do business and is in good standing in the other
states listed on Schedule 5.2(a) hereto, as such Schedule may be updated from
time to time in accordance with the terms hereof, which constitute all states in
which the failure to so qualify could reasonably be expected to have a Material
Adverse Effect. Each Loan Party has delivered to Agent true and complete copies
of its Organizational Documents and will promptly notify Agent of any amendment
or changes thereto.

 

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(b) Schedule 5.2(b) hereto, as such Schedule may be updated from time to time in
accordance with the terms hereof, sets forth (i) a true, complete and correct
list of the Subsidiaries of each Loan Party and (ii) a true, complete and
correct list of all Equity Interests held by each Loan Party in each of its
Subsidiaries.

(c) No Immaterial Subsidiary (i) owns or generates any Receivables or Inventory,
(b) has revenues in any fiscal year in excess of $250,000 (other than, in the
case of Quantum International, revenue generated through foreign branch offices
pursuant to the Transfer Pricing Program) or (c) receives or generates any
royalty revenue.

5.3 Survival of Representations and Warranties. All representations and
warranties of such Loan Party in this Agreement and the Other Documents to which
it is a party shall be true in all material respects at the time of such Loan
Party’s execution of this Agreement and the Other Documents to which it is a
party (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), and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.

5.4 Tax Returns. Each Loan Party’s federal tax identification number is set
forth on Schedule 5.4 hereto, as such Schedule may be updated from time to time
in accordance with the terms hereof. Each Loan Party has filed all federal, and
all material state and local tax returns and other material reports that it is
required by law to file and has paid all taxes, assessments, fees and other
governmental charges that are due and payable in excess of $1,000,000 in the
aggregate, except for those taxes, assessments, fees and other governmental
charges that are being Properly Contested. The provision for taxes on the books
of each Loan Party is adequate for all years not closed by applicable statutes,
and for its current fiscal year, and no Loan Party has any knowledge of any
deficiency or additional assessment in connection therewith not provided for on
its books.

5.5 Financial Statements.

(a) The pro forma balance sheet of Quantum and its Subsidiaries, on a
consolidated basis (the “Pro Forma Balance Sheet”), delivered to Agent prior to
the Closing Date reflects the consummation of the Transactions and fairly
reflects the financial condition of the Quantum and its Subsidiaries, on a
consolidated basis, as of the Closing Date after giving effect to the
Transactions, and has been prepared in accordance with GAAP. The Pro Forma
Balance Sheet has been certified by the Chief Executive Officer, Chief Financial
Officer or Treasurer of Borrowing Agent as fairly reflecting the financial
condition of Quantum and its Subsidiaries as of the date that it was
delivered. All financial statements referred to in this Section 5.5(a),
including the related schedules and notes thereto, have been prepared in
accordance with GAAP, except as may be disclosed in such financial statements.

 

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(b) The twelve (12) month cash flow and balance sheet projections of Quantum and
its Subsidiaries, on a consolidated basis (the “Closing Date Projections” and
together with the Pro Forma Balance Sheet, collectively, the “Pro Forma
Financial Statements”), delivered to Agent prior to the Closing Date were
reviewed by the Chief Executive Officer, Chief Financial Officer or Treasurer of
Quantum, are based on underlying assumptions which such officer believed to be
reasonable on the date such Closing Date Projections were delivered.

(c) The audited consolidated and consolidating balance sheets of Quantum and its
Subsidiaries (and such other Persons described therein) as of March 31, 2016,
and the related statements of income, changes in stockholder’s equity, and
changes in cash flow for the period ended on such date, all accompanied by
reports thereon containing opinions by independent certified public accountants,
copies of which have been delivered to Agent, have been prepared in accordance
with GAAP, consistently applied (except for changes described in such financial
statements) and present fairly the financial position of the Loan Parties at
such date and the results of their operations for such period. The unaudited
consolidated and consolidating balance sheets of Quantum and its Subsidiaries
(and such other Persons described therein) as of September 30, 2016, and the
related statements of income, and changes in cash flow for the period ended on
such date, copies of which have been delivered to Agent, present fairly the
financial position of the Loan Parties at such date and the results of their
operations at such date.

(d) Since March 31, 2016, there has been no change in the condition, financial
or otherwise, of the Loan Parties as shown on the consolidated balance sheet as
of such date and no change in the aggregate value of machinery, Equipment and
Real Property owned by the Loan Parties, except changes in the Ordinary Course
of Business, none of which individually or in the aggregate has been materially
adverse.

5.6 Entity Names. Except as set forth on Schedule 5.6 hereto, as such Schedule
may be updated from time to time in accordance with the terms hereof, no Loan
Party has been known by any other company or corporate name, as applicable, in
the past five (5) years and does not sell Inventory under any other name, nor
has any Loan Party been the surviving corporation or company, as applicable, of
a merger or consolidation or acquired all or substantially all of the assets of
any Person during the preceding five (5) years.

5.7 O.S.H.A. Environmental Compliance; Flood Insurance.

(a) Except as set forth on Schedule 5.7 hereto, as such Schedule may be updated
from time to time in accordance with the terms hereof, each Loan Party is in
compliance in all material respects with, and its facilities, business, assets,
property, leaseholds, Real Property and Equipment are in compliance with the
Federal Occupational Safety and Health Act, and Environmental Laws and there are
no outstanding citations, notices or orders of non-compliance issued to any Loan
Party or relating to its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations which could reasonably be expected to
have a Material Adverse Effect.

(b) Except as set forth on Schedule 5.7 hereto, as such Schedule may be updated
from time to time in accordance with the terms hereof, each Loan Party has been
issued all required material federal, state and local licenses, certificates or
permits (collectively, “Approvals”) relating to all applicable Environmental
Laws and all such Approvals are current and in full force and effect.

 

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(c) Except as set forth on Schedule 5.7 hereto, as such Schedule may be updated
from time to time in accordance with the terms hereof, and except as could
reasonably be expected to have a Material Adverse Effect: (i) there have been no
releases, spills, discharges, leaks or disposal (collectively referred to as
“Releases”) of Hazardous Materials at, upon, under or migrating from or onto any
Real Property owned, leased or occupied by any Loan Party, except for those
Releases which are in full compliance with Environmental Laws; (ii) there are no
underground storage tanks or polychlorinated biphenyls on any Real Property
owned, leased or occupied by any Loan Party, except for such underground storage
tanks or polychlorinated biphenyls that are present in compliance with
Environmental Laws; (iii) all of the Real Property owned, leased or occupied by
any Loan Party has never been used by any Loan Party to dispose of Hazardous
Materials, except as authorized by Environmental Laws; and (iv) no Hazardous
Materials are managed by any Loan Party on any Real Property owned, leased or
occupied by any Loan Party, excepting such quantities as are managed in
accordance with all applicable manufacturer’s instructions and compliance with
Environmental Laws and as are necessary for the operation of the commercial
business of any Loan Party or of its tenants.

(d) All Real Property owned by the Loan Parties is insured pursuant to policies
and other bonds which are valid and in full force and effect and which provide
adequate coverage from reputable and financially sound insurers in amounts
sufficient to insure the assets and risks of each such Loan Party in accordance
with prudent business practice in the industry of such Loan Party. Each Loan
Party has taken all actions required under the Flood Laws and/or requested by
Agent to assist in ensuring that each Lender is in compliance in all material
respects with the Flood Laws applicable to the Collateral, including, but not
limited to, providing Agent with the address and/or GPS coordinates of each
structure located upon any Real Property that will be subject to a mortgage or
deed of trust in favor of Agent, and, to the extent required by Applicable Law,
obtaining flood insurance for such property, structures and contents prior to
such property, structures and contents becoming Collateral.

5.8 Solvency; No Litigation, Violation, Indebtedness or Default; ERISA
Compliance.

(a) (i) The Loan Parties, taken as a whole, are, and after giving effect to the
Transactions, will be, solvent, able to pay their debts as they mature, (ii) the
Loan Parties, taken as a whole, have, and after giving effect to the
Transactions, will have, capital sufficient to carry on their existing
businesses and all businesses in which they are about to engage, (iii) as of the
Closing Date, the fair present saleable value of the assets of the Loan Parties,
taken as a whole, calculated on a going concern basis, are in excess of the
amount of their liabilities, and (iv) subsequent to the Closing Date, the fair
saleable value of the assets of the Loan Parties, taken as a whole (calculated
on a going concern basis), will be in excess of the amount of their liabilities.

(b) Schedule 5.8(b) hereto, as such Schedule may be updated from time to time in
accordance with the terms hereof, sets forth a complete and accurate
description, with respect to all litigation, arbitration, actions or proceedings
with asserted liabilities in excess of, or that could reasonably be expected to
result in liabilities in excess of, $1,000,000 that, as of the Closing Date, is
pending or, to the knowledge of the Loan Parties, threatened in writing against
a

 

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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.

(c) No Loan Party has any outstanding Indebtedness other than the Obligations,
except for (i) Indebtedness disclosed in Schedule 7.8 hereto and (ii)
Indebtedness otherwise permitted under Section 7.8 hereof.

(d) No Loan Party is in violation of any applicable statute, law, rule,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is any Loan Party in violation of any order
of any court, Governmental Body or arbitration board or tribunal which could
reasonably be expected to have a Material Adverse Effect,.

(e) No Loan Party or any member of the Controlled Group maintains or is required
to contribute to any Pension Benefit Plan or Multiemployer Plan other than those
listed on Schedule 5.8(e) hereto. Except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Applicable Laws. (i) Each Loan Party and each member
of the Controlled Group has met all applicable minimum funding requirements
under Section 302 of ERISA and Section 412 of the Code in respect of each Plan,
and each Pension Benefit Plan or Multiemployer Plan is in compliance with
Sections 412, 430 and 436 of the Code and Sections 206(g), 302 and 303 of ERISA,
without regard to waivers and variances; (ii) each Plan which is intended to be
a qualified plan under Section 401(a) of the Code as currently in effect has
been determined by the Internal Revenue Service to be qualified under Section
401(a) of the Code and the trust related thereto is exempt from federal income
tax under Section 501(a) of the Code or an application for such a determination
is currently being processed by the Internal Revenue Code; (iii) neither any
Loan Party nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid; (iv) no Pension Benefit Plan or
Multiemployer Plan has been terminated by the plan administrator thereof nor by
the PBGC, and there is no occurrence which would cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Plan; (v) the current value
of the assets of each Pension Benefit Plan or Multiemployer Plan exceeds the
present value of the accrued benefits and other liabilities of such Plan and
neither any Loan Party nor any member of the Controlled Group knows of any facts
or circumstances which would materially change the value of such assets and
accrued benefits and other liabilities; (vi) neither any Loan Party nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Pension Benefit
Plan or Multiemployer Plan; (vii) neither any Loan Party nor any member of the
Controlled Group has incurred any liability for any excise tax arising under
Section 4971, 4972 or 4980B of the Code, and no fact exists which could give
rise to any such liability; (viii) neither any Loan Party nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Pension Benefit
Plan or Multiemployer Plan, has engaged in a “prohibited transaction” described
in Section 406 of ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a

 

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Termination Event with respect to any such Pension Benefit Plan or Multiemployer
Plan which is subject to ERISA; (ix) no Termination Event has occurred or is
reasonably expected to occur; (x) there exists no Reportable ERISA Event; (xi)
neither any Loan Party nor any member of the Controlled Group has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA; (xii)
neither any Loan Party nor any member of the Controlled Group maintains or is
required to contribute to any Plan which provides health, accident or life
insurance benefits to former employees, their spouses or dependents, other than
in accordance with Section 4980B of the Code or similar applicable law; (xiii)
neither any Loan Party nor any member of the Controlled Group has withdrawn,
completely or partially, within the meaning of Section 4203 or 4205 of ERISA,
from any Multiemployer Plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980 and there exists no fact which would
reasonably be expected to result in any such liability; and (xiv) to the
knowledge of the Company, no Plan fiduciary (as defined in Section 3(21) of
ERISA) has any liability for breach of fiduciary duty or for any failure in
connection with the administration or investment of the assets of a Plan.

5.9 Intellectual Property. As of the Closing Date, Schedule 5.9 hereto, as such
Schedule may be updated from time to time in accordance with the terms hereof,
provides a complete and correct list of: (a) all registered patents owned by
each Loan Party and all applications for Patents owned by such Loan Party;
(b) all registered trademarks owned by each Loan Party and all applications for
registration of trademarks owned by such Loan Party; (c) all registered
copyrights owned by each Loan Party; and (d) all Intellectual Property licenses
entered into by each Loan Party pursuant to which (i) such Loan Party has
provided any license in Intellectual Property owned or controlled by such Loan
Party to any other Person (other than non-exclusive software licenses granted in
the ordinary course of business) with a value in excess of $1,000,000 or
(ii) any Person has granted to such Loan Party any license 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 (other than non-exclusive software licenses granted in the
ordinary course of business). Other than as set forth on Schedule 5.9 hereto, no
Loan Party owns any copyrights or trademarks, the failure to register which
could be materially adverse to the conduct of the business of the Loan Parties,
taken as a whole. Each Loan Party owns exclusively or holds licenses in all
Intellectual Property that is necessary in or material to the conduct of its
business, and all employees and contractors of each Loan Party who were involved
in the creation or development of any Intellectual Property for such Loan Party
that is necessary in or material to the business of such Loan Party have signed
agreements containing assignment of such employer’s or contractor’s rights in
any Intellectual Property to such Loan Party and obligations of
confidentiality. To each Loan Party’s knowledge, (x) such Loan Party is not
currently infringing or misappropriating any Intellectual Property rights of any
Person, and (y) no product manufactured, distributed, licensed or sold by, or
service provided by, such Loan Party is currently infringing or misappropriating
any Intellectual Property rights of any Person, in each case, except where such
infringement either individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Effect.

5.10 Licenses and Permits. Except as set forth in Schedule 5.10 hereto, as such
Schedule may be updated from time to time in accordance with the terms hereof,
each Loan Party (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state, provincial or local law, rule or

 

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regulation for the operation of its business in each jurisdiction wherein it is
now conducting or proposes to conduct business and where the failure to be in
compliance or to procure such licenses or permits could reasonably be expected
to have a Material Adverse Effect.

5.11 Reserved.

5.12 No Default. No Default or Event of Default has occurred.

5.13 No Burdensome Restrictions. No Loan Party is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. Each Loan Party has heretofore delivered to Agent true
and complete copies of all Material Contracts to which it is a party or to which
it or any of its properties is subject. No Loan Party has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Encumbrance.

5.14 No Labor Disputes. No Loan Party is involved in any labor dispute; there
are no strikes or walkouts or union organization of any Loan Party’s employees
in existence or, to the knowledge of the Loan Parties, threatened in writing,
and no collective bargaining contract is scheduled to expire during the Term
other than as set forth on Schedule 5.14 hereto.

5.15 Margin Regulations. No Loan Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such
Board of Governors.

5.16 Investment Company Act. No Loan Party is an “investment company” registered
or required to be registered under the Investment Company Act of 1940, as
amended, nor is it controlled by such a company.

5.17 Swaps. No Loan Party is a party to, nor will it be a party to, any swap
agreement whereby such Loan Party has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited “two-way basis”
without regard to fault on the part of either party.

5.18 Business and Property of the Loan Parties. Upon and after the Closing Date,
the Loan Parties do not propose to engage in any business other than as
permitted pursuant to Section 7.9 hereof. On the Closing Date, each Loan Party
will own all the property and possess all of the rights and Consents necessary
for the conduct of the business of such Loan Party.

5.19 Reserved.

5.20 Reserved.

 

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5.21 Equity Interests. The authorized and outstanding Equity Interests of each
Loan Party, and each legal and beneficial holder thereof as of the Closing Date,
are as set forth on Schedule 5.21 hereto, as such Schedule may be updated from
time to time in accordance with the terms hereof. All of the Equity Interests of
each Loan Party have been duly and validly authorized and issued and are fully
paid and non-assessable and have been sold and delivered to the holders hereof
in compliance with, or under valid exemption from, all federal and state laws
and the rules and regulations of each Governmental Body governing the sale and
delivery of securities. Except for the rights and obligations set forth on
Schedule 5.21 hereto, as such Schedule may be updated from time to time in
accordance with the terms hereof, there are no subscriptions, warrants, options,
calls, commitments, rights or agreement by which any Loan Party or any of the
shareholders of any Loan Party is bound relating to the issuance, transfer,
voting or redemption of shares of its Equity Interests or any pre-emptive rights
held by any Person with respect to the Equity Interests of the Loan
Parties. Except as set forth on Schedule 5.21 hereto, as such Schedule may be
updated from time to time in accordance with the terms hereof, the Loan Parties
have not issued any securities convertible into or exchangeable for shares of
its Equity Interests or any options, warrants or other rights to acquire such
shares or securities convertible into or exchangeable for such shares.

5.22 Commercial Tort Claims. The Loan Parties do not have any commercial tort
claim with a value in excess of $500,000, except as set forth on Schedule 5.22
hereto, as such Schedule may be updated from time to time in accordance with the
terms hereof.

5.23 Letter of Credit Rights. As of the Closing Date, the Loan Parties do not
have any letter of credit rights in respect of any letter of credit with a value
in excess of $500,000, except as set forth on Schedule 5.23 hereto, as such
Schedule may be updated from time to time in accordance with the terms hereof.

5.24 Material Contracts. Schedule 5.24 hereto, as such Schedule may be updated
from time to time in accordance with the terms hereof, sets forth all Material
Contracts of the Loan Parties. All Material Contracts are in full force and
effect and no defaults currently exist thereunder which could reasonably be
expected to have a Material Adverse Effect. No Loan Party has (i) received any
notice of termination or non-renewal of any Material Contract, or (ii) exercised
any option to terminate or not to renew any Material Contract, except, in each
case, any such termination which could not reasonably be expected to have a
Material Adverse Effect.

5.25 Investment Property Collateral. (i) There are no restrictions on the pledge
or transfer of any of the Subsidiary Stock other than restrictions referenced on
the face of any certificates evidencing such Subsidiary Stock, restrictions
under Applicable Law or restrictions stated in the Organizational Documents of
any Loan Party with respect thereto, as applicable; (ii) each Loan Party is the
legal owner of the Investment Property Collateral pledged by it hereunder, which
is registered in the name of such Loan Party, a custodian or a nominee; (iii)
the Investment Property Collateral is free and clear of any Liens except for
Permitted Encumbrances which, in the case of any Investment Property Collateral
constituting certificated securities, do not have priority over the Liens of
Agent thereon; and (iv) the pledge of and grant of the security interest in the
Investment Property Collateral is effective to vest in Agent a valid security
interest therein.

 

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5.26 Convertible Subordinated Debt Documents. As of the Closing Date, (i) Agent
has received true, correct and complete copies of the Convertible Subordinated
Debt Documents; and (ii) none of the Convertible Subordinated Debt Documents has
been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent. The subordination provisions with respect to
the Convertible Subordinated Debt contained in the Convertible Subordinated Debt
Documents are legal, valid and binding obligations of each Person a party
thereto, and enforceable against such Person in accordance with their terms. No
“Event of Default” (as defined in the Convertible Subordinated Debt Documents)
has occurred and is continuing. As of the Closing Date, the outstanding
principal amount owing under the Convertible Subordinated Debt Documents is
$70,000,000. The Obligations constitute “Specified Senior Indebtedness” under
the Convertible Subordinated Debt Documents.

5.27 Term Loan Documents. Agent has received true, correct and complete copies
of the Term Loan Documents. None of the Term Loan Documents has been amended or
supplemented, nor have any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has heretofore been
delivered to Agent.

5.28 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 Borrower’s 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 Documents) for purposes of or in connection with this Agreement or the
Other 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 Quantum’s 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.

 

VI. AFFIRMATIVE COVENANTS.

Each Loan Party shall, and shall cause each of its Subsidiaries to, until the
Payment in Full of the Obligations and the termination of this Agreement:

6.1 Compliance with Laws. Comply in all material respects with all Applicable
Laws with respect to the Collateral or any part thereof or to the operation of
its business the non-compliance with which could reasonably be expected to have
a Material Adverse Effect (except to the extent any separate provision of this
Agreement shall expressly require compliance with any particular Applicable Laws
pursuant to another standard). Each Loan Party may, however, contest or dispute
any Applicable Laws in any reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are established in accordance with
GAAP.

 

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6.2 Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business
practices and maintain all of its properties useful or necessary in its business
in good working order and condition (reasonable wear and tear excepted and
except as may be disposed of in accordance with the terms of this Agreement),
and use commercially reasonable efforts to enforce and protect the validity of
any Intellectual Property right or other right included in the Collateral where
the failure to do so could reasonably be expected to have a Material Adverse
Effect; (b) keep in full force and effect its existence and comply in all
material respects with the laws and regulations governing the conduct of its
business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof where the failure to do so could reasonably be expected to have a
Material Adverse Effect.

6.3 Books and Records. Keep proper books of record and account in which entries
that are full, true and correct in all material respects will be made of all
dealings or transactions of or in relation to its business and affairs
(including without limitation accruals for taxes, assessments, Charges, levies
and claims, allowances against doubtful Receivables and accruals for
depreciation, obsolescence or amortization of assets), all in accordance with,
or as required by, GAAP.

6.4 Payment of Taxes. Pay, when due, all material taxes, assessments and other
Charges lawfully levied or assessed upon it or any of the Collateral, including
real and personal property taxes, assessments and charges and all franchise,
income, employment, social security benefits, withholding, and sales taxes,
except to the extent that such Loan Party or Subsidiary has Properly Contested
such taxes, assessments or charges. If any material tax by any Governmental Body
is or may be imposed on or as a result of any transaction between any Loan Party
or any of its Subsidiaries and Agent or any Lender which Agent or any Lender may
be required to withhold or pay or if any material taxes, assessments, or other
Charges remain unpaid after the date fixed for their payment, or if any claim
shall be made which, in Agent’s opinion, may possibly create a valid Lien on the
Collateral, Agent may without notice to the Loan Parties or their Subsidiaries
pay the taxes, assessments or other Charges and each Loan Party hereby
indemnifies and holds Agent and each Lender harmless in respect thereof. Agent
will not pay any taxes, assessments or Charges to the extent that any applicable
Loan Party or any applicable Subsidiary has Properly Contested those taxes,
assessments or Charges. The amount of any payment by Agent under this Section
6.4 shall be charged to Borrowers’ Account as a Revolving Advance maintained as
a Domestic Rate Loan and added to the Obligations and, until the Loan Parties
shall furnish Agent with an indemnity therefor (or supply Agent with evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold without interest any balance standing to the Loan Parties’ credit
and Agent shall retain its security interest in and Lien on any and all
Collateral held by Agent.

6.5 Financial Covenants.

(a) Fixed Charge Coverage Ratio. Maintain as of the end of each fiscal quarter,
a Fixed Charge Coverage Ratio for Quantum and its Subsidiaries, on a
consolidated basis, of not less than the ratio set forth below for each four (4)
consecutive fiscal quarter period then ended set forth below:

 

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Fiscal Quarter Ending

   Minimum Fixed Charge Coverage Ratio

December 31, 2016 and each fiscal quarter ending thereafter through and
including the fiscal quarter ending September 30, 2017

   1.50 to 1.00

December 31, 2017 and each fiscal quarter ending thereafter

   1.25 to 1.00

(b) Senior Net Leverage Ratio. Maintain as of the end of each fiscal quarter, a
Senior Net Leverage Ratio for Quantum and its Subsidiaries, on a consolidated
basis, of not greater than the ratio set forth below for each four (4)
consecutive fiscal quarter period then ended set forth below:

 

Fiscal Quarter Ending

   Maximum Senior Net Leverage Ratio

December 31, 2016 and each fiscal quarter ending thereafter through and
including the fiscal quarter ending September 30, 2017

   2.00 to 1.00

December 31, 2017 and each fiscal quarter ending thereafter

   3.00 to 1.00

(c) Total Leverage Ratio. Maintain as of the end of each fiscal quarter, a Total
Leverage Ratio for Quantum and its Subsidiaries, on a consolidated basis, of not
greater than the ratio set forth below for each four (4) consecutive fiscal
quarters then ended set forth below:

 

Fiscal Quarter Ending

   Maximum Total Leverage Ratio

December 31, 2016 and March 31, 2017

   5.25 to 1.00

June 30, 2017 and September 30, 2017

   5.00 to 1.00

December 31, 2017 and March 31, 2018

   4.00 to 1.00

June 30, 2018 and each fiscal quarter ending thereafter through and including
the fiscal quarter ending December 31, 2019

   3.75 to 1.00

March 31, 2020 and each fiscal quarter ending thereafter

   3.50 to 1.00

 

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(d) Minimum PNC Qualified Cash. Maintain at all times PNC Qualified Cash in an
amount of not less than the Minimum PNC Qualified Cash Amount.

6.6 Insurance.

(a) (i) Keep all its insurable properties and properties in which such Loan
Party has an interest insured against such hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to such Loan
Party’s including business interruption insurance and, if applicable, the
hazards of fire, flood and sprinkler leakage; (ii) maintain a bond in such
amounts as is customary in the case of companies engaged in businesses similar
to such Loan Party insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such Loan
Party either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (iii) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (iv) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Loan Party is engaged in business; (v) deliver to Agent (A) copies of
all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (B)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as an additional insured and mortgagee and/or lender loss
payee (as applicable) as its interests may appear with respect to all insurance
coverage referred to in clauses (i) and (iii) above, and providing (I) that all
proceeds thereunder shall be payable to Agent, (II) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (III) that such policy and loss payable clauses may not be
cancelled, amended or terminated unless at least thirty (30) days prior written
notice is given to Agent (or in the case of non-payment, at least ten (10) days
prior written notice). In the event of any loss thereunder, the carriers named
therein hereby are directed by Agent and the applicable Loan Party to make
payment for such loss to Agent and not to such Loan Party and Agent jointly. If
any insurance losses are paid by check, draft or other instrument payable to any
Loan Party and Agent jointly, Agent may endorse such Loan Party’s name thereon
and do such other things as Agent may deem advisable to reduce the same to cash.

(b) Each Loan Party shall take all actions required under the Flood Laws and/or
reasonably requested by Agent to assist in ensuring that each Lender is in
compliance with the Flood Laws applicable to the Collateral, including, but not
limited to, providing Agent with the address and/or GPS coordinates of each
structure on any Real Property that will be subject to a mortgage or deed of
trust in favor of Agent, and, to the extent required, obtaining flood insurance
for such property, structures and contents prior to such property, structures
and contents becoming Collateral, and thereafter maintaining such flood
insurance in full force and effect for so long as required by the Flood Laws.

(c) Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in Sections 6.6(a)(i) and (iii) and 6.6(b) above. Any
surplus shall be paid by Agent to the Loan Parties or applied as may be
otherwise required by law. Any deficiency thereon shall be paid by the Loan
Parties to Agent, on demand.

 

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(d) If any Loan Party fails to obtain insurance as hereinabove provided, or to
keep the same in force, Agent, if Agent so elects, may obtain such insurance and
pay the premium therefor on behalf of such Loan Party, which payments shall be
charged to Borrowers’ Account and constitute part of the Obligations.

6.7 Payment of Indebtedness and Leasehold Obligations. Pay, discharge or
otherwise satisfy (i) at or before maturity (subject, where applicable, to
specified grace periods) all of its material Indebtedness, except when the
amount or validity thereof is currently being Properly Contested, subject at all
times to any applicable subordination arrangement in favor of Agent and the
Lenders and (ii) when due its material rental obligations under all leases under
which it is a tenant, and shall otherwise comply, in all material respects, with
all other terms of such leases and keep them in full force and effect.

6.8 Environmental Matters.

(a) Ensure that all of the Real Property owned or leased by it and all
operations and businesses conducted thereon are in compliance and remain in
compliance with all Environmental Laws and it shall manage any and all Hazardous
Materials on any Real Property owned or leased by it in compliance with
Environmental Laws, except where the failure to comply could not reasonably be
expected to result in a Material Adverse Effect.

(b) Establish and maintain an environmental management and compliance system to
assure and monitor continued compliance with all applicable Environmental Laws.

(c) Respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to
avoid subjecting the Collateral or Real Property to any Lien. If any Loan Party
or any of its Subsidiaries shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Loan Party or any of its
Subsidiaries shall fail to comply with any of the requirements of any
Environmental Laws, Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent’s interest in the
Collateral: (i) give such notices or (ii) enter onto the applicable Real
Property (or authorize third parties to enter onto such Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deems
reasonably necessary or advisable, to remediate, remove, mitigate or otherwise
manage with any such Hazardous Discharge or Environmental Complaint. All
reasonable and documented costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by the Loan Parties, and until paid shall be added to and
become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between Agent, any Lender and any Loan
Party.

(d) Promptly upon the written request of Agent from time to time in its
Permitted Discretion if a Default or Event of Default has occurred and is
continuing, the Loan Parties shall provide Agent, at the Loan Parties’ expense,
with an environmental site assessment or environmental compliance audit report
prepared by an environmental engineering firm

 

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acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, remediation and removal of any Hazardous
Materials found on, under, at or within all of the Real Property owned or leased
by any Loan Party. Agent hereby acknowledges that any report or investigation of
such Hazardous Discharge proposed and acceptable to the responsible Governmental
Body shall be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $2,000,000, Agent shall have the right to require the Loan
Parties to post a bond, letter of credit or other security reasonably
satisfactory to Agent to secure payment of these costs and expenses.

6.9 Standards of Financial Statements. Cause all financial statements referred
to in Sections 9.7, 9.9, 9.10, 9.11, 9.12 and 9.13 hereof as to which GAAP is
applicable to fairly present the financial condition or operating condition
(subject, in the case of interim financial statements, to normal year-end and
audit adjustments) and to be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as disclosed therein).

6.10 Federal Securities Laws. Promptly notify Agent in writing if any Loan Party
(other than Quantum) or any of its Subsidiaries (a) is required to file periodic
reports under the Exchange Act, (b) registers any securities under the Exchange
Act or (c) files a registration statement under the Securities Act.

6.11 Execution of Supplemental Instruments. Execute and deliver to Agent from
time to time, upon demand, such supplemental agreements, statements, assignments
and transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may request in its Permitted Discretion in order that
the provisions of this Agreement may be carried into effect.

6.12 Government Receivables. Take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act, the
Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivables in an aggregate amount in excess of
$500,000 arising out of any contract between any Loan Party and the United
States, any state or any department, agency or instrumentality of any of them.

6.13 Keepwell. If it is a Qualified ECP Loan Party, then jointly and severally,
together with each other Qualified ECP Loan Party, hereby absolutely
unconditionally and irrevocably (a) guarantees the prompt payment and
performance of all Swap Obligations owing by each Non-Qualifying Party (it being
understood and agreed that this guarantee is a guaranty of payment and not of
collection), and (b) undertakes to provide such funds or other support as may be
needed from time to time by any Non-Qualifying Party to honor all of such
Non-Qualifying Party’s obligations under this Agreement or any Other Document in
respect of Swap Obligations (provided, however, that each Qualified ECP Loan
Party shall only be liable under this Section 6.13 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 6.13, or otherwise under this Agreement or any Other
Document, voidable under Applicable Law, including Applicable Law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater
amount). The obligations of each

 

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Qualified ECP Loan Party under this Section 6.13 shall remain in full force and
effect until the Payment in Full of the Obligations and the termination of this
Agreement and the Other Documents. Each Qualified ECP Loan Party intends that
this Section 6.13 constitute, and this Section 6.13 shall be deemed to
constitute, a guarantee of the obligations of, and a “keepwell, support, or
other agreement” for the benefit of each other Loan Party and Guarantor for all
purposes of Section 1a(18(A)(v)(II) of the CEA.

6.14 Post-Closing Covenants.

(a) Blocked Accounts.

(i) On or prior to November 15, 2016 (or such later date as Agent shall agree in
its Permitted Discretion), Quantum shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, a Control Agreement among Quantum, Agent, Term
Loan Agent and each Specified Domestic Blocked Account Bank (other than PNC)
with respect to the Blocked Accounts of Quantum maintained at such Specified
Domestic Blocked Account Banks, duly authorized, executed and delivered by
Quantum, Agent, Term Loan Agent and each applicable Specified Domestic Blocked
Account Bank.

(ii) On or prior to December 31, 2016 (or such later date as Agent shall agree
in its Permitted Discretion), Quantum shall deliver to Agent, in form and
substance reasonably satisfactory to Agent: (A) a bank account pledge agreement
by Quantum in favor of Agent and Term Loan Agent to be governed by the laws of
Switzerland with respect to the Swiss Blocked Accounts, duly authorized,
executed and delivered by Quantum, Agent and Term Loan Agent, (B) a notice of
pledge in respect of the Swiss Blocked Accounts by Agent, Term Loan Agent and
Quantum to Specified Swiss Blocked Account Bank to be governed by the laws of
Switzerland, duly authorized, executed and delivered by Quantum, Agent and Term
Loan Agent and duly acknowledged by Specified Swiss Blocked Account Bank, and
(C) such other agreements, documents or instruments as Agent shall reasonably
request in order to perfect the Lien of Agent in the Swiss Blocked Accounts;
provided that (x) in the event that Quantum shall fail to comply with the
covenants set forth in this Section 6.14(a)(ii) on or prior to December 31, 2016
(or such later date as Agent shall agree in its Permitted Discretion), the cash
maintained in the Swiss Blocked Accounts shall cease to be included in the
calculation of Qualified Cash until such time as the covenants set forth in this
Section 6.14(a)(ii) have been satisfied; and (y) the failure of Quantum to
comply with the covenants set forth in this Section 6.14(a)(ii) shall not result
in a Default or an Event of Default.

(iii) On or prior to March 31, 2017 (or such later date as Agent shall agree in
its Permitted Discretion), all of the Blocked Accounts and all of the other
deposit accounts and securities accounts of the Loan Parties maintained at any
bank other than PNC (including without limitation each Blocked Account
maintained at each Specified Domestic Blocked Account Bank (other than PNC) but
excluding each Excluded Account and the Swiss Blocked Accounts) shall be closed
and the funds on deposit therein shall be moved to a new account or an existing
account with PNC; provided that in the event that Quantum notifies Agent that
the costs and expenses of maintaining such Blocked Accounts and other deposit
accounts with PNC are materially greater than those costs and expenses offered
by the depository banks at which Quantum is currently maintaining such accounts,
Agent hereby agrees to negotiate in good faith with Quantum to offer Quantum
costs and expenses which are competitive with those offered by such other
depository banks.

 

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(b) Intellectual Property Security Interest Releases. Quantum shall use
commercially reasonable efforts to deliver to Agent, on or prior to the date
that is sixty (60) days following the Closing Date (or such later date as Agent
shall agree in its Permitted Discretion), evidence, in form and substance
reasonably satisfactory to Agent, that all security interests assigned to each
of Keybank National Association, as Administrative Agent, and Credit Suisse,
have been released as reflected in the public records of the United States
Patent and Trademark Office or the Copyright Office, as applicable.

 

VII. NEGATIVE COVENANTS.

No Loan Party nor any of its Subsidiaries shall, until the Payment in Full of
the Obligations and the termination of this Agreement:

7.1 Merger, Consolidation, Acquisition and Sale of Assets.

(a) Enter into any merger, consolidation or other reorganization with or into
any other Person, permit any other Person to consolidate with or merge with it,
or acquire all or substantially all of the assets or Equity Interests of any
Person, or of any division or line of business of any Person, except that:

(i) any Loan Party may merge, consolidate or reorganize with another Loan Party
or a Subsidiary of a Loan Party or acquire the assets or Equity Interests of
another Loan Party or a Subsidiary of a Loan Party so long as (A) in each case,
Borrowing Agent shall provide Agent with notice of such merger, consolidation,
reorganization or acquisition within five (5) Business Days following the
consummation thereof or, to the extent that such merger, consolidation,
reorganization or acquisition does not affect the priority or perfection of
Agent’s Liens, concurrently with the delivery of the monthly financial
statements required to be delivered to Agent pursuant to Section 9.9 hereof, (B)
in connection with any merger, consolidation or reorganization to which Quantum
is a party, Quantum must be the surviving entity of such merger, consolidation
or reorganization, (C) in connection with any merger, consolidation or
reorganization to which a Borrower is, and Quantum is not, a party, the
surviving entity of such merger, consolidation or reorganization must be, or
concurrently with the consummation of such merger, consolidation or
reorganization become, a Borrower, (D) in connection with any merger,
consolidation or reorganization to which a Guarantor is, and a Borrower is not,
a party, the surviving entity of such merger, consolidation or reorganization
must be, or concurrently with the consummation of such merger, consolidation or
reorganization become, a Guarantor, and (E) Borrowing Agent shall deliver to
Agent true, correct and complete copies of all of the material agreements,
documents and instruments related to such merger, consolidation, reorganization
or acquisition concurrently with the delivery of the monthly financial
statements required to be delivered to Agent pursuant to Section 9.9 hereof,

 

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(ii) any Subsidiary of a Loan Party that is not a Loan Party may merge,
consolidate or reorganize with another Subsidiary of a Loan Party that is not a
Loan Party or acquire the assets or Equity Interests of another Subsidiary of a
Loan Party that is not a Loan Party so long as such Subsidiary shall deliver to
Agent true, correct and complete copies of all of the relevant agreement,
documents and instruments evidencing such merger, consolidation or
reorganization concurrently with the delivery of the monthly financial
statements required to be delivered to Agent pursuant to Section 9.9 hereof,

(iii) a Loan Party may make Permitted Investments, and

(iv) a Loan Party may make Permitted Acquisitions;

(b) Dispose of any of its properties or assets, except for Permitted
Dispositions; or

(c) Liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), except for:

(i) the liquidation or dissolution of Immaterial Subsidiaries,

(ii) the liquidation or dissolution of a Borrower (other than Quantum) so long
as all of the assets (including any interest in any Equity Interests) of such
liquidating or dissolving Borrower are transferred to a Borrower that is not
liquidating or dissolving,

(iii) the liquidation or dissolution of a Loan Party (other than a 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, and

(iv) the liquidation or dissolution of a Subsidiary of a Loan Party that is not
a Loan Party so long as all of the assets of such liquidating or dissolving
Subsidiary are transferred to a Loan Party or a Subsidiary of a Loan Party that
is not liquidating or dissolving.

7.2 Creation of Liens. Create or suffer to exist any Lien upon or against any of
its property or assets now owned or hereafter created or acquired, except
Permitted Encumbrances.

7.3 Guarantees. Become liable upon the obligations or liabilities of any Person
by assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders) except (a) the endorsement of checks in the Ordinary Course of
Business, (b) as disclosed on Schedule 7.3 hereto, (c) unsecured guarantees
incurred in the Ordinary Course of Business with respect to surety and appeal
bonds, performance bonds, bid bonds, appeal bonds, completion guarantee and
similar obligations, (d) unsecured guarantees arising with respect to customary
indemnification obligations to purchasers in connection with Permitted
Dispositions, and (e) guarantees with respect to other Permitted Indebtedness,
to the extent that the Person that is obligated under such guaranty could have
incurred such underlying Indebtedness.

7.4 Investments. Purchase or acquire obligations or Equity Interests of, or any
other interest in, any Person, other than Permitted Investments.

 

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7.5 Loans. Make advances, loans or extensions of credit to any Person, including
any Parent, Subsidiary or Affiliate, other than any advance, loan or extension
of credit constituting a Permitted Investment.

7.6 Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount
for all Loan Parties in excess of $20,000,000.

7.7 Restricted Payments. Declare, pay or make any Restricted Payment, except
that:

(a) Quantum may make Restricted Payments to former employees, officers or
directors of Quantum (or any spouses, ex-spouses or estates of any of the
foregoing) on account of redemptions of Equity Interests of Quantum held by such
Persons, provided that (i) such Restricted Payments are permitted by Applicable
Law; (ii) no Event of Default or Default shall have occurred or would occur
after giving pro forma effect to any such Restricted Payment; and (iii) the
aggregate amount of such Restricted Payments (whether in exchange for cash or
the issuance of Indebtedness permitted pursuant to clause (n) of the definition
of “Permitted Indebtedness”) shall not exceed $1,000,000 during the term of this
Agreement;

(b) Quantum may make Restricted Payments to former employees, officers or
directors of Quantum (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 Quantum on account of repurchases of the Equity Interests of Quantum
held by such Persons; provided (i) such Restricted Payments are permitted by
Applicable Law; (ii) no Event of Default or Default shall have occurred or would
occur after giving pro forma effect to any such Restricted Payment; and (iii)
such Indebtedness was incurred by such Persons solely to acquire Equity
Interests of Quantum;

(c) Quantum may permit the Convertible Subordinated Debt to convert into
Qualified Equity Interests in accordance with the terms of the Convertible
Subordinated Debt Documents; provided that (i) such conversion is permitted by
Applicable Law; and (ii) no Event of Default or Default shall have occurred or
would occur after giving pro forma effect to such conversion;

(d) Quantum may exchange Qualified Equity Interests for other Qualified Equity
Interests in a cashless exchange (other than respect to cash payment made in
exchange for fractional shares); provided that (i) such exchange is permitted by
Applicable Law; and (ii) no Event of Default or Default shall have occurred or
would occur after giving pro forma effect to such exchange; and

(e) a Subsidiary of Quantum may make Restricted Payments to Quantum or any other
Loan Party and a Subsidiary of Quantum that is not a Loan Party may make
Restricted Payments to another Subsidiary of Quantum that is not a Loan Party;
provided that, in each case such Restricted Payment is permitted by Applicable
Law.

7.8 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
other than Permitted Indebtedness.

 

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7.9 Nature of Business. Substantially change the nature of the business in which
it is presently engaged, nor except as specifically permitted hereby purchase or
invest, directly or indirectly, in any assets or property other than in the
Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted;
provided, that the foregoing shall not prevent Borrowers and their Subsidiaries
from engaging in any business that is reasonably related or ancillary to its or
their business or is a reasonable extension of its or their business.

7.10 Transactions with Affiliates. Directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or
otherwise enter into any transaction or deal with, any Affiliate, except for

(a) transactions (other than the payment of management, consulting, monitoring
or advisory fees) between any Loan Party or its Subsidiaries, on the one hand,
and any Affiliate of such Loan Party or Subsidiary, on the other hand, so long
as (i) if such transactions involve one or more payments by such Loan Party or
Subsidiary in excess of $5,000,000 for any single transaction or series of
related transactions, such transactions are fully disclosed to Agent prior to
the consummation thereof, and (ii) such transactions are no less favorable,
taken as a whole, to the Loan Parties and their Subsidiaries than would be
obtained in an arm’s length transaction with a non-Affiliate;

(b) any indemnity provided for the benefit of directors (or comparable managers)
of such Loan Party or its applicable Subsidiary, so long as such indemnity has
been approved by the board of directors of such Loan Party or Subsidiary in
accordance with Applicable Law;

(c) the payment of reasonable compensation, severance or employee benefit
arrangements to employees, officers and outside directors of such Loan Party or
its Subsidiaries in the Ordinary Course of Business and consistent with industry
practice, so long as such payment has been approved by the board of directors of
such Loan Party or Subsidiary in accordance with Applicable Law;

(d) transactions permitted by Section 7.1 or Section 7.7 hereof;

(e) transactions pursuant to, and made in accordance with, the Transfer Pricing
Program;

(f) Permitted Intercompany Advances;

(g) transactions permitted under clause (j) of the definition of “Permitted
Dispositions”

(h) Investments permitted under clauses (h) and (n) of the definition of
“Permitted Investments”; and

(j) Indebtedness owing to Affiliates permitted under clause (n) of the
definition of “Permitted Indebtedness” or loans or advances to Affiliates
permitted under clause (k) of the definition of “Permitted Investments”.

 

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7.11 Reserved.

7.12 Subsidiaries.

(a) Form any Subsidiary unless: (i) if such Subsidiary is either a Foreign
Subsidiary or an Immaterial Subsidiary, Borrowing Agent provides Agent with
written notice of the formation of such Subsidiary and, if requested by Agent,
true, correct and complete copies of the Organizational Documents of such
Subsidiary and all of the material agreements, documents and instruments related
to such formation concurrently with the delivery of the monthly financial
statements required to be delivered to Agent pursuant to Section 9.9 hereof with
respect to the month in which such formation occurs, (ii) if such Subsidiary is
a Domestic Subsidiary, (A) Borrowing Agent provides Agent with written notice of
the formation of such Subsidiary and, if requested by Agent, true, correct and
complete copies of the Organizational Documents of such Subsidiary and all of
the material agreements, documents and instruments related to such formation
within fifteen (15) Business Days following the date of such formation, and (B)
at Agent’s discretion, or if requested by Borrowing Agent, (x) such Subsidiary
expressly joins in this Agreement as a Borrower or a Guarantor and becomes
jointly and severally liable for the obligations of the Loan Parties hereunder
and under the Other Documents, and (y) executes a joinder to this Agreement
and/or a Guaranty and a Guarantor Security Agreement in favor of Agent and such
Other Documents related thereto as Agent shall reasonably request in connection
therewith.

(b) Enter into any partnership, joint venture or similar arrangement which does
not constitute a Permitted Investment.

(c) Permit any Immaterial Subsidiary to (i) own or generate any Receivables or
Inventory, (ii) have revenues in any fiscal year in excess of $250,000 (other
than, in the case of Quantum International, revenue generated through foreign
branch offices pursuant to the Transfer Pricing Program) or (iii) receive or
generate any royalty revenue, unless Borrowing Agent causes such Immaterial
Subsidiary to become a Borrower or a Guarantor hereunder and under the Other
Documents by providing to Agent the agreements, documents and instruments
required to be delivered pursuant to Section 7.12(a)(ii) hereof.

7.13 Fiscal Year and Accounting Changes. Change its fiscal year from March 31 or
make any change to its method of accounting (except as required by GAAP).

7.14 Reserved.

7.15 Amendment of Organizational Documents.

(a) Change (i) its legal name or its form of legal entity (e.g., converting from
a corporation to a limited liability company or vice versa)without providing
Agent with (A) written notice of such change within five (5) Business Days
following such change, and (B) true, correct and complete copies of all of the
agreements, documents and instruments related to such name change, or (ii) its
jurisdiction of organization or become (or attempt or purport to become)
organized in more than one jurisdiction.

 

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(b) Amend, modify or waive any term or material provision of its Organizational
Documents if the effect thereof, either individually or in the aggregate, could
reasonably be expected to be materially adverse to the interests of Agent and
the Lenders; provided that such Loan Party shall provide Agent with true,
correct and complete copies of any amendment, modification or waiver
concurrently with the delivery of the monthly financial statements required to
be delivered to Agent pursuant to Section 9.9 hereof with respect to the month
in which such amendment, modification or waiver occurs.

7.16 Compliance with ERISA. Except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, (a)
(x) Maintain, or permit any member of the Controlled Group to maintain, or (y)
become obligated to contribute, or permit any member of the Controlled Group to
become obligated to contribute, to any Pension Benefit Plan or Multiemployer
Plan, other than those Pension Benefit Plan or Multiemployer Plans disclosed on
Schedule 5.8(e) hereto, (b) engage, or permit any member of the Controlled Group
to engage, in any non-exempt “prohibited transaction” in respect of a Pension
Benefit Plan or Multiemployer Plan, as that term is defined in Section 406 of
ERISA or Section 4975 of the Code, (c) terminate, or permit any member of the
Controlled Group to terminate, any Pension Benefit Plan or Multiemployer Plan
where such event could result in any liability of any Loan Party or any member
of the Controlled Group or the imposition of a lien on the property of any Loan
Party or any member of the Controlled Group pursuant to Section 4068 of ERISA,
(d) incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (e) fail promptly to notify Agent of the
occurrence of any Termination Event, (f) fail to comply, or permit any member of
the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other Applicable Laws in respect of any Plan, (g) fail to meet, permit
any member of the Controlled Group to fail to meet, or permit any Plan to fail
to meet all minimum funding requirements under ERISA and the Code, without
regard to any waivers or variances, or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
to any Plan, or (h) cause, or permit any member of the Controlled Group to
cause, a representation or warranty in Section 5.8(e) hereof to cease to be true
and correct.

7.17 Prepayment of Indebtedness. At any time, directly or indirectly, prepay any
Indebtedness, or repurchase, redeem, retire or otherwise acquire any
Indebtedness (other than the Convertible Subordinated Debt) of any Loan Party,
except:

(a) Borrowers may prepay the Obligations to the extent permitted hereunder;

(b) Borrowers may make mandatory prepayments in respect of the Term Loan
Indebtedness pursuant to Section 2.3(e) of the Term Loan Agreement (as in effect
on the Closing Date hereof and as the same may be amended in accordance with the
terms of the Intercreditor Agreement) in an amount equal to fifty percent (50%)
of Excess Cash Flow of Quantum and its Subsidiaries, on a consolidated basis,
for each fiscal year commencing with the fiscal year ending on or about March
31, 2018, payable no earlier than the date on which the audited financial
statements of Quantum and its Subsidiaries referred to in Section 9.7 hereof for
such fiscal year are delivered to Agent (the “Excess Cash Flow Due Date”);
provided that (i) in the event that such financial statements are not so
delivered, then a calculation of Excess Cash Flow based upon estimated amounts
shall be made by Agent and Term Loan Agent upon which

 

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calculation Borrowers may make the prepayment permitted by this Section 7.17(b),
subject to adjustment when such financial statements are delivered to Agent as
required hereby; and (ii) on the date of any such prepayment and after giving
effect thereto, each of the Term Loan ECF Mandatory Prepayment Conditions shall
have been satisfied; provided further that, in the event Borrowers are unable to
make any mandatory prepayment described in this Section 7.17(b) on any Excess
Cash Flow Due Date due the failure to satisfy the Term Loan ECF Mandatory
Prepayment Conditions on such date, then Borrowers may make such prepayment on
or before the fifth (5th) Business Day following delivery of the first monthly
financial statements delivered thereafter to Agent pursuant to Section 9.9
hereof that demonstrates that the Term Loan ECF Mandatory Prepayment Conditions
have been satisfied;

(c) subject to the terms of the Intercreditor Agreement, Borrowers may make
mandatory prepayments in respect of the Term Loan Indebtedness pursuant to
Sections 2.3(a) and 2.3(b) of the Term Loan Agreement (as in effect on the
Closing Date hereof and as the same may be amended in accordance with the terms
of the Intercreditor Agreement);

(d) Borrowers may make mandatory prepayments in respect of the Term Loan
Indebtedness pursuant to Sections 2.3(c) and 2.3(d) of the Term Loan Agreement
(as in effect on the Closing Date hereof and as the same may be amended in
accordance with the terms of the Intercreditor Agreement);

(e) Borrowers may make voluntary prepayments in respect of the Term Loan
Indebtedness pursuant to Section 2.1(c) of the Term Loan Agreement (as in effect
on the Closing Date hereof and as the same may be amended in accordance with the
terms of the Intercreditor Agreement); provided that on the date any such
prepayment is made and after giving effect thereto, each of the Prepayment
Conditions shall have been satisfied;

(f) any Loan Party may prepay, repurchase, redeem, retire or otherwise acquire
any Indebtedness described in clauses (c), (f), (g), (h), (n), (q), (t) or (u)
of the definition of “Permitted Indebtedness”; provided that (i) on the date of
any such prepayment, repurchase, redemption, retirement or other acquisition and
after giving effect thereto, (A) each of the Payment Conditions shall have been
satisfied; and (B) Quantum and its Subsidiaries, on a consolidated basis, are
projected to be in compliance with each of the financial covenants set forth in
Section 6.5 hereof for the four (4) fiscal quarter period ended one year after
the proposed date of such payment; (ii) in connection with any prepayment,
repurchase, redemption, retirement or other acquisition of Indebtedness
described in clauses (f), (g), (h), (n) and (u) of the definition of “Permitted
Indebtedness”, all of the applicable subordination provisions (or the conditions
set forth in the applicable Subordination Agreement) related to such
Indebtedness shall have been satisfied; and

(g) Quantum may make payments in exchange for fractional shares in connection
with the conversion of any Indebtedness that has been contractually subordinated
in right of payment to the Obligations, in an otherwise cashless exchange (with
cash payment made in exchange for fractional shares) into Qualified Equity
Interests so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom.

 

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7.18 Convertible Subordinated Debt. At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium payable in connection with
the repayment or redemption of the Convertible Subordinated Debt, except that,
on or prior to the Convertible Subordinated Debt Maturity Date, Quantum shall
satisfy the Specified Convertible Subordinated Debt Condition, provided that, in
connection with any repayment, prepayment, repurchase, redemption, retirement or
other acquisition of the Convertible Subordinated Debt: (A) immediately after
giving effect to any such repayment, prepayment, repurchase, redemption,
retirement or other acquisition, Quantum and its Subsidiaries, on a consolidated
basis, shall be in compliance on a pro forma basis with the financial covenants
set forth in Section 6.5(a) and 6.5(c) hereof, recomputed for the most recently
ended fiscal month for which financial statements are required to be delivered
pursuant to Section 9.9 hereof (for the avoidance of doubt, the month ending
October 31, 2017), (B) immediately after giving effect to any such repayment,
prepayment, repurchase, redemption, retirement or other acquisition, the Senior
Net Leverage Ratio for Quantum and its Subsidiaries, on a consolidated basis,
shall be less than or equal to 3.00 to 1.00 on a pro forma basis for the
four (4) consecutive fiscal quarters ending immediately prior to any such
repayment, prepayment, repurchase, redemption, retirement or other acquisition,
recomputed for the most recently ended fiscal month for which financial
statements are required to be delivered pursuant to Section 9.9 hereof, (C) on
the date of any such repayment, prepayment, repurchase, redemption, retirement
or other acquisition and immediately after giving effect thereto, each of the
Convertible Subordinated Debt Payment Conditions shall have been satisfied, and
(D) on or before the date of any such repayment, prepayment, repurchase,
redemption, retirement or other acquisition, Borrowing Agent shall have
delivered to Agent, in form and substance satisfactory to Agent, a Compliance
Certificate demonstrating by reasonably detailed calculations (including without
limitation a calculation of EBITDA) that, upon giving effect to any repayment,
prepayment, repurchase, redemption, retirement or other acquisition, Quantum and
its Subsidiaries were and will be in compliance with the conditions set forth in
clauses (A) through (C) of this proviso.

7.19 Amendments to Certain Documents. Enter into any amendment, waiver or
modification of (a) any of the Convertible Subordinated Debt Documents that is
adverse to the interests of Agent and the Lenders in the reasonable
determination of Agent without the prior written consent of Agent and in any
event Borrowing Agent shall deliver to Agent true, correct and complete copies
of any material amendment, waiver or modification of any of the Convertible
Subordinated Debt Documents (whether or not adverse to the interests of Agent
and the Lenders) concurrently with the delivery of the monthly financial
statements required to be delivered to Agent pursuant to Section 9.9 hereof with
respect to the month in which such amendment, waiver or modification occurs, or
(b) any of the Term Loan Documents, except to the extent permitted by the terms
of the Intercreditor Agreement.

 

VIII. CONDITIONS PRECEDENT.

8.1 Conditions to Initial Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:

 

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(a) Executed Documents. Agent shall have received, in form and substance
satisfactory to Agent, this Agreement and each of the Other Documents, in each
case duly authorized, executed and delivered by the Loan Parties and any other
Person party thereto;

(b) Intercreditor Agreement. Agent shall have received, in form and substance
reasonably satisfactory to Agent, the Intercreditor Agreement, duly authorized,
executed and delivered by Term Loan Agent and acknowledged by the Loan Parties;

(c) Stock Certificates. Agent shall have received originals of stock
certificates representing 100% (or 65%, as applicable) of the Equity Interests
of each Subsidiary of Quantum, together with stock powers executed in blank.

(d) Financial Condition Certificate. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(d) attached hereto.

(e) Closing Certificate. Agent shall have received a closing certificate signed
by the Chief Financial Officer of Borrowing Agent dated as of the Closing Date,
stating that (i) all representations and warranties set forth in this Agreement
and the Other Documents are true and correct on and as of such date, and (ii) on
such date no Default or Event of Default has occurred or is continuing;

(f) Borrowing Base. Agent shall have received evidence from the Loan Parties
that the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
the Loan Parties on the Closing Date;

(g) Quality of Earnings; Closing Date EBITDA. Agent shall have received, and
been satisfied with its review of, a quality of earnings report performed by a
third party firm acceptable to Agent in its Permitted Discretion, which report,
among other things, shall confirm that the EBITDA of Quantum and its
Subsidiaries for the twelve (12) month period ending on or about July 31, 2016
was equal to or greater than $23,000,000 (the “July Quality of Earnings
Report”), and Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that the EBITDA of Quantum and its
Subsidiaries, using methodology substantially consistent with the determination
of EBITDA in the July Quality of Earnings Report, for the twelve (12) month
period ending on or about September 30, 2016 was equal to or greater than
$30,000,000 (the “Closing EBITDA Amount”);

(h) Total Funded Debt. After giving pro forma effect to the Advances made
hereunder on the Closing Date and the Term Loans made by Term Loan Lenders on
the Closing Date, the total amount of Funded Debt of Quantum and its
Subsidiaries, on a consolidated basis, on the Closing Date shall be less than or
equal to the amount equal to the product of (x) the Closing EBITDA Amount,
multiplied by (y) 4.6;

(i) Maximum Senior Net Leverage Ratio. After giving pro forma effect to the
Advances made hereunder on the Closing Date and the Term Loans made by Term Loan
Lenders on the Closing Date, the Senior Net Leverage Ratio for Quantum and its
Subsidiaries, on a consolidated basis, for the four (4) consecutive fiscal
quarters ending on or about September 30, 2016 shall be less than or equal to
1.70 to 1.00;

 

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(j) Undrawn Availability. After giving effect to the Advances made hereunder on
the Closing Date, the Borrowers shall have Undrawn Availability of at least
$30,000,000;

(k) Blocked Accounts. The Loan Parties shall have opened Blocked Accounts and
Depository Accounts with PNC, and Agent shall have received, in form and
substance reasonably satisfactory to Agent, Control Agreement among Agent, Term
Loan Agent, Quantum and PNC with respect to the Blocked Accounts and Depository
Accounts maintained by Quantum at PNC;

(l) Term Loans and Term Loan Documents. Agent shall have received true, correct
and complete copies of the Term Loan Documents, all of which shall be in form
and substance reasonably satisfactory to Agent, duly authorized, executed and
delivered by the parties thereto and in effect on the Closing Date, and the
transactions contemplated by the Term Loan Documents shall be consummated
simultaneously with the making of the initial Advances hereunder, including,
without limitation, the receipt by the Loan Parties of the gross proceeds of the
Term Loans in the sum of $50,000,000;

(m) Filings, Registrations and Recordings. Agent shall have received each
document (including any Uniform Commercial Code financing statement and Uniform
Commercial Code termination statement) required by this Agreement, any of the
Other Documents or under Applicable Law or reasonably requested by Agent to be
filed, registered or recorded in order to create, in favor of Agent, a perfected
security interest in or lien upon the Collateral and in order to terminate the
perfected security interest in or lien upon the Collateral of Existing Agent
shall have been properly filed, registered or recorded (or arrangements
reasonable satisfactory to Agent for such filing, registration or recording
shall have been made) in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested;

(n) Payoff Letter. Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, a payoff letter from Existing Agent providing
that, among other things, all of the Indebtedness of the Loan Parties under the
Existing Loan Documents has been paid and satisfied in full;

(o) Lien Waiver Agreements. Borrowers shall have exercised commercially
reasonable efforts to deliver to Agent (a) a Lien Waiver Agreement from the
owner or lessor of the chief executive office of Quantum and (b) Lien Waiver
Agreements from the owners or lessors of all of the other premises leased by
Quantum listed on Schedule 4.4 hereto and all of the warehouses and other
locations used by Quantum listed on Schedule 4.4 hereto in which Equipment and
Inventory having a value in excess of $1,000,000 is located;

(p) Secretary’s Certificates, Authorizing Resolutions and Good Standing
Certificates. Agent shall have received, in form and substance reasonably
satisfactory to Agent, a certificate of the Secretary or Assistant Secretary (or
other equivalent officer or manager) of each Loan Party dated as of the Closing
Date which shall certify (i) copies of resolutions, in form and substance
reasonably satisfactory to Agent, of the board of directors (or other equivalent
governing body or member) of such Loan Party authorizing (x) the execution,
delivery and

 

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performance of this Agreement and the Other Documents to which such Loan Party
is a party (including authorization of the incurrence of Indebtedness, borrowing
of Advances and requesting of Letters of Credit on a joint and several basis
with all Loan Parties as provided for herein), and (y) the granting by such Loan
Party of the security interests in and liens upon the Collateral to secure all
of the joint and several Obligations of the Loan Parties (and such certificate
shall state that such resolutions have not been amended, modified, revoked or
rescinded as of the date of such certificate), (ii) the incumbency and signature
of the officers of such Loan Party authorized to execute this Agreement and the
Other Documents, (iii) copies of the Organizational Documents of such Loan Party
as in effect on such date, complete with all amendments thereto, and (iv) the
good standing (or equivalent status) of such Loan Party in its jurisdiction of
organization and each other jurisdiction in which the failure to be duly
qualified or licensed could reasonably be expected to have a Material Adverse
Effect, as evidenced by good standing certificates (or the equivalent thereof
issued by any applicable jurisdiction) dated not more than thirty (30) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each such jurisdiction;

(q) Legal Opinion. Agent shall have received, in form and substance reasonably
satisfactory to Agent, the executed legal opinion of counsel to the Loan Parties
which shall cover such matters incident to the Transactions as Agent may
reasonably require and each Loan Party hereby authorizes and directs such
counsel to deliver such opinion to Agent and Lenders;

(r) No Litigation. No litigation, investigation or proceeding before or by any
arbitrator or Governmental Body shall be continuing or threatened against any
Loan Party or against the officers or directors of any Loan Party (A) in
connection with this Agreement, the Other Documents, the Convertible
Subordinated Debt Documents or any of the Transactions and which, in the
reasonable opinion of Agent, is deemed material or (B) which could, in the
reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to any Loan Party or the conduct of its business or inconsistent with
the due consummation of the Transactions shall have been issued by any
Governmental Body;

(s) Collateral Examination. Agent shall have completed Collateral examinations
and received appraisals, the results of which shall be satisfactory in form and
substance to Agent, of the Receivables, Inventory and Equipment of the Loan
Parties and all books and records in connection therewith;

(t) Fees. Agent shall have received all fees payable to Agent and Lenders on or
prior to the Closing Date hereunder, including pursuant to Article III hereof
and the Fee Letter;

(u) Pro Forma Financial Statements. Agent shall have received a copy of the Pro
Forma Financial Statements which shall be reasonably satisfactory in all
respects to Agent;

(v) Insurance. Agent shall have received in form and substance reasonably
satisfactory to Agent, (i) evidence that adequate insurance, including without
limitation, credit insurance, casualty insurance and liability insurance,
required to be maintained under this

 

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Agreement is in full force and effect, (ii) insurance certificates issued by the
Loan Parties’ insurance broker containing such information regarding the Loan
Parties’ casualty and liability insurance policies as Agent shall reasonably
request and naming Agent as an additional insured and/or lenders loss payee, and
(iii) loss payable endorsements issued by the Loan Parties’ insurer naming Agent
as lenders loss payee;

(w) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances
made pursuant to this Agreement;

(x) Consents. Agent shall have received any and all Consents necessary to permit
the effectuation of the Transactions and Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent shall deem necessary;

(y) No Adverse Material Change. (i) Since March 31, 2016, there shall not have
occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to Agent or Lenders shall have been proven to be inaccurate
or misleading in any material respect;

(z) Contract Review. Agent shall have received and reviewed all Material
Contracts of the Loan Parties including all material leases, union contracts,
collective bargaining contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall be reasonably
satisfactory in all respects to Agent; and

(aa) Compliance with Laws. Agent shall be reasonably satisfied that each Loan
Party is in compliance with all pertinent federal, state, local or territorial
regulations, including those with respect to the Federal Occupational Safety and
Health Act, the Environmental Protection Act, ERISA and the Anti-Terrorism Laws.

Each Lender that makes its initial extensions of credit under this Agreement
shall be conclusively deemed to be satisfied with, or have waived, the
conditions precedent set forth in this Section 8.1.

8.2 Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:

(a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to this Agreement and the Other Documents,
and each of the representations and warranties in any agreement, document,
instrument, certificate or financial or other statement furnished at any time
under or in connection with this Agreement and the Other 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 such date
as if made on and as of such date, except to the extent any such representation
or warranty expressly relates only to any earlier and/or specified 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 or specified
date;

 

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(b) No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date and, in the case of the initial Advance,
after giving effect to the consummation of the transactions contemplated by the
Term Loan Documents; provided, however that Agent, in its sole discretion, may
continue to make Advances notwithstanding the existence of an Event of Default
or Default and that any Advances so made shall not be deemed a waiver of any
such Event of Default or Default; and

(c) Maximum Advances. In the case of any type of Advance requested to be made,
after giving effect thereto, the aggregate amount of such type of Advance shall
not exceed the maximum amount of such type of Advance permitted under this
Agreement.

Each request for an Advance by any Loan Party hereunder shall constitute a
representation and warranty by each Loan Party as of the date of such Advance
that the conditions of this subsection shall have been satisfied.

 

IX. INFORMATION AS TO BORROWERS.

Each Loan Party shall, or (except with respect to Section 9.11 hereof) shall
cause Borrowing Agent on its behalf to, until the Payment in Full of the
Obligations and the termination of this Agreement:

9.1 Reserved.

9.2 Schedules. Deliver to Agent, in form and substance satisfactory to Agent:
(a) at all times during an Additional Reporting Period, on or before Wednesday
of each week, (i) a sales/collections report and roll-forward for the prior
week, and (ii) a report summarizing all Qualified Cash and PNC Other Cash, (b)
on or before the twentieth (20th) day of each month as of and for the prior
month: (i) accounts receivable agings inclusive of reconciliations to the
general ledger, (ii) accounts payable schedules inclusive of reconciliations to
the general ledger, (iii) perpetual Inventory reports inclusive of
reconciliations to the general ledger, (iv) a detailed report summarizing all
cash and Cash Equivalents of Quantum and its Subsidiaries (including an
indication of which amounts constitute Qualified Cash and at which Blocked
Account Banks such Qualified Cash is maintained), and (v) a Borrowing Base
Certificate (which shall be calculated as of the last day of the prior month and
which shall not be binding upon Agent or restrictive of Agent’s rights under
this Agreement), (c) within forty-five (45) days after the end of each fiscal
quarter, (i) a list of all Material Customers, and (ii) a roll-forward of the
production Inventory reserve, and (d) promptly following Agent’s request: such
other schedules, documents, reports and/or information regarding the Collateral
or the financial condition of the Loan Parties and their Subsidiaries as Agent
may reasonably request. Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests
hereunder. The items to be provided under this Section are to be in form
reasonably satisfactory to Agent and executed by each Loan Party and delivered
to Agent from time to time solely for Agent’s convenience in

 

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maintaining records of the Collateral, and any Loan Party’s failure to deliver
any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent’s Lien with respect to the Collateral. Unless otherwise agreed to by
Agent, the items to be provided under this Section 9.2 shall be delivered to
Agent by the specific method of Approved Electronic Communication designated by
Agent.

9.3 Environmental Reports.

(a) To the extent any Loan Party is not in material compliance with applicable
Environmental Laws, such Loan Party shall furnish Agent, concurrently with the
delivery of the financial statements referred to in Section 9.7 hereof, with a
certificate signed by an officer of Borrowing Agent setting forth with
specificity all areas of non-compliance and the proposed action such Loan Party
will implement in order to achieve full compliance.

(b) In the event any Loan Party receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Materials at all of the Real
Property owned or leased by any Loan Party (any such event being hereinafter
referred to as a “Hazardous Discharge”) or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at any such Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting such
Real Property or any Loan Party’s interest therein or the operations or the
business (any of the foregoing is referred to herein as an “Environmental
Complaint”) from any Person, including any Governmental Body, then Borrowing
Agent shall, within five (5) Business Days after such receipt, give written
notice of same to Agent detailing facts and circumstances of which any Loan
Party is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such information is to be provided to allow Agent to protect its
security interest in and Lien on the Collateral and is not intended to create
nor shall it create any obligation upon Agent or any Lender with respect
thereto.

(c) Borrowing Agent shall, concurrently with the delivery of the monthly
financial statements required to be delivered to Agent pursuant to Section 9.9
hereof with respect to the period in which such copies, notification or demand
letter are received, forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous
Materials at any other site owned, operated or used by any Loan Party to manage
of Hazardous Materials and shall continue to forward to Agent, concurrently with
the delivery of the monthly financial statements required to be delivered to
Agent pursuant to Section 9.9 hereof with respect to the period in which such
correspondence is received, copies of all material correspondence received by
any Loan Party from any Governmental Body regarding such claims until the claim
is settled. Borrowing Agent shall promptly forward to Agent copies of all
documents and reports concerning a Hazardous Discharge or Environmental
Complaint at any Real Property owned or leased by any Loan Party, operations or
business that any Loan Party is required to file under any Environmental Laws,
in each case concurrently with the delivery of the monthly financial statements
required to be delivered to Agent pursuant to Section 9.9 hereof with respect to
the period in which such filing occurred. Such information is to be provided
solely to allow Agent to protect Agent’s security interest in and Lien on the
Collateral.

 

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9.4 Litigation. Notify Agent in writing of any claim, litigation, suit or
administrative proceeding affecting any Loan Party, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects Collateral having a value in excess of $1,000,000
or which could reasonably be expected to have a Material Adverse Effect, in each
case, concurrently with the delivery of the monthly financial statements
pursuant to Section 9.9 hereof with respect to the period in which any Loan
Party becomes aware of such claim, litigation, suit or administrative
proceeding.

9.5 Material Occurrences. (a) Immediately after such Loan Party has knowledge
thereof, notify Agent in writing upon the occurrence of any Default or Event of
Default; and (b) promptly, but in any event within fifteen (15) Business Days
after such Loan Party has knowledge thereof, notify Agent in writing upon the
occurrence of: (i) any event of default under the Convertible Debt Documents;
(ii) any default by any Loan Party which might result in the acceleration of the
maturity of any Indebtedness in an amount of $1,000,000 or more, including the
names and addresses of the holders of such Indebtedness with respect to which
there is a default existing or with respect to which the maturity has been or
could be accelerated, and the amount of such Indebtedness; (iii) any matter
materially affecting the value, enforceability or collectability of any material
portion of the Collateral; and (iv) any other development in the business or
affairs of any Loan Party which could reasonably be expected to have a Material
Adverse Effect; and (c) promptly, but in any event not later than concurrently
with the delivery of the monthly financial statements required to be delivered
to Agent pursuant to Section 9.9 hereof with respect to the period in which such
Loan Party has knowledge thereof, notify Agent in writing upon the occurrence
of: (i) any funding deficiency which, if not corrected as provided in
Section 4971 of the Code, could subject any Loan Party or any member of the
Controlled Group to a tax imposed by Section 4971 of the Code; (ii) the receipt
by any Loan Party of any notice from any Material Customer of its intent to
either (x) terminate its relationship directly or indirectly with a Loan Party,
or (y) materially and adversely modify any material agreement involving such
Loan Party; (v) any material and adverse change in the relationship or
arrangements within the LTO Consortium; (iii) any investigation, hearing,
proceeding or other inquest by any Governmental Body into any Loan Party, or to
the knowledge of Quantum, any Affiliate of any Loan Party with respect to
Anti-Terrorism Laws; and (iv) any lapse or other termination of any Consent
issued to any Loan Party by any Governmental Body or any other Person that is
material to the operation of any Loan Party’s business or any refusal by any
Governmental Body or any other Person to renew or extend any such Consent;
and in each case as to clauses (a), (b) and (c) of this Section 9.5, describing
the nature thereof and the action the Loan Parties propose to take with respect
thereto.

9.6 Government Receivables. Notify Agent concurrently with the delivery of the
financial statements required to be delivered to Agent pursuant to Section 9.9
hereof if its Receivables in an aggregate amount in excess of $500,000 arise out
of contracts between any Loan Party and the United States, any state, or any
department, agency or instrumentality of any of them.

9.7 Annual Financial Statements. Furnish Agent within ninety (90) days after the
end of each fiscal year, audited financial statements of Quantum and its
Subsidiaries, on a consolidated basis and unaudited financial statements of
Quantum and its Subsidiaries, on a consolidating basis (which shall consist of a
balance sheet and statements of income,

 

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stockholders’ equity and cash flow), from the beginning of the current fiscal
year to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP, and in reasonable detail and
audited by independent certified public accountants reasonably acceptable to
Agent (the “Accountants”) and certified without qualification. The reports
described in this Section shall be accompanied by a Compliance Certificate.

9.8 Quarterly Financial Statements. Furnish Agent within forty-five (45) days
after the end of each fiscal quarter, (a) an unaudited balance sheet of Quantum
and its Subsidiaries, on a consolidated and consolidating basis, and unaudited
statements of income, stockholders’ equity and cash flow of Quantum and its
Subsidiaries, on a consolidated and consolidating basis, reflecting results of
operations from the beginning of the fiscal year to the end of such fiscal
quarter and for such fiscal quarter, all prepared in accordance with GAAP in all
material respects, subject to normal and year-end adjustments that individually
and in the aggregate are not material to the business operations of Quantum and
its Subsidiaries and setting forth in comparative form the respective financial
statements for the corresponding date and period in the previous fiscal year and
(b) a written statement of management of Quantum setting forth a discussion of
the financial condition, changes in financial condition and results of
operations of Quantum and its Subsidiaries. The reports described in this
Section shall be accompanied by a Compliance Certificate.

9.9 Monthly Financial Statements. Furnish Agent within thirty (30) days after
the end of each month (or within forty-five (45) days after the end of the
months of March, June, September and December), an unaudited balance sheet of
Quantum and its Subsidiaries, on a consolidated and consolidating basis, and
unaudited statements of income and cash flow of Quantum and its Subsidiaries, on
a consolidated and consolidating basis, reflecting results of operations from
the beginning of the fiscal year to the end of such month and for such month,
all (other than the statements of cash flow) prepared in accordance with GAAP in
all material respects, subject to normal and year-end adjustments that
individually and in the aggregate are not material to the business operations of
Quantum and its Subsidiaries and setting forth in comparative form the
respective financial statements for the corresponding date and period in the
previous fiscal year. The reports described in this Section shall be accompanied
by a Compliance Certificate.

9.10 Other Reports. Furnish Agent, (a) promptly, but in any event within five
(5) days following delivery or receipt thereof, copies of all material notices
and other communications sent or received by Quantum pursuant to the Convertible
Debt Documents, and (b) if requested by Agent, (i) if and when filed by Quantum,
all Form 10-Q quarterly reports, Form 10-K annual reports, Form 8-K current
reports and any other reports filed by Quantum with the SEC, and (ii) copies of
any reports or other information provided by Quantum to its shareholders
generally. Any report requested by Agent to be furnished pursuant to clause (b)
of this Section 9.10 shall be deemed to have been furnished on the date on which
Quantum has filed such report with the SEC and is available on the EDGAR website
on the Internet at www.sec.gov or any successor government website that is
freely and readily available to Agent without charge; provided that,
notwithstanding the foregoing, Borrowing Agent shall deliver to Agent paper or
electronic copies of any such report to be furnished pursuant to clause (b) of
this Section 9.10 if Agent requests that Borrowing Agent furnish such paper or
electronic copies until written notice to cease delivering such paper or
electronic copies is given by Agent to Borrowing Agent.

 

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9.11 Additional Information. Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement and the Other
Documents have been complied with by the Loan Parties including, without the
necessity of any request by Agent, (a) copies of all environmental audits and
reviews, (b) at least five (5) days prior thereto, (i) notice of Quantum’s
opening of a new chief executive office, or (ii) notice of Quantum’s closing of
its chief executive office, and (c) concurrently with the delivery of the
monthly financial statements required to be delivered to Agent pursuant to
Section 9.9 hereof with respect to the period in which such Loan Party (i) opens
any new office or place of business (other than its chief executive office), in
each case to the extent such location is required to be disclosed on Schedule
4.4 hereto, notice of such opening, (ii) closes any existing office or place of
business (other than its chief executive office), notice of such closing, and
(iii) learns of the occurrence thereof, notice of any labor dispute to which any
Loan Party may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any collective bargaining
contract to which any Loan Party is a party or by which any Loan Party is bound
and which could reasonably be expected to have a Material Adverse Effect.

9.12 Projected Operating Budget. Furnish Agent, no later than forty-five (45)
days after the beginning of each fiscal year (commencing with fiscal year ending
on or about March 31, 2017), month by month projections (including an operating
budget) and cash flow of Quantum and its Subsidiaries, on a consolidated basis,
for such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), and year by year
projections (including an operating budget) and cash flow of Quantum and its
Subsidiaries, on a consolidated basis, for the forthcoming three (3) fiscal
years, such projections to be accompanied by a certificate signed by the
President or Chief Financial Officer of Quantum to the effect that such
projections represent the good faith estimate of Quantum, on the date such
projections are delivered, of the future performance Quantum and its
Subsidiaries for the periods covered thereby based upon assumptions believed by
Quantum to be reasonable at the time of the delivery thereof to Agent. The form
and scope of the projections required to be delivered to Agent described in this
Section shall be in a form and scope consistent with the Closing Date
Projections or otherwise reasonably acceptable to Agent.

9.13 Variances From Operating Budget. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8 hereof,
a written report summarizing all material variances from budgets submitted by
the Loan Parties pursuant to Section 9.12 hereof and a discussion and analysis
by management with respect to such variances.

9.14 Reserved.

9.15 ERISA Notices and Requests. Furnish Agent with immediate written notice in
the event that (i) any Loan Party or any member of the Controlled Group knows or
has reason to know that a Termination Event has occurred, together with a
written statement describing such Termination Event and the action, if any,
which such Loan Party or any member of the Controlled Group has taken, is
taking, or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, Department of Labor or PBGC
with respect thereto, (ii) any Loan Party or any member of the Controlled Group
knows or has reason to know that a prohibited transaction (as defined in Section
406 of ERISA or 4975 of the

 

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Code) has occurred together with a written statement describing such transaction
and the action which such Loan Party or any member of the Controlled Group has
taken, is taking or proposes to take with respect thereto, (iii) a funding
waiver request has been filed with respect to any Plan together with all
communications received by any Loan Party or any member of the Controlled Group
with respect to such request, (iv) any increase in the benefits of any existing
Pension Benefit Plan or Multiemployer Plan or the establishment of any new
Pension Benefit Plan or Multiemployer Plan or the commencement of contributions
to any Pension Benefit Plan or Multiemployer Plan to which any Loan Party or any
member of the Controlled Group was not previously contributing shall occur, (v)
any Loan Party or any member of the Controlled Group shall receive from the PBGC
a notice of intention to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such notice, (vi) any Loan Party
or any member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Code, together with copies
of each such letter; (vii) any Loan Party or any member of the Controlled Group
shall receive a notice regarding the imposition of withdrawal liability,
together with copies of each such notice; (viii) any Loan Party or any member of
the Controlled Group shall fail to make a required installment under a Pension
Benefit Plan or Multiemployer Plan or any other required payment under the Code
or ERISA on or before the due date for such installment or payment; or (ix) any
Loan Party or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, (c) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan or (d) a Multiemployer Plan is subject to Section
432 of the Code or Section 305 of ERISA.

9.16 Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the terms or conditions of this Agreement.

9.17 Updates to Certain Schedules. Concurrently with the delivery of the monthly
financial statements required to be delivered pursuant to Section 9.9 hereof,
deliver to Agent, in form and, unless such updates are solely factual in nature,
in substance reasonably satisfactory to Agent, such updates to
Schedules 4.4 (Locations of Equipment and Inventory), 5.9 (Intellectual
Property), 5.21 (Equity Interests), 5.22 (Commercial Tort Claims) and 5.23
(Letter-of-Credit Rights) to this Agreement and such other Schedules hereto as
the Loan Parties shall deem required to maintain the related representations and
warranties herein as true and correct. Any such updated Schedules delivered by
the Loan Parties to Agent in accordance with this Section 9.17 shall
automatically and immediately be deemed to amend and restate the prior version
of such Schedule previously delivered to Agent and attached to and made part of
this Agreement.

9.18 Financial Disclosure. Each Loan Party hereby irrevocably authorizes and
directs all accountants and auditors employed by such Loan Party at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Loan Party’s financial statements, trial balances or other accounting
records of any sort in the accountant’s or auditor’s possession, and to disclose
to Agent and each Lender any information such accountants may have concerning
such Loan Party’s financial status and business operations. Each Loan Party
hereby authorizes all Governmental Bodies to furnish to Agent and each Lender
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reports or examinations relating to such Loan Party, whether made by such Loan
Party or otherwise; provided, however, Agent and each Lender will attempt to
obtain such information or materials directly from such Loan Party prior to
obtaining such information or materials from such accountants or Governmental
Bodies.

 

X. EVENTS OF DEFAULT.

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

10.1 Nonpayment. Failure by any Loan Party to pay when due (a) any principal or
interest on the Obligations (including without limitation pursuant to
Section 2.9 hereof), or (b) any other fee, charge, amount or liability provided
for herein or in any Other Document, in each case whether at maturity, by reason
of acceleration pursuant to the terms of this Agreement, by notice of intention
to prepay or by required prepayment.

10.2 Breach of Representation. Any representation or warranty made or deemed
made by any Loan Party in this Agreement, any of the Other Documents or in any
agreement, documents, certificate or financial or other statement furnished at
any time in connection herewith or therewith shall prove to have been incorrect
or misleading in any material respect on the date when made or deemed to have
been made;

10.3 Financial Information. Failure by any Loan Party to (a) furnish financial
information when due under Sections 9.7, 9.9, 9.12, 9.13 of this Agreement, or
(b) permit the inspection of its books or records or access to its premises for
audits and appraisals in accordance with the terms of Section 4.6 hereof;

10.4 Reserved;

10.5 Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3,
10.10 and 10.11 hereof:

(a) failure or neglect of any Loan Party to perform, keep or observe any term,
provision, condition or covenant contained in Sections 4.1, 4.2, 4.6, 4.8, 6.2
(solely if a Loan Party is not in good standing in its jurisdiction of
incorporation or formation), 6.5, 6.6(a), 6.14, any Section of Article VII
(other than Section 7.16), or Sections 9.1, 9.2, 9.5(a) or 16.18 of this
Agreement;

(b) failure or neglect of any Loan Party to perform, keep or observe any other
term, provision, condition or covenant contained in Sections 4.4, 4.5, 4.7,
4.12, 6.3, 6.11, 9.4, 9.5(b), 9.6, 9.10, 9.11, 9.17 or 9.18 of this Agreement
which is not cured within fifteen (15) days after the earlier of (x) knowledge
of such failure or neglect by a Responsible Officer of any Loan Party or (y) the
receipt by Borrowing Agent of written notice of such failure or neglect from
Agent or any Lender (provided that such fifteen (15) day period shall not apply
in the case of any failure or neglect to perform, keep or observe any term,
provision, condition or covenant which is not capable of being cured at all or
within such fifteen (15) day period); or

 

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(c) failure or neglect of any Loan Party to perform, keep or observe any other
term, provision, condition or covenant contained in this Agreement or any of the
Other Documents which is not cured within thirty (30) days after the earlier of
(x) knowledge of such failure or neglect by a Responsible Officer of any Loan
Party or (y) the receipt by Borrowing Agent of written notice of such failure or
neglect from Agent or any Lender (provided that such thirty (30) day period
shall not apply in the case of any failure or neglect to perform, keep or
observe any term, provision, condition or covenant which is not capable of being
cured at all or within such thirty (30) day period);

10.6 Judgments. Any (a) judgment, writ, order or decree for the payment of money
are rendered against any Loan Party for an aggregate amount in excess of
$1,500,000 or against all Loan Parties for an aggregate amount in excess of
$1,500,000 (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) and (b) (i) action shall be legally taken by any judgment creditor to
levy upon assets or properties of any Loan Party to enforce any such judgment,
or (ii) such judgment shall remain undischarged for a period of thirty (30)
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, shall not be in effect;

10.7 Bankruptcy. Any Loan Party or any Subsidiary of any Loan Party shall (a)
apply for, consent to or suffer the appointment of, or the taking of possession
by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or
of all or a substantial part of its property, (b) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (c) make a general assignment for the
benefit of creditors, (d) commence a voluntary case under any state or federal
bankruptcy or receivership laws (as now or hereafter in effect), (e) be
adjudicated a bankrupt or insolvent (including by entry of any order for relief
in any involuntary bankruptcy or insolvency proceeding commenced against it),
(f) file a petition seeking to take advantage of any other law providing for the
relief of debtors, (g) acquiesce to, or fail to have dismissed, within sixty
(60) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (h) take any formal action for the purpose of effecting any
of the foregoing;

10.8 Reserved;

10.9 Lien Priority. Any Lien created hereunder or provided for hereby or under
any Other Document for any reason ceases to be or is not a valid and perfected
Lien having a first priority Lien (subject only to Permitted Encumbrances that
have priority as a matter of Applicable Law) except (a) as a result of a
Disposition of the applicable Collateral in a transaction permitted hereunder,
(b) with respect to Collateral the aggregate value of which, for all such
Collateral, does not exceed at any time $1,000,000 or (c) as the result of an
action or failure to act on the part of Agent;

10.10 Reserved;

10.11 Cross Default. Either (a) an “Event of Default” under (and as such term is
defined in) the Convertible Subordinated Debt Documents, (b) any specified
“event of default” under any Indebtedness (other than the Obligations) of any
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principal balance (or, in the case of any Indebtedness not so denominated, with
a then-outstanding total obligation amount) of $1,000,000 or more, or any other
event or circumstance which would permit the holder of any such Indebtedness of
any Loan Party to accelerate such Indebtedness (and/or the obligations of such
Loan Party thereunder) prior to the scheduled maturity or termination thereof,
shall occur (regardless of whether the holder of such Indebtedness shall
actually accelerate, terminate or otherwise exercise any rights or remedies with
respect to such Indebtedness), (c) Term Loan Agent breaches, violates,
terminates or challenges the validity of the Intercreditor Agreement or (d) any
creditor party to any Subordination Agreement breaches, violates, terminates or
challenges the validity of such Subordination Agreement;

10.12 Termination or Limitation of Guaranty, Guarantor Security Agreement or
Pledge Agreement. Termination or limitation of any Guaranty, Guarantor Security
Agreement, Pledge Agreement or similar agreement executed and delivered to Agent
in connection with the Obligations of any Loan Party, or if any Loan Party or
pledgor attempts to terminate, challenges the validity of, or its liability
under, any such Guaranty, Guarantor Security Agreement, Pledge Agreement or
similar agreement (other than any termination permitted in accordance with the
terms of this Agreement);

10.13 Change of Control. Any Change of Control shall occur;

10.14 Invalidity. This Agreement or any Other Document shall, for any reason,
cease to be valid and binding on any Loan Party, or any Loan Party shall so
claim in writing to Agent or any Lender or any Loan Party challenges the
validity of or its liability under this Agreement or any Other Document;

10.15 Reserved; or

10.16 Pension Plans. An event or condition specified in Section 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, any Loan
Party or any member of the Controlled Group shall incur, or in the opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Agent, would have a Material Adverse
Effect; or the occurrence of any Termination Event, or any Loan Party’s failure
to immediately report a Termination Event in accordance with Section 9.15
hereof.

 

XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

11.1 Rights and Remedies.

(a) Upon the occurrence of: (i) an Event of Default pursuant to Section 10.7
hereof (other than Section 10.7(g) hereof), all Obligations shall be immediately
due and payable and this Agreement and the obligation of Lenders to make
Advances shall be deemed terminated, (ii) any of the other Events of Default and
at any time thereafter, at the option of Agent or at the direction of Required
Lenders all Obligations shall be immediately due and payable and Agent or
Required Lenders shall have the right to terminate this Agreement and to
terminate the obligation of Lenders to make Advances; and (iii) without limiting
Section 8.2 hereof, any Default under Sections 10.7(g) hereof, the obligation of
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suspended until such time as such involuntary petition shall be dismissed. Upon
the occurrence of any Event of Default, Agent shall have the right to exercise
any and all rights and remedies provided for herein, under the Other Documents,
under the Uniform Commercial Code and at law or equity generally, including the
right to foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take possession of and
sell any or all of the Collateral with or without judicial process. Agent may
enter any of any Loan Party’s premises or other premises without legal process
and without incurring liability to any Loan Party therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require the Loan Parties to make the Collateral
available to Agent at a convenient place. With or without having the Collateral
at the time or place of sale, Agent may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or more sales,
at such price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Agent shall give the Loan Parties reasonable
notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrowing Agent at least ten (10) days prior to such sale or
sales is reasonable notification. At any public sale Agent or any Lender may bid
(including credit bid) for and become the purchaser, and Agent, any Lender or
any other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and all such claims, rights and equities are hereby expressly
waived and released by each Loan Party. In connection with the exercise of the
foregoing remedies, including the sale of Inventory, Agent is granted a
perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted
permission to use all of each Loan Party’s (a) Intellectual Property which is
used by such Loan Party in connection with Inventory for the purpose of
marketing, advertising for sale and selling or otherwise disposing of such
Inventory and (b) Equipment for the purpose of completing the manufacture of
unfinished goods. The Net Cash Proceeds realized from the sale of any Collateral
shall be applied to the Obligations in the order set forth in Section 11.5
hereof. Noncash proceeds will only be applied to the Obligations as they are
converted into cash. If any deficiency shall arise, the Loan Parties shall
remain liable to Agent and Lenders therefor.

(b) To the extent that Applicable Law imposes duties on Agent to exercise
remedies in a commercially reasonable manner, each Loan Party acknowledges and
agrees that it is not commercially unreasonable for Agent: (i) to fail to incur
expenses reasonably deemed significant by Agent to prepare Collateral for
Disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for Disposition; (ii) to fail to
obtain third party consents for access to Collateral to be Disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or Disposition of Collateral to be collected
or Disposed of; (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral; (iv) to exercise collection remedies against
Customers and other Persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists; (v) to advertise
Dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature; (vi) to contact other
Persons, whether or not in the same business as any Loan Party, for expressions
of interest in acquiring all or any portion of such Collateral; (vii) to hire
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to assist in the Disposition of Collateral, whether or not the Collateral is of
a specialized nature; (viii) to Dispose of Collateral by utilizing internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets; (ix) to Dispose of assets in wholesale rather than
retail markets; (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements
to insure Agent against risks of loss, collection or Disposition of Collateral
or to provide to Agent a guaranteed return from the collection or Disposition of
Collateral; or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or Disposition of any of the
Collateral. Each Loan Party acknowledges that the purpose of this Section
11.1(b) is to provide non-exhaustive indications of what actions or omissions by
Agent would not be commercially unreasonable in Agent’s exercise of remedies
against the Collateral and that other actions or omissions by Agent shall not be
deemed commercially unreasonable solely on account of not being indicated in
this Section 11.1(b). Without limitation upon the foregoing, nothing in this
Section 11.1(b) shall be construed to grant any rights to any Loan Party or to
impose any duties on Agent that would not have been granted or imposed by this
Agreement or by Applicable Law in the absence of this Section 11.1(b).

(c) Without limiting any other provision hereof:

(i) At any bona fide public sale, and to the extent permitted by Applicable Law,
at any private sale, Agent shall be free to purchase all or any part of the
Investment Property Collateral. Any such sale may be on cash or credit. Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will represent and
agree that they are purchasing the Investment Property Collateral for their own
account in compliance with Regulation D of the Securities Act or any other
applicable exemption available under the Securities Act. Agent will not be
obligated to make any sale if it determines not to do so, regardless of the fact
that notice of the sale may have been given. Agent may adjourn any sale and sell
at the time and place to which the sale is adjourned. If the Investment Property
Collateral is customarily sold on a recognized market or threatens to decline
speedily in value, Agent may sell such Investment Property Collateral at any
time without giving prior notice to any Loan Party or other Person.

(ii) Each Loan Party recognizes that Agent may be unable to effect or cause to
be effected a public sale of the Investment Property Collateral by reason of
certain prohibitions of the Securities Act, so that Agent may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obligated to agree, among other things, to acquire the Investment Property
Collateral for their own account, for investment and without a view to the
distribution or resale thereof. Each Loan Party understands that private sales
so made may be at prices and on other terms less favorable to the seller than if
the Investment Property Collateral were sold at public sales, and agrees that
Agent has no obligation to delay or agree to delay the sale of any of the
Investment Property Collateral for the period of time necessary to permit the
issuer of the securities which are part of the Investment Property Collateral
(even if the issuer would agree), to register such securities for sale under the
Securities Act. Each Loan Party agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.

 

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(iii) The Net Cash Proceeds arising from the Disposition of the Investment
Property Collateral after deducting expenses incurred by Agent will be applied
to the Obligations pursuant to Section 11.5 hereof. If any excess remains after
the discharge of all of the Obligations, the same will be paid to the applicable
Loan Party or to any other Person that may be legally entitled thereto.

At any time after the occurrence and during the continuance of an Event of
Default (A) Agent may transfer any or all of the Investment Property Collateral
into its name or that of its nominee and may exercise all voting rights with
respect to the Investment Property Collateral, but no such transfer shall
constitute a taking of such Investment Property Collateral in satisfaction of
any or all of the Obligations, and (B) Agent shall be entitled to receive, for
application to the Obligations, all cash or stock dividends and distributions,
interest and premiums declared or paid on the Investment Property Collateral.

11.2 Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any
time pursue, relinquish, subordinate, or modify, which procedures, timing and
methodologies to employ, and what any other action to take with respect to any
or all of the Collateral and in what order, thereto and such determination will
not in any way modify or affect any of Agent’s or Lenders’ rights hereunder as
against the Loan Parties or each other.

11.3 Setoff. Subject to Section 14.13 hereof, in addition to any other rights
which Agent or any Lender may have under Applicable Law, upon the occurrence of
an Event of Default hereunder, Agent and such Lender shall have a right,
immediately and without notice of any kind, to apply any Loan Party’s property
held by Agent and such Lender or any of their Affiliates to reduce the
Obligations and to exercise any and all rights of setoff which may be available
to Agent and such Lender with respect to any deposits held by Agent or such
Lender.

11.4 Rights and Remedies not Exclusive. The enumeration of the foregoing rights
and remedies is not intended to be exhaustive and the exercise of any rights or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.

11.5 Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during
the continuance of an Event of Default, all amounts collected or received by
Agent on account of the Obligations (including without limitation any amounts on
account of any of Cash Management Liabilities or Hedge Liabilities), or in
respect of the Collateral may, at Agent’s discretion, and shall, at the
direction of the Required Lenders, be paid over or delivered as follows:

FIRST, to the payment of all reasonable and documented out-of-pocket costs and
expenses (including reasonable attorneys’ fees) of Agent in connection with
enforcing its rights and the rights of Lenders under this Agreement and the
Other Documents, and any Out-of-Formula Loans and Protective Advances funded by
Agent with respect to the Collateral under or pursuant to the terms of this
Agreement;

SECOND, to payment of any fees owed to Agent;

 

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THIRD, to the payment of all reasonable and documented out-of-pocket costs and
expenses (including reasonable attorneys’ fees) of each of the Lenders to the
extent owing to such Lender pursuant to the terms of this Agreement;

FOURTH, to the payment of all of the Obligations consisting of accrued interest
on account of the Swing Loans;

FIFTH, to the payment of the outstanding principal amount of the Obligations
consisting of Swing Loans;

SIXTH, to the payment of all Obligations arising under this Agreement and the
Other Documents consisting of accrued fees and interest (other than interest in
respect of Swing Loans paid pursuant to clause FOURTH above);

SEVENTH, to the payment of the outstanding principal amount of the Obligations
(other than principal in respect of Swing Loans paid pursuant to clause FIFTH
above) arising under this Agreement, including Cash Management Liabilities and
Hedge Liabilities (to the extent reserves for such Cash Management Liabilities
and Hedge Liabilities have been established by Agent) and the payment or cash
collateralization of any outstanding Letters of Credit in accordance with
Section 3.2(b) hereof;

EIGHTH, to all other Obligations arising under this Agreement, under the Other
Documents or otherwise which shall have become due and payable and not repaid
pursuant to clauses “FIRST” through “SEVENTH” above; and

NINTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that then outstanding Advances, Cash Management Liabilities and Hedge
Liabilities held by such Lender bears to the aggregate then outstanding
Advances, Cash Management Liabilities and Hedge Liabilities) of amounts
available to be applied pursuant to clauses “SIXTH”, “SEVENTH”, “EIGHTH” and
“NINTH” above; and (iii) notwithstanding anything to the contrary in this
Section 11.5, no Swap Obligations of any Non-Qualifying Party shall be paid with
amounts received from such Non-Qualifying Party under its Guaranty (including
sums received as a result of the exercise of remedies with respect to such
Guaranty) or from the proceeds of such Non-Qualifying Party’s Collateral if such
Swap Obligations would constitute Excluded Hedge Liabilities, provided, however,
that to the extent possible appropriate adjustments shall be made with respect
to payments and/or the proceeds of Collateral from other Borrowers and/or
Guarantors that are Eligible Contract Participants with respect to such Swap
Obligations to preserve the allocation to Obligations otherwise set forth above
in this Section 11.5; and (iv) to the extent that any amounts available for
distribution pursuant to clause “SEVENTH” above are attributable to the issued
but undrawn amount of outstanding Letters of Credit, such amounts shall be held
by Agent as cash collateral for the Letters of Credit pursuant to Section 3.2(b)
hereof and applied (A) first, to reimburse Issuers

 

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from time to time for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses “SEVENTH,” “EIGHTH” and “NINTH” above in the
manner provided in this Section 11.5.

 

XII. WAIVERS AND JUDICIAL PROCEEDINGS.

12.1 Waiver of Notice. Each Loan Party hereby waives notice of non-payment of
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.

12.2 Delay. No delay or omission on Agent’s or any Lender’s part in exercising
any right, remedy or option shall operate as a waiver of such or any other
right, remedy or option or of any Default or Event of Default.

12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING UNDER THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, COUNTERCLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

XIII. EFFECTIVE DATE AND TERMINATION.

13.1 Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of each Loan Party,
Agent and each Lender, shall become effective on the Closing Date and shall
continue in full force and effect until the Maturity Date (the “Term”) unless
sooner terminated as herein provided. The Loan Parties may terminate this
Agreement at any time upon ten (10) Business Days prior written notice to Agent
upon the Payment in Full of all of the Obligations.

13.2 Termination. The termination of the Agreement shall not affect Agent’s or
any Lender’s rights, or any of the Obligations having their inception prior to
the effective date of such termination or any Obligations which pursuant to the
terms hereof continue to accrue after such date, and the provisions hereof shall
continue to be fully operative until (a) all of the

 

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Obligations have been Paid in Full and this Agreement has been terminated and
(b) each of the Loan Parties has released the Secured Parties from and against
any and all claims of any nature whatsoever that any Loan Party may have against
the Secured Parties. The security interests, Liens and rights granted to Agent
and Lenders hereunder and the financing statements filed in connection herewith
shall continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrowers’ Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations have been
Paid in Full and this Agreement has been terminated in accordance with its
terms. Accordingly, each Loan Party waives any rights which it may have under
the Uniform Commercial Code to demand the filing of termination statements with
respect to the Collateral, and Agent shall not be required to send such
termination statements to each Loan Party, or to file them with any filing
office, unless and until all of the Obligations have been Paid in Full and this
Agreement shall have been terminated in accordance with its terms. All
representations, warranties, covenants, waivers and agreements set forth herein
shall survive termination hereof until all of the Obligations have been Paid in
Full and this Agreement has been terminated.

 

XIV. REGARDING AGENT.

14.1 Appointment. Each Lender hereby designates PNC to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
2.8(b) and 3.4 hereof and in the Fee Letter), charges and collections received
pursuant to this Agreement, for the ratable benefit of Lenders. Agent may
perform any of its duties hereunder by or through its agents or employees. As to
any matters not expressly provided for by this Agreement (including collection
of the Notes) Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Required Lenders, and such instructions shall be binding; provided, however,
that Agent shall not be required to take any action which, in Agent’s
discretion, exposes Agent to liability or which is contrary to this Agreement or
the Other Documents or Applicable Law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.

14.2 Nature of Duties. Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other Documents. Neither
Agent nor any of its officers, directors, employees or agents shall be (i)
liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment), or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof set forth in this Agreement, or in any of the Other
Documents 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 of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution, enforceability or sufficiency of this
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for any failure of any Loan Party to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements set forth in, or
conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of any Loan Party. The duties of Agent as respects
the Advances to the Loan Parties shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or the transactions described herein
except as expressly set forth herein.

14.3 Lack of Reliance on Agent. Independently and without reliance upon Agent or
any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each Loan
Party in connection with the making and the continuance of the Advances
hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of each Loan Party. Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Advances or at any time
or times thereafter except as shall be provided by any Loan Party pursuant to
the terms hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of this Agreement or any Other Document, or of the
financial condition of any Loan Party, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Notes, the Other Documents or the financial
condition or prospects of any Loan Party, or the existence of any Event of
Default or any Default.

14.4 Resignation of Agent; Successor Agent. Agent may resign on sixty (60) days
written notice to each Lender and Borrowing Agent and upon such resignation,
Required Lenders will promptly designate a successor Agent reasonably
satisfactory to the Loan Parties (provided that no such approval by the Loan
Parties shall be required after the occurrence and during the continuance of any
Event of Default). Any such successor Agent shall succeed to the rights, powers
and duties of Agent, and shall in particular succeed to all of Agent’s right,
title and interest in and to all of the Liens in the Collateral securing the
Obligations created hereunder or any Other Document, and the term “Agent” shall
mean such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent. However, notwithstanding
the foregoing, if at the time of the effectiveness of the new Agent’s
appointment, any further actions need to be taken in order to provide for the
legally binding and valid transfer of any Liens in the Collateral from former
Agent to new Agent and/or for the perfection of any Liens in the Collateral as
held by new Agent or it is otherwise not then possible for new Agent to become
the holder of a fully valid, enforceable and perfected Lien as to any of the
Collateral, former Agent shall continue to hold such Liens solely as agent for
perfection of such Liens on behalf of new Agent until such time as new Agent can
obtain a fully valid, enforceable and perfected Lien on all Collateral, provided
that Agent shall not be required to or have any liability or responsibility to
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perfection to continue the perfection of any such Liens (other than to forego
from taking any affirmative action to release any such Liens). After any Agent’s
resignation as Agent, the provisions of this Article XIV, and any
indemnification rights under this Agreement, including without limitation,
rights arising under Section 16.5 hereof, shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement (and in the event resigning Agent continues to hold any Liens pursuant
to the provisions of the immediately preceding sentence, the provisions of this
Article XIV and any indemnification rights under this Agreement, including
without limitation, rights arising under Section 16.5 hereof, shall inure to its
benefit as to any actions taken or omitted to be taken by it in connection with
such Liens).

14.5 Certain Rights of Agent. If Agent shall request instructions from Lenders
with respect to any act or action (including failure to act) in connection with
this Agreement or any Other Document, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from Required Lenders; and Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, Lenders shall
not have any right of action whatsoever against Agent as a result of its acting
or refraining from acting hereunder in accordance with the instructions of
Required Lenders.

14.6 Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
email, facsimile, telex, teletype or telecopier message, cablegram, order or
other document or telephone message believed by it to be genuine and correct and
to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it. Agent
may employ agents and attorneys-in-fact and shall not be liable for the default
or misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.

14.7 Notice of Default. Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder or under the Other
Documents, unless Agent has received written notice from a Lender or Borrowing
Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by Required Lenders;
provided that, unless and until Agent shall have received such directions, 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 in the best interests of Lenders.

14.8 Indemnification. To the extent Agent is not reimbursed and indemnified by
the Loan Parties, each Lender will reimburse and indemnify Agent in proportion
to its respective portion of the outstanding Advances and its respective
Participation Commitments in the outstanding Letters of Credit and outstanding
Swing Loans (or, if no Advances are outstanding, pro rata according to the
percentage that its Revolving Commitment Amount constitutes of the total
aggregate Revolving Commitment Amounts), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
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of this Agreement or any Other Document; provided that Lenders shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent’s gross (not mere) negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final non-appealable judgment).

14.9 Agent in its Individual Capacity. With respect to the obligation of Agent
to lend under this Agreement, the Advances made by it shall have the same rights
and powers hereunder as any other Lender and as if it were not performing the
duties as Agent specified herein; and the term “Lender” or any similar term
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity as a Lender. Agent may engage in business with any Loan
Party as if it were not performing the duties specified herein, and may accept
fees and other consideration from any Loan Party for services in connection with
this Agreement or otherwise without having to account for the same to Lenders.

14.10 Delivery of Documents. To the extent Agent receives financial statements
required under Sections 9.7, 9.9, 9.12 and 9.13 hereof or Borrowing Base
Certificates from any Loan Party pursuant to the terms of this Agreement which
any Loan Party is not obligated to deliver to each Lender, Agent will promptly
furnish such documents and information to Lenders.

14.11 Loan Parties Undertaking to Agent. Without prejudice to their respective
obligations to Lenders under the other provisions of this Agreement, each Loan
Party hereby undertakes with Agent to pay to Agent from time to time on demand
all amounts from time to time due and payable by it for the account of Agent or
Lenders or any of them pursuant to this Agreement to the extent not already
paid. Any payment made pursuant to any such demand shall pro tanto satisfy the
relevant Loan Party’s obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.

14.12 No Reliance on Agent’s Customer Identification Program. To the extent the
Advances or this Agreement is, or becomes, syndicated in cooperation with other
Lenders, each Lender acknowledges and agrees that neither such Lender, nor any
of its Affiliates, participants or assignees, may rely on Agent to carry out
such Lender’s, Affiliate’s, participant’s or assignee’s customer identification
program, or other obligations required or imposed under or pursuant to the USA
PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended, modified, supplemented or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any of
the Loan Parties, their Affiliates or their agents, the Other Documents or the
transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists,
(iv) customer notices or (v) other procedures required under the CIP Regulations
or such Anti-Terrorism Laws.

14.13 Other Agreements. Each of the Lenders agrees that it shall not, without
the prior written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Loan Party or any deposit
accounts of any Loan Party now or hereafter maintained with such
Lender. Anything in this Agreement to the contrary notwithstanding, each of the
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further agrees that it shall not, unless specifically requested to do so by
Agent, take any action to protect or enforce its rights arising out of this
Agreement or the Other Documents, it being the intent of Lenders that any such
action to protect or enforce rights under this Agreement and the Other Documents
shall be taken in concert and at the direction or with the consent of Agent or
Required Lenders.

 

XV. BORROWING AGENCY.

15.1 Borrowing Agency Provisions.

(a) Each Loan Party hereby irrevocably designates Borrowing Agent to be its
attorney and agent and in such capacity to (i) borrow, (ii) request advances,
(iii) request the issuance of Letters of Credit, (iv) sign and endorse notes,
(v) execute and deliver all instruments, documents, applications, security
agreements, reimbursement agreements and letter of credit agreements for Letters
of Credit and all other agreements, documents, instruments, certificates,
notices and further assurances now or hereafter required hereunder, (vi) make
elections regarding interest rates, (vii) give instructions regarding Letters of
Credit and agree with the applicable Issuer upon any amendment, extension or
renewal of any Letter of Credit and (viii) otherwise take action under and in
connection with this Agreement and the Other Documents, all on behalf of and in
the name such Loan Party or the Loan Parties, and hereby authorizes Agent to pay
over or credit all loan proceeds hereunder in accordance with the request of
Borrowing Agent.

(b) The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to the Loan Parties and at their request. Neither Agent nor any
Lender shall incur liability to the Loan Parties as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Loan Party hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of the Loan
Parties as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to the willful misconduct or
gross (not mere) negligence by the indemnified party (as determined by a court
of competent jurisdiction in a final and non-appealable judgment).

(c) All Obligations shall be joint and several, and each Loan Party shall make
payment upon the maturity of the Obligations by acceleration or otherwise, and
such obligation and liability on the part of each Loan Party shall in no way be
affected by any extensions, renewals and forbearance granted by Agent or any
Lender to any Loan Party, failure of Agent or any Lender to give any Loan Party
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Loan Party, the release by Agent or
any Lender of any Collateral now or thereafter acquired from any Loan Party, and
such agreement by each Loan Party to pay upon any notice issued pursuant thereto
is unconditional and unaffected by prior recourse by Agent or any Lender to the
other Loan Parties or any Collateral for such Loan Party’s Obligations or the
lack thereof. Each Loan Party waives all suretyship defenses.

 

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15.2 Waiver of Subrogation. Each Loan Party expressly waives any and all rights
of subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Loan Party may now or hereafter have against the other Loan
Parties or any other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to any other Loan Parties’ property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
the termination of the Commitments, the termination of this Agreement and the
Payment in Full of the Obligations.

 

XVI. MISCELLANEOUS.

16.1 Governing Law. This Agreement and each Other Document (unless and except to
the extent expressly provided otherwise in any such Other Document), and all
matters relating hereto or thereto or arising herefrom or therefrom (whether
arising under contract law, tort law or otherwise) shall, in accordance with
Section 5-1401 of the General Obligations Law of the State of New York, be
governed by and construed in accordance with the laws of the State of New
York. Any judicial proceeding brought by or against any Loan Party with respect
to any of the Obligations, this Agreement or any of the Other Documents may be
brought in any court of competent jurisdiction in the State of New York, United
States of America, and, by execution and delivery of this Agreement, each party
to this Agreement accepts for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Each party to this Agreement hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by certified or registered mail (return receipt
requested) directed to Borrowing Agent (for all Loan Parties) at its address set
forth in Section 16.6 hereof and to all other parties to this Agreement to their
respective addresses set forth in Section 16.6 hereof and service so made shall
be deemed completed five (5) days after the same shall have been so deposited in
the mails of the United States of America, or, at Agent’s option, by service
upon Borrowing Agent which each Loan Party irrevocably appoints as such Loan
Party’s agent for the purpose of accepting service within the State of New
York. Nothing herein shall affect the right to serve process in any manner
permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against any Loan Party in the courts of any other jurisdiction. Each
party to this Agreement waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. Each Loan Party waives
the right to remove any judicial proceeding brought against such Loan Party in
any state court to any federal court. Any judicial proceeding by any Loan Party
against Agent or any Lender involving, directly or indirectly, any matter or
claim in any way arising out of, related to or connected with this Agreement or
any of the Other Documents, shall be brought only in a federal or state court
located in the County of New York, State of New York.

16.2 Entire Understanding.

(a) This Agreement and the documents executed concurrently herewith contain the
entire understanding between each Loan Party, Agent and each Lender and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
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shall have no force and effect unless in writing, signed by each Loan Party’s,
Agent’s and each Lender’s respective officers. Neither this Agreement nor any
portion or provisions hereof may be amended, modified, changed, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Notwithstanding the foregoing, Agent and Borrowing Agent
may modify this Agreement or any of the Other Documents for the purposes of
completing missing content or correcting erroneous content of an administrative
nature, without the need for a written amendment, provided that Agent shall send
a copy of any such modification to the Borrowers and each Lender (which copy may
be provided by electronic mail). Each Loan Party acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.

(b) Required Lenders, Agent with the consent in writing of Required Lenders, and
the Loan Parties may, subject to the provisions of this Section 16.2(b), from
time to time enter into written supplemental agreements to this Agreement or the
Other Documents executed by the Loan Parties, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or the Loan Parties thereunder or the conditions,
provisions or terms thereof or waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
such supplemental agreement shall:

(i) increase the Revolving Commitment Percentage or the maximum dollar amount of
the Revolving Commitment Amount of any Lender without the consent of such Lender
directly affected thereby;

(ii) whether or not any Advances are outstanding, extend the Term or the time
for payment of principal or interest of any Advance (excluding the due date of
any mandatory prepayment of an Advance), or any fee payable to any Lender, or
reduce the principal amount of or the rate of interest borne by any Advances or
reduce any fee payable to any Lender, without the consent of each Lender
directly affected thereby (except that Required Lenders may elect to waive or
rescind any imposition of the Default Rate under Section 3.1 hereof or of
default rates of Letter of Credit fees under Section 3.2 hereof (unless imposed
by Agent));

(iii) except in connection with any increase pursuant to Section 2.24 hereof,
increase the Maximum Revolving Advance Amount without the consent of all
Lenders;

(iv) alter the definition of the term “Required Lenders” or alter, amend or
modify this Section 16.2(b) without the consent of all Lenders;

(v) alter, amend or modify the provisions of Section 11.5 hereof without the
consent of each Lender directly and adversely affected thereby;

(vi) release all or substantially all of the Collateral (other than in
accordance with the provisions of this Agreement) without the consent of all
Lenders directly affected thereby;

 

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(vii) subject to Section 16.2(e) below, permit any Revolving Advance to be made
if after giving effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than sixty (60) consecutive
Business Days or exceed one hundred and ten percent (110%) of the Maximum
Revolving Advance Amount without the consent of all Lenders;

(viii) increase the Advance Rates above the Advance Rates in effect on the
Closing Date without the consent of all Lenders; or

(ix) release any Borrower without the consent of all Lenders.

(c) Any such supplemental agreement shall apply equally to each Lender and shall
be binding upon the Loan Parties, Lenders and Agent and all future holders of
the Obligations. In the case of any waiver, the Loan Parties, Agent and Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.

(d) In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such consent is denied, then Agent may, at its option, require
such Lender to assign its interest in the Advances to Agent or to another Lender
or to any other Person designated by Agent (the “Designated Lender”), for a
price equal to (i) then outstanding principal amount thereof plus (ii) accrued
and unpaid interest and fees due such Lender, which interest and fees shall be
paid when collected from the Loan Parties. In the event Agent elects to require
any Lender to assign its interest to Agent or to the Designated Lender, Agent
will so notify such Lender in writing within forty five (45) days following such
Lender’s denial, and such Lender will assign its interest to Agent or the
Designated Lender no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, Agent or
the Designated Lender, as appropriate, and Agent.

(e) Notwithstanding (i) the existence of a Default or an Event of Default,
(ii) that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied or the Revolving Commitments have been
terminated for any reason, or (iii) any other contrary provision of this
Agreement, Agent may at its discretion and without the consent of any Lender,
voluntarily permit the outstanding Revolving Advances at any time to exceed the
Formula Amount by up to ten percent (10%) of the Maximum Revolving Advance
Amount for up to sixty (60) consecutive Business Days (the “Out-of-Formula
Loans”). If Agent is willing in its sole and absolute discretion to permit such
Out-of-Formula Loans, Lenders holding the Revolving Commitments shall be
obligated to fund such Out-of-Formula Loans in accordance with their respective
Revolving Commitment Percentages, and such Out-of-Formula Loans shall be payable
on demand and shall bear interest at the Default Rate for Revolving Advances
consisting of Domestic Rate Loans; provided that, if Agent does permit
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Section 2.1(a) hereof nor shall any Lender be obligated to
fund Revolving Advances in excess of its Revolving Commitment Amount. For
purposes of this paragraph, the discretion granted to Agent hereunder shall not
preclude involuntary overadvances that may result from time to time due to the
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the Formula Amount was unintentionally exceeded for any reason, including, but
not limited to, Collateral previously deemed to be “Eligible Receivables”,
“Eligible Insured Foreign Receivables”, or “Eligible Inventory”, as applicable,
becomes ineligible, collections of Receivables applied to reduce outstanding
Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Maximum
Revolving Advance Amount by more than ten percent (10%), Agent shall use its
efforts to have the Loan Parties decrease such excess in as expeditious a manner
as is practicable under the circumstances and not inconsistent with the reason
for such excess. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding
sentence. To the extent any Out-of-Formula Loans are not actually funded by the
other Lenders as provided for in this Section 16.2(e), Agent may elect in its
discretion to fund such Out-of-Formula Loans and any such Out-of-Formula Loans
so funded by Agent shall be deemed to be Revolving Advances made by and owing to
Agent, and Agent shall be entitled to all rights (including accrual of interest)
and remedies of a Lender holding a Revolving Commitment with respect to such
Revolving Advances.

(f) In addition to (and not in substitution of) the discretionary Revolving
Advances permitted in Section 16.2(e) above, Agent is hereby authorized by the
Loan Parties and Lenders, at any time in Agent’s sole discretion, regardless of
(i) the existence of a Default or an Event of Default, (ii) whether any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not
been satisfied or the Revolving Commitments have been terminated for any reason,
or (iii) any other contrary provision of this Agreement, to make Revolving
Advances to Borrowers on behalf of Lenders which Agent, in its reasonable
business judgment, deems necessary or desirable (a) to preserve or protect the
Collateral, or any portion thereof, (b) to enhance the likelihood of, or
maximize the amount of, repayment of the Advances and other Obligations, or (c)
to pay any other amount chargeable to the Loan Parties pursuant to the terms of
this Agreement (the “Protective Advances”). Lenders holding the Revolving
Commitments shall be obligated to fund such Protective Advances and effect a
settlement with Agent therefor upon demand of Agent in accordance with their
respective Revolving Commitment Percentages. To the extent any Protective
Advances are not actually funded by the other Lenders as provided for in this
Section 16.2(f), any such Protective Advances funded by Agent shall be deemed to
be Revolving Advances made by and owing to Agent, and Agent shall be entitled to
all rights (including accrual of interest) and remedies of a Lender holding a
Revolving Commitment with respect to such Revolving Advances.

16.3 Successors and Assigns; Participations; New Lenders.

(a) This Agreement shall be binding upon and inure to the benefit of the Loan
Parties, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that no Loan Party may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.

(b) Each Loan Party acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other Persons (each such transferee
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interest, a “Participant”). Each Participant may exercise all rights of payment
(including rights of set-off) with respect to the portion of such Advances held
by it or other Obligations payable hereunder as fully as if such Participant
were the direct holder thereof provided that (i) the Loan Parties shall not be
required to pay to any Participant more than the amount which it would have been
required to pay to any Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Participant had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder unless
the sale of the participation to such Participant is made with the prior written
consent of Borrowing Agent and such Participant acknowledges that it is entitled
to no greater rights hereunder and under the Other Documents than the applicable
Lender, and (ii) in no event shall the Loan Parties be required to pay any such
amount arising from the same circumstances and with respect to the same Advances
or other Obligations payable hereunder to both such Lender and such
Participant. Each Loan Party hereby grants to any Participant a continuing
security interest in any deposits, moneys or other property actually or
constructively held by such Participant as security for the Participant’s
interest in the Advances. Each Lender that sells a participation shall maintain
a register on which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each Participant’s interest in the
Advances or other Obligations (the “Participant Register”); provided that no
Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any Commitments, Advances,
Letters of Credit or its other Obligations hereunder or under any Other
Document) to any Person except to the extent that such disclosure is necessary
to establish that any such Commitment, Advance, Letter of Credit or other
Obligation is in registered form under Treas. Reg. Section 5f.103-1(c). The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, Agent (in its capacity as Agent) shall have no responsibility for
maintaining a Participant Register.

(c) Any Lender, with the consent of Agent, may sell, assign or transfer all or
any part of its rights and obligations under or relating to Revolving Advances
under this Agreement and the Other Documents to one or more additional Persons
and one or more additional Persons may commit to make Advances hereunder (each a
“Purchasing Lender”), in minimum amounts of not less than $5,000,000, pursuant
to a Commitment Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for recording, provided,
however, that 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 with respect to each of the Revolving Advances under this
Agreement in which such Lender has an interest. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Revolving Commitment Percentage as set forth therein, and (ii)
the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for that
purpose. Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
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the resulting adjustment of the Revolving Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Each Loan Party hereby consents to the addition of such Purchasing
Lender and the resulting adjustment of the Revolving Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. The Loan Parties shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing; provided, however, that the consent of Borrowing Agent (such consent
not to be unreasonably withheld, conditioned or delayed) shall be required
unless (x) an Event of Default has occurred and is continuing at the time of
such assignment or (y) such assignment is to a Permitted Assignee; provided that
Borrowing Agent shall be deemed to have consented to any such assignment unless
it shall object thereto by written notice to Agent within seven (7) Business
Days after having received prior notice thereof.

(d) Any Lender, with the consent of Agent which shall not be unreasonably
withheld or delayed, may directly or indirectly sell, assign or transfer all or
any portion of its rights and obligations under or relating to Revolving
Advances under this Agreement and the Other Documents to an entity, whether a
corporation, partnership, trust, limited liability company or other entity that
(i) is engaged in making, purchasing, holding or otherwise investing in bank
loans and similar extensions of credit in the ordinary course of its business
and (ii) is administered, serviced or managed by the assigning Lender or an
Affiliate of such Lender (a “Purchasing CLO” and together with each Participant
and Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect
the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor
Lender, and Agent as appropriate and delivered to Agent for recording. Upon such
execution and delivery, from and after the transfer effective date determined
pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO
thereunder shall be a party hereto and, to the extent provided in such Modified
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder and (ii) the transferor Lender thereunder shall, to the extent
provided in such Modified Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Modified Commitment Transfer Supplement
creating a novation for that purpose. Such Modified Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing CLO. Each Loan
Party hereby consents to the addition of such Purchasing CLO. The Loan Parties
shall execute and deliver such further documents and do such further acts and
things in order to effectuate the foregoing.

(e) Agent, acting as a non-fiduciary agent of the Loan Parties, shall maintain
at its address a copy of each Commitment Transfer Supplement and Modified
Commitment Transfer Supplement delivered to it and a register (the “Register”)
for the recordation of the names and addresses of each Lender and the
outstanding principal, accrued and unpaid interest and other fees due
hereunder. The entries in the Register shall be conclusive, in the absence of
manifest error, and each Loan Party, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The Register shall be available for
inspection by Borrowing Agent or any Lender at any reasonable time and from time
to time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon
the effective date of each transfer or assignment (other than to an intermediate
purchaser) to such Purchasing Lender and/or Purchasing CLO.

 

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(f) Each Loan Party authorizes each Lender to disclose to any Transferee and any
prospective Transferee any and all financial information in such Lender’s
possession concerning such Loan Party which has been delivered to such Lender by
or on behalf of such Loan Party pursuant to this Agreement or in connection with
such Lender’s credit evaluation of such Loan Party; provided that such
Transferee or prospective Transferee shall agree to be bound by the provisions
of Section 16.15 hereof.

(g) Notwithstanding anything to the contrary set forth in this Agreement, any
Lender may at any time and from time to time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

16.4 Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. To the extent that any Loan Party
makes a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for any Loan Party’s benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.

16.5 Indemnity. Each Loan Party shall defend, protect, indemnify, pay and save
harmless Agent, each Issuer, each Lender and each of their respective officers,
directors, Affiliates, attorneys, employees and agents (each an “Indemnified
Party”) for and from and against any and all claims, demands, liabilities,
obligations, losses, damages, penalties, fines, actions, judgments, suits,
costs, charges, expenses and disbursements of any kind or nature whatsoever
(including reasonable and documented fees and disbursements of counsel
(including allocated costs of internal counsel)) (collectively, “Claims”) which
may be imposed on, incurred by, or asserted against any Indemnified Party in
arising out of or in any way relating to or as a consequence, direct or
indirect, of: (i) this Agreement, the Other Documents, the Advances and other
Obligations and/or the transactions contemplated hereby including the
Transactions, (ii) any action or failure to act or action taken only after delay
or the satisfaction of any conditions by any Indemnified Party in connection
with and/or relating to the negotiation, execution, delivery or administration
of the Agreement and the Other Documents, the credit facilities established
hereunder and thereunder and/or the transactions contemplated hereby including
the Transactions, (iii) any Loan Party’s failure to observe, perform or
discharge any of its covenants, obligations, agreements or duties under or
breach of any of the representations or warranties made in this Agreement and
the Other Documents, (iv) the enforcement of any of the rights and remedies of
Agent, any Issuer or any Lender under the Agreement and the Other Documents, (v)
any threatened or actual imposition of fines or penalties, or disgorgement of
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violation of any Anti-Terrorism Law by any Loan Party or any Subsidiary of any
Loan Party, and (vi) any claim, litigation, proceeding or investigation
instituted or conducted by any Governmental Body or instrumentality or any other
Person with respect to any aspect of, or any transaction contemplated by, or
referred to in, or any matter related to, this Agreement or the Other Documents,
whether or not Agent or any Lender is a party thereto. Without limiting the
generality of any of the foregoing, each Loan Party shall defend, protect,
indemnify, pay and save harmless each Indemnified Party from (x) any Claims
which may be imposed on, incurred by, or asserted against any Indemnified Party
arising out of or in any way relating to or as a consequence, direct or
indirect, of the issuance of any Letter of Credit hereunder, and (y) any Claims
which may be imposed on, incurred by, or asserted against any Indemnified Party
under any Environmental Laws with respect to or in connection with any Real
Property owned or leased by any Loan Party, any Hazardous Discharge, the
presence of any Hazardous Materials affecting any Real Property owned or leased
by any Loan Party (whether or not the same originates or emerges from such Real
Property or any contiguous real estate), including any Claims consisting of or
relating to the imposition or assertion of any Lien on any Real Property owned
or leased by any Loan Party under any Environmental Laws and any loss of value
of such Real Property as a result of the foregoing except to the extent such
loss, liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. The Loan Parties’
obligations under this Section 16.5 shall arise upon the discovery of the
presence of any Hazardous Materials at any Real Property owned or leased by any
Loan Party, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any Hazardous
Materials, in each such case except to the extent that any of the foregoing
arises out of the gross negligence or willful misconduct of the Indemnified
Party (as determined by a court of competent jurisdiction in a final and
non-appealable judgment). Without limiting the generality of the foregoing, this
indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) asserted
against or incurred by any of the Indemnified Parties by any Person under any
Environmental Laws or similar laws by reason of any Loan Party’s or any other
Person’s failure to comply with laws applicable to solid or hazardous waste
materials, including Hazardous Materials and Hazardous Waste, or other Toxic
Substances. The foregoing to the contrary notwithstanding, (A) the Loan Parties
shall have no obligation to any Indemnified Party under this Section 16.5 with
respect to any Claims that (I) a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Party or its officers, directors, employees, attorneys or
agents; (II) result from disputes solely between or among the Lenders or from
disputes solely between or among the Lenders and their respective Affiliates; it
being understood and agreed that the provisions of this Section 16.5 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, and (B) any obligation for any Claim with respect
to legal counsel shall be limited to the reasonable and documented fees, charges
and disbursements of (I) one primary counsel and any special and local counsel
for Agent and the other Indemnified Parties and (II) in the event of any actual
or potential conflicts of interest, one additional primary counsel and any
additional special and local counsel, in each case, for all similarly situated
Indemnified Parties. This Section 16.5 shall not apply with respect to Taxes.

 

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16.6 Notice. Any notice or request hereunder may be given to Borrowing Agent or
any Loan Party or to Agent or any Lender at their respective addresses set forth
below or at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section. Any notice,
request, demand, direction or other communication (for purposes of this Section
16.6 only, a “Notice”) to be given to or made upon any party hereto under any
provision of this Agreement shall be given or made by telephone or in writing
(which includes by means of electronic transmission (i.e., “e-mail”) or
facsimile transmission or by setting forth such Notice on a website to which the
Loan Parties are directed (an “Internet Posting”) if Notice of such Internet
Posting (including the information necessary to access such site) has previously
been delivered to the applicable parties hereto by another means set forth in
this Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names set forth below in this Section 16.6 or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 16.6. Any Notice shall be effective:

(a) In the case of hand-delivery, when delivered;

(b) If given by mail, four (4) days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;

(c) In the case of a telephonic Notice, when a party is contacted by telephone,
if delivery of such telephonic Notice is confirmed no later than the next
Business Day by hand delivery, a facsimile or electronic transmission, an
Internet Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);

(d) In the case of a facsimile transmission, when sent to the applicable party’s
facsimile machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;

(e) In the case of electronic transmission, when actually received;

(f) In the case of an Internet Posting, upon delivery of a Notice of such
posting (including the information necessary to access such site) by another
means set forth in this Section 16.6; and

(g) If given by any other means (including by overnight courier), when actually
received.

Any Lender giving a Notice to Borrowing Agent or any Loan Party shall
concurrently send a copy thereof to Agent, and Agent shall promptly notify the
other Lenders of its receipt of such Notice.

 

  (A) If to Agent or PNC at:

PNC Bank, National Association

200 South Wacker Drive, Suite 600

Chicago, IL 60606

Attention: Relationship Manager

Facsimile: (312) 454-2919

 

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with a copy to:

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0208

Attention: Michael J. Loesberg, Esq.

Facsimile: (212) 885-5001

 

  (B) If to Borrowing Agent or any Loan Party:

Quantum Corporation

224 Airport Parkway, Suite 300

San Jose, CA 95110

Attention: Shawn Hall

Facsimile: (408) 944-6581

with a copy to:

Latham & Watkins LLP

140 Scott Drive

Menlo Park, California 94025

Attention: Tad J. Freese, Esq.

Facsimile: (650) 463-2600

16.7 Survival. The obligations of the Loan Parties under Sections 2.2(f),
2.2(g), 2.2(h), 3.7, 3.8, 3.9, 3.10, 16.5 and 16.9 hereof and the obligations of
Lenders under Sections 2.2, 2.15(b), 2.16, 2.18, 2.19, 14.8 and 16.5 hereof,
shall survive termination of this Agreement and the Other Documents and the
Payment in Full of the Obligations.

16.8 Severability. If any part of this Agreement is contrary to, prohibited by,
or deemed invalid under Applicable Laws, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.

16.9 Expenses. The Loan Parties shall pay (a) all reasonable and documented
out-of-pocket expenses incurred by Agent and its Affiliates (including the
reasonable and documented fees, charges and disbursements of one primary counsel
and any special and local counsel), and shall pay all reasonable and documented
fees and time charges and disbursements for attorneys who may be employees of
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of
this Agreement and the Other Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (b) all reasonable and
documented out-of-pocket expenses incurred by any Issuer in connection with the
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Credit or any demand for payment thereunder, (c) all documented out-of-pocket
expenses incurred by Agent, any Lender or any Issuer (including the reasonable
and documented fees, charges and disbursements of (x) one primary counsel and
any special and local counsel for Agent, the Lenders and the Issuers and (y) in
the event of any actual or potential conflicts of interest, one additional
primary counsel and any additional special and local counsel, in each case, for
all similarly situated Lenders and Issuers), and shall pay all fees and time
charges for attorneys who may be employees of Agent and any Issuer in connection
with the enforcement or protection of its rights (i) in connection with this
Agreement and the Other Documents, including its rights under this Section, or
(ii) in connection with the Advances made or Letters of Credit issued hereunder,
including all such documented out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Advances or Letters of
Credit, and (d) all reasonable and documented out-of-pocket expenses of Agent’s
regular employees and agents engaged periodically to perform audits of any Loan
Party’s or any Loan Party’s Affiliate’s or Subsidiary’s books, records and
business properties.

16.10 Injunctive Relief. Each Loan Party recognizes that, in the event any Loan
Party fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefor, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.

16.11 Consequential Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to any Loan Party (or any Affiliate of
any such Person) for indirect, punitive, exemplary or consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of
any transaction contemplated under this Agreement or any Other Document.

16.12 Captions. The captions at various places in this Agreement are intended
for convenience only and do not constitute and shall not be interpreted as part
of this Agreement.

16.13 Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile or electronic transmission (including email transmission of a PDF
image) shall be deemed to be an original signature hereto.

16.14 Construction. The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.

16.15 Confidentiality; Sharing Information. Agent, each Lender, each Issuer and
each Transferee shall hold all non-public information obtained by Agent, such
Lender, such Issuer or such Transferee pursuant to the requirements of this
Agreement in accordance with Agent’s, such Lender’s, such Issuer and such
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information of this nature; provided, however, Agent, each Lender, each Issuer
and each Transferee may disclose such confidential information (a) to its
examiners, so long as such examiners are informed of the confidential nature of
such information; (b) to its Affiliates, outside auditors, counsel and other
professional advisors, so long as such Affiliates, outside auditors, counsel or
other professional advisors either have a legal obligation to keep such
information confidential or agree to comply with the provisions of this Section
16.15; (c) to Agent or any Lender; (d) to any prospective Transferees, so long
as such prospective Transferees agree to comply with the provisions of this
Section 16.15; and (e) as required or requested by any Governmental Body or
representative thereof or pursuant to legal process; provided further that
(i) unless specifically prohibited by Applicable Law, Agent, each Lender and
each Transferee shall use its reasonable best efforts prior to disclosure
thereof, to notify the applicable Loan Party of the applicable request for
disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Loan Party other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been Paid in Full and this Agreement has been
terminated. Each Loan Party acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Loan Party or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Loan Party hereby authorizes each Lender to
share any information delivered to such Lender by such Loan Party and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provisions of this
Section 16.15 as if it were a Lender hereunder. Such authorization shall survive
the repayment of the other Obligations and the termination of this
Agreement. Notwithstanding any non-disclosure agreement or similar document
executed by Agent in favor of any Loan Party or any of any Loan Party’s
affiliates, the provisions of this Agreement shall supersede such agreements.

16.16 Publicity. Each Loan Party and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among the
Loan Parties, Agent and Lenders, including announcements which are commonly
known as tombstones, in such publications and to such selected parties as Agent
shall in its sole and absolute discretion deem appropriate.

16.17 Certifications From Banks and Participants; USA PATRIOT Act.

(a) Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and is not
excepted from the certification requirement in Section 313 of the USA PATRIOT
Act and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to Agent the certification, or, if applicable, recertification,
certifying that such Lender is not a “shell” and certifying to other matters as
required by Section 313 of the USA PATRIOT Act and the applicable regulations:
(1) within ten (10) days after the Closing Date, and (2) as such other times as
are required under the USA PATRIOT Act.

 

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(b) The USA PATRIOT Act requires all financial institutions to obtain, verify
and record certain information that identifies individuals or business entities
which open an “account” with such financial institution. Consequently, each
Lender may from time to time request, and each Loan Party shall provide to
Lender, such Loan Party’s name, address, tax identification number and/or such
other identifying information as shall be necessary for Lender to comply with
the USA PATRIOT Act and any other Anti-Terrorism Law.

16.18 Anti-Terrorism Laws.

(a) Each Loan Party represents and warrants that (i) no Covered Entity is a
Sanctioned Person and (ii) no Covered Entity, either in its own right or through
any third party, (A) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person in violation of any
Anti-Terrorism Law; (B) does business in or with, or derives any of its income
from investments in or transactions with, any Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law; or (C) engages in any dealings or
transactions prohibited by any Anti-Terrorism Law.

(b) Each Loan Party covenants and agrees that (i) no Covered Entity will become
a Sanctioned Person, (ii) no Covered Entity, either in its own right or through
any third party, will (B) have any of its assets in a Sanctioned Country or in
the possession, custody or control of a Sanctioned Person in violation of any
Anti-Terrorism Law; (C) do business in or with, or derive any of its income from
investments in or transactions with, any Sanctioned Country or Sanctioned Person
in violation of any Anti-Terrorism Law; (D) engage in any dealings or
transactions prohibited by any Anti-Terrorism Law or (E) use the Advances to
fund any operations in, finance any investments or activities in, or, make any
payments to, a Sanctioned Country or Sanctioned Person in violation of any
Anti-Terrorism Law, (iii) the funds used to repay the Obligations will not be
derived from any unlawful activity, (iv) each Covered Entity shall comply
with all Anti-Terrorism Laws and (v) the Loan Parties shall promptly notify
Agent in writing upon the occurrence of a Reportable Compliance Event.

16.19 Acknowledgment and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary contained in this
Agreement, any Other Document, or any other agreement, arrangement or
understanding among any Agent, Lenders and the Loan Parties, Agent, each Lender
and each Loan Party acknowledges that any liability of any EEA Financial
Institution arising under this Agreement or any Other Document, to the extent
such liability is unsecured, may be subject to the Write-Down and Conversion
Powers of an EEA Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if
applicable:

 

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(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any Other Document; or

(iii) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of any EEA Resolution.

 

XVII. GUARANTY.

17.1 Guaranty. Each Guarantor hereby unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, the due and punctual performance of all Obligations;
provided that with respect to Obligations under or in respect of any Swap
Obligation, the foregoing guarantee shall only be effective to the extent that
such Guarantor is a Qualified ECP Loan Party at the time such Swap Obligation is
entered into and such Obligations and such guarantee thereof are not Excluded
Hedge Liabilities. Each payment made by any Guarantor pursuant to this Guaranty
shall be made in lawful money of the United States in immediately available
funds.

17.2 Waivers. Each Guarantor hereby absolutely, unconditionally and irrevocably
waives (a) promptness, diligence, notice of acceptance, notice of presentment of
payment and any other notice hereunder, (b) demand of payment, protest, notice
of dishonor or nonpayment, notice of the present and future amount of the
Obligations and any other notice with respect to the Obligations, (c) any
requirement that Agent, any Lender protect, secure, perfect or insure any
security interest or Lien on any property subject thereto or exhaust any right
or take any action against any other Loan Party, or any Person or any
Collateral, (d) any other action, event or precondition to the enforcement
hereof or the performance by each such Guarantor of the Obligations, and (e) any
defense arising by any lack of capacity or authority or any other defense of any
Loan Party or any notice, demand or defense by reason of cessation from any
cause of Obligations other than the Payment in Full of the Obligations and any
defense that any other guarantee or security was or was to be obtained by Agent.

17.3 No Defense. No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Other Document or any other agreement
or instrument relating thereto, or of all or any part of the Obligations or of
any collateral security therefor shall affect, impair or be a defense hereunder.

17.4 Guaranty of Payment. The Guaranty hereunder is one of payment and
performance, not collection, and the obligations of each Guarantor hereunder are
independent of the Obligations of the other Loan Parties, and a separate action
or actions may be brought and prosecuted against any Guarantor to enforce the
terms and conditions of this Article XVII, irrespective of whether any action is
brought against any other Loan Party or other Persons or whether any other Loan
Party or other Persons are joined in any such action or actions. Each

 

158

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Guarantor waives any right to require that any resort be had by Agent or any
Lender to any security held for payment of the Obligations or to any balance of
any deposit account or credit on the books of Agent or any Lender in favor of
any Loan Party or any other Person. No election to proceed in one form of action
or proceedings, or against any Person, or on any Obligations, shall constitute a
waiver of Agent’s right to proceed in any other form of action or proceeding or
against any other Person unless Agent has expressed any such right in
writing. Without limiting the generality of the foregoing, no action or
proceeding by Agent against any Loan Party under any document evidencing or
securing indebtedness of any Loan Party to Agent shall diminish the liability of
any Guarantor hereunder, except to the extent Agent receives actual payment on
account of Obligations by such action or proceeding, notwithstanding the effect
of any such election, action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party.

17.5 Liabilities Absolute. The liability of each Guarantor hereunder shall be
absolute, unlimited and unconditional and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligation or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
shall not be discharged or impaired, released, limited or otherwise affected by:

(a) any change in the manner, place or terms of payment or performance, and/or
any change or extension of the time of payment or performance of, release,
renewal or alteration of, or any new agreements relating to any Obligation, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, or any rescission of, or amendment, waiver or other modification of, or
any consent to departure from, this Agreement or any Other Document, including
any increase in the Obligations resulting from the extension of additional
credit to any Loan Party or otherwise;

(b) any sale, exchange, release, surrender, loss, abandonment, realization upon
any property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, all or any of the Obligations, and/or any offset there
against, or failure to perfect, or continue the perfection of, any Lien in any
such property, or delay in the perfection of any such Lien, or any amendment or
waiver of or consent to departure from any other guaranty for all or any of the
Obligations;

(c) the failure of Agent or any Lender to assert any claim or demand or to
enforce any right or remedy against any other Loan Party or any other Person
under the provisions of this Agreement or any Other Document or any other
document or instrument executed and delivered in connection herewith or
therewith;

(d) any settlement or compromise of any Obligation, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and any subordination of the payment of all or any
part thereof to the payment of any obligation (whether due or not) of any Loan
Party to creditors of any Loan Party other than any other Loan Party;

 

159

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(e) any manner of application of Collateral, or proceeds thereof, to all or any
of the Obligations, or any manner of Disposition of any Collateral for all or
any of the Obligations or any other assets of any Loan Party; and

(f) any other agreements or circumstance of any nature whatsoever that may or
might in any manner or to any extent vary the risk of any Guarantor, or that
might otherwise at law or in equity constitute a defense available to, or a
discharge of, the Guaranty hereunder and/or the obligations of any Guarantor, or
a defense to, or discharge of, any Loan Party or any other Person or party
hereto or the Obligations or otherwise with respect to the Advances or other
financial accommodations to the Loan Parties pursuant to this Agreement and/or
the Other Documents.

17.6 Waiver of Notice. Agent shall have the right to do any of the above without
notice to or the consent of any Guarantor and each Guarantor expressly waives
any right to notice of, consent to, knowledge of and participation in any
agreements relating to any of the above or any other present or future event
relating to Obligations whether under this Agreement or otherwise or any right
to challenge or question any of the above and waives any defenses of such
Guarantor which might arise as a result of such actions (in each case other than
the defense of Payment in Full of the Obligations).

17.7 Agent’s Discretion. Agent may at any time and from time to time (whether
prior to or after the revocation or termination of this Agreement) without the
consent of, or notice to, any Guarantor, and without incurring responsibility to
any Guarantor or impairing or releasing the Obligations, apply any sums by
whomsoever paid or howsoever realized to any Obligations regardless of what
Obligations remain unpaid.

17.8 Reinstatement.

(a) The Guaranty provisions herein set forth herein shall continue to be
effective or be reinstated, as the case may be, if claim is ever made upon Agent
or any Lender for repayment or recovery of any amount or amounts received by
such Agent or such Lender in payment or on account of any of the Obligations and
such Person repays all or part of said amount for any reason whatsoever,
including, without limitation, by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over such Person or the
respective property of each, or any settlement or compromise of any claim
effected by such Person with any such claimant (including any Loan Party); and
in such event each Guarantor hereby agrees that any such judgment, decree,
order, settlement or compromise or other circumstances shall be binding upon
such Guarantor, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any Obligation, and each Guarantor shall be
and remain liable to Agent and/or Lenders for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by such
Persons.

(b) Agent shall not be required to marshal any assets in favor of any Guarantor,
or against or in payment of Obligations.

 

 

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(c) No Guarantor shall be entitled to claim against any present or future
security held by Agent from any Person for Obligations in priority to or equally
with any claim of Agent, or assert any claim for any liability of any Loan Party
to any Guarantor in priority to or equally with claims of Agent for Obligations,
and no Guarantor shall be entitled to compete with Agent with respect to, or to
advance any equal or prior claim to any security held by Agent for Obligations.

(d) If any Loan Party makes any payment to Agent, which payment is wholly or
partly subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to any Person under any federal or provincial
statute or at common law or under equitable principles, then to the extent of
such payment, the Obligation intended to be paid shall be revived and continued
in full force and effect as if the payment had not been made, and the resulting
revived Obligation shall continue to be guaranteed, uninterrupted, by each
Guarantor hereunder.

(e) All present and future monies payable by any Loan Party to any Guarantor,
whether arising out of a right of subrogation or otherwise, are assigned to
Agent for its benefit and for the ratable benefit of Lenders as security for
such Guarantor’s liability to Agent and Lenders hereunder and are postponed and
subordinated to Agent’s prior right to Payment in Full of the
Obligations. Except to the extent prohibited otherwise by this Agreement, if an
Event of Default shall have occurred and be continuing, all monies received by
any Guarantor from any Loan Party shall be held by such Guarantor as agent and
trustee for Agent. This assignment, postponement and subordination shall only
terminate when the Obligations are Paid in Full and this Agreement is
irrevocably terminated.

(f) Each Loan Party acknowledges this assignment, postponement and subordination
and, except as otherwise set forth herein, agrees that, after the occurrence and
during the continuance of an Event of Default, it shall make no payments to any
Guarantor without the prior written consent of Agent. Each Loan Party agrees to
give full effect to the provisions hereof.

[signature pages follow]

 

161

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Each of the parties has signed this Agreement as of the day and year first above
written.

 

BORROWER:

 

QUANTUM CORPORATION

 

By:

  

/s/ Fuad Ahmad

 

Name:

   Fuad Ahmad  

Title:

   Chief Financial Officer

AGENT AND LENDER:

 

PNC BANK, NATIONAL ASSOCIATION,

as Agent and Lender

 

By:

  

/s/ Walt Hill

 

Name:

   Walt Hill  

Title:

   Senior Vice President

Signature Page to Revolving Credit and Security Agreement

 

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

Exhibit 1.2(a)

Form of Borrowing Base Certificate

[See attached]

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

Exhibit 1.2(b)

Form of Compliance Certificate

COMPLIANCE CERTIFICATE

PNC Bank, National Association

200 South Wacker Drive, Suite 600

Chicago, IL 60606

Attention: Portfolio Manager

The undersigned, the [Chief Financial Officer] of QUANTUM CORPORATION, a
Delaware corporation (“Borrowing Agent”), certifies to PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent (in such capacity, “Agent”), and the
Lenders (as defined below) that, pursuant to the terms and conditions of that
certain Revolving Credit and Security Agreement, dated as of October 21, 2016
(as may be amended, modified, supplemented, renewed, restated or replaced from
time to time, the “Credit Agreement”), by and among the Borrowing Agent
(together with each other Person joined thereto as a borrower from time to time,
collectively, the “Borrowers”, and each a “Borrower”), each Person joined
thereto as a guarantor from time to time (collectively, the “Guarantors”, and
each a “Guarantor” and together with the Borrowers, collectively the “Loan
Parties” and each a “Loan Party”), the financial institutions party thereto as
lenders from time to time (collectively, the “Lenders” and each a “Lender”) and
Agent, the Loan Parties are in compliance for the [month / quarter / fiscal
year] ending              , 201     with all required covenants set forth in the
Credit Agreement and no Default or Event of Default exists (if not true, in the
“Comments Regarding Exceptions” section below specify the Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by the Loan Parties with respect to such Default or Event of
Default). Capitalized terms used in this Compliance Certificate and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.

Without limiting the foregoing, the undersigned certifies that the Loan Parties
are in compliance with the requirements or restrictions imposed by Sections 6.5,
7.3, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.10 of the Credit Agreement, except as may be
set forth below

Attached hereto as Schedule A are covenant calculations which show such
compliance (or non-compliance) with Sections 6.5(a), 6.5(b), 6.5(c), 6.5(d) and
7.6 of the Credit Agreement.

Compliance status is indicated by circling Yes/No under “Complies” column.

 

Financial Covenants

   Required    Actual    Complies

Section 6.5(a) – Fixed Charge Coverage Ratio

   ³ [    ] to 1.00             to 1.00    Yes    No

Section 6.5(b) – Senior Net Leverage Ratio

   £ [    ] to 1.00             to 1.00    Yes    No

Section 6.5(c) – Total Leverage Ratio

   £ [    ] to 1.00             to 1.00    Yes    No

Section 6.5(d) – Minimum PNC Qualified Cash

   ³ [$20,000,000]

    [$12,000,000]

   $                 Yes    No

Section 7.6 – Annual Capital Expenditures

   £ $20,000,000    $                 Yes    No

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

Other Covenants

   Complies

Section 7.2 – Encumbrances

   Yes     No

Section 7.3 – Guarantees

   Yes     No

Section 7.4 – Investments

   Yes     No

Section 7.5 – Loans

   Yes     No

Section 7.7 – Dividends

   Yes     No

Section 7.8 – Indebtedness

   Yes     No

Section 7.10 – Transactions with Affiliates

   Yes     No

To my knowledge, each Loan Party is in compliance in all material respects with
all applicable Environmental Laws.

Since the date of the last Compliance Certificate, there has been no change to
the Loan Parties’ operating or other deposit accounts, securities accounts,
commodities accounts, and other accounts at which any Loan Party maintains funds
or Investments, except as set forth below:                                 .

Since the date of the last Compliance Certificate, there has been no change to
the Loan Parties’ Intellectual Property, including any applications for any of
the foregoing, and including any licenses pursuant to which any Loan Party is a
licensee of any of the foregoing, except as set forth below:
                                                                 .

Since the date of the last Compliance Certificate, there has been no change to
the Loan Parties’ locations of Equipment and Inventory (other than those
locations permitted in the Credit Agreement), except as set forth below:
                                .

Since the date of the last Compliance Certificate, there has been no change to
any bond posted on behalf of any Loan Party to secure such Loan Party’s
performance of any contract, and no new bond has been posted to secure any Loan
Party’s performance of any contract, except as set forth below:
                                                                 .

Since the date of the last Compliance Certificate, there has been no change to
Loan Parties’ Equity Interests except as set forth below:
                                                             .

[Attached as Exhibit I hereto are updates to the following schedules as
permitted by Section 9.17 of the Credit Agreement]

Comments Regarding Exceptions:                                          
                       .

[signature page follows]

 

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

Very truly yours,

QUANTUM CORPORATION,

as Borrowing Agent

By:  

 

Name:

Title:

 

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

SCHEDULE A TO COMPLIANCE CERTIFICATE

Calculations

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

EXHIBIT I TO COMPLIANCE CERTIFICATE

Updates to Schedules

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

Exhibit 2.1

Form of Revolving Credit Note

REVOLVING CREDIT NOTE

 

$80,000,000    October 21, 2016

FOR VALUE RECEIVED, QUANTUM CORPORATION, a Delaware corporation (“Quantum” and
together with each Person joined to the Credit Agreement (as defined below) as a
borrower from time to time, collectively, the “Borrowers” and each a
“Borrower”), hereby jointly and severally promise to pay to the order of PNC
BANK, NATIONAL ASSOCIATION (the “Holder”), at the Payment Office: (i) at the end
of the Term (as defined in the Credit Agreement) and/or (ii) earlier as provided
in the Credit Agreement, the principal sum of EIGHTY MILLION DOLLARS
($80,000,000) or such lesser sum which then represents Holder’s Revolving
Commitment Percentage of the aggregate unpaid principal amount of all Revolving
Advances made or extended to Borrowers by Holder pursuant to the Credit
Agreement, in lawful money of the United States of America in immediately
available funds, together with interest on the principal hereunder remaining
unpaid from time to time, at the rate or rates from time to time in effect under
the Credit Agreement.

THIS REVOLVING CREDIT NOTE is executed and delivered under and pursuant to the
terms of that certain Revolving Credit and Security Agreement, dated as of the
date hereof (as the same may be amended, modified, supplemented, renewed,
restated or replaced from time to time, the “Credit Agreement”), by and among
the Borrowers, each Person joined thereto as a guarantor from time to time
(collectively, the “Guarantors” and each a “Guarantor” and together with the
Borrowers, collectively the “Loan Parties” and each a “Loan Party”), the
financial institutions named therein or which hereafter become a party thereto
as lenders (the “Lenders”), and PNC Bank, National Association, in its capacity
as agent for Lenders (in such capacity, “Agent”). Capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement.

Borrowers hereby waive diligence, presentment, demand, protest and notice of any
kind whatsoever as further set forth in the Credit Agreement.

This Revolving Credit Note is one of the Notes referred to in the Credit
Agreement, which among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayments of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain terms and conditions therein specified.

THIS REVOLVING CREDIT NOTE, AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM
(WHETHER ARISING UNDER CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.

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

EACH BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS REVOLVING
CREDIT NOTE, ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS REVOLVING CREDIT NOTE, ANY OTHER DOCUMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH BORROWER HEREBY CONSENTS THAT ANY SUCH CLAIM, COUNTERCLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
BORROWER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE BORROWERS HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

[Signatures to Follow on Separate Page]

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

IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit Note the
day and year first written above intending to be legally bound hereby.

 

QUANTUM CORPORATION By:  

 

Name:

Title:

 

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

Exhibit 2.4

Form of Swing Loan Note

SWING LOAN NOTE

 

$8,000,000    October 21, 2016

FOR VALUE RECEIVED, QUANTUM CORPORATION, a Delaware corporation (“Quantum” and
together with each Person joined to the Credit Agreement (as defined below) as a
borrower from time to time, collectively, the “Borrowers” and each individually
a “Borrower”), hereby jointly and severally promise to pay to the order of PNC
BANK, NATIONAL ASSOCIATION (the “Holder”), at the Payment Office, the principal
sum of EIGHT MILLION DOLLARS ($8,000,000) or such lesser sum which then
represents the aggregate unpaid principal amount of all Swing Loans made or
extended to Borrowers by the Holder pursuant to the Credit Agreement, in lawful
money of the United States of America in immediately available funds, together
with interest on the principal hereunder remaining unpaid from time to time, at
the rate or rates from time to time in effect under the Credit Agreement;
provided, however, that the entire unpaid principal balance of this Swing Loan
Note shall be due and payable in full at the end of the Term, or earlier as
provided in the Credit Agreement.

THIS SWING LOAN NOTE is executed and delivered under and pursuant to the terms
of that certain Revolving Credit and Security Agreement, dated as of the date
hereof (as the same may be amended, modified, supplemented, renewed, restated or
replaced from time to time, the “Credit Agreement”), by and among the Borrowers,
each Person joined thereto as a guarantor from time to time (collectively, the
“Guarantors” and each a “Guarantor” and together with the Borrowers,
collectively the “Loan Parties” and each a “Loan Party”), the financial
institutions named therein or which hereafter become a party thereto as lenders
(the “Lenders”), and PNC Bank, National Association, in its capacity as agent
for Lenders (in such capacity, “Agent”). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.

Each Borrower hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever as further set forth in the Credit Agreement.

This Swing Loan Note is one of the Notes referred to in the Credit Agreement,
which among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and mandatory
prepayments of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain terms and conditions therein specified.

THIS SWING LOAN NOTE, AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM
(WHETHER ARISING UNDER CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.

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

EACH BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS SWING
LOAN NOTE, ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS SWING LOAN NOTE, ANY OTHER DOCUMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH BORROWER HEREBY CONSENTS THAT ANY SUCH CLAIM, COUNTERCLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
BORROWER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE BORROWERS HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

[Signatures to Follow on Separate Page]

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

IN WITNESS WHEREOF, the undersigned have executed this Swing Loan Note the day
and year first written above intending to be legally bound hereby.

 

QUANTUM CORPORATION By:  

 

Name:

Title:

 

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

Exhibit 2.24

Form of Lender Joinder and Assumption Agreement

LENDER JOINDER AND ASSUMPTION AGREEMENT

This Lender Joinder and Assumption Agreement (this “Joinder”) is made as of
[      , 201      ] (the “Effective Date”) by [                    ] (the “New
Commitment Provider”).

Background

Reference is made to the Revolving Credit and Security Agreement, dated as of
October 21, 2016 (as may be amended, modified, supplemented, renewed, restated
or replaced from time to time, the “Credit Agreement”), by and among QUANTUM
CORPORATION, a Delaware corporation (“Quantum” and together with each other
Person joined thereto as a borrower from time to time, collectively, the
“Borrowers”, and each a “Borrower”), each Person joined thereto as a guarantor
from time to time (collectively, the “Guarantors”, and each a “Guarantor” and
together with the Borrowers, collectively the “Loan Parties” and each a “Loan
Party”), the financial institutions party thereto as lenders from time to time
(collectively, the “Lenders” and each a “Lender”) and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for Lenders (in such capacity,
“Agent”). Capitalized terms defined in the Credit Agreement are used herein as
defined therein.

Agreement

In consideration of the Lenders’ permitting the New Commitment Provider to
become a Lender under the Credit Agreement, the New Commitment Provider agrees
that (a) effective as of the Effective Date, the New Commitment Provider shall
become, and shall be deemed to be, a Lender under the Credit Agreement and each
of the Other Documents and (b) from the Effective Date and so long as the New
Commitment Provider remains a party to the Credit Agreement, New Commitment
Provider shall assume the obligations of a Lender under and perform, comply with
and be bound by each of the provisions of the Credit Agreement which are stated
to apply to a Lender and shall be entitled to the benefits, rights and remedies
set forth therein and in each of the Other Documents. The New Commitment
Provider hereby acknowledges that it has heretofore received a true and correct
copy of the Credit Agreement (including any amendments or modifications thereof
or supplements or waivers thereto) as in effect on the Effective Date and the
executed original of its Note dated the Effective Date issued by the Borrowers
under the Credit Agreement in the face amount of $                    .

The Revolving Commitment Amount of the New Commitment Provider and the Revolving
Commitment Amount of each of the other Lenders are as set forth on Exhibit A
attached hereto.

[Signature to Follow on Separate Pages]

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

IN WITNESS WHEREOF, the New Commitment Provider has duly executed and delivered
this Joinder as of the Effective Date.

 

[NEW COMMITMENT PROVIDER] By:  

 

Name:

Title:

 

 

ACKNOWLEDGED:

 

PNC BANK, NATIONAL ASSOCIATION,

as Agent

By:  

 

Name:

Title:

 

ACKNOWLEDGED:

 

QUANTUM CORPORATION, as Borrowing Agent

By:  

 

Name:

Title:

 

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

EXHIBIT A

COMMITMENT AMOUNTS

 

Lender

   Revolving
Commitment Amount      Total Commitment
Amount  

PNC Bank, National Association

   $                            $                            $
                           $                        

Total

     

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

Exhibit 8.1(d)

Form of Financial Condition Certificate

FINANCIAL CONDITION CERTIFICATE

October 21, 2016

TO: PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Lenders
described below (in such capacity, together with its successors and assigns, the
“Agent”), in connection with that certain Revolving Credit and Security
Agreement, dated of even date herewith (as may be supplemented, restated,
superseded, amended or replaced from time to time, the “Credit Agreement”),
among Quantum Corporation, a Delaware corporation (“Quantum” and together with
each other Person joined thereto as a borrower from time to time, collectively,
the “Borrowers” and each a “Borrower”), each Person joined thereto as a
guarantor from time to time, (collectively, the “Guarantors” and each a
“Guarantor” and together with the Borrowers, collectively the “Loan Parties” and
each a “Loan Party”), the financial institutions party thereto as lenders from
time to time (collectively, the “Lenders” and each a “Lender”) and
Agent. Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement.

In connection with the Credit Agreement and the Other Documents, I hereby
certify that, effective as of the Closing Date, I am the duly elected, qualified
and acting Chief Financial Officer of each Loan Party and, in such capacity, I
hereby conclude to my knowledge that:

A. The execution and delivery of the Credit Agreement and the Other Documents
and the granting of any security interests or Liens pursuant to the Credit
Agreement and the Other Documents by the Loan Parties will not render any Loan
Party insolvent. I understand that, in this context, “insolvent” with respect to
a Loan Party means that the present fair valuation of such Loan Party’s assets
taken as a whole is less than the present fair valuation of its probable
liabilities.

B. The execution and delivery of the Credit Agreement and the Other Documents
and the granting of the security interests and Liens by each Loan Party pursuant
to the Credit Agreement and the Other Documents will not leave any Loan Party
with property which would constitute unreasonably small capital for such Loan
Party’s business or the business of the Loan Parties taken as a whole. In
reaching this conclusion, I understand that “unreasonably small capital” depends
upon the nature of the business of the Loan Parties as presently conducted, and
I have reached my conclusion based on the actual and reasonably anticipated
needs for capital of the business anticipated to be conducted by the Loan
Parties and consistent with the Closing Date Projections and other information
described herein.

C. I conclude that the Loan Parties will not, taken as a whole, likely incur
debts beyond their ability to pay as such debts mature. This conclusion is
based, in part, upon my review of the Closing Date Projections, which project
that the Loan Parties will have positive cash flow after paying all of their
scheduled and anticipated Indebtedness as it matures. I have concluded that the
realization from the assets of the Loan Parties in the Ordinary Course of
Business, taken as a whole, will be sufficient to pay their recurring current
debt, short term debt, and long term debt as such debts require.

 

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D. No Loan Party has executed the Credit Agreement or any of the Other Documents
or made any transfer or incurred any obligations thereunder with actual intent
to hinder, delay, or defraud either present or future creditors.

I understand that Agent and the Lenders are relying on the truth and accuracy of
the foregoing in connection with the extensions of credit under the Credit
Agreement.

[Signatures to Follow on Separate Page]

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I hereby certify, in my capacity as Chief Financial Officer of each Loan Party,
and not individually, that the foregoing information is true and correct and
execute this certificate as of the date first written above.

 

QUANTUM CORPORATION By:  

 

Name:   Title:   Chief Financial Officer

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Exhibit 16.3

Form of Commitment Transfer Supplement

COMMITMENT TRANSFER SUPPLEMENT

This COMMITMENT TRANSFER SUPPLEMENT, dated as of [                    ],
201[    ] (this “Commitment Transfer Supplement”), by and among
                     (“Transferor Lender”),                      (“Purchasing
Lender”), and PNC BANK, NATIONAL ASSOCIATION, as agent for the Lenders under the
Credit Agreement (as defined below) (in such capacity, the “Agent”).

W I T N E S S E T H

WHEREAS, this Commitment Transfer Supplement is being executed and delivered in
accordance with Section 16.3 of that certain Revolving Credit and Security
Agreement, dated as of October 21, 2016 (as amended, modified, supplemented,
renewed, restated or replaced from time to time, the “Credit Agreement”), by and
among Quantum Corporation, a Delaware corporation (“Quantum” and together with
each other Person joined thereto as a borrower from time to time, collectively,
the “Borrowers”, and each a “Borrower”), each Person joined thereto as a
guarantor from time to time (collectively, the “Guarantors” and each a
“Guarantor” and together with the Borrowers, collectively the “Loan Parties” and
each a “Loan Party”), the financial institutions party thereto as lenders from
time to time (collectively, the “Lenders” and each a “Lender”) and Agent.

WHEREAS, Purchasing Lender wishes to become a Lender party to the Credit
Agreement; and

WHEREAS, the Transferor Lender is selling and assigning to Purchasing Lender
rights, obligations and commitments under the Credit Agreement;

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. All capitalized terms used herein which are not defined shall have the
meanings given to them in the Credit Agreement.

2. Upon receipt by Agent of four counterparts of this Commitment Transfer
Supplement, to each of which is attached a fully completed Schedule I, and each
of which has been executed by the Transferor Lender and Agent, Agent will
transmit to Transferor Lender and Purchasing Lender a Transfer Effective Notice,
substantially in the form of Schedule II to this Commitment Transfer Supplement
(a “Transfer Effective Notice”). Such Transfer Effective Notice shall set forth,
inter alia, the date on which the transfer effected by this Commitment Transfer
Supplement shall become effective (the “Transfer Effective Date”), which date
unless otherwise noted therein, shall not be earlier than the first Business Day
following the date such Transfer Effective Notice is received. From and after
the Transfer Effective Date, Purchasing Lender shall be a Lender party to the
Credit Agreement for all purposes thereof.

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3. At or before 12:00 Noon (New York time) on the Transfer Effective Date
Purchasing Lender shall pay to Transferor Lender, in immediately available
funds, an amount equal to the purchase price, as agreed between Transferor
Lender and such Purchasing Lender (the “Purchase Price”), of the portion of the
Advances being purchased by such Purchasing Lender (such Purchasing Lender’s
“Purchased Percentage”) of the outstanding Advances and other amounts owing to
the Transferor Lender under the Credit Agreement, and the Note(s). Effective
upon receipt by Transferor Lender of the Purchase Price from a Purchasing
Lender, Transferor Lender hereby irrevocably sells, assigns and transfers to
such Purchasing Lender, without recourse, representation or warranty, and
Purchasing Lender hereby irrevocably purchases, takes and assumes from
Transferor Lender, such Purchasing Lender’s Purchased Percentage of the Advances
and other amounts owing to the Transferor Lender under the Credit Agreement and
the Note(s) together with all instruments, documents and collateral security
pertaining thereto.

4. Transferor Lender has made arrangements with Purchasing Lender with respect
to (i) the portion, if any, to be paid, and the date or dates for payment, by
Transferor Lender to such Purchasing Lender of any fees heretofore received by
Transferor Lender pursuant to the Credit Agreement prior to the Transfer
Effective Date and (ii) the portion, if any, to be paid, and the date or dates
of payment, by such Purchasing Lender to Transferor Lender of fees or interest
received by such Purchasing Lender pursuant to the Credit Agreement from and
after the Transfer Effective Date.

5. (a) All principal payments that would otherwise be payable from and after the
Transfer Effective Date to or for the account of Transferor Lender pursuant to
the Credit Agreement and the Note(s) shall, instead, be payable to or for the
account of Transferor Lender and Purchasing Lender, as the case may be, in
accordance with their respective interests as reflected in this Commitment
Transfer Supplement.

(b)All interest, fees and other amounts that would otherwise accrue for the
account of Transferor Lender from and after the Transfer Effective Date pursuant
to the Credit Agreement and the Note(s) shall, instead, accrue for the account
of, and be payable to, Transferor Lender and Purchasing Lender, as the case may
be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement. In the event that any amount of interest, fees
or other amounts accruing prior to the Transfer Effective Date was included in
the Purchase Price paid by any Purchasing Lender, Transferor Lender and
Purchasing Lender will make appropriate arrangements for payment by Transferor
Lender to such Purchasing Lender of such amount upon receipt thereof from
Borrowers.

6. Concurrently with the execution and delivery hereof, Transferor Lender will
provide to Purchasing Lender conformed copies of the Credit Agreement and all
related documents delivered to Transferor Lender.

7. Each of the parties to this Commitment Transfer Supplement agrees that at any
time and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Commitment Transfer Supplement.

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8. By executing and delivering this Commitment Transfer Supplement, Transferor
Lender and Purchasing Lender confirm to and agree with each other and Agent and
Lenders as follows: (i) other than the representation and warranty that it is
the legal and beneficial owner of the interest being assigned hereby free and
clear of any adverse claim, Transferor Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, the Note(s) or any other instrument or
document furnished pursuant thereto; (ii) Transferor Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers or the performance or observance by Borrowers
of any of their Obligations under the Credit Agreement, the Note(s) or any other
instrument or document furnished pursuant hereto; (iii) Purchasing Lender
confirms that it has received a copy of the Credit Agreement, together with
copies of such financial statements and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Commitment Transfer Supplement; (iv) Purchasing Lender will,
independently and without reliance upon Agent, Transferor Lender or any other
Lenders 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 the Credit Agreement; (v) Purchasing Lender appoints and authorizes
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to Agent by the terms thereof; (vi)
Purchasing Lender agrees that it will perform all of its respective obligations
as set forth in the Credit Agreement to be performed by each as a Lender; and
(vii) Purchasing Lender represents and warrants to Transferor Lender, Lenders,
Agent and Borrowers that it is either (x) entitled to the benefits of an income
tax treaty with the United States of America that provides for an exemption from
the United States withholding tax on interest and other payments made by
Borrowers under the Credit Agreement and Other Documents or (y) is engaged in
trade or business within the United States of America.

9. Schedule I hereto sets forth the revised Revolving Commitment Percentages of
Transferor Lender and the Revolving Commitment Percentages of Purchasing Lender
as well as administrative information with respect to Purchasing Lender.

10. This Commitment Transfer Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York applied to contracts to be
performed wholly within the State of New York (including Sections 5-1401 and
5-1402 of the New York General Obligations Law, but excluding all other choice
of law and conflicts of law rules).

[Signatures Begin on Next Page]

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IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on the
date set forth above.

 

[                                                                             
        ] as Transferor Lender By:  

 

Name:   Title:   [                                   
                                                  ] as Purchasing Lender By:  

 

Name:   Title:   PNC BANK, NATIONAL ASSOCIATION, as Agent By:  

 

Name:   Title:  

[Signature Page to Commitment Transfer Supplement]

 

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SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT

LIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS

 

[TRANSFEROR LENDER]

  

Revised Revolving Commitment Amount

   $                              

 

 

    

Revised Revolving Commitment Percentage

       %       

 

 

 

[PURCHASING LENDER]

  

Revolving Commitment Amount

   $           

 

 

    

Revolving Commitment Percentage

       %       

 

 

 

Addresses for Notices for Purchasing Lender

 

Attention:

Telephone:

Telecopier:

     

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SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT

[Form of Transfer Effective Notice]

To:                     , as Transferor Lender

and

                    , as Purchasing Lender:

The undersigned, as Agent under the Revolving Credit and Security Agreement,
dated as of October 21, 2016, by and among Quantum Corporation, a Delaware
corporation (“Quantum” and together with each other Person joined thereto as a
borrower from time to time, collectively, the “Borrowers”, and each a
“Borrower”), each Person joined thereto as a guarantor from time to time
(collectively, the “Guarantors”, and each a “Guarantor” and together with the
Borrowers, collectively the “Loan Parties” and each a “Loan Party”), each of the
financial institutions party thereto from time to time as lenders (collectively,
the “Lenders”), and PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders,
acknowledges receipt of four (4) executed counterparts of a completed Commitment
Transfer Supplement in the form attached hereto. [Note: Attach copy of
Commitment Transfer Supplement.] Capitalized terms defined in the Commitment
Transfer Supplement are used herein as therein defined.

Pursuant to such Commitment Transfer Supplement, you are advised that the
Transfer Effective Date will be [Insert date of Transfer Effective Notice].

 

PNC BANK, NATIONAL ASSOCIATION,

as Agent

By:  

 

Name:   Title:  

ACCEPTED FOR RECORDATION

IN REGISTER: